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EXHIBIT 10.1
SALE AND SUBSERVICING AGREEMENT
Dated as of June 6, 1997
by and among
COASTAL RECEIVABLES LLC,
as Seller,
COASTAL PHYSICIAN GROUP, INC.
as Subservicer,
NPF XI, INC.,
as Purchaser,
and
NATIONAL PREMIER FINANCIAL SERVICES, INC.,
as Servicer
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................................................................2
Section 1.1 Certain Defined Terms..............................................................................2
Section 1.2 Other Terms.......................................................................................14
ARTICLE II PURCHASE AND SALE; ESTABLISHMENT OF ACCOUNTS..........................................................14
Section 2.1 Purchase and Sale.................................................................................14
Section 2.2 Conveyance of Receivables.........................................................................15
Section 2.3 Establishment of Accounts; Conveyance of Interests Therein; Investment............................16
Section 2.4 Grant of Security Interest........................................................................20
Section 2.5 Further Action Evidencing Purchases...............................................................20
Section 2.6 Eligible Receivables..............................................................................21
Section 2.7 Offsets...........................................................................................21
Section 2.8 Administrative Fee................................................................................22
Section 2.9 Assignment of Agreement...........................................................................22
Section 2.10 Confidentiality..................................................................................22
ARTICLE III CONDITIONS OF PURCHASES..............................................................................23
Section 3.1 Conditions Precedent to Effectiveness of Agreement................................................23
Section 3.2 Conditions Precedent to All Purchases.............................................................25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER AND SUBSERVICER..............................................26
Section 4.1 Representations and Warranties as to the Seller and Coastal Physician Group, Inc..................26
Section 4.2 Representations and Warranties of the Seller as to Purchased Receivables..........................32
Section 4.3 Repurchase Obligations............................................................................35
ARTICLE V GENERAL COVENANTS OF THE SELLER........................................................................36
Section 5.1 Affirmative Covenants of the Seller...............................................................36
Section 5.2 Reporting Requirements of the Seller..............................................................37
Section 5.3 Negative Covenants of the Seller..................................................................38
ARTICLE VI ACCOUNTS ADMINISTRATION...............................................................................39
Section 6.1 Collection Account................................................................................39
Section 6.2 Determinations of the Servicer....................................................................39
Section 6.3 Distributions from Accounts.......................................................................40
Section 6.4 Allocation of Moneys following Termination Date...................................................40
Section 6.5 Accounting........................................................................................41
ARTICLE VII APPOINTMENT OF THE SUBSERVICER AND SUCCESSOR SERVICER................................................41
Section 7.1 Appointment of the Subservicer....................................................................41
Section 7.2 Additional Subservicers...........................................................................41
Section 7.3 Duties and Responsibilities of the Subservicer....................................................42
Section 7.4 Authorization of the Servicer.....................................................................44
Section 7.5 Subservicing Fee; Subservicing Expenses...........................................................45
Section 7.6 Annual Statement as to Compliance.................................................................45
Section 7.7 Transfer of Servicing Between Subservicer and Servicer............................................46
Section 7.8 Subservicer Not to Resign.........................................................................46
Section 7.9 Appointment of the Successor Subservicer..........................................................46
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Section 7.10 Duties of the Subservicer to the Successor Servicer..............................................47
Section 7.11 Effect of Termination or Resignation.............................................................47
ARTICLE VIII EVENTS OF SELLER DEFAULT............................................................................47
Section 8.1 Events of Seller Default..........................................................................47
ARTICLE IX INDEMNIFICATION.......................................................................................50
Section 9.1 Indemnities by the Seller.........................................................................50
Section 9.2 Security Interest.................................................................................51
ARTICLE X MISCELLANEOUS..........................................................................................51
Section 10.1 Notices, Etc.....................................................................................51
Section 10.2 Remedies.........................................................................................51
Section 10.3 Binding Effect; Assignability....................................................................52
Section 10.4 Costs, Expenses and Taxes........................................................................52
Section 10.5 No Proceedings...................................................................................53
Section 10.6 Amendments; Waivers; Consents....................................................................53
Section 10.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.....................................53
Section 10.8 Execution in Counterparts; Severability..........................................................54
Schedule 1 Ineligible Medicaid States
Schedule 2 Ineligible Blue Cross/Blue Shield Plans
Schedule 3 List of Names Under Which Seller is Doing Business, Names of
Provider Affiliates and Addresses at Which Provider Affiliates
are Doing Business, Names of Provider Physicians and Addresses
at Which Provider Physicians are Doing Business.
Schedule 4 Disclosures by the Seller and the Provider Affiliates
Regarding HCFA Matters
Schedule 5 Additional Subservicers
Schedule 6 Litigation Disclosure
Schedule 7 Stock/Asset Dispositions
Exhibit A Form of Notice to Payors
Exhibit B Form of Lockbox Account Agreement
Exhibit C Form of Purchase Assignment
Exhibit D Form of Manager's Certificate for the Seller
Exhibit E Form of Opinion of Counsel for the Seller
Exhibit F Form of Repurchase Assignment
Exhibit G Form of Section 6.2 Determination of the Servicer
Exhibit H-1 Form of Independent Contractor (Physician) Agreement
Exhibit H-2 Form of Independent Contractor (Physician) Agreement
Exhibit H-3 Form of Independent Contractor (Physician) Agreement
Exhibit I Form of Service Agreement
Exhibit J Form of Assignment Of Postal Box Agreement
Exhibit K Supplemental Letter Agreement
Exhibit L Form of Billing and Collection Agreement
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SALE AND SUBSERVICING AGREEMENT (the "Agreement"), dated as of
June 6, 1997, by and among COASTAL RECEIVABLES LLC, a Delaware limited liability
company, as Seller (as such, together with its successors and permitted assigns,
the "Seller") and Coastal Physician Group, Inc., a Delaware Corporation, as
Subservicer hereunder (as such, together with its successors and permitted
assigns, the "Subservicer"), NPF XI, INC., an Ohio corporation, as Purchaser (as
such, together with its successors and permitted assigns, the "Purchaser"), and
NATIONAL PREMIER FINANCIAL SERVICES, INC., an Ohio corporation, as Servicer (as
such, together with its successors and permitted assigns, the "Servicer").
WITNESSETH:
WHEREAS, the Seller, a special purpose limited liability
company, desires to sell certain health care receivables administered by and
purchased from the Provider Affiliates of the Seller;
WHEREAS, the Purchaser is a special purpose corporation formed
for the purpose of purchasing certain health care receivables and funding such
purchases with the proceeds from the issuance of promissory notes;
WHEREAS, the Seller and the Purchaser intend that the
Purchaser will purchase certain health care receivables from the Seller from
time to time;
WHEREAS, the Purchaser has appointed the Servicer to perform
certain servicing, administrative and collection functions in respect of the
receivables purchased by the Purchaser under this Agreement (the "Purchased
Receivables");
WHEREAS, in order to effectuate the purposes of this
Agreement, the Purchaser and the Servicer desire that the Subservicer be
appointed to perform certain servicing, administrative and collection functions
in respect of the Purchased Receivables;
WHEREAS, the Subservicer has been requested and is willing to
act as the Subservicer; and
NOW, THEREFORE, the parties agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS.
