REVOCABLE STANDING MEDICARE/MEDICAID
DEPOSIT ACCOUNT SERVICE AGREEMENT[1]
Executed and Delivered as of ______, 20__
This Agreement is among the persons signing this Agreement as the “Lender”, the “Debtor” and the “Bank”.[2]
BACKGROUND
The Debtor is the Bank’s customer with respect to one or more lockboxes identified on Schedule A to this Agreement (individually and collectively, including any checks or other items for payment received therein, the “Lockbox”) and one or more demand deposit accounts identified on Schedule A to this Agreement (individually and collectively, and including any funds in the demand deposit account or accounts, the “Deposit Account”) and any Lockbox (as herein defined. All moneys in the Deposit Account, and all items for payment in the Lockbox are together referred to herein as the “Collateral”). The Debtor is requesting that the Bank and the Lender enter into this Agreement to set forth their relative rights and duties with respect to the Collateral, which is intended to supplement any deposit account agreement or lockbox service agreement between the Debtor and the Bank. Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follow.
AGREEMENT
1. Lockbox and Lockbox Account. The Lender and the Debtor hereby agree that (a) theThe Lockbox has been established in the name of the Debtor with the Bank under one or more agreements (collectively, the “Lockbox Agreement”) for the sole purpose of receiving checks and other items of collections, if any, and ExplanationExplanations of Benefits from Governmental Entities for deposit into the Deposit Account, and (b) the Deposit Account has been established with the Bank in the name of the Debtor under one or more depository account agreements (collectively, the “Account Agreement”) for such purpose and for the purpose of receiving electronic funds transfers from such Governmental Entities. The Bank has no obligation to determine the source of payments received in the Lockbox or the Deposit Account. The term “Deposit-related Agreements” means, collectively, the Lockbox Agreement, the Account Agreement, and any other agreements between the Bank and the Debtor governing the Lockbox, the Deposit Account and any cash management or similar services provided by the Bank to the Debtor in connection with the Lockbox or the Deposit Account. The Lockbox and the Deposit Account shall be maintained by the Bank pursuant to the terms hereof and of the Deposit-related Agreements for the sole benefit of the Debtor.
Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follow.
AGREEMENT
1. Definitions and Rules of Interpretation.
(a) In this Agreement (i) terms defined in the UCC and not otherwise defined in this Agreement have the same meanings in this Agreement as in the UCC, (ii) the rules of interpretation in Article 1 of the UCC apply to the interpretation of this Agreement, (iii) the term “or” is not exclusive, (iv) unless otherwise stated, section references are to sections of this Agreement, (v) an “address” includes the person or persons or department of the Bank on an “attention” line, (vi) a “communication” includes a Directive or a notice, and (vii) a “writing” means a tangible writing, including a facsimile, and; “written” refers to a communication in the form of a writing.
(b) “Business Day" means: (i) for communications to the Bank, a day other than a day (A) that is not a “business day” as defined in Federal Reserve Board Regulation CC, 12 CFR Part 229, (B) on which the office, branch or department of the Bank specified as the Bank’s address is closed, or (C) on which commercial banks are closed in the State; and (ii) for communications to any other party, a day, other than a Saturday or Sunday, on which the other party is open for business at the location to which the communication is sent.
(c) “Claim” means a claim, loss, cost or expense, and includes out-of-pocket or allocable internal legal fees and expenses incurred in bringing or defending a claim.
(d) “Directive” means a written instruction from the Debtor to the Bank directing the disposition of funds in the Deposit Account. The term includes (i) any request by the Debtor for replacement, substitution, amendment or modification of a Directive and (ii) any termination, suspension, cancellation or revocation of a Directive by the Debtor.
(e) “Governmental Entity” means the United States of America, any state, any political subdivision of a state and any agency or instrumentality of the United States of America or any state or political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
(f) “Lockbox” means a lock box arrangement associated with a Deposit Account, or, if there is more than one lock box arrangement, the lock box arrangements, individually and collectively, associated with the Deposit Account. Each Lockbox is identified on Schedule A.
