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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NO. 0-10454
UNIVERSAL HEALTH SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 23-2077891
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PENNSYLVANIA 19406
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (610) 768-3300
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each Class Name of exchange on which registered
Class B Common Stock, $.01 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
CLASS D COMMON STOCK, $.01 PAR VALUE
(TITLE OF EACH CLASS)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The number of shares of the registrant's Class A Common Stock, $.01 par value,
Class B Common Stock, $.01 par value, Class C Common Stock, $.01 par value,
and Class D Common Stock, $.01 par value, outstanding as of February 11, 1994,
was 1,139,123, 12,179,161, 114,482, and 26,026, respectively.
The aggregate market value of voting stock held by non-affiliates at February
11, 1994 was $267,020,534. (For purpose of this calculation, it was assumed
that Class A, Class C, and Class D Common Stock, which are not traded but are
convertible share-for-share into Class B Common Stock, have the same market
value as Class B Common Stock.)
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's definitive proxy statement for its 1994 Annual
Meeting of Stockholders, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 1993 (incorporated by reference
under Part III).
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PART I
ITEM I. Business
Universal Health Services, Inc., (together with its subsidiaries, the
"Company" or "UHS"), formed in 1978, is engaged principally in owning and
operating acute care and psychiatric hospitals and ambulatory treatment
centers. The Company currently operates 26 hospitals with an aggregate of
3,579 licensed beds. Of these facilities, 13 are general acute care hospitals
and 13 are psychiatric care facilities (two of which are substance abuse
facilities). In addition, the Company, as part of its Ambulatory Treatment
Centers Division, owns in partnership with physicians, and operates surgery
centers located in Springfield, Missouri; Midwest City, Oklahoma; Odessa,
Texas; St. George, Utah; Littleton, Colorado; New Albany, Indiana; Ponca City,
Oklahoma; and Rancho Mirage, California.
UHS has also entered into other specialized medical service arrangements,
laboratory services, mobile Computerized Tomography (CT) and Magnetic
Resonance Imaging (MRI) services, preferred provider organization
arrangements, health maintenance organization contracts, medical office
building leasing, construction management services, and real estate management
and administrative services.
UHS provides capital resources, as well as a variety of management
services to its hospitals and ambulatory treatment centers, including central
purchasing, data processing, finance and control systems, facilities planning,
physician recruitment services, administrative personnel management, marketing
and public relations. Each of the hospitals and ambulatory treatment centers
currently owned by the Company provides the medical and surgical, psychiatric,
or ambulatory services typically available in such facilities. Each hospital
is managed on a day-to-day basis by a managing director employed by the
Company. In addition, a Board of Governors, including members of the
hospital's medical staff, governs the medical, professional and ethical
practices at each hospital.
The Company selectively seeks opportunities to expand its base of
operations by acquiring, constructing or leasing additional hospital
facilities. In addition, it is the Company's objective to increase the
operating revenues and profitability of owned hospitals by the introduction of
new services, improvement of existing services including an emphasis on the
expansion of outpatient services, physician recruitment and the application of
financial and operational controls. The Company also continues to examine its
facilities and to dispose of those facilities which it believes do not have
the potential to contribute to the Company's growth or operating strategy.
The Company is involved in continual development activities. Applications
to state health planning agencies to add new services in existing hospitals
are currently on file in several states which require certificates of need
(e.g., Georgia and Florida). Although the Company expects that some of these
applications will result in the addition of new facilities or services to the
Company's operations, no assurances can be made for ultimate success by the
Company in these efforts.
The Company serves as advisor to Universal Health Realty Income Trust
("UHT") which leases to the Company the real property of 8 facilities operated
by the Company. In addition, UHT holds interests in properties owned by
unrelated companies. The Company receives a fee for its advisory services
based on the value of UHT's assets. In addition, certain of the directors and
officers of the Company serve as trustees and officers of UHT. As of February
11, 1994, the Company owns 7.7% of UHT's outstanding shares and has an option
to purchase UHT shares in the future at fair market value to enable it to
maintain a 5% interest.
RECENT DEVELOPMENTS
The Company continued its strategy of consolidation in 1993 to focus on
its core operations and selective expansion in areas in which it believes
there are opportunities for growth. The Company sold the operations and fixed
assets of Doctors' Hospital of Hollywood, a 124-bed acute care facility in
Hollywood, Florida in October 1993. In December 1993, the Company sold the
operations and certain fixed assets of Belmont Community Hospital, a 134-bed
acute care facility in Chicago, Illinois which had been leased from UHT. Con-
currently, the Company sold certain related real property to UHT which leased
the facility to an unaffiliated third party.
1
In 1993, the Company continued to add to its Ambulatory Treatment Centers
Division and acquired, in partnership with physicians, four additional free-
standing ambulatory surgery centers located in Littleton, Colorado; New
Albany, Indiana; Ponca City, Oklahoma; and Rancho Mirage, California. Also, as
part of this Division, the Company acquired Columbia Radiation Oncology, a
radiotherapy facility in Washington, D.C.
The Company also selectively expanded its operations at certain of its
existing facilities: Valley Hospital Medical Center in Las Vegas, Nevada, (1)
opened its 57,000 square foot two-story tower which accommodates 106 new
patient beds, nursing facilities and administrative offices; (2) opened its
new Cardiology Department and Catheterization Lab; and (3) opened its new
emergency room. McAllen Medical Center in McAllen, Texas opened its newly
constructed 7th and 8th floors which contain a 32-bed Sub-Acute Skilled Nursing
Center and 67 additional medical/surgical beds. Auburn General Hospital in
Auburn, Washington began construction on a medical office building which is
scheduled for completion in October 1994.
In addition, the Company opened a second medical office building on the
Regional Cancer Center Campus at its Wellington Regional Medical Center in
West Palm Beach, Florida, and opened the Comprehensive Cancer Center at
Westlake Medical Center in Westlake Village, California.
BED UTILIZATION AND OCCUPANCY RATES
The following table shows the bed utilization and occupancy rates for the
hospitals operated by the Company for the years indicated, excluding
information relating to hospitals no longer owned by the Company as of
December 31, 1993 and, accordingly, the information is presented on a basis
different from that used in preparing the historical financial information
included in this Report.
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
Average Licensed Beds............... 3,145 3,169 3,266 3,352 3,447
Average Available Beds (1).......... 2,903 2,871 2,966 3,001 3,146
Hospital Admissions................. 70,961 72,037 76,544 77,415 80,140
Average Length of Patient
Stay (Days)....................... 8.1 7.9 7.7 7.3 6.9
Patient Days (2).................... 574,045 572,154 587,882 565,397 550,603
Occupancy Rate (3):
Licensed Beds..................... 50% 49% 49% 46% 44%
Available Beds.................... 54% 55% 54% 51% 48%
- ----------
(1) "Average Available Beds" is the number of beds which are actually in service at any given time for immediate patient use
with the necessary equipment and staff available for patient care. A hospital may have appropriate licenses for more beds
than are in service for a number of reasons, including lack of demand, incomplete construction, and anticipation of
future needs.
(2) "Patient Days" is the aggregate sum for all patients of the number of days that hospital care is provided to each patient.
(3) "Occupancy Rate" is calculated by dividing average patient days (total patient days divided by the total number of days
in the period) by the number of average beds, either available or licensed.
The number of patient days of a hospital is affected by a number of
factors, including the number of physicians using the hospital, changes in the
number of beds, the composition and size of the population of the community in
which the hospital is located, general and local economic conditions,
variations in local medical and surgical practices and the degree of
outpatient use of the hospital services. Current industry trends in
utilization and occupancy have been significantly affected by changes in
reimbursement policies of third party payors. A continuation of such industry
trends could have a material adverse impact upon the Company's future operating
performance. The Company has experienced growth in outpatient utilization over
the past several years. The Company is unable to predict the rate of growth
and resulting impact on the Company's future revenues because it is dependent
2
upon developments in medical technologies and physician practice patterns,
both of which are outside of the Company's control. The Company is also unable
to predict the extent which other industry trends will continue or accelerate.
SOURCES OF REVENUE
The Company receives payment for services rendered from private insurers,
the Federal government under the Medicare program, state governments under
their respective Medicaid programs and directly from patients. Most of the
Company's hospitals are certified as providers of Medicare and Medicaid
services by the appropriate governmental authorities. The requirements for
certification are subject to change, and, in order to remain qualified for
such programs, it may be necessary for the Company to make changes from time
to time in its facilities, equipment, personnel and services. Although the
Company intends to continue in such programs, there is no assurance that it
will continue to qualify for participation.
Valley Hospital in Las Vegas, Nevada contributed 16%, 16% and 16% of net
revenues from the Company's U.S. hospitals and 34%, 32% and 28% of operating
income from the Company's U.S. hospitals for the three years ended December
31, 1993, 1992 and 1991, respectively, excluding the effect of the $13.5
million and $29.8 million special Medicaid reimbursement increases for the
Company as a whole recorded in 1993 and 1992, respectively. McAllen Medical
Center in McAllen, Texas contributed 18%, 16% and 13% of net revenues from
the Company's U.S. hospitals and 35%, 24% and 20% of operating income from the
Company's U.S. hospitals for the three years ended December 31, 1993, 1992 and
1991, respectively, excluding the effect of the $13.5 million and $29.8
million special Medicaid reimbursement increases recorded in 1993 and 1992,
respectively.
The following table shows approximate percentages of gross revenue derived
by the Company's hospitals owned as of December 31, 1993 since their
respective dates of acquisition by the Company from third party sources and
from all other sources during the five years ended December 31, 1993.
PERCENTAGE OF REVENUES
------------------------------------------------------------
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
Third Party Payors:
Blue Cross............................................. 3.0% 2.5% 2.7% 2.0% 1.8%
Medicare............................................... 38.6% 39.4% 40.7% 41.0% 40.1%
Medicaid............................................... 6.4% 7.3% 8.0% 10.1% 11.8%
-------- -------- -------- -------- --------
TOTAL.................................................. 48.0% 49.2% 51.4% 53.1% 53.7%
Other Sources (including patients and private
insurance carriers)...................................... 52.0% 50.8% 48.6% 46.9% 46.3%
-------- -------- -------- -------- --------
100% 100% 100% 100% 100%
REGULATION AND OTHER FACTORS
Within the statutory framework of the Medicare and Medicaid programs,
there are substantial areas subject to administrative rulings, interpretations
and discretion which may affect payments made under either or both of such
programs and reimbursement is subject to audit and review by third party
payors. Management believes that adequate provision has been made for any
adjustments that might result therefrom.
The Federal government makes payments to participating hospitals under its
Medicare program based on various formulae. The Company's general acute care
hospitals are subject to a prospective payment system ("PPS"). PPS pays
hospitals a predetermined amount per diagnostic related group ("DRGs") based
upon a hospital's location and the patient's diagnosis.
The deficit-reduction legislation passed by Congress in 1987 limits the
increases in PPS reimbursement based on the rate of inflation and the location
of hospitals. Psychiatric hospitals, which are exempt from PPS, are cost
reimbursed by the Medicare program, but are subject to a per discharge
3
limitation, calculated based on the hospital's first full year in the Medicare
program. Capital related costs are exempt from this limitation.
On August 30, 1991, the Health Care Financing Administration issued final
Medicare regulations establishing a prospective payment methodology for
inpatient hospital capital-related costs. These regulations apply to hospitals
which are reimbursed based upon the prospective payment system and took effect
for cost years beginning on or after October 1, 1991. For each of the
Company's hospitals, the new methodology began on January 1, 1992.
The regulations provide for the use of a 10-year transition period in
which a blend of the old and new capital payment provisions will be utilized.
One of two methodologies will apply during the 10-year transition period: if
the hospital's hospital-specific capital rate exceeds the federal capital
rate, the hospital will be paid on the basis of a "hold harmless" methodology
which is a blend of cost reimbursement and a prospectively determined national
federal capital rate; or, with limited exceptions, if the hospital-specific
rate is below the federal rate, the hospital will receive payments based upon
the fully prospective ("blended") methodology, which is a blend of the
hospital's actual base year capital rate and a prospectively determined
national federal capital rate. Each hospital's hospital-specific rate will be
determined based upon allowable capital costs incurred during the "base year",
which, for all of the Company's hospitals, is the year ended December 31,
1990.
Within certain limits, a hospital can manage its costs, and, to the extent
this is done effectively, a hospital may benefit from the DRG system. However,
many hospital operating costs are incurred in order to satisfy licensing laws,
standards of the Joint Commission on the Accreditation of Healthcare
Organizations and quality of care concerns. In addition, hospital costs are
affected by the level of patient acuity, occupancy rates and local physician
practice patterns, including length of stay judgments and number and type of
tests and procedures ordered. A hospital's ability to control or influence
these factors which affect costs is, in many cases, limited.
HCFA implemented new regulations, effective January 1, 1992, which set
forth fee schedules for physicians providing services to Medicare patients. In
general, fees for "procedural" services (e.g., surgery and radiology) were
reduced, and fees for "cognitive" services (e.g., visits and consultations)
were increased. The system may reduce the economic incentive for physicians to
perform surgery, radiology and other hospital-based procedures while
encouraging preventative measures and office consultations.
There have been additional proposals either proposed by the Administration
or in Congress to reduce the funds available for the Medicare and Medicaid
programs and to change the method by which hospitals are reimbursed for
services provided to Medicare and Medicaid patients, including free indigent
care. In addition, state governments may, in the future, reduce funds
available under the Medicaid programs which they fund or impose additional
restrictions on the utilization of hospital services. A number of legislative
initiatives have been proposed, which if enacted, would result in major
changes in the health care system, nationally and/or at the state level. Under
consideration are proposals which would impose price controls on hospitals,
require that all businesses offer health insurance to their employees and
expand health insurance coverage to those presently uninsured. In addition,
President Clinton has proposed a health care reform plan to Congress, which
among other things, includes a provision limiting the rate of increase in
spending for Medicare and other health care costs as part of his overall
deficit reduction proposals. Six other health care reform bills have been
proposed in Congress. The Company is unable to predict which bill, if any,
will be adopted, or the ultimate impact their adoption would have on the
Company; however, the new legislation, if passed, may have a material adverse
effect on the Company's future revenues.
The Company currently operates two psychiatric hospitals with a total of
186 beds in Massachusetts, which has mandated hospital rate-setting. The
Company also operates three hospitals containing 378 beds in Florida which are
subject to a mandated form of rate-setting if increases in hospital revenues
per admission exceed certain target percentages. The Company does not believe
that such regulation has had a material adverse effect on its operations.
4
Pursuant to Federal legislation, in general, the Federal government is
required to match state funds applied to state Medicaid programs. Several
states have initiated programs under which certain hospital providers are
taxed to generate Medicaid funds which must be matched by the Federal
government. New legislation passed by Congress on November 27, 1991, limits
each state's use of provider taxes in 1993. State programs involving provider
taxes in which UHS' hospitals are participants are in place in Texas,
Louisiana, Missouri, Nevada, and Washington. Included in the Company's 1993
financial results is revenue attributable to these programs, some of which
expired and some of which are scheduled to expire in mid-1994. The Company
cannot predict whether the remaining programs will continue beyond the
scheduled termination dates.
Under the Omnibus Budget Reconciliation Act of 1989 ("OBRA"), enacted by
Congress in late 1989, physicians are precluded from referring Medicare
patients for clinical laboratory services where the physician has an ownership
interest or investment interest in, or compensation arrangement with, an
entity that provides clinical laboratory services. Effective January 1, 1992,
these entities were prohibited from billing the Medicare program for such
services. The legislation includes exceptions for in-office and group practice
laboratories, and hospital laboratories where the referring physician has an
ownership interest in the hospital as a whole. In addition to the restrictions
related to clinical laboratories, all Medicare providers and suppliers became
subject to certain reporting and disclosure requirements beginning October 1,
1990. Under these requirements, providers and suppliers must disclose certain
information concerning their financial relationships with referring
physicians, including the names and Medicare provider numbers of referring
physician investors and their immediate relatives and the items and services
provided by referring investor physicians.
In 1991, 1992 and 1993, the Inspector General of the Department of Health
and Human Services ("HHS") issued regulations dealing in part with such
ownership arrangements. These regulations provide for "safe harbors"; if an
arrangement or transaction meets each of the stipulations established for a
particular safe harbor, the arrangement will not be subject to challenge by
the Inspector General. If an arrangement does not meet the safe harbor
criteria, it will be analyzed under its particular facts and circumstances to
determine whether it violates the Medicare anti-kickback statute which
prohibits, in general, fraudulent and abusive practices, and enforcement
action may be taken by the Inspector General. In addition to the investment
interests safe harbor, other safe harbors include space rental, equipment
rental, personal service/management contracts, sales of a physician practice,
referral services, warranties, employees, discounts and group purchasing
arrangements, among others.
The Company does not anticipate that either the OBRA provisions or the
safe harbor regulations will have material, adverse effects upon its
operations.
Several states, including Florida and Nevada, have passed new legislation
which limits physician ownership in medical facilities providing imaging
services, rehabilitation services, laboratory testing, physical therapy and
other services. This legislation is not expected to significantly affect the
Company's operations.
All hospitals are subject to compliance with various federal, state and
local statutes and regulations and receive periodic inspection by state
licensing agencies to review standards of medical care, equipment and
cleanliness. The Company's hospitals must comply with the licensing
requirements of federal, state and local health agencies, as well as the
requirements of municipal building codes, health codes and local fire
departments. All the Company's eligible hospitals have been accredited by the
Joint Commission on the Accreditation of Healthcare Organizations, with the
exception of Dallas Family Hospital which is accredited by the American
Osteopathic Association.
The Social Security Act and regulations thereunder contain numerous
provisions which affect the scope of Medicare coverage and the basis for
reimbursement of Medicare providers. Among other things, this law provides
that in states which have executed an agreement with the Secretary of the
Department of Health and Human Services (the "Secretary"), Medicare
reimbursement may be denied with respect to depreciation, interest on borrowed
funds and other expenses in connection with capital expenditures which have
not received prior approval by a designated state health planning agency.
Additionally, many of the states in which the Company's hospitals are located
have enacted legislation requiring certificates of need ("CON") as a condition
5
prior to hospital capital expenditures, construction, expansion, modernization
or initiation of major new services. The Company has not experienced and does
not expect to experience any material adverse effects from those requirements.
Health planning statutes and regulatory mechanisms are in place in many
states in which the Company operates. These provisions govern the distribution
of health care services, the number of new and replacement hospital beds,
administer required state CON laws, contain health care costs, and meet the
priorities established therein. Significant CON reforms have been proposed in
a number of states, including increases in the capital spending thresholds and
exemptions of various services from review requirements. The Company is unable
to predict the impact of these changes upon its operations.
Federal regulations provide that admissions and utilization of facilities
by Medicare and Medicaid patients must be reviewed in order to insure
efficient utilization of facilities and services. The law and regulations
require Peer Review Organizations ("PROs") to review the need for
hospitalization and utilization of hospital services and to set standards for
patient care. The Company has contracted with PROs in each state where it does
business as to the scope of such functions.
In 1988, Congress passed the Medical Waste Tracking Act. Infectious waste
generators, including hospitals, now face substantial penalties for improper
arrangements regarding disposal of medical waste, including civil penalties of
up to $25,000 per day of noncompliance, criminal penalties of $150,000 per
day, imprisonment, and remedial costs. The comprehensive legislation
establishes programs for medical waste treatment and disposal in designated
states. The legislation also provides for sweeping inspection authority in the
Environmental Protection Agency, including monitoring and testing. The Company
believes that its disposal of such wastes is in compliance with all state and
federal laws.
MEDICAL STAFF AND EMPLOYEES
The Company's hospitals are staffed by licensed physicians who have been
admitted to the medical staff of individual hospitals. With a few exceptions,
physicians are not employees of the Company's hospitals and members of the
medical staffs of the Company's hospitals also serve on the medical staffs of
hospitals not owned by the Company and may terminate their affiliation with
the Company's hospitals at any time. The Company's hospitals had approximately
9,100 employees at December 31, 1993, of whom 6,330 were employed full-time.
At Valley Hospital Medical Center in Las Vegas, unionized employees belong
to the Culinary Workers and Bartenders Union and the International Union of
Operating Engineers. Registered nurses at Auburn General Hospital located in
Washington State, are represented by the Washington State Nurses Association,
and the practical nurses at Auburn are represented by the United Food and
Commercial Workers. The Service Employees International Union, Local 6,
purports to have perfected an affiliation with the LPNA. That affiliation is
currently being challenged by Seattle area hospitals in federal court. In
addition, at Auburn, the technical employees are represented by the United
Food and Commercial Workers, and the maintenance employees are represented by
the International Union of Operating Engineers. The registered nurses,
licensed practical nurses, certain technicians and therapists, and
housekeeping employees at the Human Resource Institute in Boston are
represented by the Service Employees International Union. All full-time and
regular part-time professional employees of LaAmistad Residential Treatment
Center in Maitland, Florida are represented by the United Nurses of
Florida/United Health Care Employees Union.
The Company believes that its relations with its employees are
satisfactory.
COMPETITION
In most geographical areas in which the Company operates, there are other
hospitals which provide services comparable to those offered by the Company's
hospitals, some of which are owned by governmental agencies and supported by
tax revenues, and others of which are owned by nonprofit corporations and may
be supported to a large extent by endowments and charitable contributions.
Such support is not available to the Company's hospitals. In addition, certain
hospitals which are located in the areas served by the Company are special
6
service hospitals providing medical, surgical and psychiatric services that
are not available at the Company's or other general hospitals. The competitive
position of a hospital is to a large degree dependent upon the number and
quality of staff physicians. Although a physician may at any time terminate
his or her affiliation with a hospital, the Company seeks to retain doctors of
varied specializations on its hospital staffs and to attract other qualified
doctors by improving facilities and maintaining high ethical and professional
standards. The competitive position of a hospital is also affected by the
presence of alternative health care delivery systems such as preferred provider
organizations, health maintenance organizations and indemnity insurance
programs in the hospital's service area. Such systems normally require a
discount from a hospital's established charges. Outpatient treatment and
diagnostic facilities, outpatient surgical centers, and freestanding ambulatory
surgical centers also impact the health care marketplace.
LIABILITY INSURANCE
The Company insures its general and professional liability risks through
self-insurance and unrelated commercial insurance carriers. The Company is
self-insured for its general liability risks for claims limited to $5,000,000
per occurrence and for its professional liability risks for claims limited to
$25,000,000 per occurrence. Coverage in excess of these limits up to
$100,000,000 is maintained with commercial insurance carriers. In 1993, the
Company purchased a general and professional liability occurrence policy with
a commercial insurer for one of its larger acute care facilities. This policy,
which is scheduled to terminate in July 1994, includes coverage up to $25
million per occurrence for general and professional liability risks. The cost
of such insurance has been increasing and the Company expects that this trend
will continue. Although the Company feels that it currently has adequate
insurance coverage, the commercial policies are limited to one-year terms and
require annual renegotiation or replacement. The Company has no assurance that
it will be able to maintain such insurance in the future on terms acceptable
to the Company.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company, whose terms will expire at such
time as their successors are elected, are as follows:
NAME AND AGE PRESENT POSITION WITH THE COMPANY
------------ ---------------------------------
Alan B. Miller (56)....................... Director, Chairman of the Board,
President and Chief Executive
Officer
Kirk E. Gorman (43)....................... Senior Vice President and
Chief Financial Officer
Richard C. Wright (46).................... Vice President
Thomas J. Bender (41)..................... Vice President
Michael G. Servais (47)................... Vice President
Steve G. Filton (36)...................... Vice President and Controller
Sidney Miller (67)........................ Director and Secretary
Mr. Alan B. Miller has been Chairman of the Board, President and Chief
Executive Officer of the Company since its inception. Prior thereto, he was
President, Chairman of the Board and Chief Executive Officer of American
Medicorp, Inc.
Mr. Gorman was elected Senior Vice President and Chief Financial Officer
in December 1992, and has served as Vice President and Treasurer of the
Company since April 1987. From 1984 until then, he served as Senior Vice
President of Mellon Bank, N.A. Prior thereto, he served as Vice President of
Mellon Bank, N.A.
7
Mr. Wright was elected Vice President of the Company in May 1986. He has
served in various capacities with the Company since 1978, including Senior
Vice President of its Acute Care Division since 1985.
Mr. Bender was elected Vice President of the Company in March 1988. He has
served in various capacities with the Company since 1982, including
responsibility for the Psychiatric Care Division since November 1985.
Mr. Filton was elected Vice President and Controller of the Company in
November 1991, and has served as Director of Accounting and Control since July
1985.
Mr. Servais was elected Vice President of the Company in January 1994, and
has served as Assistant Vice President of the Company since January 1993, and
Group Director since December 1990. Prior thereto, he served as President of
Jupiter Hospital Corporation, and Vice President of Operations of American
Health Group International.
Mr. Sidney Miller has served as Secretary of the Company since 1990 and
Director of the Company since 1978. He has served in various capacities with
the Company, including Executive Vice President since 1983, Vice President
since 1978, and Assistant to the President during 1993. Prior thereto, he was
Vice President-Financial Services and Control of American Medicorp, Inc.
ITEM 2. Properties
EXECUTIVE OFFICES
The Company owns an office building with 68,000 square feet available for
use located on 11 acres of land in King of Prussia, Pennsylvania. The Company
currently uses approximately 40,000 square feet of office space in the
building and the balance is leased to unrelated entities.
HOSPITALS
ACUTE CARE HOSPITALS
--------------------
AUBURN GENERAL HOSPITAL MCALLEN MEDICAL CENTER(1) VALLEY HOSPITAL MEDICAL
Auburn, Washington McAllen, Texas CENTER
149 Beds 428 Beds Las Vegas, Nevada
416 Beds
CHALMETTE MEDICAL RIVER PARISHES HOSPITAL(6)
CENTER(1) LaPlace and Chalmette, VICTORIA REGIONAL MEDICAL
Chalmette, Louisiana Louisiana CENTER
118 Beds 216 Beds Victoria, Texas
154 Beds
DALLAS FAMILY HOSPITAL SPARKS FAMILY HOSPITAL(3)
Dallas, Texas Sparks, Nevada WELLINGTON REGIONAL
104 Beds 150 Beds MEDICAL CENTER(1)
West Palm Beach, Florida
DOCTORS' HOSPITAL OF UNIVERSAL MEDICAL CENTER 120 Beds
SHREVEPORT(2) Plantation, Florida
Shreveport, Louisiana 202 Beds WESTLAKE MEDICAL
180 Beds CENTER(1)
Westlake Village,
INLAND VALLEY REGIONAL California
MEDICAL CENTER(1) 126 Beds
Wildomar, California
80 Beds
8
PSYCHIATRIC HOSPITALS
---------------------
THE ARBOUR HOSPITAL HRI HOSPITAL RIVER CREST HOSPITAL
Boston, Massachusetts Brookline, Massachusetts San Angelo, Texas
118 Beds 68 Beds 80 Beds
THE BRIDGEWAY(1) KEYSTONE CENTER(4) RIVER OAKS HOSPITAL
North Little Rock, Wallingford, Pennsylvania New Orleans, Louisiana
Arkansas 84 Beds 126 Beds
70 Beds
DEL AMO HOSPITAL(2) LA AMISTAD RESIDENTIAL TURNING POINT HOSPITAL(4)
Torrance, California TREATMENT CENTER Moultrie, Georgia
166 Beds Maitland, Florida 59 Beds
56 Beds
TWO RIVERS PSYCHIATRIC
FOREST VIEW HOSPITAL MERIDELL ACHIEVEMENT HOSPITAL
Grand Rapids, Michigan CENTER(1) Kansas City, Missouri
62 Beds Austin, Texas 80 Beds
114 Beds
GLEN OAKS HOSPITAL
Greenville, Texas
53 Beds
AMBULATORY TREATMENT CENTERS
----------------------------
COLUMBIA RADIATION OUTPATIENT SURGICAL SURGERY CENTER OF
ONCOLOGY CENTER OF PONCA CITY(5) LITTLETON(5)
Washington, D.C. Ponca City, Oklahoma Littleton, Colorado
COMPREHENSIVE CANCER SURGERY CENTER OF
CENTER THE REGIONAL CANCER SPRINGFIELD(5)
Westlake, California CENTER AT Springfield, Missouri
WELLINGTON
GOLDRING SURGICAL AND West Palm Beach, Florida SURGERY CENTER OF
DIAGNOSTIC CENTER TEXAS(5)
Las Vegas, Nevada ST. GEORGE SURGICAL Odessa, Texas
CENTER(5)
HOPE SQUARE SURGICAL St. George, Utah SURGICAL CENTER OF
CENTER(5) NEW ALBANY(5)
Rancho Mirage, THE SURGERY CENTER OF New Albany, Indiana
California CHALMETTE
Chalmette, Louisiana
M.D. PHYSICIANS
SURGICENTER OF
MIDWEST CITY(5)
Midwest City, Oklahoma
- ----------
(1) Real property leased from UHT (see Item 1. Business). (2) Real property
leased with an option to purchase. (3) General partnership interest in limited
partnership. (4) Addictive disease facility. (5) General partnership and
limited partnership interests in a limited partnership. The real property is
leased from third parties. (6) Includes Chalmette Hospital, a 114-bed
rehabilitation facility, the real property of which is leased from UHT.
Some of these hospitals are subject to mortgages, and substantially all
the equipment located at these facilities is pledged as collateral to secure
long-term debt. The Company owns or leases medical office buildings adjoining
certain of its hospitals.
ITEM 3. Legal Proceedings
The Company is subject to claims and suits in the ordinary course of
business, including those arising from care and treatment afforded at the
Company's hospitals and is party to various other litigation. However,
management believes the ultimate resolution of these pending proceedings will
not have a material adverse effect on the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders
Inapplicable. No matter was submitted during the fourth quarter of the
fiscal year ended December 31, 1993 to a vote of security holders.
9
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters
See Item 6, Selected Financial Data.
ITEM 6. Selected Financial Data
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1993 1992 1991 1990 1989
- -------------------------------------------------------------------------------------------------------------------------------
SUMMARY OF OPERATIONS
Net revenues..................... $761,544,000 $731,227,000 $691,619,000 $674,982,000 $631,233,000
Net income....................... $ 24,011,000 $ 20,020,000 $ 20,319,000 $ 11,607,000 $ 9,043,000
Net margin....................... 3.2% 2.7% 2.9% 1.7% 1.4%
Return on average equity......... 11.2% 10.3% 11.6% 7.1% 5.7%
FINANCIAL DATA
Cash provided by
operating activities........... $ 84,640,000 $ 81,731,000 $ 47,190,000 $ 47,552,000 $ 52,207,000
Capital expenditures............. $ 52,690,000 $ 40,554,000 $ 29,926,000 $ 29,125,000 $ 34,781,000
Total assets..................... $460,422,000 $472,427,000 $500,706,000 $535,041,000 $526,109,000
Long-term borrowings............. $ 75,081,000 $114,959,000 $127,235,000 $205,646,000 $205,624,000
Common stockholders' equity...... $224,488,000 $202,903,000 $184,353,000 $167,419,000 $158,061,000
Percentage of total debt to 26% 37% 49% 56% 58%
capital........................
PER SHARE DATA
Net income....................... $ 1.71 $ 1.43 $ 1.45 $ 0.84 $ 0.62
Book value....................... $ 16.69 $ 14.88 $ 13.42 $ 12.21 $ 11.18
COMMON STOCK PERFORMANCE
Market price of common stock
High-Low, by quarter
1st.............................. 16 -12-5/8 15-1/2-12-3/8 14-1/4- 8-1/4 10 -8-1/2 9-3/8-6-3/8
2nd.............................. 16-1/4-13 13-7/8-11-1/8 15-7/8-13-1/8 9-1/2-7-5/8 10-1/4-8-7/8
3rd.............................. 17 -14-1/2 13-3/8-11-1/4 17-5/8-14-5/8 10 -6-3/8 11-5/8-9-3/4
4th.............................. 20-5/8-16-5/8 15-1/8-11-3/4 16 -10-7/8 9-1/4-6-3/8 11-3/8-7-3/8
- -------------------------------------------------------------------------------------------------------------------------------
These prices are the high and low closing sales prices of the Company's
Class B Common Stock as reported by the New York Stock Exchange since June 7,
1991 and NASDAQ for all periods prior to June 7, 1991. Class A, C and D Common
Stock are convertible on a share-for-share basis into Class B Common Stock.
OTHER INFORMATION
Average number of
shares outstanding............. 14,819,000 14,970,000 14,992,000 13,823,000 14,538,000
A special dividend of $.20 per share or approximately $2,900,000 in the
aggregate was declared and paid in 1989. No cash dividends were declared or
paid in any other years. The Company's ability to repurchase its shares,
redeem its convertible debentures, and pay dividends is limited by long-term
debt convenants to $7.5 million plus 25% of cumulative net income since
January 1992.
The 1993, 1992 and 1991 earnings per share and average number of shares
outstanding have been adjusted to reflect the assumed conversion of the
Company's convertible debentures. The common equivalent shares and the
corresponding interest savings on the assumed conversion of the convertible
debentures were not included in the 1990 or 1989 earnings per share
computations because the effect was anti-dilutive.
10
Number of shareholders of record as of January 31, 1994 were as follows:
- ------------------------
Class A Common 7
Class B Common 640
Class C Common 7
Class D Common 384
- ------------------------
ITEM 7. Management's Discussion and Analysis of Operations and Financial
Condition
YEAR ENDED DECEMBER 31, 1993 COMPARED TO 1992
During 1993, net revenue growth was experienced in each of the Company's
principal business groups: acute care hospitals, psychiatric hospitals and
ambulatory treatment centers. Net revenues in 1993 increased 7% over 1992 at
acute care hospitals owned during both years, after excluding the effects of
additional revenues received from special Medicaid reimbursement programs.
Despite the continued shift in the delivery of healthcare services to
outpatient care, the Company's acute care hospitals experienced a slight
increase in inpatient admissions in 1993 due to the expansion of service lines
at many of its hospitals. Outpatient activity also increased this year and
gross outpatient revenues now comprise 23% of the Company's gross revenues as
compared to 21% in 1992. The increase is primarily the result of advances in
medical technologies, which allow more services to be provided on an
outpatient basis, and increased pressure from Medicare, Medicaid, health
maintenance organizations (HMOs), preferred provider organizations (PPOs) and
insurers to reduce hospital stays and provide services, where possible, on a
less expensive outpatient basis.
To take advantage of the trend toward increased outpatient services, the
Company has continued to invest in the acquisition and development of
ambulatory treatment centers. During 1993, the Company acquired a radiation
treatment center and majority interests in four partnerships which own and
operate ambulatory surgery facilities. The Company now operates twelve
ambulatory treatment centers, which have contributed to the increase in the
Company's outpatient revenues. The Company expects the growth in outpatient
services to continue, although the rate of growth may be moderated in the
future.
Net revenues in 1993 at the Company's psychiatric hospitals increased
approximately 6% over 1992. While admissions at these facilities increased
17%, patient days decreased 7% due to shorter average lengths of stay and
increased emphasis on outpatient treatment programs. The shift to outpatient
care was reflected in higher revenues from outpatient services, which now
comprise 13% of gross revenues in the psychiatric group as compared to 10% in
the prior year. The trend in outpatient treatment for psychiatric patients is
expected to continue as a result of advances in patient care and continued
cost containment pressures from payors.
The Company received $13.5 million and $29.8 million in 1993 and 1992,
respectively, from the special Medicaid reimbursement programs mentioned
above. These programs are scheduled to terminate in August 1994 and the
Company cannot predict whether these programs will continue beyond the
scheduled termination date.
An increased proportion of the Company's revenue is derived from fixed
payment services, including Medicare and Medicaid which accounted for 40%, 39%
and 35% of the Company's net patient revenues during 1993, 1992 and 1991,
respectively, excluding the additional revenues from special Medicaid
reimbursement programs. The Company expects Medicare and Medicaid revenues to
continue to increase due to the general aging of the population and the
expansion of state Medicaid programs. In addition to the Medicare and Medicaid
programs, other payors continue to actively negotiate the amounts they will
pay for services performed. In general, the Company expects the percentage of
its business from managed care programs, including HMOs and PPOs, to continue
to grow. The consequent growth in managed care networks and the resulting
impact of these networks on the operating results of the Company's facilities
vary among the markets in which the Company operates.
During 1993, continuing the consolidation strategy in which the Company
focuses its efforts on those markets where there is a maximum potential for
continued growth, the Company sold two acute care hospitals for total proceeds
11
of approximately $11.2 million. These dispositions resulted in a $4.4 million
pre-tax loss ($2.2 million after-tax) which is included in operating expenses
in the Company's 1993 consolidated statement of income. Since 1991, the
Company has closed or sold a total of eight hospitals as part of this
strategy. The Company also recorded a pre-tax charge of $4.4 million related to
the winding down or disposition of non-strategic businesses which is included
in operating expenses in the Company's 1993 consolidated statement of income.
Excluding the additional revenues received from special Medicaid
reimbursement programs mentioned above and the losses resulting from the
disposition of two acute care hospitals and other non-strategic businesses,
operating expenses as a percentage of net revenues for 1993 remained
relatively flat as compared to the prior year. Although the rate of inflation
has not had a significant impact on the results of operations, pressure on
operating margins is expected to continue because, while Medicare fixed
payment rates are indexed for inflation annually, the increases have
historically lagged behind actual inflation.
In addition to the trends described above that continue to have an impact
on operating results, there are a number of other, more general factors
affecting the Company's business. The Company and the healthcare industry as a
whole face increased uncertainty with respect to the level of payor payments
because of national and state efforts to reform healthcare. These efforts
include proposals at all levels of government to contain healthcare costs
while making quality, affordable health services available to more Americans.
The Company is unable to predict which proposals will be adopted or the
resulting implications for providers at this time. However, the Company
believes that the delivery of primary care, emergency care, obstetrical and
psychiatric services will be an integral component of any strategy for
controlling healthcare costs and it also believes it is well positioned to
provide these services.
Interest expense decreased 24% in 1993 as compared to 1992 due to lower
average outstanding borrowings.
Depreciation and amortization expense decreased approximately $9.5 million
in 1993 compared to 1992, due primarily to a $13.5 million amortization charge
in 1992 resulting from the revaluation of certain goodwill balances. Partially
offsetting this decrease was a $2.4 million increase in depreciation and
amortization expense related to the Company's acquisitions of ambulatory
treatment centers.
The effective tax rate was 32% in 1993 as compared to 51% in 1992. The
decrease in the effective rate for 1993 as compared to 1992 was due to the
above-mentioned $13.5 million goodwill amortization recorded in the 1992
period, which was not deductible for income tax purposes, and a reduction in
the 1993 state tax provision. The net effect of the impact of the 1993 tax law
changes on the current and deferred tax provisions was immaterial.
YEAR ENDED DECEMBER 31, 1992 COMPARED TO 1991
Net revenues in 1992 increased 6% over 1991 at hospitals owned during both
years after excluding $29.8 million of favorable Medicaid reimbursement
increases in 1992 and a $4.8 million pre-tax gain resulting from the sale of
the Company's U.K. operations in 1991. The increased revenue resulted from
higher utilization of outpatient and ancillary services, general price
increases and increased severity of illness of patients admitted. The increase
in outpatient services reflects the continuing advancements in medical
technologies and pressures from payors to direct less acutely ill patients
from inpatient services to outpatient care. The 1992 acquisitions of majority
interests in four partnerships which own and operate ambulatory surgery
facilites also contributed to an increase in the outpatient revenues.
In 1992, in accordance with its consolidation strategy, the Company closed
a 96-bed acute care hospital and a 48-bed psychiatric hospital. The closings
did not have a material impact on the consolidated financial statements. In
1991, the Company sold its U.K. operations and sold an 88-bed acute care
hospital. Admissions at the Company's hospitals which were owned during both
years increased 1% in 1992 as compared to 1991. Patient days at these
hospitals decreased 4% over 1991 due to a decrease in the average length of
stay, particularly at the psychiatric hospitals.
12
Excluding the nonrecurring revenue items described above, operating
expenses as a percentage of net revenues remained relatively flat in 1992
compared to 1991.
Excluding the $5 million reversal of an unneeded interest accrual in 1991,
interest expense decreased 13% in 1992 due to lower average outstanding
borrowings and lower average interest rates on floating rate debt.
Depreciation and amortization expense increased in 1992 compared to 1991
as a result of a $13.5 million amortization charge recorded in 1992 resulting
from the revaluation of certain goodwill balances.
The effective tax rate was 51% in 1992, as compared to 34% in 1991. The
higher 1992 tax resulted principally from the above-mentioned goodwill
amortization which is not deductible for income tax purposes, while the 1991
provision for income taxes was reduced due to the utilization of a capital
loss carryforward which offset all of the $4.8 million pre-tax gain resulting
from the sale of the Company's U.K. operations.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased to $84.6 million in
1993 from $81.7 million in 1992. The increase resulted primarily from improved
operating results at the Company's facilities during 1993 as compared to 1992.
The Company received $10.3 million of cash from the disposition of two acute
care hospitals in 1993 and also received $8.2 million of cash related to
facilities divested in prior years. During each of the past three years, the
net cash provided by operating activities substantially exceeded the scheduled
maturities of long-term debt. During 1993, the Company used $47.3 million of
its operating cash flow to finance capital expenditures, $11.5 million to
acquire a radiation therapy center and majority interests in partnerships
which own four ambulatory surgery centers, $3.2 million to acquire the real
estate assets of a facility previously leased, and $3.2 million to repurchase
shares of its outstanding common stock. During 1993, the Company reduced
outstanding debt by $44.7 million using funds generated from operations and
the proceeds from the disposition of hospitals. Total debt as a percentage of
total capitalization declined to 26% at December 31, 1993 from 37% at December
31, 1992. The year-end ratio is the lowest since the Company went public in
1981.
Expected capital expenditures for 1994 include approximately $21 million
for capital equipment and renovations of existing facilities, $38 million for
new projects and $10 million for acquisitions and development of ambulatory
treatment centers. The Company believes that its capital expenditures program
is adequate to expand, improve and equip its existing hospitals.
During 1993, the Company entered into a commercial paper program which
currently provides up to $25 million of renewable borrowings which are secured
by patient accounts receivable. The Company has sufficient patient receivables
to support a larger program and upon the mutual consent of the Company and the
participating lending institutions, the commitment can be increased to $65
million. At December 31, 1993, there were no borrowings outstanding under this
program.
The Company also has a $72.4 million non-amortizing revolving credit
agreement which matures in August of 1995. However, 50% of the net proceeds,
in excess of $15 million annually, from the sale of assets reduce available
borrowing commitments. At December 31, 1993, the Company had $72.4 million of
unused borrowing capacity, and there were no borrowings outstanding under this
revolving credit facility.
The Company has entered into interest rate swap agreements to reduce the
impact of changes in interest rates on its floating rate debt. At December 31,
1993, the Company had interest rate swap agreements with commercial banks
having a total notional principal amount of $40 million. These agreements call
for the payment of fixed rate interest by the Company in return for the
assumption by the commercial banks of the variable rate costs, which
effectively fixes the Company's interest rate on a portion of its floating
rate debt at 10.4%. The interest rate swap agreements in the amounts of $10
million, $20 million and $10 million mature in 1994, 1995 and 1996
respectively. Additionally, the Company is a party to a swap agreement with a
notional principal amount of $20 million expiring in 1994, from which it
receives interest from a commercial bank at a fixed rate of 5.4% and pays
13
interest at various rates to the bank. The Company is exposed to credit loss
in the event of non-performance by the other parties to the interest rate swap
agreements. However, the Company does not anticipate nonperformance by the
counterparties. The cost to terminate the net swap obligations at December 31,
1993 is approximately $4,922,000.
With internally generated funds and amounts available under its long-term
debt facilities, the Company expects to have sufficient funds to meet its
working capital and capital expenditure requirements.
ITEM 8. Financial Statements and Supplementary Data
The Company's Consolidated Balance Sheets, Consolidated Statements of
Income, Statements of Common Stockholders' Equity, and Consolidated Statements
of Cash Flows, together with the report of Arthur Andersen & Co., independent
public accountants, are included elsewhere herein. Reference is made to the
"Index to Financial Statements and Financial Statement Schedules."
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
There is hereby incorporated by reference the information to appear under
the caption "Election of Directors" in the Company's Proxy Statement, to be
filed with the Securities and Exchange Commission within 120 days after
December 31, 1993. See also "Executive Officers of the Registrant" appearing
in Part I hereof.
ITEM 11. Executive Compensation
There is hereby incorporated by reference the information to appear under
the caption "Executive Compensation" in the Company's Proxy Statement to be
filed with the Securities and Exchange Commission within 120 days after
December 31, 1993.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
There is hereby incorporated by reference the information to appear under
the caption "Security Ownership of Certain Beneficial Owners and Management"
in the Company's Proxy Statement, to be filed with the Securities and Exchange
Commission within 120 days after December 31, 1993.
ITEM 13. Certain Relationships and Related Transactions
There is hereby incorporated by reference the information to appear under
the caption "Certain Relationships and Related Transactions" in the Company's
Proxy Statement, to be filed with the Securities and Exchange Commission
within 120 days after December 31, 1993.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. and 2. Financial Statements and Financial Statement Schedules.
See Index to Financial Statements and Financial Statement Schedules on
page 18.
(b) Reports on Form 8-K
None
14
(c) Exhibits
3.1 Restated Certificate of Incorporation, as amended, previously filed
as Exhibit 3.1 to Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1983, Exhibit 3.2 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1985, and Exhibit 3.1 to
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
1987, are incorporated herein by reference.
3.2 Bylaws of Registrant as amended, previously filed as Exhibit 3.2 to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1987, is incorporated herein by reference.
4.1 Indenture, dated as of April 1, 1983, of Registrant to
Manufacturers Hanover Trust Company, Trustee, previously filed as Exhibit
4.2 to Registration Statement No. 2-82718 on Form S-1, is incorporated
herein by reference.
4.2 Instrument of Resignation, Appointment and Acceptance, dated as of
March 23, 1988 among the Registrant, Manufacturers Hanover Trust Company
and the First National Bank of Boston, previously filed as Exhibit 1 to
Registrant's Report on Form 8-K dated March 23, 1988, is incorporated
herein by reference.
9. Stockholders Agreement, dated September 26, 1985, among Alan B.
Miller, Thomas L. Kempner, Sidney Miller, Anthony Pantaleoni and George H.
Strong, previously filed as Exhibit 9 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1985, is incorporated herein by
reference.
9.1 Amendment No. 1, dated as of November 1, 1989, to Stockholders
Agreement, dated September 26, 1985, among Alan B. Miller, Thomas L.
Kempner, Sidney Miller, Anthony Pantaleoni and George H. Strong, previously
filed as Exhibit 9.1 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1989, is incorporated herein by reference.
10.1 Amended and Restated Credit Agreement, dated as of August 21, 1992
among Universal Health Services, Inc., Certain Participating Banks, and
Morgan Guaranty Trust Company of New York, as Agent, previously filed as
Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1992, is incorporated herein by reference.
10.2 Restated Purchase Agreement, dated June 22, 1981, among
Registrant, its preferred stockholders and certain of its officers,
previously filed as Exhibit 10.10 to Registration Statement No. 2-72393 on
Form S-1, is incorporated herein by reference.
10.3 Restated Employment Agreement, dated as of July 14, 1992, by and
between Registrant and Alan B. Miller.
10.4 Purchase and Sale Agreement, dated as of February 8, 1991, by and
among Registrant, London Independent Hospital, Inc., UHS International,
Inc., UHS Leasing Company, Inc., UHS International Limited, and Compass
Group plc, previously filed with Registrant's Current Report on Form 8-K
dated February 8, 1991, is incorporated herein by reference.
10.5 Form of Employee Stock Purchase Agreement for Restricted Stock
Grants, previously filed as Exhibit 10.12 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1985, is incorporated herein by
reference.
10.6 Advisory Agreement, dated as of December 24, 1986, between
Universal Health Realty Income Trust and UHS of Delaware, Inc., previously
filed as Exhibit 10.2 to Registrant's Current Report on Form 8-K dated
December 24, 1986, is incorporated herein by reference.
10.7 Agreement, effective January 1, 1994, to renew Advisory Agreement,
dated as of December 24, 1986, between Universal Health Realty Income Trust
and UHS of Delaware, Inc.
10.8 Form of Leases, including Form of Master Lease Document for
Leases, between certain subsidiaries of the Registrant and Universal Health
Realty Income Trust, filed as Exhibit 10.3 to Amendment No. 3 of the
Registration Statement on Form S-11 and Form S-2 of Registrant and
15
Universal Health Realty Income Trust (Registration No. 33-7872), is
incorporated herein by reference.
10.9 Share Option Agreement, dated as of December 24, 1986, between
Universal Health Realty Income Trust and Registrant, previously filed as
Exhibit 10.4 to Registrant's Current Report on Form 8-K dated December 24,
1986, is incorporated herein by reference.
10.10 Corporate Guaranty of Obligations of Subsidiaries Pursuant to
Leases and Contract of Acquisition, dated December 24, 1986, issued by
Registrant in favor of Universal Health Realty Income Trust, previously
filed as Exhibit 10.5 to Registrant's Current Report on Form 8-K dated
December 24, 1986, is incorporated herein by reference.
10.11 1989 Non-Employee Director Stock Option Plan, previously filed as
Exhibit 10.23 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989, is incorporated herein by reference.
10.12 1990 Employees' Restricted Stock Purchase Plan, previously filed
as Exhibit 10.24 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1990, is incorporated herein by reference.
10.13 1992 Corporate Ownership Program, previously filed as Exhibit
10.24 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991, is incorporated herein by reference.
10.14 1992 Stock Bonus Plan, previously filed as Exhibit 10.25 to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1991, is incorporated herein by reference.
10.15 1992 Stock Option Plan, previously filed as Exhibit 10.16 to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1992, is incorporated herein by reference.
10.16 Sale and Servicing Agreement dated as of November 16, 1993,
between Certain Hspitals and UHS Receivables Corp.
10.17 Servicing agreement dated as of November 16, 1993, among UHS
Receivables Corp., UHS oof Delaware, Inc. and Continental Bank, National
Association.
10.18 Pooling Agreement dated as of November 16, 1993, among UHS
Receivables Corp., Sheffield Receivables Corporation and Continental Bank,
National Association.
10.19 Guarantee dated as of November 16, 1993, by Universal Health
Services, Inc. in favor of UHS Receivables Corp.
10.20 Amendment No. 1 to the 1989 Non-Employee Director Stock
Option Plan.
10.21 Amendment No. 1 to the 1992 Stock Bonus Plan.
10.22 1994 Executive Incentive Plan.
11. Statement re: computation of per share earnings.
22. Subsidiaries of Registrant.
24. Consent of Independent Public Accountants.
Exhibits, other than those incorporated by reference, have been included
in copies of this Report filed with the Securities and Exchange Commission.
Stockholders of the Company will be provided with copies of those exhibits
upon written request to the Company.
16
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
UNIVERSAL HEALTH SERVICES, INC.
By: /s/ ALAN B. MILLER
-----------------------------------------
ALAN B. MILLER
PRESIDENT
March 23, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ ALAN B. MILLER Chairman of the Board, March 23, 1994
- --------------------------------------------------------- President and Director
ALAN B. MILLER (Principal Executive
Officer)
/s/ SIDNEY MILLER Secretary and Director March 23, 1994
- ---------------------------------------------------------
SIDNEY MILLER
/s/ LEONARD W. CRONKHITE, JR., MD Director March 23, 1994
- ---------------------------------------------------------
LEONARD W. CRONKHITE, JR., MD
/s/ ANTHONY PANTALEONI Director March 23, 1994
- ---------------------------------------------------------
ANTHONY PANTALEONI
/s/ MARTIN MEYERSON Director March 23, 1994
- ---------------------------------------------------------
MARTIN MEYERSON
/s/ ROBERT H. HOTZ Director March 23, 1994
- ---------------------------------------------------------
ROBERT H. HOTZ
/s/ JOHN H. HERRELL Director March 23, 1994
- ---------------------------------------------------------
JOHN H. HERRELL
/s/ KIRK E. GORMAN Senior Vice President and March 23, 1994
- --------------------------------------------------------- Treasurer (Chief Financial
KIRK E. GORMAN Officer)
17
UNIVERSAL HEALTH SERVICES, INC.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(ITEM 14(A))
PAGE
---------
FORM
10-K
---
Consolidated Financial Statements:
Report of Independent Public Accountants on Financial Statements
and Schedules................................................... 19
Consolidated Statements of Income for the three years ended
December 31, 1993............................................... 20
Consolidated Balance Sheets as of December 31, 1993 and 1992....... 21
Consolidated Statements of Common Stockholders' Equity for the
three years ended December 31, 1993............................. 22
Consolidated Statements of Cash Flows for the three years ended
December 31, 1993............................................... 23
Notes to Consolidated Financial Statements......................... 24
Supplemental Financial Statement Schedules:
II Amounts Receivable from Related Parties, Underwriters,
Promoters and Employees Other Than Related Parties............ 33
V Property and Equipment........................................ 34
VI Accumulated Depreciation and Amortization of Property and
Equipment..................................................... 35
VIII Valuation and Qualifying Accounts............................. 35
X Supplementary Income Statement Information.................... 35
18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of Universal Health Services, Inc.:
We have audited the accompanying consolidated balance sheets of Universal
Health Services, Inc. (a Delaware corporation) and subsidiaries as of December
31, 1993 and 1992, and the related consolidated statements of income, common
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1993. These consolidated financial statements and the
schedules referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Universal Health Services, Inc. and subsidiaries as of December 31, 1993 and
1992, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31, 1993 in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the Index to
Financial Statements and Financial Statement Schedules are presented for the
purpose of complying with the Securities and Exchange Commission's rules and
are not a required part of the basic financial statements. These schedules have
been subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Philadelphia, Pennsylvania
February 15, 1994
19
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 1993, 1992 and 1991
1993 1992 1991
--------------- --------------- ---------------
Net revenues................................................... $761,544,000 $731,227,000 $691,619,000
--------------- --------------- ---------------
Operating charges
Operating expenses........................................... 643,923,000 595,947,000 583,410,000
Depreciation & amortization.................................. 39,599,000 49,059,000 35,022,000
Lease and rental expense..................................... 34,281,000 33,854,000 34,479,000
Interest expense, net........................................ 8,645,000 11,414,000 8,150,000
--------------- --------------- ---------------
Total operating charges...................................... 726,448,000 690,274,000 661,061,000
--------------- --------------- ---------------
Income before income taxes..................................... 35,096,000 40,953,000 30,558,000
Provision for income taxes..................................... 11,085,000 20,933,000 10,239,000
--------------- --------------- ---------------
Net income..................................................... $ 24,011,000 $ 20,020,000 $ 20,319,000
=============== =============== ===============
Earnings per common & common share equivalent (fully diluted).. $1.71 $1.43 $1.45
=============== =============== ===============
Weighted average number of common shares and equivalents....... 14,819,000 14,970,000 14,992,000
=============== =============== ===============
The accompanying notes are an integral part of these consolidated financial statements.
20
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 1993 and 1992
ASSETS 1993 1992
- ------ --------------- ---------------
CURRENT ASSETS
Cash and cash equivalents......................................................... $ 569,000 $ 6,686,000
Accounts receivable, net of allowance of $28,444,000 in 1993 and
$27,257,000 in 1992 for doubtful accounts....................................... 78,605,000 92,716,000
Supplies.......................................................................... 12,617,000 12,360,000
Deferred income taxes............................................................. 7,733,000 5,189,000
Other current assets.............................................................. 2,475,000 1,859,000
--------------- ---------------
Total current assets.............................................................. 101,999,000 118,810,000
PROPERTY AND EQUIPMENT
Land.............................................................................. 29,026,000 23,154,000
Buildings and improvements........................................................ 284,510,000 274,214,000
Equipment......................................................................... 191,483,000 188,306,000
Property under capital lease...................................................... 18,937,000 13,227,000
--------------- ---------------
523,956,000 498,901,000
Less accumulated depreciation..................................................... 231,509,000 215,543,000
--------------- ---------------
292,447,000 283,358,000
Construction in progress.......................................................... 9,985,000 12,350,000
--------------- ---------------
302,432,000 295,708,000
OTHER ASSETS
Excess of cost over fair value of net assets acquired............................. 38,089,000 33,809,000
Deferred charges.................................................................. 1,697,000 1,454,000
Other............................................................................. 16,205,000 22,646,000
--------------- ---------------
55,991,000 57,909,000
--------------- ---------------
$460,422,000 $472,427,000
=============== ===============
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
- -------------------------------------------
CURRENT LIABILITIES
Current maturities of long-term debt.............................................. $ 4,313,000 $ 3,737,000
Accounts payable.................................................................. 34,038,000 34,542,000
Accrued liabilities
Compensation and related benefits............................................... 16,565,000 15,511,000
Interest........................................................................ 3,247,000 3,659,000
Other........................................................................... 25,789,000 19,774,000
Federal and state taxes......................................................... 2,547,000 7,871,000
--------------- ---------------
Total current liabilities......................................................... 86,499,000 85,094,000
DEFERRED INCOME TAXES............................................................. 3,863,000 8,685,000
OTHER NONCURRENT LIABILITIES...................................................... 70,491,000 60,786,000
LONG-TERM DEBT.................................................................... 75,081,000 114,959,000
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS' EQUITY
Class A Common Stock, voting, $.01 par value;
authorized 12,000,000 shares; issued and outstanding
1,139,123 shares in 1993 and 1,211,850 in 1992.................................. 11,000 12,000
Class B Common Stock, limited voting, $.01 par value;
authorized 50,000,000 shares; issued and outstanding
12,171,454 shares in 1993 and 12,276,146 in 1992................................ 122,000 123,000
Class C Common Stock, voting, $.01 par value;
authorized 1,200,000 shares; issued and outstanding
114,482 shares in 1993 and 121,755 in 1992...................................... 1,000 1,000
Class D Common Stock, limited voting, $.01 par value;
authorized 5,000,000 shares; issued and outstanding
26,223 shares in 1993 and 28,648 in 1992........................................ -- --
Capital in excess of par value, net of deferred compensation of
$291,000 in 1993 and $569,000 in 1992........................................... 80,878,000 83,302,000
Retained earnings................................................................. 143,476,000 119,465,000
--------------- ---------------
224,488,000 202,903,000
--------------- ---------------
$460,422,000 $472,427,000
=============== ===============
The accompanying notes are an integral part of these consolidated financial
statements.
21
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1993, 1992 and 1991
CAPITAL IN CUMULATIVE
CLASS A CLASS B CLASS C CLASS D EXCESS OF RETAINED TRANSLATION
COMMON COMMON COMMON COMMON PAR VALUE EARNINGS ADJUSTMENTS TOTAL
---------- ----------- --------- --------- -------------- -------------- -------------- ------------
Balance
January 1, 1991....... $ 26,000 $108,000 $ 3,000 $ 1,000 $84,165,000 $ 79,126,000 $ 3,990,000 $167,419,000
Common Stock
Issued.............. -- -- -- -- 168,000 -- -- 168,000
Converted........... (12,000) 13,000 (1,000) -- -- -- -- --
Amortization
of deferred
compensation........ -- -- -- -- 437,000 -- -- 437,000
Translation
adjustments......... -- -- -- -- -- -- (3,990,000) (3,990,000)
Net income............ -- -- -- -- -- 20,319,000 -- 20,319,000
----- ----- ----- ----- ------- -------- ------- ------------
Balance
January 1, 1992....... 14,000 121,000 2,000 1,000 84,770,000 99,445,000 -- 184,353,000
Common Stock
Issued.............. -- -- -- -- 1,134,000 -- -- 1,134,000
Converted........... (2,000) 4,000 (1,000) (1,000) -- -- -- --
Repurchased......... -- (2,000) -- -- (2,924,000) -- -- (2,926,000)
Amortization
of deferred
compensation........ -- -- -- -- 361,000 -- -- 361,000
Cancellation of
stock grant......... -- -- -- -- (39,000) -- -- (39,000)
Net income............ -- -- -- -- -- 20,020,000 -- 20,020,000
----- ----- ----- ----- ------- -------- ------- ------------
Balance
January 1, 1993....... 12,000 123,000 1,000 -- 83,302,000 119,465,000 -- 202,903,000
Common Stock
Issued.............. -- 1,000 -- -- 518,000 -- -- 519,000
Converted........... (1,000) 1,000 -- -- -- -- -- --
Repurchased......... -- (3,000) -- -- (3,233,000) -- -- (3,236,000)
Amortization
of deferred
compensation........ -- -- -- -- 333,000 -- -- 333,000
Cancellation of
stock grant......... -- -- -- -- (42,000) -- -- (42,000)
Net income............ -- -- -- -- -- 24,011,000 -- 24,011,000
----- ----- ----- ----- ------- -------- ------- ------------
Balance
December 31, 1993..... $ 11,000 $122,000 $ 1,000 -- $80,878,000 $143,476,000 -- $224,488,000
===== ===== ===== ===== ======= ======== ======= ============
The accompanying notes are an integral part of these consolidated financial statements.