As used in this Agreement, the following terms shall have the
following meanings:
"ACCREDITATION" means certification by the JCAHO that a
facility fully complies with the standards set by the JCAHO for operation of
such facility.
"ADDITIONAL SUBSERVICER" has the meaning specified in Section
7.2.
"ADDITIONAL SUBSERVICING AGREEMENT" has the meaning specified
in Section 7.2.
"ADMINISTRATIVE FEE" means, as of any Purchase Date, an amount
equal to 8.5% of the Net Value of Purchased Receivables purchased on such
Purchase Date, deposited, for servicing expenses, with the Servicer,
reimbursable, from time to time, in whole or in part, to the Subservicer by
payment of the Subservicing Fee.
"ADVERSE CLAIM" means any claim of ownership or any lien,
security interest or other charge or encumbrance, or other type of preferential
arrangement having the effect of a lien or security interest.
"AFFILIATE" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person within the meaning of control under Section 15 of the
Securities Act of 1933.
"BASE RATE" means, as of any Purchase Date, a percentage equal
to 10.97% per annum, subject to adjustment during the six-month period
immediately subsequent to the Closing Date such that the Base Rate will, in no
event, be less than Purchaser's cost of funds plus 325 basis points, and upon
the occurrence of and during the continuance of an Event of Seller
Non-compliance, means, as of any Purchase Date the percentage set forth above
plus an additional 2% per annum.
"BILLED AMOUNT" means, with respect to any Receivable the
amount billed to the related Payor with respect thereto prior to the application
of any Contractual Allowance.
"BILLING DATE" means the earlier of the date on which the
claim with respect to a Receivable was submitted to the related Payor and ninety
(90) days after the date on which the services giving rise to a Receivable were
rendered, and as related to Rebilled Receivables the date on which a Receivable
is initially billed or rebilled, as the case may be, to the appropriate Payor
provided such rebilling is approved by the Servicer.
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"BLUE CROSS/BLUE SHIELD CONTRACT" means any and all agreements
currently in force between the Seller and any Blue Cross/Blue Shield plan.
"BUSINESS DAY" means any day of the year other than a
Saturday, Sunday or any day on which banks are required, or authorized, by law
to close in the State of Ohio, the State of New York or the State of North
Carolina.
"CHAMPUS" means the Civilian Health and Medical Program of the
Uniformed Service, a program of medical benefits covering retirees and
dependents of a member or a former member of a uniformed service, provided,
financed and supervised by the United States Department of Defense established
by 10 USC ▇▇.▇▇. 1071 et seq.
"CHAMPUS RECEIVABLE" means a Receivable payable pursuant to
CHAMPUS.
"CHAMPUS REGULATIONS" means collectively, all regulations of
the Civilian Health and Medical Program of the Uniformed Services including (a)
all federal statutes (whether set forth in 10 USC 1071 or elsewhere) affecting
CHAMPUS; and (b) all applicable provisions of all rules, regulations (including
32 CFR 199), manuals, orders, and administrative, reimbursement and other
guidelines of all Governmental Authorities (including, without limitation, HHS,
the Department of Defense, the Department of Transportation, the Assistant
Secretary of Defense (Health Affairs), and the Office of CHAMPUS, or any Person
or entity succeeding to the functions of any of the foregoing) promulgated
pursuant to or in connection with any of the foregoing (whether or not having
the force of law), in each case as may be amended, supplemented or otherwise
modified from time to time.
"CLOSING DATE" means June 6, 1997.
"COASTAL PHYSICIAN GROUP, INC." is a Delaware corporation and
owner of the Manager, each Provider Affiliate, directly or indirectly, and has
an ownership interest, along with each of the Provider Affiliates, in the
Seller. Coastal Physician Group, Inc., together with its Subsidiaries, is a
physician management company providing a broad range of health care and
administrative services to physicians, hospitals, governmental agencies, managed
care programs, employers, and other health care organizations nationwide.
"COLLECTION ACCOUNT" means the trust account maintained with
the Trustee described in Section 2.3(c).
"COLLECTIONS" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable.
"COMMERCIAL LOCKBOX ACCOUNT" has the meaning specified in
Section 2.3(a).
"COMMERCIAL PAYMENT" has the meaning set forth in Section 2.3
(a).
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"CONCENTRATION LIMITS" means: the following expressed as a
percentage or Dollar amount of the aggregate Net Value of the Purchased
Receivables then outstanding:
(i) Purchased Receivables payable by Blue Cross and Blue
Shield plans -- 5%;
(ii) Purchased Receivables payable by any one state
Medicaid program -- 10%;
(iii) Purchased Receivables payable by any one Blue Cross
and Blue Shield plan-- 4%;
(iv) Purchased Receivables payable by any one commercial
insurer, HMO, PPO or other similar managed care
program or Provider Payor -- 10%;
(v) Purchased Receivables payable by any one federal
Governmental Authority other than Medicare and
CHAMPUS -- 15%;
(vi) Purchased Receivables payable by any one state
Governmental Authority other than Medicaid -- 5%; and
(vii) Purchased Receivables payable by all state Medicaid
programs -- 25%.
"CONTRACT" means an agreement (or agreements), pursuant to, or
under which, a Payor shall be obligated to pay the Seller, a Provider Affiliate,
or a Provider Physician for services rendered or merchandise sold to patients of
such Provider Affiliate or Provider Physician.
"CONTRACTUAL ALLOWANCE" means an amount verified by the
Servicer in accordance with historical liquidation experience (actual
collections received on the Billed Amount within 180 days of the Billing Date)
and reimbursement schedules by Payor Class by which the amount of charges billed
to any Payor are to be adjusted to reflect the entitled reimbursement pursuant
to any contract or other arrangement between such Payor and the Seller, a
Provider Affiliate or a Provider Physician.
"CREDIT DEFICIENCY" has the meaning specified in Section
6.2(d).
"CURRENT NET VALUE AMOUNT" has the meaning specified in
Section 6.2(c).
"DCR" means Duff & ▇▇▇▇▇▇ Credit Rating Co., its successors
and assigns.
"DEBT" of any Person means (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) obligations of such Person to pay the
deferred purchase price of property or services, (d) obligations of such Person
as lessee under leases which have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases, (e)
obligations secured by any lien or other charge upon property or assets owned by
such Person,
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even though such Person has not assumed or become liable for the payment of such
obligations, (f) obligations of such Person under direct or indirect guaranties
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 clauses (a)
through (e) above, and (g) liabilities in respect of unfunded vested benefits
under plans covered by Title IV of the Employee Retirement Income Security Act
of 1974, as amended.