(g) “Order or Process” means an order, judgment, decree or injunction, or a garnishment, restraining notice or other legal process, directing, or prohibiting or otherwise restricting, the disposition of the funds in the Deposit Account.
(h) “Payment” means any payment from a Governmental Entity and shall include, without limitation, payments governed under the Social Security Act (42 U.S.C. §§ 1395 et seq.), including payments under Medicare, Medicaid and TRICARE/CHAMPUS, and payments administered or regulated by the Centers for Medicare and Medicaid Services of the United States Department of Health and Human Services.
(i) “UCC” means the Uniform Commercial Code of the jurisdiction whose law governs this Agreement or, if relevant to any matter other than the meaning of a defined term, the Uniform Commercial Code of the jurisdiction whose law applies to the matter under the choice of law rules of the jurisdiction whose law governs this Agreement.
2. Debtor’s Standing Revocable Directive. This Section constitutes a standing revocable Directive originated by the Debtor.[3]
(a) The Bank will pick up and thereafter process the checks and other items and correspondence received by the Bank in the Lockbox, including depositing only to the Deposit Account as specified above the checks and other items of paymentPayment, all in accordance with the Lockbox Servicing Agreement.
(b) Unless and until the Bank shall have received a new Directive from the Debtor in accordance with the provisions of this Agreement, on each Business Day, with respect to all available funds in the Deposit Account, without further notice to or consent of the Debtor, the Bank will initiate a funds transfer to and in accordance with the following instructions:
Bank Name:
Bank Address:
Bank ABA Routing # :
Account Number:
Account Name:
Reference Data:
(c) To the extent that the Bank has the operational ability to establish restrictions on the Debtor’s access to funds in the Deposit Account by funds transfer or other electronic means, without limiting or affecting the Lender’s screen access to monitor activity in the Deposit Account as described in Section 7(a), the Deposit Account will be established with such restrictions, and the Debtor agrees that it shall not have the ability to access funds in the Deposit Account by funds transfer or other electronic means.
(d) (c) The Debtor agrees to provide the BankLender with prior written noticea copy of any Directive accompanied by the new Directive. Except as provided in Section 8, theThe Bank will comply with the Directive effective on or before the opening of business on the third (3rd) Business Day after the Business Day on which the noticeDirective is actually received at the address for the Bank specified below; provided, however, that if the noticeDirective is actually received at that address after 12:00 noon, local time, then the noticeDirective will be considered to have been actually received on the following Business Day. To the extent that the Bank has the operational ability to do so, the Bank will exercise reasonable efforts to notify the Lender of receipt of a Directive or notice of any Directive.[4]
(e) (d) If a bankruptcy or insolvency proceeding is commenced by or against the Debtor, the Bank shall be entitled, without any liability, to refuse to (i) permit withdrawals or transfers from the Deposit Account or (ii) accept or comply with any instruction in connection with the Deposit Account thereafter received by the Bank, until the Bank shall have received an appropriate court order or other assurances reasonably acceptable to the Bank in its sole discretion establishing that (A) continued withdrawals or transfers from the Deposit Account or honoring or following any Directive or other instruction the Bank may receive from the Debtor and (B) its right to set off against or charge the Deposit Account or otherwise be reimbursed for all amounts described in Section 3, are authorized and shall not violate any law, regulation, or order of any court.
(f) (e) THE PARTIES HERETO HEREBY AGREE AND CONFIRM THAT DEBTOR HAS SOLE DOMINION AND CONTROL OVER THE DEPOSIT ACCOUNT AND ALL FUNDS HELD THEREIN AND EACH PARTY OTHER THAN THE DEBTOR HEREBY DISCLAIMS ANY RIGHT OF ANY NATURE WHATSOEVER TO CONTROL THE DEPOSIT ACCOUNT OR OTHERWISE DIRECT OR MAKE ANY CLAIM AGAINST THE FUNDS HELD, FROM TIME TO TIME, HELD IN THE DEPOSIT ACCOUNT, EXCEPT AS OTHERWISE PROVIDED HEREIN.