22
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1993, 1992 and 1991
1993 1992 1991
--------------- --------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................................... $ 24,011,000 $ 20,020,000 $ 20,319,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................ 39,599,000 49,059,000 35,022,000
Provision for self-insurance reserves........................ 20,755,000 21,193,000 24,949,000
Reserve for loss on closure of hospital...................... -- -- 3,000,000
Changes in assets and liabilities, net of effects from
acquisitions and dispositions:
Accounts receivable.......................................... 12,928,000 7,608,000 (7,700,000)
Accrued interest............................................. (412,000) (256,000) (667,000)
Accrued and deferred income taxes............................ (8,990,000) (9,955,000) (10,607,000)
Other working capital accounts............................... 4,858,000 3,960,000 (5,212,000)
Other assets and deferred charges............................ (5,804,000) (2,120,000) 502,000
Other........................................................ 1,002,000 620,000 6,790,000
Payments made in settlement of self-insurance claims......... (12,135,000) (8,398,000) (13,664,000)
Loss (gain) on sales of businesses............................... 8,828,000 -- (5,542,000)
--------------- --------------- ---------------
Net cash provided by operating activities...................... 84,640,000 81,731,000 47,190,000
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions............................... (47,319,000) (33,244,000) (28,715,000)
Disposition of assets.......................................... 227,000 2,652,000 9,353,000
Acquisition of properties previously leased.................... (3,218,000) -- (13,014,000)
Acquisition of businesses...................................... (11,526,000) (7,188,000) --
Disposition of businesses...................................... 18,492,000 12,355,000 30,152,000
--------------- --------------- ---------------
Net cash used in investing activities.......................... (43,344,000) (25,425,000) (2,224,000)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings.......................................... 1,800,000 15,375,000 29,349,000
Reduction of long-term debt.................................... (46,496,000) (85,900,000) (74,690,000)
Issuance of common stock....................................... 519,000 1,134,000 168,000
Repurchase of common shares.................................... (3,236,000) (2,926,000) --
--------------- --------------- ---------------
Net cash used in financing activities.......................... (47,413,000) (72,317,000) (45,173,000)
--------------- --------------- ---------------
DECREASE IN CASH AND CASH EQUIVALENTS............................ (6,117,000) (16,011,000) (207,000)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD............................................ 6,686,000 22,697,000 22,904,000
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD......................... $ 569,000 $ 6,686,000 $ 22,697,000
=============== =============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid.................................................. $ 9,057,000 $ 11,670,000 $ 13,367,000
Income taxes paid, net of refunds.............................. $ 19,901,000 $ 31,086,000 $ 20,852,000
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
See Notes 2 and 6
The accompanying notes are an integral part of these consolidated financial statements.
23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Universal Health Services, Inc. (the "Company") is primarily engaged in
owning and operating acute care and psychiatric hospitals and ambulatory
treatment centers. The consolidated financial statements include the accounts
of the Company and its majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. The more
significant accounting policies follow:
NET REVENUES: Net revenues are reported at the estimated net realizable
amounts from patients, third-party payors, and others for services rendered,
including estimated retroactive adjustments under reimbursement agreements
with third-party payors. These net revenues are accrued on an estimated basis
in the period the related services are rendered and adjusted in future periods
as final settlements are determined. Medicare and Medicaid net revenues
represented 40%, 39% and 35% of net patient revenues for the years 1993, 1992
and 1991, respectively, excluding the additional revenues from special
Medicaid reimbursement programs described in Note 9.
PROPERTY AND EQUIPMENT: Property and equipment are stated at cost.
Expenditures for renewals and improvements are charged to the property
accounts. Replacements, maintenance and repairs which do not improve or extend
the life of the respective asset are expensed as incurred. The Company removes
the cost and the related accumulated depreciation from the accounts for assets
sold or retired and the resulting gains or losses are included in the results
of operations.
Depreciation is provided on the straight-line method over the estimated
useful lives of buildings and improvements (twenty to forty years) and
equipment (five to fifteen years).
OTHER ASSETS: The excess of cost over fair value of net assets acquired
in purchase transactions, net of accumulated amortization of $47,663,000 in
1993 and $43,828,000 in 1992, is amortized over periods ranging from five to
forty years. During 1992 the Company recorded a $13.5 million charge to
amortization expense due to a revaluation of certain goodwill balances.
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Earnings per share are
based on the weighted average number of common shares outstanding during the
year adjusted to give effect to common stock equivalents. The 1993, 1992 and
1991 earnings per share have been adjusted to reflect the assumed conversion
of the Company's convertible debentures.
INCOME TAXES: The Company and its subsidiaries file consolidated Federal
tax returns. Deferred taxes are recognized for the amount of taxes payable or
deductible in future years as a result of differences between the tax bases of
assets and liabilities and their reported amounts in the financial statements.
OTHER NONCURRENT LIABILITIES: Other noncurrent liabilities include the
long-term portion of the Company's professional and general liability and
workers' compensation reserves.
STATEMENT OF CASH FLOWS: For purposes of the consolidated statements of
cash flows, the Company considers all highly liquid investments purchased with
maturities of three months or less to be cash equivalents. Interest expense
in the consolidated statements of income is net of interest income of
$498,000, $515,000 and $2,188,000 in 1993, 1992 and 1991, respectively.
INTEREST RATE SWAP AGREEMENTS: The differential to be paid or received is
accrued as interest expense as interest rates change and is recognized over
the life of the agreements.
2) ACQUISITIONS, DISPOSITIONS AND CLOSURES
1993 -- During 1993 the Company purchased a radiation therapy center and
majority interests in four separate partnerships which own and operate
ambulatory surgery facilities for $11.5 million in cash and the assumption of
liabilities totaling $300,000.
During the fourth quarter, the Company sold the operations and fixed
assets of a 124-bed acute care hospital for approximately $7.8 million in
cash. The Company also sold the operations and certain
24
fixed assets of a 134-bed acute care hospital for cash of $1.5 million.
Concurrently, the Company sold certain related real property to Universal
Health Realty Income Trust (the "Trust"), an affiliate and the lessor of this
134-bed acute care hospital, for $1 million in cash and a note receivable of
$900,000 (see Note 8). In connection with this transaction, the Company's
lease with the Trust for this property was terminated. The disposition of
these two facilities resulted in a pre-tax loss of $4.4 million ($2.2 million
after tax), which is included in operating expenses in the 1993 consolidated
statement of income.
Also during 1993, the Company recorded a pre-tax charge of $4.4 million
related to the winding down or disposition of other non-strategic businesses
which is included in operating expenses in the 1993 consolidated statement of
income.
1992 -- During 1992 the Company purchased majority interests in four
separate partnerships which own and operate ambulatory surgery facilities for
$7.2 million in cash and the assumption of liabilities totaling $5.4 million.
Also during 1992, the Company discontinued operations at a 96-bed acute
care hospital and sold the fixed assets of this facility for $3.4 million. The
closing and sale of this hospital did not have a material impact on the
consolidated financial statements.
1991 -- During 1991 the Company sold its entire U.K. operations,
consisting of three acute care hospitals and certain other assets. This
transaction resulted in a pre-tax gain of approximately $4.8 million
(including $4.3 million transferred from cumulative translation adjustment)
which is included in net revenues in the 1991 financial statements. The
Company received $30.2 million in cash during 1991, an additional $9 million
in 1992 and $4.9 million in 1993. The Company is entitled to receive
additional consideration of approximately (pounds sterling)2.5 million as well
as additional amounts if certain earnings targets are achieved by one of these
hospitals. Based upon the year-end exchange rate, the Company expects to
receive approximately $3.6 million in 1994.
In 1991 the Company entered into a 15-year operating lease agreement for a
166-bed psychiatric hospital. The lease terms include three 5-year renewal
terms at the Company's option, annual base lease rentals of $1,620,000 and
additional rentals beginning in 1993 based upon revenues in excess of a base
year amount ($24,000 in 1993).
3) LONG-TERM DEBT
A summary of long-term debt follows:
DECEMBER 31
---------------------------------
1993 1992
-------------- ---------------
LONG-TERM DEBT:
Notes payable (including obligations under capitalized leases of
$12,132,000 in 1993 and $9,581,000 in 1992) with varying maturities through 2000;
weighted average interest at 7% in 1993 and 7.8% in 1992 (see Note 6 regarding
capitalized leases).............................................................. $13,727,000 $ 11,795,000
Mortgages payable, interest at 6.0% to 11.0% with varying maturities through 2000.. 3,811,000 2,734,000
Revolving credit and demand notes.................................................. 4,600,000 46,850,000
Commercial paper................................................................... -- --
Revenue bonds, interest at floating rates ranging from 2.4% to 2.8% at December 31,
1993............................................................................. 18,200,000 18,200,000
and fixed rates ranging from 7.5% to 8.3% with varying maturities
through 2015..................................................................... 9,151,000 9,212,000
Subordinated debt:
Debentures at 7-1/2%, convertible at $23.52 per share, due in 2008............... 29,905,000 29,905,000
-------------- ---------------
79,394,000 118,696,000
Less -- Amounts due within one year................................................ 4,313,000 3,737,000
-------------- ---------------
$75,081,000 $114,959,000
============== ===============
25
During 1993, the Company commenced a commercial paper program which
provides up to $25 million of renewable borrowings which are secured by
patient accounts receivable. The Company has sufficient patient receivables to
support a larger program, and upon the mutual consent of the Company and the
participating lending institutions, the commitment can be increased to $65
million. A fee of .76% is required on this $25 million commitment.
The Company has a $72.4 million non-amortizing revolving credit agreement
which matures in August of 1995 and provides for interest, at the Company's
option, at the prime rate, certificate of deposit rate plus 11/8% or LIBOR
plus 1%. A fee of 3/8% is required on the unused portion of this commitment.
There are no compensating balance requirements. The agreement contains a
provision whereby 50% of the net consideration, in excess of $15 million
annually, from the disposition of assets will be applied to reduce
commitments. At December 31, 1993, the Company had $72.4 million of unused
borrowing capacity, and there were no borrowings outstanding under this
revolving credit agreement.
The average amounts outstanding during 1993, 1992 and 1991 under the
revolving credit notes and commercial paper program were $25,069,000,
$47,318,000 and $91,770,000, respectively, with corresponding effective
interest rates of 13.9%, 11.2% and 10.0% including commitment fee and interest
rate swaps. The maximum amounts outstanding at any month-end were $46,800,000,
$91,650,000 and $114,416,000 during 1993, 1992 and 1991 respectively.
The Company has entered into interest rate swap agreements to reduce the
impact of changes in interest rates on its floating rate debt. At December 31,
1993, the Company had interest rate swap agreements with commercial banks
having a total notional principal amount of $40 million. These agreements call
for the payment of fixed rate interest by the Company in return for the
assumption by the commercial banks of the variable rate costs, which
effectively fixes the Company's interest rate on a portion of its floating
rate debt at 10.4%. The interest rate swap agreements in the amounts of $10
million, $20 million and $10 million mature in 1994, 1995 and 1996
respectively. Additionally, the Company is a party to a swap agreement with a
notional principal amount of $20 million expiring in 1994, from which it
receives interest from a bank at a fixed rate of 5.4% and pays interest at
various rates to the bank. The Company is exposed to credit loss in the event
of non-performance by the other parties to the interest rate swap agreements.
However, the Company does not anticipate nonperformance by the counterparties.
The cost to terminate the net swap obligations at December 31, 1993 is
approximately $4,922,000.
Covenants relating to long-term debt require maintenance of a minimum net
worth and cash flows, specified debt to net worth and fixed charge coverage
ratios. Covenants also limit the Company's ability to incur additional senior
debt and to pay cash dividends, repurchase its shares and retire convertible
debenture debt and limit capital expenditures, among other restrictions.
The fair value of the Company's subordinated debentures at December 31,
1993 was approximately $31,101,000 based on quoted market prices. The Company
has the option to redeem these debentures at Par value at any time upon 30
days notice. The fair value of the Company's remaining long-term debt at
December 31, 1993 was approximately equal to its carrying value.
Substantially all accounts receivable and the stock of subsidiary
companies are pledged as collateral to secure long-term debt.
Aggregate maturities follow:
----------------------------
1994 $ 4,313,000
1995 9,671,000
1996 3,815,000
1997 2,284,000
1998 805,000
Later 58,506,000
----------------------------
Total $79,394,000
----------------------------
26
4) COMMON STOCK
During 1993, the Company repurchased 224,800 shares of its Class B Common
Stock at an average purchase price of $14.39 per share or an aggregate of
approximately $3.2 million. Since January 1, 1992 the Company has repurchased
454,700 shares at an aggregate purchase price of approximately $6.2 million or
$13.55 per share. The Company's ability to repurchase its shares is limited by
long-term debt covenants to $7.5 million plus 25% of cumulative net income
since January, 1992. Under the terms of these covenants, the Company had the
ability to repurchase an additional $12.3 million of its Common Stock as of
December 31, 1993. The repurchased shares are treated as retired.
At December 31, 1993, 3,340,350 shares of Class B Common Stock were
reserved for issuance upon conversion of shares of Class A, C and D Common
Stock outstanding, for issuance upon exercise of options to purchase Class B
Common Stock, for issuance upon conversion of the Company's Convertible
Subordinated Debentures and for issuance of stock under other incentive plans.
Class A, C and D Common Stock are convertible on a share for share basis into
Class B Common Stock.
In 1992, the Company adopted a Stock Bonus Plan and a Corporate Ownership
Program, both of which were approved by the stockholders at the 1992 annual
meeting. Under the terms of the Stock Bonus Plan, eligible employees may elect
to receive all or part of their annual bonuses in shares of restricted stock
(the "Bonus Shares"). Those electing to receive bonus shares also receive
additional restricted shares in an amount equal to 20% of their Bonus Shares
(the "Premium Shares"). Restrictions on one-half of the Bonus Shares and one-
half of the Premium Shares lapse after one year and the restrictions on the
remaining shares lapse after two years. The Company has reserved 150,000
shares of Class B Common Stock for this plan and has issued 46,313 shares at
December 31, 1993.
Under the terms of the Corporate Ownership Program, eligible employees may
purchase shares of common stock, directly from the Company, at the market
price. The Company will loan each eligible employee an amount equal to 90% of
the purchase price for the shares. The loans, which are partially recourse to
the employee, bear interest at the applicable Federal rate and are due five
years from the purchase date. Shares purchased under this plan are restricted
from sale or transfer. Restrictions on one-half of the shares lapse after one
year and restrictions on the remaining shares lapse after two years. The
Company has reserved 100,000 shares of Class B Common Stock for this plan. As
of December 31, 1993, 19,803 shares were sold under the terms of this plan.
The Company also has a Restricted Stock Purchase Plan which allows
eligible participants to purchase shares of Class B Common Stock at par value,
subject to certain restrictions. Under the terms of this plan, 300,000 shares
of Class B Common Stock have been reserved for purchase by officers, key
employees and consultants. The restrictions lapse as to one-third of the
shares on the third, fourth and fifth anniversary dates of the purchase. The
Company has issued 143,000 shares under this plan, of which 45,000 became
fully vested during 1993 and 5,333 were cancelled. Compensation expense, based
on the difference between the market price on the date of purchase and par
value, is being amortized over the restriction period and was $240,000 in
1993, $265,000 in 1992 and $278,000 in 1991.
Stock options to purchase Class B Common Stock have been granted to
officers, key employees and directors of the Company under various plans. All
stock options were granted with an exercise price equal to the fair market
value on the date of the grant. Options are exercisable ratably over a four
year period beginning one year after the date of the grant. The options expire
five years after the date of the grant.
27
Information with respect to these options is summarized as follows:
AVERAGE
NUMBER OPTION
OUTSTANDING OPTIONS OF SHARES PRICE
- ------------------- ---------- --------
Balance, January 1, 1991.................................................... 177,316 $ 6.62
Granted................................................................... 17,500 $13.67
Exercised................................................................. (39,814) $ 4.97
Cancelled................................................................. (7,000) $ 8.55
---------- --------
Balance, January 1, 1992.................................................... 148,002 $ 7.80
Granted................................................................... 135,000 $12.72
Exercised................................................................. (78,487) $ 6.82
Cancelled................................................................. (4,340) $12.67
---------- --------
Balance, January 1, 1993.................................................... 200,175 $11.40
Granted................................................................... 7,400 $14.88
Exercised................................................................. (40,238) $ 7.23
Cancelled................................................................. (3,000) $12.50
---------- --------
Balance, December 31, 1993.................................................. 164,337 $12.53
========== ========
Options for 259,100 shares were available for grant at December 31, 1993.
At December 31, 1993, options for 49,313 shares of Class B Common Stock with
an aggregate purchase price of $581,273 (average of $11.79 per share) were
exercisable.
5) INCOME TAXES
Components of income tax expense are as follows:
Year Ended December 31
--------------------------------------------------
1993 1992 1991
-------------- -------------- --------------
Currently payable
Federal.......................................................... $17,315,000 $28,495,000 $20,447,000
State............................................................ 1,136,000 3,949,000 2,834,000
-------------- -------------- --------------
18,451,000 32,444,000 23,281,000
-------------- -------------- --------------
Deferred
Federal.......................................................... (6,482,000) (10,110,000) (11,457,000)
State............................................................ (884,000) (1,401,000) (1,585,000)
-------------- -------------- --------------
(7,366,000) (11,511,000) (13,042,000)
-------------- -------------- --------------
$11,085,000 $20,933,000 $10,239,000
============== ============== ==============
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes", (SFAS
109). Under SFAS 109, deferred taxes are required to be classified based on
the financial statement classification of the related assets and liabilities
which give rise to temporary differences. The effect of adopting SFAS 109 was
not material to the Company's 1991 results of operations. The Company had
previously accounted for income taxes under the provisions of Statement of
Financial Accounting Standards No. 96. The net effect of the impact of the
1993 tax law changes on the current and deferred tax provisions was
immaterial.
28
Deferred taxes result from temporary differences between the financial
statement carrying amounts and the tax bases of assets and liabilities. The
components of deferred taxes are as follows:
Year Ended December 31
--------------------------------
1993 1992
-------------- --------------
Self-insurance reserves............................................................... $29,134,000 $25,840,000
Doubtful accounts and other reserves.................................................. 6,270,000 3,963,000
State income tax (assets) accruals.................................................... (1,546,000) 1,221,000
Other deferred tax assets............................................................. 491,000 313,000
Depreciable and amortizable assets.................................................... (22,434,000) (24,226,000)
Conversion from cash basis to accrual basis of accounting............................. (7,634,000) (10,081,000)
Other deferred tax liabilities........................................................ (411,000) (526,000)
-------------- --------------
Total............................................................................... $ 3,870,000 $(3,496,000)
============== ==============
Year Ended December 31
-----------------------------------
1993 1992 1991
----- ----- -----
Federal statutory rate........................................................... 35.0% 34.0% 34.0%
Utilization of capital loss carryforward......................................... -- -- (5.8)
(Deductible) nondeductible depreciation, amortization and other.................. (3.9) 13.0 2.6
State taxes, net of Federal income tax benefit................................... 0.5 4.1 2.7
----- ----- -----
31.6% 51.1% 33.5%
===== ===== =====
At December 31, 1990, the Company had capital loss carryforwards of
$7,800,000 which were available to offset future capital gains for financial
reporting purposes. These capital loss carryforwards were fully utilized in
1991 as a result of the U.K. divestiture transaction. During the current year,
the Company disposed of several hospitals and ancillary businesses resulting
in the recoupment of previously non-deductible charges. During the year, the
Company reviewed its deferred state tax balances and as a result reduced its
current year tax provision by $780,000.
The net deferred tax assets and liabilities are comprised as follows:
Year Ended December 31
--------------------------------
1993 1992
-------------- --------------
Currently deferred taxes
Assets............................................................................. $10,723,000 $ 8,161,000
Liabilities........................................................................ (2,990,000) (2,972,000)
-------------- --------------
Total deferred taxes-current....................................................... 7,733,000 5,189,000
-------------- --------------
Noncurrent deferred taxes
Assets............................................................................. 25,172,000 23,176,000
Liabilities........................................................................ (29,035,000) (31,861,000)
-------------- --------------
Total deferred taxes-noncurrent.................................................... (3,863,000) (8,685,000)
-------------- --------------
Total deferred taxes................................................................. $ 3,870,000 $(3,496,000)
============== ==============
The assets and liabilities classified as current relate primarily to the
allowance for uncollectible patient accounts and the current portion of the
temporary differences related to self-insurance reserves and the change in
accounting method. Under SFAS 109, a valuation allowance is required when it
is more likely than not that some portion of the deferred tax assets will not
be realized. The Company has not provided a valuation allowance since
management believes that all of the deferred tax assets will be realized
through the reversal of temporary differences that result in deferred tax
liabilities and through expected future taxable income.
29
6) LEASE COMMITMENTS
Certain of the Company's hospital and medical office facilities and
equipment are held under operating or capital leases which expire through
2013. Certain of these leases also contain provisions allowing the Company to
purchase the leased assets during the term or at the expiration of the lease
at fair market value.
A summary of property under capital lease follows:
Year Ended December 31
--------------------------------
1993 1992
-------------- --------------
Land, buildings and equipment........................................................ $18,937,000 $13,227,000
Less: accumulated amortization....................................................... 6,400,000 3,543,000
-------------- --------------
$12,537,000 $ 9,684,000
============== ==============
Future minimum rental payments under lease commitments with a term of more
than one year as of December 31, 1993 are as follows:
CAPITAL OPERATING
YEAR LEASES LEASES
- ---- -------------- --------------
1994 $ 4,435,000 $ 23,556,000
1995 3,861,000 22,374,000
1996 3,177,000 20,633,000
1997 1,815,000 18,292,000
1998 440,000 17,374,000
Later Years -- 53,380,000
----------- ------------
Total minimum rental $13,728,000 $155,609,000
Less: Amount representing interest 1,596,000 ============
-----------
Present value of minimum rental commitments 12,132,000
Less: Current portion of capital lease obligations 3,641,000
-----------
Long-term portion of capital lease obligations $ 8,491,000
===========
Capital lease obligations of $5,371,000, $7,310,000 and $1,467,000 in
1993, 1992 and 1991 respectively, were incurred when the Company entered into
capital leases for new equipment.
7) COMMITMENTS AND CONTINGENCIES
The Company is self-insured for its general liability risks for claims
limited to $5 million per occurrence and for its professional liability risks
for claims limited to $25 million per occurrence. Coverage in excess of these
limits up to $100 million is maintained with major insurance carriers. During
1993, the Company purchased a general and professional liability occurrence
policy with a commercial insurer for one of its larger acute care facilities.
This policy, which is scheduled to terminate in July, 1994, includes coverage
up to $25 million per occurrence for general and professional liability risks.
As of December 1993 and 1992, the reserve for professional and general
liability risks was $65.2 million and $58.6 million, respectively, of which
$8.3 million in 1993 and $7.4 million in 1992 is included in current
liabilities. Self-insurance reserves are based upon actuarially determined
estimates.
The Company has outstanding letters of credit totaling $22 million related
to the Company's self-insurance programs ($11.3 million), as support for
various debt instruments ($2.1 million) and as support for a loan guarantee
for an unaffiliated party ($8.6 million). The Company has also guaranteed
approximately $2 million of loans.
The Company estimates the cost to complete major construction projects in
progress at December 31, 1993 will approximate $24 million.
30
The Company has entered into a long term contract with a third party to
provide certain data processing services for its acute care and psychiatric
hospitals. This contract expires in 1999.
Various suits and claims arising in the ordinary course of business are
pending against the Company. In the opinion of management, the outcome of such
claims and litigation will not materially affect the Company's consolidated
financial position or results of operations.
8) RELATED PARTY TRANSACTIONS
At December 31, 1993, the Company held approximately 7% of the outstanding
shares of Universal Health Realty Income Trust (the "Trust"). Certain officers
and directors of the Company are also officers and/or Directors of the Trust.
The Company accounts for its investment in the Trust using the equity method
of accounting. The Company's pre-tax share of income/(loss) from the Trust was
$757,000, ($110,000) and $674,000 in 1993, 1992 and 1991, respectively, and is
included in net revenues in the accompanying consolidated statements of
income. The carrying value of this investment at December 31, 1993 and 1992
was $7,375,000 and $4,524,000, respectively and is included in other assets in
the accompanying consolidated balance sheets. The market value of this
investment at December 31, 1993 was $10,352,000.
During 1993, pursuant to the terms of its lease with the Trust, the
Company purchased the real property of a 48-bed psychiatric hospital located
in Texas for $3.2 million. The real property of this hospital was previously
leased by the Company and base rental payments continued under the existing
lease until the date of sale. Operations at this hospital were discontinued
during the first quarter of 1992, however, the facility is currently being
utilized for outpatient services at one the Company's acute care hospitals.
Also during 1993, the Company sold to the Trust certain real estate assets of
a 134-bed hospital located in Illinois for approximately $1.9 million. These
assets consisted of additions and improvements made to the facility by the
Company since the sale of the major portion of the real estate assets to the
Trust in 1986. The operations of this facility were sold during 1993 to an
operator unaffiliated with the Company.
As of December 31, 1993, the Company leased eight hospital facilities from
the Trust with initial terms expiring in 1999 through 2003. These leases
contain up to six 5-year renewal options. Future minimum lease payments to the
Trust are included in Note 6. The terms of the lease provide that in the event
the Company discontinues operations at the leased facility for more than one
year, the Company is obligated to offer a substitute property. If the Trust
does not accept the substitute property offered, the Company is obligated to
purchase the leased facility back from the Trust at a price equal to the
greater of its then fair market value or the original purchase price paid by
the Trust. Total rent expense under these operating leases was $16,600,000 in
1993, $17,000,000 in 1992 and $16,800,000 in 1991. The Company received an
advisory fee of $880,000 in 1993, $913,000 in 1992 and $909,000 in 1991 from
the Trust for investment and administrative services provided under a
contractual agreement which is included in net revenues in the accompanying
consolidated statements of income.
In connection with the exercise of stock options by certain officers, the
Company agreed to lend these officers an amount equal to the Company's tax
savings resulting from the exercise of these options. In 1991, $112,000 of the
loan balances, and in 1992 the remaining loan balances of $352,000 were
forgiven by the Board of Directors and charged to compensation expense.
In 1985, shares of Class A Common Stock were granted to certain officers
and key employees, primarily in exchange for notes receivable. The obligations
to repay the notes, which lapsed over a seven-year period, terminated during
1992. Compensation expense charged to operations related to these stock grants
was $26,000 in 1992 and $136,000 in 1991.
At January 1, 1992, the Company had a non-interest bearing demand note
from a principal officer which was fully forgiven during 1992. Compensation
expense charged to operations related to this note was $393,000 in 1992 and
$100,000 in 1991.
A member of the Company's Board of Directors is a partner in the law firm
used by the Company as its principal outside counsel.
31
9) QUARTERLY RESULTS (UNAUDITED)
The following tables summarize the Company's quarterly financial data for
the two years ended December 31, 1993.
FIRST SECOND THIRD FOURTH
1993 QUARTER QUARTER QUARTER QUARTER
- ---- ---------------- ---------------- ---------------- ----------------
Net revenues................................. $195,305,000 $187,453,000 $186,332,000 $192,454,000
Income before income taxes................... $ 13,120,000 $ 9,735,000 $ 7,503,000 $ 4,738,000
Net income................................... $ 8,611,000 $ 6,478,000 $ 5,157,000 $ 3,765,000
Earnings per share (fully diluted)........... $ 0.60 $ 0.46 $ 0.37 $ 0.28
=============================================================================================================================
Net revenues in 1993 include $13.5 million of additional revenues received
from special Medicaid reimbursement programs. These programs are scheduled to
terminate in August, 1994. Of the amount received, $4.6 million was recorded
in each of the first and second quarters, $1.0 million was recorded in the
third quarter and $3.3 million was recorded in the fourth quarter. These
amounts were recorded in the periods that the Company met all of the
requirements to be entitled to these reimbursements. The first quarter
operating results also include approximately $4.1 million of expenses related
to the disposition of ancillary businesses and the second quarter operating
results include a $3.2 million increase in the reserves for the Company's
self-insurance programs. Net revenues in the third quarter include $3.0
million of unfavorable adjustments related to prior year reimbursement issues
and the fourth quarter operating results includes a $4.7 million pre-tax loss
on disposal of two acute care hospitals and the winding down or disposition of
non-strategic businesses. The Company's effective tax rate in the fourth
quarter was significantly lower than other quarters due to the disposition of
two acute care hospitals resulting in the recoupment of previously non-
deductible charges.
FIRST SECOND THIRD FOURTH
1992 QUARTER QUARTER QUARTER QUARTER
- ---- ---------------- ---------------- ---------------- ----------------
Net revenues................................. $202,049,000 $174,428,000 $173,720,000 $181,030,000
Income before income taxes................... $ 19,974,000 $ 10,047,000 $ 5,730,000 $ 5,202,000
Net income................................... $ 7,443,000 $ 6,120,000 $ 3,400,000 $ 3,057,000
Earnings per share (fully diluted)........... $ 0.52 $ 0.43 $ 0.25 $ 0.23
=============================================================================================================================
Net revenues in 1992 include $29.8 million of favorable Medicaid
reimbursements. Of this amount, $22.2 million was recorded in the first
quarter, $3 million was recorded in the third quarter and $4.6 million was
recorded in the fourth quarter. These amounts were recorded in the periods
that the Company met all of the requirements to be entitled to these
reimbursements. The first quarter's operating results also include a $13.5
million amortization charge resulting from the revaluation of certain goodwill
balances. Net revenues in the second quarter include a $2.3 million favorable
adjustment related to prior year reimbursement issues.
32
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES,
UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
DEDUCTIONS
BALANCE AT ------------------------
BEGINNING AMOUNTS AMOUNTS BALANCE AT
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN OFF END OF PERIOD
--------- ------------- ----------- --------- ----------- --------------
Year Ended December 31, 1993:
Sidney Miller (f)............................ $ 40,000 -- -- $ 20,000(d) $ 20,000
Thomas J. Bender (g)......................... $ 150,000 -- $ 150,000 -- --
Thomas J. Bender (h)......................... $ 60,000 $ 3,000 -- -- $ 63,000
Year Ended December 31, 1992:
Alan B. Miller (b)........................... $ 393,000 -- -- $ 393,000(d) --
Alan B. Miller (a)........................... $ 70,000 -- -- $ 70,000(d) --
Alan B. Miller (a)........................... $ 191,000 -- -- $ 191,000(d) --
Alan B. Miller (c)........................... $ 23,000 -- -- $ 23,000(e) --
Sidney Miller (a)............................ $ 6,000 -- -- $ 6,000(d) --
Sidney Miller (c)............................ $ 1,000 -- -- $ 1,000(e) --
Sidney Miller (c)............................ $ 2,000 -- -- $ 2,000(e) --
Sidney Miller (a)............................ $ 85,000 -- -- $ 85,000(d) --
Sidney Miller (f)............................ $ 40,000 -- -- -- $ 40,000
Thomas J. Bender (g)......................... $ 150,000 -- -- -- $ 150,000
Thomas J. Bender (h)......................... -- $ 60,000 -- -- $ 60,000
Year Ended December 31, 1991:
Alan B. Miller (b)........................... $ 493,000 -- -- $ 100,000(d) $ 393,000
Alan B. Miller (a)........................... $ 105,000 -- -- $ 35,000(d) $ 70,000
Alan B. Miller (a)........................... $ 239,000 -- -- $ 48,000(d) $ 191,000
Alan B. Miller (c)........................... $ 139,000 -- -- $ 116,000(e) $ 23,000
Sidney Miller (a)............................ $ 10,000 -- -- $ 4,000(d) $ 6,000
Sidney Miller (c)............................ $ 6,000 -- -- $ 5,000(e) $ 1,000
Sidney Miller (c)............................ $ 13,000 -- -- $ 11,000(e) $ 2,000
Sidney Miller (a)............................ $ 110,000 -- -- $ 25,000(d) $ 85,000
Sidney Miller (f)............................ $ 40,000 -- -- -- $ 40,000
Thomas J. Bender (g)......................... $ 150,000 -- -- -- $ 150,000
- ---------
(a)Interest accrued at 11%.
(b)Non-interest bearing demand note.
(c)Interest accrued at 6.9%.
(d)Amounts forgiven by Board of Directors and charged to compensation expense.
(e)Amounts charged to compensation expense for financial reporting purposes.
Loan forgiveness vested over periods up to seven years per agreement.
(f)Interest accrues at 9%.
(g)Interest accrues at 9%.
(h)Interest accrues at 5% payable in 1997.
33
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
SCHEDULE V -- PROPERTY AND EQUIPMENT
ADDITIONS
BALANCE AT ----------------------------- BALANCE
BEGINNING ACQUISITION SALES AND OTHER AMOUNTS AT END
DESCRIPTION OF PERIOD OF BUSINESS(A) OTHER RETIREMENTS ADD (DEDUCT)(B) OF PERIOD
---------- ------------- -------------- ------------ ------------ ----------------- -------------
YEAR ENDED DECEMBER 31,
1993:
Land........................ $ 23,154,000 $ -- $ 2,802,000 $ (1,360,000) $ 4,430,000 $ 29,026,000
Buildings and improvements.. 274,214,000 703,000 5,838,000 (15,769,000) 19,524,000 284,510,000
Equipment................... 188,306,000 2,278,000 15,554,000 (19,579,000) 4,924,000 191,483,000
Construction in progress.... 12,350,000 -- 26,344,000 -- (28,709,000) 9,985,000
Property under capital lease 13,227,000 508,000 5,371,000 -- (169,000) 18,937,000
------------- ------------ ------------ ------------ ------------ -------------
Total................... $511,251,000 $ 3,489,000 $55,909,000 $(36,708,000) $ -- $533,941,000
============= ============ ============ ============ ============ =============
YEAR ENDED DECEMBER 31,
1992:
Land........................ $ 22,548,000 $ -- $ 606,000 $ -- $ -- $ 23,154,000
Buildings and improvements.. 263,143,000 10,000 3,397,000 (2,336,000) 10,000,000 274,214,000
Equipment................... 182,716,000 2,667,000 15,407,000 (15,067,000) 2,583,000 188,306,000
Construction in progress.... 11,683,000 -- 13,834,000 (834,000) (12,333,000) 12,350,000
Property under capital lease 5,616,000 643,000 7,310,000 (92,000) (250,000) 13,227,000
------------- ------------ ------------ ------------ ------------ -------------
Total................... $485,706,000 $ 3,320,000 $40,554,000 $(18,329,000) $ -- $511,251,000
============= ============ ============ ============ ============ =============
YEAR ENDED DECEMBER 31,
1991:
Land........................ $ 30,424,000 $ -- $ 411,000 $ (8,467,000) $ 180,000 $ 22,548,000
Buildings and improvements.. 270,894,000 -- 31,241,000 (39,968,000) 976,000 263,143,000
Equipment................... 191,077,000 -- 13,529,000 (31,832,000) 9,942,000 182,716,000
Construction in progress.... 12,886,000 -- 8,348,000 -- (9,551,000) 11,683,000
Property under capital lease 4,405,000 -- 1,211,000 -- -- 5,616,000
------------- ------------ ------------ ------------ ------------ -------------
Total................... $509,686,000 $ -- $54,740,000 $(80,267,000) $ 1,547,000 $485,706,000
============= ============ ============ ============ ============ =============
- ---------
(a) Represents the fair market value at the date of acquisition of assets
acquired in business combinations accounted for as purchases.
(b) Listed below are the components of the 1993, 1992 and 1991 "Other Amounts"
column:
BUILDING PROP. UNDER
LAND & IMPROV. EQUIPMENT C.I.P. CAP LEASE TOTAL
----------- ------------ ----------- ------------ ------------ ------------
1993
----
Reclasses.............................. $ 4,430,000 $ 19,524,000 $ 4,924,000 $(28,709,000) $ (169,000) $ --
=========== ============ =========== ============ ============ ============
1992
----
Reclasses.............................. $ -- $ 10,000,000 $ 2,583,000 $(12,333,000) $ (250,000) $ --
=========== ============ =========== ============ ============ ============
1991
----
Cumulative translation adjustments..... $ 180,000 $ 695,000 $ 672,000 $ -- $ -- $ 1,547,000
Reclasses.............................. $ -- $ 281,000 $ 9,270,000 $ (9,551,000) $ -- $ --
----------- ------------ ----------- ------------ ------------ ------------
Total other amounts.................... $ 180,000 $ 976,000 $ 9,942,000 $ (9,551,000) $ -- $ 1,547,000
=========== ============ =========== ============ ============ ============
34
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY AND EQUIPMENT
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND SALES AND OTHER AMOUNTS AT END
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS ADD (DEDUCT) OF PERIOD
------ ------------- ------------ ------------ --------------- -------------
YEAR ENDED DECEMBER 31,
1993:
Buildings and improvements........ $103,165,000 $16,775,000 $ (3,905,000) $(1,313,000 $114,722,000
Equipment......................... 108,835,000 14,225,000 (13,946,000) 1,273,000) 110,387,000
Property under capital lease...... 3,543,000 2,817,000 -- 40,000 6,400,000
------------- ------------ ------------ ----------- -------------
$215,543,000 $33,817,000 $(17,851,000) $ -- $231,509,000
============= ============ ============ =========== =============
YEAR ENDED DECEMBER 31,
1992:
Buildings and improvements........ $ 86,778,000 $16,028,000 $ 359,000 $ -- $103,165,000
Equipment......................... 104,880,000 14,241,000 (10,286,000) -- 108,835,000
Property under capital lease...... 2,114,000 1,510,000 (81,000) -- 3,543,000
------------- ------------ ------------ ----------- -------------
$193,772,000 $31,779,000 $(10,008,000) $ -- $215,543,000
============= ============ ============ =========== =============
YEAR ENDED DECEMBER 31,
1991:
Buildings and improvements........ $ 97,312,000 $15,075,000 $(26,000,000) $ 391,000 $ 86,778,000
Equipment......................... 97,082,000 14,854,000 (6,994,000) (62,000) 104,880,000
Property under capital lease...... 1,228,000 886,000 -- -- 2,114,000
------------- ------------ ------------ ----------- -------------
$195,622,000 $30,815,000 $(32,994,000) $ 329,000(a) $193,772,000
============= ============ ============ =========== =============
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
ADDITIONS
-----------------------------
BALANCE AT CHARGED TO WRITE-OFF OF BALANCE
BEGINNING COSTS AND ACQUISITIONS UNCOLLECTIBLE AT END
DESCRIPTION OF PERIOD EXPENSES OF BUSINESSES ACCOUNTS OF PERIOD
------ ------------ ------------ ------------- ------------- ------------
ALLOWANCE FOR DOUBTFUL ACCOUNTS
RECEIVABLE:
Year ended December 31, 1993............ $27,257,000 $55,409,000 $ -- $(54,222,000) $28,444,000
============ ============ ========= ============ ============
Year ended December 31, 1992............ $25,166,000 $45,008,000 $ -- $(42,917,000) $27,257,000
============ ============ ========= ============ ============
Year ended December 31, 1991............ $22,438,000 $44,832,000 $ -- $(42,104,000) $25,166,000
============ ============ ========= ============ ============
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
1993 1992 1991
-------------- -------------- --------------
Maintenance and repairs........................................ $13,243,000 $13,224,000 $13,517,000
Taxes, other than payroll and income taxes..................... $15,347,000 $14,339,000 $14,598,000
Amortization of intangible assets.............................. $ 5,782,000 $17,280,000(b) $ 4,207,000
(a) Consists of Cumulative Translation Adjustment.
(b) Includes $13.5 million amortization charge recorded in 1992 resulting from
the revaluation of certain goodwill balances.
All other items are omitted since the required information is not applicable.
35
==============================================================================
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
DECEMBER 31, 1993 0-10454
--------------
UNIVERSAL HEALTH SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- ------------------------------------------------------------------------------
==============================================================================
INDEX TO EXHIBITS
Exhibit
10.3 Restated Employment Agreement, dated as of July 14,
1992, by and between Registrant and Alan B. Miller.
10.7 Agreement, effective January 1, 1994, to renew Advisory
Agreement, dated as of December 24, 1986, between
Universal Health Realty Income Trust and UHS of
Delaware, Inc.
10.16 Sale and Servicing Agreement dated as of November 16,
1993, between Certain Hospitals and UHS Receivables
Corp.
10.17 Servicing Agreement dated as of November 16, 1993,
among UHS Receivables Corp., UHS of Delaware, Inc. and
Continental Bank, National Association.
10.18 Pooling Agreement dated as of November 16, 1993, among
UHS Receivables Corp., Sheffield Receivables
Corporation and Continental Bank, National Association.
10.19 Guarantee dated as of November 16, 1993, by Universal
Health Services, Inc. in favor of UHS Receivables Corp.
10.20 Amendment No. 1 to the 1989 Non-Employee Director Stock
Option Plan.
10.21 Amendment No. 1 to the 1992 Stock Bonus Plan.
10.22 1994 Executive Incentive Plan.
11. Statement re: computation of per share earnings.
22. Subsidiaries of Registrant.
24. Consent of Independent Public Accountants.
EXHIBIT 10.3
RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of July 14, 1992, by and between UNIVERSAL
HEALTH SERVICES, INC., a Delaware corporation having its principal office at
367 South Gulph Road, King of Prussia, Pennsylvania 19406 (the "Company") and
ALAN B. MILLER, residing at 57 Crosby Brown Road, Gladwyne, Pennsylvania 19035
("Employee").
W I T N E S S E T H:
WHEREAS, employee has been and is employed by the Company as its
President and Chief Executive Officer pursuant to an Employment Agreement
dated as of January 1, 1981, as amended December 1984, July 15, 1987 and June
1, 1989 (the "Employment Agreement"), and Employee has served and is presently
serving as a Director of the Company;
WHEREAS, the Company and Employee desire that such employment
continue pursuant to the terms and conditions hereof;
WHEREAS, because of the position Employee now holds with the
Company and will hold during the term of this Agreement, the Company's Board
of Directors considers it in the best interests of the Company, for an
extended period after the term of Employee's active employment, that the
Company have the benefit of Employee's services as a consultant and that
Employee refrain from competing with the Company; and
WHEREAS, after the term of his active employment by the Company,
Employee is willing to serve as a consultant to the Company and to refrain
from competing with the Company pursuant to the terms and conditions hereof
applicable thereto;
WHEREAS, the Employment Agreement is hereby amended and restated in
its entirety by this Agreement;
NOW, THEREFORE, for and in consideration of the mutual premises,
representations and covenants herein contained, it is agreed as follows:
1. Term of Active Employment and Consulting Period.
The phrase "term of active employment", as used in this Agreement,
shall mean the period beginning July 14, 1992 and ending on December 31, 1997,
subject, however, to earlier termination as expressly provided herein, and
subject further to the right of Employee or the Company to extend the term of
active employment until December 31, 2002 by giving written notice thereof to
the other within 180 days prior to December 31, 1997. The phrase "consulting
period", as used in this Agreement, shall mean, except as otherwise provided
herein, the period beginning immediately upon the expiration of the term of
active employment, as it may be extended, and continuing for five years after
such expiration. The phrase "term of this Agreement", as used in this
Agreement, shall mean the term of active employment and the consulting period
together.
2. Active Employment.
The Company agrees to employ Employee, and Employee agrees to be
employed by the Company, as Chief Executive Officer and President of the
Company during the term of employment.
3. Duties.
(a) Employee agrees in the performance of his duties as Chief
Executive Officer and President of the Company during the term of active
employment to comply with the policies and reasonable directives of the Board
of Directors of the Company (and any subsidiary or subsidiaries of the Company
which shall, with the consent of Employee, at the time employ Employee).
(b) Employee agrees to devote his full time to the performance
of his duties during the term of active employment; and Employee shall not,
directly or indirectly, alone or as a member of a partnership, or as an
officer, director or employee of any other corporation, partnership or other
organization, be actively engaged in or concerned with any other duties or
pursuits which interfere with the performance of his duties hereunder.
(c) The Company agrees that during the term of active
employment Employees' duties shall be such as to allow him to work and live in
the Philadelphia Metropolitan Area, and in no event shall Employee be required
to move his residence from, or operate (except in accordance with past
practice) outside of, the Philadelphia Metropolitan Area.
4. Base Salary.
(a) As compensation for the services to be rendered by
Employee hereunder, the Company agrees to pay or cause to be paid to Employee
for the fiscal year ending December 31, 1992 and each fiscal year thereafter
during the term of this Agreement a base salary of six hundred seventy five
thousand ($675,000) dollars per annum which salary shall be increased by an
amount equal at least to the percentage increase in the Consumer Price Index
over the previous year as reported by the United States Department of Labor,
Bureau of Labor Statistics, for the Philadelphia Metropolitan Area, and may be
increased by such larger amount as the Board of Directors in its discretion
may determine, but in no event shall the salary be reduced from the salary
paid during the previous fiscal year.
(b) The Company also agrees to pay or reimburse Employee
during the term of active employment for all reasonable travel and other
expenses incurred or paid by Employee in connection with the performance of
his services under this Agreement in accordance with past practice.
5. Annual Bonus.
It is acknowledged that it has been the practice of the Company to
award Employee an annual bonus (the "Annual Bonus"). It is agreed that the
Annual Bonus award shall be continued during the term of employment as
follows: the Company shall pay to Employee during the term of active
employment, within ninety (90) days after the end of the fiscal year ending
December 31, 1992 and of each fiscal year of the Company thereafter during the
term of active employment, an amount determined by the Board of Directors, but
not less than $100,000.
6. Other Bonuses and Benefits.
(a) Employee may also be paid during the term of active
employment, in addition to the arrangements described above, such bonuses and
other compensation as may from time to time be determined by the Board of
Directors of the Company.
(b) (1) The Company agrees to pay Employee an annual amount
of $13,674.00 during the term of this Agreement as payment for
premiums under a life insurance policy, Policy No. 158034323 (the
"Policy") issued by Manufacturers Life Insurance Company (the
"Insurer"), on the life of Employee.
(2) Should Employee's employment with the Company cease
because of Employee's resignation from employment with the Company
or "discharge for cause" under the terms of this Agreement, the
Company's obligations under clause (b)(1) hereof shall also cease.
At such time, the Company shall be entitled to receive from Employee
a payment (based on the year of resignation or "discharge for
cause") as follows:
Year Amount
---- -------
1992 $29,090
1993 $38,716
1994 $48,815
1995 $59,410
1996 $70,534
1997 $90,843
1998 $103,774
1999 $117,338
2000 $131,443
2001 $146,119
2002 $151,334
(3) Employee's obligations under clause (b)(2) hereof are
non-recourse to Employee and are secured solely by the cash
surrender value of the Policy. Should Employee not make the
required payment to the Company of the amounts set forth in clause
(b)(2) hereof, Employee agrees to surrender the Policy for
termination by the Insurer in return for the payment by the Insurer
to the Company of the cash surrender value of the Policy.
(4) The Company's interest in the Policy shall be limited
to the right to recover the cash surrender value of the Policy under
the terms of this Agreement.
(5) Except as specifically herein granted to the Company,
Employee shall retain all incidents of ownership in the Policy,
including, but not limited to, the right to change the beneficiary
of the Policy, and the right to exercise all settlement options
permitted by the terms of the Policy; provided, however, that all
rights retained by Employee, transferee and beneficiary shall be
subject to the terms and conditions of this Agreement.
(6) The Insurer is authorized by this Agreement to
recognize the Company's claims to rights hereunder without
investigating the reason for any action taken by the Company, the
termination of Employees' employment, the giving of any notice
required herein, or the application to be made by the Company of any
amounts to be paid to the Company. The signature of any officer of
the Company shall be sufficient for the exercise of any rights under
the Policy and the receipt of the Company for any sums received by
it shall be a full discharge and release therefor to the Insurer.
(7) If the Insurer is made or elects to become a party to
any litigation concerning the proper apportionment under this
agreement, Employee and the Company and their transferees agree to
be jointly and severally liable for the Insurer's litigation
expenses, including reasonable attorney fees.
(c) Employee shall also be eligible to and shall participate
in, and receive the benefits of, any and all profit sharing, pension, bonus,
stock option or insurance plans, or other similar types of benefit plans which
may be initiated or adopted by the Company.
7. Fringe Benefits.
Employee shall be entitled to and shall receive the following
benefits during the term of this Agreement:
(a) All prior benefits previously enjoyed in accordance with
past practice; and
(b) Health, disability and accident insurance as presently in
force or as may be improved by the Board of Directors.
8. Consulting Period Retention and Duties.
(a) Except as otherwise provided in Sections 9, 10 and 11
hereof, Employee agrees to be retained by the Company, and Company agrees to
retain Employee, as a consultant to the Company during the consulting period.
(b) During the consulting period Employee will provide such
reasonable consulting services concerning the business, affairs and management
of the Company as may be requested by the Company's Board of Directors, but
Employee shall not be required to devote more than five (5) business days each
month to such services, which shall be performed at such place as is mutually
convenient to both parties or, in the event there is no agreement as to a
mutually convenient place, such services shall be performed at the principal
executive offices of the Company. Employee may, subject to the restrictions
of Section 13, engage in other employment during the consulting period as is
not inconsistent with his consulting obligations hereunder.
9. Consulting Period Compensation.
(a) As compensation for the services to be rendered by
Employee during the consulting period the Company agrees to pay or cause to be
paid to Employee a fee equal to one-half Employee's base salary paid under
Section 4 hereof at the date of the expiration of the term of active
employment, payable in equal monthly installments during the consulting
period.
(b) The Company also agrees to pay or reimburse Employee for
all reasonable travel and other expenses incurred or paid by Employee in
connection with the performance of his services under this Agreement during
the consulting period in accordance with the payment or reimbursement
practices in effect during the term of active employment.
10. Disability.
If during the term of active employment Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
prevented from performing his usual duties for a period of six consecutive
months, or for shorter periods aggregating six months in any twelve-month
period, the Company shall, nevertheless, continue to pay Employee his full
compensation, when otherwise due, as provided in this Agreement through the
last day of the sixth consecutive month of disability or the date on which the
shorter periods of disability shall have equalled a total of six months in any
twelve-month period. The Company may, by action of all but one of the members
of the Company's Board of Directors, at any time on or after such day, by
written notice to Employee (the "Disability Notice"), provided Employee has
not resumed his usual duties prior to the date of the Disability Notice,
terminate (as of the first day of the month following the date of the
Disability Notice, provided that Employee shall also be paid a pro rata
portion of the Annual Bonus which would otherwise have been payable for such
fiscal year in which the Disability Notice is given) the compensation
otherwise payable to Employee during the term of active employment and pay to
Employee the Disability Payment. The Disability Payment shall mean the
payment by the Company to Employee of a sum equal to one-half of Employee's
base salary paid under Section 4 hereof at the date of the Disability Notice,
payable in twelve equal monthly installments.
11. Death.
(a) If Employee shall die during the term of this Agreement,
this Agreement shall terminate as of the last day of the month of Employee's
death except as set forth in subsection (b) of this Section 11.
(b) Anything to the contrary notwithstanding, the Company
shall pay to Employee's wife on the date of his death or, in the event
Employee is unmarried on the date of his death, to his estate, a pro rata
portion of the Annual Bonus which would otherwise have been payable to
Employee for the fiscal year in which he died, which pro rata portion shall be
determined as of the last day of the month of Employee's death, together with
any items of reimbursement or salary owed to Employee as of the date of his
death. In addition, the Company shall file claims and take other appropriate
action with respect to any life insurance policies maintained on Employee's
life by the Company for which Employee had the right to designate the
beneficiary.
12. Termination.
(a) Discharge for cause. The Company recognizes that during
the many ears of Employee's employment by the Company, the Company has become
familiar with Employee's ability, competence and judgment. The Company
acknowledges, on the basis of such familiarity, that Employee's ability,
competence and judgment are satisfactory to the Company. Employee is
continuing his employment with the Company hereunder in reliance upon the
foregoing expression of satisfaction by the Company. It is therefore agreed
that "discharge for cause" shall include discharge by the Company on the
following grounds only:
(i) Employee's conviction (which, through lapse of time
or otherwise, is not subject to appeal) of any crime or offense involving
money or other property of the Company or its subsidiaries; or
(ii) Employee's conviction (which, through lapse of time
or otherwise, is not subject to appeal) of any other crime (whether or
not involving the Company or its subsidiaries) which constitutes a felony
in the jurisdiction involved; or
(iii) Employee's continuing repeated wilful failure or
refusal to perform his duties as required by this Agreement, provided
that discharge pursuant to this subparagraph (iii) shall not constitute
discharge for cause unless Employee shall have first received written
notice from the Board of Directors of such failure and refusal and
affording Employee an opportunity, as soon as practicable, to correct the
acts or omissions complained of.
In the event that Employee shall be discharged for cause, all salary and other
benefits payable by the Company under this Agreement in respect of periods
after such discharge shall terminate upon such discharge, but any benefits
payable to or earned by Employee with respect to any period of his employment
prior to such discharge shall not be terminated by reason of such discharge.
Anything in the foregoing to the contrary notwithstanding, if Employee is
convicted of any crime set forth in either Section 12(a)(i) or 12(a)(ii)
above, the Company may forthwith suspend Employee without any compensation and
choose a new person or persons to perform his duties hereunder during the
period between conviction and the time when such conviction, through lapse of
time or otherwise, is no longer subject to appeal; provided, however, that if
Employee's conviction is subsequently reversed (i) he shall promptly be paid
all compensation to which he would otherwise have been entitled during the
period of suspension, together with interest thereon (which interest shall be
calculated at a rate per annum equal to the rate of interest payable on the
date of such reversal on money judgments after entry thereof under the laws of
the Commonwealth of Pennsylvania), and (ii) the Company shall have the right
(exercisable within sixty (60) days after such reversal) but not the
obligation to restore Employee to active service hereunder at full
compensation. If the Company elects not to restore Employee to active service
after reversal of a conviction, Employee shall thereafter be paid the full
compensation which would otherwise have been payable during the balance of the
term of active employment and during the consulting period and Employee shall
be entitled to obtain other employment, subject however to (i) an obligation
to perform consulting services so long as he is receiving compensation
pursuant to the terms of this Agreement, (ii) the continued application of the
covenants provided in Section 13 and (iii) the condition that, if Employee
does obtain other employment during the period ending on December 31, 1997, or
December 31, 2002 if this Agreement is extended by Employee or the Company,
his total compensation therefrom (whether paid to him or deferred for his
benefit) shall reduce, pro tanto, any amount which the Company would otherwise
have been required to pay him during the period ending on December 31, 1997,
or December 31, 2002 if this Agreement is extended by Employee or the Company.
(b) Breach by Company. If Employee shall terminate his
employment with the Company because of a material change in the duties of his
office or any other breach by the Company of its obligations hereunder, or in
the event of the termination of Employee's employment by the Company in breach
of this Agreement, Employee shall, except as otherwise provided herein,
continue to receive all of the compensation provided hereunder and shall be
entitled to all of the benefits otherwise provided herein, during the term of
this Agreement notwithstanding such termination and Employee shall have no
further obligations or duties under this Agreement.
(c) Mitigation. In the event of the termination by Employee
of his employment with the Company as a result of a material breach by the
Company of any of its obligations hereunder, or in the event of the
termination of Employee's employment by the Company in breach of this
Agreement, Employee shall not be required to seek other employment in order to
mitigate his damages hereunder; provided, however, that if Employee does
obtain other employment, his total compensation therefrom, whether paid to him
or deferred for his benefit, shall reduce, pro tanto, any amount which the
Company would otherwise be required to pay to him as a result of such breach.
13. Non-Competition.
Employee agrees that he will not during the term of this Agreement,
directly or indirectly, own, manage, operate, join, control, be controlled by,
or be connected in any manner with any business of the type conducted by the
Company or render any service or assistance of any kind to any competitor of
the Company or any of its subsidiaries; provided, however, that (i) in the
event Employee terminates his employment with the Company as result of a
material breach by the Company of any of its obligations hereunder or in the
event the Company discharges Employee without cause, Employee shall continue
to be bound by the restrictions of this Section 13 only if Employee is
receiving the compensation payable to him in accordance with Section 12(b)
hereof and (ii) in the event the Company discharges Employee for cause,
Employee shall be bound by the restrictions of this Section for a period of
one year following such discharge.
14. Binding Effect.
Except as otherwise provided for herein, this Agreement shall inure
to the benefit of and be binding upon the heirs, executors, administrators,
successors in interest and assigns of the parties hereto.
15. Effective Date.
This Agreement shall become effective on July 14, 1992.
16. Notices.
All notices provided for herein to be given to any party shall be in
writing and signed by the party giving the notice and shall be deemed to have
been duly given if mailed, registered or certified mail, return receipt
requested, as follows:
(i) If to Employee:
57 Crosby Brown Road
Gladwyne, Pennsylvania 19035
(ii) If to Company:
367 South Gulph Road
King of Prussia, Pennsylvania 19406
Attention: Secretary
Either party may change the address to which notices, requests, demands and
other communications hereunder shall be sent by sending written notice of such
change of address to the other party.
17. Amendment, Modification and Waiver.
The terms, covenants, representations, warranties or conditions of
this Agreement may be amended, modified or waived only by a written instrument
executed by the parties hereto, except that a waiver need only be executed by
the party waiving compliance. No waiver by any party of any condition, or of
the breach of any term, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed to be or construed as a waiver of any other condition or breach of
any other term, covenant, representation or warranty of this Agreement.
18. Governing Law.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania applicable to agreements made and to be performed
therein.
19. Entire Agreement.
This Agreement contains the entire agreement of the parties relating
to the subject matter herein contained and supersedes all prior contracts,
agreements or understandings between and among the parties, except as set
forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
UNIVERSAL HEALTH SERVICES, INC.
By:__________________________________
Executive Vice President
______________________________________
Alan B. Miller
EXHIBIT 10.7
January 12, 1994
Mr. Alan B. Miller
President
UHS of Delaware, Inc.
367 South Gulph Road
King of Prussia, PA 19406
Dear Alan:
The Board of Trustees of Universal Health Realty Income Trust at their
December 1, 1993, meeting authorized the renewal of the current Advisory
Agreement between the Trust and UHS of Delaware, Inc. ("Agreement") upon the
same terms and conditions.
This letter constitutes the Trust's offer to renew the Agreement until
December 31, 1994, upon the same terms and conditions. Please acknowledge UHS
of Delaware, Inc.'s acceptance of this offer by signing in the space provided
below and returning one copy of this letter to me.
Sincerely yours,
Sidney Miller
Secretary
SM/jds
cc: Warren J. Nimetz, Esquire
Charles Boyle
AGREED TO AND ACCEPTED:
UHS of Delaware, Inc.
By: -------------------------
Alan B. Miller, President
- ------------------------------------------------------------------------------
SALE AND SERVICING AGREEMENT
between
the
HOSPITAL
and
UHS RECEIVABLES CORP.
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASES AND SALES . . . . . . . . . . 2
2.1. Agreement to Purchase and to Sell . . . . . . . . . . . . . . . . 2
2.2. Purchase of Receivables . . . . . . . . . . . . . . . . . . . . . 2
2.3. Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
CONDITIONS TO PURCHASE . . . . . . . . 3
3.1. Conditions to Initial Purchase . . . . . . . . . . . . . . . . . 3
3.2. Conditions to All Purchases . . . . . . . . . . . . . . . . . . 4
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE HOSPITAL. . . . . . . . 5
4.1. Representations, Warranties and Covenants of the
Hospital . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2. Representations and Warranties Concerning Receivables . . . . . . 9
4.3. Additional Covenants of the Hospital. . . . . . . . . . . . . . . 11
4.4. Removal of Non-qualifying Receivables . . . . . . . . . . . . . . 16
4.5. Representations and Warranties of Finco . . . . . . . . . . . . . 17
ARTICLE V
ADMINISTRATION AND COLLECTIONS . . . . . . 18
5.1. Servicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2. Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3. Hospital's Obligations as Agent for the Servicer. . . . . . . . . 19
5.4. Claims Against Third Parties. . . . . . . . . . . . . . . . . . . 19
5.5. Hospital Concentration Account. . . . . . . . . . . . . . . . . . 20
ARTICLE VI
TERMINATION OF PURCHASE COMMITMENT. . . . . 20
6.1. Exclusion Events. . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VII
INDEMNIFICATION AND EXPENSES . . . . . . . 25
7.1. Indemnities by the Hospital . . . . . . . . . . . . . . . . . . . 25
7.2. Audits of Hospital, Etc . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII
MISCELLANEOUS. . . . . . . . . . . 27
8.1. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . 28
8.3. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.4. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.5. The Hospital's Obligations. . . . . . . . . . . . . . . . . . . . 28
8.6. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.7. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 29
8.8. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.9. Consent to Assignment; Third Party Beneficiaries. . . . . . . . . 29
8.10. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.11. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.12. No Bankruptcy Petition Against Finco or Sheffield . . . . . . . . 31
8.13. Finco May Act Through Agents. . . . . . . . . . . . . . . . . . . 31
8.14. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.15. No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . 31
8.16. SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL; SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . 32
8.17. UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.18. Execution; Effectiveness. . . . . . . . . . . . . . . . . . . . . 33
Exhibits
Exhibit A Form of Subordinated Note
Exhibit B Form of Confidentiality Agreement
Schedules
Schedule I Hospital and UHS place of business; List of Insurers; UCCs
Filed
Schedule II Notifications as to Accreditation and Licensing
Schedule III Fiscal Years Open to Audit
Schedule IV Governmental Programs for Which the Hospital is a Qualified
Provider
Schedule V Hospital Concentration Account
SALE AND SERVICING AGREEMENT
SALE AND SERVICING AGREEMENT, dated as of November 16, 1993 (this
"Agreement"), between each hospital company referred to in Section 8.18
(together with its successors and assigns, the "Hospital") and UHS Receivables
Corp., a Delaware corporation (together with its successors and assigns,
"Finco").