"DEFAULTED RECEIVABLE" means a Receivable as to which, on any
Determination Date (a) any part of the Net Value thereof remains unpaid for more
than 180 days from the Billing Date for such Receivable; or (b) the Payor
thereof has taken any action, or suffered any event to occur, of the type
described in Section 8.1(c); or (c) the Servicer or the Subservicer otherwise
reasonably deems any part of the Net Value thereof to be uncollectible from an
Eligible Payor.
"DETERMINATION DATE" means the Business Day preceding the
Purchase Date of each week.
"DOLLAR" and "$" means lawful money of the United States of
America.
"DRG CODE" means the Diagnosis Related Group code assigned by
HCFA.
"ELIGIBLE PAYOR" means a Payor which is
(a) (i) a commercial insurance company, organized under
the laws of any jurisdiction in the United States,
having its principal office in the United States;
(ii) a Blue Cross/Blue Shield plan other than those
listed on Schedule 2; (iii) Medicare, Medicaid plans
other than those administered by the states listed on
Schedule 1, or CHAMPUS; (iv) an HMO, PPO or other
similar managed care program, each organized under
the laws of any jurisdiction in the United States,
having its principal office in the United States; (v)
a Provider Payor provided that a Provider Payor shall
not be an Eligible Payor without the consent of the
Servicer; or (vi) a Governmental Authority Payor;
(b) in the case of (a)(i), (ii), (iv) and (v) above, to
the extent required by the Purchaser, in receipt of a
letter substantially in the form of Exhibit A hereto;
and
(c) not subject to bankruptcy or insolvency proceedings
at the time of sale of the Receivable to the
Purchaser.
"ELIGIBLE RECEIVABLE" means, at any time, a Receivable as to
which the representations and warranties of Section 4.2 are true and correct in
all respects at the time of Purchase.
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"ELIGIBLE RECEIVABLE AMOUNT" means, with respect to any
Eligible Receivable, an amount equal to its Billed Amount after giving effect to
any Contractual Allowance with respect to such Eligible Receivable.
"EQUITY ACCOUNT" means the trust account of the Purchaser
maintained with the Trustee titled "Equity Account."
"EVENT OF SELLER DEFAULT" has the meaning specified in Section
8.1.
"EVENT OF SELLER NON-COMPLIANCE" means the occurrence and
continuance of any Event of Seller Default or the Seller's or Subservicer's
breach or failure to comply with any representation, warranty, covenant or
obligation of the Seller or Subservicer set forth in this Agreement for a period
of the lesser of (a) twenty (20) days or (b) ten (10) days after notice to the
Seller from the Servicer or the Purchaser of such breach or failure.
"FEE-FOR-SERVICE CONTRACTS" has the meaning set forth in
Section 2.3 (a).
"FLAT RATE CONTRACT" means those Contracts with respect to
which the applicable Payor is obligated to pay a single monthly lump sum payment
to the Seller or Provider Affiliate other than a Contract with respect to an
HMO, PPO or other managed care plan or group.
"▇▇▇▇▇▇▇▇" shall have the meaning set forth in Section 2.3
(a).
"GOVERNMENTAL AUTHORITY" means the United States of America,
any federal, state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions thereof or pertaining thereto.
"GOVERNMENTAL RECEIVABLE" means a Receivable generated under a
written Contract with a Governmental Authority.
"GOVERNMENTAL CONSENTS" has the meaning specified in Section
4.1(h).
"HBR" has the meaning set forth in Section 2.3 (a).
"HCFA" means the Health Care Financing Administration, an
agency of the HHS charged with administering and regulating, inter alia, certain
aspects of Medicaid and Medicare.
"HEALTH FACILITY LICENSE" means a license issued by a state
health agency or similar agency or body certifying that the facility has been
inspected and found to comply with applicable laws for operating such a health
facility.
"HHS" means the Department of Health and Human Services, an
agency of the Federal Government of the United States.
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"HMO" means a health maintenance organization.
"IPN" has the meaning set forth in Section 2.3 (a).
"INDEMNIFIED AMOUNTS" has the meaning specified in Section
9.1(a).
"INDEMNIFIED PARTY" has the meaning specified in Section
9.1(a).
"INDEPENDENT CONTRACTOR (PHYSICIAN) AGREEMENT" means an
agreement between a Provider Physician and a Provider Affiliate substantially in
the form of Exhibit H-1, H-2 or H-3 (or similar form acceptable to the
Servicer), providing for, among other things, the transfer and assignment of
Receivables to a Provider Affiliate.
"INDIVIDUALLY ENROLLED PROVIDER PHYSICIAN" has the meaning
specified in Section 2.3(a)(ii)(A)2 of this Agreement.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended.
"INVESTMENT INCOME" means income of any nature from the
investment or deposit of funds in the Seller Credit Reserve Account or Offset
Reserve Account or any other reserve or account required hereunder.
"JCAHO" means the Joint Commission for Accreditation of Health
Care Organizations.
"LOCKBOX ACCOUNT" has the meaning specified in Section 2.3(a).
"LOCKBOX ACCOUNT AGREEMENT" means an agreement among the
Servicer and a depository institution satisfactory to the Purchaser with respect
to the Commercial Lockbox Account and among the Seller, the Servicer and a
depository institution satisfactory to the Purchaser with respect to the
Medicare Lockbox Account, in each case (a) providing that all Collections
therein shall be remitted directly by such depository institution to the
Collection Account within one Business Day of receipt and (b) otherwise
satisfactory to the Purchaser.
"MANAGER" means Coastal SPC Member Corp., a Delaware
corporation, which is a member of the Seller designated in the operating
agreement of the Seller as having management authority for the purpose of
conducting the business of the Seller.
"MANAGER'S CERTIFICATE" means a certificate signed by at least
two (2) officers of the Manager, which officers must be a part of the management
structure of the Seller, (a) one such officer shall hold the office of the
President, Vice President or Treasurer of the Manager and (b) the second such
officer shall hold (i) any of the offices described in the preceding clause (a)
or (ii) the office of Secretary of the Manager.
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"MEDICAID" means the medical assistance program established by
Title XIX of the Social Security Act (42 USC ▇▇.▇▇. 1396 et seq.) and any
statutes succeeding thereto.
"MEDICAID CERTIFICATION" means certification of a facility by
HCFA or a state agency or entity under contract with HCFA that the facility
fully complies with all the conditions of participation set forth in Medicaid
Regulations.
"MEDICAID PROVIDER AGREEMENT" means an agreement entered into
between a federal or state agency or other such entity administering the
Medicaid program and a health care facility under which the health care facility
agrees to provide services or merchandise for Medicaid patients in accordance
with the terms of the agreement and Medicaid Regulations.
"MEDICAID RECEIVABLE" means a Receivable payable pursuant to
Medicaid.