3. Setoff and Chargeback
(a) Except as otherwise provided in Section 3(b), the Bank (i) waives all of its existing and future rights of recoupment, set-off and banker’s lien against the Lockbox and the Deposit Account, (ii) agrees that it will not exercise any security interest or any other interest in or against the Lockbox, the Deposit Account or the Collateral, and (iii) hereby subordinates to the Lender any such security interest (except for the security interest provided in Section 4-210 of the applicable state Uniform Commercial CodeUCC), right or lien which the Bank may have against the Lockbox, the Deposit Account or the Collateral.
(b) Notwithstanding Section 3(a), and regardless of any agreement of the Debtor to compensate the Bank by means of balances in the Deposit Account, the Bank may charge the Deposit Account, to the extent permitted by any Deposit-related Agreement and applicable law, for any of the following (each, a “Permitted Debit”):
(i) the face amount of a check, draft, money order, instrument, wire transfer of funds, automated clearing house entry, other electronic transfer of funds or other item (A) deposited in or credited to the Deposit Account and returned unpaid or otherwise uncollected or subject to an adjustment entry, whether for insufficient funds or for any other reason and without regard to the timeliness of the return or adjustment or the occurrence or timeliness of any other person’s notice of nonpayment or adjustment, or (B) subject to a Claim against the Bank for breach of transfer, presentment, encoding, retention or other warranty under Federal Reserve Regulations or Operating Circulars, clearing house rules, the UCC or other applicable law,
(ii) normal service charges or fees payable to the Bank in connection with the Deposit Account or any related services,
(iii) any adjustments or corrections of any posting or encoding errors, and
(iv) reimbursements for out-of-pocket or allocable internal legal fees and expenses in connection with the negotiation, administration or enforcement of this Agreement by the Bank.
(c) If (i) the Bank is unable to set off or charge any Permitted Debit against the Deposit Account because of insufficient funds in the Deposit Account, or (ii) the Bank makes a good faith determination that any Order or Process prohibits such setoff or charge against the Deposit Account, or (iii) the Deposit Account is closed, then: (A) the Bank may charge such Permitted Debit to and set off same against any other deposit account(s) of the Debtor at the Bank; and (B) if there are insufficient funds in the Deposit Account (and any such other deposit account(s) of the Debtor at the Bank) against which to charge or set off such Permitted Debits, then the Bank shall demand (unless the Bank makes a good faith determination that any Order or Process prohibits such demand) that the Debtor pay, and the Debtor shall pay, to the Bank, promptly upon written demand therefor, the full amount of all unpaid Permitted Debits.
(d) If there are insufficient funds in the Deposit Account (and any other deposit account(s) of the Debtor at the Bank), against which the Bank could charge or set off Permitted Debits and the Debtor fails to pay the Bank the full amount of unpaid Permitted Debits, then the Bank may demand that the Lender pay, and the Lender shall pay, to the Bank within five (5) Business Days of the Lender’s receipt of the Bank’s written demand therefor, the amount of unpaid Permitted Debits, but such paymentliability of the Lender shall be limited to the aggregate amount of Payments transferred from the Deposit Account to the Lender pursuant to a Directive. The Lender’s reimbursement obligations will not apply to (i) a charge for reimbursement of or indemnification for any out-of-pocket or allocable internal legal fees and expenses incurred by the Bank in connection with any Claim or defense by the Bank against the Lender relating to this Agreement or (ii) the amount of any loss incurred by the Bank to the extent directly caused by the Bank’s gross negligence or willful misconduct. If the Bank satisfies any Claim against the Debtor referred to in the foregoing clause (i) by charging the Deposit Account, the amount of the Lender’s maximum liability for reimbursement obligations will be reduced by the amount of the Claim so satisfied.