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions of this Agreement,
Finco wishes to purchase from the Hospital, and the Hospital wishes to sell to
Finco, all of the Hospital's Receivables (all capitalized terms used in the
recitals without definition, as defined in the Definitions List referred to
below) and all related Transferred Property arising during the term of this
Agreement;
WHEREAS, pursuant to the Pooling Agreement, Finco has agreed to
transfer to the Trust, for the benefit of the Participants, and the Trust will
acquire from Finco, the Purchased Receivables and other Total Transferred
Property on the terms and conditions of the Pooling Agreement;
WHEREAS, in order to provide for the collection of all amounts
payable under the Receivables, the Interested Parties have required as a
condition precedent to the effectiveness of the Operative Documents that the
Hospital undertake the primary responsibility for the management and
administration of and collection on the Receivables, as such responsibilities
are defined and set forth in the Servicing Agreement, and the Hospital,
pursuant to the terms and conditions of this Agreement, has agreed to
undertake all such responsibilities in consideration for payments to it under
this Agreement and other valuable consideration; and
WHEREAS, pursuant to the Guarantee, UHS has guaranteed the
obligations of the Hospital hereunder and of UHS Delaware under the Servicing
Agreement;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement (unless the
context requires a different meaning), capitalized terms used herein shall
have the meanings assigned to them in the Definitions List, dated as of
November 16, 1993 (the "Definitions List"), that refers to this Agreement,
which Definitions List is incorporated herein by reference and shall be deemed
to be a part of this Agreement.
ARTICLE II
PURCHASES AND SALES
Section 2.1. Agreement to Purchase and to Sell. Subject to the
terms of this Agreement, the Hospital shall sell, assign, transfer and convey
all the Receivables and the related Transferred Property generated by it to
Finco until an Exclusion Event shall have occurred and, upon the
representations, warranties, covenants and agreements of the Hospital
hereinafter set forth, and subject to the terms and conditions of this
Agreement, Finco shall purchase such Receivables from the Hospital pursuant to
Section 2.2 and pay the Hospital for such Receivables pursuant to Section 2.3
from time to time until an Exclusion Event shall have occurred.
Section 2.2. Purchase of Receivables. (a) In consideration of the
agreements set forth herein, the Hospital hereby sells, assigns, transfers and
otherwise conveys to Finco all of its right, title and interest in and to the
Receivables and the related Transferred Property now existing and hereafter
arising. All of the Hospital's right, title and interest in and to such
Receivables and the related Transferred Property, whether now existing or
hereafter created, shall be sold, assigned, transferred and conveyed to Finco
without any further action by the Hospital. The parties hereto intend that
this transfer and conveyance shall be considered a sale; provided, however, in
the event that for any reason such transfer is determined by a court of
competent jurisdiction not to be a sale, the parties hereby agree that this
transfer and conveyance creates a security interest in favor of Finco securing
repayment by the Hospital of a loan, in the amount of the aggregate Purchase
Price, made by Finco to the Hospital, and the Hospital hereby grants to Finco
a first priority security interest in all of the Hospital's right, title and
interest in the Receivables and the related Transferred Property, whether now
existing or hereafter created, as collateral security for the repayment of
such loan and all other amounts owed under and in connection with this
Agreement by the Hospital to Finco.
(b) All Receivables of the Hospital and the related Transferred
Property shall be purchased by Finco immediately upon creation of such
Receivables and the related Transferred Property. Payment of the Purchase
Price for such Purchased Receivables shall be made on the related Payment Date
in accordance with Section 2.3. On the Initial Closing Date, the aggregate
Outstanding Balance of Receivables of the Hospital for which the Payment Date
is on or prior to the Initial Closing Date will be reported in a Servicer
Daily Statement prepared by the Servicer and delivered on the Initial Closing
Date in accordance with Section 3.1, and the aggregate Purchase Price for all
such Purchased Receivables will be paid on the Initial Closing Date in
accordance with Section 2.3. At the close of business on each Business Day
after the Initial Closing Date the Servicer will determine, in accordance with
the Servicing Agreement, the aggregate Outstanding Balance of the Purchased
Receivables created by the Hospital for which the Payment Date is such
Business Day, and Finco shall make payment of the aggregate Purchase Price for
all such Purchased Receivables on such Payment Date in accordance with Section
2.3.
Section 2.3. Payment of Purchase Price. (a) On the Initial
Closing Date, Finco shall pay to the Hospital, in cash, as payment in full for
the Purchased Receivables and the related Transferred Property for which the
Payment Date is on or prior to the Initial Closing Date, an amount equal to
the aggregate Purchase Price with respect to all such Purchased Receivables
and Transferred Property.
(b) On each Business Day after the Initial Closing Date, Finco
directs the Trustee, pursuant to Section 7.2(e) of the Pooling Agreement and
subject to the terms and conditions of this Agreement and the Pooling
Agreement, to pay to the Hospital, on behalf of Finco and as payment in full
for the Purchased Receivables and the related Transferred Property for which
the Payment Date is such Business Day, an amount equal to the aggregate
Purchase Price with respect to such Purchased Receivables and related
Transferred Property (after deducting any amounts payable by the Hospital
pursuant to Section 4.4 on such Business Day), such payment to be in cash in
immediately available funds to the extent of amounts available in accordance
with the terms of the Pooling Agreement; provided, however, that to the extent
that sufficient cash is not available under Section 7.2(e) of the Pooling
Agreement to pay such aggregate Purchase Price in full on such date, then
Finco shall deliver a Subordinated Note, substantially in the form of Exhibit
A attached hereto, in favor of such Hospital or, if such Subordinated Note has
previously been delivered pursuant to this Section, the principal amount
thereof shall be increased, in each case in an amount equal to the difference
between the aggregate Purchase Price (net of all deductions pursuant to
Section 4.4) and the amount of cash so delivered pursuant to this Section
2.3(b). The Hospital hereby agrees to all of the terms and conditions of the
Subordinated Note and such terms and conditions are incorporated herein by
reference.
ARTICLE III
CONDITIONS TO PURCHASE
Section 3.1. Conditions to Initial Purchase. The initial purchase
of Receivables is subject to the satisfaction by the Hospital of all
conditions precedent to be satisfied by it pursuant to the Conditions List,
which Conditions List is incorporated herein by reference, and of all
conditions set forth in Section 3.2.
Section 3.2. Conditions to All Purchases. The obligation of Finco
to cause the Trustee to make payment of the Purchase Price on any Payment Date
with respect to any purchase of Purchased Receivables hereunder from the
Hospital is subject to the following conditions precedent:
(a) On the Purchase Date and on such Payment Date the Hospital
shall have complied with all of its covenants hereunder and shall have
fulfilled all of its obligations hereunder;
(b) The representations and warranties of the Hospital set forth in
Article IV shall be true and correct in all material respects on and as of the
applicable Purchase Date after giving effect to any such payment;
(c) The Hospital shall be in full compliance with all the terms and
conditions of Article V, including, without limitation, those terms and
conditions governing the Hospital Concentration Account;
(d) All legal matters incident to the execution and delivery by the
Hospital of this Agreement and to the purchases by Finco of the Purchased
Receivables from the Hospital shall be satisfactory to counsel for Finco; and
(e) No Exclusion Event, and no event which, after notice or lapse
of time or both, would become an Exclusion Event, shall have occurred and then
be continuing.
The acceptance by the Hospital of any payment or Subordinated Note for any
Purchased Receivables shall be deemed to be a representation and warranty by
the Hospital as of such acceptance date as to the matters in paragraphs (a),
(b), (c) and (e) of this Section 3.2; provided that if, prior to the Payment
Date, Finco shall have been notified of the occurrence of an Exclusion Event
and shall have elected to exercise the remedy provided in Section 6.2(a)(i) or
(ii) with respect to such Exclusion Event, then the acceptance by the Hospital
of any Subordinated Note for any Purchased Receivable shall not be deemed to
be a representation and warranty as to the matters in paragraph (e) of this
Section 3.2. If, on any Payment Date, any of the conditions precedent set
forth in this Section 3.2 with respect to the related purchase of Receivables
from the Hospital are not satisfied, Finco shall have the option to (A) make
payment for such Purchased Receivables pursuant to the terms hereof and retain
its interest therein or (B) reassign to the Hospital without recourse,
representation or warranty its interest in such Receivables and the related
Transferred Property and not make any payment therefor.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE HOSPITAL
Section 4.1. Representations, Warranties and Covenants of the
Hospital. The Hospital represents and warrants to and covenants with Finco as
of the date hereof, and as of each future Purchase Date and each related
Payment Date, that:
(a) The Hospital has been duly organized and is validly existing
and in good standing as a corporation or limited partnership under the laws of
the state of its organization, with full power and authority to own or lease
its properties and to conduct its business as presently conducted and to
execute, deliver and perform this Agreement and the other Hospital Documents
and any other documents related hereto and thereto to which it is a party and
to consummate the transactions contemplated hereby and thereby. The Hospital
is duly qualified as a foreign corporation or limited partnership and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except where any such failure or failures to be so qualified
would not, alone or in the aggregate, have a material adverse effect on its
business, operations, properties, assets or financial condition.
(b) The execution, delivery and performance by the Hospital of this
Agreement and the other Hospital Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all requisite action and will not (with due
notice or lapse of time or both) 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 upon any of its property or assets pursuant
to the terms of any indenture, mortgage, deed of trust, lease, loan agreement
or other agreement, instrument or undertaking by which it is bound or to which
any of its property or assets is subject, nor will such action result in any
violation or violations of any applicable Requirement of Law, including,
without limitation, any rule or regulation of JCAHO or AOA, as the case may
be, or otherwise relating to the eligibility of the Hospital to receive
payment and to participate as an accredited and certified provider of
healthcare services under Medicare, Medicaid, Champus, Blue Cross/Blue Shield,
Worker's Compensation or equivalent programs, which violation or violations
would, alone or in the aggregate, have a material adverse effect on the
Hospital's ability to perform under the terms of this Agreement or the other
Hospital Documents to which it is a party or on the collectibility (other than
as a result of the credit quality of any Obligor) or enforceability of the
Purchased Receivables purchased on the date on which this representation is
made or deemed made or the value of the related Transferred Property; and no
consent, approval, authorization, order, registration, filing, qualification,
license or permit of or with any Governmental Authority or body or any other
Person is required to be obtained by or with respect to the Hospital in
connection with the execution, delivery and performance by the Hospital of
this Agreement, the other Hospital Documents (other than the actions required
to file or record any Security Filings, all of which actions, subject to
Section 5.3 of the Pooling Agreement, have been taken) or the consummation of
the transactions contemplated hereby or thereby.
(c) Each of the Hospital Documents to which the Hospital is a party
has been duly and validly authorized, executed and delivered by the Hospital
and constitutes a valid and legally binding obligation of the Hospital,
enforceable against the Hospital in accordance with its terms, subject as to
enforceability to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally, and to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(d) There is (i) no effective financing statement (or similar
statement or instrument of registration under the law of any jurisdiction) on
file or registered in any public office and (ii) no assignment filed or
delivered by or on behalf of the Hospital covering any interest of any kind in
the Transferred Property or intended so to be filed, delivered or registered,
and the Hospital will not execute nor will there be on file in any public
office any effective financing statement (or similar statement or instrument
of registration under the laws of any jurisdiction) or any assignment or other
notification relating to the Transferred Property, except (i) the Security
Filings relating to the Permitted Interests and (ii) any such financing
statements or notifications as to which the Hospital has submitted to Finco
evidence satisfactory to Finco of the termination of the ownership or security
interest intended to be perfected by the filing, delivery or registration
thereof. The interest of Finco in the Transferred Property purchased on the
date on which this representation is made or deemed made is an ownership
interest, valid and enforceable against, and prior to, all claims of existing
and future creditors of the Hospital and all subsequent purchasers from the
Hospital of the Purchased Receivables.
(e) All Security Filings which are required to perfect the
interests of Finco in the Purchased Receivables purchased on the date on which
this representation is made or deemed made and the related Transferred
Property have been filed, delivered or received, as the case may be (other
than as limited by Section 5.3 of the Pooling Agreement) and are in full force
and effect, and the Hospital shall, at its expense, perform all acts and
execute all documents reasonably requested by Finco at any time to evidence,
perfect, maintain and enforce the first priority ownership, and, in the
alternative, security interests of Finco in the Transferred Property.
Schedule I attached hereto lists (i) all offices where UCC filings must be
made to perfect the Permitted Interests of Finco in the Purchased Receivables
purchased on the date on which this representation is made or deemed made and
the related Transferred Property and (ii) the insurers or other third-party
payors which are Obligors maintaining the ten highest average Outstanding
Balances of Receivables, calculated, as of August 31, 1993, on an aggregate
basis for all Hospitals that are parties to any Sale and Servicing Agreement.
The Hospital will, on the reasonable request of an Authorized Officer of
Finco, execute and deliver all such Security Filings (satisfactory in form and
substance to Finco) requested by Finco and, where permitted by law, the
Hospital authorizes Finco to file one or more such Security Filings signed
only by Finco. The Hospital hereby irrevocably appoints Finco its
attorney-in-fact to file and deliver, and to receive Confirmations in respect
of, one or more such Security Filings signed on behalf of the Hospital by
Finco as the attorney-in-fact of the Hospital.
(f) There are no actions, proceedings or investigations pending or,
to the knowledge of the Hospital, threatened, before any court, administrative
agency or other tribunal (i) which, if determined adversely to the Hospital,
could, alone or in the aggregate, have a material adverse effect on the
business, operations, properties, assets, condition (financial or otherwise)
or prospects of the Hospital, (ii) asserting the invalidity of this Agreement
or any of the other Hospital Documents, (iii) questioning the consummation by
the Hospital of any of the transactions contemplated by this Agreement or the
other Hospital Documents or (iv) which, if determined adversely, could, alone
or in the aggregate, materially and adversely affect the ability of the
Hospital to perform its obligations under, or the validity or enforceability
of, this Agreement, the other Hospital Documents or the Purchased Receivables
purchased on the date on which this representation is made or deemed made.
(g) The place of business of the Hospital is located at the address
set forth on Schedule I hereto, which place of business is the place where the
Hospital is "located" for the purposes of Section 9-103(3)(d) of the UCC of
the state indicated in such Schedule, and the locations of the offices where
the Hospital keeps all of the Transferred Property are at the addresses set
forth on Schedule I hereto.
(h) The Hospital has, and will have on each Purchase Date, all
permits, licenses, agreements with third-party payors, accreditations and
certifications (including, without limitation, any required accreditations by
JCAHO and AOA and any required accreditations and certifications as a provider
of healthcare services eligible to receive payment and compensation and to
participate under Medicare, Medicaid, Champus, Blue Cross/Blue Shield,
Worker's Compensation and similar applicable programs) necessary to own its
assets and to carry on its business as now conducted, except where failure to
have such permits, licenses, agreements with third-party payors, accreditation
and certifications would not, alone or in the aggregate, have a material
adverse effect on (i) the business, operations, property or condition
(financial or otherwise) of the UHS Entities taken as a whole, (ii) the
collectibility (other than as a result of the credit quality of any Obligor)
or enforceability of the Purchased Receivables purchased on the date on which
this representation is made or deemed made or the value of the related
Transferred Property or (iii) the ability of the Hospital to perform its
servicing obligations hereunder. Except as set forth on Schedule II hereto,
during the last twenty-four months, the Hospital has not been notified by
JCAHO, AOA or any relevant Governmental Authority (including, without
limitation, any state licensing authority) with respect to a license to
operate an acute care or psychiatric facility, as the case may be, of such
Person's intention to rescind or not renew any of its respective
accreditations or licenses.
(i) No material Reportable Event has occurred during the five-year
period prior to the date on which this representation is made or deemed made
with respect to any Plan, and each Plan has complied in all material respects
with the applicable provisions of ERISA and the Code. The present value of
all accrued benefits under each Single Employer Plan maintained by the
Hospital or any Commonly Controlled Entity (based on those assumptions used to
fund such Plans) did not, as of the last annual valuation date prior to the
date on which this representation is made or deemed made, materially exceed
the value of the assets of such Plan allocable to such accrued benefits.
Neither the Hospital nor any Commonly Controlled Entity has had a complete or
partial withdrawal from any Multiemployer Plan which has resulted or could
result in any material liability under ERISA, and neither the Hospital nor any
Commonly Controlled Entity would become subject to any material liability
under ERISA if the Hospital or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed
made. No such Multiemployer Plan is in reorganization or insolvent. The
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees
participating) of the liability of the Hospital and each Commonly Controlled
Entity for post-retirement benefits to be provided to their current and former
employees under Plans which are welfare benefit plans (as defined in Section
3(1) of ERISA) does not, in the aggregate, materially exceed the assets under
all such Plans allocable to such benefits.
(j) The Hospital has no Subsidiaries.
(k) The Hospital has filed or caused to be filed all material
federal, state and local tax returns which are required to be filed, and has
paid or caused to be paid all taxes as shown on said returns and any other
taxes or assessments payable by it (other than any such taxes or assessments
the amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Hospital and with respect to which
collection has been stayed), and no tax Lien has been filed and, to the
knowledge of the Hospital, no claims are being asserted with respect to any
such taxes, fees or other charges which, alone or in the aggregate, could
reasonably be expected to have a material adverse effect on the rights of
Finco or its direct or indirect assignees under the Operative Documents or
with respect to the Transferred Property. Except with respect to the fiscal
years of the Hospital listed on Schedule III, as of the Initial Closing Date,
the federal tax returns previously filed by or on behalf of the Hospital are
not subject to future challenge or audit by the Internal Revenue Service.
Section 4.2. Representations and Warranties Concerning Receivables.
(i) On the date hereof and (ii) with respect to Sections 4.2(a), 4.2(j) and
4.2(l) on each following date and (iii) with respect to Sections 4.2(b)
through (i) and 4.2(k), with respect to Purchased Receivables on each related
Purchase Date, the Hospital represents and warrants to Finco as follows:
(a) The Hospital has, immediately prior to its conveyance of the
Purchased Receivables pursuant to Section 2.2, good title to the Purchased
Receivables and the related Transferred Property, and the Outstanding Balances
are free and clear of any Lien or other claim of any kind or any offset,
counterclaim or defense of any kind, other than contractual adjustments in
respect of, and in no event greater than, the Applicable Contractual
Adjustment and any offsets included in the Offset Reserves. At all times
during which this Agreement is in effect, the Transferred Property and the
Outstanding Balances in relation thereto will not be subject to any Lien or
claim of any kind or to any counterclaim or defense of any other kind other
than the Permitted Interests and the offsets included in the Offset Reserves.
(b) Each of the Purchased Receivables and the related Transferred
Property complies with and will comply with all Requirements of Law
(including, in the case of Governmental Receivables, all applicable
requirements of the programs listed on Schedule IV) and is not the subject of
any litigation, court proceeding or other dispute.
(c) Each of the Purchased Receivables (i) is and will be in full
force and effect and represents and will represent a valid and legally binding
obligation of the related Obligor, enforceable against such Obligor in
accordance with its terms and (ii) constitutes an "account" or "general
intangible" under the UCC in effect in the state in which the Hospital's place
of business is located, or a right to payment under a policy of insurance or
proceeds thereof.
(d) (i) The statements and information constituting Receivables
Information provided by the Hospital are true and correct and do not contain
any untrue statement of a material fact or omit any material fact which would
make such statements and information, in light of the circumstances in which
they were made or given, misleading and (ii) the other statements and
information furnished by any Authorized Officer of the Hospital to Finco are
true and correct and do not contain any untrue statement of a material fact or
omit any material fact which would make such other statement or information,
in light of the circumstances in which they were made or given, misleading.
(e) This Agreement, together with the Security Filings, vests and
at all times will vest in Finco the ownership interest in, or, in the event
such interest is recharacterized by a court of competent jurisdiction as a
security interest, the security interest in and Lien on, the Transferred
Property purported to be conveyed hereby and thereby and in accordance with
the terms hereof and thereof, and such conveyance of the Transferred Property
constitutes and will constitute a valid sale of, or, if recharacterized as
described above, a security interest in, and Lien on, such Transferred
Property and the Collections in respect thereof, enforceable against the
Hospital and all creditors of and purchasers from the Hospital prior to all
sales or other assignments thereof.
(f) No Obligor on the Purchased Receivables and other Transferred
Property (including, without limitation, any insurance company or other third-
party payor or guarantor of such Obligor obligated in respect of any such
Purchased Receivables) is bankrupt, insolvent, undergoing composition or
adjustment of debts or is unable to make payment of its obligations when due;
provided that this representation shall not apply to any Governmental
Authority which is an Obligor on Medicaid Receivables and which is currently
insolvent but the Receivables of which would not be considered Uncollectible
Receivables under clause (c) of the definition of Uncollectible Receivables
(taking into account the proviso contained in such definition).
(g) The Hospital is a qualified provider in respect of the
Purchased Receivables of the Hospital constituting Governmental Receivables.
(h) All amounts paid on each Governmental Receivable being
purchased on any Purchase Date will be paid to the Hospital in accordance with
all Requirements of Law either (i) in the Hospital's name to the Hospital
Concentration Account in accordance with Section 4.3(m) or (ii) in the name of
UHS, for the benefit of the Hospital, to the Master Receivables Account.
(i) Each Non-governmental Receivable of the Hospital being
purchased by Finco hereunder is not and will not be payable by an Obligor
which is an agency or instrumentality of the federal government of the United
States of America unless all applicable requirements of the Assignment of
Claims Act of 1940, as amended, including the giving of all requisite notices
of assignment to all Persons to whom such notices must be given and the
acknowledgement of receipt thereof by all such Persons, have been complied
with in all material respects and unless Finco shall have been provided with
evidence thereof in form and substance satisfactory to it.
(j) All accounting information relating to the Receivables of the
Hospital which is provided to Finco hereunder shall be in accordance with the
Hospital's accounting policies, including the Hospital's Credit and Collection
Policy.
(k) Each of the Purchased Receivables, other than any Excluded
Receivable and any Self-pay Receivable, is and will be an Eligible Receivable
on the Purchase Date for such Purchased Receivable.
(l) Each of the Purchased Receivables originated by the Hospital
shall at all times be separately identifiable from the Receivables, if any,
repurchased by Finco in accordance with Section 4.4, and the Financible
Receivables shall at all times be separately identifiable from those Purchased
Receivables that are not Financible.
Section 4.3. Additional Covenants of the Hospital. The Hospital
covenants and agrees with Finco that so long as this Agreement shall remain in
effect:
(a) The Hospital will preserve and maintain its existence as a
corporation or limited partnership, as the case may be, in good standing under
the laws of the state of its incorporation or organization and its
qualification as a foreign corporation or limited partnership where such
qualification is required, except where any such failure or failures to so
qualify would not, alone or in the aggregate, be material to the Hospital's
performance of its obligations under the Hospital Documents.
(b) The Hospital, as agent for the Servicer, will, at its own cost
and expense, (i) retain a record of the Receivables generated by the Hospital
and copies of all documents relating to each Receivable generated by the
Hospital, (ii) mark such record to the effect that the Purchased Receivables
generated by the Hospital listed thereon have been sold to Finco and (iii)
take any actions necessary to remove reference thereto to Receivables that
have been repurchased by it in accordance with the terms of this Agreement.
(c) In any suit, proceeding or action brought by Finco for any sum
owing with respect to any Receivable, the Hospital will save, indemnify and
keep Finco harmless from and against all expense, loss or damage suffered by
reason of any defense, set-off, counterclaim, recoupment or reduction of
liability whatsoever under such Receivable and the related Transferred
Property, in each case arising out of a breach by the Hospital of any
obligation under such Receivable or the related Transferred Property or
arising out of any other agreement, indebtedness or liability at any time
owing to or in favor of any other Person from the Hospital, and all such
obligations of the Hospital shall be and remain enforceable against and only
against the Hospital and shall not be enforceable against Finco.
(d) The Hospital will comply with all Requirements of Law which are
applicable to the Purchased Receivables or any part thereof; provided,
however, that the Hospital may contest any act, regulation, order, decree or
direction in any manner which, in the reasonable opinion of Finco, shall not
materially and adversely affect the rights of Finco in the Transferred
Property. The Hospital will comply with the terms of its contracts with
Obligors relating to Purchased Receivables except where any such
non-compliance would not, alone or in the aggregate, reasonably be expected to
have a material adverse effect on its ability to receive payments under any
such contract.
(e) The Hospital will not create, permit or suffer to exist, and
will defend Finco's rights against, and take such other actions as are
necessary to remove, any Lien on, claim in respect of or right to, the
Transferred Property, and will defend the right, title and interest of Finco
in and to the Transferred Property against the claims and demands of all
Persons whomsoever, other than the Permitted Interests and will not otherwise
enter into any agreement or execute any document or instrument or take any
other action inconsistent with Finco's ownership of the Receivables and
Transferred Property.
(f) The Hospital will advise Finco promptly and in reasonable
detail of (i) any Lien asserted or offset or claim made against any of the
Transferred Property, (ii) the occurrence of any breach by the Hospital of any
of its representations, warranties and covenants contained herein, (iii) the
occurrence of any Exclusion Event or any other event which, with the giving of
notice or lapse of time or both, would become an Exclusion Event and (iv) the
occurrence of any event of which the Hospital has knowledge which would
reasonably be expected to have a material adverse effect on (A) the business,
operations, property or condition (financial or otherwise) of the UHS Entities
taken as a whole, (B) the collectibility (other than as a result of the credit
quality of any Obligor) or enforceability of the Purchased Receivables or the
value of the Transferred Property or (C) the ability of the Hospital to
perform its servicing obligations hereunder, (iv) the receipt from any
Governmental Authority of a deficiency notice with respect to the Purchased
Receivables, (v) the receipt by the Hospital from any Governmental Authority
of a Deficiency Notice with respect to the Receivables originated by the
Hospital, (vi) the receipt by the Hospital of any notice of preliminary or
final determination resulting from any Audit relating to the Hospital or its
Receivables.
(g) Unless prohibited by any Requirement of Law including, without
limitation, any applicable regulations of JCAHO and AOA, Finco and its
employees, agents and representatives (A) shall at all times have full and
free access during normal business hours to all the books, correspondence and
records of the Hospital insofar as they relate to the Transferred Property and
may examine the same, take extracts therefrom and make photocopies thereof,
and the Hospital agrees to render to Finco (and its employees, agents and
representatives), at the Hospital's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto and (B) may
discuss the affairs, finances and accounts of the Hospital with, and be
advised as to the same by, executive officers and independent accountants of
the Hospital, all as Finco may reasonably deem appropriate for the purpose of
verifying the accuracy of any reports or information delivered to Finco
pursuant to this Agreement or for otherwise ascertaining compliance with this
Agreement; provided, however, that Finco acknowledges that in exercising the
rights and privileges conferred in this Section 4.3(g) Finco may, from time to
time, obtain knowledge of information, practices, books, correspondence and
records of a confidential nature and in which the Hospital has a proprietary
interest; and provided, further, that the Hospital and Finco acknowledge that
the Operative Documents and documents required to be filed by or on behalf of
UHS and its Subsidiaries with the Securities and Exchange Commission and
available to the public shall not be considered confidential for purposes of
this Agreement (such confidential information, collectively, the
"Information"). Finco agrees that the Information is to be regarded as
confidential information and that the Information may be subject to laws,
rules and regulations regarding patient confidentiality and agrees that
subject to the following sentence, (i) it shall, and shall cause its
employees, agents and representatives to, retain in confidence and not
disclose without the prior written consent of the Hospital any or all of the
Information and (ii) it will not, and will ensure that its employees, agents
and representatives will not, make any use whatsoever (other than for the
purposes contemplated by this Agreement, the Pooling Agreement, the other
Operative Documents or for the enforcement of any of the rights granted
hereunder or thereunder) of any of the Information without the prior written
consent of the Hospital. Notwithstanding the foregoing, Finco may (x)
disclose Information to any Person that has executed and delivered to the
addressee thereof and UHS a confidentiality agreement, substantially in the
form of Exhibit B with respect to the Information, or (y) disclose or use such
Information (A) to the extent that such Information is required or appropriate
in any reports, statement or testimony submitted to any municipal, state, or
federal regulatory body having or claiming to have jurisdiction over Finco or
the National Association of Insurance Commissioners or similar organizations
or their successors, (B) to the extent such Information is required in
response to any summons or subpoena or in connection with any litigation, (C)
to the extent that such Information is believed by Finco to be required in
order to comply with any law, order, regulation or ruling applicable to Finco,
(D) to the extent that such information was publicly available or otherwise
known to Finco at the time of disclosure (E) to the extent that such
information subsequently becomes publicly available other than through any act
or omission of Finco or (F) to the extent that such information subsequently
becomes known to Finco other than through a person known to be acting in
violation of his or its obligations to the Hospital.
(h) The Hospital shall execute and file, at the Hospital's expense,
such continuation statements and other documents relating to the Security
Filings requested by Finco which may be required by law to fully preserve and
protect the interest of Finco hereunder in and to the Transferred Property.
(i) The Hospital will not, without providing 30 days' notice to
Finco, and without filing such amendments to the Security Filings as Finco may
require, (i) change the location of its place of business or the location of
the offices where the records relating to the Receivables or the other
Transferred Property are kept or (ii) change its name, identity or corporate
structure in any manner which would, could or might make any Security Filing
or continuation statement filed by the Hospital in accordance with Section
4.1(e) or Section 4.3(h) seriously misleading within the meaning of Section
9-402(7) of any applicable enactment of the UCC.
(j) The Hospital shall (i) promptly instruct the Servicer to (A)
notify Finco of any insurance provider or other third-party payor which
becomes an Obligor after the Initial Closing Date pursuant to a written
contract or arrangement which purports to prohibit the assignment of any
rights of the Hospital under such contract or arrangement without the consent
of such Obligor and (B) deliver or cause to be delivered to such Obligor a
Notice of Assignment and receive a Confirmation in respect thereof as may be
required by Finco or its counsel and (ii) comply with all other reasonable
requests of Finco with respect to the Security Filings.
(k) The Hospital shall not change the terms of the payor contracts
and agreements relating to the Purchased Receivables and related Transferred
Property or its normal policies and procedures with respect to the servicing
thereof (including, without limitation, the amount and timing of finance
charges, fees and write-offs) except such changes as are permitted under
Section 3.1(e) of the Servicing Agreement.
(l) The Hospital hereby acknowledges that UHS Delaware will
initially be appointed as Servicer for Finco pursuant to the Servicing
Agreement and that, pursuant to the Guarantee, UHS will guarantee the
performance by UHS Delaware of all of its obligations as Servicer.
(m) The Hospital hereby represents and covenants that it has (i)
designated personnel and (ii) directed such personnel to deposit all
Collections and proceeds thereof in respect of Purchased Receivables on each
Business Day upon which Collections are received (or, if such Collections are
received by the Hospital on a day which is not a Business Day, on the next
Business Day) into the Hospital Concentration Account in accordance with
Section 5.2.
(n) Subject to Section 4.3(k), the Hospital will duly fulfill all
obligations on its part to be fulfilled under or in connection with each
Purchased Receivable and will do nothing to impair the rights of Finco in the
Transferred Property.
(o) Except for the purpose of collection in the ordinary course of
business, the Hospital will not sell, discount or otherwise dispose of any
Receivable of such Hospital except to Finco as provided hereunder.
(p) All financial statements prepared by Finco or any Hospital and
made available to any Person other than any UHS Entity shall indicate the sale
to Finco of the Purchased Receivables and other Transferred Property.
(q) The Hospital shall not terminate the Hospital Concentration
Account or modify the conditions upon which such account was established, or
establish any other Hospital Concentration Account unless (i) the Hospital has
given Finco 10 days' prior written notice of such change and (ii) the
Hospital, after such change, remains in full compliance with the terms of
Article V.
(r) The Hospital shall promptly instruct the Servicer to notify
Finco on any date on which the Hospital becomes, applies to become or no
longer remains a qualified provider in respect of Governmental Receivables.
(s) The Hospital shall have filed, and shall have caused each of
its Subsidiaries to file, all federal, state and local tax returns which are
required to be filed, and shall have paid or caused to be paid all taxes as
shown on said returns or any other taxes or assessments payable by it (other
than any taxes or assessments the amount or validity of which are currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of the
Hospital or such Subsidiary and with respect to which collection has been
stayed); and no tax Lien has been filed and, to the knowledge of the Hospital,
no claims are being asserted with respect to any such taxes or assessments
which could, alone or in the aggregate, reasonably be expected to have a
material adverse effect on the rights of Finco hereunder or with respect to
the Transferred Property.
(t) The Hospital shall cause each contract entered into after the
Initial Closing Date with any third-party payor in respect of Non-governmental
Receivables to permit the assignment of payments thereunder pursuant to the
terms of this Agreement and the other Operative Documents. The Hospital shall
also cause each invoice delivered after the Initial Closing Date to each
insurance carrier (including, without limitation, each invoice to be
transmitted to the Obligor thereunder solely through electronic means) to
include a notice that the amounts payable under such invoice have been
assigned to Finco and its assignees, including the Trustee, and that future
amounts payable by such insurance carrier will be so assigned.
(u) The Hospital will take no action to cause any Purchased
Receivable to be evidenced by any instrument (as defined in the UCC of the
state in which the Hospital is located), except in connection with its
enforcement or collection of such Receivable, in which event the Hospital
shall deliver such instrument to Finco as soon as reasonably practicable but
in no event more than five days after execution thereof.
(v) The Hospital will not hold itself out, or permit itself to be
held out by any other Person, as having agreed to pay, or as being liable for,
any debt or liability of Finco.
Section 4.4. Removal of Non-qualifying Receivables; Purchase Price
Adjustments. (a) Subject to Section 4.4(b), the Hospital will notify each of
the Servicer and Finco of the aggregate Outstanding Balances of those
Receivables, if any, which were Non-qualifying Receivables as of the Purchase
Date for such Receivables. All Non-qualifying Receivables generated by the
Hospital and sold to Finco shall be repurchased by it on any Business Day (a
"Repurchase Date") on which Finco shall so request. On the Repurchase Date,
the Hospital shall make available to Finco by deposit in the Collateral
Account in immediately available funds, or by deduction from the Purchase
Price payable by Finco on such date, an amount equal to the acquisition price
of each such Non-qualifying Receivable previously sold to Finco. Such
acquisition price shall be equal to the Hospital Repurchase Price of such Non-
qualifying Receivable as determined by the Servicer. Such payment or
deduction of the Hospital Repurchase Price shall be considered a payment in
full of each such Non-qualifying Receivable. On the date on which such amount
is deposited in the Collateral Account or on which such deduction is made,
Finco shall automatically and without further action be deemed to transfer,
assign, set-over and otherwise convey to the Hospital, without recourse,
representation or warranty, all the right, title and interest of Finco in and
to such Non-qualifying Receivables, all monies due or to become due with
respect thereto, and all proceeds thereof. Finco shall execute such documents
and instruments of transfer or assignment and take such other actions as shall
reasonably be requested by the Hospital to effect the conveyance of such Non-
qualifying Receivables repurchased pursuant to this Section 4.4.
(b) Notwithstanding anything to the contrary in this Section 4.4,
the Hospital's obligation in respect of Receivables which are Non-qualifying
Receivables solely because the Applicable Contractual Adjustment on the
related Purchase Date was less than the Actual Contractual Adjustment shall be
to make available to Finco, by deposit in the Collateral Account in
immediately available funds, or by deduction from the Purchase Price payable
on such date, an amount equal to the difference between the Applicable
Contractual Adjustment as calculated on the Purchase Date and the Actual
Contractual Adjustment, and such Receivable shall not be repurchased by or
transferred to the Hospital from Finco. The deposit or deduction referred to
in the immediately preceding sentence shall be made by the Hospital (i) in the
case of any Receivable designated as a Financible Receivable on the Payment
Date therefor, on any Business Day that Finco shall request and (ii) in the
case of any Purchased Receivable that was not designated as a Financible
Receivable on the Payment Date therefor, on the Settlement Date next
succeeding the Purchase Date for such Receivable.
Section 4.5. Representations and Warranties of Finco. Finco
represents and warrants to the Hospital that, as of the Initial Closing Date
and as of each Purchase Date and each related Payment Date:
(a) Finco has been duly organized and is validly existing and in
good standing as a corporation under the laws of the State of Delaware, with
full corporate power and authority to own its properties and to transact the
business in which it is now engaged or in which it proposes to engage.
(b) The purchase by Finco of the Purchased Receivables pursuant to
this Agreement and the consummation of the transactions herein contemplated
will not conflict with, or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, lease, loan agreement or other agreement, instrument or undertaking to
which Finco is a party or by which it is bound or to which any of the property
or assets of Finco is subject, nor will such action result in any violation of
any applicable Requirement of Law; and no consent, approval, authorization,
order, registration or qualification of or with any Governmental Authority is
required for the purchase by Finco of the Purchased Receivables hereunder
except such as have been obtained.
(c) This Agreement has been duly authorized, executed and delivered
by Finco and constitutes the valid and legally binding obligation of Finco,
enforceable against Finco in accordance with its terms, subject as to
enforceability to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally, and to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
ARTICLE V
ADMINISTRATION AND COLLECTIONS
Section 5.1. Servicing. (a) In further consideration for Finco
entering into this Agreement with the Hospital, the Hospital agrees that it
shall undertake such obligations in connection with the servicing of the
Receivables as shall be delegated to it by the Servicer. In this connection,
the Hospital covenants and agrees that it will comply with all the agreements
made by the Servicer, and shall perform all the obligations undertaken by the
Servicer in Article III of the Servicing Agreement with respect to the
Purchased Receivables of such Hospital as if such agreements were set forth
herein as covenants of the Hospital and as if such obligations were directly
undertaken by the Hospital.
(b) In furtherance of Section 5.1(a), the Hospital agrees that it
will, in a timely manner, provide the Servicer with all information regarding
itself and its Receivables and other Transferred Property necessary for the
Servicer or that the Servicer has requested.
(c) The obligation of the Hospital to service the Receivables of
the Hospital is personal to the Hospital and the parties recognize that it
would be difficult for any other Person to perform such obligations.
Accordingly, the Hospital's obligation to service the Receivables of the
Hospital hereunder shall, to the extent permitted by applicable law, be
specifically enforceable and shall be absolute and unconditional in all
circumstances, including, without limitation, after the occurrence and during
the continuation of any Exclusion Event.
(d) The Hospital shall not resign from the obligations and duties
hereby imposed on it as servicer of the Receivables of the Hospital.
Section 5.2. Collections. (a) All Collections on account of Non-
governmental Receivables sold to Finco shall be deposited directly into the
Hospital Concentration Account or the Master Receivables Account on the date
of receipt thereof by the Hospital or the Servicer. The Hospital agrees to
require all Obligors in respect of Non-Governmental Receivables who make
payment in the form of electronic or wire transfers to make such payments
directly to the Master Receivables Account. All such Collections on account
of Non-governmental Receivables will be held in trust by the Hospital for the
benefit of Finco pending remittance to the Collateral Account. All
Collections on Non-governmental Receivables received by Finco or any of its
direct or indirect assignees shall be transferred by Finco or such assignee to
the Trustee for deposit in the Collateral Account.
(b) All Collections received by the Hospital or the Servicer on
account of Governmental Receivables sold to Finco shall be deposited directly
into the Hospital Concentration Account on the date of receipt thereof. The
Hospital agrees to require all Obligors in respect of Governmental Receivables
who make payment in the form of electronic or wire transfers to UHS, for the
benefit of the Hospital, to make such payments directly to the Master
Receivables Account. Except as provided in the preceding sentence, all
Collections on Governmental Receivables received by Finco or any of its direct
or indirect assignees shall be transferred to the Hospital payee for deposit
into the Hospital Concentration Account or the Master Receivables Account.
(c) In no event shall the Hospital deposit any Collections into any
account established, held or maintained by the Hospital or any other Person
other than the Hospital Concentration Account or the Master Receivables
Account or transfer such Collections other than in accordance with the
provisions of this Agreement. The Hospital and Finco hereby agree that all
available funds received in the Hospital Concentration Account shall be
transferred within one Business Day of receipt to the Master Receivables
Account. Amounts so transferred from the Hospital Concentration Account or
otherwise received in the Master Receivables Account prior to the close of
business on any Business Day shall be transferred at the close of business on
such Business Day to the Collateral Account. Amounts received in the Master
Receivables Account after the close of business on any Business Day or on any
day which is not a Business Day shall be transferred to the Collateral Account
on the next succeeding day. Amounts transferred to the Collateral Account
shall be applied in accordance with Article VII of the Pooling Agreement.
Section 5.3. Hospital's Obligations as Agent for the Servicer. The
Hospital and Finco expressly agree that the obligations of the Hospital under
Sections 5.1 and 5.2 hereof have been undertaken by the Hospital, to the
extent permitted by all Requirements of Law, solely as agent for Finco and the
Servicer and the Hospital hereby disavows any other interest in such
Collections or in any such funds collected on behalf of Finco or the Servicer
or transferred by the Hospital for deposit pursuant to this Article V.
Section 5.4. Claims Against Third Parties. The Hospital agrees
that it will continue to make and pursue claims on the Purchased Receivables
to the extent that any Requirement of Law or contractual provision requires
the Hospital to directly make and pursue such claims; provided that the
Hospital agrees that it is making and pursuing such claims for the benefit of
Finco, and that any funds received by the Hospital based on such claims will
be transferred in accordance with Section 5.2.
Section 5.5. Hospital Concentration Account. (a) The Hospital
has, prior to the execution and delivery of this Agreement, established a
deposit account with the Hospital's banking institution in the sole name of
the Hospital and for the benefit of the Hospital (such account, the "Hospital
Concentration Account") into which all Collections are to be deposited by the
Hospital by the close of business on each Business Day received, or on the
next Business Day if not received on a Business Day. The name, location and
account number of the Hospital Concentration Account is set forth on Schedule
V to this Agreement. The Hospital Concentration Account shall be maintained
with documentation and instructions in form and substance satisfactory to
Finco. Available amounts received in the Hospital Concentration Account in
respect of Collections shall be transferred within one Business Day to the
Collateral Account. The Hospital shall not (i) without 10 days' prior written
notice to Finco, change the Hospital Concentration Account or establish any
additional Hospital Concentration Account or (ii) change such instructions or
documentation at any time so long as Finco or any of its direct or indirect
assignees has any interest in the Hospital's Receivables.
(b) The Hospital agrees that it shall use its best efforts to
ensure that only Collections on Purchased Receivables are deposited into the
Hospital Concentration Account and the Master Receivables Account. Finco
agrees that, promptly following the establishment to the satisfaction of the
Hospital that any funds received in the Hospital Concentration Account or the
Master Receivables Account do not constitute Collections on Purchased
Receivables, including any payments on Receivables which have been reassigned
to the Hospital and any payments to the Hospital not in respect of
Receivables, Finco shall remit such funds to the Hospital in immediately
available funds. In the event that the Hospital is unable to determine
whether funds received by the Hospital or the Servicer constitute Collections
on Purchased Receivables, such funds shall be deposited in the Hospital
Concentration Account and applied in accordance with Section 5.2.
ARTICLE VI
TERMINATION OF PURCHASE COMMITMENT
Section 6.1. Exclusion Events. If any of the following events
occur (any such event, an "Exclusion Event"), Finco may give notice thereof
pursuant to Section 6.2, and Finco may exercise the remedies available to it
pursuant to Section 6.2:
(a) the Hospital shall fail to make any payment to be made by
it to any party to any of the Operative Documents when due; or the
Hospital shall fail to perform or observe any term, covenant or
agreement contained in Sections 4.3(e) through 4.3(i), Section
4.3(k), Sections 4.3(o) through 4.3(r) or Section 7.2 of this
Agreement;
(b) the Hospital shall default in the performance of any
agreement or undertaking hereunder (other than as provided in clause
(a) above) and such default shall continue for 30 days after written
notice thereof has been given to the Hospital by Finco; or
(c) any representation or warranty made by the Hospital in any
Hospital Document to which it is a party or in any certificate or
financial or other statement furnished pursuant to the terms of any
Operative Document (other than as provided in clauses (a) or (b)
above) shall prove to have been untrue or incomplete in any material
respect when made or deemed made and the Hospital shall fail to cure
such breach of representation, warranty or other statement within 15
days after written notice thereof has been given to the Hospital by
Finco; provided, however, that no breach of any representation or
warranty made by the Hospital under Section 4.2 as to any Receivable
on the related Purchase Date shall constitute an "Exclusion Event"
hereunder if the Hospital cures such breach in accordance with the
terms of Section 4.4 of this Agreement; or
(d) (i) the Hospital shall (A) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or the
like of itself or of its property, (B) admit in writing its
inability to pay its debts generally as they become due, (C) make a
general assignment for the benefit of creditors, (D) be adjudicated
a bankrupt or insolvent or (E) commence a voluntary case under the
federal bankruptcy laws of the United States of America or file a
voluntary petition or answer seeking reorganization, an arrangement
with creditors or an order for relief or seek to take advantage of
any insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or take any corporate action
for the purpose of effecting any of the foregoing; or (ii) without
the application, approval or consent of the Hospital, a proceeding
shall be instituted in any court of competent jurisdiction under any
law relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking in respect of the Hospital, an order for relief or
an adjudication in bankruptcy, reorganization, dissolution, winding
up or liquidation, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or the like of the Hospital or of all or any
substantial part of the Hospital's assets, or other like relief in
respect thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Hospital in good faith, the
same shall (A) result in the entry of an order for relief or any
such adjudication or appointment or (B) continue undismissed, or
pending and unstayed, for any period of sixty (60) consecutive days;
or
(e) (i) obligations of the Hospital or any of its Subsidiaries
in respect of Debt in excess of $1,000,000 in the aggregate shall be
declared to be or shall become due and payable prior to the stated
maturity thereof, (ii) principal payments in excess of $1,000,000 in
the aggregate in respect of any Debt of the Hospital shall not be
paid when due or (iii) any judgment or judgments for the payment of
money in an aggregate amount in excess of $500,000 shall have been
rendered against the Hospital and the same shall have remained
unsatisfied and in effect for any period of 30 consecutive days
during which no stay of execution shall have been obtained; or
(f) there shall have occurred an Early Amortization Event; or
(g) UHS shall cease to (i) have the power to control the board
of directors or other managing body of the Hospital, (ii) operate
the Hospital, (iii) own, directly or indirectly, through one or more
wholly-owned Subsidiaries, at least sixty percent (60%) of the
outstanding capital stock or other ownership interests of the
Hospital, (iv) any such capital stock or ownership interests shall
be subject to any Lien, charge, pledge or encumbrance (other than
(A) Liens for taxes which are not then due and payable or which are
being contested in good faith through appropriate proceedings and
with respect to which reserves in conformity with GAAP have been
provided on the books of the Hospital or (B) any Lien of any
Financial institution securing Debt of UHS and its subsidiaries) or
(v) any pledgee of any such stock of the Hospital pledged as
collateral pursuant to clause (ii) shall take any action to realize
upon such collateral; or
(h) (i) the Hospital or any Commonly Controlled Entity shall
engage in any Prohibited Transaction (as defined in Section 406 of
ERISA or Section 4975 of the Code) involving any Plan, (ii) any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan,
(iii) a Reportable Event shall occur with respect to, or proceedings
shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment
or a trustee is, in the reasonable opinion of Finco, likely to
result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA, (v) the Hospital or any Commonly Controlled
Entity shall, or in the reasonable opinion of Finco is likely to,
incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist, with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if
any, could subject the Hospital or any of its Subsidiaries, to any
tax, penalty or other liabilities in the aggregate material in
relation to the business, operations, property or financial or other
condition of the UHS Entities taken as a whole; or
(i) there shall have occurred any other circumstance which
could, in the sole judgement of Finco have a material adverse impact
on the validity or enforceability of this Agreement or any Operative
Document or on the enforceability or collectibility (other than as a
result of the credit quality of any Obligor) of the Purchased
Receivables or the value of the related Transferred Property; or
(j) a Voluntary Exclusion Event with respect to the Hospital
shall have occurred.
Section 6.2. Remedies. (a) If any Exclusion Event shall have
occurred and be continuing, Finco, by notice in writing given to the Hospital,
may do any or all of the following: (i) continue to purchase Receivables in
accordance with this Agreement except that Finco shall only pay for Purchased
Receivables with Subordinated Notes, (ii) notify the Servicer that such
Purchased Receivables are Excluded Receivables or (iii) cease purchasing
Receivables from the Excluded Hospital, and the Excluded Hospital hereby
agrees to any and all such remedies taken by Finco; provided, however that if
an Exclusion Event described in Section 6.1(d) shall have occurred and be
continuing, then the obligation of Finco to acquire Receivables shall
immediately terminate without written notice and without presentment, demand,
protest, notice of protest or dishonor or any other notice of any other kind,
all of which are hereby expressly waived by the Hospital.
(b) If an Exclusion Event described in Section 6.1(d) shall have
occurred or if Finco ceases to acquire Receivables from the Hospital pursuant
to Section 6.2(a)(iii), then the obligation of the Hospital to continue to
sell Receivables to Finco shall also immediately terminate and all Collections
thereafter received from each Obligor in respect of the Purchased Receivables
for which such Obligor is obligated to make payments shall be applied to the
Purchased Receivables to which such payments relate.
(c) Notwithstanding the occurrence of any Exclusion Event and the
remedies elected by Finco in respect thereof, if the Hospital thereafter
(i) cures all Exclusion Events at such time continuing and (ii) complies, in
the sole judgment of Finco, with all of the terms and conditions of this
Agreement for a period of 60 consecutive days during which no Exclusion Event
shall have occurred, then, upon the Hospital's provision of all documentation
required, in the sole judgment of Finco, to demonstrate such compliance, the
Hospital shall cease to be an Excluded Hospital and Finco shall resume
purchasing Receivables from the Hospital in accordance with the terms of this
Agreement; provided, however, that in no event shall any Receivables which
were Excluded Receivables be deemed to be Eligible Receivables.
(d) If for any reason (i) the transfer of the Transferred Property
is not considered a sale and (ii) an Exclusion Event shall have occurred, in
addition to all other rights and remedies granted to it under this Agreement
and in any other instrument or agreement securing, evidencing or relating to
the rights and remedies hereunder, and by operation of law, Finco shall have
all rights and remedies of a secured party under the UCC (and under any other
applicable law). Without limiting the generality of the foregoing, and
subject to the provisions of Section 8.9 and to the terms and conditions of
the Pooling Agreement, Finco, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Hospital or any other Person
(all and each of which demands, defenses, advertisements and notices are
hereby waived to the extent permitted by applicable law), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Transferred Property, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and
deliver the Transferred Property or any part thereof (or contract to do any of
the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of Finco or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. To the extent permitted by applicable law, the Hospital waives
all claims, damages and demands it may acquire against each of Finco, its
direct and indirect assignees and each of their respective directors,
officers, employees and Affiliates arising out of the exercise by any of them
of any rights under this Section 6.2(d). If any notice of a proposed sale or
other disposition of the Transferred Property shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition.
(e) Notwithstanding any Exclusion Event, Finco shall continue to
maintain its interest in all Purchased Receivables. Subject to Section 4.4,
all amounts received as payments on Purchased Receivables will continue to be
paid by the Hospital to Finco for application in accordance with Article V.
In the event that the Hospital shall, after any Exclusion Event, receive
payments from any Obligor which is an Obligor with respect to both Purchased
Receivables and Receivables not purchased under this Agreement, to the extent
that the Servicer is unable to determine the specific Receivables to which
such payments relate, the Hospital shall apply all such amounts first to the
Outstanding Balance of such Obligor's Purchased Receivables, in the order such
Purchased Receivables were created, until such Purchased Receivables have been
paid in full.
ARTICLE VII
INDEMNIFICATION AND EXPENSES
Section 7.1. Indemnities by the Hospital. Without limiting any
other rights which Finco may have hereunder or under applicable law, the
Hospital hereby agrees to indemnify each of Finco, its direct and indirect
assignees and each of their respective officers, directors, employees and
Affiliates (collectively, the "Indemnified Parties") from and against any and
all damages, losses (other than loss of profit), claims, actions, suits,
judgments, demands, taxes, liabilities (including liabilities for penalties)
and out-of-pocket costs and expenses, including without limitation, reasonable
attorneys' fees and expenses but excluding costs and expenses attributable to
administrative overhead (all of the foregoing being collectively referred to
as "Indemnified Amounts"), awarded against or incurred by any of them arising
out of or as a result of this Agreement, the other Hospital Documents or
Finco's ownership of any Transferred Property or its assignment thereof
pursuant to Section 8.9, excluding, however, Indemnified Amounts resulting
from gross negligence or willful misconduct on the part of the Indemnified
Party to which such Indemnified Amounts would otherwise be due. Without
limiting the generality of the foregoing, the Hospital shall indemnify the
Indemnified Parties for Indemnified Amounts relating to or resulting from:
(i) the transfer of any Non-qualifying Receivable;
(ii) any set-off or adjustment applied by any Obligor against any
Non-governmental Receivable conveyed to Finco whether or not the amount
of such set-off or adjustment was reflected in the Offset Reserves on the
Purchase Date relating to such Purchased Receivable;
(iii) reliance on any representation or warranty made by the Hospital
(or any of its Authorized Officers) under or in connection with this
Agreement, and any information or report delivered by the Hospital
pursuant hereto, which shall have been false or incorrect in any material
respect when made or deemed made;
(iv) the failure by the Hospital to comply with any Requirement of
Law with respect to any Purchased Receivable or the related Transferred
Property, or the nonconformity of any Purchased Receivable or the related
Transferred Property with any Requirement of Law;
(v) the failure to take all actions which would be required to
maintain in favor of Finco a valid, perfected, first priority security
interest in and Lien on the Purchased Receivables and related Transferred
Property, together with all Collections and Outstanding Balances related
to such Receivables, free and clear of any Lien whether existing at the
Initial Closing Date or at any time thereafter;
(vi) the failure to file, record, deliver or receive in a timely
manner all Security Filings, including without limitation, financing
statements or other similar instruments or documents required under the
UCC in effect in the state in which the Hospital's place of business is
located or under other applicable laws with respect to any Purchased
Receivables;
(vii) any failure of the Hospital to perform its duties or
obligations in accordance with the provisions of this Agreement or the
other Hospital Documents; or
(viii) the administration or enforcement of this Agreement by Finco or
any of its direct or indirect assignees.
Section 7.2. Audits of Hospital, Etc.
(a) The Hospital shall immediately, but in no event later than five
Business Days thereafter, notify Finco (i) of any Deficiency Notice received
by it and (ii) of any preliminary or final determination resulting from any
audit relating to it or the Receivables generated by it (including, without
limitation, any "audit exception" to such determination), or any other
investigation, by HHS or any other Governmental Authority or any intermediary
thereof (any of the preceding, an "Audit").
(b) If, as a result of any Audit, any Governmental Authority or any
intermediary thereof determines that the Hospital shall owe any amounts, (i)
to the extent possible, the Hospital shall not permit any claims or
adjustments resulting from the Audit to be applied as set-offs or adjustments
to the Purchased Receivables and (ii) to the extent any claims or adjustments
resulting from any Audit are applied against any Purchased Receivables, the
Hospital shall immediately pay to the Hospital Concentration Account the
amount so set-off or adjusted as Collections in respect of the Purchased
Receivables.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Notices, Etc. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto shall be in writing and shall be personally delivered or sent by
registered, certified or express mail, postage prepaid, return receipt
requested, or by telecopy (with voice confirmation thereof) or telegram (with
messenger delivery specified in the case of a telegram) and shall be deemed to
be given when such personal delivery is made or such return receipt or
confirmation is received by the party giving such notice, demand, instruction
or communication. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section, notices, demands,
instructions and other communications in writing shall be given to or made
upon the respective parties hereto at their respective addresses (or to their
respective telecopy numbers) indicated below, and, in the case of telephonic
instructions or notices, by calling the telephone number or numbers indicated
for such party below:
If to the Hospital:
At the location set forth in Schedule I hereto.
If to Finco:
UHS Receivables Corp.
27292 Calle Arroyo, Suite B
San Juan Capistrano, California 92675
Attention: President
Tel. No.: 714-661-9323
Telecopier No.: 714-661-9445
With a copy to:
UHS Receivables Corp.
c/o Universal Health Services, Inc.
Universal Corporate Center
367 South Gulph Road
King of Prussia, Pennsylvania 19406
Attention: General Counsel
Tel. No.: 215-768-3300
Telecopier No.: 215-768-3318
Section 8.2. Successors and Assigns. This Agreement shall be
binding upon the Hospital and Finco and their respective successors and
assigns and shall inure to the benefit of the Hospital and Finco and their
respective successors and assigns; provided that the Hospital shall not assign
any of its rights or obligations hereunder without the prior written consent
of Finco. Except as expressly permitted hereunder or in the other Operative
Documents, Finco shall not assign any of its rights or obligations hereunder
without the prior written consent of the Trustee.
Section 8.3. Severability. Any provisions of this Agreement which
are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 8.4. Amendments. This Agreement may not be modified,
amended, waived, supplemented or surrendered except pursuant to a written
instrument executed by the Hospital and Finco, and then such amendment,
supplement, waiver or consent shall be effective only in the specific instance
and for the specific purpose given. If any amendment, modification,
supplement or waiver shall be so consented to by Finco, the Hospital agrees,
promptly following a request by Finco, to execute and deliver in its own name
and at its own expense, such instruments, consents and other documents as
Finco may deem necessary or appropriate in the circumstances. Notwithstanding
anything in this Section 8.4, no amendment shall be entered into if such
amendment would, in the aggregate, adversely affect the interests of Finco.
Section 8.5. The Hospital's Obligations. It is expressly agreed
that, anything contained in this Agreement to the contrary notwithstanding,
the Hospital shall be obligated to perform all of its obligations under the
Receivables to the same extent as if Finco had no interest therein and Finco
shall have no obligations or liability under the Receivables or the
Transferred Property to any Obligor thereunder by reason of or arising out of
this Agreement, nor shall Finco be required or obligated in any manner to
perform or fulfill any of the obligations of the Hospital under or pursuant to
any Receivables.
Section 8.6. No Recourse. (a) No directors, officers, employees
or agents of the Hospital shall be under any liability to Finco or any other
Person for any action of the Hospital hereunder pursuant to this Agreement;
provided, however, that this provision shall not protect the Hospital or any
such Person against any liability which would otherwise be imposed by reason
of willful misfeasance, bad faith or gross negligence in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
(b) Except as expressly provided in this Agreement, the Hospital
shall have no liability for the payment of the Purchased Receivables in excess
of the Collections and amounts deemed Collections on all Purchased
Receivables. The preceding sentence shall not relieve the Hospital or UHS
from any obligations hereunder or under the Guarantee with respect to its
respective representations, warranties, covenants and other payment and
performance obligations herein or therein described.
Section 8.7. Further Assurances. The Hospital agrees to do such
further acts and things and to execute and deliver to Finco such additional
assignments, agreements, powers and instruments as are required by Finco to
carry into effect the purposes of this Agreement or to better assure and
confirm unto Finco its rights, powers and remedies hereunder.
Section 8.8. Survival. Notwithstanding any termination of this
Agreement (whether on account of an Exclusion Event or otherwise) and subject
to Section 6.2, and without limiting the survival of any other obligation of
the Hospital or Finco hereunder, (i) all representations and warranties of the
Hospital and Finco shall survive the execution and delivery of this Agreement,
(ii) all of the rights and obligations of the parties (A) under Article VII,
shall survive such termination and (B) under any other provision hereof, shall
survive such termination as long as any Purchased Receivable is an Outstanding
Receivable and (iii) the Hospital shall continue to be obligated to do all
things necessary to collect on all Uncollectible Receivables and to apply
Collections that it receives with respect thereto in the manner provided in
this Agreement and to perform its obligations hereunder with respect thereto.
Section 8.9. Consent to Assignment; Third Party Beneficiaries.