"MEDICAID REGULATIONS" means, collectively, (a) all federal
statutes (whether set forth in Title XIX of the Social Security Act or
elsewhere) affecting Medicaid; (b) all state statutes and plans for medical
assistance enacted in connection with such statutes and federal rules and
regulations promulgated pursuant to or in connection with such statutes; and (c)
all applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement and other guidelines of all Governmental
Authorities (including, without limitation, HHS, HCFA, the office of the
Inspector General for HHS, or any Person succeeding to the functions of any of
the foregoing) promulgated pursuant to or in connection with any of the
foregoing (whether or not having the force of law), in each case as may be
amended, supplemented or otherwise modified from time to time.
"MEDICARE" means the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act (42 USC ▇▇.▇▇.
1395 et seq.) and any statutes succeeding thereto.
"MEDICARE CERTIFICATION" means certification of a facility by
HCFA or a state agency or entity under contract with HCFA that the facility
fully complies with all the conditions of participation set forth in Medicare
Regulations.
"MEDICARE LOCKBOX ACCOUNT" has the meaning specified in
Section 2.3(a).
"MEDICARE/MEDICAID OFFSET" means, with respect to Medicare
Receivables and Medicaid Receivables, an offset against payment thereof, which
has occurred due to a Medicare or Medicaid settlement.
"MEDICARE PAYMENT" has the meaning set forth in Section 2.3
(a).
"MEDICARE PROVIDER AGREEMENT" means an agreement entered into
between a federal or state agency or other such entity administering the
Medicare program and a health care facility under which the health care facility
agrees to provide services or merchandise for Medicare patients in accordance
with the terms of the agreement and Medicare Regulations.
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"MEDICARE RECEIVABLE" means a Receivable payable pursuant to
Medicare.
"MEDICARE REGULATIONS" means, collectively, (a) all federal
statutes (whether set forth in Title XVIII of the Social Security Act or
elsewhere) affecting Medicare; and (b) all applicable provisions of all rules,
regulations, manuals, orders and administrative, reimbursement and other
guidelines of all Governmental Authorities (including, without limitation, HHS,
HCFA, the Office of the Inspector General for HHS, or any Person succeeding to
the functions of any of the foregoing) promulgated pursuant to or in connection
with the foregoing (whether or not having the force of law), as each may be
amended, supplemented or otherwise modified from time to time.
"NET ADMINISTRATIVE FEE" means, as of any Purchase Date, an
amount equal to the Administrative Fee minus the Subservicing Fee for such
Purchase Date (but not less than zero).
"NET SUBSERVICING FEE" means, as of any Purchase Date, an
amount equal to the Subservicing Fee minus the Administrative Fee for such
Purchase Date (but not less than zero).
"NET VALUE" of any Receivable at any time means an amount (not
less than zero) equal to (a)(i) the Eligible Receivable Amount multiplied by
(ii) 0.91; minus (b) all payments received from the Payor with respect thereto;
provided, that if the Servicer makes a reasonable determination that all
payments by the Payor with respect to such Receivable have been made, the Net
Value shall be zero, and provided, further, that for purposes of calculations
under Article VI only, (a) no deductions in Net Value will be made until such
time as the Servicer has received Collections with respect to a Purchased
Receivable and processed the related Remittance Advice and (b) the Net Value of
a Defaulted Receivable shall be zero.
"OFFSET RESERVE ACCOUNT" means the trust account maintained
with the Trustee as specified in Section 2.3(b).
"OTHER SELLERS" has the meaning specified in Section 2.7.
"PAID RECEIVABLE" means, as of any Determination Date, a
Purchased Receivable as to which a payment by the Payor with respect to such
Receivable has been received.
"PAID RECEIVABLES AMOUNT" has the meaning specified in Section
6.2(b).
"PAYOR" means, with respect to any Receivable, the Person
primarily obligated to make payments in respect thereto.
"PAYOR CLASS" means, with respect to any Payor, one of the
following: (a) commercial insurance Payors; (b) Medicare Payors; (c) Medicaid
Payors; (d) Blue Cross/Blue
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Shield Payors; (e) CHAMPUS Payors; (f) HMO and PPO Payors; (g) Provider Payors;
and (h) Governmental Authority Payors.
"PERSON" means an individual, partnership, limited liability
company, corporation (including a business trust), joint stock company, trust,
voluntary association, joint venture, a government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"PO BOXES" has the meaning set forth in Section 2.3 (a).
"PPO" means a preferred provider organization.
"PRINCIPAL AMORTIZATION EVENT" means an event under any loan
agreement or indenture following which the funding of the Purchaser to be
utilized in purchasing Receivables hereunder may be terminated.
"PRIOR NET VALUE AMOUNT" has the meaning specified in Section
6.2(a).
"PROGRAM FEE" means, (a) as of the first Purchase Date in any
calendar month, an amount determined by the Servicer, equal to (i) 1/12 of the
annualized Base Rate multiplied by (ii) the aggregate Net Value of all Purchased
Receivables including (A) Defaulted Receivables (net of recoveries including
amounts that have been deducted from the Seller Credit Reserve Account) and (B)
those Receivables to be purchased on such Purchase Date; and (b) as of any
subsequent Purchase Date in any month, an amount determined by the Servicer,
equal to (i) 7/360 of the annualized Base Rate multiplied by (ii) any increase
in the aggregate Net Value of all Purchased Receivables since such first
Purchase Date including (A) Defaulted Receivables (net of recoveries including
amounts that have been deducted from the Seller Credit Reserve Account) and (B)
those Receivables to be purchased on such Purchase Date, provided, that if the
Seller and the Purchaser agree to a Purchase on a date other than a regularly
scheduled Purchase Date, then the Program Fee shall be calculated and paid on
the date of such Purchase in the manner provided above, except that the Program
Fee for such date shall be prorated based upon the actual number of days elapsed
since the preceding Purchase Date.
"PROVIDER AFFILIATE" means an Affiliate of the Seller, listed
on Schedule 3 attached hereto, wholly owned or controlled by Coastal Physician
Group, Inc., a Delaware corporation, which has contracted with the Seller to
sell, transfer and assign its Receivables to the Seller.
"PROVIDER PAYOR" means any medical services provider
(including but not limited to hospitals and urgent care units) for which a
Provider Affiliate or a Provider Physician has provided services by contract
resulting in the generation of a Receivable to be reimbursed by an HMO, PPO or
other similar managed care program, commercial insurer, Medicare, Medicaid,
CHAMPUS, Governmental Authority or other governmental program created or
organized under the laws of any jurisdiction in the United States, having its
principal office in the United States.
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"PROVIDER PHYSICIAN" means a healthcare provider that is
either an individually licensed physician or group of physicians operating as a
business, professional corporation or professional association that has entered
into an Independent Contractor (Physician) Agreement or Service Agreement (or
similar agreement acceptable to the Servicer) with a Provider Affiliate whereby
the Provider Physician sells, transfers and assigns its Receivables to a
Provider Affiliate.
"PURCHASE" means a purchase by the Purchaser of Eligible
Receivables from the Seller pursuant to Section 2.2.
"PURCHASE ACCOUNT" means the trust account of the Purchaser
maintained with the Trustee titled "NPF XI - Purchase Account."