(a) The Hospital acknowledges that all of Finco's right, title and interest
in (i) the Purchased Receivables and related Transferred Property and (ii) the
obligations of the Hospital to Finco and the rights of Finco against the
Hospital under this Agreement with respect to the Transferred Property have
been assigned, transferred and otherwise conveyed by Finco to the Trustee, for
the benefit of the Participants, pursuant to the terms and conditions of the
Pooling Agreement. It is understood, agreed and acknowledged that Sheffield
shall assign to the Liquidity Agent, for the benefit of the Liquidity Banks,
all of Sheffield's right, title and interest in, to and under this Agreement
and in the Transferred Property. The Hospital consents to such assignment by
Finco to the Trustee, and by Sheffield to the Liquidity Agent, and agrees that
the Trustee and the Participants (or upon notice by Sheffield or the Liquidity
Agent of a default under the Liquidity Agreement or the Security Agreement,
and to the extent provided in the Pooling Agreement, the TRIPS Holders and the
Liquidity Agent) shall be entitled to enforce the terms of this Agreement and
the rights and responsibilities of Finco directly against the Hospital,
whether or not any Early Amortization Event or Exclusion Event shall have
occurred. The Hospital further agrees that (i) it will not take any action in
connection with the Receivables or which could affect the rights of Finco
hereunder (other than those actions which are consistent with its obligations
hereunder and which occur in the normal course of its operations) without the
prior consent of the Trustee or the Participants (or the TRIPs Holders and the
Liquidity Agent, as the case may be) and (ii) in respect of its obligations
hereunder, the Hospital will act at the direction of and in accordance with
all requests and instructions from the Trustee or the Participants (or the
TRIPs Holders and the Liquidity Agent, as the case may be). The Hospital and
Finco hereby agree that, in the event of any conflict of requests or
instructions to the Hospital between Finco on the one hand, and the Trustee or
the Participants (or the TRIPs Holders and the Liquidity Agent, as the case
may be) on the other hand, the Hospital will at all times act in accordance
with the requests and instructions of the Trustee or the Participants (or the
TRIPs Holders and the Liquidity Agent, as the case may be), and in the event
of any conflict of requests or instructions among Participants, Finco shall
act in accordance with the instructions of the Trustee. The Hospital and
Finco further agree that, in the event of any conflict of requests or
instructions to the Hospital between Sheffield on the one hand and the
Liquidity Agent on the other hand, the Hospital will at all times act in
accordance with the requests and instructions of the Liquidity Agent.
(b) Notwithstanding anything in Section 8.9(a) to the contrary, and
without limitation upon the rights and obligations of the parties set forth in
such Section, each of the Interested Parties shall have the rights of third-
party beneficiaries hereunder.
(c) Each of Finco and the Hospital acknowledges that Sheffield has
appointed Barclays to act as Managing Agent. Unless otherwise instructed by
Sheffield, copies of all notices, requests, demands and other documents to be
delivered to Sheffield pursuant to the terms hereof shall be delivered to the
Managing Agent. Unless otherwise instructed by Sheffield, all notices,
requests, demands and other documents to be executed or delivered, and any
action to be taken, by Sheffield pursuant to the terms hereof may be executed,
delivered and/or taken by the Managing Agent. The rights and responsibilities
of the Managing Agent under this Agreement with respect to any action taken by
the Managing Agent or the exercise or non-exercise by the Managing Agent of
any option, right, request, judgment or other right or remedy provided to
Sheffield herein or resulting or arising out of this Agreement shall, as
between the Managing Agent and Sheffield be governed by such agreements with
respect thereto as may exist from time to time between them, but, as between
the Managing Agent and the Hospital, the Managing Agent shall be conclusively
presumed to be acting as agent for Sheffield with full and valid authority so
to act or refrain from acting, and neither Finco nor the Hospital shall be
under any obligation or entitlement to make any inquiry respecting such
authority.
Section 8.10. Counterparts. This Agreement may be executed by the
Hospital and Finco on the same or separate counterparts, each of which shall
be deemed to be an original instrument.
Section 8.11. Headings. Section headings used in this Agreement
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
Section 8.12. No Bankruptcy Petition Against Finco or Sheffield.
The Hospital covenants and agrees that prior to the date which is one year and
one day after the Aggregate Capital is reduced to zero and all other amounts
due under or in connection with the Operative Documents are paid in full it
will not institute against, or join any other Person in instituting against,
Finco or Sheffield any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law.
Section 8.13. Finco May Act Through Agents. Finco may exercise any
of its rights or perform any of its duties hereunder through agents of its
choosing, and any action so taken shall have the same force and effect as if
taken by Finco directly.
Section 8.14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE
STATE OF NEW YORK WITHOUT REFERENCE TO CONFLICTS OF LAW RULES OF THE STATE OF
NEW YORK; PROVIDED THAT ALL MATTERS RELATING TO THE PERFECTION AND PRIORITY OF
THE OWNERSHIP OR SECURITY INTEREST GRANTED HEREIN IN THE RECEIVABLES AND
TRANSFERRED PROPERTY OF THE HOSPITAL SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE WHERE THE HOSPITAL IS
LOCATED.
Section 8.15. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of Finco, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
Section 8.16. SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL; SERVICE OF PROCESS. (a) THE HOSPITAL (FOR ITSELF AND ITS RESPECTIVE
SUCCESSORS AND ASSIGNS) HEREBY IRREVOCABLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW YORK AND
TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING
ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER HOSPITAL DOCUMENTS OR
THE SUBJECT MATTER HEREOF OR THEREOF BROUGHT BY FINCO OR ANY OF ITS DIRECT OR
INDIRECT ASSIGNEES. THE HOSPITAL (FOR ITSELF AND ITS RESPECTIVE SUCCESSORS
AND ASSIGNS), TO THE EXTENT PERMITTED BY ANY REQUIREMENTS OF LAW, HEREBY (A)
WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT,
ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-
NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR
EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR THE OTHER HOSPITAL DOCUMENTS OR THE SUBJECT MATTER HEREOF OR
THEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT AND (B) WAIVES THE RIGHT TO
ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY SET-OFFS OR COUNTERCLAIMS
EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE ARISE FROM THE SAME
SUBJECT MATTER. THE HOSPITAL HEREBY AGREES THAT SERVICE OF PROCESS AND OTHER
DOCUMENTS ON THE HOSPITAL MAY BE EFFECTED BY CERTIFIED OR REGISTERED MAIL (OR
ANY SUBSTANTIALLY SIMILAR FORM OF MAIL) TO ITS ADDRESS AS SET FORTH ON
SCHEDULE I AND SUCH SERVICE SHALL CONSTITUTE VALID AND EFFECTIVE SERVICE
AGAINST THE HOSPITAL. THE HOSPITAL AGREES THAT ITS SUBMISSION TO JURISDICTION
AND CONSENT TO SERVICE OF PROCESS BY MAIL IN ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION
(A) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF
WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF INDEBTEDNESS
OR LIABILITY THEREIN DESCRIBED OR (B) IN ANY OTHER MANNER PROVIDED BY OR
PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT FINCO
OR ANY DIRECT ASSIGNEE MAY AT ITS OPTION BRING SUIT OR INSTITUTE OTHER
JUDICIAL PROCEEDINGS AGAINST THE HOSPITAL OR ANY OF ITS RESPECTIVE ASSETS IN
ANY STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE
WHERE THE HOSPITAL OR SUCH ASSETS MAY BE FOUND.
(b) EACH OF FINCO AND THE HOSPITAL (AND THEIR RESPECTIVE SUCCESSORS
AND ASSIGNS) HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT OR THE OTHER HOSPITAL DOCUMENTS.
(c) THIS SECTION 8.16 SHALL SURVIVE THE TERMINATION OF THIS
AGREEMENT.
Section 8.17. UCC. Finco and the Hospital hereby agree that each
sale hereunder, to the extent permitted by all Requirements of Law, is
intended to be, for all purposes of New York law, a "sale of accounts" (as
that term is used in Section 9-102(1)(b) of the New York UCC).
Section 8.18. Execution; Effectiveness. (a) This Agreement shall
constitute a two-party agreement between Finco on the one hand and the
hospital company designated on any signature page hereto (in respect of the
hospital indicated as the d/b/a on such signature page) on the other hand.
This Agreement shall become effective on the date on which counterparts of
such signature page shall have been executed and delivered by each of Finco
and such hospital company. To the extent any Schedule referred to in this
Agreement designates information applicable to a particular Hospital, only
such portion of such Schedule shall be deemed to be delivered by such Hospital
and no other portion of such Schedule shall be deemed to be part of the
Agreement between Finco and such Hospital. To the extent that the information
in any Schedule does not specify which Hospital to which such information
applies, such information shall be deemed to be delivered initially by each
Hospital; provided that Finco and each such Hospital may amend the information
on any such Schedule without affecting the information on such Schedule deemed
to be delivered by any other Hospital. All references to the "Hospital", this
"Agreement" or this "Sale and Servicing Agreement" or to any Schedule hereto
shall be deemed to be a reference to the hospital company executing such
signature page, to the agreement between Finco and such hospital company and
to the Schedules or portions thereof deemed to be delivered by such hospital
company only, without regard to any Sale and Servicing Agreement or schedules
executed and delivered by any other hospital company.
(b) Any amendment, supplement or other modification of the terms,
covenants and conditions contained herein approved by Finco and any Hospital
in accordance with the terms of Section 8.4 shall be effective only as between
Finco and such Hospital and shall have no effect on such terms, covenants and
conditions as they apply to any Sale and Servicing Agreement between Finco and
any other Hospital.
IN WITNESS WHEREOF, each of the Hospital and Finco have caused this
Sale and Servicing Agreement to be duly executed and delivered by its duly
authorized officer on the date indicated below.
Date: November 16, 1993
CHALMETTE GENERAL HOSPITAL, INC.
DALLAS FAMILY HOSPITAL, INC.
DEL AMO HOSPITAL, INC.
HRI HOSPITAL, INC.
LA AMISTAD RESIDENTIAL TREATMENT CENTER,
INC.
MCALLEN MEDICAL CENTER, INC.
MERIDELL ACHIEVEMENT CENTER, INC.
RIVER OAKS, INC.
TURNING POINT CARE CENTER, INC.
UHS OF ARKANSAS, INC.
UHS OF AUBURN, INC.
UHS OF BELMONT, INC.
UHS OF MASSACHUSETTS, INC.
UHS OF RIVER PARISHES, INC.
UHS OF SHREVEPORT, INC.
UNIVERSAL HEALTH SERVICES OF
INLAND VALLEY, INC.
UNIVERSAL HEALTH SERVICES OF NEVADA, INC.
VICTORIA REGIONAL MEDICAL CENTER, INC.
WELLINGTON REGIONAL MEDICAL
CENTER INCORPORATED
By:__________________________
Kirk E. Gorman
Treasurer
SPARKS RENO PARTNERSHIP L.P.
By: Sparks Family Hospital,
Inc., General Partner
By:__________________________
Kirk E. Gorman
Treasurer
UHS RECEIVABLES CORP.
By:__________________________
Cheryl Ramagano
Vice President and
Treasurer
EXHIBIT A TO
SALE AND SERVICING
AGREEMENT
UHS RECEIVABLES CORP.
NON-NEGOTIABLE SUBORDINATED NOTE
___________ __, 1993
For value received, UHS Receivables Corp., a Delaware corporation
("Finco"), promises to pay (but only on a subordinated basis and to the extent
of Available Cash, as defined below), to the order of ______________________
(the "Hospital"), the principal amounts indicated on Schedule A attached
hereto on the dates shown on such schedule (subject to the terms hereof).
This Subordinated Note shall be due and payable on the Trust Termination Date,
but may be prepaid at any time without premium. Capitalized terms used herein
without definition shall have the meanings set forth in the Definitions List,
dated as of November 16, 1993, 1993 that refers to the Sale and Servicing
Agreement, dated as of November 16, 1993 (as amended, supplemented, or
otherwise modified from time to time, the "Sale and Servicing Agreement"),
between Finco and the Hospital. This Subordinated Note is subject to the
terms and conditions of the Sale and Servicing Agreement.
Finco further promises to pay interest on the unpaid principal
hereof from the dates specified in the schedule attached hereto at the annual
fixed rate or rates specified therein (but only on a subordinated basis and to
the extent of Available Cash from time to time) and payable on each
anniversary of the date of this Subordinated Note to the extent funds are
available therefor (subject to the terms hereof) until such principal shall
have been paid in full; provided, however, that the interest rate or rates
shall not be in excess of the Base Rate applicable from time to time.
All payments of principal hereof and interest hereon shall be made
in Dollars and in immediately available funds.
The Hospital agrees that it shall not sell, transfer, assign,
negotiate or pledge its rights under this Subordinated Note to any third
party; provided that if the Hospital shall cease to be a Subsidiary of UHS,
the Hospital shall assign this Subordinated Note to another Hospital or to
UHS.
Notwithstanding any provision to the contrary in this Subordinated
Note or elsewhere, no demand for the payment of principal or interest may be
made hereunder, no principal or interest shall be due with respect hereto and
the Hospital shall have no claim for the payment of any principal or interest,
except to the extent that Finco, pursuant to the terms and conditions of the
Pooling Agreement, holds and owns cash ("Available Cash") free and clear of
any lien, claim, encumbrance or obligation to make payments under the Sale and
Servicing Agreement, and free and clear of any lien, claim, encumbrance or
obligation under any similar agreement hereafter entered into by Finco
including, without limitation, to the extent provided under the terms of the
Pooling Agreement and in any event only to the extent such payments are
provided for in the Pooling Agreement.
The Hospital understands and agrees that the obligations of Finco
under this Subordinated Note are subordinated in right of payment to the prior
payment in full of the Participations and all of the other obligations of
Finco under the Finco Documents.
The Hospital further understands that the Hospital shall have no
recourse to any assets or property of Finco or any assignee thereof other than
Available Cash and further agrees that in the event of any assignment for the
benefit of creditors, marshalling of assets dissolution, winding up or
liquidation of Finco, whether voluntary or involuntary, in bankruptcy or
insolvency or other similar proceedings, the obligations of Finco to pay
principal and interest on this Subordinated Note shall remain fully
subordinated and may not be accelerated, claimed or proved.
In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, the Hospital shall receive any
payment or distribution on this Subordinated Note from any source other than
Available Cash, such payment shall be received and held in trust by the
Hospital for the benefit of Finco and its assignees and shall be paid over to
the Trustee by the Hospital.
The Hospital covenants and agrees that prior to the date which is
one year and one day after the Aggregate Capital is reduced to zero it will
not institute against, or join any other Person in instituting against, Finco
or Sheffield any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law.
Finco may prepay all or any portion of this Subordinated Note on any
Business Day out of Available Cash only to the extent and in the manner
provided under the Pooling Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SUBORDINATED NOTE
OR ELSEWHERE, NO AMOUNTS OTHERWISE PAYABLE TO THE HOSPITAL BY FINCO UNDER THIS
NOTE OR THE SALE AND SERVICING AGREEMENT SHALL BE DUE OR PAYABLE TO THE
HOSPITAL IF IT IS AN EXCLUDED HOSPITAL PURSUANT TO THE SALE AND SERVICING
AGREEMENT, AND NO INTEREST SHALL BE DUE OR PAYABLE ON ANY AMOUNTS OTHERWISE
DUE OR PAYABLE UNDER THIS SUBORDINATED NOTE FOR ANY PERIOD THAT THE HOSPITAL
IS AN EXCLUDED HOSPITAL.
This Subordinated Note shall be deemed to have been made under and
shall be governed by and construed in accordance with the laws of the state of
New York.
IN WITNESS WHEREOF, Finco has caused this Subordinated Note to be
duly executed on the date first above written.
UHS RECEIVABLES CORP.
By:___________________________
Authorized Officer
Schedule A to
Subordinated Note
Interest Rate: 4%
Principal Principal Unpaid
Amount Amount Principal Notation
Date of Loan Repaid Balance Made By
EXHIBIT B TO SALE
AND SERVICING AGREEMENT
FORM OF CONFIDENTIALITY AGREEMENT
[Letterhead of RECIPIENT of Information]
___________ __, 199_
UHS Receivables Corp.
27292 Calle Arroyo
Suite B
San Juan Capistrano, CA 92675
Universal Health Services, Inc.
Universal Corporate Center
367 South Gulph Road
King of Prussia, PA 19406
Dear Sirs:
Reference is made to the Sale and Servicing Agreement, dated as of
November 16, 1993 (as amended from time to time, the "Sale and Servicing
Agreement"), UHS Receivables Corp., a Delaware corporation (the "Transferor"),
and [Hospital] (the "Hospital"), and to the pending and proposed discussions
between the Transferor and [recipient] (the "Recipient") regarding [describe
transaction requiring disclosure]. Unless otherwise defined herein,
capitalized terms defined in the Sale and Servicing Agreement are used herein
as so defined.
Pursuant to our discussions, the Transferor hereby agrees to provide
to the Recipient certain information, practices, books, correspondence, and
records of a confidential nature and in which the Hospital has a proprietary
interest (the "Information") on the terms and conditions set forth below. By
its execution of this Agreement, the Recipient hereby agrees to all such terms
and conditions.
The Recipient hereby acknowledges that all Information received by
it from the Transferor shall be regarded as confidential information and that
the Information may be subject to laws, rules and regulations regarding
patient confidentiality.
The Recipient agrees that, subject to the following sentence, (i) it
shall, and shall cause its employees, agents and representatives to, retain in
confidence and not disclose the Information without the prior written consent
of the Transferor and (ii) it will not, and will ensure that its employees,
agents and representatives will not, make any use whatsoever (other than for
the purposes contemplated by the Sale and Servicing Agreement and the other
Operative Documents or for the enforcement of any of the rights granted
thereunder) of any of the Information without the prior written consent of the
Transferor. Notwithstanding the foregoing, the Recipient may (x) disclose
Information to any Person that has executed and delivered a confidentiality
agreement in substantially the same form as this agreement naming the
Transferor and the Hospital as third party beneficiaries thereof and (y)
disclose or otherwise use Information (A) to the extent that such Information
is required or appropriate in any report, statement or testimony submitted to
any municipal, state or federal regulatory body having or claiming to have
jurisdiction over the Recipient or submitted to the National Association of
Insurance Commissioners or similar organizations or their successors, (B) to
the extent such Information is required in response to any summons or subpoena
or in connection with any litigation, (C) to the extent that such Information
is believed to be required in order to comply with any law, order, regulation
or ruling applicable to the Recipient, (D) to the extent that such Information
was publicly available or otherwise known to the Recipient at the time of
disclosure, (E) to the extent that such Information subsequently becomes
publicly available, other than through any act or omission of the Recipient or
(F) to the extent that such Information subsequently becomes known to the
Recipient, other than through a Person whom the Recipient knows to be acting
in violation of its obligations to the Transferor or the Hospital.
The parties agree that any breach of this letter agreement would
cause damages which cannot be determined in money and that injunction is an
appropriate remedy for breach, though not necessarily the sole remedy.
This Agreement shall inure to the benefit of the parties hereto,
each of their respective successors and permitted assigns and the Hospital,
and the Hospital will be deemed to be a third party beneficiary of this
Agreement.
This Agreement shall be governed by, and construed in accordance
with the law of the State of New York, and may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one agreement.
Please acknowledge your agreement to the foregoing by signing three
copies of this letter agreement and returning them to the Transferor. Upon
receipt of the executed letter agreement, the Transferor pursuant to the terms
of the Sale and Servicing Agreement, will deliver an executed agreement to UHS
and the Hospital.
Very truly yours,
[RECIPIENT]
By:_________________________
Title:
Acknowledged and Agreed:
UHS Receivables Corp.
27292 Calle Arroyo
Suite B
San Juan Capistrano, CA 92675
By:____________________________
Title:
cc: [Hospital Name]
[Address]
SCHEDULE I
Hospital and UHS place of business
List of Insurers
UCCs Filed
A. Locations of Hospital and UHS place of business s
Name Place of business
Universal Health Services, Inc. 367 South Gulph Road
King of Prussia, PA 19406
Chalmette General Hospital, Inc. 9001 Patricia Street
Chalmette, LA 70043
and
800 Virtue Street
Chalmette, LA 70043
Dallas Family Hospital, Inc. 2929 South Hampton Road
Dallas, TX 75224
Del Amo Hospital, Inc. 23700 Camino del Sol
Torrance, CA 90505
HRI Hospital, Inc. 227 Babcock Street
Brookline, NM 02146
La Amistad Residential Treatment 201 Alpine Drive
Center, Inc. Maitland, FL 32751
McAllen Medical Center, Inc. 301 West Expressway 83
McAllen, TX 78503
Meridell Achievement Center, Inc. Highway 29 West
Liberty Hill, TX 78642
and
2501 Cypress Creek Road
Cedar Park, TX 78613
River Oaks, Inc. 1525 River Oaks Road West
New Orleans, LA 70123
Sparks Reno Partnership, L.P. 2375 E. Prater Way
Sparks, NV 89434
Turning Point Care Center, Inc. 319 East By-Pass
Moultrie, GA 31768
UHS of Arkansas, Inc. 21 BridgeWay Road
North Little Rock, AR 72118
UHS of Auburn, Inc. 20 Second Street, N.E.
Auburn, WA 98002
UHS of Belmont, Inc. 4058 West Melrose Street
Chicago, IL 60641
UHS of Massachusetts, Inc. 49 Robinwood Avenue
Boston, MA 02130
UHS of River Parishes, Inc. 500 Rue de Sante
LaPlace, LA 70068
UHS of Shreveport, Inc. 1130 Louisiana Avenue
Shreveport, LA 71101
Universal Health Services 36485 Inland Valley Drive
of Inland Valley, Inc. Wildomar, CA 92395
Universal Health Services of 620 Shadow Lane
Nevada, Inc. Las Vegas, NV 89106
Victoria Regional Medical 101 Medical Drive
Center, Inc. Victoria, TX 77904
Wellington Regional Medical 10101 Forest Hill Blvd.
Center Incorporated West Palm Beach, FL 33414
B. List of Insurers
Insurers or other third-party payors which are Obligors maintaining the ten
highest average Outstanding Balances of Receivables, calculated as of August
31, 1993, on an aggregate basis for all Hospitals that are parties to any Sale
and Servicing Agreement:
1. Aetna $ 1,824,491 2.43%
2. Family Health Plan HMO 1,086,921 1.45%
3. Metropolitan 1,013,152 1.35%
4. Culinary HMO 831,672 1.11%
5. Travelers 781,682 1.04%
6. CIGNA 712,905 .95%
7. Prudential 607,419 .81%
8. King County HMO 495,950 .66%
9. CAC HMO 374,835 .50%
10. Kaiser HMO 365,364 .49%
----------- ----
Total Top 10 8,094,391 10.79%
Total Financial Receivables $74,995,728 100%
=========== ====
C. UCCs Filed
Name Filing Location(s)
Universal Health Services, Inc. Secretary of the Commonwealth of
Pennsylvania and Montgomery
County Prothonotary's Office
Chalmette General Hospital, Inc. Clerk of Court of Saint Bernard
Parish
Dallas Family Hospital, Inc. Secretary of State of State
of Texas
Del Amo Hospital, Inc. Secretary of State of State
of California
HRI Hospital, Inc. Secretary of State of State of
Massachusetts and Town Clerk's
Office of town of Brookline
McAllen Medical Center, Inc. Secretary of State of State
of Texas
Meridell Achievement Center, Inc. Secretary of State of State
of Texas
River Oaks, Inc. Clerk of Court of Jefferson
Parish
Sparks Reno Partnership, L.P. Secretary of State of State
of Nevada
Turning Point Care Center, Inc. Clerk of Superior Court of
Colquitt County
UHS of Arkansas, Inc. Secretary of State of State of
Arkansas and Clerk of Circuit
Court and Ex-Officio Recorder
of Pulaski County
UHS of Auburn, Inc. Licensing Department of State
of Washington
UHS of Belmont, Inc. Secretary of State of State
of Illinois
UHS of Maitland, Inc. Florida Department of State
UHS of Massachusetts, Inc. Secretary of State of State
of Massachusetts and Town Clerk's
Office of town of Boston
Name Filing Location(s)
UHS of River Parishes, Inc. Clerk of Court of St. John the
Baptist Parish
UHS of Shreveport, Inc. Clerk of Court of Caddo Parish
Universal Health Recovery Secretary of the Commonwealth of
Centers, Inc. Pennsylvania and Chester County
Prothonotary's Office
Universal Health Services of Secretary of State of State of
Inland Valley, Inc. California
Universal Health Services of Secretary of State of State
Nevada, Inc. of Nevada
Victoria Regional Medical Secretary of State of State
Center, Inc. of Texas
Wellington Regional Medical Florida Department of State
Center Incorporated
Westlake Medical Center, Inc. Secretary of State of State
of California
SCHEDULE II
Notifications: Accreditation and Licensing
None.
SCHEDULE III
Fiscal Years Open to Audit
Name of Hospital Years Open
Chalmette General Hospital, Inc. 1990, 1991, 1992
Dallas Family Hospital, Inc. 1990, 1991, 1992
Del Amo Hospital, Inc. 1991, 1992
HRI Hospital, Inc. 1990, 1991, 1992
McAllen Medical Center, Inc. 1990, 1991, 1992
Meridell Achievement Center, Inc. 1990, 1991, 1992
River Oaks, Inc. 1990, 1991, 1992
Sparks Reno Partnership, L.P. 1990, 1991, 1992
Turning Point Care Center, Inc. 1990, 1991, 1992
UHS of Arkansas, Inc. 1990, 1991, 1992
UHS of Auburn, Inc. 1990, 1991, 1992
UHS of Belmont, Inc. 1990, 1991, 1992
UHS of Maitland, Inc. 1990, 1991, 1992
UHS of Massachusetts, Inc. 1990, 1991, 1992
UHS of River Parishes, Inc. 1990, 1991, 1992
UHS of Shreveport, Inc. 1990, 1991, 1992
Universal Health Recovery Centers, Inc. 1990, 1991, 1992
Universal Health Services of Inland 1990, 1991, 1992
Valley, Inc.
Universal Health Services of Nevada, 1990, 1991, 1992
Inc.
Victoria Regional Medical Center, Inc. 1990, 1991, 1992
Wellington Regional Medical Center 1990, 1991, 1992
Incorporated
Westlake Medical Center, Inc. 1990, 1991, 1992
SCHEDULE IV
Governmental Programs for which the Hospital
is a Qualified Provider
==============================================================================
Governmental Program Hospitals Qualified
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SCHEDULE V
Location and Identification of
Hospital Concentration Accounts
Name of Hospital Bank Account Number
Chalmette General Hospital, Inc. Hibernia National 8122-2924-9
Bank
UHS of De La Ronde, Inc. Hibernia National 8122-2925-7
Bank
Dallas Family Hospital, Inc. Bank One -- Texas 9830-10-741-7
Del Amo Hospital, Inc. Bank of America 1233-4-57852
HRI Hospital, Inc. First National 503-11965
Bank of Boston
McAllen Medical Center, Inc. Texas Commerce 0960-0370185
Bank
Meridell Achievement Center, Inc.Bank One -- Texas 75-0025-5968
River Oaks, Inc. Hibernia National 8122-2923-0
Bank
Sparks Reno Partnership, L.P. Bank of America 47-0012378
Turning Point Care Center, Inc. Moultrie National 01-41110-1-01
Bank
UHS of Arkansas, Inc. First Commercial 0657433
Bank
UHS of Auburn, Inc. Seafirst 62269519
UHS of Belmont, Inc. Park National 16-5301
Bank
UHS of Maitland, Inc. Nationsbank of 0088376877
Florida
UHS of Massachusetts, Inc. First National 503-52636
Bank of Boston
UHS of River Parishes, Inc. Bank of La Place 01-0622-4
UHS of Shreveport, Inc. Hibernia National 762001756
Bank
Universal Health Recovery First Fidelity 4004517290
Centers, Inc. Bank
Universal Health Services of Bank of America 1233-2-56080
Inland Valley, Inc.
Universal Health Services of Bank of America 01-212-2036
Nevada, Inc.
Victoria Regional Medical Victoria Bank & 5101017337
Center, Inc. Trust
Wellington Regional Medical Sun Bank South 0629-002-005381
Center Incorporated Florida N.A.
Westlake Medical Center, Inc. Bank of America 1233-9-56195
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DEFINITIONS LIST
dated as of
November 16, 1993
- ------------------------------------------------------------------------------
DEFINITIONS LIST
The capitalized terms used herein and in the documents listed below
shall have the meanings set forth in this Definitions List.
1. Each of the Sale and Servicing Agreements (each as amended,
supplemented or otherwise modified from time to time, a "Sale and
Servicing Agreement"), in each case between a Hospital and Finco.
2. The Servicing Agreement, dated as of November 16, 1993 (as amended,
supplemented or otherwise modified from time to time, the "Servicing
Agreement"), among Finco, UHS Delaware, as Servicer, and the
Trustee.
3. The Pooling Agreement, dated as of November 16, 1993 (as amended,
supplemented or otherwise modified from time to time, the "Pooling
Agreement"), among Finco, ONC, Sheffield and the Trustee.
4. The Guarantee, dated as of November 16, 1993 (as amended,
supplemented or otherwise modified from time to time, "Guarantee"),
executed by UHS in favor of Finco and the Trustee.
5. The Conditions List, dated as of November 16, 1993 (the "Conditions
List"), incorporated by reference in certain of the above documents.
Accounting Terms - As used in this Definitions List and in all
documents incorporating this Definitions List, all accounting terms not
otherwise defined shall have the meanings assigned to them under GAAP as in
effect at the time of the relevant determination.
Other Definitional Provisions - References to "Sections,"
"Subsections," "Paragraphs," "Subparagraphs," "Appendices," "Recitals" and
"Exhibits" shall be to Sections Subsections, Paragraphs, Subparagraphs,
Appendices, Recitals and Exhibits of the document in which such references
appear unless otherwise specifically provided. Any of the terms defined in
this Definitions List may be used in singular or plural form. As used herein,
the singular includes the plural, and the masculine gender includes the
feminine and neuter genders, and vice versa, unless the context otherwise
requires. Except as otherwise provided herein or in any document
incorporating this Definitions List, references to any document or instrument
are as amended or supplemented or otherwise modified from time to time in
accordance with the terms and conditions of such document. The words
"hereof," "herein" and "hereunder" and words of similar import when used in
any document incorporating this Definitions List shall refer to such document
as a whole and not to any particular provision of such document.
Acceleration Event: As defined in Section 10.1(h) of the Pooling
Agreement.
Actual Contractual Adjustment: With respect to each Purchased
Receivable, at the time of reference thereto, the amount by which the payment
due from the Obligor of such Purchased Receivable is less than the gross
amount chargeable by the relevant Hospital for the goods or services reflected
on the invoice relating to such Purchased Receivable. The amount due from the
Obligor shall be determined for each payor class and for each Hospital and
shall result in an amount due which is no greater than the amount of revenue
(net of contractual adjustments) which would be reflected in respect of such
Receivable for purposes of the consolidated financial statements of UHS and
its Subsidiaries. To the extent that a Financible Receivable reflects a
discount in excess of the discount which would be reflected in the
determination of revenue, such excess shall be a Deleted Receivable.
Additional Account: Any lockbox account established by the Trustee,
as permitted by Section 7.8 of the Pooling Agreement or Section 3.7 of the
Servicing Agreement.
Adjusted Aggregate Capital: At any time, the sum of the Adjusted
TRIPs Capital and the Adjusted Sheffield Capital.
Adjusted Eurodollar Rate: With respect to any Sheffield Tranche for
any Fixed Period, an interest rate per annum equal to (a) 1-1/4% plus (b) the
Reference Rate for that Fixed Period.
Adjusted Sheffield Capital: On any date, the Sheffield Capital on
such date minus all funds on deposit in the Sheffield Payment Account on such
date (other than funds to be used for payment of Sheffield Yield).
Adjusted TRIPs Capital: On any date, the TRIPs Capital on such date
minus the amount of all funds on deposit in the TRIPs Payment Account on such
date (other than funds to be used for payment of TRIPs Yield or the Make-Whole
Payment Amount).
Affiliate: As to any specified Person, any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have
meanings correlative to the foregoing.
Aggregate Blue Cross/Blue Shield: Collectively, Preferred Blue
Cross Blue Shield and Other Blue Cross/Blue Shield.
Aggregate Capital: At any time, the sum of the TRIPs Capital and
the Sheffield Capital at such time.
Aggregate Insurers/HMOs/PPOs: Collectively, Preferred
Insurers/HMOs/PPOs and Other Insurers/HMOs/PPOs.
Allocable Sheffield Capital: With respect to any Business Day
during the Sheffield Revolving Period, the Adjusted Sheffield Capital on the
preceding Business Day, and with respect to any Business Day during the
Sheffield Amortization Period, the Adjusted Sheffield Capital on the last day
of the Sheffield Revolving Period.
Allocable TRIPs Capital: With respect to any Business Day during
the Adjusted TRIPs Revolving Period, the Sheffield TRIPs Capital on the
preceding Business Day, and with respect to any Business Day during the TRIPs
Amortization Period, the Adjusted TRIPs Capital on the last day of the TRIPs
Revolving Period.
Alternative Rate: For any Fixed Period with respect to any
Sheffield Tranche, an interest rate per annum equal to the Adjusted Eurodollar
Rate or the Base Rate, as Finco shall select in accordance with the terms of
the Pooling Agreement; provided, however, that the "Alternative Rate" for any
Sheffield Tranche shall be the Base Rate if (i) on or before the first day of
such Fixed Period, the Liquidity Agent shall have notified Sheffield that a
Eurodollar Disruption Event has occurred, (ii) such Fixed Period is a period
of from one to 29 days or (iii) the Sheffield Capital allocated to such
Sheffield Tranche is less than $100,000.
AOA: The American Osteopathic Association, and any successor
thereto.
Applicable Contractual Adjustment: With respect to each Purchased
Receivable, the amount which the Servicer estimates, to the best of its
knowledge in accordance with the Credit and Collection Policy, on the basis of
the payor class of the Obligor and the Hospital originating such Receivable,
to be the Actual Contractual Adjustment which will be applicable to such
Purchased Receivable.
Assigned Agreements: Each Sale and Servicing Agreement, the
Servicing Agreement, the Pooling Agreement and the Guarantee.
Assignors: Each of the Hospitals, UHS, Finco and the Servicer.
Audit: As defined in Section 7.2 of each Sale and Servicing
Agreement.
Authorized Officer: (i) With respect to the Trustee, any officer
within its corporate trust office, including any Vice President, Assistant
Vice President, Secretary, Assistant Secretary, Trust Officer and any other
officer of the Trustee customarily performing functions similar to those
customarily performed by any of the above designated officers, and also, with
respect to a particular matter, any other officer of the Trustee to whom such
matter is referred because of such officer's knowledge of, or familiarity
with, the particular subject and (ii) with respect to any party to any
Operative Document, each officer whose name appears in an officers'
certificate delivered by such party on the Initial Closing Date, as such
officers' certificate may be amended from time to time.
Available Cash Collections: On any date, the portion of Collections
actually received in the Collateral Account in the form of immediately
available funds pursuant to the terms of the Operative Documents.
Average Financible Turnover Period: As of any Settlement Date, a
number, calculated as of the last day of the fiscal month immediately
preceding such Settlement Date (such date, the "Reference Date"), equal to (a)
the sum, for each Aging Category (as defined below) of the product of (i) the
aggregate Outstanding Balance of all Financible Receivables in such Aging
Category as of the Reference Date and (ii) the number designated below as the
"Midpoint" applicable to such Aging Category, as specified below, divided by
(b) the total Outstanding Balance of Financible Receivables as of the
Reference Date. For purposes of this definition "Aging Category" shall mean,
as of the Reference Date, any of the five categories of Financible Receivables
for which the number of days which have elapsed since the date on which
Financible Receivables in such category were first billed is as set forth
below:
Number of Days Elapsed Since Date of Billing Midpoint
1. More than zero days but not more than 60 days. 30
2. More than 60 days but not more than 90 days. 75
3. More than 90 days but not more than 120 days. 105
4. More than 120 days but not more than 150 days. 135
5. More than 150 days but not more than 180 days. 165
Average Pool Turnover Period: On any day during any Settlement
Period, (i) the aggregate Outstanding Balance of all Purchased Receivables as
of the last day of the preceding Settlement Period divided by (ii) the daily
average amount of
Purchased Receivables purchased by Finco during such preceding Settlement
Period.
Average Sheffield Yield Rate: On any day during any Settlement
Period, the daily weighted average Sheffield Yield Rate for all Sheffield
Tranches outstanding during the immediately preceding Settlement Period.
Barclays: Barclays Bank PLC, New York Branch.
Base Rate: As of any day, a fluctuating interest rate per annum
equal to the higher of (a) the rate of interest announced publicly by Barclays
in New York, New York from time to time as Barclays' prime rate in effect on
such date and (b) 1% above the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day of
such transactions received by Barclays from three Federal funds brokers of
recognized standing selected by it.
Borrowing Base: On any date, (a) all cash and Permitted Investments
held in the Collateral Account, any sub-account thereof, other than the TRIPs
Interest Sub-account, the Sheffield Interest Sub-account or the Expense Sub-
account (exclusive of Collections that have not been identified as to
Receivables), and any Other Account plus (b) the Financible Pool Balance minus
(c) the Loss Reserves minus (d) the Yield Reserves minus (e) the Fee/Expense
Reserves minus (f) if the Call Option has been exercised, the excess of the
Make-Whole Estimated Amount over the TRIPs Make-Whole Funds; provided,
however, that during the TRIPs Amortization Period or the Sheffield
Amortization Period, for purposes of calculating any of the reserves set forth
in clauses (c), (d) and (f), the TRIPs Capital or the Sheffield Capital, as
the case may be, on the last day of the applicable Revolving Period, rather
than the Capital on the date of calculation, shall be used to make the related
reserve calculation.
Business Day: A day of the year on which (a) banks in New York, New
York or Chicago, Illinois are not required or authorized to close and (b) if
the term "Business Day" is used in connection with the Adjusted Eurodollar
Rate, dealings in dollar deposits are carried on in the London interbank
market.
Call Date: As defined in Section 2.14 of the Pooling Agreement.
Call Option: As defined in Section 2.14 of the Pooling Agreement.
Champus: The Civilian Health and Medical Program of the Uniformed
Services, 32 C.F.R. 199, jointly administered by the Secretary of Defense, the
Secretary of Transportation and HHS, as the same may be amended from time to
time.
Champus Receivable: A Receivable of which the Obligor is the United
States and which arises out of charges reimbursable to a Hospital under
Champus.
Change of Control: As to any specified Person, a Change of Control
shall be deemed to have occurred if, at any time after the Initial Closing
Date, (i) a majority of the board of directors or other managers of such
specified Person shall have first become a director or other manager during
the preceding twelve months or (ii) any other Person or group of Persons has
during the preceding twelve months acquired or increased its ownership
interest in such Person so that it owns, directly or indirectly, 50% or more
of such specified Person's stock ordinarily having voting power for the
election of directors.
Code: The United States Internal Revenue Code of 1986, as the same
may be amended from time to time.
Collateral Account: An account established under Section 7.1(a) of
the Pooling Agreement, including all sub-accounts thereof established from
time to time pursuant to the Pooling Agreement.
Collections: All amounts due and owing on Purchased Receivables
that either (a) have been collected in available funds by any Hospital or by
the Servicer, Finco or the Trustee for deposit into the related Hospital
Concentration Account or the Master Receivables Account in accordance with the
terms of the Sale and Servicing Agreements or (b) have been posted as received
by the Servicer pursuant to the Credit and Collection Policy but have not yet
become available funds; provided, however, that amounts collected on Purchased
Receivables that are not Financible Receivables shall be deemed to be
"Collections" only upon satisfaction of clause (b) above.
Commercial Paper or Commercial Paper Note: The short-term
promissory notes of Sheffield and issued to fund the maintenance of the
Sheffield Participation under the Pooling Agreement, which promissory notes
shall be denominated in Dollars and shall have a maturity of not more than 120
days.
Commonly-Controlled Entity: As to any Person, a Person, whether or
not incorporated, which is under common control with such Person within the
meaning of Section 4001 of ERISA or is part of a group which includes such
Person and which is treated as a single employer under Section 414 of the
Code.
Concentration Limit: On any date of determination and when used
with reference to Eligible Receivables of a specified type held by Finco and
in which the Participants have acquired the Participations, the following
applicable percentage of the aggregate Outstanding Balance of all Eligible
Receivables so held by Finco represented by such type of Eligible Receivables,
after giving effect to any purchases by Finco of Eligible Receivables to be
effected on such date:
Obligor
Medicare 40%
Medicaid 10%
Preferred Blue Cross/Blue Shield 10%
Aggregate Blue Cross/Blue Shield 10%
Aggregate Insurers/HMOs/PPOs 60%
Champus 7%
Worker's Compensation 10%
Preferred Insurer/HMO/PPO 7%
Other Blue Cross/Blue Shield 1%
Other Insurer/HMO/PPO 1%
Concentration Limit Excess: On any date of determination, the
portion of the Outstanding Balance of Eligible Receivables (or portions
thereof) as of the last day of the immediately preceding Settlement Period
that exceeded the Concentration Limits.
Conditions List: As defined on the first page hereof.
Confirmation: Each acknowledgement or notice of receipt of or
agreement in respect of a related Notice of Assignment which is required to be
delivered by or received from the recipient of such Notice of Assignment to
any Hospital pursuant to Section 5.3 of the Pooling Agreement.
Continental: Continental Bank, National Association, a national
banking association.
Cost of Funds: In any Settlement Period, and for any Purchased
Receivable of any Hospital purchased by Finco on any Purchase Date, the
product of (i) the Average Pool Turnover Period then in effect times (ii) the
Outstanding Balance of such Purchased Receivable times (iii) the Base Rate
plus 1% divided by 365.
CP Holders: The holders from time to time of Outstanding Commercial
Paper Notes.
CP Rate: For any Fixed Period, with respect to any Sheffield
Tranche, the rate equivalent to the rate (or if more than one rate, the
weighted average of the rates) at which Commercial Paper Notes issued by
Sheffield having a term equal to such Fixed Period and to be issued to fund
the acquisition or maintenance of, such Sheffield Tranche may be sold by the
commercial paper dealer or placement agent selected by Sheffield, as agreed
between each such agent or dealer and Sheffield and notified by Sheffield to
the Trustee; provided, however, that if the rate (or rates) as agreed between
any such agent or dealer and Sheffield is a discount rate (or rates), the "CP
Rate" for such Fixed Period shall be the rate (or if more than one rate, the
weighted average of the rates) resulting from converting such discount rate
(or rates), including the portion of such discount representing dealers' fees,
to an interest-bearing equivalent rate per annum.
Credit and Collection Policy: Those credit and collection policies
and practices of UHS and the Servicer relating to Receivables in existence on
the date hereof and attached hereto as Exhibit B, as modified in compliance
with Section 4.3(k) of each Sale and Servicing Agreement and 3.1(k) of the
Servicing Agreement.
Daily Program Expense Amount: On any Business Day, 105% of (a) the
Monthly Program Expense Amount divided by (b) the number of days in the
current Settlement Period.
Daily Sheffield Expense Amount: On any Business Day, 105% of (a)
the Monthly Sheffield Expense Amount divided by (b) the number of days in the
current Settlement Period.
Daily TRIPs Expense Amount: On any Business Day, 105% of (a) the
Monthly TRIPs Expense Amount divided by (b) the number of days in the current
Settlement Period.
Debt: Of a Person at a particular date, the sum at such date of
(i) indebtedness for borrowed money or for the deferred purchase price of
property or services, (ii) obligations as lessee under leases which shall have
been or should be, in accordance with GAAP, recorded as capital leases,
(iii) obligations under direct or indirect guarantees in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (i) or (ii) above and
(iv) liabilities in respect of unfunded vested benefits under any Plan.
Decrease: As defined in Section 2.6(b) of the Pooling Agreement.
Deficiency Notice: A notice from any Governmental Authority to UHS
or any Subsidiary thereof indicating that UHS or such Subsidiary is required
to pay any amounts to such Governmental Authority, to the extent that the
failure to pay such amount would, in accordance with applicable law, result in
the offset by any Obligor of any amount owed to UHS or any Subsidiary under
any Receivable.
Defaulted Receivable: Any Receivable as to which the Servicer
believes, in its good faith judgment, all amounts due thereunder are not or
would not be ultimately recoverable because of the bankruptcy, insolvency or
poor credit quality of the Obligor.
Deleted Receivable: Any Eligible Receivable or portion thereof
designated by the Servicer pursuant to Section 3.6 of the Servicing Agreement
to be excluded from the pool of Financible Receivables.
Delinquency Ratio: With respect to any Settlement Period, a
fraction, the numerator of which is the Outstanding Balance of Financible
Receivables which were Delinquent Receivables on the last day or the
immediately preceding Settlement Period and the denominator of which is the
Outstanding Balance of Financible Receivables as of the last day of the
immediately preceding Settlement Period.
Delinquent Receivable: As to any date of determination, any
Receivable as to which all amounts due and payable thereunder have not been
paid and in respect of which the date on which such Receivable was first
billed occurred more than 120 days but less than 181 days prior to such date
of determination.
Deposited Funds: All funds at any time, and from time to time, on
deposit or otherwise to the credit of the Collateral Account or any Other
Account, including, without limitation, all Permitted Investments.
Dollars and $: Lawful money of the United States of America.
Early Amortization Event: As defined in Section 10.1 of the Pooling
Agreement.
Eligible Institution: Any depositary institution or trust company
organized under the laws of the United States of America or any state thereof
or the District of Columbia; provided that each such institution shall be a
member of the FDIC and shall maintain at all times a long-term unsecured debt
rating of A or better by Moody's and S&P; provided that Continental shall be
an Eligible Institution so long as it either has a rating for its long-term
deposits of at least Baa3 from Moody's and at least BBB- from S&P or is
otherwise acceptable to the Rating Agencies.
Eligible Pool Balance: At any date of determination, (a) the
Outstanding Balance of all Eligible Receivables in the Receivables Pool minus
(b) the Offset Reserves.
Eligible Receivable: On any date, each Receivable other than any
Self-pay Receivable, (a) as to which the Obligor is not an Obligor on any
Defaulted Receivable, (b) (i) as to which on the Purchase Date of such
Receivable each representation and warranty of the Hospital made under
Sections 4.1(d), 4.1(e) and 4.2 of the related Sale and Servicing Agreement
and Section 4.2 of the Pooling Agreement is true and correct and (ii) which,
on each date after the related Purchase Date, satisfies all of the criteria
set forth in Sections 4.1(d), 4.1(e), 4.2(a) through 4.2(f), 4.2(h) and 4.2(i)
of the related Sale and Servicing Agreement and Sections 4.2(a) through (h),
4.2(j) and 4.2(k) of the Pooling Agreement, (c) as to which every covenant of
the Hospital under the Sale and Servicing Agreement shall have been complied
with in all material respects, (d) which is not an Uncollectible Receivable,
(e) the Obligor of which is located in the United States and is not an
affiliate of UHS, (f) which is denominated and payable in United States
Dollars in the United States, (g) which is in full force and effect and
constitutes the legal, valid and binding obligation of the Obligor in
accordance with its terms, (h) which is not subject to any dispute,
counterclaim or defense, or any offset other or greater than the Applicable
Contractual Adjustment, (i) which is not an Excluded Receivable, (j) which is
not a Receivable as to which the Obligor thereof has a guarantee thereof, a
letter of credit providing credit support therefor or collateral security
therefor unless such guarantee, letter of credit or collateral security shall
have been assigned to Finco and the Interested Parties and such guarantee,
letter of credit or collateral security is not to Finco's knowledge subject to
any Lien in favor of any other Person and (k) which, as of the Payment Date,
arose under an invoice (i) delivered to the Obligor within [15] days after the
date of discharge of the patient to whose account such Receivable related and
(ii) with respect to which the goods or services billed under such invoice
were not previously billed to any other third party payor.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Eurocurrency Liabilities: As defined in Regulation D of the Board
of governors of the Federal Reserve System, as in effect from time to time.
Eurodollar Disruption Event: With respect to any Sheffield Tranche
for any Fixed Period, any of the following: (i) a determination by Sheffield
that it would be contrary to law or to the directive of any central bank or
other Governmental Authority (whether or not having the force of law) to
obtain United States Dollars in the London interbank market for the
acquisition or maintenance of such Sheffield Tranche for such Fixed Period,
(ii) the failure of the Barclays to furnish timely information for purposes of
determining the Adjusted Eurodollar Rate, (iii) a determination by Sheffield
that the rate at which deposits of United States Dollars are being offered to
Sheffield in the London interbank market does not accurately reflect the cost
to Sheffield of funding its acquisition or maintenance of such Sheffield
Tranche for such Fixed Period or (iv) the inability of Sheffield to obtain
United States Dollars in the London interbank market to fund its acquisition
of such Sheffield Tranche for such Fixed Period.
Eurodollar Reserve Percentage: For any Fixed Period for any
Sheffield Tranche, the reserve percentage applicable during such Fixed Period
(or, if more than one such percentage shall be so applicable, the daily
average of such percentages for those days in such Fixed Period during which
any such percentage shall be so applicable) under regulations issued from time
to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for Barclays with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Fixed Period.
Exchange Act: The Securities Exchange Act of 1934, as amended from
time to time.
Excluded Hospital: Any Hospital as to which an Exclusion Event has
occurred and as to which Finco has exercised the remedies available to it
under Section 6.3(a) of the related Sale and Servicing Agreement.
Excluded Receivable: Any Receivable purchased from an Excluded
Hospital as to which Finco has exercised on the related Purchase Date its non-
exclusive remedy, under Section 6.3(a)(ii) of the related Sale and Servicing
Agreement, that no such Purchased Receivable shall be an Eligible Receivable.
Exclusion Event: As defined in Section 6.1 of each Sale and
Servicing Agreement.
Expense Sub-account: A sub-account of the Collateral Account
established pursuant to Section 7.1(a) of the Pooling Agreement.
Face Amount: With respect to the Commercial Paper Notes, the face
amount of any Commercial Paper Note issued on a discount basis and the
principal amount of, plus the amount of all interest stated to accrue thereon
to the stated maturity date of, any Commercial Paper Note issued on an
interest-bearing basis and, with respect to any TRIP, the principal amount of
such TRIP.
Fee/Expense Reserves: At any date of determination, (a) (i) 105% of
the amount of all liabilities of Finco (other than any Capital of or Yield on
the Participations) accrued as of such date pursuant to the Operative
Documents, including, without limitation, liabilities in respect of the
Servicing Fee and all other liabilities included in the calculation of the
Monthly Program Expense Amount, the Monthly Sheffield Expense Amount and the
Monthly TRIPs Expense Amount minus (ii) the amount on deposit in the Expense
Sub-account on such date plus (without duplication) (b) 105% of the amount
budgeted to accrue in respect of such liabilities during a period equal to the
Average Financible Turnover Period.
Final Sheffield Maturity Date: The Transfer Date occurring 12
months after the Sheffield Termination Date.
Final TRIPs Maturity Date: The Transfer Date occurring 12 months
after the TRIPs Termination Date.
Financible Pool Balance: At any date of determination, (a) the
Outstanding Balance of all Financible Receivables in the Receivables Pool
minus (b) the Offset Reserves and minus (c) the Concentration Limit Excess.
Financible Receivables: At any time, all Eligible Receivables,
other than all Deleted Receivables.
Finco Documents: The collective reference to the Sale and Servicing
Agreements, the Servicing Agreement, the Pooling Agreement, the Security
Filings in favor of the Trustee and any other agreement or instrument related
to any of the foregoing.
Finco Transferred Property: All of Finco's right, title and
interest in and to the Assigned Agreements and any documents or instruments
delivered in connection therewith.
Finco: UHS Receivables Corp., a Delaware corporation.
Fixed Period: For any Sheffield Tranche, (i) if Sheffield Yield in
respect thereof is computed by reference to the CP Rate, a period of 1 to and
including 120 days, (ii) if Sheffield Yield in respect thereof is computed by
reference to the Adjusted Eurodollar Rate, a period of one, two or three
months and (iii) if Sheffield Yield in respect thereof is computed at the Base
Rate, a period of 1 to and including 30 days.
GAAP: Generally accepted accounting principles in effect from time
to time in the United States.
Governmental Authority: Any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
Governmental Receivables: With respect to each Hospital, the
Receivables of such Hospital which, consistent with UHS's past accounting
practice, are initially classified as (i) Medicare Receivables, (ii) Medicaid
Receivables or (iii) Champus Receivables.
Guarantee: As defined on the first page hereof.
Guaranteed Parties: The collective reference to the Hospitals and
UHS Delaware.
HCFA: The Health Care Finance Administration, a division of HHS,
and any successor thereof.
HHS: The United States Department of Health and Human Services, or
the Secretary thereof, as the context may require, and successors thereof.
Hospital: any hospital or other health care institution which
enters into a Sale and Servicing Agreement with Finco, initially as listed on
Exhibit A hereto.
Hospital Concentration Account: The account or sub-account
maintained by each Hospital in the name of such Hospital in accordance with
the terms of Section 5.5 of the respective Sale and Servicing Agreements.
Hospital Documents: The collective reference, as to each Hospital,
to the related Sale and Servicing Agreement, the Security Filings executed on
behalf of the Hospital in favor of Finco and the Trustee, and any other
agreement or instrument related to any of the foregoing.
Hospital Repurchase Price: With respect to any Receivable, the
Purchase Price of such Receivable less any amounts collected or received by
Finco with respect to such Receivable plus interest at the rate equal to the
Base Rate plus 1% on the Purchase Price from the Purchase Date of such
Receivable to the Repurchase Date.
Increase: As defined in Section 2.6 of the Pooling Agreement.
Increase Amount: The amount designated as the Increase Amount in
the notice delivered by Finco pursuant to Section 2.6 of the Pooling Agreement
and paid to Finco by Sheffield on any Business Day in payment for any
Increase.
Indemnified Amounts: As defined pursuant to each related Operative
Document.
Initial Closing Date: The date on which all conditions precedent
contained in the Conditions List are first satisfied or waived.
Initial Sheffield Capital: The amount specified as the Initial
Sheffield Capital in the notice delivered to Sheffield by Finco, and paid to
Finco by Sheffield on the Initial Closing Date in respect of the Initial
Sheffield Purchase, pursuant to Section 2.5(a) of the Pooling Agreement.
Initial Sheffield Purchase: As defined in Section 2.5(a) of the
Pooling Agreement.
Initial TRIPs Capital: The amount paid to Finco on the TRIPs
Closing Date by all TRIPs Holders in respect of their purchases of the TRIPs
Participations pursuant to Section 2.5(b) of the Pooling Agreement.
Insolvency: With respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
Insolvent: Pertaining to a condition of Insolvency.
Interested Parties: The collective reference to the Participants,
the Trustee, the Liquidity Agent and the Program Bank.
Investment Company Act: The Investment Company Act of 1940, as
amended from time to time.
JCAHO: The Joint Commission on the Accreditation of Healthcare
Organizations, and any successor thereto.
Lenders: The collective reference to the Liquidity Agent, the
Liquidity Banks, the Program Bank, Barclays (in its capacity as lender under
the Stub Loan) and their respective successors.
Lien: Any lien, mortgage, security interest, pledge, charge,
equity, encumbrance or right of any kind whatsoever.
Liquidation Date: The earlier to occur of (a) the fifteenth day
preceding the Scheduled Liquidity Commitment Termination Date (as defined in
the Liquidity Agreement) and (b) the date of the termination in whole of the
commitments of the Liquidity Banks under the Liquidity Agreement.
Liquidity Agent: Barclays, in its capacity as Liquidity Agent under
the Liquidity Agreement, and its successors in such capacity.
Liquidity Agreement: The Liquidity Agreement, dated as of November
16, 1993, among Sheffield, the Liquidity Agent and the Liquidity Banks, as the
same may be amended, supplemented or otherwise modified from time to time.
Liquidity Bank: Each bank or other financial institution providing
liquidity support for the Sheffield Participation pursuant to the Liquidity
Agreement.
Liquidity Loan: An advance made by the Liquidity Banks to Sheffield
pursuant to the Liquidity Agreement in order to pay maturing Commercial Paper
or maintain the level of the Sheffield Participation.
Loans: The collective reference to Liquidity Loans, Program Loans
and Stub Loans.
Loss Factor: For any Settlement Period, the percentage equivalent
of the greater of (a) .15 and (b) three times the average Loss-to-Liquidation
Ratio for the three immediately preceding Settlement Periods.
Loss Reserves: On any date, the product of (a) the Loss Factor and
(b) the Aggregate Capital on such date.
Loss-to-Liquidation Ratio: With respect to any Settlement Period,
the percentage equivalent of a fraction, (a) the numerator of which is the sum
of (i) the amount of Receivables which were included as Financible Receivables
and which became Uncollectible Receivables during such Settlement Period
(including any such Uncollectible Receivables which were repurchased pursuant
to Section 4.4 of the applicable Sale and Servicing Agreement) and (ii) the
aggregate of the Uncollectible Amounts which arose during such Settlement
Period with respect to Receivables which were included as Financible
Receivables during such Settlement Period (including any such Uncollectible
Amounts reimbursed pursuant to Section 4.4 of the Applicable Sale and
Servicing Agreement) and (b) the denominator of which is the aggregate amount
of Collections during such Settlement Period.
Make-Whole Estimated Amount: An amount equal to the present value,
discounted, at an interest rate equal to 1/2 of 1% above the interest rate set
forth in H.15(519) on the date the Call Option is exercised as the interest
rate on United States Treasury securities having a maturity date of the
Scheduled TRIPs Termination Date (such rate, the "Estimated Comparison Rate"),
from the period from the Call Date to the Scheduled TRIPs Termination Date, of
(a) the TRIPs Capital on such date times (b) the excess of (i) the TRIPs Yield
Rate over (ii) the Estimated Comparison Rate.
Make-Whole Payment Amount: With respect to any repayment of TRIPs
Capital on any Transfer Date following the Call Date, an amount equal to the
present value, discounted in accordance with standard financial practices, at
an interest rate equal to 1/2 of 1% above the interest rate set forth in the
Federal Reserve Board publication H.15(519) on the last day of the immediately
preceding Settlement Period as the interest rate on United States Treasury
securities having a maturity date of the Scheduled TRIPs Termination Date or
determined by linear interpolation therefrom (such rate, the "Actual
Comparison Rate"), from the period from such Transfer Date to the Scheduled
TRIPs Termination Date, of (a) the TRIPs Capital being repaid on such date
times (b) the excess of (i) the TRIPs Yield Rate over (ii) the Actual
Comparison Rate.
Managing Agent: Barclays, in its capacity as managing agent or
administrative agent for Sheffield.
Master Receivables Account: As defined in Section 3.7 of the
Servicing Agreement.
Maximum Aggregate Capital. $85,000,000.
Maximum Sheffield Capital: $25,000,000, as such amount may be
increased from time to time in accordance with Section 2.13 of the Pooling
Agreement.
Maximum TRIPs Capital: $50,000,000.
Medicaid: In any state, the hospital insurance program created by
that state's statutes in accordance with Title XIX of the Social Security Act.
Medicaid Receivable: With respect to any state, a Receivable of
which the Obligor is the state and, to the extent provided by law, the United
States, acting through the state Medicaid agency, and which arises out of
charges properly reimbursable to a Hospital under Medicaid.
Medicare: The hospital insurance program created by Part A of Title
XVIII of the Social Security Act.
Medicare Receivable: A Receivable of which the Obligor is the
United States and which arises out of charges reimbursable to a Hospital under
Medicare.
Monthly Program Expense Amount: With respect to each Settlement
Period, the following fees and expenses payable by Finco during such
Settlement Period and to be paid pursuant to Section 7.3(a) of the Pooling
Agreement on the subsequent Transfer Date:
(i) the Servicing Fee;
(iv) all Indemnified Amounts; and
(v) all other fees (all of which fees shall have been agreed to
by Finco prior to the Initial Closing Date), costs, expenses and
indemnities payable by Finco, the Participants or any other party to the
Operative Documents other than those fees, costs and expenses to be
payable out of the Servicing Fee or included in the Monthly Sheffield
Expense Amount or the Monthly TRIPs Expense Amount.
Monthly Sheffield Expense Amount: With respect to each Settlement
Period, all fees (all of which fees shall have been agreed to by Finco prior
to the Initial Closing Date) and expenses payable by Finco during such
Settlement Period (other
than Sheffield Yield) solely in connection with the issuance and
administration of the Commercial Paper Notes, including all commitment fees
and other fees payable by Sheffield to the Liquidity Agent, the Liquidity
Banks, the Program Bank and Barclays under the Liquidity Agreement, the
Program Loan Agreement and any Stub Loan and all fees and expenses set forth
in the letter dated the date hereof among Finco, UHS, Sheffield and the
Placement Agent.
Monthly TRIPs Expense Amount: With respect to each Settlement
Period, all fees (which fees shall be specified in writing prior to the TRIPs
Closing Date) and expenses payable by Finco during such Settlement Period
(other than TRIPs Yield) solely in connection with the issuance and
administration of the TRIPs.
Moody's: Moody's Investors Service, Inc., and any successor
thereof.
Multiemployer Plan: A Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
Non-governmental Receivables: With respect to each Hospital, the
Receivables of such Hospital, other than Governmental Receivables, together
with any and all rights to receive payments due thereon, and all proceeds
thereof in any way derived, whether directly or indirectly.
Non-qualifying Receivable: Any Receivable as to which any
representation or warranty set forth in Section 4.1(d) or (e) or 4.2 of the
related Sale and Servicing Agreement is not true and correct on the related
Purchase Date.
Notice of Assignment: Each notice of assignment delivered by or on
behalf of any Hospital to any insurer or third party intermediary that is an
Obligor on such Hospital's Receivables pursuant to the Conditions List and
Section 5.3 of the Pooling Agreement, which notice of assignment shall notify
such Obligor of the assignment of the Permitted Interests and, to the extent
required by Section 5.3 of the Pooling Agreement, request such Obligor to
consent to such assignment.
Notice Review Date: The date 90 days after the Initial Closing Date
or such other date determined pursuant to Section 5.3(b) of the Pooling
Agreement.
Obligations: As defined in Paragraph 1 of the Guarantee.
Obligor: Each Person who is indebted on a Receivable.
Offset Reserves: On any date, the sum of (a) $1,000,000, (b) an
amount determined as of the last day of the preceding Settlement Period to be
equal to the unpaid portion, as reflected in all audited periodic cost reports
filed by all Hospitals with the appropriate state and federal Governmental
Authorities under the applicable Medicaid programs and with HCFA under
Medicare, of the amount payable by all Hospitals for which cost reports
indicate amounts payable to such governmental authorities and (c) an
additional amount, if greater than zero, determined as of the date of
completion of all audits of all periodic cost reports filed during the
preceding fiscal year of UHS for all UHS Entities to be equal to (i) the
greater of (A) 1.5 times the highest amount (rounded to the nearest
$1,000,000) payable to such Governmental Authorities and reflected in the past
three annual audited cost reports of all Hospitals for which audits determined
amounts to be payable to such Governmental Authorities and (B) three times the
amount payable to such Governmental Authorities and reflected in the most
recent audited cost reports of all Hospitals for which audits determined
amounts to be payable to such governmental authorities minus (ii) an amount
equal to the aggregate Collections received in respect of Self-Pay Receivables
during the period of two Consecutive Settlement Periods occurring in the
fiscal year immediately preceding such date of determination for which such
aggregate Collections were the lowest.
Operative Documents: The collective reference to the Hospital
Documents, the Sheffield Documents, the Finco Documents, the Servicing
Agreement, the Guarantee and any other agreement or instrument related to any
of the foregoing.
Other Accounts: As defined in Section 7.1(d) of the Pooling
Agreement.
Other Blue Cross/Blue Shield: At any time of reference,
individually, an Obligor that is a blue cross or blue shield entity and is not
a Preferred Blue Cross/Blue Shield.
Other Insurer/HMO/PPO: At any time of reference, individually, a
commercial insurer, health maintenance organization, primary pay organization
or similar entity (excluding Blue Cross/Blue Shield) which is not a Preferred
Insurer/HMO/PPO.
Outstanding: At any time, (a) with respect to any Commercial Paper
Note, each Commercial Paper Note authenticated and issued by Sheffield, other
than (i) each Commercial Paper Note paid upon or following its maturity as
provided in such Commercial Paper Note, and (ii) each Commercial Paper Note as
to which funds for payment have been deposited with any depositary or paying
agent with respect thereto and are not subject to any Lien, (b) with respect
to any of the TRIPs, each TRIP authenticated and issued pursuant to the
Pooling Agreement, other than each TRIP paid upon, prior to or following its
maturity as provided in accordance with its terms and (c) with respect to any
Loan, each advance made by any Lender, other than any such advance paid upon,
prior to or following its maturity as provided in accordance with its terms.
Outstanding Balance: With respect to any Receivable as of any time
of determination, (i) the net amount of such Receivable as calculated by the
Hospital in accordance with its normal and reasonable billing procedures,
after deduction for any contractual or similar allowance or write-off
determined based on payor class of Obligor, including the Applicable
Contractual Adjustment (or, if determined, the Actual Contractual Adjustment)
applicable to such Receivable, minus (ii) all Uncollectible Amounts in respect
of such Receivable and minus (iii) Collections received by the Hospital in
respect of such Receivable. It is understood that the Outstanding Balance of
an Uncollectible Receivable is $0.
Outstanding Receivable: With respect to any Receivable as of any
time of reference, a Receivable that has not been fully paid, has not become
an Uncollectible Receivable or has not been repurchased pursuant to Section
4.4 of the related Sale and Servicing Agreement prior to such time of
reference.
Participants: The TRIPs Holders (if any) and Sheffield,
collectively, as transferees of the Participations pursuant to the Pooling
Agreement.
Participation: As defined in Section 2.4 of the Pooling Agreement.
Payment Date: With respect to any Purchased Receivable, one
Business Day following the earlier to occur of (a) the date on which the
invoice relating to such Purchased Receivable is sent to the Obligor and (b)
the date of discharge of the patient to whose account such Receivable relates.
PBGC: The Pension Benefit Guarantee Corporation established
pursuant to Subtitle A of title IV of ERISA.
Permitted Interests: All rights granted (a) by the Hospitals to
Finco pursuant to the Sale and Servicing Agreements and (b) to the Interested
Parties pursuant to the Pooling Agreement and the Security Agreement.
Permitted Investments: (a) Direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the
full faith and credit of the United States of America (including obligations
issued or held in book-entry form on the books of the Department of the
Treasury of the United States of America); (b) commercial or finance paper or
other similar obligations rated at the time of purchase A-1+ or better by S&P
and P-1 or VMIG-1 by Moody's; (c) interest-bearing demand or time deposits
(including certificates of deposit) in any issuing bank or trust company rated
A-1+ by S&P and P-1 by Moody's and secured at all times, in the manner and to
the extent provided by law, by collateral security (described in clause (a) of
this definition) of a market value (valued at least quarterly) of no less than
the amount of money so invested; (d) negotiable or non-negotiable certificates
of deposit, time deposits or other similar banking arrangements issued by any
bank or trust company, having the highest short-term rating by S&P and Moody's
or fully insured by the Federal Deposit Insurance Corporation; (e) any money
market fund having the highest fund rating by S&P and Moody's and the funds of
which are invested only in any of the above (including, without limitation,
such mutual funds as are offered by the Person who is acting as Trustee or any
agent of such Person).
Person: An individual, a partnership, a corporation, a business
trust, a joint stock company, a trust, an unincorporated association, a joint
venture, a Governmental Authority or other entity of whatever nature.
Plan: With respect to a particular Person at a particular time, any
employee benefit plan which is covered by ERISA and in respect of which such
Person or a Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
Pooling Agreement: The Pooling Agreement, as defined on the first
page hereof.
Preferred Blue Cross/Blue Shield: At any time of reference,
individually, any Obligor that is a blue cross or blue shield organization
rated at least "A" by S&P and Moody's.
Preferred Insurer/HMO/PPO: At any time of reference, individually,
any Obligor which is a commercial insurer, health maintenance organization,
primary pay organization or similar entity (excluding Blue Cross/Blue Shield)
and which is rated at least "A" by S&P and Moody's.
Principal Pay-Down: With respect to any Commercial Paper Notes or
Loans maturing on any Business Day, the excess of (a) the sum of (i) the Face
Amount of such Commercial Paper Notes or principal amount of such Loans, as
the case may be, and (ii) all accrued and unpaid Sheffield Yield (except to
the extent included in the Face Amount of the applicable Commercial Paper
Note) with respect to such Commercial Paper Notes or Loans over (b) the sum of
(x) the net proceeds from the sale of any Commercial Paper Notes (after
deduction of all fees payable to any issuing and paying agent or commercial
paper dealer in connection therewith) or the incurrence of Loans on such
Business Day and (y) the amount on deposit in the Sheffield Payment Account on
such Business Day.
Program Bank: Barclays, in its capacity as Program Bank under the
Program Loan Agreement, and its successors in such capacity.
Program Loan: An advance made by the Program Bank to Sheffield
pursuant to the Program Loan Agreement in order to pay maturing Commercial
Paper.
Program Loan Agreement: The Irrevocable Program Loan Agreement,
dated as of December 12, 1991, between Sheffield and the Program Bank, as the
same may be amended, supplemented or otherwise modified from time to time.
Prohibited Transaction: The meaning assigned to that term in
Section 4975 of the Code.
Purchase Date: Each date (commencing with the Initial Closing Date)
on which any Receivable is purchased by Finco pursuant to the terms of any
Sale and Servicing Agreement.
Purchase Price: With respect to any Receivable to be purchased on
any Purchase Date, an amount equal to (a) the aggregate Outstanding Balance of
such Receivable minus (b) the Cost of Funds.
Purchased Receivables: The Receivables, including any Receivables
that have become Uncollectible Receivables, purchased by Finco from all
Hospitals pursuant to all Sale and Servicing Agreements and not repurchased by
the applicable Hospital in accordance with the terms thereof.
Rating Agency: Initially, S&P and Moody's, and thereafter, any
other such agency or agencies then rating the Commercial Paper Notes at the
request of Sheffield or the TRIPs at the request of the TRIPs Holders.
Receivables: With respect to each Hospital, the patient accounts
existing or hereafter created of that Hospital (including, without limitation,
Self-pay Receivables), any and all rights to receive payments due on such
accounts from any Obligor or other third-party payor under or in respect of
such accounts (including without limitation all insurance companies, Blue
Cross/Blue Shield, Medicare, Medicaid, Champus, Workers' Compensation and
health maintenance organizations and primary pay organizations) and all
proceeds of, or in any way derived, whether directly or indirectly, from any
of the foregoing.
Receivables Information: Any information provided in writing by an
Authorized Officer of any Hospital, Finco, UHS or UHS Delaware to any
Interested Party.
Receivables Pool: At any date of determination, all Purchased
Receivables with an Outstanding Balance, less all Receivables repurchased
pursuant to Section 4.4 of any Sale and Servicing Agreement.
Record Date: With respect to each Transfer Date, the date occurring
five Business Days prior to such Transfer Date.
Reference Rate: With respect to each Sheffield Tranche for the
relevant Fixed Period, an interest rate per annum determined by Barclays equal
to the quotient of (a) the rate at which it would offer deposits in United
States dollars to prime banks in the London interbank market for a period
equal to such Fixed Period and in a principal amount of not less than
$1,000,000 at or about 11:00 A.M. (London time) on the second Business Day
before (and for value on) the first day of such Fixed Period divided by (b)
one minus the Eurodollar Reserve Percentage (expressed as a decimal)
applicable to Barclays for such Fixed Period.
Reorganization: With respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
Reportable Event: Any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section
2615.
Repurchase Date: Any date on which Non-qualifying Receivables are
to be purchased by a Hospital in accordance with Section 4.4 of each Sale and
Servicing Agreement.
Required Coverage Amount: On any date of determination, an amount
equal to (a) the sum of (i) the TRIPs Capital on such date, (ii) the Sheffield
Capital on such date and (iii) the principal amount of all Loans Outstanding
on such date plus (b) the Loss Reserves plus (c) the Yield Reserves plus (d)
the Fee/Expense Reserves plus (e) the Make-Whole Estimated Amount minus (f)
the Sheffield Retained Funds and minus (g) the TRIPs Make-Whole Funds;
provided, however, that during the TRIPs Amortization Period or the Sheffield
Amortization Period, (i) the Required Coverage Amount shall be reduced by the
amount of all funds in any Other Account (other than funds to be used for the
payment of Yield or the Make Whole Payment Amount) and (ii) for purposes of
calculating any of the reserves set forth in clauses (b), (c) and (f) above,
the TRIPs Capital or Sheffield Capital, as the case may be, on the last day of
the applicable Revolving Period, rather than the Capital on the date of
calculation, shall be used to make the related reserve calculation.
Required Participants: At any time, Participants holding
Participations aggregating more than 50% of the Aggregate Capital at such
time.
Required TRIPs Holders: At any time, TRIPs Holders holding TRIPs
Participations aggregating more than 50% of the TRIPs Capital at such time.
Requirement of Law: As to any Person, (i) the Certificate of
Incorporation and By-laws, corporation agreement or other organizational or
governing documents of such Person, and (ii) any law, treaty, rule or
regulation, or determination of an arbitrator or a court, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
Revolving Period: The TRIPs Revolving Period or the Sheffield
Revolving Period, as the context requires.
S&P: Standard & Poor's Corporation, and any successor thereof.
Sale and Servicing Agreement: Each Sale and Servicing Agreement, as
defined on the first page hereof.
Scheduled Sheffield Termination Date: ________, 1998, as such date
may be extended pursuant to Section 2.13 of the Pooling Agreement.
Scheduled TRIPs Termination Date: The date designated in writing by
Finco as the Scheduled TRIPs Termination Date in its notice to Sheffield and
the Trustee pursuant to Section 2.5(b) of the Pooling Agreement.
Securities Act: The Securities Act of 1933, as amended from time to
time.
Security Agreement: The Security Agreement, dated as of November
16, 1993, between Sheffield and the Liquidity Agent.
Security Filings: All filings and recordations (including, without
limitation, those filings pursuant to the UCC in effect in the State in which
any Hospital's chief executive office is located), and, subject to Section 5.3
of the Pooling Agreement and the Conditions List, all Notices of Assignments
and Confirmations, which are required to be made to perfect (i) the interest
of Finco and its assignees in the Purchased Receivables and other Transferred
Property, (ii) the interest of the Trustee and the Participants in the Trust
Assets and (iii) the interest of the Liquidity Agent and the Liquidity Banks
in Sheffield's right, title and interest in and to the Trust Assets.
Self-pay Receivable: That portion of any patient account under
which the primary obligation to pay for any services rendered under such
account is solely and directly that of the patient or a guarantor of such
patient's account who is a natural person.
Servicer: UHS Delaware, in its capacity as servicer of the
Receivables, and any successor under the Servicing Agreement.
Servicer Daily Statement: As defined in Section 3.5 of the
Servicing Agreement.
Servicer Incumbency Certificate: A certificate as to the incumbency
and specimen signatures of the Servicing Agents.
Servicer Termination Notice: The notice delivered by Finco pursuant
to Section 4.2 of the Servicing Agreement terminating all rights and
obligations of the Servicer.
Servicer's Certificate: The Certificate required to be delivered by
the Servicer to Sheffield and the Trustee pursuant to Section 3.2 of the
Servicing Agreement.
Servicing Agent: Any Secretary or Assistant Secretary of the
Servicer, or any other person authorized to act, and to give instructions and
notices on behalf of the Servicer under the Servicing Agreement whose name and
specimen signature appears on a Servicer Incumbency Certificate signed by any
Secretary or Assistant Secretary thereof and delivered to Sheffield and the
Trustee. Such Servicing Agents may be designated from time to time by the
Servicer.
Servicing Agreement: The Servicing Agreement, as defined on the
first page hereof.
Servicing Fee: The fee set forth in Section 3.1 of the Servicing
Agreement.
Settlement Date: The date during each month occurring two Business
Days prior to the Transfer Date.
Settlement Date Statement: The statement required to be delivered
by the Servicer, on or before each Settlement Date, pursuant to Section 3.3 of
the Servicing Agreement.
Settlement Period: The period from the first day of a month (or, in
the case of the month in which the Initial Closing Date occurs, the period
from the Initial Closing Date) through and including the last day of that
month.
Sheffield: Sheffield Receivables Corporation, a Delaware
corporation.
Sheffield Amortization Period: The period commencing on the
Sheffield Termination Date and ending on the earliest to occur of (a) the date
on which the Sheffield Capital is reduced to zero, (b) the date on which the
Outstanding Balance of Purchased Receivables is reduced to zero and (c) the
Final Sheffield Maturity Date.
Sheffield Bankruptcy Event: Any of the following events: (a)
Sheffield shall have made a general assignment for the benefit of creditors;
(b) any proceeding shall have been instituted by or against Sheffield seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, 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 and, in the case
of any proceeding against it (but not instituted by it), either such
proceeding shall remain unstayed or undismissed 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 similar official for, it or for any substantial part of
its property) shall occur; or (c) Sheffield shall take any corporate action to
authorize any of the foregoing actions.
Sheffield Capital: With respect to the Sheffield Participation,
(a) the Initial Sheffield Capital plus (b) each Increase Amount minus
(c) funds received and distributed to Sheffield on account of such Sheffield
Capital pursuant to Section 7.4 of the Pooling Agreement; provided, however,
that such Sheffield Capital shall not be reduced by any distribution of any
portion of Collections if at any time such distribution is rescinded or must
be returned for any reason.
Sheffield Documents: The Commercial Paper Notes, the Pooling
Agreement, the Liquidity Agreement, the Program Loan Agreement, the Security
Agreement, the Security Filings executed by Sheffield in favor of the
Liquidity Agent and any other agreement or instrument related to any of the
foregoing.
Sheffield Interest Sub-account: A sub-account of the Sheffield Sub-
account established pursuant to Section 7.1(a) of the Pooling Agreement.
Sheffield Participation: A senior undivided participating interest
in the Trust Assets acquired by Sheffield from Finco pursuant to the terms and
conditions of the Pooling Agreement.
Sheffield Payment Account: As defined in Section 7.1(c) of the
Pooling Agreement.
Sheffield Percentage: On any Business Day, the percentage
equivalent of a fraction, the numerator of which is the Allocable Sheffield
Capital and the denominator of which is the sum of the (i) the Allocable
Sheffield Capital and (ii) the Allocable TRIPs Capital.
Sheffield Retained Funds: On any date, the aggregate amount of
funds in the Sheffield Sub-account on such date which have been retained in
such sub-account pursuant to Section 7.2(b)(iv) of the Pooling Agreement.
Sheffield Revolving Period: The period commencing on the Initial
Closing Date and ending on the Sheffield Termination Date.
Sheffield Sub-account: A sub-account of the Collateral Account
established pursuant to Section 7.1(a) of the Pooling Agreement.
Sheffield Termination Date: The earliest to occur of (a) the
Scheduled Sheffield Termination date, (b) the occurrence of an Early
Amortization Event (i) described in Section 10.1(f) of the Pooling Agreement
or (ii) declared by Sheffield pursuant to Section 10.2 of the Pooling
Agreement, (c) the date which occurs three days after the occurrence of any
Early Amortization Event described in Section 10.1(o) through (r) of the
Pooling Agreement and (d) the date on which Sheffield gives written notice to
Finco and the Trustees of the occurrence of (i) the Liquidation Date or (ii) a
Sheffield Bankruptcy Event.
Sheffield Termination Sale Amount: With respect to any sale of
Receivables or interests therein pursuant to Section 14.1(a) of the Pooling
Agreement, the product of (a) the sum of (i) $7,500,000 and (ii) (A) one plus
the Loss Factor times (B) the Outstanding Balance of Purchased Receivables on
such date and (b) the Sheffield Percentage.
Sheffield Tranche: Any portion of the Sheffield Capital, as
designated by Finco and approved by Sheffield pursuant to Section 2.5, 2.6 or
2.10 of the Pooling Agreement, with respect to which Sheffield Yield is
calculated by reference to a specified Sheffield Yield Rate and Fixed Period.
Sheffield Yield: With respect to a Sheffield Tranche for any Fixed
Period, the product of (a) the Sheffield Yield Rate divided by 365, (b) the
portion of the Sheffield Capital allocable to such Sheffield Tranche and (c)
the number of days elapsed in such Fixed Period.
Sheffield Yield Factor Amount: For any Business Day, (a) (i) the
Average Financible Turnover Period plus 10 divided by (ii) 360 times (b) the
Base Rate times (c) the Sheffield Capital on such Business Day.
Sheffield Yield Rate: For any Fixed Period with respect to a
Sheffield Tranche, (a) to the extent Sheffield will fund such Sheffield
Tranche through the issuance of Commercial Paper Notes, the CP Rate and (b) to
the extent that Sheffield will fund such Sheffield Tranche through the
incurrence of Loans, the Alternative Rate.
Single Employer Plan: Any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
Social Security Act: The Social Security Act of 1935, 42 U.S.C.
Sections 401 et seq., as the same may be amended, supplemented or otherwise
modified from time to time.
Statement Delivery Day: As defined in Section 3.5(b) of the
Servicing Agreement.
Stub Loan: An advance, other than a Liquidity Loan or a Program
Loan, made by Barclays to Sheffield, the proceeds of which are used to
maintain the Sheffield Participation.
Subordinated Interest: As defined in Section 2.9 of the Pooling
Agreement.
Subordinated Note: A subordinated promissory note, substantially in
the form of Exhibit A to any Sale and Servicing Agreement, executed by Finco
in favor of the Hospital party to such Sale and Servicing Agreement.
Subsidiary: As to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
voting power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which
is otherwise controlled directly or indirectly through one or more
intermediaries, or both, by such Person.
Successor Servicer: Any successor servicer as defined pursuant to
Section 4.4 of the Servicing Agreement.
Taxes: As defined in Section 2.12 of the Pooling Agreement.
Total Transferred Property: The collective reference to the
Transferred Property and the Finco Transferred Property.
Transfer Agent and Registrar: As defined in Section 9.3 of the
Pooling Agreement.
Transfer Date: The 15th calendar day of each month, or if such day
is not a Business Day, the subsequent Business Day, commencing December 15,
1993.
Transferred Property: The Purchased Receivables and, subject to
confidentiality rights under applicable laws and regulations and under the
rules of JCAHO or AOA, as the case may be, all now existing or hereafter
arising instruments, documents, agreements, books and records relating to the
foregoing.
TRIPs: The Trade Receivables Investment Participations,
substantially in the form of Exhibit A to the Pooling Agreement, issued by the
Trust to the TRIPs Holders pursuant to the Pooling Agreement.
TRIPs Amortization Period: The period commencing on the Business
Day following the TRIPs Termination Date and ending on the earliest to occur
of (a) the date on which the TRIPs Capital is reduced to zero, (b) the date on
which the Outstanding Balance of Purchased Receivables is reduced to zero and
(c) the Final TRIPs Maturity Date.
TRIPs Capital: With respect to the TRIPs Participations, the
Initial TRIPs Capital, as reduced from time to time by Collections received
and distributed on account of the TRIPs Capital pursuant to Section 7.5 of the
Pooling Agreement; provided, however, that the TRIPs Capital shall not be
reduced by any distribution of any portion of Collections if at any time such
distribution is rescinded or must be returned for any reason.
TRIPs Closing Date: Any date after the Initial Closing Date on
which all applicable conditions precedent required by Section 3.1 of the
Pooling Agreement with respect to such date are satisfied or waived.
TRIPs Holders: The holders from time to time of the Outstanding
TRIPs.
TRIPs Interest Default: The occurrence on any Transfer Date of an
excess of (a) the TRIPs Yield payable on such Transfer Date over (b) the
amount of funds on deposit in the TRIPs Interest Sub-account on such Transfer
Date.
TRIPs Interest Sub-account: A sub-account of the TRIPs Sub-account
established pursuant to Section 7.1(a) of the Pooling Agreement.
TRIPs Make-Whole Funds: On any date, the aggregate amount of funds
in the TRIPs Interest Sub-Account on such date which have been deposited in
such sub-account pursuant to Section 7.2(c)(iv) of the Pooling Agreement.
TRIPs Participation: The aggregate senior undivided participating
interest in the Trust Assets acquired by any TRIPs Holder from Finco pursuant
to the terms and conditions of the Pooling Agreement and evidenced by a TRIP;
collectively, the "TRIPs Participations".
TRIPs Payment Account: As defined in Section 7.1(d) of the Pooling
Agreement.
TRIPs Percentage: On any Business Day, the percentage equivalent of
a fraction, the numerator of which is the Allocable TRIPs Capital and the
denominator of which is the sum of (i) the Allocable TRIPs Capital and (ii)
the Allocable Sheffield Capital.
TRIPs Register: As defined in Section 9.3 of the Pooling Agreement.
TRIPs Revolving Period: The period commencing on the TRIPs Closing
Date and ending on the TRIPs Termination Date.
TRIPs Sub-account: A sub-account of the Collateral Account
established pursuant to Section 7.1(a) of the Pooling Agreement.
TRIPs Termination Date: The earliest to occur of (a) the Scheduled
TRIPs Termination Date, (b) the Call Date, (c) the occurrence of an Early
Amortization Event (i) described in Section 10.1(f) of the Pooling Agreement
or (ii) declared by the TRIPs Holders pursuant to Section 10.2 of the Pooling
Agreement and (d) the date which is three days after the occurrence of any
Early Amortization Event described in Section 10.1(o) through (r) of the
Pooling Agreement.
TRIPs Termination Sale Amount: With respect to any sale of
Receivables or interests therein pursuant to Section 14.1(b) of the Pooling
Agreement, the product of (a) the sum of (i) $7,500,000 and (ii) (A) one plus
the Loss Factor times (B) the Outstanding Balance of Purchased Receivables on
such date and (b) the TRIPs Percentage.
TRIPs Yield: With respect to any date, (a) the TRIPs Yield Rate
divided by 360 times (b) the TRIPs Capital on such date.
TRIPs Yield Factor Amount: On any date of determination, (i) the
TRIPs Yield Rate times (ii) (A) the Average Financible Turnover Period plus 10
divided by (B) 360 times (iii) the TRIPs Capital on such date.
TRIPs Yield Rate: The rate specified as the TRIPs Yield Rate in the
written notice delivered by Finco pursuant to Section 2.5(b) of the Pooling
Agreement.
Trust: The UHS Healthcare Receivables Trust created by the Pooling
Agreement.
Trust Assets: As defined in Section 2.1 of the Pooling Agreement.
Trust Termination Date: The later to occur of the Final Sheffield
Maturity Date and the Final TRIPs Maturity Date.
Trustee: Continental, in its capacity as Trustee under the Pooling
Agreement, and any successor in such capacity.
Trustee Fee: The fees specified in the Trustee Fee Letter.
Trustee Fee Letter: The letter agreement among Finco, UHS and the
Trustee setting forth the trustee fee.
UCC: The Uniform Commercial Code as in effect in the specified
jurisdiction or, if no jurisdiction is specified, as in effect in the state
whose law, by agreement of the parties, governs the document or agreement in
which the term "UCC" or "security interest" appears.
UHS: Universal Health Services, Inc., a Delaware corporation.
UHS Delaware: UHS of Delaware, Inc., a Delaware corporation.
UHS Entities: The collective reference to UHS, the Hospitals, Finco
and UHS Delaware.
Uncollectible Amount: With respect to each Receivable other than an
Uncollectible Receivable, all reductions in the gross amount due under such
Receivable other than the lesser of (a) the Applicable Contractual Adjustment
and (b) the Actual Contractual Adjustment (including, without limitation, any
write-offs and/or reserves taken in relation to such Receivable).
Uncollectible Receivable: On any date of determination, any
Receivable as to which all amounts due and payable thereunder have not been
paid and (a) as to which the Servicer believes, in its good faith judgment,
all amounts due thereunder are not or would not be ultimately recoverable or
(b) in respect of which more than 180 days have elapsed since the date on
which such Receivable was first billed or (c) as to which any Obligor on such
Receivable is bankrupt, insolvent, undergoing composition or adjustment of
debts or is otherwise unable to make payments on its obligations when due;
provided that a Medicaid Receivable (other than a Medicaid Receivable
described in clause (a) or (b) above) shall not be deemed to be an
Uncollectible Receivable solely because the Obligor on such Medicaid
Receivable is currently insolvent if (i) such Obligor would not reasonably be
expected to remain insolvent or otherwise unable or unwilling to make payment
under such Receivable and (ii) the Servicer has determined in good faith and
in accordance with the Credit and Collection Policy that such Medicaid
Receivable should not be deemed an Uncollectible Receivable.
Voluntary Exclusion Event: With respect to any UHS Entity, such UHS
Entity shall contest or deny that it is bound by, or has any or further
liability or obligation under, the terms and conditions of any of the
Operative Documents to which it is a party provided that a denial of liability
by any Hospital and the Sale and Servicing Agreement to which it is a party as
a result of (i) the disposition by UHS of such Hospital or (ii) the occurrence
of an Exclusion Event of the type described in Section 6.1(d) of such Sale and
Servicing Agreement shall not constitute a Voluntary Exclusion Event.
Yield: Sheffield Yield or TRIPs Yield, as the context requires.
Yield Reserves: On any date, the sum of (i) the portion of all
accrued and unpaid Sheffield Yield which is not on deposit in the Sheffield
Interest Sub-account on such date plus (ii) the portion of all accrued and
unpaid TRIPs Yield which is not on deposit in the TRIPs Interest Sub-account
on such date plus (iii) the Sheffield Yield Factor Amount plus (iv) the TRIPs
Yield Factor Amount.
EXHIBIT A
LIST OF HOSPITALS
Names and Principal Place of Business of Hospitals
Name Principal Place of Business
Chalmette General Hospital, Inc. 9001 Patricia Street
Chalmette, LA 70043
and
800 Virtue Street
Chalmette, LA 70043
Dallas Family Hospital, Inc. 2929 South Hampton Road
Dallas, TX 75224
Del Amo Hospital, Inc. 23700 Camino del Sol
Torrance, CA 90505
HRI Hospital, Inc. 227 Babcock Street
Brookline, NM 02146
La Amistad Residential 201 Alpine Drive
Treatment Center, Inc. Maitland, FL 32751
McAllen Medical Center, Inc. 301 West Expressway 83
McAllen, TX 78503
Meridell Achievement Center, Inc. Highway 29 West
Liberty Hill, TX 78642
and
2501 Cypress Creek Road
Cedar Park, TX 78613
River Oaks, Inc. 1525 River Oaks Road West
New Orleans, LA 70123
Sparks Reno Partnership, L.P. 2375 E. Prater Way
Sparks, NV 89434
Turning Point Care Center, Inc. 319 East By-Pass
Moultrie, GA 31768
UHS of Arkansas, Inc. 21 BridgeWay Road
North Little Rock, AR 72118
UHS of Auburn, Inc. 20 Second Street, N.E.
Auburn, WA 98002
UHS of Belmont, Inc. 4058 West Melrose Street
Chicago, IL 60641
UHS of Massachusetts, Inc. 49 Robinwood Avenue
Boston, MA 02130
UHS of River Parishes, Inc. 500 Rue de Sante
LaPlace, LA 70068
UHS of Shreveport, Inc. 1130 Louisiana Avenue
Shreveport, LA 71101
Universal Health Services 36485 Inland Valley Drive
of Inland Valley, Inc. Wildomar, CA 92395
Universal Health Services of 620 Shadow Lane
Nevada, Inc. Las Vegas, NV 89106
Victoria Regional Medical 101 Medical Drive
Center, Inc. Victoria, TX 77904
Wellington Regional Medical 10101 Forest Hill Blvd.
Center Incorporated West Palm Beach, FL 33414
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SERVICING AGREEMENT
among
UHS RECEIVABLES CORP.,
UHS OF DELAWARE, INC.
as Servicer
and
CONTINENTAL BANK, NATIONAL ASSOCIATION,
as Trustee
dated as of
November 16, 1993
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . 2
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS. . . . . . . . 2
Section 2.1. Representations, Warranties and Covenants of
the Servicer . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2. Covenants of the Servicer. . . . . . . . . . . . . . . . . 4
ARTICLE III
ADMINISTRATION, COLLECTIONS
AND OTHER OBLIGATIONS. . . . . . . . . . . . . 8
Section 3.1. Servicing. . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.2. Delivery of Settlement Date Statement. . . . . . . . . . . 13
Section 3.3. Settlement Date Statement. . . . . . . . . . . . . . . . . 13
Section 3.4. Record of Collections. . . . . . . . . . . . . . . . . . . 14
Section 3.5. Servicer Daily Statement . . . . . . . . . . . . . . . . . 14
Section 3.6. Deleted Receivables. . . . . . . . . . . . . . . . . . . . 15
Section 3.7. Master Receivables Account . . . . . . . . . . . . . . . . 16
ARTICLE IV
EVENTS OF DEFAULT; SERVICING TERMINATION. . . . . . . 17
Section 4.1. Events of Default. . . . . . . . . . . . . . . . . . . . . 17
Section 4.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.3. Successor Servicer . . . . . . . . . . . . . . . . . . . . 18
Section 4.4. Appointment of Successor . . . . . . . . . . . . . . . . . 19
Section 4.5. Monitoring . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V
MISCELLANEOUS . . . . . . . . . . . . . . 20
Section 5.1. Notices, Etc.. . . . . . . . . . . . . . . . . . . . . . . 20
Page
Section 5.2. Successors and Assigns . . . . . . . . . . . . . . . . . . 21
Section 5.3. Severability Clause. . . . . . . . . . . . . . . . . . . . 21
Section 5.4. Amendments . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.5. The Servicer's Obligations . . . . . . . . . . . . . . . . 22
Section 5.6. No Recourse. . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.7. Further Assurances . . . . . . . . . . . . . . . . . . . . 22
Section 5.8. Termination. . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.9. Consent to Assignment; Third Party
Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.10. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.11. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.12. No Bankruptcy Petition. . . . . . . . . . . . . . . . . . . 24
Section 5.13. Servicer May Act Through Agents . . . . . . . . . . . . . . 25
Section 5.14. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.15. No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . 25
Section 5.16. SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL; SERVICE OF PROCESS . . . . . . . . . . . . . . 25
Section 5.17. Indemnification . . . . . . . . . . . . . . . . . . . . . . 26
Schedule I - Document Locations; Servicer's Principal Place of
Business; UHS's Principal Place of Business
Schedule II - Master Receivables Account
Exhibit A - Settlement Date Statement
Exhibit B - Servicer's Certificate
Exhibit C - Servicer Daily Statement
Exhibit D - Form Confidentiality Agreement
SERVICING AGREEMENT
SERVICING AGREEMENT (this "Agreement"), dated as of November 16,
1993, among UHS Receivables Corp., a Delaware corporation (together with its
successors and assigns, "Finco"), UHS of Delaware, Inc., a Delaware
corporation (in its individual capacity, together with its successors and
assigns, "UHS Delaware"; as servicer, together with its successors and
assigns, the "Servicer"), and Continental Bank, National Association, as
trustee (in such capacity, together with its successors and assigns, the
"Trustee") under the Pooling Agreement (all capitalized terms used in the
preamble and the recitals unless otherwise defined, as defined in the
Definitions List referred to below).
W I T N E S S E T H :
WHEREAS, Sheffield desires to issue and sell its promissory notes in
the commercial paper market and Finco desires to issue the TRIPs to certain
financial institutions;
WHEREAS, subject to the terms and conditions of the several Sale and
Servicing Agreements, each between a Hospital and Finco, Finco will purchase
from each Hospital and each Hospital will sell to Finco its Receivables, other
than Non-qualifying Receivables, and the related Transferred Property;
WHEREAS, in order for Finco to pay for the Transferred Property
purchased by it from the Hospitals, Finco has entered into a Pooling Agreement
under which Finco has conveyed to the Trustee, for the benefit of the
Participants, its right, title and interest in and to the Transferred Property
and the Finco Transferred Property, and the Participants have offered to
acquire from Finco, and Finco has agreed to transfer to the Participants,
senior undivided participating interests in the Trust Assets;
WHEREAS, Sheffield intends to issue and sell its promissory notes in
the commercial paper market and Finco intends to issue the TRIPs to certain
financial institutions;
WHEREAS, in order to collect the amounts due to Finco under the
Purchased Receivables sold to Finco by the Hospitals pursuant to the Sale and
Servicing Agreements and in which the Participants have acquired the
Participations pursuant to the Pooling Agreement, the Interested Parties have
required Finco and the Trustee to enter into an agreement with UHS Delaware
requiring UHS Delaware to administer and collect the amounts owing to Finco in
respect of the Receivables;
WHEREAS, it is contemplated that following the sale and assignment
of the Purchased Receivables from the Hospitals to Finco and the transfer of
the Participations from Finco to the Participants, the Hospitals will collect
the Receivables from the Obligors thereon and will transfer such sums as
provided herein and in the Sale and Servicing Agreements;
WHEREAS, Finco, the Trustee and UHS Delaware, as Servicer under this
Agreement, accordingly wish to enter into this Agreement providing, among
other things, for the servicing and administration of, and collection on, such
Receivables by the Servicer; and
WHEREAS, pursuant to the Guarantee executed by UHS in favor of
Finco, UHS has guaranteed all obligations of UHS Delaware as Servicer
hereunder and the Hospitals under the Sale and Servicing Agreements.
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Servicing Agreement and unless the context requires
a different meaning, capitalized terms used herein shall have the meanings
assigned to such terms in the Definitions List, dated as of the date hereof
(the "Definitions List"), that refers to this Agreement, which Definitions
List is incorporated herein by reference and shall be deemed to be a part of
this Agreement.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1. Representations, Warranties and Covenants of the
Servicer. The Servicer, on the Initial Closing Date, the TRIPs Closing Date,
each Purchase Date and each Payment Date, represents, warrants and covenants
to Finco and the Trustee that:
(a) The Servicer has been duly organized and (i) is validly
existing and in good standing as a corporation under the laws of the state of
its incorporation, with full corporate power and authority to own or lease its
properties and to conduct its business as presently conducted and to execute,
deliver and perform this Agreement, and to consummate the transactions
contemplated hereby, (ii) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification, except where any such failure or failures to be so qualified
would not, alone or in the aggregate, have a material adverse effect on its
business, operations, properties, assets or condition (financial or
otherwise), (iii) is in compliance with all Requirements of Law and (iv) is
not in default under any mortgage, indenture, deed of trust, loan agreement
lease, contract or other agreement, instrument or undertaking to which the
Servicer is a party or by which the Servicer or any of its assets may be
bound, except to the extent that such defaults would not, alone or in the
aggregate, have a material adverse effect on the ability of the Servicer to
perform its obligations hereunder.
(b) The execution, delivery and performance by the Servicer of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all requisite corporate action and will
not conflict with, violate 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 encumbrance upon any of its property or
assets pursuant to the terms of, any indenture, mortgage, deed of trust, loan
agreement, lease, contract or other agreement, instrument or undertaking by
which it is bound or to which any of its property or assets is subject, nor
will such action, result in any violation of any applicable Requirement of
Law; 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 Authority, other body or any
other Person, will be required to be obtained by, or with respect to, the
Servicer in connection with the execution, delivery and performance by the
Servicer of this Agreement and the consummation of the transactions
contemplated hereby and thereby which the Servicer shall not have so obtained.
(c) This Agreement has been duly and validly authorized, executed
and delivered by the Servicer and constitutes a valid and legally binding
obligation of the Servicer, enforceable against the Servicer in accordance
with its terms, subject to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting 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).
(d) All filings, recordings and notices (including pursuant to the
UCC) required to perfect the interest of Finco in the Transferred Property and
of the Trustee in the Total Transferred Property have been accomplished and
are in full force and effect and the Servicer shall at its expense perform all
acts and execute all documents reasonably requested by Finco or the Trustee at
any time to evidence, perfect, maintain and enforce the interests of Finco and
the Trustee.
(e) There is (i) no effective financing statement (or similar
statement or instrument of registration under the law of any jurisdiction) on
file or registered in any public office and (ii) no assignment filed or
delivered by or on behalf of the Servicer, in each case covering any interest
of any kind in the Transferred Property or intended so to be filed, delivered
or registered, and, except to the extent required hereunder, the Servicer will
not execute any effective financing statement (or similar statement or
instrument of registration under the laws of any jurisdiction) or statements
or any assignment or other notification relating to the Total Transferred
Property.
(f) There are no actions, proceedings or investigations pending or,
to the knowledge of the Servicer, threatened, before any court, administrative
agency or other tribunal, (i) asserting the invalidity of this Agreement or
any of the Security Filings, (ii) questioning the consummation by the Servicer
or any of its Subsidiaries of any of the transactions contemplated by the
Operative Documents or (iii) which, if determined adversely, alone or in the
aggregate, could materially and adversely affect the ability of the Servicer
to perform its obligations under, or the validity or enforceability of, this
Agreement.
(g) The Receivables Information provided by the Servicer on the
date hereof or on the Purchase Date on which these representations are made or
deemed made does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements in the Receivables
Information, in light of the circumstances in which they were made, not
misleading.
(h) The chief place of business and chief executive office of the
Servicer is at the address set forth on Schedule I hereto, which place of
business is the place where the Servicer is "located" for the purposes of
Section 9-103(3)(d) of the UCC of the state indicated on such Schedule, and
the locations of the offices where all of the instruments, documents,
agreements, books and records relating to the Receivables are kept are at the
addresses shown on the schedule attached hereto as Schedule I.
Section 2.2. Covenants of the Servicer. (a) The Servicer will
preserve and maintain its existence as a corporation in good standing under
the laws of Delaware or any other state in which it is incorporated. The
Servicer will preserve and maintain its existence as a foreign corporation in
good standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification, except where any such failure or failures to be so qualified
would not, alone or in the aggregate, have a material adverse effect on its
ability to perform its obligations hereunder.
(b) The Servicer, will, at its own cost and expense, (i) retain the
electronic ledger used by the Servicer as a master record of the Receivables
and copies of all documents relating to each Receivable as custodian for Finco
and the Interested Parties, (ii) mark such electronic ledger to the effect
that the Receivables listed thereon that have been sold to Finco have been
transferred and assigned from each of the Hospitals to Finco and (iii) take
any actions necessary to remove references to Receivables that have been
repurchased by any Hospital in accordance with the Sale and Servicing
Agreements.
(c) The Servicer will advise Finco and the Trustee promptly, and in
reasonable detail, of (i) any Lien asserted or claim made against any of the
Transferred Property of which it obtains knowledge, (ii) the occurrence of any
breach by the Servicer or any other UHS Entity of any of its respective
representations, warranties and covenants contained in any Operative Document
of which the Servicer has knowledge, (iii) the occurrence of any event which
would be reasonably be expected to have a material adverse effect on the
ability of the Servicer to perform its obligations hereunder and (iv) the
receipt from any Governmental Authority of a deficiency notice with respect to
the Purchased Receivables.
(d) Unless prohibited by any Requirement of Law, including, without
limitation, by regulations of JCAHO or AOA, as the case may be, Finco, the
Trustee and each of their respective employees, agents, representatives (A)
shall at all times have full and free access during normal business hours to
all the books, correspondence and records of the Servicer insofar as they
relate to the Transferred Property, and Finco and the Trustee (and their
respective employees, agents and representatives) may examine the same, take
extracts therefrom and make photocopies thereof, and the Servicer agrees to
render to Finco and the Trustee, at the Servicer's cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto and (B) may discuss the affairs, finances and accounts of the Servicer
with, and be advised as to the same by, executive officers and independent
accountants of the Servicer, all as Finco or the Trustee may reasonably deem
appropriate for the purpose of verifying the accuracy of any reports or
information delivered to Finco or the Trustee pursuant to this Agreement or
for otherwise ascertaining compliance with this Agreement; provided, however,
that each of Finco and the Trustee acknowledges that in exercising the rights
and privileges conferred in this Section 2.2(d) it may, from time to time,
obtain knowledge of information, practices, books, correspondence and records
of a confidential nature and in which the Servicer has a proprietary interest;
and provided, further, that the Servicer, Finco and the Trustee acknowledge
that the Operative Documents and documents required to be filed by or on
behalf of UHS and its Subsidiaries with the Securities and Exchange Commission
and available to the public shall not be considered confidential for purposes
of this Agreement (such confidential information, collectively, the
"Information"). Each of Finco and the Trustee agrees that the Information is
to be regarded as confidential information and may be subject to laws, rules
and regulations regarding patient confidentiality and agrees that subject to
the following sentence, (i) it shall, and shall cause its employees agents and
representatives to, retain in confidence not disclose without the prior
written consent of the Servicer any or all of the Information and (ii) it will
not, and will ensure that its employees, agents and representatives will not,
make any use whatsoever (other than for the purposes contemplated by this
Agreement, the other Operative Documents or for the enforcement of any of the
rights granted hereunder or thereunder) of the Information without the prior
written consent of the Servicer. Notwithstanding the foregoing, each of Finco
and the Trustee may (x) disclose Information to any Person that executes and
delivers to the addressee and UHS a confidentiality agreement, substantially
in the form of Exhibit D hereto with respect to the Information or (y)
disclose or use such Information (A) to the extent that such Information is
required or appropriate in any reports, statement or testimony submitted to
any municipal, state, or federal regulatory body having or claiming to have
jurisdiction over Finco, the Trustee or the National Association of Insurance
Commissioners or similar organization or their successors, (B) to the extent
such Information is required in response to any summons or subpoena or in
connection with any litigation, (C) to the extent that such Information is
believed by Finco or the Trustee to be required in order to comply with any
law, order, regulation or ruling applicable to Finco or the Trustee, (D) to
the extent that such information was publicly available or otherwise known to
Finco or the Trustee at the time of disclosure, (E) to the extent that such
information subsequently becomes publicly available other than through any act
or omission of Finco, and (F) to the extent that such information subsequently
becomes known to Finco or the Trustee other than through a person known to be
acting in violation of his or its obligations to the Servicer.
(e) The Servicer shall execute and file such UCC financing
statements, continuation statements and any other documents, if any, requested
by Finco (and in form and substance satisfactory to Finco), or which may be
required by law to fully preserve and protect the ownership interests and/or
security interests of Finco and the Interested Parties under the Operative
Documents in and to the Total Transferred Property.
(f) The Servicer will not, without providing 30 days' notice to
Finco and without filing such amendments to the Security Filings as Finco may
require, (i) change the location of its chief executive office or the location
of the offices where the records relating to the Receivables are kept or (ii)
change its name, identity or corporate structure in any manner which could
make any Security Filing or related continuation statement seriously
misleading within the meaning of Section 9-402(7) of any applicable enactment
of the UCC applicable thereto or (iii) delete or otherwise modify the marking
on the electronic ledger referred to in Section 2.2(b) other than as provided
in clause (iii) thereof.
(g) The Servicer will preserve all records that it is required to
maintain pursuant to this Agreement until the later of (i) four years after
the date upon which the Receivable to which such records relate is paid in
full or (ii) seven years.
(h) The Servicer shall deliver or cause to be delivered to Finco
and the Trustee, all such documents, reports, certificates and other matters
as are required by the Operative Documents including, without limitation,
notice, to the extent required pursuant to the terms of any Sale and Servicing
Agreement, of commercial insurers or other third-party payors which are
Obligors of any Hospital and which first become Obligors after the Initial
Closing Date (with any related Notice of Assignment and Confirmation required
pursuant to such Sale and Servicing Agreement) and notice of each change in
any Hospital's qualifications and status as a provider in respect of
Governmental Receivables.
(i) The Servicer will comply with all Requirements of Law which are
applicable to the Transferred Property or any part thereof; provided, however,
that the Servicer may contest any act, regulation, order, decree or direction
in any manner which, in the reasonable opinion of Finco and the Trustee, would
not reasonably be expected to materially and adversely affect the rights of
Finco or any Interested Party in the Transferred Property or the
collectibility (other than as a result of the credit quality of any Obligor)
or enforceability of the Purchased Receivables.
(j) The Servicer will not create, permit or suffer to exist, and
will defend Finco's and the Interested Parties' rights to the Total
Transferred Property against, and take such other actions as are necessary to
remove, any Lien on, or claim or right in, to or under the Total Transferred
Property, and will defend the right, title and interest of Finco and the
Interested Parties in and to the Total Transferred Property against the claims
and demands of all Persons whomsoever, other than the Liens in respect of the
Permitted Interests.
(k) Subject to Section 3.1(e), the Servicer will duly fulfill all
obligations on its part to be fulfilled under or in connection with each
Purchased Receivable and will do nothing to impair the rights of Finco or the
Interested Parties in the Transferred Property.
(l) Subject to Section 3.1(e), the Servicer will not sell, discount
or otherwise dispose of any Purchased Receivable except to Finco or the
Interested Parties as provided under the Sale and Servicing Agreements and the
Pooling Agreement.
(m) The Servicer shall not distribute or assist in the distribution
of any financial statements which shall not account for the transactions
contemplated by the Sale and Servicing Agreements in a manner which reflects
the sale to Finco of the Purchased Receivables, and any publicly available
financial statements prepared by the Servicer shall indicate the sale to Finco
of the Purchased Receivables originated by the Hospitals.
(n) The Servicer shall not merge or consolidate with, or transfer
all or substantially all its assets to, any other entity unless the Servicer
is the entity surviving such merger or consolidation or unless (i) the
surviving or transferee entity expressly assumes all of the covenants,
obligations and agreements of the Servicer under this Agreement in a written
instrument satisfactory in form and substance to Finco and the Trustee and
(ii) such merger, consolidation or other transfer shall not, in the judgment
of Finco, result in an Exclusion Event or an Early Amortization Event.
(o) The Servicer shall not, without the prior written consent of
Finco and the Trustee, which consent shall not be unreasonably withheld,
permit any Hospital to alter the hardware or software systems used by such
Hospital in generating its reports to the Servicer in respect of the Purchased
Receivables and Collections and, in any event, shall not permit any such
alteration unless such alteration is designed to improve the Servicer's
ability to monitor and collect on the Receivables.
(p) The Servicer shall give to Finco and the Trustee prompt notice
of any breach of any representation, warranty, covenant or agreement under
this Agreement of which it has knowledge.
(q) The Servicer will not hold itself out as liable for any Debt of
Finco.
ARTICLE III
ADMINISTRATION, COLLECTIONS
AND OTHER OBLIGATIONS
Section 3.1. Servicing. (a) Finco and the Trustee hereby appoint
the Servicer as their agent to administer and service, in accordance with the
terms of this Article III, all Purchased Receivables, and the Servicer hereby
accepts such appointment to administer and service the Purchased Receivables
for the benefit of Finco and the Interested Parties. Except as otherwise
provided herein, the Servicer shall have full power and authority to do any
and all things in connection with such administration and servicing as it may
deem necessary or desirable, including, without limitation, appointing
subservicers to perform its servicing obligations hereunder. Without in any
respect limiting the foregoing, the Servicer shall, in accordance with all
Requirements of Law, but subject to the terms and conditions of the Operative
Documents, manage and administer each of the Purchased Receivables, exercise
all discretionary powers involved in such management, collection and
administration and bear all costs and expenses incurred in connection
therewith that may be necessary or advisable and permitted for carrying out
the transactions contemplated by this Agreement and the other Operative
Documents. In the management, collection and administration of the Purchased
Receivables, the Servicer shall exercise the same care that it exercises in
handling similar matters for its own account, and the Servicer will create and
administer policies and practices (including those with respect to reserves
and write-offs) consistent with the policies and practices applied in handling
similar matters for its own account. The Servicer will comply at all times,
in all material respects, with good business policies, practices, procedures
and internal controls in effect at such time with respect to servicing and
collecting the Receivables. Subject to the provisions of Article VII of the
Pooling Agreement, the Servicing Fee payable by Finco with respect to the
Purchased Receivables shall be 0.35 of 1% per annum of the average Outstanding
Balance of the Purchased Receivables during each Settlement Period and shall
be paid to the Servicer in accordance with Sections 7.2 and 7.3 of the Pooling
Agreement. The Servicer shall be required to pay expenses for its own
account, and shall not be entitled to any payment therefor other than the
Servicing Fee. The Trustee Fee and the other fees and expenses of the Trustee
payable pursuant to Section 11.5 of the Pooling Agreement during any
Settlement Period shall be payable by the Servicer solely out of the Servicing
Fee paid to the Servicer with respect to such Settlement Period. In no event
shall the Servicer be liable for any federal, state or local income or
franchise tax, or any interest or penalties with respect thereto, assessed on
the Trust, the Trustee or the Participants except as expressly provided
herein. To the extent provided in Article VII of the Pooling Agreement, or in
the event that the Servicer fails to pay any amount due to the Trustee
pursuant to Section 11.5 of the Pooling Agreement, the Trustee shall be
entitled, in addition to any other rights it may have under law, to receive
such amounts from the Servicing Fee prior to the payment thereof to the
Servicer.
(b) The Servicer hereby agrees and acknowledges that all
Collections on account of Non-governmental Receivables sold to Finco shall be
deposited directly into the Hospital Concentration Account or the Master
Receivables Account on the date of receipt thereof. Payments in respect of
Non-Governmental Receivables in the form of electronic or wire transfers shall
be made to the Master Receivables Account. Except as provided in the
following sentence, all Collections on account of Governmental Receivables
sold to Finco shall be paid to the Hospital and deposited directly into the
applicable Hospital Concentration Account on the date of receipt thereof.
Collections from Obligors on Governmental Receivables in the form of
electronic or wire transfers to UHS, for the benefit of a Hospital, shall be
made directly to the Master Receivables Account. Available Collections
received in the Hospital Concentration Accounts shall be transferred within
one Business Day of receipt to the Master Receivables Account. Amounts so
transferred or otherwise received in the Master Receivables Account prior to
the close of business on any Business Day shall be transferred to the
Collateral Account at the close of business on the Business Day received.
Amounts received in the Master Receivables Account after the close of business
on any Business Day or on any day which is not a Business Day shall be
transferred to the Collateral Account at the close of business on the next
succeeding Business Day. Except as provided in Section 3.1(i), the Servicer
shall not transfer, or permit to be transferred, any amount from any Hospital
Concentration Account or the Master Receivables Account other than to the
Collateral Account. Subject to Section 3.1(h), all such Collections received
will be endorsed by the Servicer in the name of the Hospital where required.
(c) The obligation of UHS Delaware to service the Receivables is
personal to UHS Delaware and the parties recognize that another Person may not
be qualified to perform such obligations. Accordingly, UHS Delaware's
obligation to service the Receivables hereunder, to the extent permitted by
applicable law, shall be specifically enforceable and shall be absolute and
unconditional in all circumstances, including, without limitation, after the
occurrence and during the continuation of any Exclusion Event or Early
Amortization Event; provided, however, that a Successor Servicer may be
appointed pursuant to Article IV; and provided, further, that nothing
contained in this Agreement shall be construed to prevent UHS from performing
any obligation hereunder in accordance with the terms of the Guarantee. The
provisions of this Section 3.1(c) shall not preclude UHS Delaware from
subcontracting any or all of its responsibilities hereunder so long as UHS
Delaware shall retain supervisory control of any such subcontractor and UHS
Delaware shall obtain the consent of Finco and the Trustee prior to entering
into such subcontracting arrangement. UHS Delaware shall insure, as a
condition precedent to entering such subcontracting arrangement, that each
such subcontractor shall agree to service the Receivables in accordance with
all Requirements of Law and pursuant to the terms of this Agreement and the
related Sale and Servicing Agreements, including, without limitation, such
terms as are related to Collections in respect of Governmental Receivables and
Non-governmental Receivables. Notwithstanding the immediately preceding
sentence, UHS Delaware shall be fully responsible to Finco and the Interested
Parties for any and all acts or failures to act of any such subcontractor to
the same extent as if UHS Delaware were performing or directly responsible for
such subcontractor's duties and responsibilities.
(d) The Servicer shall not resign from the obligations and duties
hereby imposed on it as Servicer except upon determination that (i) the
performance of its duties hereunder is no longer permissible under applicable
law and (ii) there is no reasonable action which the Servicer could take to
make the performance of its duties hereunder permissible under applicable law.
Any such determination permitting the resignation of the Servicer shall be
evidenced as to clause (i) above by an opinion of counsel to the Servicer to
such effect and as to clause (ii) above by a certificate of an Authorized
Officer of the Servicer, in each case addressed to Finco, the Trustee and the
Participants. No such resignation shall become effective until a Successor
Servicer shall have assumed the responsibilities and obligations of the
Servicer in accordance with Section 4.4.
(e) The Servicer shall have the power and authority, with notice to
Finco, to make such changes in contracts, agreements and terms in respect of
any Purchased Receivable as the Servicer, on behalf of Finco, may reasonably
deem advisable to the extent that (i) the Servicer shall reasonably believe
that such changes in contracts, agreements or terms in respect of any
Purchased Receivables will increase the collectibility of such Receivable
without extending the payment date, so long as (A) such change is in
accordance with the Credit and Collection Policy and consistent with past
practice and (B) such change shall not have a disproportionate effect on the
Purchased Receivables as compared with Receivables (or future Receivables) not
sold to Finco; and (ii) the Servicer, in the event that such Purchased
Receivable becomes an Uncollectible Receivable, shall reasonably believe that
such change of contracts, agreements or terms will improve the collectibility
of such Uncollectible Receivable; provided that no such change permitted by
clause (i) or (ii) shall, in the reasonable belief of Finco, result in an
Exclusion Event or an Early Amortization Event; and provided, further, that no
such change shall cause the Borrowing Base to be less than the sum of (A) the
TRIPs Capital, (B) the Face Amount of Commercial Paper Outstanding and (C) the
principal amount of Loans Outstanding. In the enforcement or collection of
any such Purchased Receivable, the Servicer shall be entitled to sue thereon
in its own name, if possible, or, if, and only if, Finco or the Trustee
consents in writing, as agent of Finco or the Trustee, as the case may be.
(f) Subject to Section 3.1(e), the Servicer shall not change the
terms of the payor contracts and agreements relating to the Purchased
Receivables and related Transferred Property or its normal policies and
procedures with respect to the servicing thereof (including without limitation
the amount and timing of finance charges, fees and write-offs).
(g) Finco hereby irrevocably grants to the Servicer an irrevocable
power-of-attorney, which power is coupled with an interest, with full power of
substitution, to take in the name of Finco or in its own name all steps
necessary or advisable to endorse, negotiate or otherwise realize upon any
writing or other report of any kind held or owned by Finco or transmitted to
or received by the Servicer as payment on account or otherwise in respect of
any Purchased Receivables. Finco shall execute and deliver to the Servicer
such additional powers-of-attorney as the Servicer may deem necessary or
appropriate to enable the Servicer to endorse for payment any check, draft or
other instrument delivered in payment of any amount under or in respect of the
Purchased Receivables.
(h) If, at any time, the Servicer receives any Collections on
account or otherwise in respect of Non-governmental Receivables, the Servicer
shall hold such Collections in trust for the benefit of Finco and the
Interested Parties and shall use its best efforts not to commingle any such
amounts with any other funds or property held by the Servicer other than
Collections and the Servicer shall cause such Collections (properly endorsed,
where required, so that such items may be collected by Finco) to be paid over
or delivered to the Trustee (as soon as practicable and in any event within
one Business Day) pursuant to the terms of Section 7.1 of the Pooling
Agreement, which transmission or delivery shall occur forthwith after any such
Collections shall have been identified by the Servicer as being on account of
such a Purchased Receivable. If, and at any time, the Servicer receives any
such Collections in respect of Governmental Receivables, the Servicer shall
transfer all such amounts to the related Hospital payee for immediate deposit
by such Hospital into the appropriate Hospital Concentration Account or the
Master Receivables Account.
(i) The Servicer agrees that it shall use its best efforts to
ensure that only Collections on Purchased Receivables are deposited into the
Hospital Concentration Accounts and the Master Receivables Account. Finco
agrees that, promptly following the establishment to the satisfaction of the
Servicer and any Hospital that any funds received in any Hospital
Concentration Account or the Master Receivables Account do not constitute
Collections on Purchased Receivables, including any payments on Receivables
which have been reassigned to such Hospital and any payments to such Hospital
not in respect of Receivables, to the extent such funds are available in the
Hospital Concentration Account, the Master Receivables Account or the
Collateral Account, the Servicer shall remit, or cause the Trustee to remit,
such funds to such Hospital in immediately available funds. In the event that
the Servicer and any Hospital are unable to determine whether funds received
by the Servicer or such Hospital constitute Collections on Purchased
Receivables, such funds shall be deposited in the Hospital Concentration
Account or the Master Receivables Account and transferred in accordance with
Section 3.1(b) hereof and Article V of the applicable Sale and Servicing
Agreement.
(j) The Servicer shall cause each written contract entered into by
any Hospital after the Initial Closing Date with a third-party payor in
respect of Non-governmental Receivables to permit the assignment of payments
thereunder pursuant to the terms of this Agreement and the Operative
Documents. In the alternative the Servicer shall promptly (A) notify Finco of
any insurance provider or other third-party payor which becomes an Obligor
after the Initial Closing Date pursuant to a written contract or arrangement
which purports to prohibit the assignment of any rights of any Hospital under
such contract or arrangement without the consent of such Obligor and (B)
deliver or cause to be delivered to such Obligor a Notice of Assignment from
each Hospital party to any such contract or arrangement and receive a
Confirmation in respect thereof as may be required by Finco or its counsel and
(ii) comply with all other reasonable requests of Finco with respect to the
Security Filings.
The Servicer shall also cause each invoice sent after the Initial
Closing Date to each insurance carrier or third party intermediary to include
a notice that the amount payable under such invoice has been assigned to Finco
and its assignees, including the Trustee, and that future amounts payable by
such insurance carrier will be so assigned.
Section 3.2. Delivery of Settlement Date Statement. On each
Settlement Date the Servicer shall report to Finco, the Trustee and such other
Persons as Finco or the Trustee may designate, by delivering to them, by 1:00
p.m. (New York City time) on such Settlement Date, the Settlement Date
Statement, substantially in the form of Exhibit A hereto (the "Settlement Date
Statement"), with a certificate, substantially in the form of Exhibit B hereto
(the "Servicer's Certificate"), covering the Settlement Period next preceding
such Settlement Date.