"PURCHASE ASSIGNMENT" means the assignment of Purchased
Receivables entered into between the Seller and the Purchaser on the initial
Purchase Date and any subsequent Purchase Date upon the Purchaser's request
substantially in the form of Exhibit C.
"PURCHASE COMMITMENT" means an amount not to exceed
$112,000,000.
"PURCHASE DATE" means the Closing Date and thereafter, Monday
of each week or the following Business Day if such day is not a Business Day, or
any other Business Day mutually agreed to by the Seller and the Purchaser.
"PURCHASE NOTICE" means a notice in a form reasonably
acceptable to the Purchaser, which enables the Purchaser to identify all
Eligible Receivables owned on such date by the Seller, and the Required
Information with respect thereto, segregated by Payor Class.
"PURCHASE PRICE" has the meaning specified in Section 2.2(b).
"PURCHASED RECEIVABLE" means any Receivable which has been
purchased by the Purchaser from the Seller hereunder, including all Defaulted
Receivables and a Rejected Receivable prior to its repurchase.
"PURCHASER" means NPF XI, Inc., an Ohio corporation, together
with its successors and assigns.
"RVU" means Relative Value Unit as defined by HCFA in order to
calculate the relative value assigned to a physician service based on the work
involved in, the practice overhead expense attributable to, and the malpractice
risk associated with, the performance of that service.
"REBILLED RECEIVABLE" means a Receivable which has been
revised and rebilled to an Eligible Payor as a result of reclassification of
such Receivable previously determined by the Subservicer or the Servicer to be
other than an Eligible Receivable.
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"RECEIVABLE" means (a) an account receivable billed to a Payor
arising from the provision of health care services (and any services or sales
ancillary thereto) by the Seller, the Provider Affiliate or Provider Physicians
who have entered into various agreements with the Provider Affiliate including
the right to payment of any interest or finance charges and other obligations of
such Payor with respect thereto;
(b) all security interests or liens and property subject
thereto from time to time purporting to secure payment by the Payor;
(c) all guarantees, indemnities and warranties and proceeds
thereof, proceeds of insurance policies, UCC financing statements and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Receivable; and
(d) all Collections, Records and proceeds with respect to any
of the foregoing.
"RECEIVABLES PURCHASE AND CONTRIBUTION AGREEMENT" means that
certain agreement dated as of June 6, 1997 by and among one or more of the
Provider Affiliates and the Seller whereby, inter alia, the Seller has purchased
or will purchase from the Provider Affiliates all of their respective right,
title and interest in, to and under their health care receivables.
"RECORDS" means all Contracts and other documents, books,
records (excluding medical records subject to the physician/patient privilege or
otherwise required to be kept confidential by law) and other information
(including, without limitation, computer programs (subject to any restrictions
contained in licensing agreements), tapes, disks, punch cards, data processing
software (subject to any restrictions contained in licensing agreements) and
related property and rights) prepared and maintained by the Seller, the Provider
Affiliates or the Subservicer with respect to Receivables (including Purchased
Receivables) and the related Payors.
"REJECTED AMOUNT" has the meaning specified in Section 6.2(e).
"REJECTED RECEIVABLE" has the meaning specified in Section
4.3.
"RELATED DOCUMENTS" means the Receivables Purchase and
Contribution Agreement, the Independent Contractor (Physician) Agreements, the
Service Agreements, each Purchase Assignment, the Lockbox Account Agreement and
all documents required to be delivered thereunder and under this Agreement.
"REMITTANCE ADVICE" means, with respect to a Receivable,
written confirmation received by the Servicer from the Subservicer or the
related Payor of the amount paid on a specific Receivable.
"REQUIRED INFORMATION" means, with respect to a Receivable,
(a) the Payor, (b) the DRG Code, if applicable, (c) the Eligible Receivable
Amount, (d) the Billing Date, (e) the RVUs, if applicable, and (f) the patient
account number, if applicable.
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"S & P" means Standard & Poor's Rating Group, a division of
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors and assigns.
"SSG" has the meaning set forth in Section 2.3 (a).
"SELLER" means Coastal Receivables LLC, a Delaware limited
liability company, together with its successors and assigns.
"SELLER CREDIT RESERVE ACCOUNT" means the trust account
maintained with the Trustee as specified in Section 2.3(b).
"SERVICE AGREEMENT" means an agreement between a Provider
Physician and a Provider Affiliate substantially in the form of Exhibit I (or
similar form acceptable to the Servicer), providing for, among other things, the
transfer and assignment of Receivables to a Provider Affiliate.
"SERVICE DATE" means the date on which services are rendered
to the applicable patient or health care facility with respect to a particular
Receivable.
"SERVICER" means National Premier Financial Services, Inc., an
Ohio corporation, or any Person designated as the successor Servicer, and its
successors and assigns, from time to time.
"SERVICING OFFICER" OR "SERVICING MEMBER", as the case may be,
means any officer or member of the Servicer involved in, or responsible for, the
administration and servicing of the Purchased Receivables whose name appears on
an Officer's Certificate or Manager's Certificate listing servicing officers or
members furnished to the Purchaser by the Servicer, as amended, from time to
time.
"SERVICING RECORDS" means all documents, books, records and
other information (including, without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
prepared and maintained by the Subservicer or the Servicer with respect to the
Purchased Receivables and the related Payors.
"SPECIFIED CREDIT RESERVE BALANCE" means, with respect to the
Seller in the Seller Credit Reserve Account, as of any Purchase Date, an amount
equal to 6.5% of the Net Value of Purchased Receivables including, but not
limited to (a) Defaulted Receivables (net of recoveries including amounts that
have been deducted from the Seller Credit Reserve Account) and (b) those
Receivables to be purchased on such Purchase Date.
"SPECIFIED OFFSET RESERVE BALANCE" means, with respect to the
Seller in the Offset Reserve Account, as of any Purchase Date, an amount equal
to the greater of (a) 2.0% of the Net Value of Purchased Receivables including,
but not limited to (i) Defaulted Receivables (net of recoveries including
amounts that have been deducted from the Seller Credit Reserve
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Account) and (ii) those Receivables to be purchased on such Purchase Date; and
(b) 1.5 times the most recent year's aggregate audited Medicare and Medicaid
cost report liabilities, if applicable.
"SUBSERVICER" means Coastal Physician Group, Inc., or any
Person designated as Subservicer, from time to time, hereunder.
"SUBSERVICING FEE" has the meaning specified in Section 7.5.
"SUBSERVICING OFFICER" OR "SUBSERVICING MEMBER", as the case
may be, means any officer or member of the Subservicer involved in, or
responsible for, the administration and servicing of the Purchased Receivables
whose name appears on an Officer's Certificate or Manager's Certificate listing
servicing officers or members furnished to the Purchaser or the Servicer by the
Subservicer, as amended, from time to time.
"SUBSIDIARY" means, as to any Person, any corporation, limited
liability company or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors, Manager, voting members or other Persons performing similar functions
are at the time directly or indirectly owned by such Person.