Section 3.3. Settlement Date Statement. The Servicer shall set
forth in the Settlement Date Statement:
(a) all Collections respecting Purchased Receivables and Financible
Receivables owned by Finco that have been collected during the Settlement
Period immediately preceding the Settlement Date;
(b) the aggregate Outstanding Balance of Purchased Receivables, the
aggregate Outstanding Balance of Eligible Receivables and the aggregate
Outstanding Balance of all Financible Receivables then owned by Finco
(and in respect of which the Participants have acquired the
Participations) as of the last day of the immediately preceding
Settlement Period, in each case determined in accordance with GAAP and
based on all Receivables created and outstanding on such last day,
whether or not invoiced;
(c) the aggregate amount of all adjustments to the Purchase Prices
to be paid by Finco to the Hospitals on such date;
(d) the aggregate balance of all Receivables which were included as
Financible Receivables and which became Uncollectible Receivables during
the immediately preceding Settlement Date and all Uncollectible Amounts
arising during the immediately preceding Settlement Date in respect of
Receivables included as Financible Receivables during such Settlement
Period;
(e) the Loss-to Liquidation Ratio, the Loss Factor, the Sheffield
Yield Factor Amount, the TRIPs Yield Factor Amount, the Monthly Program
Expense Amount and the aggregate fees and expenses scheduled to accrue
during the Average Financible Turnover Period, each calculated as of the
last day of the immediately preceding Settlement Period;
(f) costs, expenses, fees, taxes, indemnities and other amounts
payable from the Collateral Account and due to be paid on the related
Transfer Date pursuant to Section 7.3(a) of the Pooling Agreement;
(g) the Average Pool Turnover Period and the Average Financible
Turnover Period as of the last day of the immediately preceding
Settlement Period;
(h) the Delinquency Ratio as of the last day of the immediately
preceding Settlement Period; and
(i) the aggregate amount of all liabilities reflected on the
periodic cost reports of all UHS Entities for each of the three most
recent reporting periods; the aggregate amount of Collections received
during each Settlement Period in the preceding fiscal year in respect of
Self-pay Receivables; and any other information required to determine the
Offset Reserve.
The Servicer shall set forth its determinations in each Settlement
Date Statement, which shall contain the numbers, amounts or information called
for in each of clauses (a) through (h) above and any additional calculations
as the Rating Agencies may reasonably require.
Section 3.4. Record of Collections. The Servicer shall keep a
computer record of all Collections on Purchased Receivables owned by Finco and
deposited in the Collateral Account.
Section 3.5. Servicer Daily Statement. (a) As of the close of
business on each Business Day, the Servicer shall determine, and set forth its
determinations in a statement substantially in the form of Exhibit C (a
"Servicer Daily Statement") as to:
(i) the aggregate Purchased Receivables, Financible Receivables and
the estimated amount of Eligible Receivables owned by Finco and in which
the Participants have acquired the Participations, and all required
adjustments thereto, as of the end of the preceding Business Day and all
Collections received on Purchased Receivables, Eligible Receivables and
Financible Receivables;
(ii) amounts in the Collateral Account as of the end of the prior
Business Day, all Available Cash Collections and other funds received in
the Collateral Account since the preceding Business Day and all transfers
to the Sub-accounts required to be made since the prior Business Day;
(iii) the aggregate Outstanding Balances of all Purchased
Receivables, Eligible Receivables and Financible Receivables purchased on
such Business Day and to be paid for on the Statement Delivery Day and
the aggregate Outstanding Balances of Purchased Receivables, Eligible
Receivables and Financible Receivables in the Receivables Pool after
giving effect to such purchases;
(iv) the Purchase Price of all Receivables to be paid for on the
Statement Delivery Day, the aggregate amount of cash available in the
Collateral Account to be paid and the Subordinated Notes to be issued to
the Hospitals in respect thereof on the Statement Delivery Day;
(v) the Servicer's calculations in respect of the Offset Reserves,
the Yield Reserves, the Loss Reserves, the Fee/Expense Reserves and the
Required Coverage Amount as of such Business Day;
(vi) the amount of all Deleted Receivables purchased on such
Business Day to be paid for on the Statement Delivery Day; and
(vii) such additional calculations as the Trustee or Sheffield
shall reasonably require;
it being understood that cash deposited from Collections in the Collateral
Account shall not be deemed to be available for the purposes of calculating
the Borrowing Base or for the determination of any payments to be made to any
of UHS Delaware, Finco or any Hospital until the identification of the
Receivables to which such Collections relate.
(b) The Servicer shall deliver to Finco, the Trustee and such other
Persons as Finco or the Trustee may designate, by 1:00 p.m. New York City time
on each Business Day (the "Statement Delivery Day"), the Servicer Daily
Statement prepared as of the close of business on the previous Business Day,
certified by an Authorized Officer of the Servicer; the Trustee and each of
the other Interested Parties shall rely on such Servicer Daily Statement in
respect of all actions under this Agreement and the other Operative Documents.
Each such Servicer Daily Statement shall also contain all information as the
Trustee shall require, pursuant to the terms of the Pooling Agreement, to pay
all Sheffield Capital and TRIPs Capital of, and all Yield on, all Commercial
Paper Notes, Loans and TRIPs, to retain all required amounts in the Collateral
Account, each sub-account of the Collateral Account and each Other Account, to
purchase Receivables and to make all other payments and transfers, all in
accordance with the terms and conditions of the Pooling Agreement. The
Servicer shall furnish to the Trustee such further information as it may
require in connection with the preparation of the Servicer Daily Statement.
Section 3.6. Deleted Receivables. (a) On each Purchase Date, the
Servicer shall, in its discretion, designate certain Receivables purchased by
Finco on such Purchase Date and to be paid for by Finco on the Statement
Delivery Day as Deleted Receivables, which Deleted Receivables shall be
excluded from the pool of Financible Receivables; provided, however, that the
Servicer shall not so exclude Deleted Receivables from the Financible Pool
Balance if, as a result of such designation and exclusion, the quality and
collectibility (including as a result of the credit quality of the Obligors on
the Financible Receivables) of the pool of Financible Receivables would
reasonably be expected to be any worse than the quality and collectibility
(including as a result of the credit quality of the Obligors on the Eligible
Receivables) of the pool of Eligible Receivables.
(b) The aggregate Outstanding Balance of Deleted Receivables
identified on each Business Day shall be included in the Daily Servicer
Statement delivered by the Servicer on the related Statement Delivery Day.
Such disclosure shall constitute a representation and warranty by the Servicer
that, after giving effect to the exclusion of such Deleted Receivables from
the pool of Financible Receivables, the quality and collectibility (including
as a result of the credit quality of the Obligors on the Financible
Receivables) of the pool of Financible Receivables is no worse than the
quality and collectibility (including as a result of the credit quality of the
Obligors on the Eligible Receivables) of the pool of Eligible Receivables.
(c) The designation by the Servicer of any Purchased Receivable as
a Deleted Receivable is irrevocable, and no such Deleted Receivable shall be
considered a Financible Receivable or included in the Financible Pool Balance
for any purpose.
Section 3.7. Master Receivables Account. UHS has previously
established an account with Continental (the "Master Receivables Account")
into which Collections received from Obligors by means of electronic transfers
shall be deposited by such Obligors. The Master Receivables Account has been
designated as an account in the name of UHS, for the benefit of UHS, the
Hospitals, Finco and the Interested Parties. The Servicer hereby represents
and warrants that set forth on Schedule II hereto is the name, location and
account number of the Master Receivables Account. The Servicer shall not, and
shall not permit any other Person to, establish, terminate or change the
Master Receivables Account designated on Schedule II, unless such action is in
conformity with all Requirements of Law and the prior written consent of Finco
and the Trustee has been obtained. At any time that the Servicer receives
notice that an Early Amortization Event shall have occurred and is continuing,
the Servicer agrees, to the extent permitted by applicable Requirements of
Law, to immediately take all actions necessary, upon receipt of
indemnification satisfactory to it and written directions from Finco or the
Trustee as to the nature of such actions to direct those Obligors making
payments into the Master Receivables Account to make all payments on the
Receivables to an Additional Account or directly to the Trustee for deposit in
the Collateral Account.
ARTICLE IV
EVENTS OF DEFAULT; SERVICING TERMINATION
Section 4.1. Events of Default. The occurrence and continuation of
any one of the following events shall be an "Event of Default" under this
Agreement:
(a) The entry of a decree or order for relief by a court having
jurisdiction in respect of the Servicer in an involuntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar law,
or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Servicer or of any
substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Servicer and the continuance of any
such decree or order unstayed and in effect for a period of 60
consecutive days; or
(b) The Servicer shall (i) become insolvent or admit in writing its
inability to pay its debts as they come due, (ii) commence a voluntary
case under the federal bankruptcy laws, as now or hereafter in effect, or
any other present or future federal or state bankruptcy, insolvency or
similar law, (iii) consent to the appointment of, or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Servicer or of any substantial part of its
property, (iv) make an assignment for the benefit of creditors, (v) fail
generally to pay its debts as such debts become due or (vi) take any
corporate action in furtherance of any of the foregoing; or
(c) The Servicer shall fail to pay any amount required to be paid
by it under this Agreement or transfer to the Trustee any amount
collected by the Servicer in accordance with the terms of this Agreement;
or
(d) There shall occur a material default by the Servicer in the
observance or performance of any other covenant or agreement in this
Agreement, and such default shall continue unremedied for a period of 30
days following notice given by Finco or any Interested Party to the
Servicer; or
(e) Any of the representations or warranties by the Servicer
contained in this Agreement shall prove to have been incorrect when made
or deemed made in any material respect; or
(f) A material adverse change in the business, operations, property
or financial or other condition of the Servicer and its Subsidiaries
taken as a whole shall have occurred and such change shall materially
adversely affect its ability to perform its obligations, hereunder; or
(g) The Guarantee shall at any time fail to be in full force and
effect.
Section 4.2. Remedies. Following the occurrence of an Event of
Default hereunder Finco or the Trustee may, by notice given in writing to the
Servicer (a "Servicer Termination Notice"), terminate all of the rights and
obligations of the Servicer, as Servicer, under this Agreement.
Notwithstanding any termination of the rights and obligations of the Servicer
pursuant to this Section 4.2, the Servicer shall remain responsible for any
acts or omissions to act by it as Servicer prior to such termination.
Section 4.3. Successor Servicer. (a) On the date that a Successor
Servicer shall have been appointed by Finco and the Trustee pursuant to
Section 4.4, all authority and power of the then Servicer under this Agreement
shall pass to and be vested in a Successor Servicer; and, without limitation,
each of Finco and the Trustee are hereby authorized and empowered (upon the
failure of the Servicer to cooperate) to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, all documents and other
instruments upon the failure of the Servicer to execute or deliver such
documents or instruments, and to do and accomplish all other acts or things
necessary or appropriate to effect the purposes of such transfer of servicing
rights.
(b) The Servicer agrees to cooperate with Finco and the Successor
Servicer in effecting the termination of the responsibilities and rights of
the Servicer to conduct servicing hereunder, including, without limitation,
the transfer to such Successor Servicer of all authority of the Servicer to
service the Receivables provided for under this Agreement, including, without
limitation, all authority to receive Collections which shall on the date of
transfer be held by the Servicer for deposit, or which shall thereafter be
received with respect to the Receivables.
(c) Subject to any Requirement of Law, the Servicer shall promptly
transfer its electronic records (including, without limitation, the related
computer programs necessary to use such electronic records) and all other
records relating to the Receivables and the Transferred Property to the
Successor Servicer in such electronic form or other forms as the Successor
Servicer may reasonably request and shall promptly transfer to the Successor
Servicer all other records, correspondence and documents necessary for the
continued servicing of the Receivables in the manner and at such times as the
Successor Servicer shall reasonably request. To the extent that compliance
with this Section 4.3 shall require the Servicer to disclose to the Successor
Servicer information of any kind which the Servicer reasonably deems to be
confidential or subject to license, the Successor Servicer shall be required
to enter into such customary licensing and confidentiality agreements as the
Servicer shall deem necessary to protect its interest.
(d) At any time following the designation of the Successor
Servicer, any Successor Servicer shall be authorized to take any and all steps
in UHS Delaware's name as Servicer and on behalf of UHS Delaware necessary or
desirable (subject to laws, rules and regulations regarding patient
confidentiality), in the determination of the Successor Servicer, to collect
all amounts due under any and all Receivables, including, without limitation,
endorsing UHS Delaware's name on checks and other instruments representing
Collections and enforcing the Receivables.
Section 4.4. Appointment of Successor. (a) Notwithstanding the
receipt by a Servicer of a Servicer Termination Notice or the resignation of a
Servicer pursuant to Section 3.1(d), the Servicer shall continue to perform
all of its obligations under this Agreement until the later of (i) the
appointment of a Successor Servicer or (ii) the date specified in the Servicer
Termination Notice or otherwise specified by Finco or the Trustee in writing
or, if no such date is specified in the Servicer Termination Notice, or
otherwise specified by Finco or the Trustee, until a date mutually agreed upon
by the Servicer, Finco and the Trustee. Finco and the Trustee shall (as
promptly as possible after the giving of a Servicer Termination Notice or the
resignation of a Servicer pursuant to Section 3.1(d)) appoint a successor
servicer (the "Successor Servicer") and such Successor Servicer shall accept
its appointment by a written assumption in a form acceptable to Finco and the
Trustee. Such Successor Servicer, as a condition precedent to its
appointment, shall represent, warrant and covenant on its behalf to each of
Finco and the Trustee, for the benefit of the Participants, the
representations, warranties and covenants in Section 2.1 in a writing
satisfactory to Finco and the Trustee in their sole discretion. Finco and the
Trustee may obtain bids from any potential Successor Servicer.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on UHS Delaware or the Servicer by the
terms and provisions hereof, and all references in this Agreement to UHS
Delaware or the Servicer shall be deemed to refer to the Successor Servicer.
Any Successor Servicer, by its acceptance of its appointment, will
automatically agree to be bound by the terms and provisions of the Operative
Documents, if any are applicable.
(c) In connection with the appointment of a Successor Servicer,
Finco may make such arrangements to compensate the Successor Servicer out of
Collections as it and such Successor Servicer shall agree; provided, however,
that the priority of payment of such compensation shall be determined pursuant
to Sections 7.2 and 7.3 of the Pooling Agreement and that no such compensation
shall be in excess of the Servicing Fee paid to UHS Delaware.
(d) All authority and power granted to any Successor Servicer under
this Agreement shall automatically cease and terminate upon the termination of
this Agreement and upon payment of all amounts due the parties under the Sale
and Servicing Agreements, the Pooling Agreement and the other Operative
Documents and shall pass to and be vested in UHS Delaware and, without
limitation, UHS Delaware is hereby authorized and empowered to execute and
deliver, on behalf of the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Successor Servicer shall transfer its
electronic records relating to the Receivables to UHS Delaware in such
electronic form as UHS Delaware may reasonably request and shall transfer all
other records, correspondence and documents to UHS Delaware in the manner and
at such times as UHS Delaware shall reasonably request.
Section 4.5. Monitoring. If Finco and the Trustee shall be unable
to replace the Servicer with a Successor Servicer, Finco and the Trustee shall
have the right to appoint a firm of public accountants to monitor the
servicing of the Receivables by the Servicer and to furnish to Finco and the
Trustee, at the expense of the Servicer, such letters, certificates or reports
thereon as Finco and the Trustee shall reasonably request. The Servicer shall
cooperate with such firm in the subsequent monitoring of its servicing of the
Receivables pursuant to this Agreement notwithstanding that any fees in
connection therewith shall be the expense of Finco.
ARTICLE V
MISCELLANEOUS
Section 5.1. Notices, Etc. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto shall be in writing and shall be personally delivered or sent by
registered, certified or express mail, postage prepaid, return receipt
requested, or by telecopy (with voice confirmation thereof) or telegram (with
messenger delivery specified in the case of a telegram) and shall be deemed to
be given for purposes of this Agreement when such personal delivery is made or
such return receipt or confirmation is received by the party giving such
notice, demand, instruction or other communication. Unless otherwise
specified in a notice sent or delivered in accordance with the foregoing
provisions of this Section, notices, demands, instructions and other
communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective telecopy
numbers) indicated below, and, in the case of telephonic instructions or
notices, by calling the telephone number or numbers indicated for such party
below:
If to Finco:
UHS Receivables Corp.
27292 Calle Arroyo, Suite B
San Juan Capistrano, California 92675
Attention: President
Tel. No.: 714-661-9323
Telecopier No.: 714-661-9445
with a copy to:
UHS Receivables Corp.
c/o Universal Health Services, Inc.
367 South Gulph Road
King of Prussia, PA 19406
If to UHS Delaware:
UHS of Delaware, Inc.
367 South Gulph Road
King of Prussia, PA 19406
Attention:
Tel. No.: 215-768-3300
Telecopier No.: 215-768-3336
If to the Trustee:
Continental Bank, National Association
231 South LaSalle Street, 7th Floor
Chicago, Illinois 60697
Attention: Steve Charles
Tel. No.: (312) 828-7321
Telecopier No.: (312) 828-6528
Section 5.2. Successors and Assigns. This Agreement shall be
binding upon the Servicer, Finco and the Trustee and their respective
successors and assigns and shall inure to the benefit of the Servicer, Finco
and the Trustee and their respective successors and assigns; provided that
except as provided hereunder the Servicer shall not assign any of its rights
or obligations hereunder without the prior written consent of Finco. Except
as expressly permitted hereunder or in any of the Operative Documents, Finco
shall not assign any of its rights or obligations hereunder without the prior
written consent of the Trustee.
Section 5.3. Severability Clause. Any provisions of this Agreement
which are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 5.4. Amendments. This Agreement may not be modified,
amended, waived, supplemented or surrendered except pursuant to a written
instrument executed by the Servicer, Finco and the Trustee, and then such
amendment, modification, supplement or waiver shall be effective only in the
specific instance and for the specific purpose given. If any such amendment,
modification, supplement or waiver shall be so consented to by Finco and the
Trustee, the Servicer agrees, promptly following a request by Finco or the
Trustee, to execute and deliver in its own name, and at its own expense, such
instruments, consents and other documents as Finco and the Trustee may deem
necessary or appropriate in the circumstances.
Section 5.5. The Servicer's Obligations. It is expressly agreed
that, anything contained in this Agreement to the contrary notwithstanding,
the Servicer shall be obligated to perform all of its obligations hereunder to
the same extent as if the Interested Parties had no interest therein and
neither Finco, the Trustee nor any Interested Party shall have obligations or
liability under the Purchased Receivables to any Obligor thereunder by reason
of or arising out of this Agreement, nor shall Finco, the Trustee or any
Interested Party be required or obligated in any manner to perform or fulfill
any of the obligations of the Servicer in connection with any Receivables.
Section 5.6. No Recourse. (a) No directors or officers or
employees or agents of the Servicer shall be under any liability to Finco, the
Hospitals, the Interested Parties, the CP Holders or any other Person for any
action of the Servicer hereunder pursuant to this Agreement; provided,
however, that this provision shall not protect the Servicer or any such Person
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder.
(b) The obligations of the Interested Parties, if any, under this
Agreement are solely the corporate obligations of such entities. No recourse
shall be had for the payment of any amount owing in respect of this Agreement
or for the payment of any fee hereunder or for any other obligation or claim
arising out of or based upon this Agreement against any such entity or against
any stockholder, employee, officer, director or incorporator thereof.
Section 5.7. Further Assurances. The Servicer agrees to do such
further acts and things and to execute and deliver to Finco and the Trustee
such additional assignments, agreements, powers and instruments as are
required by Finco to carry into effect the purposes of this Agreement or to
better assure and confirm unto Finco its rights, powers and remedies
hereunder.
Section 5.8. Termination. (a) The Servicer's obligations under
this Agreement shall terminate with respect to any Hospital upon the
termination of the related Sale and Servicing Agreement and all Purchased
Receivables owned by Finco and purchased from such Hospital having been paid
in full or having become Uncollectible Receivables; provided, however, that
the Servicer shall continue to be obligated to do all things necessary to
collect such Uncollectible Receivables and to apply Collections with respect
thereto that it receives in the manner provided in this Agreement and to
perform its obligations hereunder with respect thereto.
(b) This Agreement shall terminate (whether on account of a Early
Amortization Event or otherwise) when the Outstanding Balance of all Purchased
Receivables which are Outstanding Receivables shall be reduced to zero,
provided that the Servicer shall continue to be obligated to do all things
necessary to collect on all Uncollectible Receivables and to apply all
Collections that it receives with respect thereto in the manner provided in
this Agreement and to perform its obligations hereunder with respect thereto.
(c) The representations and warranties of the Servicer hereunder
shall survive the execution and delivery of this Agreement and the purchase of
the Participations.
Section 5.9. Consent to Assignment; Third Party Beneficiaries. (a)
The Servicer acknowledges that all of Finco's right, title and interest in the
obligations of the Servicer to Finco and the rights of Finco against the
Servicer under this Agreement have been assigned, transferred and otherwise
conveyed by Finco to the Trustee, for the benefit of the Participants,
pursuant to the terms and conditions of the Pooling Agreement. The Servicer
hereby agrees and acknowledges that Sheffield shall assign to the Liquidity
Agent, for the benefit of the Liquidity Banks, all of Sheffield's right, title
and interest in, to and under this Agreement. The Servicer consents to such
assignment and transfer to the Trustee and by Sheffield to the Liquidity Agent
and agrees that the Participants (or upon notice by Sheffield or the Liquidity
Agent of a default under the Liquidity Agreement or the Security Agreement,
and to the extent provided in the Pooling Agreement, the TRIPS Holders and the
Liquidity Agent) and the Trustee shall be entitled to enforce the terms of
this Agreement directly against the Servicer, whether or not any Early
Amortization Event or Exclusion Event shall have occurred. The Servicer and
Finco further agree that (i) the Servicer will not take any action (other than
those actions which are consistent with its obligations hereunder and which
occur in the normal course of its operations) without the prior consent of the
Participants (or the TRIPs Holders and the Liquidity Agent, as the case may
be) or the Trustee and (ii) in respect of its obligations hereunder the
Servicer will act at the direction of and in accordance with all requests and
instructions of the Trustee and the Participants (or the TRIPs Holders and the
Liquidity Agent, as the case may be). Finco and the Servicer hereby agree
that, in the event of any conflict of requests or instructions to the Servicer
between Finco on the one hand and the Participants (or the TRIPs Holders and
the Liquidity Agent, as the case may be) or the Trustee, on the other hand,
the Servicer will at all times act in accordance with the requests and
instructions of the Participants(or the TRIPs Holders and the Liquidity Agent,
as the case may be) or the Trustee, and in the event of any conflict of
requests or instructions among Participants, Finco shall act in accordance
with the instructions of the Trustee. The Servicer, Finco and the Trustee
agree that in the event of any conflict of requests or instructions to the
Servicer between Sheffield and the Liquidity Agent, the Servicer will at all
times act in accordance with the requests and instructions of the Liquidity
Agent.
(b) Notwithstanding anything hereunder to the contrary, each
Interested Party shall have the rights of a third-party beneficiary hereunder.
(c) Each of Finco, the Trustee and the Servicer acknowledges that
Sheffield has appointed Barclays to act as Managing Agent. Unless otherwise
instructed by Sheffield, copies of all notices, requests, demands and other
documents to be delivered to Sheffield pursuant to the terms hereof shall be
delivered to the Managing Agent. Unless otherwise instructed by Sheffield,
all notices, requests, demands and other documents to be executed or
delivered, and any action to be taken, by Sheffield pursuant to the terms
hereof may be executed, delivered and/or taken by the Managing Agent. The
rights and responsibilities of the Managing Agent under this Agreement with
respect to any action taken by the Managing Agent or the exercise or non-
exercise by the Managing Agent of any option, right, request, judgment or
other right or remedy provided to Sheffield herein or resulting or arising out
of this Agreement shall, as between the Managing Agent and Sheffield, be
governed by such agreements with respect thereto as may exist from time to
time between them, but, as between the Managing Agent and the parties to this
Agreement, the Managing Agent shall be conclusively presumed to be acting as
agent for Sheffield, with full and valid authority so to act or refrain from
acting, and neither Finco, the Trustee nor the Servicer shall be under any
obligation or entitlement to make any inquiry respecting such authority.
Section 5.10. Counterparts. This Agreement may be executed in any
number of copies, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument.
Section 5.11. Headings. Section headings used in this Agreement
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
Section 5.12. No Bankruptcy Petition. Each of the parties hereto
covenants and agrees that prior to the date which is one year and one day
after the Aggregate Capital has been reduced to zero and all other amounts due
under or in connection with the Operative Documents have been paid, it will
not institute against, or join any other Person in instituting against, Finco
or Sheffield any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law.
Section 5.13. Servicer May Act Through Agents. Subject to the
terms and conditions of this Agreement, the Servicer may exercise any of its
rights or perform any of its duties hereunder through agents of its choosing,
and any action so taken shall have the same force and effect as if taken by
the Servicer directly.
Section 5.14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE
STATE OF NEW YORK WITHOUT REFERENCE TO CONFLICTS OF LAW RULES OF THE STATE OF
NEW YORK.
Section 5.15. No Waiver; Cumulative Remedies. No failure to
exercise, and no delay in exercising, on the part of Finco or any Interested
Party, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
Section 5.16. SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL; SERVICE OF PROCESS. (a) EACH OF THE SERVICER AND UHS DELAWARE (FOR
ITSELF AND ITS RESPECTIVE SUCCESSORS AND ASSIGNS) HEREBY IRREVOCABLY SUBMITS,
FOR ITSELF AND ITS PROPERTY, TO THE JURISDICTION OF THE STATE COURTS OF THE
STATE OF NEW YORK AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF ANY SUIT, ACTION OR
OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF BROUGHT BY FINCO OR ANY INTERESTED PARTY. EACH OF THE SERVICER
AND UHS DELAWARE (FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS) TO THE EXTENT
PERMITTED BY ANY REQUIREMENTS OF LAW (A) HEREBY WAIVES, AND AGREES NOT TO
ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT, ANY CLAIM THAT IT IS NOT SUBJECT
PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS
EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND (B) HEREBY WAIVES THE
RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY OFFSETS OR
COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE ARISE FROM
THE SAME SUBJECT MATTER. THE SERVICER AND UHS DELAWARE HEREBY AGREE THAT
SERVICE OF ANY AND ALL PROCESS AND OTHER DOCUMENTS ON THE SERVICER OR UHS
DELAWARE, AS THE CASE MAY BE, MAY BE EFFECTED BY CERTIFIED OR REGISTERED MAIL
(OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL) TO ITS RESPECTIVE ADDRESS AS SET
FORTH ON SCHEDULE I AND SUCH SERVICE SHALL CONSTITUTE VALID AND EFFECTIVE
SERVICE AGAINST UHS DELAWARE OR THE SERVICER, AS THE CASE MAY BE. EACH OF THE
SERVICER AND UHS DELAWARE AGREES THAT ITS SUBMISSION TO JURISDICTION AND
CONSENT TO SERVICE OF PROCESS BY MAIL IN ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (A) BY
SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH
SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF INDEBTEDNESS OR
LIABILITY THEREIN DESCRIBED OR (B) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT
TO THE LAWS OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT ANY OF FINCO
OR ANY INTERESTED PARTY MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER
JUDICIAL PROCEEDINGS AGAINST THE SERVICER OR UHS DELAWARE OR ANY OF ITS
RESPECTIVE ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY
COUNTRY OR PLACE WHERE THE SERVICER OR UHS DELAWARE OR SUCH ASSETS MAY BE
FOUND.
(b) EACH OF THE SERVICER, UHS DELAWARE, FINCO, THE TRUSTEE (AND
THEIR RESPECTIVE SUCCESSORS AND ASSIGNS) HEREBY WAIVES ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
(c) THIS SECTION 5.16 SHALL SURVIVE THE TERMINATION OF THIS
AGREEMENT.
Section 5.17. Indemnification. If at any time any demand, claim,
cause of action, damage or liability or any action or other legal proceeding
(collectively a "claim") should be asserted against, or incurred by Finco, any
Interested Party or any of their respective directors, officers, employees and
agents by reason of, or in connection with, any act or failure to act on the
part of the Servicer, the Servicer shall indemnify and hold Finco any such
Interested Party, and any such directors, officers, employees and agents, as
the case may be, harmless of and from any and all loss (other than loss of
profit as a result of the credit quality of the Obligor), damage, claim,
penalty, liability and/or expense which it may sustain or incur by reason
thereof, including the amount of any judgment, plus costs and interest
thereon, which may be entered against or incurred by Finco or any Interested
Party with respect to any such claim, as well as any and all reasonable
attorneys' fees and other disbursements paid or incurred in connection
therewith (any of the foregoing, an "Indemnified Amount"), provided the
Servicer has been notified thereof in writing and has been given a reasonable
opportunity to respond to and to defend same. This indemnity shall survive
the termination of this Agreement.
IN WITNESS WHEREOF, UHS Delaware, as Servicer, and Finco have caused
this Agreement to be duly executed by their duly authorized officers, all on
the day and year first above written.
UHS OF DELAWARE, INC., as
Servicer
By:__________________________
Title:
UHS RECEIVABLES CORP.
By:__________________________
Title:
CONTINENTAL BANK, NATIONAL
ASSOCIATION, as Trustee
By:__________________________
Title:
Acknowledged and Agreed:
BARCLAYS BANK PLC, as Managing
Agent for Sheffield
By:____________________________
Title:
SCHEDULE I
Document Locations
Servicer's Principal Place of Business
UHS's Principal Place of Business
A. Document Locations
Hospital Document Locations(s)
Chalmette General Hospital, Inc. 9001 Patricia Street
Chalmette, LA 70043
and
800 Virtue Street
Chalmette, LA 70043
Dallas Family Hospital, Inc. 2929 South Hampton Road
Dallas, TX 75224
Del Amo Hospital, Inc. 23700 Camino del Sol
Torrance, CA 90505
Doctors' General Hospital, Ltd. 6701 West Sunrise Blvd.
Plantation, FL 33313
HRI Hospital, Inc. 227 Babcock Street
Brookline, MA 02146
McAllen Medical Center, Inc. 301 West Expressway 83
McAllen, TX 78503
Meridell Achievement Center, Inc. Highway 29 West
Liberty Hill, TX 78642
and
2501 Cypress Creek Road
Cedar Park, TX 78613
River Oaks, Inc. 1525 River Oaks Road West
New Orleans, LA 70123
Sparks Reno Partnership, L.P. 2375 E. Prater Way
Sparks, NV 89434
Turning Point Care Center, Inc. 319 East By-Pass
Moultrie, GA 31768
UHS of Arkansas, Inc. 21 BridgeWay Road
North Little Rock, AR 72118
UHS of Auburn, Inc. 20 Second Street, N.E.
Auburn, WA 98002
UHS of Belmont, Inc. 4058 West Melrose Street
Chicago, IL 60641
UHS of Maitland, Inc. 201 Alpine Drive
Maitland, FL 32751
UHS of Massachusetts, Inc. 49 Robinwood Avenue
Boston, MA 02130
UHS of River Parishes, Inc. 500 Rue de Sante
LaPlace, LA 70068
UHS of Shreveport, Inc. 1130 Louisiana Avenue
Shreveport, LA 71101
Universal Health Recovery Centers, Inc. 2001 Providence Road
Chester, PA 19013
Universal Health Services of Inland 36485 Inland Valley Drive
Valley, Inc. Wildomar, CA 92395
Universal Health Services of Nevada, Inc. 620 Shadow Lane
Las Vegas, NV 89106
Victoria Regional Medical Center, Inc. 101 Medical Drive
Victoria, TX 77904
Wellington Regional Medical Center 10101 Forest Hill Blvd.
Incorporated West Palm Beach, FL 33414
Westlake Medical Center, Inc. 4415 South Lakeview
Canyon Road
Westlake Village, CA 91361
B. Servicer's Principal Place of Business
367 South Gulph Road
King of Prussia, PA 19406
C. UHS Principal Place of Business
367 South Gulph Road
King of Prussia, PA 19406
SCHEDULE II
Master Receivables Account
Bank: Continental Bank, N.A., Chicago, Illinois
Account Name: Universal Health Services, Inc. Master Receivables Account
Account Number: 78-27784
EXHIBIT A TO
SERVICING
AGREEMENT
Settlement Date Statement
EXHIBIT B TO
SERVICING
AGREEMENT
Servicer's Certificate
[Settlement Date Statement]
[Servicer Daily Statement]
_________________________ hereby certifies that he/she is an Authorized
Officer of UHS of Delaware, Inc. (the "Servicer") holding the office set
forth beneath his/her signature and that he/she is duly authorized to execute
this Servicer's Certificate on behalf of the Servicer and further certifies
[with respect to the immediately preceding Settlement Period (________) to
(________) that (i) the information set forth in the Settlement Date Statement
attached hereto as Exhibit A is true and correct in all material respects as
of the date thereof, (ii) the Servicer has, to the best of my knowledge, fully
performed its obligations under the Servicing Agreement and (iii) except as
set forth on Exhibit A attached, no default in the performance of such
obligations has occurred and is continuing] [that the information set forth in
the Servicer Daily Statement attached hereto as Exhibit A is true and correct
in all material respects as of the Statement Delivery Day].
UHS of Delaware, Inc., as
Servicer
By: _________________________
Name:
Title:
Dated: __________________
EXHIBIT C TO
SERVICING
AGREEMENT
Servicer Daily Statement
EXHIBIT D
TO SERVICING AGREEMENT
FORM OF CONFIDENTIALITY AGREEMENT FOR USE BY FINCO
[Letterhead of Recipient of Information]
___________ __, 199_
UHS Receivables Corp.
27292 Calle Arroyo, Suite B
San Juan Capistrano, CA 92675
Universal Health Services, Inc.
Universal Corporate Center
367 South Gulph Road
King of Prussia, PA 19406
Dear Sirs:
Reference is made to the Servicing Agreement, dated as of _______
__, 1993 (as amended from time to time, the "Servicing Agreement"), among UHS
Receivables Corp., a Delaware corporation (the "Transferor"), Universal Health
Services, Inc., a Delaware corporation (the "Servicer"), and Continental Bank,
a national banking association, not in its individual capacity but solely as
Trustee, and to the pending and proposed discussions between the Transferor
and [recipient] (the "Recipient") regarding [describe transaction requiring
disclosure]. Unless otherwise defined herein, capitalized terms defined in
the Servicing Agreement are used herein as so defined.
Pursuant to our discussions, the Transferor hereby agrees to provide
to the Recipient certain information, practices, books, correspondence, and
records of a confidential nature and in which the Servicer has a proprietary
interest (the "Information") on the terms and conditions set forth below. By
its execution of this Agreement, the Recipient hereby agrees to all such terms
and conditions.
The Recipient hereby acknowledges that all Information received by
it from the Transferor shall be regarded as confidential information and that
the Information may be subject to laws, rules and regulations regarding
patient confidentiality.
The Recipient agrees that, subject to the following sentence, (i) it
shall, and shall cause its employees, agents and representatives to, retain in
confidence and not disclose the Information without the prior written consent
of the Transferor and (ii) it will not, and will ensure that its employees,
agents and representatives will not, make any use whatsoever (other than for
the purposes contemplated by the Servicing Agreement and the other Operative
Documents or for the enforcement of any of the rights granted thereunder) of
any of the Information without the prior written consent of the Transferor.
Notwithstanding the foregoing, the Recipient may (x) disclose Information to
any Person that has executed and delivered a confidentiality agreement in
substantially the same form as this agreement naming the Transferor and the
Servicer as third party beneficiaries thereof and (y) disclose or otherwise
use Information (A) to the extent that such Information is required or
appropriate in any report, statement or testimony submitted to any municipal,
state or federal regulatory body having or claiming to have jurisdiction over
the Recipient or submitted to the National Association of Insurance
Commissioners or similar organizations or their successors, (B) to the extent
such Information is required in response to any summons or subpoena or in
connection with any litigation, (C) to the extent that such Information is
believed to be required in order to comply with any law, order, regulation or
ruling applicable to the Recipient, (D) to the extent that such Information
was publicly available or otherwise known to the Recipient at the time of
disclosure, (E) to the extent that such Information subsequently becomes
publicly available, other than through any act or omission of the Recipient or
(F) to the extent that such Information subsequently becomes known to the
Recipient, other than through a Person whom the Recipient knows to be acting
in violation of its obligations to the Transferor or the Servicer.
The parties agree that any breach of this letter agreement would
cause damages which cannot be determined in money and that injunction is an
appropriate remedy for breach, though not necessarily the sole remedy.
This Agreement shall inure to the benefit of the parties hereto,
each of their respective successors and permitted assigns and the Servicer,
and the Servicer will be deemed to be a third party beneficiary of this
Agreement.
This Agreement shall be governed by, and construed in accordance
with the law of the State of New York, and may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one agreement.
Please acknowledge your agreement to the foregoing by signing three
copies of this letter agreement and returning them to the Transferor. Upon
receipt of the executed letter agreement, the Transferor pursuant to the terms
of the Servicing Agreement, will deliver an executed agreement to the
Servicer.
Very truly yours,
[RECIPIENT]
By:_________________________
Title:
Acknowledged and Agreed:
UHS RECEIVABLES CORP.
By:____________________________
Title:
- -----------------------------------------------------------------------------
POOLING AGREEMENT
among
UHS RECEIVABLES CORP.,
SHEFFIELD RECEIVABLES CORPORATION,
and
CONTINENTAL BANK, NATIONAL ASSOCIATION,
Trustee,
dated as of
November 16, 1993
UHS HEALTHCARE RECEIVABLES TRUST
- ------------------------------------------------------------------------------
**********
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
CONVEYANCE OF THE RECEIVABLES;
PARTICIPATIONS; TRIPs
2.1. Conveyance of Receivables and Total Transferred
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . 3
2.3. Construction of Agreement. . . . . . . . . . . . . . . . . . . . 4
2.4. Participations . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5. Initial Purchase of the Sheffield Participation
and Issuance of the TRIPs. . . . . . . . . . . . . . . . . . . . 4
2.6. Increases and Decreases in the Sheffield
Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7. Maintenance of Aggregate Capital . . . . . . . . . . . . . . . . 7
2.8. Borrowing Base Compliance. . . . . . . . . . . . . . . . . . . . 7
2.9. Subordination of Finco Interest. . . . . . . . . . . . . . . . . 8
2.10. Selection of Fixed Periods . . . . . . . . . . . . . . . . . . 8
2.11. Increased Costs; Capital Adequacy; Illegality . . . . . . . . . 10
2.12. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.13. Extension of Sheffield Revolving Period;
Increase of Maximum Sheffield Capital . . . . . . . . . . . . 12
2.14. Optional Acceleration of TRIPs Amortization
Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III
CONDITIONS TO PAYMENTS
3.1. Conditions to Initial Purchase . . . . . . . . . . . . . . . 14
3.2. Conditions to all Payments . . . . . . . . . . . . . . . . . 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. General Representations and Warranties of Finco. . . . . . . 15
4.2. Representations and Warranties of Finco
Concerning the Receivables . . . . . . . . . . . . . . . . . 19
ARTICLE V
COVENANTS OF FINCO
5.1. General Covenants. . . . . . . . . . . . . . . . . . . . . . 22
Page
5.2. Covenants of Finco Relating to the Receivables . . . . . . . 26
5.3. Notice and Consent Procedures . . . . . . . . . . . . . . . 31
5.4. Removal of Non-qualifying Receivables. . . . . . . . . . . .. 32
5.5. Hospital Concentration Accounts. . . . . . . . . . . . . . . 33
5.6. Performance of Agreements. . . . . . . . . . . . . . . . . . 33
5.7. Amendment of Assigned Agreements; Waivers. . . . . . . . . . 34
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
6.1. Servicing. . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.2. Collections. . . . . . . . . . . . . . . . . . . . . . . . . 35
6.3. Claims Against Third Parties . . . . . . . . . . . . . . . . 36
6.4. Deleted Receivables. . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VII
COLLATERAL ACCOUNT AND OTHER ACCOUNTS;
ALLOCATIONS AND DISTRIBUTIONS
7.1. Establishment of Collateral Account and Other
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.2. Daily Allocations. . . . . . . . . . . . . . . . . . . . . . 39
7.3. Monthly Applications . . . . . . . . . . . . . . . . . . . . 42
7.4. Payments to Sheffield. . . . . . . . . . . . . . . . . . . . 44
7.5. Amortization . . . . . . . . . . . . . . . . . . . . . . . . 44
7.6. Allocation and Payment Procedures. . . . . . . . . . . . . . 46
7.7. Permitted Investments. . . . . . . . . . . . . . . . . . . . 47
7.8. Additional Accounts. . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII
DISTRIBUTIONS AND REPORTS TO PARTICIPANTS
8.1. Distributions. . . . . . . . . . . . . . . . . . . . . . . . 48
8.2. Statements to Participants . . . . . . . . . . . . . . . . . 48
ARTICLE IX
TRIPs; RIGHTS OF PARTICIPANTS
9.1. The TRIPs. . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.2. Authentication of TRIPs. . . . . . . . . . . . . . . . . . . 49
9.3. Registration of Transfer and Exchange of TRIPs . . . . . . . 49
9.4. Restrictions on Transfer . . . . . . . . . . . . . . . . . . 50
9.5. Mutilated, Destroyed, Lost or Stolen TRIPs . . . . . . . . . 50
9.6. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . 51
9.7. Access to List of Participants' Names and
Addresses. . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.8. Authenticating Agent . . . . . . . . . . . . . . . . . . . . 52
9.9. Limitation on Rights of Participants . . . . . . . . . . . . 53
9.10. Participations Nonassessable and Fully Paid . . . . . . . . . . 53
9.11. Actions by TRIPs Holders. . . . . . . . . . . . . . . . . . . . 53
Page
ARTICLE X
EARLY AMORTIZATION EVENTS
10.1. Early Amortization Events . . . . . . . . . . . . . . . . . . . 54
10.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE XI
THE TRUSTEE
11.1. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . 60
11.2. Rights of the Trustee. . . . . . . . . . . . . . . . . . . . . 61
11.3. Trustee Not Liable for Recitals. . . . . . . . . . . . . . . . 62
11.4. Trustee May Own TRIPs. . . . . . . . . . . . . . . . . . . . . 63
11.5. Compensation of Trustee. . . . . . . . . . . . . . . . . . . . 63
11.6. Eligibility Requirements for Trustee . . . . . . . . . . . . . 63
11.7. Resignation or Removal of Trustee. . . . . . . . . . . . . . . 64
11.8. Successor Trustee. . . . . . . . . . . . . . . . . . . . . . . 64
11.9. Merger or Consolidation of Trustee . . . . . . . . . . . . . . 65
11.10. Appointment of Co-Trustee or Separate Trustee. . . . . . . . . 65
11.11. Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.12. Trustee May Enforce Claims Without Possession
of TRIPs. . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.13. Suits for Enforcement. . . . . . . . . . . . . . . . . . . . . 67
11.14. Rights of Participants to Direct Trustee . . . . . . . . . . . 67
11.15. Representations and Warranties of Trustee. . . . . . . . . . . 68
11.16. Maintenance of Office or Agency. . . . . . . . . . . . . . . . 68
ARTICLE XII
INDEMNIFICATION AND EXPENSES
12.1. Indemnities by Finco. . . . . . . . . . . . . . . . . . . . . . 69
12.2. Additional Costs. . . . . . . . . . . . . . . . . . . . . . . . 70
12.3. Survival of Indemnities . . . . . . . . . . . . . . . . . . . . 71
12.4. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE XIII
TERMINATION OF TRUST
13.1. Final Termination of Participations; Optional
Repurchase of TRIPs. . . . . . . . . . . . . . . . . . . . . 72
13.2. Final Payment of the TRIPs. . . . . . . . . . . . . . . . . . . 73
13.3. Termination of Trust. . . . . . . . . . . . . . . . . . . . . . 73
13.4. Finco's Termination Rights. . . . . . . . . . . . . . . . . . . 74
ARTICLE XIV
MISCELLANEOUS
14.1. Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . . . 74
14.2. Successors and Assigns; Survival . . . . . . . . . . . . . . . 76
14.3. Severability Clause. . . . . . . . . . . . . . . . . . . . . . 76
14.4. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Page
14.5. Finco's Obligations. . . . . . . . . . . . . . . . . . . . . . 77
14.6. Consent to Assignment. . . . . . . . . . . . . . . . . . . . . 77
14.7. Authority of Managing Agent. . . . . . . . . . . . . . . . . . 78
14.8. Further Assurances . . . . . . . . . . . . . . . . . . . . . . 78
14.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 78
14.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
14.11. No Bankruptcy Petition Against Sheffield or
Finco . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
14.12. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . 79
14.13. No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . 79
14.14. SUMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL; SERVICE OF PROCESS. . . . . . . . . . . . . . . 79
14.15. Acquisition of Participations. . . . . . . . . . . . . . . . . 80
14.16. Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
EXHIBIT A Form of TRIP
EXHIBIT B Auditors' Report
EXHIBIT C Form of Confidentiality Agreement
EXHIBIT D Transfer Certificate
SCHEDULE I Finco Principal Place of Business
SCHEDULE II Accounts
POOLING AGREEMENT
POOLING AGREEMENT, dated as of November 16, 1993 (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), among
UHS Receivables Corp., a Delaware corporation (together with its successors
and assigns, "Finco"), Sheffield Receivables Corporation, a Delaware
corporation (together with its successors and assigns, "Sheffield"), and
Continental Bank, National Association, a national banking association, as
trustee (in such capacity, together with its successors and assigns, the
"Trustee").
WHEREAS, pursuant to the Sale and Servicing Agreements (capitalized
terms used without definition in the recitals have the meanings assigned to
them in the Definitions List referred to below) the Hospitals have agreed to
sell, and Finco has agreed to purchase, the Receivables and other Transferred
Property;
WHEREAS, Finco wishes to assign and transfer to the Trustee on
behalf of the Trust and pursuant to the terms and conditions set forth herein
all of its right, title and interest in, to and under the Receivables and
other Finco Transferred Property;
WHEREAS, the Trust will issue the Sheffield Participation on the
Initial Closing Date, which Participation will be subject to increase or
decrease as set forth herein; and
WHEREAS, it is contemplated that one or more TRIPs Participations
will be issued on a TRIPs Closing Date to occur after the Initial Closing
Date.
In consideration for the premises and the mutual agreements herein
contained, each party agrees, for the benefit of the other parties and the
Participants, as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement (unless the
context requires a different meaning), capitalized terms shall have the
meanings assigned to them in the Definitions List, dated as of the date hereof
(the "Definitions List"), that refers to this Agreement, which Definitions
List is incorporated herein by reference and shall be deemed to be a part of
this Agreement, and all terms herein shall be interpreted in accordance with
the terms of the Definitions List.
ARTICLE II
CONVEYANCE OF THE RECEIVABLES;
PARTICIPATIONS; TRIPs
Section 2.1. Conveyance of Receivables and Total Transferred
Property. (a) By execution of this Agreement, Finco does hereby transfer,
assign, set over and otherwise convey to the Trustee on behalf of the Trust,
in trust for the benefit of the Participants and, to the extent set forth in
Section 2.9, Finco, without recourse (except as specifically provided herein),
all its right, title and interest in, to and under: (i) the Purchased
Receivables and the other Transferred Property with respect to which the
Payment Date is the Initial Closing Date and created from time to time
thereafter until the Trust Termination Date, all monies due or to become due
and all amounts received or to be received with respect thereto and all
proceeds thereof (including, without limitation, "proceeds" as defined in
Section 9-306 of the UCC in effect in the state in which Finco's chief
executive office is located), subject, however, to the repurchase provisions
of Section 5.4 and (ii) the Assigned Agreements and the other Finco
Transferred Property, including, without limitation, all amounts due and to
become due to Finco from the Servicer, the Hospitals, UHS or any other Person
under or in connection with the Assigned Agreements, whether payable as
interest, fees, expenses, costs, taxes, indemnities, insurance recoveries,
damages for breach of any of the Assigned Agreements or otherwise and all
proceeds thereof (including, without limitation, "proceeds" as defined in
Section 9-306 of the UCC in effect in the state in which Finco's chief
executive office is located), and all rights, remedies, powers, privileges and
claims of Finco against any or all of the Assignors under or with respect to
the respective Assigned Agreements (whether arising pursuant to the terms of
the Assigned Agreements or otherwise available to Finco at law or in equity),
including, without limitation, the rights of Finco (A) to enforce (x) the Sale
and Servicing Agreements against the respective Hospitals thereunder, (y) the
Servicing Agreement against the Servicer and (z) the Guarantee against UHS and
(B) to give or withhold any and all consents, requests, notices, directions,
approvals, extensions or waivers under or with respect to the Assigned
Agreements to the same extent as Finco might do but for the assignment of all
such rights by Finco to the Trustee in this Section 2.1. Such property,
together with all monies from time to time on deposit in the Collateral
Account, the Other Accounts and any Additional Account, shall constitute the
assets of the Trust (the "Trust Assets"). In exchange for the conveyance of
the Trust Assets on the Initial Closing Date, Finco shall receive the
Sheffield Participation to be acquired on the Initial Closing Date by
Sheffield and the Subordinated Interest.
(b) Notwithstanding the foregoing transfer, assignment, set-over
and conveyance, subject to Sections 5.6 and 5.7, Finco shall nevertheless be
permitted to take all actions, if any, required by the specific terms of any
of the Assigned Agreements, and such transfer, assignment, set-over and
conveyance (i) does not constitute and is not intended to result in the
creation or an assumption by the Trust, the Trustee or any Interested Party of
any obligation of Finco, any UHS Entity or any other Person in the Transferred
Property, the Assigned Agreements or the other Finco Transferred Property and
(ii) shall not relieve Finco from the performance of any term, covenant,
condition or agreement on Finco's part to be performed or observed under or in
connection with any of the Assigned Agreements, or from any liability to any
Assignor under any of the Assigned Agreements, or impose any obligation on any
of the Interested Parties to perform or observe any such term, covenant,
condition or agreement on Finco's part to be so performed or observed or
impose any liability on any of the Interested Parties for any act or omission
on the part of Finco or any Assignor or from any breach of any representation
or warranty on the part of Finco or any Assignor contained herein or in the
other Assigned Agreements, or made in connection herewith or therewith.
(c) In connection with such transfer, assignment, set-over and
conveyance, and subject to Section 5.3, Finco agrees to file or deliver, as
the case may be, at its own expense, all Security Filings with respect to the
Purchased Receivables, the other Transferred Property, and the Finco
Transferred Property, now existing and hereafter created, meeting the
requirements of applicable state laws in such manner and in such jurisdictions
as are necessary to perfect the assignment of the Transferred Property and the
Finco Transferred Property to the Trustee, and to deliver a file-stamped copy
or other evidence of filing of any UCC financing statements and any
continuation statements to the Trustee. The Trustee shall be entitled to rely
on the Security Filings filed or delivered by Finco without any independent
investigation.
(d) In connection with such transfer, assignment, set-over and
conveyance, Finco further agrees, at its own expense, on or prior to the
Initial Closing Date, to indicate in its computer files and to cause the
Servicer and the Hospitals to indicate in their computer files that the
Purchased Receivables have been conveyed to the Trustee on behalf of the Trust
pursuant to this Agreement for the benefit of the Participants.
Section 2.2. Acceptance by Trustee. (a) The Trustee hereby
acknowledges its acceptance on behalf of the Trust of all right, title and
interest to the property, now existing and hereafter created, conveyed to the
Trustee on behalf of the Trust pursuant to Section 2.1 and declares that it
shall maintain such right, title and interest, upon the trust herein set
forth, for the benefit of all Participants.
(b) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in Sections 9.3(b) and 9.8(d) of this Agreement.
Section 2.3. Construction of Agreement. (a) Finco hereby grants
to the Trustee on behalf of the Trust a security interest in all of Finco's
right, title and interest in, to and under the Total Transferred Property to
secure all of Finco's obligations hereunder and under the other Finco
documents, including, without limitation, Finco's obligation to transfer
Receivables hereafter created to the Trustee on behalf of the Trust, and this
Agreement shall constitute a security agreement under applicable law.
(b) It is the intent of Finco, the Trustee and the Participants
that, for federal, state and local income and franchise tax purposes and
consolidated financial accounting, the Participations will be considered
indebtedness of Finco secured by the Total Transferred Property. Finco and
Sheffield, by entering into this Agreement, and each TRIPs Holder, by its
acceptance of its TRIP, agree to treat the Participations for federal, state
and local income and franchise tax purposes as indebtedness of Finco.
Section 2.4. Participations. Subject to the terms of this
Agreement, each Participation shall represent senior undivided participating
ownership or security interests in the Trust Assets, including the right to
receive all Collections and other amounts received in respect of the Purchased
Receivables, all funds on deposit in the Collateral Account credited to the
sub-accounts maintained for the Participants and all funds in the Other
Accounts and any Additional Accounts (each such interest being hereinafter
referred to as a "Participation"), all as provided in this Agreement. The
TRIPs Participations shall be evidenced by the TRIPs, each substantially in
the form of Exhibit A. The TRIPs shall, upon issue, be executed and delivered
by Finco to the Trustee for authentication and redelivery as provided in
Sections 2.5 and 9.2. Sheffield is hereby authorized to record the date of
the Initial Sheffield Purchase and each Increase, the Initial Sheffield
Capital and each Increase Amount and the date and amount of each Decrease on
its books and records, and any such recordation shall, absent manifest error,
constitute prima facie evidence of the Sheffield Capital and the Sheffield
Participation.
Section 2.5. Initial Purchase of the Sheffield Participation and
Issuance of the TRIPs. (a) Subject to the terms and conditions of this
Agreement, the Sheffield Participation shall be initially acquired (the
"Initial Sheffield Purchase") by Sheffield on the Initial Closing Date and
upon request of Finco and acceptance by Sheffield; provided that Finco gives
irrevocable written notice to Sheffield prior to 3:00 pm (New York City time)
on the Business Day prior to the Initial Closing Date, unless the Sheffield
Yield Rate with respect to the Initial Sheffield Capital shall be calculated
by reference to the Adjusted Eurodollar Rate, in which case such notice shall
be delivered no later than 3:00 pm (New York City time) three Business Days
prior to the Initial Closing Date. Such notice shall state (i) the Initial
Closing Date, (ii) the Initial Sheffield Capital, which shall not be less than
$1,000,000, (iii) the Fixed Period applicable to each Sheffield Tranche
comprising such Initial Sheffield Capital and (iv) the Sheffield Yield Rate
approved by Sheffield for each such Sheffield Tranche provided that the Fixed
Period applicable to any Sheffield Tranche comprising the Initial Sheffield
Capital shall be selected in accordance with the requirements of Section 2.10.
On the Initial Closing Date, Sheffield shall make available to Finco at
Finco's office specified in Section 14.1, in immediately available funds, the
Initial Sheffield Capital. Sheffield shall not agree to make the Initial
Sheffield Purchase if, after giving effect thereto, the Sheffield Capital
would exceed the Maximum Sheffield Capital.
(b) On the TRIPs Closing Date, Sheffield may reduce the Sheffield
Participation. In exchange therefor, subject to the terms and conditions of
this Agreement and payment of any amounts required to be paid in respect of
the Sheffield Participation, upon written order of Finco to the Trustee, on
the TRIPs Closing Date the Trust shall (i) issue the TRIPs evidencing the
TRIPs Participations and (ii) reduce the Sheffield Capital to the extent of
the TRIPs Capital of the TRIPs so issued. The TRIPs Participations so issued
on the TRIPs Closing Date shall be acquired by the TRIPs Holders and the TRIPs
shall be issued in favor of the TRIPs Holders on the TRIPs Closing Date in an
aggregate amount equal to the Initial TRIPs Capital; provided that Finco shall
give five Business Days' prior written notice to Sheffield, the Rating
Agencies and the Trustee of such acquisition, and if such acquisition will
result in a Decrease of the Sheffield Capital, Finco shall satisfy the
conditions of Section 2.6(b). Such notice shall specify (i) the TRIPs Closing
Date, (ii) the Initial TRIPs Capital, (iii) the Scheduled TRIPs Termination
Date and (iv) the TRIPs Yield Rate. On the TRIPs Closing Date, each TRIPs
Holder shall make available to the Trustee, for deposit in the Collateral
Account, in immediately available funds, its portion of the Initial TRIPs
Capital; provided, however, that, after giving effect to such deposit and to
any Increases and Decreases proposed to be made on the TRIPs Closing Date, the
Initial TRIPs Capital shall not exceed the Maximum TRIPs Capital and the sum
of the Sheffield Capital and the TRIPs Capital shall not exceed the Maximum
Aggregate Capital. On the TRIPs Closing Date, Finco shall execute, and the
Trustee, upon written order of Finco, shall duly authenticate and deliver to
the TRIPs Holders, TRIPs executed in favor of each TRIPs Holder, in
denominations equal to the TRIPs Holders' respective portions of the Initial
TRIPs Capital.
Section 2.6. Increases and Decreases in the Sheffield Capital. (a)
The Sheffield Capital may be increased (an "Increase") on any Business Day
upon request of Finco and (subject to the limitations set forth herein) at
Sheffield's option; provided that Finco gives irrevocable written notice to
Sheffield prior to 3:00 pm (New York City time) on the Business Day prior to
the date of such Increase, unless the Sheffield Yield Rate with respect to the
Increase Amount shall be calculated by reference to the Adjusted Eurodollar
Rate, in which case such notice shall be delivered no later than 3:00 pm three
Business Days prior to the date of such Increase. Such notice shall state (i)
the Business Day on which such Increase is proposed to occur, (ii) the
Increase Amount, which shall not be less than $1,000,000, (iii) the Fixed
Period applicable to such Increase Amount and (iv) the Sheffield Yield Rate
applicable to such Increase Amount. Promptly upon receipt of such notice,
Sheffield shall determine, in its sole discretion, its willingness to acquire
the Increase, and shall promptly notify Finco of such determination. If
Sheffield agrees to acquire any Increase, on the applicable Business Day on
which such Increase is scheduled to occur, Sheffield shall make available to
Finco at its office specified in Section 14.1, in immediately available funds,
the applicable Increase Amount. Sheffield shall not agree to acquire any
Increase if, after giving effect thereto, the Sheffield Capital would exceed
the Maximum Sheffield Capital.
(b) Prior to 3:00 pm (New York City time) on the last day of any
Fixed Period with respect to any Sheffield Tranche, upon election of Finco,
the Sheffield Capital may be decreased (a "Decrease") through the distribution
to Sheffield of an amount equal to all or any portion of such Sheffield
Tranche; provided that (i) Finco shall give written notice of such Decrease
prior to 3:00 pm (New York City time) on the Business Day preceding such
decrease to Sheffield and the Trustee, (ii) such distribution shall be made
from funds (A) retained in the Sheffield Sub-account pursuant to Section
7.2(b)(iv)(B) or (B) allocated to the Collateral Account pursuant to Sections
7.2(b)(v) and 7.2(c)(v) and (iii) after giving effect to such distribution,
and to Section 2.10, no Sheffield Tranche shall be less than $100,000.
(c) The Sheffield Capital shall not be increased unless each of the
following conditions have been satisfied, and delivery by Finco of any request
for any Increase pursuant to subsection 2.6(a) shall be deemed to be a
representation and warranty by Finco as to the satisfaction of such
conditions:
(i) On each such date Finco shall have complied, in all material
respects, with all its covenants hereunder and shall have fulfilled all
its obligations hereunder;
(ii) The representations and warranties of Finco set forth in
Article IV shall be true and correct in all material respects on and as
of such date after giving effect to any such payment; and
(iii) Since the previous Business Day, there shall have been no
material adverse change or changes in (i) the business, property, assets
or condition (financial or otherwise) of the UHS Entities taken as a
whole that would reasonably be expected to have, alone or in the
aggregate, a material adverse effect on the ability of the UHS Entities
to perform their obligations under the Operative Documents or (B) the
collectibility (other than as a result of the credit quality of any
Obligor) or enforceability of the Purchased Receivables taken as a whole
or the value of the related Transferred Property.
(d) To the extent that Sheffield elects to maintain the Sheffield
Participation and the Sheffield Capital in accordance with Section 2.7, Fixed
Periods shall be selected from time to time to apply to each Sheffield Tranche
in accordance with Section 2.10.
Section 2.7. Maintenance of Aggregate Capital. (a) During the
TRIPs Revolving Period, and subject to the terms and conditions of this
Agreement, the Trustee, on behalf of the TRIPs Holders, shall maintain the
TRIPs Capital by paying to Finco on each Business Day the amounts (if any)
required to be paid pursuant to Section 7.2(d).
(b) During the Sheffield Revolving Period, and subject to the terms
and conditions of this Agreement, the Trustee, on behalf of Sheffield, shall,
unless otherwise instructed in writing by Sheffield, maintain the Sheffield
Capital, subject to increase or decrease as provided herein, by paying to
Finco on each Business Day the amounts (if any) required to be paid pursuant
to Section 7.2(d). Nothing in this Agreement shall be deemed to be or
construed as a commitment by Sheffield to make the Initial Sheffield Purchase
or any Increase or to make any payment to Finco to maintain the Sheffield
Capital. Sheffield may elect upon 90 days' prior written notice, in its sole
discretion, not to maintain the Sheffield Capital. Sheffield shall send
notice of such election to Finco and the Trustee and the Trustee shall
thereupon provide notice thereof to each TRIPs Holder. Commencing 90 days
after receipt of such notice, the Trustee, on behalf of Sheffield, shall make
the allocation provided in Section 7.2(b)(iv)(A).