"TERMINATION DATE" means the earlier of (a) June 1, 2000, or
(b) the date of declaration or automatic occurrence of the Termination Date
pursuant to Section 8.1.
"TRIAD" has the meaning set forth in Section 2.3 (a).
"TRUSTEE" means The Chase Manhattan Bank, a national banking
association, or any successor Trustee appointed by the Purchaser.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the state of the location of the Seller's chief executive office.
SECTION 1.2 OTHER TERMS.
All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All terms
used in Article 9 of the UCC, and not specifically defined herein, are used
herein as defined in such Article 9.
ARTICLE II
PURCHASE AND SALE; ESTABLISHMENT OF ACCOUNTS
SECTION 2.1 PURCHASE AND SALE.
The Seller does hereby agree to sell, transfer, assign, set
over and convey to the Purchaser, without recourse other than as provided
herein, all right, title and interest of the Seller
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in and to the Receivables sold pursuant to this Agreement and the Purchaser does
hereby agree to purchase Eligible Receivables pursuant to the terms of this
Agreement; provided, that with respect to each Purchased Receivable which is a
Medicare Receivable, a Medicaid Receivable, a CHAMPUS Receivable or other
Governmental Receivables to the extent required by applicable law, the Provider
Affiliates, the Provider Physician, the Seller, and/or the Subservicer
hereunder, shall retain all rights of collection with respect to such Receivable
to the extent required by applicable law.
SECTION 2.2 CONVEYANCE OF RECEIVABLES.
(a) No later than 2:00 p.m. on the fifth Business Day prior to
each Purchase Date, the Seller shall deliver, or cause to be delivered, to the
Servicer a Purchase Notice. In the event that the Seller does not provide such
notification, the Purchaser will have no obligation to purchase any Eligible
Receivable on such Purchase Date. Upon receipt of a Purchase Notice, the
Servicer, as agent for the Purchaser, shall reasonably determine which of the
Receivables specified therein are Eligible Receivables. In the event the
Servicer determines that any Receivables identified on such notice are not
Eligible Receivables, such Receivables shall not be eligible for sale on such
Purchase Date. On each Purchase Date, following its selection of Eligible
Receivables, the Servicer will determine the Purchase Price in accordance with
subsection (b) hereof. The Seller shall be obligated to execute and deliver to
the Purchaser a Purchase Assignment with respect to Purchased Receivables as of
the initial Purchase Date and thereafter upon the written request of the
Purchaser. Notwithstanding the foregoing, the Purchaser shall have no obligation
to purchase Receivables from the Seller to the extent the aggregate Net Value of
all Purchased Receivables (including Defaulted Receivables to the extent
recoveries have not been made with respect to such Defaulted Receivables) is in
excess of the Purchase Commitment.
(b) The Purchase Price with respect to Purchased Receivables
purchased on any Purchase Date shall be an amount (not less than zero) equal to
(i) the aggregate Net Value of such Purchased Receivables; minus (ii) the sum of
(A) the Program Fee as of such Purchase Date; (B) the amount, if any, by which
the amount in the Seller Credit Reserve Account deposited hereunder (net of
withdrawals required hereunder) is less than the Specified Credit Reserve
Balance as of such Purchase Date (which amount will be the full Specified Credit
Reserve Balance on the initial Purchase Date); and (C) the amount, if any, by
which the amount in the Offset Reserve Account deposited hereunder (net of
withdrawals required hereunder) is less than the Specified Offset Reserve
Balance as of such Purchase Date (which amount will be the full Specified Offset
Reserve Balance on the initial Purchase Date) and (D) the Net Administrative Fee
due to the Servicer. Following delivery of a duly executed Purchase Assignment,
subject to the satisfaction of the conditions set forth in Section 3.2, the
Purchaser shall, by withdrawal from the Purchase Account, (w) pay to the Seller
the Purchase Price for all Purchased Receivables purchased on such Purchase
Date, (x) deposit the Program Fee in the Equity Account, (y) make a deposit in
the amount set forth in (B) above, if any, in the Seller Credit Reserve Account,
and (z) make a deposit in the amount set forth in (C) above, if any, in the
Offset Reserve Account, and pay to the Servicer the Net Administrative Fee.
Payment of such Purchase Price shall be made by the Servicer, as agent for the
Purchaser, causing the
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Trustee to effect such payment. In the event the Purchase Price is zero on any
Purchase Date, the Purchaser shall only be required to make deposits specified
in (x), (y), and (z) above in an amount equal to the Net Value of such Purchased
Receivables as of such Purchase Date, with priority being given in the foregoing
order. In the event the Net Value of such Purchased Receivables purchased on
that Purchase Date is less than the Program Fee (including where no Receivables
are purchased on the relevant Purchase Date), to the extent funds deposited
hereunder (net of withdrawals required hereunder) are sufficient, the Servicer
shall cause the Trustee to withdraw the difference from the Seller Credit
Reserve Account to the extent of amounts in excess of the Specified Credit
Reserve Balance on such Purchase Date and deposit it in the Equity Account.
(c) Following payment of the Purchase Price on any Purchase
Date, ownership of each Purchased Receivable will be vested in the Purchaser.
The Seller shall not take any action inconsistent with such ownership and shall
not claim any ownership interest in any Purchased Receivable. The Seller shall
indicate in its Records that ownership of each Purchased Receivable is held by
the Purchaser and shall cause each Provider Affiliate to so indicate in its
Records. In addition, the Seller shall respond to any inquiries with respect to
ownership of a Purchased Receivable by stating that it is no longer the owner of
such Purchased Receivable and that ownership of such Purchased Receivable is
held by the Purchaser. Documents (other than medical records, which shall be
retained by each Provider Affiliate) relating to the Purchased Receivables shall
be held in trust by the Seller and the Subservicer, for the benefit of the
Purchaser as the owner thereof, and possession of any Required Information or
incident relating to the Purchased Receivables so retained is for the sole
purpose of facilitating the servicing of the Purchased Receivables. Such
retention and possession is at the will of the Purchaser and in a custodial
capacity for the benefit of the Purchaser only. To further evidence such sale,
at the request of the Purchaser, the Seller shall cause each Provider Affiliate
and/or Provider Physician to (i) ▇▇▇▇ conspicuously each invoice evidencing each
Purchased Receivable with a legend, acceptable to the Purchaser, evidencing that
the Purchaser has purchased all right and title thereto and interest therein as
provided in this Agreement; (ii) ▇▇▇▇ its master data processing records
evidencing such Purchased Receivables with such legend; and (iii) send
notification to Payors as to the transfer of such interest in the Purchased
Receivables.
SECTION 2.3 ESTABLISHMENT OF ACCOUNTS; CONVEYANCE OF INTERESTS
THEREIN; INVESTMENT.
(a) Lockbox Account.