Section 2.8. Borrowing Base Compliance. (a) If, on any Business
Day during the Sheffield Revolving Period, after giving effect to all
allocations and distributions required pursuant to Sections 7.2(a) through
(c), the Aggregate Capital would exceed the Borrowing Base (as reflected in
the Servicer Daily Statement), the Sheffield Capital shall be reduced through
the repayment of Commercial Paper and Loans by the lesser of (i) the amount of
such excess, (ii) the sum of (A) the portion of the Sheffield Capital
allocable to all Commercial Paper maturing on such Business Day and (B) the
principal amount of all Loans maturing or which may be prepaid on such
Business Day and (iii) the amount of funds deposited in the Collateral Account
pursuant to Sections 7.2(b)(v)(A) and 7.2(c)(vi)(A) on such Business Day. The
amount of new Commercial Paper which could otherwise be issued on such date
shall be reduced to the extent of such excess. If no Commercial Paper Notes
are scheduled to mature on such date and no Loans are then Outstanding, then
the Sheffield Capital shall not be so reduced as a result of such excess.
(b) Notwithstanding any provision of this Agreement to the
contrary, the amount of any payment to Finco in respect of the Participations,
whether in respect of the initial acquisition of any Participation, any
Increase or the maintenance of the Aggregate Capital, shall be reduced to the
extent that, after giving effect to such payment (absent the reduction
required pursuant to this Section) and to all allocations and distributions
required pursuant to Article VII on such day, and any reduction in the
Sheffield Capital required by Section 2.8(a), the Aggregate Capital would
exceed the Borrowing Base.
Section 2.9. Subordination of Finco Interest. (a) Finco shall
receive an interest in the Trust Assets not represented by the Participations
(the "Subordinated Interest"), which interest shall be subordinated to the
interests of the Participants in the Trust Assets; provided that, except as
specifically provided in Article VII, the Subordinated Interest shall not
represent any interest in the Collateral Account, the Other Accounts, any
Additional Account or any other account maintained for the benefit of the
Participants. Subject to the terms and conditions of this Agreement, Finco
shall be entitled to receive the amounts (if any) payable to it pursuant to
Section 7.2(d) in respect of the Subordinated Interest. Finco hereby agrees
that all its right, title and interest in the Collections on the Purchased
Receivables shall be subordinated to the extent of the priorities and in the
manner set forth in Article VII.
(b) If an Early Amortization Event shall have occurred and be
continuing, no amount shall be paid to Finco in respect of the Subordinated
Interest or otherwise until (i) the Adjusted Aggregate Capital shall have been
reduced to zero, (ii) all Yield and any Make-Whole Payment Amount scheduled to
accrue or be paid in respect of the Participations shall have been deposited
in the Sheffield Interest Sub-account or the TRIPs Interest Sub-account, as
the case may be, and (iii) all fees, costs, expenses and Indemnified Amounts
scheduled to accrue or be paid pursuant to the Operative Documents shall have
been deposited in the Expense Sub-account.
Section 2.10. Selection of Fixed Periods. (a) From time to time
hereafter until the Sheffield Termination Date, Finco shall, subject to the
limitations described below, select (i) Fixed Periods for each Sheffield
Tranche so that all Sheffield Capital is at all times allocated to a Fixed
Period and (ii) Sheffield Yield Rates approved by Sheffield to apply to each
such Sheffield Tranche for each such Fixed Period. The initial Fixed Periods
and Sheffield Yield Rates applicable to the Initial Sheffield Capital and each
Increase Amount, respectively, shall be specified in the notice relating to
the Initial Sheffield Purchase and each Increase, as described in Sections 2.5
and 2.6. Each subsequent Fixed Period for each Sheffield Tranche shall
commence on the last day of the immediately preceding Fixed Period for such
Sheffield Tranche, and the duration of, and Sheffield Yield Rate applicable
to, such subsequent Fixed Period shall be such as Finco shall select and
Sheffield shall approve on notice from Finco received by Sheffield (including
notice by telephone, confirmed in writing) not later than 3:00 pm (New York
City time) on such last day, except that (i) (A) if Sheffield shall notify
Finco on or prior to receipt of such notice that the Sheffield Yield Rate
applicable to any Sheffield Tranche shall be the Alternative Rate, then the
Sheffield Yield Rate applicable to such Sheffield Tranche shall be the
Alternative Rate, (B) no Sheffield Tranche outstanding after the Sheffield
Termination Date and calculated by reference to the CP Rate shall have a fixed
period ending after the 120th day after the Sheffield Termination Date (or if
an Early Amortization Event of a type specified in subsection 10.1(f) or (s)
shall have occurred, after the Sheffield Termination Date) and (C) each Fixed
Period commencing after the occurrence of an Early Amortization Event of a
type specified in subsection 10.1(f) or (s) hereof shall be calculated by
reference to the Alternative Rate, (ii) if Sheffield shall not have received
such notice before 3:00 pm (New York City time) or Sheffield and Finco shall
not have so mutually agreed before 3:00 pm (New York City time) on such last
day, such Fixed Period shall be one day and the applicable Sheffield Yield
Rate shall be the Base Rate, (iii) if Finco is requesting that Sheffield Yield
accrue at the Adjusted Eurodollar Rate for such Fixed Period, such notice must
be received by Sheffield no later than 3:00 pm on the third Business Day prior
to such last day and (iv) if Sheffield shall have notified Finco of the
existence of a Eurodollar Disruption Event, the Applicable Sheffield Yield
Rate shall not be calculated by reference to the Adjusted Eurodollar Rate.
Any Fixed Period which would otherwise end on a day which is not a Business
Day shall be extended to the next succeeding Business Day. In addition,
whenever any Fixed Period as to which Sheffield Yield accrues at the Adjusted
Eurodollar Rate commences on the last Business Day in a month or on a day for
which there is no numerically corresponding day in the month in which such
Fixed Period ends, the last day of such Fixed Period shall occur on the last
Business Day of the month in which such Fixed Period ends. Any Fixed Period
which commences before the Scheduled Sheffield Termination Date and would
otherwise end on a date occurring after the Scheduled Sheffield Termination
Date shall end on the Scheduled Sheffield Termination Date. Any Fixed Period
which commences on or after the Scheduled Sheffield Termination Date shall be
of such duration as shall be selected by Sheffield. Sheffield shall, on the
first day of each Fixed Period for each Sheffield Tranche, notify the Trustee
of the Sheffield Yield Rate for such Sheffield Tranche.
(b) Sheffield shall notify Finco in the event that a Eurodollar
Disruption Event as described in clause (i) of the definition of "Eurodollar
Disruption Event" has occurred, whereupon any Sheffield Tranche in respect of
which Sheffield Yield accrues at the Adjusted Eurodollar Rate for the then
current Fixed Period shall immediately be converted to accrue at the Base Rate
for the remainder of such Fixed Period.
(c) If any acquisition of the Initial Sheffield Purchase or any
Increase requested by Finco, or any selection of a subsequent Fixed Period and
Sheffield Yield Rate approved by Sheffield pursuant to this Section 2.10 for
any Sheffield Tranche is not, for any reason (other than as a result of the
gross negligence or willful misconduct of Sheffield or any Lender), made or
effectuated, as the case may be, on the date specified therefor, or if any
Decrease in any Sheffield Tranche is made on any day other than the last day
of the Fixed Period with respect to such Sheffield Tranche, Finco shall
indemnify Sheffield for any loss, cost or expense incurred by Sheffield,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by
Sheffield to fund such Initial Sheffield Purchase or Increase or to maintain
such Sheffield Tranche during the applicable Fixed Period. The agreements and
obligations of Finco contained in this Section 2.10(c) shall survive the
termination of this Agreement.
Section 2.11. Increased Costs; Capital Adequacy; Illegality. (a)
If as a result of the introduction of or any change (including, without
limitation, any change by way of imposition or increase of reserve
requirements) in or in the interpretation of any Requirement of Law or the
compliance by any Lender or any Affiliate thereof with any law, guideline,
rule, regulation, directive or request from any central bank or other
Governmental Authority or agency (whether or not having the force of law),
Sheffield is required to compensate any Lender in connection with this
Agreement or the funding or maintenance of the Sheffield Participation
hereunder, then within ten days after demand by Sheffield, Finco shall pay to
Sheffield such additional amount or amounts as may be necessary to reimburse
Sheffield for any amounts paid by it.
(b) When making a claim under this Section 2.11, Sheffield shall
submit to Finco a certificate as to such additional or increased cost or
reduction, which certificate shall be conclusive absent manifest error.
(c) The agreements and obligations of Finco contained in this
Section 2.11 shall survive the termination of this Agreement.
Section 2.12. Taxes. (a) Any and all payments in respect of the
Participations or any other fees, costs, expenses or Indemnified Amounts
hereunder shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Interested Party, net income taxes that are imposed by the United
States and franchise taxes, gross receipts taxes and net income taxes that are
imposed on such Interested Party by any state or foreign jurisdiction (as the
case may be) under the laws of which such Interested Party is organized or
with which such Interested Party is associated other than as a result of this
Agreement, or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If Finco or the Servicer shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Interested Party, (i) Finco shall make an additional payment
to such Interested Party in an amount sufficient so that, after making all
required deductions (including deductions applicable to additional sums
payable under this Section 2.12), such Interested Party receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
Finco or the Servicer, as the case may be, shall make such deductions and
(iii) Finco or the Servicer, as the case may be, shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) Finco will indemnify each Interested Party for the full amount
of Taxes, including, without limitation, any Taxes imposed by any jurisdiction
on amounts payable under this Section 2.12 paid by such Interested Party, and
any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto; provided that, in making a demand for indemnity
payment an Interested Party shall provide Finco, at its address referred to in
Section 14.1, with a certificate from the relevant taxing authority or from a
responsible officer of such Interested Party stating or otherwise evidencing
that such Interested Party has made payment of such Taxes and will provide a
copy of or extract from documentation, if available, furnished by such taxing
authority evidencing assertion or payment of such Taxes. This indemnification
shall be made within ten days after the date such Interested Party makes
written demand therefor.
(c) Within 30 days after the date of any payment of Taxes by Finco,
Finco will furnish to the party requesting such payment, at its address
referred to in Section 14.1, appropriate evidence of payment thereof.
(d) Each Interested Party that is not incorporated under the laws
of the United States of America or a state thereof shall, to the extent that
it may then do so under applicable laws and regulations, deliver to Finco (i)
within 15 days after the date hereof (or after the TRIPs Closing Date in the
case of the TRIPs Holders), two (or such other number as may from time to time
be prescribed by applicable laws or regulations) duly completed copies of IRS
Form 4224 or Form 1001 (or any successor forms or other certificates or
statements which may be required from time to time by the relevant United
States taxing authorities or applicable laws or regulations), as appropriate,
to permit payments to be made hereunder for the account of such Interested
Party without deduction or withholding of United States federal income or
similar taxes and (ii) upon the obsolescence of or after the occurrence of any
event requiring a change in, any form or certificate previously delivered
pursuant to this Section 2.12(d), copies (in such numbers as may from time to
time be prescribed by applicable laws or regulations) of such additional,
amended or successor forms, certificates or statements as may be required
under applicable laws or regulations to permit payments to be made hereunder
for the account of such Interested Party without deduction or withholding of
United States federal income or similar taxes.
(e) For any period with respect to which an Interested Party has
failed to provide Finco with the appropriate form, certificate or statement
required pursuant to Section 2.12(d) (other than if such failure is due to a
change in law occurring after the date of this Agreement), such Interested
Party shall not be entitled to indemnification under Section 2.12(a) or
2.12(b) with respect to Taxes imposed by the United States.
(f) Within 30 days of the written request of Finco therefor, each
Interested Party shall execute and deliver to Finco such certificates, forms
or other documents which can be furnished consistent with the facts, which are
reasonably necessary to assist Finco in applying for refunds of Taxes remitted
hereunder and which are not detrimental to such Interested Party.
(g) If Sheffield is required to compensate a Lender in respect of
taxes under circumstances equivalent to those described in this Section 2.12,
then within ten days after demand by Sheffield, Finco shall pay to Sheffield
such additional amount or amounts as may be necessary to reimburse Sheffield
for any amounts paid by it.
(h) The agreements and obligations of Finco contained in this
Section 2.12 shall survive the termination of this Agreement.
Section 2.13. Extension of Sheffield Revolving Period; Increase of
Maximum Sheffield Capital. (a) Finco may request that the Sheffield
Revolving Period be extended for one or more additional years by submitting in
writing to Sheffield and the Trustee, no later than 90 days prior to the
Scheduled Sheffield Termination Date, a request for such extension; provided
that at the time of such request (i) no Early Amortization Event shall have
occurred and be continuing and (ii) neither Finco nor the Servicer shall be in
default in the performance of any covenant or agreement contained herein or in
any Operative Document. Sheffield shall, in its sole discretion, accept or
reject such request in writing within 45 days of receipt thereof and Finco
shall thereupon notify the Trustee in writing of such acceptance or rejection.
If Sheffield shall accept such request in writing, the Sheffield Revolving
Period shall automatically and without any further action be extended for the
period specified in such request. A failure by Sheffield to provide the
required response to such request shall be deemed to be a rejection of such
request.
(b) On any Business Day following the Initial Closing Date, Finco
may request, by submission of an irrevocable written request to Sheffield and
the Trustee, that the Maximum Sheffield Capital be increased by an amount
specified by Finco in such request, provided that, after giving effect to such
increase, the Aggregate Capital shall be no greater than $85,000,000; and
provided, further, that no such increase shall become effective unless all
conditions precedent set forth in subsection (c) shall have been satisfied.
Within 30 days of receipt of such request, Sheffield shall, in its sole
discretion, accept or reject such request in writing and Finco shall thereupon
notify the Trustee in writing of such acceptance or rejection.
(c) Any increase requested by Finco and agreed to by Sheffield
shall become effective on the first day of the Settlement Period following the
satisfaction of the following conditions precedent:
(i) Each Rating Agency shall have delivered written
confirmation to Finco and the Trustee that the proposed increase
will not adversely affect its rating of the TRIPs and/or the
Commercial Paper, as the case may be; and
(ii) Finco shall have delivered a certificate of an
Authorized Officer dated the date of such increase to the effect
that, after giving effect to such increase, (A) no Early
Amortization Event shall have occurred and (B) neither Finco nor the
Servicer shall be in default in the performance of any covenant or
agreement contained herein or in any Operative Document.
Section 2.14. Optional Acceleration of TRIPs Amortization Period.
Upon at least 30 days prior written notice to Sheffield and the Trustee, which
notice shall be irrevocable, Finco may elect (such election being referred to
herein as the exercise of the "Call Option") to have the TRIPs Amortization
Period begin after the close of business on the Transfer Date specified in
such written notice (such Transfer Date, the "Call Date"); provided that Finco
may not exercise the Call Option if, after giving effect to such exercise, and
all allocations and distributions to be made pursuant to Article VII on such
date, the Aggregate Capital would exceed the Borrowing Base. The Trustee
shall give prompt notice to the TRIPs Holders of the exercise of the Call
Option by Finco. If the Call Option is exercised, the TRIPs Holders shall be
entitled to receive in repayment of the Participations, in addition to
repayments of the TRIPs Capital and all TRIPs Yield accrued thereon, the Make-
Whole Payment Amounts as provided in Article VII.
ARTICLE III
CONDITIONS TO PAYMENTS
Section 3.1. Conditions to Initial Purchase. The initial purchase
of any Participation on the Initial Closing Date or the TRIPs Closing Date, as
the case may be, is subject to the satisfaction, on terms satisfactory to such
Participants, the Trustee and the Placement Agent, if any, of all applicable
conditions specified in the Conditions List and to all conditions specified in
Section 3.2.
Section 3.2. Conditions to all Payments. The Trustee shall make
payments to Finco on behalf of the Participants as provided in this Agreement
on each Business Day unless it shall have received notice from Sheffield or
the Required TRIPs Holders or unless an Authorized Officer of the Trustee
shall otherwise have actual knowledge (in which case the Trustee shall
immediately notify the Participants), that one or more of the following
conditions precedent have not been satisfied:
(a) Finco and the Servicer shall be in full compliance with all the
terms and conditions of Article VI hereof and Article III of the
Servicing Agreement, including the terms and conditions regarding the
Master Receivables Account;
(b) No Early Amortization Event and no event which, after notice or
lapse of time or both, would become an Early Amortization Event, shall
have occurred and then be continuing; and
(c) After giving effect to such payment, and all other allocations
and distributions to be made on such date, the Aggregate Capital shall
not exceed the Borrowing Base.
The acceptance by Finco of any payment by or on behalf of any Participant
shall be deemed to be a representation and warranty by Finco to the Trustee
and each Participant as of such acceptance date as to the matters in
paragraphs (a) through (c) of this Section 3.2. If, on any Business Day, the
condition precedent set forth in subsection 3.2(a) is not satisfied, Sheffield
or the TRIPs Holders shall have the option to (A) take no action, in which
case the Trustee shall make payment to Finco pursuant to the terms hereof, (B)
by written notice delivered by Sheffield to the Trustee, instruct the Trustee
not to make the portion of such payment hereunder payable from the Sheffield
Sub-account and to retain the amount of such payment in the Sheffield Sub-
account pursuant to Section 7.2(b)(iv)(A), thereby requiring Finco to increase
its Subordinated Interest on such date or (C) by written notice by the
Required TRIPs Holders to the Trustee, instruct the Trustee not to make the
portion of such payment hereunder payable from the TRIPs Sub-account and to
retain the amount of such payment in the TRIPs Sub-account pursuant to Section
7.2(c)(v), thereby requiring Finco to increase its Subordinated Interest on
such date. In the event that the condition precedent set forth in Section
3.2(c) is not satisfied, the Trustee shall, without further notice or
instruction by any Participant, retain in the Collateral Account pursuant to
Section 7.2(d)(ii), such portion of the amount otherwise payable to Finco as
shall be necessary to satisfy such condition. In the event that the condition
precedent set forth in Section 3.2(b) is not satisfied, the Trustee may, and
to the extent required hereunder shall, exercise such rights and remedies as
set forth in Article X and make the appropriate allocations set forth in
Article VII.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. General Representations and Warranties of Finco.
Finco represents and warrants to and covenants with the Trustee and the
Participants, as of the date hereof, as of the TRIPs Closing Date and as of
the date of any Increase as follows:
(a) Finco has been duly organized and is validly existing and in
good standing as a corporation under the laws of the state of Delaware,
with full corporate power and authority to own or lease its properties
and to conduct its business as presently conducted and to execute,
deliver and perform this Agreement and the other Finco Documents and each
other document related hereto and thereto to which it is a party and to
consummate the transactions contemplated hereby and thereby. Finco is
duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification,
except where any such failure or failures to be so qualified would not
have, alone or in the aggregate, a material adverse effect on its
business, operations, properties, assets or condition (financial or
otherwise).
(b) The execution, delivery and performance by Finco of this
Agreement and the other Finco Documents and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite corporate action and will not (with due
notice or lapse of time or both) 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 upon any of its property
or assets pursuant to the terms of, any indenture, mortgage, deed of
trust, lease, loan agreement or other agreement, instrument or
undertaking by which it is bound or to which any of its property or
assets is subject, nor will such action result in any violation of any
applicable Requirement of Law; and no consent, approval, authorization,
order, registration, filing, qualification, license or permit of or with
any court or any regulatory authority or other Governmental Authority or
body or any other Person is required to be obtained by or with respect to
Finco in connection with the execution, delivery and performance by Finco
of this Agreement, the other Finco Documents, any other documents related
hereto or thereto or the consummation of the transactions contemplated
hereby or thereby (other than the actions required to file, deliver or
record any Security Filings, all of which actions have been taken).
(c) Each of the Finco Documents has been duly authorized, executed
and delivered by Finco and constitutes a valid and legally binding
obligation of Finco, enforceable against Finco in accordance with its
terms, subject as to enforceability to applicable bankruptcy,
reorganization, insolvency, moratorium and other similar laws affecting
creditors' rights generally, and to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or
at law).
(d) There are no actions, proceedings or investigations pending or,
to the knowledge of Finco (after due investigation), threatened, before
any court, administrative agency or other tribunal (i) which, if
determined adversely to Finco, alone or in the aggregate, could have a
material adverse effect on the business, operations, properties, assets
or condition (financial or otherwise) of Finco, (ii) asserting the
invalidity of this Agreement or any of the other Finco Documents, (iii)
questioning the consummation by Finco of any of the transactions
contemplated by this Agreement or the other Finco Documents, or (iv)
which, if determined adversely, alone or in the aggregate, could
materially and adversely affect the ability of Finco to perform its
obligations under, or the validity or enforceability of, this Agreement,
the other Finco Documents or the Participations; and Finco is not in
default with respect to any order of any court, arbitrator or
Governmental Authority.
(e) Each purchase of any Participation hereunder, each Increase and
each reinvestment of Collections will constitute a purchase or other
acquisition of notes, drafts, acceptances, open accounts receivable or
other obligations representing part or all of the sale price of
merchandise, insurance or services within the meaning of Section 3(c)(5)
of the Investment Company Act. Neither Finco nor the Trust is an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act.
(f) The chief executive office of Finco is located at the address
set forth on Schedule I hereto, which place of business is the place
where Finco is "located" for the purposes of Section 9-103(3)(d) of the
UCC of the state indicated on such Schedule, and the location of the
office where Finco keeps all of the instruments, documents, agreements,
books and records relating to the Total Transferred Property is at the
address set forth on Schedule I hereto.
(g) Finco has no Subsidiaries.
(h) Each Hospital (including, without limitation, each Excluded
Hospital with respect to Receivables and Transferred Property purchased
by Finco prior to exercise by Finco of the remedy set forth in subsection
6.2(a)(iii) of the applicable Sale and Servicing Agreement) is in
compliance with the terms and conditions of Article V of the related Sale
and Servicing Agreement.
(i) Finco has no trade names, fictitious names, assumed names or
"doing business as" names.
(j) No material Reportable Event has occurred during the five-year
period prior to the date on which this representation is made or deemed
made with respect to any Plan, and each Plan has complied in all material
respects with the applicable provisions of ERISA and the Code. The
present value of all accrued benefits under each Single Employer Plan
maintained by Finco or any Commonly Controlled Entity (based on those
assumptions used to fund the Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or
deemed made, materially exceed the value of the assets of such Plan
allocable to such accrued benefits. Neither Finco nor any Commonly
Controlled Entity has had a complete or partial withdrawal or withdrawals
from any Multiemployer Plan which, alone or in the aggregate, has
resulted or could result in any material liability under ERISA, and
neither Finco nor any Commonly Controlled Entity would become subject to
any material liability under ERISA if Finco or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which
this representation is made or deemed made. No such Multiemployer Plan
is in reorganization or Insolvent. The present value (determined using
actuarial and other assumptions which are reasonable in respect of the
benefits provided and the employees participating) of the liability of
Finco and each Commonly Controlled Entity for post-retirement benefits to
be provided to their current and former employees under Plans which are
welfare benefit plans (as defined in Section 3(1) of ERISA) does not, in
the aggregate, materially exceed the assets under all such Plans
allocable to such benefits.
(k) As of the date of delivery thereof, each Servicer Daily
Statement and each Settlement Date Statement were true, correct and
complete in all material respects.
(l) The Master Receivables Account has been established in
accordance with, and is in compliance with, the terms and conditions of
Section 3.7 of the Servicing Agreement.
(m) Finco has and shall have filed or caused to be filed all
material federal, state and local tax returns which are required to be
filed, and has and shall have paid or caused to be paid all taxes as
shown on said returns or any other taxes or assessments payable by it
(other than any such taxes or assessments the amount or validity of which
are currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been
provided on the books of Finco and with respect to which collection has
been stayed), and no tax Lien has been filed and, to the knowledge of
Finco, no claims are being asserted with respect to any such taxes, fees
or other charges which, alone or in the aggregate, could reasonably be
expected to have a material adverse effect on the rights of the
Interested Parties under the Operative Documents or with respect to the
Transferred Property.
(n) None of the transactions contemplated in this Agreement
(including the use of proceeds from the sale of the TRIPs) will result in
a violation of Section 7 of the Securities Exchange Act of 1934, as
amended, or any regulations issued pursuant thereto, including
Regulations G, T, U, and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II.
(o) Neither Finco nor anyone acting on its behalf has offered, or
will offer, directly or indirectly, any TRIPs, any interest in any TRIPs,
or any other similar instrument, or has solicited, or will solicit any
offer to buy any of the same, from such type or aggregate number of
Persons, or in such manner, as to require the offering, issuance or sale
of the TRIPs to be registered pursuant to the provisions of the
Securities Act. The offer and sale of the TRIPs to the TRIPs Holders are
exempt from the registration requirements of the Securities Act and
neither Finco nor any Person acting on behalf of Finco will take any
action that will subject the offer and sale of the TRIPs to such
registration requirements.
Section 4.2. Representations and Warranties of Finco Concerning the
Receivables. On the date hereof and (i) with respect to Sections 4.2(a), (e),
(f), (l) and (n), on each following date (including each Purchase Date) and
(ii) with respect to Sections 4.2(b) through (k) and (m), with respect to the
Receivables purchased by Finco on each related Purchase Date, Finco represents
and warrants to the Trustee and the Participants as follows:
(a) Finco has, immediately prior to each conveyance pursuant to
Section 2.1, good title to the Purchased Receivables and other Total
Transferred Property conveyed to the Trust, and such Purchased
Receivables and other Total Transferred Property are not subject to any
Lien or other claim of any kind or to any offset, counterclaim or defense
of any kind, other than contractual adjustments in respect of, and in no
event greater than, the Applicable Contractual Adjustment and any offsets
included in the Offset Reserves. At all times during which this
Agreement is in effect, the Purchased Receivables, the Total Transferred
Property and the Outstanding Balances in relation thereto conveyed to the
Trustee on behalf of the Trust and in which the Participants have
purchased the Participations will not be subject to any Lien or claim of
any kind or to any counterclaim or defense of any kind other than the
Permitted Interests and the offsets included in the Offset Reserves.
(b) All of the Purchased Receivables and the other Total
Transferred Property comply with and will comply with all Requirements of
Law (including, in the case of Governmental Receivables originated by any
Hospital, all applicable requirements of the programs listed on Schedule
II of the Sale and Servicing Agreement to which such Hospital is a party)
and are not the subject of any litigation, court proceeding or other
dispute.
(c) Each of the Purchased Receivables (i) is and will be in full
force and effect and represents and will represent a valid and legally
binding obligation of the related Obligor enforceable against such
Obligor in accordance with its terms and (ii) constitutes an "account" or
a "general intangible" under the UCC in effect in the state in which
Finco's chief executive office is located, or a right to payment under a
policy of insurance or proceeds thereof; the Assigned Agreements and the
other Finco Transferred Property (x) are and will be in full force and
effect and represent and will represent valid and legally binding
obligations of the Assignors enforceable against the Assignors in
accordance with their terms and (y) constitute accounts or general
intangibles under the UCC in effect in the state in which Finco's chief
executive office is located.
(d) (i) The statements and information constituting Receivables
Information, as they relate to Finco, are true and correct and do not
contain any untrue statement of a material fact or any omission of any
material fact which would make such statements and information, in light
of the circumstances in which they were made or given, misleading and
(ii) the other statements and information furnished by any Authorized
Officer of Finco to any Interested Party are true and correct and shall
not contain any untrue statement of a material fact or any omission of
any material fact which would make such other statements or information,
in light of the circumstances in which they were made or given,
misleading.
(e) There is (i) no effective financing statement (or similar
statement or instrument of registration under the law of any
jurisdiction) on file or registered in any public office and (ii) no
assignment filed or delivered by or on behalf of Finco covering any
interest of any kind in the Purchased Receivables or the other Total
Transferred Property or intended so to be filed, delivered or registered,
and Finco will not execute nor will there be on file in any public office
any effective financing statement (or any similar statement or instrument
of registration under the laws of any jurisdiction) or any assignment or
other notification relating to the Total Transferred Property, except the
Security Filings in respect of the Permitted Interests. The interest of
the Trustee, on behalf of the Trust, is an ownership or security
interest, valid and enforceable against, and prior to, all claims of
existing and future creditors of Finco and all subsequent purchasers from
Finco of the Total Transferred Property.
(f) All Security Filings which are required to perfect the
interests of the Participants in the Purchased Receivables and the other
Total Transferred Property have been filed, delivered or received, as the
case may be (other than as limited by Section 5.3), and are in full force
and effect. Schedule I attached hereto lists all offices where UCC
filings must be made to perfect the security interests of the
Participants in the Purchased Receivables and other Total Transferred
Property.
(g) This Agreement, together with the Security Filings, vests and
at all times will vest in the Trustee on behalf of the Trust, for the
benefit of the Participants, the ownership interests or first priority
security interests in, and Liens on, the Purchased Receivables and other
Total Transferred Property and the Collections purported to be conveyed
hereby and in accordance with the terms hereof, and such conveyance of
the Purchased Receivables, other Total Transferred Property and
Collections constitutes and will constitute a valid transfer of, or
security interest in and Lien on, the Purchased Receivables, Total
Transferred Property and Collections, enforceable against Finco and all
creditors of and purchasers from Finco prior to all sales or other
assignments thereof.
(h) No Obligor on the Purchased Receivables and other Transferred
Property (including, without limitation, any insurance company or other
third-party payor or guarantor of such Obligor obligated in respect of
any such Purchased Receivables or Transferred Property) is bankrupt,
insolvent, undergoing composition or adjustment of debts or is unable to
make payment of its obligations when due; provided that this
representation shall not apply to any Governmental Authority which is an
Obligor on Medicaid Receivables if the Receivables of such Obligor would
not be considered Uncollectible Receivables under clause (c) of the
definition of Uncollectible Receivables (taking into account the proviso
contained in such definition).
(i) Each Hospital is a qualified provider in respect of all
Purchased Receivables of such Hospital constituting Governmental
Receivables.
(j) All amounts paid on each Governmental Receivable will be paid
to each Hospital in accordance with all Requirements of Law, either (i)
in such Hospital's name to the related Hospital Concentration Account in
accordance with Section 4.3(m) of the applicable Sale and Servicing
Agreement or (ii) in the name of UHS, for the benefit of such Hospital,
to the Master Receivables Account.
(k) Each Non-governmental Receivable being purchased by Finco from
each Hospital pursuant to the Sale and Servicing Agreement to which such
Hospital is a party is not and will not be payable by an Obligor which is
an agency or instrumentality of the federal government of the United
States of America unless all applicable requirements of the Assignment of
Claims Act of 1940, as amended, and all regulations promulgated
thereunder, including the giving of all requisite notices of assignment
to all Persons to whom such notice must be given and the acknowledgement
of receipt thereof by all such Persons, have been complied with in all
material respects and unless the Participants shall have been provided
with evidence thereof in form and substance satisfactory to the Required
Participants.
(l) All accounting information relating to the Receivables which
has been provided to any Participant hereunder is in accordance with each
Hospital's accounting policies, including such Hospital's Credit and
Collection Policy.
(m) Each of the Purchased Receivables, other than any Excluded
Receivable, any Self-pay Receivable and any Uncollectible Receivable for
which the Payment Date is the Initial Closing Date, is and will be an
Eligible Receivable on the Purchase Date for such Purchased Receivable.
(n) Each of the Purchased Receivables shall at all times be
separately identifiable from those Receivables not transferred by Finco
to the Trust, and all Financible Receivables shall at all times be
separately identifiable from those Receivables that are not Financible
Receivables.
ARTICLE V
COVENANTS OF FINCO
Section 5.1. General Covenants. Finco covenants and agrees with
the Trustee and the Participants that, so long as this Agreement shall remain
in effect:
(a) Finco will preserve and maintain its existence as a corporation
in good standing under the laws of the state of its incorporation and its
qualification as a foreign corporation where such qualification is
required, except where any such failure or failures to so qualify, alone
or in the aggregate, could not have a material adverse effect on Finco's
performance of its obligations under the Finco Documents.
(b) Finco will advise Sheffield and the Trustee promptly and in
reasonable detail, and the Trustee shall thereupon provide notice thereof
to the TRIPs Holders, of (i) any Lien asserted or offset or claim made
against any of the Purchased Receivables or Total Transferred Property,
(ii) the occurrence of any breach by any of Finco or any Assignor of any
of its respective representations, warranties and covenants contained
herein or in any of the other Finco Documents or the Assigned Agreements,
as the case may be, (iii) the occurrence of any Early Amortization Event
and of any event which, with the giving of notice or passage of time or
both would become an Early Amortization Event, (iv) the occurrence of any
Exclusion Event and of any event which, with the giving of notice or
passage of time or both would become an Exclusion Event, (v) the
occurrence of any event or events of which Finco has knowledge which
would, alone or in the aggregate, reasonably be expected to have a
material adverse effect on (A) the business, operations, property or
condition (financial or otherwise) of the UHS Entities taken as a whole,
(B) the value of the Total Transferred Property or the collectibility
(other than as a result of the credit quality of any Obligor) or
enforceability of the Purchased Receivables or (C) the ability of Finco
to perform its obligations hereunder, (vi) the receipt from any
Governmental Authority of a Deficiency Notice with respect to the
Purchased Receivables or otherwise, (vii) the receipt of any notice of
preliminary or final determination resulting from any Audit relating to
any Hospital or the Receivables (including, without limitation, any
"audit exception" to such determination), (viii) any other investigation
of any Hospital by HHS or any intermediary thereof or (ix) any
investigation by any other Governmental Authority or any intermediary
thereof concerning the Receivables or the result of which could alone or
in the aggregate materially adversely affect the ability of any UHS
Entity to perform its obligations under the Operative Documents.
(c) Subject to Section 5.2(i), Finco will duly fulfill all
obligations on its part to be fulfilled under or in connection with the
conveyance by Finco of the Total Transferred Property to the Trustee on
behalf of the Trust and the conveyance of the Participations to the
Participants and will do nothing, and shall cause each Assignor to do
nothing, to impair the rights of the Interested Parties in the Total
Transferred Property.
(d) All financial statements prepared by Finco or any Hospital and
made available to any Person other than any UHS Entity shall indicate the
sale to Finco of the Purchased Receivables and other Transferred
Property.
(e) Finco shall file or shall cause to be filed all federal, state
and local tax returns which are required to be filed, and shall pay or
cause to be paid all taxes as shown on said returns and any other taxes
or assessments payable by it (other than any such taxes or assessments
the amount or validity of which are contested in good faith by
appropriate proceedings and with respect to which reserves in conformity
with GAAP are provided on the books of Finco and with respect to which
collection has been stayed).
(f) Finco shall not (i) invest in (by capital contribution or
otherwise), suffer to exist any investment in, or acquire or purchase or
make any commitment to purchase the obligations or capital stock of, or
other indicia of equity rights in, or make any loan, advance or extension
of credit to, or purchase any bonds, notes, debentures or other
securities of, any Person or (ii) make any expenditure (by long-term or
operating lease or otherwise) for capital assets (either realty or
personalty).
(g) Finco shall not wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation, convey, sell,
lease or otherwise dispose of all or any part of its property or assets
other than in accordance with the terms of the Operative Documents; enter
into any joint venture, syndicate or other combination with any other
Person, or issue any shares of capital stock or other securities (other
than to UHS or any Hospital) or agree to do any of the foregoing at any
future time.
(h) Finco shall not declare or pay or permit to be paid any
dividends or make or agree to make any other payments to any Affiliate;
provided, however, that Finco shall not be prohibited from paying to UHS
any amounts received pursuant to Section 7.2(d) and not payable to the
Hospitals pursuant to Section 7.2(e).
(i) Finco shall not engage in any business, or enter into any
contract, agreement or transaction, except as contemplated by its
Certificate of Incorporation, its By-Laws and the Operative Documents.
(j) Finco shall not, except as approved by the Required
Participants, amend any provision of its Certificate of Incorporation,
By-Laws or any Operative Document to which it is a party, or waive any
rights or claims of substantial value thereunder or enter into any
additional Operative Documents.
(k) Finco shall not contract, create, incur, assume or suffer to
exist any indebtedness for borrowed money or any obligation in respect of
a lease of property which is required to be capitalized in accordance
with GAAP or any other liability (contingent or otherwise), except as
permitted under the Operative Documents.
(l) Finco shall:
(i) (A) subject to Article V of the Sale and Servicing
Agreement, Section 3.1 of the Servicing Agreement and Article VI
hereof, maintain its own deposit account or accounts with commercial
banking institutions, separate from those of any Affiliate; (B) not
divert the funds of Finco to any other Person or for other than
corporate uses of Finco nor, subject to Article V of the Sale and
Servicing Agreement, Section 3.1 of the Servicing Agreement and
Article VI hereof, commingle the funds of Finco with funds of any
other person held in any account of any other Person; and (C) use
its best efforts to ensure that no funds of any other Person are
commingled with funds of Finco held in any account of Finco;
(ii) to the extent that it shares the same officers or other
employees as any of its stockholders or Affiliates, ensure that the
salaries of and the expenses related to providing benefits to such
officers and other employees are fairly allocated among such
entities, and that each such entity bears its fair share of the
salary and benefit costs associated with all such common officers
and employees;
(iii) to the extent that it jointly contracts with any of its
stockholders or Affiliates to do business with vendors or service
providers or to share overhead expenses, ensure that the costs
incurred in so doing are allocated fairly among such entities, and
that each such entity bears its fair share of such costs; to the
extent that Finco contracts or does business with vendors or service
providers where the goods and services provided are partially for
the benefit of any other Person, ensure that the costs incurred in
so doing are fairly allocated to or among such entities for whose
benefit the goods and services are provided, and that each such
entity bears its fair share of such costs;
(iv) ensure that all material transactions between Finco and
any of its Affiliates are on an arm's length basis;
(v) conduct its business separate from that of each other
UHS Entity and each other Subsidiary of UHS; and not hold itself out
or permit itself to be held out as being liable for the debts of any
Affiliate; and
(vi) conduct its affairs strictly in accordance with its
Certificate of Incorporation and By-laws and observe all necessary,
appropriate and customary corporate formalities, including, but not
limited to, holding regular and special stockholders' and directors'
meetings appropriate to authorize all corporate action, keeping
separate and accurate minutes of its meetings, passing all
resolutions or consents necessary to authorize actions taken or to
be taken, and maintaining accurate and separate books, records and
accounts, including, but not limited to, payroll and intercompany
transaction accounts.
(m) Finco shall furnish to the Trustee and Sheffield, and the
Trustee shall promptly deliver to each TRIPs Holder, (i) as soon as
practicable and in any event within 90 days after the end of each fiscal
year of Finco, (A) a report prepared by Arthur Andersen & Co. or such
other firm of independent certified public accountants, substantially in
the form of Exhibit B and (B) an unaudited balance sheet of Finco as of
the end of such fiscal year and unaudited statements of income and
retained earnings and of cash flow of Finco for such fiscal year; (ii) as
soon as practicable and in any event within 45 days after the end of each
of the first three fiscal quarters of Finco, an unaudited balance sheet
of Finco as of the close of such fiscal quarter and unaudited statements
of income and retained earnings and of cash flow of Finco for such fiscal
quarter and the portion of the fiscal year through such date, setting
forth in comparative form the figures for the corresponding periods of
the preceding fiscal year; (iii) at the time of the delivery of the
financial statements required by clauses (i) and (ii) of this Section
5.2(m), a certificate of an Authorized Officer of Finco to the effect
that (i) such financial statements are complete and correct and were
prepared in accordance with GAAP applied consistently throughout the
periods reflected therein and with prior periods, except as approved by
such Authorized Officer and disclosed therein and (ii) there exists no
Early Amortization Event or Exclusion Event under any Sale and Servicing
Agreement and no condition, event or act which, with the giving of notice
or lapse of time, or both, would constitute an Early Amortization Event
or an Exclusion Event, or if any such Early Amortization Event, Exclusion
Event, condition, event or act exists, specifying the nature thereof, the
period of existence thereof and the action Finco proposes to take with
respect thereto; and (iv) with reasonable promptness, such further
information regarding the business, affairs and financial condition of
Finco as the Trustee or any Participant may reasonably request.
Section 5.2. Covenants of Finco Relating to the Receivables. Finco
covenants and agrees with the Trustee and the Participants that so long as
this Agreement shall remain in effect:
(a) Finco will cause each Hospital, at such Hospital's own cost and
expense, to (i) retain a record of the Receivables generated by such
Hospital and copies of all documents relating to each Receivable
generated by such Hospital, (ii) mark such record to the effect that the
Purchased Receivables generated by such Hospital listed thereon have been
sold to Finco, (iii) maintain a record of Receivables that have been
repurchased by such Hospital in accordance with the terms of the
applicable Sale and Servicing Agreement and (iv) maintain a record of
Receivables that have been repurchased by Finco pursuant to Section 5.4
hereof.
(b) Finco will take no action and will not permit any Hospital to
take any action to cause any Purchased Receivable to be evidenced by any
instrument (as defined in the UCC in the state in which the chief
executive office of Finco or such Hospital, as the case may be, is
located), except in connection with its enforcement or collection of such
Receivable, in which event Finco shall deliver such instrument to the
Trustee as soon as reasonably practicable but in no event more than 10
days after execution thereof.
(c) Finco will comply and cause each Hospital to comply with all
Requirements of Law which are applicable to the Purchased Receivables and
the other Total Transferred Property or any part thereof; provided,
however, that Finco may contest and permit any Hospital to contest any
act, regulation, order, decree or direction in any manner which could not
reasonably, alone or in the aggregate, materially and adversely affect
the Participations or the Interested Parties. Subject to Section 5.2(i)
hereof and Section 4.3(k) of each Sale and Servicing Agreement, Finco
will, and will cause each Hospital to, comply with the terms of its
respective contracts with Obligors relating to such Receivables except
where non-compliance would not in the aggregate reasonably be expected to
have a material adverse effect on any Hospital's ability to receive
payments under such contracts.
(d) Finco will not create, permit or suffer to exist, and will
defend the Interested Parties' rights to the Total Transferred Property
against, and take such other actions as are necessary to remove, any Lien
on, claim in respect of, or right to, such Total Transferred Property,
and will defend the right, title and interest of the Interested Parties
in and to such Total Transferred Property against the claims and demands
of all Persons whomsoever, other than the Permitted Interests.
(e) Unless prohibited by any Requirement of Law, the Participants
and the Trustee and their respective employees, agents and
representatives (collectively, the "Recipients") (A) shall at all times
have full and free access during normal business hours to all the books,
correspondence and records of Finco, the Servicer, UHS and the Hospitals
insofar as they relate to the Total Transferred Property, and the
Recipients may examine the same, take extracts therefrom and make
photocopies thereof, and Finco agrees to render to the Recipients and
cause the Servicer, UHS and the Hospitals to render to such Recipients,
at Finco's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto and (B) may discuss the affairs,
finances and accounts of Finco, the Servicer, UHS and the Hospitals with,
and be advised as to the same by, executive officers and independent
accountants of Finco, the Servicer, UHS and the Hospitals (and Finco
shall cause the executive officers and independent accountants of Finco,
the Servicer, UHS and the Hospitals to so discuss and advise), all as any
such Recipient may reasonably deem appropriate for the purpose of
verifying the accuracy of any reports or information delivered to the
Trustee or the Participants pursuant to this Agreement or for otherwise
ascertaining compliance with this Agreement; provided, however, that each
of the Recipients acknowledges that in exercising the rights and
privileges conferred in this Section 5.2(e) the Recipients may, from time
to time, obtain knowledge of information, practices, books,
correspondence and records of a confidential nature and in which Finco,
the Servicer, UHS or any Hospital has a proprietary interest; and
provided, further, that Finco and each Recipient acknowledges that the
Operative Documents and documents required to be filed on behalf of UHS
and its Subsidiaries with the Securities and Exchange Commission and
available to the public shall not be considered confidential for the
purposes of this Agreement (all such confidential information,
collectively, the "Information"). Each of the Recipients agrees that the
Information is to be regarded as confidential information and that the
Information may be subject to laws, rules and regulations regarding
patient confidentiality and agrees that, subject to the following
sentence, (i) it shall, and shall cause its employees, agents and
representatives to, retain in confidence and not disclose without the
prior written consent of Finco, the Servicer, UHS or such Hospital, as
the case may be, any or all of the Information, and (ii) it will not, and
will ensure that its employees, agents and representatives will not, make
any use whatsoever (other than for the purposes contemplated by this
Agreement and the other Operative Documents or for the enforcement of any
of the rights granted hereunder or thereunder) of any of the Information
without the prior written consent of Finco, the Servicer, UHS or such
Hospital, as the case may be. Notwithstanding the foregoing, a Recipient
may (x) disclose Information to any Person that has executed and
delivered to the addressee and UHS a confidentiality agreement,
substantially in the form of Exhibit C hereto, with respect to such
Information and (y) disclose Information (A) to the extent that such
Information is required or appropriate in any report, statement or
testimony submitted to any municipal, state, or federal regulatory body
having or claiming to have jurisdiction over the Recipient or to the
National Association of Insurance Commissioners or similar organizations
or their successors, (B) to the extent such Information is required in
response to any summons or subpoena or in connection with any litigation,
(C) to the extent that such Information is believed by the Recipient to
be required in order to comply with any law, order, regulation or ruling
applicable to the Recipient, (D) to the extent that such Information was
publicly available or otherwise known to the Recipient at the time of
disclosure, (E) to the extent that such information subsequently becomes
publicly available, other than through any act or omission of the
Recipient or (F) to the extent that such Information subsequently becomes
known to the Recipient other than through a Person whom the Recipient
knows to be acting in violation of his or its obligations to Finco, the
Servicer, UHS or such Hospital.
(f) Finco shall execute and file, and shall cause each Hospital to
file, at Finco's expense, such continuation statements and other
documents relating to the Security Filings which may be required by law
to fully preserve and protect the interest of the Interested Parties in
and to the Total Transferred Property. Finco shall, at its own expense,
perform or cause to be performed all acts and execute all documents
necessary to evidence, perfect, maintain and enforce the security
interests and Liens of the Interested Parties in the Purchased
Receivables and the other Total Transferred Property and the first
priority thereof. Finco will, on the reasonable request of the Required
Participants or an Authorized Officer of the Trustee, execute and deliver
all such Security Filings (satisfactory in form and substance to the
Trustee and the Required Participants) and, where permitted by law, Finco
authorizes the Trustee to file one or more such Security Filings signed
only by the Trustee. Finco hereby irrevocably appoints the Trustee as
its attorney-in-fact to file and deliver Security Filings (and receive
Confirmations in respect of one or more such Security Filings) signed on
behalf of Finco by the Trustee as the attorney-in-fact of Finco.
(g) Finco will not, without providing 30 days' notice to the
Trustee and Sheffield, and without filing such amendments to the Security
Filings as may be required to preserve the priority of the ownership or
security interest perfected thereby change or permit any Hospital to
change (i) the location of its chief executive office or the location of
the offices where the records relating to the Receivables and the other
Total Transferred Property are kept or (ii) its name, identity or
corporate structure in any manner which would, could or might make any
Security Filing or continuation statement filed by Finco or such Hospital
in accordance with Section 4.2(f) or Section 5.2(f) of this Agreement or
the provisions of the applicable Sale and Servicing Agreement seriously
misleading within the meaning of Section 9-402(7) of any enactment of the
UCC applicable thereto.
(h) Finco shall (i) promptly cause the Servicer to (A) notify the
Trustee and Sheffield of any insurance provider or other third-party
payor which becomes an Obligor after the Initial Closing Date pursuant to
a written contract or arrangement which purports to prohibit the
assignment of any rights of the Hospital under such contract or
arrangement without the consent of such Obligor and (B) deliver or cause
to be delivered to such Obligor a Notice of Assignment and receive a
Confirmation with respect thereto; and (ii) comply with and cause each
Hospital to comply with all other reasonable requests of the Trustee, the
Required Participants or Sheffield with respect to the Security Filings.
(i) Finco shall not change, and shall not cause or otherwise allow
any Hospital or the Servicer to change, the terms of the payor contracts
and agreements relating to the Purchased Receivables and related
Transferred Property or the normal policies and procedures with respect
to the origination and servicing thereof (including without limitation
the amount and timing of finance charges, fees and write-offs) except (i)
that Finco or any Hospital may make such changes in connection with
Purchased Receivables which increase the collectibility of such Purchased
Receivables without extending the payment date thereof, so long as each
such change (A) is in accordance with the Credit and Collection Policy
and consistent with past practice and (B) shall not have a
disproportionate effect on the Purchased Receivables as compared with
Receivables (or future Receivables) not sold to Finco; and (ii) in
respect of such Purchased Receivables which have become Uncollectible
Receivables and only to the extent that Finco or any Hospital shall
reasonably believe that such change of terms will improve the
collectibility of such Uncollectible Receivables; provided that no such
change permitted by clause (i) or (ii) shall, or shall reasonably be
expected to, result in an Exclusion Event or an Early Amortization Event;
and provided, further, that no such change shall cause the Borrowing Base
to be less than the Aggregate Capital.
(j) Finco hereby acknowledges and agrees that UHS Delaware will be
initially appointed as the Servicer of the Receivables pursuant to the
Servicing Agreement, that each Hospital will perform certain servicing
functions with respect to the Receivables pursuant to the terms of the
Servicing Agreement and the Sale and Servicing Agreements, that UHS
Delaware may subcontract certain other servicing functions as permitted
under the Servicing Agreement while still retaining liability for
performance of such functions and that UHS will guarantee the performance
by UHS Delaware and the Hospitals of their respective obligations. Finco
shall cooperate with any requests made by the Servicer for information
required by the Servicer in connection with the Servicer's determination
of amounts due hereunder and under the Servicing Agreement and in
connection with the delivery by the Servicer of statements and reports
required thereunder.
(k) Finco hereby covenants that it will cause each Hospital to
designate personnel and to direct such designated personnel to deposit
all Collections and proceeds thereof on each Business Day upon which such
Collections are received (or, if such Collections are received by any
Hospital on a day which is not a Business Day, on the next Business Day)
into such Hospital's Hospital Concentration Account in accordance with
Section 6.2.
(l) Except for the purpose of collection in the ordinary course of
business and in accordance with the restrictions set forth in Section
5.2(i), Finco will not, and will not allow any Hospital to, sell,
discount or otherwise dispose of any Purchased Receivable except to the
Interested Parties as provided hereunder and to Finco as provided under
the Sale and Servicing Agreement to which such Hospital is a party.
(m) Finco shall not terminate and shall not allow any other Person
to terminate any Hospital Concentration Account or establish any other
Hospital Concentration Account, unless (i) Finco has provided 10 days'
prior written notice of such change to the Trustee and Sheffield and (ii)
immediately after any such event, the representations and warranties in
Section 4.1(h) shall be true and correct; and Finco shall not terminate
and shall not allow any other Person to terminate, or change the
instructions governing the operation of, the Master Receivables Account
or establish any other Master Receivables Account, unless (i) the
Required TRIPs Holders and Sheffield shall have consented to such change
or termination and (ii) immediately after such event, the representations
and warranties in Section 4.1(h) shall be true and correct. The Trustee
shall promptly forward any notice received by it from Finco under this
Section 5.2(m) to the TRIPs Holders.
(n) Finco shall promptly cause the Servicer to notify the Trustee
and Sheffield, and the Trustee shall thereupon promptly notify the TRIPs
Holders, on any date on which any Hospital becomes, applies to become, or
no longer remains, a qualified provider in respect of Governmental
Receivables listed on Schedule II of the Sale and Servicing Agreement to
which such Hospital is a party.
(o) Finco shall not, without the prior written consent of the
Required Participants, which consent shall not be unreasonably withheld,
permit any Hospital to materially alter the hardware or software systems
used by such Hospital in generating its reports to the Servicer in
respect of the Purchased Receivables and the Collections and, in any
event, shall not permit any such alteration unless such alteration is
designed to improve the Servicer's ability to monitor and collect on the
Receivables.
Section 5.3. Notice and Consent Procedures. Finco represents and
warrants as of the date hereof and as of the TRIPs Closing Date that (i) each
Hospital has sent or caused to be sent a Notice of Assignment to each insurer
or third-party intermediary that is an Obligor on such Hospital's Non-
governmental Receivables and that has a written contract or other written
arrangement with one or more of the Hospitals which prohibits assignment of
any rights of such Hospital under such contract or arrangement without the
consent of such insurer or third party intermediary and (ii) each Hospital has
sent or caused to be sent a Notice of Assignment to each of the ten insurers
or third-party intermediaries that are Obligors on any Receivables and that
maintained the ten highest average Outstanding Balances of Receivables
originated by all UHS Entities taken as a whole during the August, 1993 fiscal
month. Finco agrees to use its best efforts to ensure that the Trustee and
Sheffield promptly receive all Confirmations in respect of the Notices of
Assignment described in clauses (i) and (ii).
Section 5.4. Removal of Non-qualifying Receivables. (a) In the
event that any representation or warranty set forth in Section 4.2 with
respect to any Purchased Receivable is not true and correct on the Purchase
Date with respect thereto, then Finco shall repurchase such Purchased
Receivable by depositing in the Collateral Account or deducting from the
amount otherwise payable to Finco pursuant to Article VII, the Outstanding
Balance of such Purchased Receivable as of the date of conveyance to the Trust
less any Collections received in respect thereof. The deposit or deduction
required pursuant to subsection 5.4 hereof shall be made by Finco on any date
on which the Trustee shall request. Notwithstanding the foregoing, if any
such representation or warranty with respect to such Purchased Receivable was
untrue solely because the Applicable Contractual Adjustment on the Purchase
Date was less than the Actual Contractual Adjustment, such Purchased
Receivable shall not be repurchased, but instead the difference between the
Actual Contractual Adjustment and the Applicable Contractual Adjustment shall
be deposited in the Collateral Account by Finco or deducted from the amount
otherwise payable to Finco under Article VII. Notwithstanding the foregoing
provisions of this Section 5.4, no such deduction or repurchase shall be
required in respect of any Receivable conveyed to the Trust on the Initial
Closing Date that was an Uncollectible Receivable on such date unless and
until an Early Amortization Event occurs hereunder. In such event, the amount
that would otherwise be payable by Finco or deducted from amounts payable to
Finco in respect of such Receivable shall be reduced by the amount of any
Collections (if any) on such Receivable received by Finco prior to the date of
such Early Amortization Event.
(b) In addition, upon notice by any Hospital that Non-qualifying
Receivables of such Hospital have been sold to Finco, Finco shall immediately
demand that all such Non-qualifying Receivables be repurchased or a portion of
the purchase price thereof be reimbursed pursuant to Section 4.4 of the
applicable Sale and Servicing Agreement.
(c) On the date on which any amount required to be paid to the
Collateral Account or deducted from the amount payable to Finco pursuant to
Section 5.4(a) or 5.4(b) is so paid or deducted, the Trustee shall
automatically and without further action be deemed to sell, transfer, assign,
set over and otherwise convey to Finco (or in the case of Non-qualifying
Receivables repurchased by a Hospital, to the applicable Hospital), without
recourse, representation or warranty, all the right title and interest of the
Trustee in and to such repurchased Receivable, all monies due or to become due
with respect thereto, and all proceeds thereof. The Trustee shall execute
such documents and instruments of transfer or assignment and take such other
actions as shall be reasonably requested by Finco to effect the conveyance
pursuant to this Section 5.4. Amounts paid to the Trustee pursuant to
paragraph (a) above shall be treated as Collections on Non-governmental
Receivables.
Section 5.5. Hospital Concentration Accounts. Finco represents and
warrants to the Trustee and the Participants as of the date hereof and as of
the TRIPs Closing Date that each Hospital has previously established in its
name a Hospital Concentration Account into which Collections on the Hospital's
Purchased Receivables are transferred in accordance with the terms and
conditions of Section 5.2 of the Sale and Servicing Agreement to which such
Hospital is a party. Finco hereby represents and warrants to the Trustee and
the Participants that set forth as Schedule II hereto is the name, location
and account number of each such Hospital Concentration Account. Pursuant to
Section 5.2(m), Finco will give to the Trustee and Sheffield, and upon receipt
thereof the Trustee will give to the TRIPs Holders, prior written notification
of the establishment of any Hospital Concentration Account or the termination
of any Hospital Concentration Account. Subject to all Requirements of Law,
Finco shall not, and shall not instruct or permit any Person to, deposit any
Collections into any account other than such designated Hospital Concentration
Account or the Master Receivables Account without the prior written consent of
the Required TRIPs Holders and Sheffield. Finco hereby agrees that it will
promptly notify the Trustee and Sheffield, which notice shall be promptly
forwarded by the Trustee to each of the TRIPs Holders, if Finco has received
notice or otherwise obtained information that any Hospital is not in full
compliance with the provisions of this Section 5.5 or of the related
provisions of the Sale and Servicing Agreements.
Section 5.6. Performance of Agreements. Finco, for the benefit of
the Trust and the Participants, hereby agrees, at its own expense, duly and
punctually to perform and observe each of its obligations to the Servicer
under the Servicing Agreement and to the Hospitals under the related Sale and
Servicing Agreements. In addition, promptly following a request from
Sheffield or the Trustee, on behalf of the Participants, to do so, and at
Finco's own expense, Finco agrees to take all such lawful action as the
Trustee or the Required Participants may request to compel or secure the
performance and observance by any or all of the Assignors under or in
connection with the respective Assigned Agreements in accordance with the
terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to Finco under or in connection with the
Assigned Agreements to the extent and in the manner directed by the Trustee or
the Required Participants, including, without limitation, the transmission of
notices of default on the part of any of the Assignors thereunder and the
institution of legal or administrative actions or proceedings to compel or
secure performance by such Assignor or Assignors of their obligations under
the Assigned Agreements. Finco further agrees that it will not, without the
prior written consent of the Trustee and the Required Participants, exercise
any right, remedy, power or privilege available to it with respect to any of
the Assignors under the respective Assigned Agreements or take any action to
compel or secure performance or observance by any of such Assignors of their
respective obligations thereunder, or give any consent, request, notice,
direction, approval, extension or waiver to any of such Assignors under the
Assigned Agreements not required to be exercised, taken, observed or given by
Finco pursuant to the terms of the respective Assigned Agreements. Finco
agrees promptly to provide, or cause to be provided, to Sheffield and the
Trustee copies of all notices, requests, demands and other documents received
from any Assignor under any of the Assigned Agreements and to cause all legal
opinions and other documents delivered for the benefit of Finco under the
Assigned Agreements to be delivered and addressed to each Interested Party.
Section 5.7. Amendment of Assigned Agreements; Waivers. Finco
agrees that it will not amend, modify, supplement, waive, terminate or
surrender, or agree to any amendment, modification, supplement, waiver,
termination or surrender of, any of the Total Transferred Property or any
portion thereof or any Assigned Agreement or part thereof, or waive timely
performance or observance by any of the Assignors of their respective
obligations thereunder, or any default on the part of any Assignor under any
Assigned Agreement without the prior written consent of the Required
Participants; provided, however, that Finco may take whatever action any
applicable Hospital reasonably deems necessary (if any) to release Non-
qualifying Receivables repurchased pursuant to Section 4.4 of any Sale and
Servicing Agreement by such Hospital, so long as such action does not affect
the ownership or security interest granted in the Trust Assets other than the
Non-qualifying Receivables so repurchased, without obtaining such consent. If
any such amendment, modification, supplement or waiver shall be so consented
to by the Required Participants, Finco agrees, promptly following a request by
the Trustee or the Required Participants, to execute and deliver, in its own
name and at its own expense, such agreements, instruments, consents and other
documents (in form and substance reasonably satisfactory to the Required
Participants) as the Trustee or the Required Participants may reasonably deem
necessary or appropriate in the circumstances.
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
Section 6.1. Servicing. (a) In further consideration for the
obligations of the Trustee and the Participants hereunder, Finco agrees that
it shall service the Purchased Receivables by (i) causing UHS Delaware,
pursuant to the Servicing Agreement, to undertake all obligations of the
Servicer thereunder in connection with the servicing of the Purchased
Receivables and the other Transferred Property, (ii) causing each Hospital,
pursuant to the Sale and Servicing Agreement to which such Hospital is a
party, to undertake such obligations in connection with the servicing of the
Purchased Receivables and the other Transferred Property as the Servicer shall
delegate to such Hospital and (iii) causing UHS to comply with the terms of
the Guarantee, pursuant to which UHS will guarantee the performance by the
Hospitals and UHS Delaware of all of their respective obligations under the
Sale and Servicing Agreements and the Servicing Agreement. By their
acceptance of the Participations, the Participants consent to UHS Delaware
acting as Servicer in accordance with the Servicing Agreement and to the
Servicing arrangements described therein and in the previous sentence.