(i) Prior to the execution and delivery of this Agreement, the
Seller shall
(A) in the Servicer's sole discretion, establish and
maintain at the Seller's expense (1) account(s) in the name of the Seller, the
names of the Provider Affiliates or the names of the Provider Physicians, as the
case may be, with a depository institution satisfactory to the Purchaser (the
"Medicare Lockbox Account") into which all Collections in respect of Medicaid,
Medicare and CHAMPUS Receivables shall be deposited; and (2) an account in the
name of the Servicer into which all Collections from Eligible Payors in respect
of other
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Receivables shall be deposited (the "Commercial Lockbox Account"); provided that
neither the Seller nor the Servicer shall be permitted to withdraw any amounts
from the Commercial Lockbox Account or change the procedures under the Lockbox
Account Agreement except in the case of an assignment by the Purchaser of its
interests herein under Section 10.3. The Medicare Lockbox Account and the
Commercial Lockbox Account are referred to collectively in this Agreement as the
"Lockbox Account"); and (B) enter into the Lockbox Account Agreement.
The provisions of the Lockbox Account Agreement described in
the definition thereof may not be amended without the consent of the Trustee.
The Seller hereby agrees upon the request of Purchaser or Servicer to direct or
cause each Provider Affiliate or Provider Physician, as the case may be, to
direct each Payor of an Eligible Receivable to remit all payments with respect
to such Receivable for deposit into the Commercial Lockbox Account (other than
the Payors of Medicaid, Medicare and CHAMPUS Receivables and, to the extent
determined by the Servicer, Governmental Receivables which the Seller shall
direct or cause each Provider Affiliate or Provider Physician, as the case may
be to direct, to remit all payments with respect to such Receivables for deposit
in the Medicare Lockbox Account) by delivering to such Payor a notice attached
as Exhibit A hereto. The Seller further agrees not to change any such directive
to Payors without the prior written consent of the Purchaser and the Servicer.
The Seller agrees not to terminate, or permit the Provider Affiliates or
Provider Physicians to terminate, the Medicare Lockbox Account Agreement without
first providing the Purchaser and the Servicer with written notice at least 30
days prior to the effective date of such termination. The Seller acknowledges
that payments deposited in the Medicare Lockbox Account will be swept from the
Medicare Lockbox Account to the Collection Account on a daily basis. The Seller
hereby agrees not to change or direct the custodian thereof to modify such sweep
order without first providing the Purchaser and the Servicer with written notice
at least 30 days prior to the effective date of such change in sweep order. In
the event the Seller or any other Person terminates the Medicare Lockbox
Account, changes the sweep order with respect to the Medicare Lockbox Account or
the Payors receive any instruction whatsoever from the Seller indicating that
Collections with respect to the Eligible Receivables should be sent to any
location other than the Lockbox Account or such other location as may be
mutually agreed to by the Purchaser and the Seller, the Seller hereby
acknowledges and agrees that such actions would be an express violation of this
Agreement, would cause irreparable harm to the Purchaser for which there would
be no adequate remedy at law, and agrees and consents to grant the Purchaser
specific performance of the terms and provisions of this Agreement. The
custodian of the Lockbox Account may rely upon the terms and restrictions set
forth in subsection 2.3(a); and
(ii) Seller and Subservicer agree that the following
procedures will be followed in the collection of the Purchased Receivables:
(A)(1) Receivables for Fee-for-Service Contracts
Billed by Healthcare Business Resources, Inc. Certain of the Provider Affiliates
have entered into billing and collection agreements with Healthcare Business
Resources, Inc. ("HBR"), a corporation owned or controlled by Subservicer, for
billing and collection of Fee-for-Service contracts ("Fee-for-Service
Contracts") of such Provider Affiliates. Seller represents that Payors with
respect to such Fee-for-Service Contracts have been instructed to remit, and are
currently remitting,
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payments under each Fee-for-Service Contract to post office boxes ("PO Boxes")
maintained with respect to each Fee-for-Service Contract in Durham, North
Carolina, Dallas, Texas, or Pawleys Island, South Carolina. So long as Coastal
Physician Group, Inc. continues as the Subservicer, there shall be no change in
the "pay to" instructions given to the Payors and all collections for the
Fee-for-Service Contracts shall continue to be sent to the PO Boxes. Remittances
to the PO Boxes shall be administered as follows: Servicer, through its
employees, shall be given control over the PO Boxes located in Durham, North
Carolina, Pawleys Island, South Carolina and Dallas, Texas, and shall have first
access to all mail received in such PO Boxes in accordance with the Mailroom and
Posting Agreement attached hereto as Exhibit J. Servicer agrees to retrieve the
mail from the PO Boxes on each Business Day and review and divide the
remittances into three categories: (1) those received that constitute payments
of Medicare Receivables, Medicaid Receivables, CHAMPUS Receivables and
Governmental Receivables to the extent required by the Servicer to be deposited
to the Medicare Lockbox Account (the "Medicare Payments"); (2) remittances from
all other Eligible Payors (the "Commercial Payments"); and (3) remittances that
are from Payors who are not Eligible Payors. Medicare Payments shall be
deposited by Servicer in the Medicare Lockbox Account. Commercial Payments shall
be deposited by Servicer in the Commercial Lockbox Account. All other payments
received by the Servicer with respect to the HBR billed Fee-for-Service
Contracts shall be administered in accordance with Sections 2.3(d) and 6.3;
(A)(2) Receivables for Individually Enrolled Provider
Physician Billed by Healthcare Business Resources, Inc. Certain of the
individual Provider Physicians (each an "Individually Enrolled Provider
Physician") have entered into Billing and Collection Agreements in the form of
Exhibit L attached hereto (each a "Billing and Collection Agreement") or have
entered into an oral agreement with HBR on terms substantially identical to the
Billing and Collection Agreement (an "Oral Billing Agreement"), pursuant to
which HBR bills and collects for professional medical services performed by an
Individually Enrolled Provider Physician pursuant to an Independent Contractor
(Physician) Agreement and pursuant to which HBR submits claims for payment under
Part B of Medicare under the Individually Enrolled Provider Physician's
individual Medicare supplier identification billing number. Upon receipt of
proceeds of Medicare Receivables, Medicaid Receivables, CHAMPUS Receivables or
CHAMPVA Receivables, HBR shall deposit such proceeds in a Medicare Lockbox in
the name of the Provider Affiliate with whom the Individually Enrolled Provider
Physician has contracted. All other payments received by HBR with respect to
Receivables of the Individually Enrolled Provider Physician shall be deposited
by Servicer in the Commercial Lockbox Account. All other payments received by
the Servicer with respect to the Receivables generated by the Individually
Enrolled Provider Physician shall be administered in accordance with Sections
2.3(d) and 6.3.