(b) In furtherance of Section 6.1(a), Finco agrees, subject to
applicable confidentiality requirements under law, that it will provide
promptly and shall cause the Servicer, UHS and each Hospital to provide
promptly to the Trustee and the Participants and any other Person retained by
any of them all information, including, without limitation, all information in
relation to the Purchased Receivables and other Total Transferred Property,
that any such Person requests, including, without limitation, information with
respect to the periodic reports by Arthur Andersen & Co. or other certified
public accountant delivered pursuant to Section 5.1(m) or reports by any other
agent of Finco, the Servicer, UHS or the Hospitals on the Purchased
Receivables and other Total Transferred Property conveyed to the Trust. The
Trustee and the Participants agree that all such information is to be regarded
as Information subject to the confidentiality provisions of Section 5.2(e).
Section 6.2. Collections. (a) Finco shall apply, and shall cause
each of the Servicer and each Hospital to apply, all Collections on all
Purchased Receivables strictly in accordance with the terms of the Sale and
Servicing Agreements, the Servicing Agreement and this Agreement in order to
permit the Trustee, for the benefit of the Interested Parties, to make all
allocations and payments required hereunder.
(b) To the extent held or received by Finco or any Interested Party
(other than the Hospital payee), all Collections on account of Non-
governmental Receivables will be held in trust for the benefit of the
Participants and deposited in the Master Receivables Account pending
remittance to the Trustee.
(c) Any Collections on Governmental Receivables received by any
Interested Party or Finco shall be immediately paid to the Hospital payee for
deposit in such Hospital's Hospital Concentration Account or the Master
Receivables Account.
(d) In no event shall Finco permit any Hospital to deposit any
Collections into any account established, held or maintained by such Hospital
or any other Person other than the related Hospital Concentration Account or
the Master Receivables Account or transfer such Collections other than in
accordance with the provisions of this Agreement, the related Sale and
Servicing Agreement and the Servicing Agreement. Available amounts in the
Hospital Concentration Accounts shall be transferred within one Business Day
of receipt to the Master Receivables Account. Amounts so transferred from the
Hospital Concentration Accounts and amounts otherwise received in the Master
Receivables Account prior to the close of business on any Business Day shall
be transferred to the Collateral Account on such Business Day. Amounts
received in the Master Receivables Account after the close of business on any
Business Day or on any day which is not a Business Day shall be transferred to
the Collateral Account on the next succeeding Business Day. Amounts received
in the Collateral Account shall be applied in accordance with Article VII.
(e) Finco agrees that it shall use its best efforts to ensure that
only Collections on Purchased Receivables are deposited into the Hospital
Concentration Accounts and the Master Receivables Account. The Participants
and the Trustee agree that, promptly following the establishment to the
satisfaction of Finco and any Hospital that any funds received in such
Hospital's Hospital Concentration Account or the Master Receivables Account do
not constitute Collections on Purchased Receivables (including any funds
constituting payments on Receivables which have been reassigned to such
Hospital and payments to such Hospital not in respect of Receivables) to the
extent such funds are available in the Hospital Concentration Accounts, the
Master Receivables Account or the Collateral Account, the Servicer shall
remit, or cause the Trustee to remit, such funds to such Hospital in
immediately available funds.
Section 6.3. Claims Against Third Parties. Finco agrees that it
will make and pursue, and continue to cause each Hospital to make and pursue,
for the benefit of the Interested Parties, claims on the Purchased Receivables
sold to Finco and not repurchased pursuant to Section 4.4 of each Sale and
Servicing Agreement to the extent that any Requirement of Law or contractual
provision requires Finco or such Hospital to directly make and pursue such
claims; provided that Finco agrees that it is making and pursuing such claims
for the benefit of the Interested Parties and that any funds received by Finco
based on such claims will be transferred in accordance with Section 6.2.
Section 6.4. Deleted Receivables. Finco agrees that it shall
permit the Servicer, in accordance with the terms of Section 3.6 of the
Servicing Agreement, to exclude Deleted Receivables from the pool of
Financible Receivables only on the Business Day on which Finco is obligated to
make payment of the Purchase Price with respect thereto under the Sale and
Servicing Agreement and only to the extent that, after giving effect to such
exclusion, the quality and collectibility (including as a result of the credit
quality of the Obligors on the Financible Receivables) of the pool of
Financible Receivables would not be any worse than the quality and
collectibility (including as a result of the credit quality of the Obligors on
the Eligible Receivables) of the pool of Eligible Receivables. Finco agrees
to cause the Servicer, for the benefit of the Interested Parties, to comply
with all representations, warranties and covenants of the Servicer with
respect to the Deleted Receivables, including, without limitation, the
agreement that no Deleted Receivable shall be added to the calculation of the
Financible Pool Balance or considered to be a Financible Receivable for any
reason.
ARTICLE VII
COLLATERAL ACCOUNT AND OTHER ACCOUNTS;
ALLOCATIONS AND DISTRIBUTIONS
Section 7.1. Establishment of Collateral Account and Other
Accounts. (a) The Trustee, for the benefit of the Participants, shall
maintain a segregated trust account, in the name of the Trust, on behalf of
the Trust and in the corporate trust department of an Eligible Institution
satisfactory to the Trustee and Finco, bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Participants (the "Collateral Account" and identified as Account No. 0004359),
the operation of which Collateral Account shall be governed by this Article
VII. For administrative purposes only, the Trustee shall establish or cause
to be established, simultaneously with the Collateral Account (i) the
following three sub-accounts of the Collateral Account: (A) for the benefit
of Sheffield, the "Sheffield Sub-account", (B) for the benefit of the TRIPs
Holders, the "TRIPs Sub-account" and (C) for the benefit of the Participants
and certain Persons specified in Section 7.3(a) to whom amounts are payable in
connection with the administration of the Trust and the Participations, the
"Expense Sub-account" and (ii) a sub-account of each of the Sheffield Sub-
account and the TRIPs Sub-account (the "Sheffield Interest Sub-account" and
the "TRIPs Interest Sub-account", respectively). The Trustee shall make all
transfers, deposits and withdrawals to and from the Collateral Account, all
sub-accounts thereof and the Other Accounts pursuant to this Article VII.
(b) There shall be deposited in the Collateral Account the
following monies, cash and proceeds: (i) all Available Cash Collections
received by the Trustee pursuant to Section 3.1 of the Servicing Agreement,
Section 5.2 of the Sale and Servicing Agreements and Section 6.2 hereof, (ii)
all amounts earned pursuant to Section 7.7, (iii) all proceeds, if any, of
Commercial Paper and Loans in excess of the amount required to repay maturing
Commercial Paper and Loans and (iv) any and all other monies at any time and
from time to time received by or on behalf of the Participants or Finco, and
required by the terms of this Agreement, each of the Sale and Servicing
Agreements, the Servicing Agreement or any other Operative Document to be
deposited in the Collateral Account.
(c) The Trustee shall at all times during the term of this
Agreement maintain a segregated trust account in the name of the Trust in the
corporate trust department of an Eligible Institution satisfactory to the
Trustee, Finco and Sheffield, for the exclusive benefit of Sheffield and the
Liquidity Agent, for the benefit of the Lenders (the "Sheffield Payment
Account" and identified as Account No. 0004365), into which account shall be
deposited all amounts required pursuant to this Article VII.
(d) The Trustee shall at all times during the term of this
Agreement maintain a segregated trust account in the name of the Trust in the
corporate trust department of an Eligible Institution satisfactory to the
Trustee, Finco and the Required TRIPs Holders, for the benefit of the TRIPs
Holders (the "TRIPs Payment Account" and identified as Account No. 0004366;
the TRIPs Payment Account and the Sheffield Payment Account, collectively, the
"Other Accounts") into which account shall be deposited all amounts required
pursuant to this Article VII.
(e) Schedule II hereto sets forth the Eligible Institution at which
the Collateral Account and each Other Account is held, along with the name and
account number of each such account. Subject to all Requirements of Law, the
Trustee shall have exclusive dominion and control over the Collateral Account,
the Other Accounts and any Additional Accounts, for the exclusive benefit of
the Participants and those Persons specified in Section 7.3(a) as their
respective interests may appear. Except as expressly provided herein, no
Person other than the Trustee shall have any right of withdrawal therefrom.
The Servicer shall have no right of set-off or banker's lien against, and no
right to otherwise deduct from, any funds held or to be deposited in the
Collateral Account, any Other Account or any Additional Account for any amount
owed to it by the Trust or any Interested Party. If, at any time the
institution holding the Collateral Account, any Other Account or any
Additional Account ceases to be an Eligible Institution and the Trustee is
notified of such fact, the Trustee shall establish a new account with an
Eligible Institution meeting the applicable conditions specified above,
transfer any cash and/or any investments to such new account and from the date
such new account is established, it shall be the "Collateral Account" or the
applicable "Other Account" or "Additional Account", as the case may be.
Section 7.2. Daily Allocations. (a) On each Business Day, the
Trustee shall allocate Available Cash Collections, all other amounts received
on deposit in the Collateral Account and all amounts remaining on deposit in
the Collateral Account from the previous Business Day that have not been
allocated to any sub-account thereof as follows:
(i) an amount equal to the Sheffield Percentage of such amount
shall be allocated to the Sheffield Sub-account; and
(ii) an amount equal to the TRIPs Percentage of such amount shall
be allocated to the TRIPs Sub-account.
(b) On each Business Day, amounts allocated to the Sheffield Sub-
account (or retained therein on a prior Business Day) shall be applied by the
Trustee in the following priority:
(i) an amount equal to the imputed or stated Sheffield Yield, as
the case may be, accrued since the previous Business Day shall be
allocated (to the extent not previously so allocated) to the Sheffield
Interest Sub-account; provided that on any date on which a Stub Loan is
incurred, five hundred dollars ($500) shall be allocated to the Sheffield
Interest Sub-account and no further daily allocation shall be made in
respect of the Sheffield Yield to accrue on such Stub Loan;
(ii) the following amounts shall be allocated to the Expense Sub-
account:
(A) an amount equal to the Sheffield Percentage of the Daily
Program Expense Amount for such Business Day; provided, however,
that for so long as the Servicer is an Affiliate of Finco and no
Early Amortization Event shall have occurred, the Sheffield
Percentage of the accrued and unpaid Servicing Fee shall not be
transferred to the Expense Subaccount but rather shall be paid to
the Servicer on such Business Day; and provided, further, that the
amount so paid on any Business Day shall be reduced by an amount
equal to the excess of (A) the Required Coverage Amount over (B) the
Financible Pool Balance on such Business Day (and such excess shall
be transferred to the Expense Sub-account); plus
(B) any amounts not allocated from the Sheffield Sub-account
to the Expense Sub-account as required on any previous Business Day;
plus
(C) if such Business Day is a Transfer Date, an amount equal to
the excess of (1) (x) the Sheffield Percentage of the amount to be
withdrawn from the Expense Sub-account on such Business Day in
respect of the Monthly Program Expense Amount plus (y) the amount to
be withdrawn from the Expense Sub-account in respect of the Monthly
Sheffield Expense Amount accrued and unpaid on such date, in each
case pursuant to Section 7.3(a) over (2) the total amount on deposit
in the Expense Sub-account, after giving effect to all allocations
to be made to the Expense Sub-account on such Business Day;
(iii) the Daily Sheffield Expense Amount, and any amount in respect
of the Daily Sheffield Expense Amount not allocated as required on any
prior Business Day, shall be allocated to the Expense Sub-account;
(iv) In the event that the Trustee has been directed in writing by
either Finco or Sheffield to reserve funds in order to decrease the
Sheffield Capital, the following funds shall be retained in the Sheffield
Sub-account:
(A) upon written notice by Sheffield of (1) the occurrence of
the Liquidation Date, (2) an election by Sheffield pursuant to
Section 2.7 (and the passage of the appropriate notice period) or
(3) the failure by Finco to satisfy a condition precedent set forth
in Section 3.2, any funds remaining in the Sheffield Sub-account
after application pursuant to Section 7.2(b)(iii); and
(B) in the case of an election by Finco pursuant to Section
2.6, an amount specified by the Servicer in the Servicer Daily
Statement for such Business Day; and
(v) after giving effect to any Principal Pay-Down pursuant to
Section 7.4, any remaining funds shall be applied as follows:
(A) during the Sheffield Revolving Period, such funds shall be
allocated to the Collateral Account and applied pursuant to Section
7.2(d); and
(B) during the Sheffield Amortization Period, such funds shall
be applied pursuant to Section 7.5.
(c) On each Business Day, amounts allocated to the TRIPs Sub-
account shall be applied by the Trustee in the following priority:
(i) an amount equal to the TRIPs Yield accrued since the previous
Business Day shall be allocated (to the extent not previously so
allocated) to the TRIPs Interest Sub-account; provided that in the event
that a TRIPs Interest Default has occurred on any prior Transfer Date,
then the amount to be so allocated shall be an amount equal to the excess
of (A) the aggregate TRIPs Yield scheduled to be paid on the subsequent
Transfer Date over (B) the amount on deposit in the TRIPs Interest Sub-
account on such Business Day;
(ii) the following amounts shall be allocated to the Expense Sub-
account:
(A) an amount equal to the TRIPs Percentage of the Daily
Program Expense Amount; provided, however, that for so long as the
Servicer is an Affiliate of Finco and no Early Amortization Event
shall have occurred, the TRIPs Percentage of the accrued and unpaid
Servicing Fee shall not be transferred to the Expense Subaccount but
rather shall be paid to the Servicer on such Business Days; and
provided, further, that the amount so paid on any Business Day shall
be reduced by an amount equal to the excess of (A) the Required
Coverage Amount over (B) the Financible Pool Balance on such
Business Day (and such excess shall be transferred to the Expense
Sub-account); plus
(B) any amounts not allocated from the TRIPs Sub-account to
the Expense Sub-account as required on any previous Business Day;
plus
(C) if such Business Day is a Transfer Date, an amount equal
to the excess of (1) (x) the TRIPs Percentage of the amount to be
withdrawn from the Expense Sub-account on such Business Day in
respect of the Monthly Program Expense Amount plus (y) the amount to
be withdrawn on such Business Day in respect of the Monthly TRIPs
Expense Amount accrued and unpaid on such date, in each case
pursuant to section 7.3(a) over (2) the total amount on deposit in
the Expense Sub-account, after giving effect to all allocations to
be made to the Expense Sub-account on such Business Day;
(iii) the Daily TRIPs Expense Amount for such Business Day, and any
amount in respect of the Daily TRIPs Expense Amount not allocated as
required on any prior Business Day, shall be allocated to the Expense
Sub-account;
(iv) during the period commencing on the date on which the Call
Option is exercised and ending on the Call Date, an amount equal to the
excess, if any, of (A) the Make-Whole Estimated Amount over (B) the
amount on deposit in the TRIPs Interest Sub-account minus the portion of
such amount deposited therein pursuant to Section 7.2(c)(i) shall be
deposited in the TRIPs Interest Sub-account;
(v) in the event that the Trustee has been directed in writing by
the Required TRIPs Holders to retain funds in the TRIPs Sub-account as a
result of a failure by Finco to satisfy a condition precedent set forth
in Section 3.2, any remaining funds shall be retained in the TRIPs Sub-
account; and
(vi) any remaining funds shall be applied as follows:
(A) during the TRIPs Revolving Period such funds shall be
allocated to the Collateral Account and applied pursuant to Section
7.2(d); and
(B) during the TRIPs Amortization Period such funds shall be
applied pursuant to Section 7.5.
(d) On each Business Day, after giving effect to any Principal Pay-
Down pursuant to Section 7.4, funds allocated to the Collateral Account (other
than any sub-account thereof) pursuant to Sections 7.2(b)(v)(A) and (c)(vi)(A)
shall be applied by the Trustee in the following priority:
(i) an amount equal to the excess, if any, of (A) the Required
Coverage Amount over (B) the Financible Pool Balance shall be retained in
the Collateral Account until the following Business Day; and
(ii) any remaining funds shall be paid to Finco to maintain the
Aggregate Capital as provided in Section 2.7 and in respect of the
Subordinated Interest.
(e) Amounts paid to Finco pursuant to Section 7.2(d) shall be
applied by the Trustee, on behalf of Finco, as follows:
(i) first, the aggregate Purchase Price payable on such Business
Day pursuant to the Sale and Servicing Agreements (after giving effect to
all adjustments thereto) shall, pursuant to Section 2.3 of the Sale and
Servicing Agreements, be paid to the Hospitals pro rata in accordance
with the respective Purchase Prices payable to such Hospitals; provided
that no amount otherwise payable pursuant to this provision shall be paid
to any Excluded Hospital;
(ii) second, the aggregate principal amount plus all outstanding
interest payable on all Subordinated Notes shall be paid to the Hospitals
pro rata in accordance with the amounts payable to such Hospitals;
provided that no amount otherwise payable pursuant to this provision
shall be paid to any Excluded Hospital; and
(iii) third, all remaining amounts may be retained by Finco for its
own account and applied by Finco in any manner not otherwise prohibited
by the Operative Documents.
Section 7.3. Monthly Applications. The Trustee shall make the
following applications and distributions from the Collateral Account, the
applicable sub-accounts thereof and the applicable Other Accounts on each
Transfer Date:
(a) an amount equal to the sum of (x) the Monthly Program Expense
Amount, (y) the Monthly Sheffield Expense Amount and (z) the Monthly
TRIPs Expense Amount with respect to the related Settlement Period, and
any unpaid amounts in respect of such amounts payable on any prior
Transfer Date shall be paid from the Expense Sub-account in the following
manner and priority:
(i) first, all amounts payable and not paid on any prior
Transfer Date shall be paid in the order of priority stated in
clauses (ii) through (iv) below;
(ii) second, to the extent not otherwise paid by the Servicer
prior to such date out of the Servicing Fee pursuant to Section 3.1
of the Servicing Agreement, and subject to the aggregate dollar
limitation set forth in such Section of the Servicing Agreement, all
reasonable out-of-pocket costs and expenses of the Trustee,
including all expenses incurred by the Trustee in compensating the
Transfer Agent and Registrar and any authenticating agent or co-
trustee, and all Indemnified Amounts owing to the Trustee shall be
paid to the Trustee;
(iii) third, to the extent not otherwise paid by the Servicer
prior to such date pursuant to the Servicing Agreement, and subject
to the aggregate dollar limitation set forth in such Section of the
Servicing Agreement, the Trustee Fee accrued during the related
Settlement Period shall be paid to the Trustee; and
(iv) fourth, all other fees in respect of the Monthly Program
Expense Amount, the Monthly Sheffield Expense Amount and the Monthly
TRIPs Expense Amount and all other fees, costs and expenses shall be
paid to the appropriate payees; provided that except in the case of
regularly scheduled fees payable to any Interested Party such payees
shall have submitted a statement of such expenses to the Trustee at
least 10 days prior to such Transfer Date; provided, further, that
if sufficient funds are not available to pay all such fees, costs
and expenses in full, such fees, costs and expenses shall be paid
pro rata according to the respective amounts owed to each such
payee; and provided, further, that if the Servicer is an Affiliate
of UHS, after giving effect to the payment to the Trustee of any
portion of the Servicing Fee payable to it pursuant to Section 3.1
of the Servicing Agreement and subsections 7.3(a)(i), (ii) and (iii)
hereof, the Servicing Fee (to the extent not otherwise paid pursuant
to Section 7.2(b)(ii)(A) and 7.2(c)(ii)(A)) shall be paid to the
Servicer only after all other amounts payable pursuant to this
clause (iv) have been paid in full;
any amounts remaining in the Expense Sub-account after payment of the
above amounts shall be deposited in the Collateral Account and allocated
pursuant to Section 7.2(a) on the following Business Day; and
(b) an amount equal to the sum of (i) the TRIPs Yield with respect
to the related Settlement Period and (ii) any TRIPs Yield previously due
but not distributed on any prior Transfer Date shall be transferred from
the TRIPs Interest Sub-account to the TRIPs Payment Account and
distributed to the TRIPs Holders pursuant to Section 8.1(b).
Section 7.4. Payments to Sheffield. (a) On the last day of the
Fixed Period with respect to any Sheffield Tranche, in payment of any amounts
owing in respect of any Commercial Paper Notes or Loans issued to fund such
Sheffield Tranche, the Trustee shall make the following applications:
(i) an amount equal to the Sheffield Yield on such Sheffield
Tranche shall be transferred from the Sheffield Interest Sub-account to
the Sheffield Payment Account; and
(ii) an amount equal to the Principal Pay-Down, if any, with
respect to such Sheffield Tranche shall be transferred to the Sheffield
Payment Account from the Sheffield Sub-account or the Collateral Account
(excluding any sub-account thereof).
(b) The Principal Pay-Down, if any, plus all accrued and unpaid
Sheffield Yield with respect to such Sheffield Tranche shall be distributed by
the Trustee to Sheffield on such date.
Section 7.5. Amortization. (a) During the Sheffield Amortization
Period, the Trustee shall make the following applications:
(i) on each Business Day on which the Adjusted Sheffield Capital is
greater than zero, an amount equal to the lesser of (A) the amount
remaining in the Sheffield Sub-account after application pursuant to
Section 7.2(b) and (B) the Adjusted Sheffield Capital shall be deposited
in the Sheffield Payment Account to pay maturing Commercial Paper Notes
and Loans; and
(ii) on each Business Day after the Adjusted Sheffield Capital has
been reduced to zero, first, an amount equal to the excess of all
Sheffield Yield scheduled to accrue in respect of all Commercial Paper
Notes and Loans Outstanding over the amount on deposit in the Sheffield
Interest Sub-account shall be deposited in the Sheffield Interest Sub-
account and, thereafter, so long as no Early Amortization Event shall
have occurred and be continuing, all amounts remaining in the Sheffield
Sub-account after application pursuant to Section 7.2(b) shall be paid to
Finco.
During the Sheffield Amortization Period, no payments shall be made to Finco
from the Sheffield Sub-account or any sub-account thereof until the Adjusted
Sheffield Capital has been reduced to zero, all unpaid Sheffield Yield
scheduled to accrue thereon has been deposited in the Sheffield Interest Sub-
account and all unpaid fees, costs and expenses accrued or scheduled to accrue
which are allocable to the Sheffield Participation have been deposited in the
Expense Sub-account.
(b) During the TRIPs Amortization Period, the Trustee shall make
the following applications:
(i) on each Business Day on which the Adjusted TRIPs Capital is
greater than zero, an amount equal to the lesser of (A) the amount
remaining in the TRIPs Sub-account after application pursuant to Section
7.2(c) and (B) the Adjusted TRIPs Capital shall be deposited in the TRIPs
Payment Account;
(ii) on each Business Day after the Adjusted TRIPs Capital has been
reduced to zero, first, an amount equal to the excess of the TRIPs Yield
payable on the subsequent Transfer Date over the amount on deposit in the
TRIPs Interest Sub-account shall be deposited in the TRIPs Interest Sub-
account and, thereafter, so long as no Early Amortization Event shall
have occurred and be continuing, all amounts remaining in the TRIPs Sub-
account after application pursuant to Section 7.2(c) shall be paid to
Finco;
(iii) on each Transfer Date after the Call Date, the Make-Whole
Payment Amount for such Transfer Date shall be transferred from the TRIPs
Interest Sub-account to the TRIPs Payment Account; and
(iv) on each Transfer Date, the amount on deposit in the TRIPs
Payment Account shall be distributed to the TRIPs Holders pursuant to
Section 8.1(b) in payment of accrued TRIPs Yield, the Make-Whole Payment
Amount, if any, with respect to such Transfer Date and the TRIPs Capital.
During the TRIPs Amortization Period, no payments shall be made to Finco from
the TRIPs Sub-account or any sub-account thereof until the Adjusted TRIPs
Capital has been reduced to zero, all unpaid TRIPs Yield and each unpaid Make-
Whole Payment Amount accrued or scheduled to accrue thereon has been deposited
in the TRIPs Interest Sub-account and all unpaid fees, costs and expenses
accrued or scheduled to accrue which are allocable to the TRIPs Participations
have been deposited in the Expense Sub-account.
(c) Upon the occurrence and during the continuation of an Early
Amortization Event, no amounts shall be payable to Finco or any Affiliate
thereof pursuant to the Operative Documents until the date on which (i) the
Adjusted Aggregate Capital has been reduced to zero, (ii) all amounts have
been allocated to the Sheffield Interest Sub-account and the TRIPs Interest
Sub-account pursuant to Sections 7.5(a) and (b) and (iii) all fees, costs and
expenses scheduled to accrue shall have been deposited in the Expense Sub-
account. Prior to such date, any amounts otherwise payable to Finco or any
Affiliate thereof from the Sheffield Sub-account pursuant to Section 7.5(a)
shall be deposited in the TRIPs Sub-account for application pursuant to this
Article VII, and any amounts otherwise payable to Finco or any Affiliate
thereof from the TRIPs Sub-account pursuant to Section 7.5(b) shall be
deposited in the Sheffield Sub-account for application pursuant to this
Article VII. On any date after the occurrence and continuation of an Early
Amortization Event, the priority of allocations to be made pursuant to this
Article VII shall be adjusted so that no amount shall be allocated pursuant to
this Article unless the full amount of the Servicing Fee with respect to such
Settlement Period shall have first been deposited in the Expense Sub-account
(or, if the Servicer is an Affiliate of Finco, the portion of the Servicing
Fee distributable to the Trustee pursuant to subsections 7.3(a)(i), (ii) and
(iii)).
(d) On the date on which the Aggregate Capital has been reduced to
zero, all Yield and each Make-Whole Payment Amount, if any, has been paid and
all fees, expenses and other amounts payable under the Operative Documents
have been paid, all amounts remaining in the Master Receivables Account, the
Collateral Account, any sub-account thereof, the Other Accounts and any
Additional Account shall be paid to Finco.
Section 7.6. Allocation and Payment Procedures.
(a) All calculations made by the Servicer and any other Person designated by
the Participants and delivered to the Trustee in order to effectuate the
operation of this Article VII shall be effective upon receipt of written
instructions from such Person. The Trustee shall promptly comply with any
calculations delivered to it pursuant to this Section 7.6.
(b) The Trustee shall from time to time, and at least monthly,
provide the Participants, Finco, the Servicer and UHS with statements of
account relative to the Collateral Account and the Other Accounts in
accordance with the Trustee's customary practices.
(c) For purposes of determining the payments to be made to any
Person pursuant to Sections 7.2 through 7.5 and in transferring such amounts,
the Trustee may rely on certificates or statements furnished to or by it in
accordance with the provisions of this Section 7.6. Any application to be
made of Deposited Funds by the Trustee pursuant to Section 7.3(a) may be made
pursuant to a statement by the payee delivered to the Trustee, Sheffield,
Finco, the Servicer and UHS setting forth in reasonable detail the nature of
the payee's claim and the amount owing on account thereof. For purposes of
determining the application to be made of Deposited Funds payable pursuant to
this Article VII (other than pursuant to the immediately preceding sentence),
the Trustee may rely exclusively, absent manifest error, upon the Servicer
Daily Statement and the Settlement Date Statement.
(d) Finco shall cause a copy of each Servicer Daily Statement and
each Settlement Date Statement to be provided by Servicer to the Trustee. The
Trustee shall not be liable for any application of the Deposited Funds in
accordance with any certificate or direction delivered pursuant to this
Section 7.6; provided, however, that no application of the Deposited Funds in
accordance with any certificate delivered pursuant to this Section 7.6 shall
be deemed to restrict or limit the right of the Trustee or Sheffield to
contest with purported obligees their respective claims in respect of the
amount set forth in such certificate.
Section 7.7. Permitted Investments. (a) Monies held in the
Collateral Account and the Other Accounts shall be invested by the Trustee
exclusively in Permitted Investments (which investments, prior to the
occurrence of an Early Amortization Event, shall be specified pursuant to the
written direction of the Servicer). Each such direction shall certify that
the requested investment constitutes a Permitted Investment. The Trustee
shall not be responsible or liable for any loss resulting from the investment
performance of any investment or reinvestment of monies held in the Collateral
Account or any other account maintained by the Trustee for the purposes of
this Agreement in Permitted Investments (other than any Permitted Investment
in respect of which the Trustee is the obligor), or from the sale or
liquidation of any Permitted Investments in accordance with this Agreement.
All Permitted Investments shall be made exclusively in the name of the Trust,
shall be payable to the Trustee and shall be held exclusively in the
Collateral Account and the Other Accounts. All proceeds from Permitted
Investments shall be retained in the Collateral Account or the Other Account
in which they are earned. Proceeds from Permitted Investments held in the
Collateral Account shall be allocated pursuant to Section 7.2(a).
(b) The Trustee may liquidate any Permitted Investment when
required to make an application pursuant to this Article VII. Finco agrees to
cause the Servicer to use its best efforts to schedule the maturities of such
Permitted Investments so as to avoid the necessity of liquidating the same.
Section 7.8. Additional Accounts. At any time that the Trustee
receives written notice that a bankruptcy, insolvency, reorganization or
similar proceeding has been commenced with respect to any Hospital, the
Trustee agrees to immediately take all actions necessary, upon receipt of
indemnification satisfactory to it and written directions from Required
Participants as to the nature of such actions, to obtain a court order
directing Obligors to make all payments on the Receivables from such Hospital
directly to an Additional Account or to the Trustee for deposit in the
Collateral Account. In any such event, the Trustee is hereby authorized to
establish an Additional Account for the receipt of such payments, and all such
payments shall be promptly transferred from such Additional Account to the
Collateral Account by the Trustee after such payments become immediately
available funds. The Trustee shall notify each of the Participants, Finco,
UHS and the Servicer of the establishment of any Additional Account. The
Trustee shall receive such assurances of indemnification for any actions taken
by it in good faith pursuant to this Section 7.8 as it shall reasonably
request.
ARTICLE VIII
DISTRIBUTIONS AND REPORTS TO PARTICIPANTS
Section 8.1. Distributions. (a) The Trustee shall distribute to
Sheffield such amounts from the Sheffield Payment Account on such dates as are
specified in Section 7.4.
(b) On each Transfer Date, the Trustee shall pay to each TRIPs
Holder of record on the Record Date for such Transfer Date, by wire transfer
of immediately available funds to an account designated by such TRIPs Holder,
such TRIPs Holder's pro rata share (based on the aggregate portion of the
TRIPs Capital represented by TRIPs held by such TRIPs Holder) of the amounts
on deposit in the TRIPs Payment Account.
Section 8.2. Statements to Participants. (a) On each Business
Day, Finco shall cause the Servicer, on behalf of the Trustee, to deliver the
Servicer Daily Statement to Sheffield.
(b) On each Settlement Date, Finco shall cause the Servicer, on
behalf of the Trustee, to deliver the Settlement Date Statement to each
Participant and the Rating Agency and the Liquidity Agent.
(c) On or before January 31 of each calendar year, commencing in
1994, the Trustee shall furnish or cause to be furnished to each Person who
was a Participant at any time during the preceding calendar year, a statement
on the appropriate Internal Revenue Service form prepared by the Servicer
containing the information required to be provided by an issuer of
indebtedness under the Code and such other customary information as is
necessary to enable the Participants to prepare their tax returns.
ARTICLE IX
TRIPs; RIGHTS OF PARTICIPANTS
Section 9.1. The TRIPs. The TRIPs shall be issued in fully
registered form and shall be substantially in the form of Exhibit A. The
TRIPs shall, upon issue, be executed and delivered by Finco to the Trustee for
authentication and redelivery as provided in Sections 2.5 and 9.2. The TRIPs
shall be issued in minimum denominations of $1,000,000 and in integral
multiples of $100,000 in excess thereof. Each TRIP shall be executed by
manual or facsimile signature on behalf of Finco by an Authorized Officer of
Finco. TRIPs bearing the manual or facsimile signature of an individual who
was, at the time when such signature was affixed, authorized to sign on behalf
of Finco or the Trustee shall not be rendered invalid, notwithstanding that
such individual has ceased to be so authorized prior to or on the date of the
authentication and delivery of such TRIPs or does not hold such office at the
date of such TRIPs. No TRIP shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such TRIP a
certificate of authentication substantially in the form provided for herein
executed by or on behalf of the Trustee by the manual or facsimile signature
of an Authorized Officer, and such certificate upon any TRIP shall be
conclusive evidence, and the only evidence, that such TRIP has been duly
authenticated and delivered hereunder. All TRIPs shall be dated the date of
their authentication.
Section 9.2. Authentication of TRIPs. On the TRIPs Closing Date,
the Trustee shall authenticate and deliver the TRIPs to the TRIPs Holders,
executed in favor of the TRIPs Holders upon the order of Finco, against
payment to Finco in accordance with Section 2.5(a). The TRIPs shall be duly
authenticated by or on behalf of the Trustee in authorized denominations equal
to (in the aggregate) the Initial TRIPs Capital.
Section 9.3. Registration of Transfer and Exchange of TRIPs. (a)
The Trustee shall cause to be kept at the office or agency to be maintained by
a transfer agent and registrar (which may be the Trustee) (the "Transfer Agent
and Registrar") in accordance with the provisions of Section 11.16 a register
(the "TRIPs Register") in which, subject to such reasonable regulations as the
Trustee may prescribe, the Transfer Agent and Registrar shall provide for the
registration of the TRIPs and of transfers and exchanges of the TRIPs as
herein provided. The Trust hereby appoints Continental as the initial
Transfer Agent and Registrar for the purpose of registering the TRIPs and
transfers and exchanges of the TRIPs as herein provided. Continental shall be
permitted to resign as Transfer Agent and Registrar upon 30 days' written
notice to Finco, the Trustee and the Participants; provided, however, that
such resignation shall not be effective and Continental shall continue to
perform its duties as Transfer Agent and Registrar until the Trust has
appointed a successor Transfer Agent and Registrar acceptable to Finco and the
Required TRIPs Holders. If the Transfer Agent and Registrar does not have an
office in New York City, Finco may appoint any co-transfer agent and co-
registrar chosen by Finco and acceptable to the Required TRIPs Holders. Any
reference in this Agreement to the Transfer Agent and Registrar shall include
any co-transfer agent and co-registrar unless the context requires otherwise.
(b) The Trustee agrees to pay to the Transfer Agent and Registrar
from time to time reasonable compensation for its services under this Section
9.3, and the Trustee shall be entitled to be reimbursed, and the Trustee shall
be reimbursed, for such payments in accordance with and subject to Article
VII.
(c) Upon surrender for registration of transfer of any TRIP at any
office or agency of the Transfer Agent and Registrar maintained for such
purpose, Finco shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new TRIPs
in authorized denominations representing a like aggregate portion of the TRIPs
Capital.
(d) At the option of any TRIPs Holder, TRIPs may be exchanged for
other TRIPs in authorized denominations of a like aggregate portion of the
TRIPs Capital, upon surrender of the TRIPs to be exchanged at any such office
or agency of the Transfer Agent and Registrar maintained for such purpose.
Whenever any TRIPs are so surrendered for exchange, Finco shall execute, and
the Trustee shall authenticate and (unless the Transfer Agent and Registrar is
different than the Trustee, in which case the Transfer Agent and Registrar
shall) deliver the TRIPs which the TRIPs Holder making the exchange is
entitled to receive. Every TRIP presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in a form satisfactory to the Trustee and the Transfer Agent and Registrar
duly executed by the TRIPs Holder thereof or his attorney duly authorized in
writing.
(e) No service charge shall be made for any registration of
transfer or exchange of TRIPs, but the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of TRIPs.
(f) All TRIPs surrendered for registration of transfer and exchange
shall be cancelled and disposed of in a manner satisfactory to the Trustee and
Finco.
(g) Finco shall execute and deliver to the Trustee or the Transfer
Agent and Registrar, as applicable, TRIPs in such amounts and at such times as
are necessary to enable the Trustee and the Transfer Agent and Registrar to
fulfill their respective responsibilities under this Agreement and the TRIPs.
Section 9.4. Restrictions on Transfer. The Trustee shall not
register the transfer of any TRIP unless the Trustee shall have received a
certificate, substantially in the form of Exhibit D hereto, and an opinion of
counsel (which opinion of counsel may be rendered by salaried counsel employed
by the holder or prospective holder of such TRIP) reasonably acceptable to the
Trustee that such transfer is exempt from, or not subject to, the registration
requirements of the Securities Act.
Section 9.5. Mutilated, Destroyed, Lost or Stolen TRIPs. If (a)
any mutilated TRIP is surrendered to the Transfer Agent and Registrar or the
Transfer Agent and Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any TRIP and (b) there is delivered to the
Transfer Agent and Registrar and the Trustee such security or indemnity as may
be required by them to save each of them harmless (any institutional TRIPs
Holder's unsecured agreement of indemnity being satisfactory for these
purposes), then, in the absence of notice to an Authorized Officer of the
Trustee that such TRIP has been acquired by a bona fide purchaser, Finco shall
execute, and the Trustee shall authenticate and deliver (in compliance with
applicable law), in exchange for or in lieu of any such mutilated, destroyed,
lost or stolen TRIP, a new TRIP of like tenor and aggregate portion of the
TRIPs Capital. In connection with the issuance of any new TRIP under this
Section 9.5, the Trustee or the Transfer Agent and Registrar may require the
payment by the TRIPs holder of a sum sufficient to cover any tax or other
governmental expenses (including the fees and expenses of the Trustee and the
Transfer Agent and Registrar) connected therewith. Any duplicate TRIP issued
pursuant to this Section 9.5 shall constitute complete and indefeasible
evidence of ownership in the Trust Assets, as if originally issued, whether or
not the lost, stolen or destroyed TRIP shall be found at any time.
Section 9.6. Persons Deemed Owners. Prior to due presentation of a
TRIP for registration of transfer, the Trustee, the Transfer Agent and
Registrar and any agent of any of them may treat the Person in whose name any
TRIP is registered as the owner of such TRIP for the purpose of receiving
distributions pursuant to Article VII and for all other purposes whatsoever,
and neither the Trustee, the Transfer Agent and Registrar nor any agent of any
of them shall be affected by any notice to the contrary. Notwithstanding the
foregoing provisions of this Section 9.6, in determining whether the holders
of the requisite portion of the TRIPs Capital have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, TRIPs owned by
any UHS Entity or any affiliate thereof (as defined in Rule 405 under the
Securities Act), shall be disregarded and deemed not to be outstanding, except
that, in determining whether the Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only TRIPs which an Authorized Officer of the Trustee knows to be so owned
shall be so disregarded. TRIPs so owned which have been pledged in good faith
shall not be disregarded and may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such TRIPs and that the pledgee is not Finco, any UHS Entity
or an affiliate thereof (as defined above).
Section 9.7. Access to List of Participants' Names and Addresses.
The Trustee will furnish or cause to be furnished by the Transfer Agent and
Registrar to Finco, any Participant or the Servicer, within five Business Days
after receipt by the Trustee of a request therefor in writing, a list in such
form as Finco, such Participant or the Servicer may reasonably require, of the
names and addresses of the Participants. Every Participant, by acquiring the
Participations, agrees with the Trustee that neither the Trustee, the Transfer
Agent and Registrar, nor any of their respective agents shall be held
accountable by reason of the disclosure of any such information as to the
names and addresses of the Participants hereunder, regardless of the sources
from which such information was derived.
Section 9.8. Authenticating Agent. (a) The Trustee may appoint
one or more authenticating agents with respect to the TRIPs which shall be
authorized to act on behalf of the Trustee in authenticating the TRIPs in
connection with the issuance, delivery, registration of transfer, exchange or
repayment of the TRIPs. Whenever reference is made in this Agreement to the
authentication of TRIPs by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an authenticating agent and a certificate of
authentication executed on behalf of the Trustee by an authenticating agent.
Each authenticating agent must be acceptable to the Trustee and Finco.
(b) Any institution succeeding to the corporate agency business of
an authenticating agent shall continue to be an authenticating agent without
the execution or filing of any paper or any further act on the part of the
Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving
written notice of resignation to the Trustee and to Finco, which notice shall
be forwarded by the Trustee to the Participants. The Trustee may at any time
terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent, the Participants and Finco. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time an authenticating agent shall cease to be acceptable to the
Trustee or Finco, the Trustee promptly may appoint a successor authenticating
agent. Any successor authenticating agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
authenticating agent. No successor authenticating agent shall be appointed
unless acceptable to the Trustee and Finco.
(d) The Trustee agrees to pay to each authenticating agent from
time to time reasonable compensation for its services under this Section 9.8,
and the Trustee shall be entitled to be reimbursed for such payments in
accordance with and subject to the provisions of Article VII.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 9.8, the
TRIPs may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially
the following form:
This is one of the TRIPs described in the Pooling Agreement.
_________________________
_________________________
as authenticating agent
for the Trustee
By _______________________
Authorized Officer
Section 9.9. Limitation on Rights of Participants. (a) The death
or incapacity of any Participant shall not operate to terminate this Agreement
or the Trust, nor shall such death or incapacity entitle such Participant's
legal representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) Except as expressly provided herein, no Participant shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the TRIPs, be
construed so as to constitute the Participants from time to time as partners
or members of an association; nor shall any Participant be under any liability
to any third person by reason of any action taken by the parties to this
Agreement pursuant to any provision hereof.
Section 9.10. Participations Nonassessable and Fully Paid. It is
the intention of the parties to this Agreement that the Participants shall not
be personally liable for obligations of the Trust, that the interests in the
Trust represented by the Participations shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever and that the TRIPs upon
authentication thereof by the Trustee pursuant to Sections 2.5 and 9.2 are and
shall be deemed fully paid.
Section 9.11. Actions by TRIPs Holders. Any request, demand,
authorization, direction, notice, consent, waiver or other act by a TRIPs
Holder shall bind such TRIPs Holder and every subsequent holder of such TRIP
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done or omitted to be done by the Trustee
in reliance thereon, whether or not notation of such action is made upon such
TRIP.
ARTICLE X
EARLY AMORTIZATION EVENTS
Section 10.1. Early Amortization Events. If any of the following
events occur (each, an "Early Amortization Event"), Sheffield or the Required
TRIPs Holders may give notice thereof pursuant to Section 10.2, and the
Trustee, on behalf of the Participants, may exercise the remedies available to
it pursuant to Section 10.2:
(a) Finco shall fail to make any payment to be made by it hereunder
to any party to any of the Operative Documents when due; or Finco shall
fail to perform or observe any term, covenant or agreement contained in
Section 5.1(b), 5.1(d), 5.1(g), 5.1(j), 5.1(k), 5.2(d) through (f),
5.2(i) or 5.2(k) through (n); or
(b) Finco shall default in the performance of any covenant or
agreement set forth in subsection 5.1(l) and such default shall continue
unremedied for a period of three days or Finco shall default in the
performance of any other agreement or undertaking hereunder (other than
as provided in clause (a) above) and such default shall continue for 30
days after written notice thereof has been given to Finco by the
Servicer, any Participant or the Trustee; or
(c) any representation or warranty made by Finco, UHS or the
Servicer in any Operative Document or in any certificate or financial or
other statement furnished pursuant to the terms of such Operative
Document (other than as provided in clauses (a) or (b) above) shall prove
to have been untrue or incomplete in any material respect when made or
deemed made and Finco, UHS or the Servicer, as the case may be, shall
fail to cure such breach of representation, warranty or other statement
within 15 days after written notice thereof has been given to Finco, UHS
or the Servicer by the Servicer, any Participant or the Trustee;
provided, however, that no breach of any representation or warranty made
by Finco as to any Receivable being an Eligible Receivable on the related
Purchase Date shall constitute an "Early Amortization Event" hereunder if
Finco cures or causes to be cured such breach in accordance with the
terms of Section 5.4 of this Agreement; or
(d) any of Finco, the Servicer or UHS shall fail to perform or
observe any other term, covenant or agreement contained in any of the
Operative Documents to which it is a party (other than as provided in
paragraphs (a) through (c) above), and any such failure shall remain
unremedied for 30 days after written notice thereof shall have been given
to Finco, the Servicer or UHS, as the case may be, by the Servicer, any
Participant or the Trustee; or
(e) any material provision of any of the Operative Documents shall
at any time for any reason cease to be valid and binding on the parties
thereto or shall be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Governmental Authority,
in each case in a manner and to an extent which, either individually or
in the aggregate, could have or result in a material adverse effect on
any of the Interested Parties or the CP Holders; or
(f) (i) any of Finco, UHS or the Servicer shall (A) apply for or
consent to the appointment of a receiver, trustee, liquidator or
custodian or the like of itself or of its property, (B) admit in writing
its inability to pay its debts generally as they become due, (C) make a
general assignment for the benefit of creditors, (D) be adjudicated a
bankrupt or insolvent, or (E) commence a voluntary case under the Federal
bankruptcy laws of the United States of America or file a voluntary
petition or answer seeking reorganization, an arrangement with creditors
or an order for relief or seeking to take advantage of any insolvency law
or file an answer admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization or insolvency proceeding; or
corporate action shall be taken by it for the purpose of effecting any of
the foregoing; or (ii) without the application, approval or consent of
Finco, UHS or the Servicer, a proceeding shall be instituted in any court
of competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
Finco, UHS or the Servicer an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or the like
of Finco, UHS or the Servicer or of all or any substantial part of the
assets of Finco, UHS or the Servicer, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such proceeding
is being contested by Finco, UHS or the Servicer in good faith, the same
shall (A) result in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed, or pending and
unstayed, for any period of 60 consecutive days; or
(g) (i) Finco, UHS, the Servicer or any Hospital or any Commonly
Controlled Entity shall engage in any Prohibited Transaction (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan,
(iii) a Reportable Event shall occur with respect to, or proceedings
shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required TRIPs Holders or
Sheffield, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) UHS or any Commonly Controlled Entity
shall, or in the reasonable opinion of the Required TRIPs Holders or
Sheffield is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist, with
respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or
conditions, if any, could subject UHS or any of its Subsidiaries to any
tax, penalty or other liabilities in the aggregate material in relation
to the business, operations, property or financial or other condition of
the UHS Entities taken as a whole; or
(h) (i) Except as permitted hereunder, Finco shall incur any Debt
or obligations of UHS or any of its Subsidiaries in respect of Debt in
excess of $5,000,000 in the aggregate, including Debt assumed or
guaranteed by UHS or any of its Subsidiaries, shall be declared to be or
shall become due and payable prior to the stated maturity thereof (an
"Acceleration Event"); (ii) obligations of UHS or any of its Subsidiaries
in respect of Debt in excess of $5,000,000 in the aggregate shall not be
paid when the same becomes due and payable (after taking into account any
period of grace permitted with respect thereto); (iii) (A) there shall
occur and be continuing any other default or defaults by UHS or any of
its Subsidiaries under any instruments, agreements or evidences of
indebtedness relating to Debt in excess of $5,000,000 in the aggregate
and such defaults shall continue unremedied for 30 days beyond any period
of grace permitted with respect thereto and (B) the effect of such
default or defaults is to permit the holder or holders of such
instruments, agreements or evidences of indebtedness, or a trustee, agent
or other representative on behalf of such holder or holders, to cause
Debt in excess of $5,000,000 in the aggregate to become due prior to its
stated maturity; or
(i) any judgment or judgments for the payment of money (A) in an
aggregate amount in excess of $10,000 shall have been rendered against
Finco or (B) in an aggregate amount in excess of $5,000,000 shall have
been rendered against UHS or any Subsidiary or Subsidiaries of UHS (other
than Finco), and in any such case the same shall have remained
unsatisfied and in effect for any period of 30 consecutive days during
which no stay of execution shall have been obtained; and any such event,
in the reasonable judgment of Sheffield or the Required TRIPs Holders,
shall materially impair the ability of any UHS Entity to perform its
obligations under the Operative Documents; or
(j) (i) UHS shall cease to own, directly or indirectly through one
or more wholly owned Subsidiaries, all of the outstanding capital stock
of Finco or of UHS Delaware; or (ii) any such capital stock of Finco or
UHS Delaware shall be subject to any Lien, charge, pledge or encumbrance
(other than (a) any Lien for taxes which may not then be due and payable
or which can be discharged thereafter without penalty or (b) any Lien of
any financial institution securing Debt of UHS and its Subsidiaries); or
(iii) any pledgee of any such stock of Finco or UHS Delaware pledged as
collateral as permitted by clause (ii) shall take any action to realize
upon such collateral; or
(k) this Agreement shall at any time not give the Trustee the
ownership or security interests and rights, powers and privileges
purported to be created hereby (including, without limitation, a
perfected ownership or security interest in, or Lien on, all of the Trust
Assets), prior to the rights of all other Persons and subject to no other
mortgage, pledge, Lien, security interest or other charge or encumbrance
of any kind; or
(l) (i) the Servicer or any Hospital shall fail to make any payment
or deposit within one Business Day after the date it is required to do so
under the terms of the Sale and Servicing Agreements or the Servicing
Agreement; or (ii) the Servicer shall fail to deliver a Settlement Date
Statement and the related Servicer's Certificate within three Business
Days after the date it is required to do so or shall fail to deliver a
Servicer Daily Statement within one Business Day after it is required to
do so under the terms of the Servicing Agreement; or (iii) any Hospital
shall fail to comply with the terms of Section 7.2 of the related Sale
and Servicing Agreement; or
(m) UHS shall undergo a Change of Control or change in management,
unless such event, in the reasonable judgment of Sheffield and the
Required TRIPs Holders, would not be expected to materially impair the
ability of UHS to perform its obligations under the Guarantee; or
(n) a Voluntary Exclusion Event shall have occurred; or
(o) the Loss-to-Liquidation Ratio for any Settlement Period shall
exceed 12%; or
(p) the average Loss-to-Liquidation Ratio for the three most recent
Settlement Periods shall exceed 10%; or
(q) the Delinquency Ratio shall exceed 12% on any Settlement Date;
or
(r) at any time (i) the Eligible Pool Balance plus (ii) all cash
held in the Collateral Account (other than the TRIPs Interest Sub-
account, the Sheffield Interest Sub-account or the Expense Sub-account)
shall cease to be at least $7,500,000 greater than the Required Coverage
Amount; or
(s) there shall have occurred any other circumstance or
circumstances which would, alone or in the aggregate, in the sole
judgment of Sheffield or the Required TRIPs Holders, have a material
adverse impact on the validity or enforceability of this Agreement or any
other Operative Document, or on the enforceability or collectibility
(other than as a result of the credit quality of any Obligor) of the
Participations.
Section 10.2. Remedies. (a) If any Early Amortization Event,
other than an event described in Section 10.1(f) or (o) through (r), shall
have occurred and be continuing, (i) upon written notice given by the Required
TRIPs Holders to Finco, Sheffield and the Trustee, the TRIPs Amortization
Period shall commence and (ii) upon written notice given by Sheffield to Finco
and the Trustee (a copy of which notice the Trustee shall promptly deliver to
the TRIPs Holders), the Sheffield Amortization Period shall commence.
(b) If any Early Amortization Event described in Section 10.1(f) or
(o) through (r) shall have occurred and be continuing, then, without notice or
other action on the part of the Trustee or any Participant, (i) in the case of
an Early Amortization Event described in Section 10.1(f) or (r), immediately
upon the occurrence of such event, (ii) in the case of an Early Amortization
Event described in Section 10.1(o) or (q), three days after the Settlement
Date on which the occurrence of such event is, or is required to be, reported
in the Settlement Date Statement, and (iii) in the case of an Early
Amortization Event described in Section 10.1(p), three days after the
occurrence of such event, the TRIPs Amortization Period and the Sheffield
Amortization Period shall commence.
(c) If both the TRIPs Amortization Period and the Sheffield
Amortization Period have commenced pursuant to Section 10.2(a) or (b) or if
the Sheffield Amortization Period shall have commenced when there are no TRIPs
outstanding, Finco shall immediately cease to transfer Purchased Receivables
to the Trust. In any such event, all Collections thereafter received from
each Obligor in respect of the Purchased Receivables previously conveyed to
the Trust shall continue to be a part of the Trust as provided in this
Agreement and shall be applied to such Purchased Receivables in the order such
Purchased Receivables were created. If both the TRIPs Amortization Period and
the Sheffield Amortization Period have commenced pursuant to Section 10.2(a)
or (b), the Trustee, for the benefit of the Participants, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon
Finco or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may forthwith collect, receive,
appropriate and realize upon the Total Transferred Property, or any part
thereof, and/or may forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Trust Assets or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Trustee or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. To the extent
permitted by applicable law, Finco waives all claims, damages and demands it
may acquire against the Trustee and any Participant arising out of the
exercise by the Trustee of any rights under this Section 10.2. If any notice
of a proposed sale or other disposition of such Total Transferred Property
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. Without limiting
the generality of the foregoing, the Trustee, for the benefit of the
Participants, shall have, in addition to all other rights and remedies granted
to it under this Agreement and in any other instrument or agreement securing,
evidencing or relating to the rights and remedies hereunder, all rights and
remedies of a secured party under the UCC. Nothing in this Section 10.2 shall
be construed to prejudice any rights the Trustee or the Participants have as
purchasers or owners of the Transferred Property.
(d) In case any Early Amortization Event occurs, and as a result
thereof the TRIPs Amortization Period commences, by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of any UHS Entity
with the intention of avoiding payment of any Make-Whole Payment Amount which
Finco would have had to pay if Finco had exercised the Call Option pursuant to
Section 2.14, then Finco shall pay to the TRIPs Holders, after payment of all
Capital and Yield, an amount equal to the sum of each Make-Whole Payment
Amount that would have been payable during the TRIPs Amortization Period if
such TRIPs Amortization Period had commenced as a result of the exercise of
the Call Option.
(e) In the event that Finco shall, after any Early Amortization
Event, receive payments from any Obligor which is an Obligor with respect to
both Purchased Receivables and Receivables which have not been conveyed to the
Trustee, on behalf of the Trust, then, to the extent that Finco shall be
unable to determine the Receivables to which such payments relate, Finco shall
apply all such amounts first to the Outstanding Balance of such Obligor's
Purchased Receivables, and in the order such Purchased Receivables were
created, until all such Purchased Receivables have been paid in full.
(f) Unless the Trustee shall fail to take action required to be
taken by it in this Section 10.2 and Article XIV, no Participant shall have
any right directly to enforce the ownership or security interests and Liens
granted by this Agreement. No CP Holder shall have any right to require the
Trustee to take or fail to take any action under this Agreement.
ARTICLE XI
THE TRUSTEE
Section 11.1. Duties of Trustee. (a) The Trustee, prior to the
occurrence of an Early Amortization Event of which an Authorized Officer of
the Trustee has actual knowledge, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. If, to the
actual knowledge of an Authorized Officer of the Trustee, an Early
Amortization Event has occurred (and has not been cured or waived), the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall, subject to Section 11.2,
examine them to determine whether they substantially conform to the
requirements of this Agreement. The Trustee shall give prompt written notice
to the Participants of any material lack of conformity of any such instrument
to the applicable requirements of this Agreement discovered by the Trustee
which would entitle a specified percentage of the Participants to take any
action pursuant to this Agreement.
(c) Subject to Section 11.1(a), no provision of this Agreement
shall be construed to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:
(i) The Trustee shall not be liable for an error of judgment made
in good faith by an Authorized Officer or Authorized Officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(ii) The Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Required TRIPs Holders or Sheffield, or if such
directions given by the Required TRIPs Holders, Sheffield conflict or if
the Operative Documents so require, the direction of the Required
Participants or the Required TRIPs Holders and Sheffield jointly,
relating to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement; and
(iii) The Trustee shall not be charged with knowledge of an Early
Amortization Event or any default by the Servicer unless an Authorized
Officer of the Trustee obtains actual knowledge of such event or the
Trustee receives written notice of such event from Finco, the Servicer or
any Participant.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any obligations of the Servicer under or pursuant to this Agreement or the
Servicing Agreement except during such time, if any, as the Trustee shall be
the successor to, and be vested with the rights, duties, powers and privileges
of the Servicer.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the interests of the
Trust in any Purchased Receivable now existing or hereafter created or to
impair the value of any Purchased Receivable now existing or hereafter
created.
(f) Except as expressly provided in this Agreement, the Trustee
shall have no power to vary the corpus of the Trust.
(g) In the event that the Transfer Agent and Registrar shall fail
to perform any obligation, duty or agreement in the manner or on the day
required to be performed by the Transfer Agent and Registrar under this
Agreement, the Trustee shall be obligated, promptly upon actual knowledge of
an Authorized Officer thereof, to perform such obligation, duty or agreement
in the manner so required.
Section 11.2. Rights of the Trustee. Except as otherwise provided
in Section 11.1:
(a) The Trustee may rely on and shall be protected in acting on, or
in refraining from acting in accordance with, any resolution, officer's
certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented to it pursuant to this Agreement by the proper
party or parties;
(b) The Trustee may consult with counsel, and any opinion of
counsel (other than any such opinion rendered subsequent to the Initial
Closing Date by any counsel for any UHS Entity) shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance with
such opinion of counsel;
(c) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(d) The Trustee shall not be bound to make any investigation into
the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
the Required TRIPs Holders or Sheffield;
(e) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys or a custodian or nominee, and the Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed
with due care by it hereunder;
(f) Except as may be required by Section 11.1 hereof, the Trustee
shall not be required to make any initial or periodic examination of any
documents or records related to the Purchased Receivables or the
Transferred Property for the purpose of establishing the presence or
absence of defects, the compliance by Finco with its representations and
warranties or for any other purpose; and
(g) In the event that the Trustee is also acting as Transfer Agent
and Registrar hereunder, the rights and protections afforded to the
Trustee pursuant to this Article XI shall also be afforded to such
Transfer Agent and Registrar.
Section 11.3. Trustee Not Liable for Recitals. The Trustee assumes
no responsibility for the correctness of the recitals contained herein and in
the TRIPs (other than the
certificate of authentication on the TRIPs). Except as set forth in Section
11.15, the Trustee makes no representations as to the validity or sufficiency
of this Agreement or of the TRIPs (other than the certificate of
authentication on the TRIPs) or of any Transferred Property or Finco
Transferred Property. The Trustee shall not be accountable for the use or
application by Finco of any of the TRIPs or the proceeds of the Participations
or for the use or application of any funds paid to Finco in respect of the
Transferred Property or deposited in or withdrawn from the Collateral Account,
any Other Account or any account hereafter established to effectuate the
transactions contemplated herein and in accordance with the terms hereof.
Section 11.4. Trustee May Own TRIPs. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of TRIPs
with the same rights as it would have if it were not the Trustee.
Section 11.5. Compensation of Trustee. Subject to the provisions
of Section 3.1 of the Servicing Agreement, Article VII hereof and the Trustee
Fee Letter, the Trustee shall be entitled to receive reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), but which shall be limited to
the extent of the Servicing Fee, for all services rendered by it in the
execution of the trust hereby created and in the exercise and performance of
any of the powers and duties hereunder of the Trustee, and, subject to such
subsection, shall be entitled to reimbursement for its request for all
reasonable expenses (including, without limitation, expenses incurred in
connection with notices or other communications to Participants),
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable fees and
expenses of its agents, any co-trustee and counsel) except any such expense,
disbursement or advance as may arise from its gross negligence or bad faith.
All amounts payable pursuant to this Section 11.5 shall be paid from the
Collateral Account in accordance with Article VII.
Section 11.6. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States of America or any state thereof authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination
by Federal or State authority and, except in the case of Continental, a long-
term unsecured debt rating of A or higher from Moody's and S&P. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then, for the purpose of this Section 11.6, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 11.6, the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.7.
Section 11.7. Resignation or Removal of Trustee. (a) The Trustee
may at any time resign and be discharged from the trust hereby created by
giving written notice thereof to Finco and the Participants. Upon receiving
such notice of resignation, Finco shall, with the consent of the Required
Participants (which consent may not be unreasonably withheld) promptly appoint
a successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.6 hereof and shall fail to resign
after written request therefor by Finco or the Required Participants, or if at
any time the Trustee shall be legally unable to act, or shall be adjudged a
bankrupt or insolvent, or if a receiver of the Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then Finco or the Required Participants may
remove the Trustee and promptly appoint a successor trustee acceptable to
Finco and the Required Participants by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of
successor trustee pursuant to any of the provisions of this Section 11.7 shall
not become effective until acceptance of appointment by the successor trustee
as provided in Section 11.8 hereof.
(d) The obligations of Finco described in Sections 12.1 and 11.5
shall survive the removal or resignation of the Trustee as provided in this
Agreement.
Section 11.8. Successor Trustee. (a) Any successor trustee
appointed as provided in Section 11.7 hereof shall execute, acknowledge and
deliver to Finco and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee herein. The predecessor Trustee
shall, at the expense of Finco, deliver to the successor trustee all documents
or copies thereof and statements held by it hereunder; and Finco and the
predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor trustee all such rights, power, duties and
obligations. Finco shall immediately give notice to the Rating Agency upon
the appointment of a successor trustee.
(b) No successor trustee shall accept appointment as provided in
this Section 11.8 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 11.6 hereof.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.8, such successor trustee shall mail notice of
such succession hereunder to all Participants at their addresses as specified
in Section 14.1.
Section 11.9. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding
to the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.6 hereof, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 11.10. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust may at the time be located, the Trustee shall have the power
and may execute and deliver all instruments to appoint one or more Persons to
act as a co-trustee or co-trustees, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person or Persons, in
such capacity and for the benefit of the Participants, such title to the
Trust, or any part thereof, and, subject to the other provisions of this
Section 11.10, such powers, duties, obligations, rights and trusts as the
Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 11.6 and no notice to the Participants of the
appointment of any co-trustee or separate trustee shall be required under
Section 11.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