(B) Receivables Billed by Specialty Services Group,
Inc. Certain Provider Affiliates have entered into billing and collection
agreements with Specialty Services Group, Inc. ("SSG"), a corporation owned or
controlled by Subservicer, for billing and collection of Fee-for-Service
Contracts of such Provider Affiliates. Seller represents that all Payors with
respect to such Fee-for-Service Contracts have been instructed to remit, and are
currently remitting, payments under each Fee-for-Service Contract to separate
lockboxes that correspond
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to each Fee-for-Service Contract. Such payments shall continue to be collected
into the existing lockboxes, but within one (1) Business Day after receipt (to
allow SSG time to sort and credit the payments) all funds collected with respect
to Purchased Receivables shall be wire transferred to the Collection Account or
such other account or accounts designated by Servicer (which may but need not be
the Medicare Lockbox Account and the Commercial Lockbox Account) pursuant to a
standing sweep order that may not be amended or modified absent the Servicer's
written consent. Any other funds received by Servicer, with respect to the SSG
billed Receivables, shall be administered in accordance with Sections 2.3(d) and
6.3;
(C) Receivables Billed by ▇▇▇▇▇▇▇▇ Financial
Services, Inc. or Triad Certain Provider Affiliates have entered into billing
and collection agreements with ▇▇▇▇▇▇▇▇ Financial Services, Inc. ("▇▇▇▇▇▇▇▇") or
Triad ("Triad"), billing companies not affiliated with Subservicer, for billing
and collection of Fee-for-Service Contracts of such Provider Affiliates. Seller
represents that all Payors with respect to such Fee-for-Service Contracts have
been instructed to remit, and are currently remitting, payments under each
Fee-for-Service Contract to single lockboxes in the name of the Provider
Affiliate. Such payments shall continue to be collected into the existing
lockboxes, but all funds collected with respect to all Receivables with respect
to Fee-for-Services Contracts billed by ▇▇▇▇▇▇▇▇ or Triad shall be wire
transferred daily to the Collection Account or such other account or accounts
designated by Servicer (which may but need not be the Medicare Lockbox Account
and the Commercial Lockbox Account) pursuant to a standing sweep order that may
not be amended or modified absent the Servicer's written consent. Any other
funds received by the Servicer with respect to the ▇▇▇▇▇▇▇▇ and Triad billed
Receivables shall be administered in accordance with Sections 2.3(d) and 6.3.
(D) EFT Payments. Certain Provider Affiliates collect
electronic funds transferred for payments on Flat Rate Contracts or capitated
arrangement Contracts. Absent the Servicer's direction otherwise, the Seller and
Subservicer shall cause and hereby represent that all such payments shall be
wire transferred, within one (1) Business Day of receipt, to the Collection
Account. Any other funds received by the Servicer as EFT Payments with respect
to Flat Rate Contracts or capitated arrangement Contracts shall be administered
in accordance with Sections 2.3(d) and 6.3.
(E) Flat Rate Contracts and Capitated Payments that
are not EFT Transfers. All payments received on Flat Rate Contracts or capitated
Contracts by Provider Affiliates relating to Purchased Receivables are currently
remitted to Subservicer for deposit in an account of Subservicer. Such amounts
shall be deposited in an account designated by Servicer or deposited by
Subservicer in its account and wire transferred to the Collection Account within
one (1) Business Day of receipt of good funds.
(b) Seller Credit Reserve Account; Offset Reserve Account. The
Purchaser has established and shall maintain trust accounts with the corporate
trust department of the Trustee titled "NPF XI - Seller Credit Reserve Account"
(the "Seller Credit Reserve Account") and "NPF XI - Offset Reserve Account" (the
"Offset Reserve Account").
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(c) Collection Account. The Purchaser has established and
shall maintain a trust account with the corporate trust department of the
Trustee titled "NPF XI - Collection Account" (the "Collection Account").
(d) The Seller does hereby sell, transfer, assign, set over
and convey to the Purchaser all right, title and interest of the Seller in and
to (i) all amounts deposited, from time to time, in the Seller Credit Reserve
Account and the Offset Reserve Account and (ii) subject to the provisions of
Article VI hereunder, all amounts deposited, from time to time, in the Lockbox
Account and the Collection Account. All Collections in respect of Purchased
Receivables received by the Seller or the Subservicer pending transfer to the
Collection Account as provided in this Agreement, shall be held by the Seller or
the Subservicer, as the case may be, in trust for the benefit of the Purchaser
until such amounts are deposited into the Collection Account or the Lockbox
Account. All Collections in respect of Purchased Receivables received by the
Seller and not deposited directly by the Payor in the Lockbox Account shall be
remitted by the Seller or the Subservicer, as the case may be, to the Collection
Account not later than the first Business Day after the day of receipt, and if
such Collections are not so remitted on a timely basis, in addition to its other
remedies hereunder, the Purchaser shall be entitled to receive a late charge
(which shall be in addition to the Program Fee) equal to 12% per annum or the
maximum rate legally permitted if less than such rate, of such Collections
calculated as of the first Business Day of such delinquency. The Seller shall
pay any such late charge on demand therefor by the Purchaser.
(e) Notwithstanding any other provision herein to the
contrary, the Seller may, but shall not be obligated to, make a deposit at any
time in the Seller Credit Reserve Account or the Offset Reserve Account to
satisfy a deficiency, provided that the Seller shall in no event have any right,
title or interest in or to such account or any cash or other property therein.
Further, the Seller is not entitled to, nor shall the Seller have any interest
in, Investment Income.
SECTION 2.4 GRANT OF SECURITY INTEREST.
It is the intention of the parties hereto that each payment by
the Purchaser to the Seller with respect to Purchased Receivables made or to be
made hereunder shall constitute part of the purchase and sale of such Purchased
Receivables and not a loan. In the event, however, that a court of competent
jurisdiction were to hold that the transaction evidenced hereby constitutes a
loan and not a purchase and sale, it is the intention of the parties hereto that
this Agreement shall constitute a security agreement under the UCC and any other
applicable law, and that the Seller shall be deemed to have granted to the
Purchaser a first priority perfected security interest in all of the Seller's
right, title and interest in, to and under the Purchased Receivables; all
Contracts related to Purchased Receivables; all Receivable Purchase and
Contribution Agreements; all Independent Contractor (Physician) Agreements; all
Service Agreements; all payments of principal of or interest on such Purchased
Receivables; all amounts on deposit from time to time in the Seller Credit
Reserve Account and the Offset Reserve Account; and all amounts on deposit with
respect to Purchased Receivables from time to time in
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the Lockbox Account and the Collection Account, all other rights relating to and
payments made in respect of this Agreement, and all proceeds of any of the
foregoing.
SECTION 2.5 FURTHER ACTION EVIDENCING PURCHASES.
(a) The Seller agrees that, from time to time, at its expense,
it will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or appropriate, or that the
Purchaser may reasonably request, in order to perfect, protect or more fully
evidence the transfer of ownership of the Purchased Receivables or to enable the
Purchaser to exercise or enforce any of its rights hereunder or under any
Purchase Assignment. Without limiting the generality of the foregoing, the
Seller will, upon the request of the Purchaser, execute and file such financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or appropriate, or as the
Purchaser may request and at the Purchaser's request undertake, or cause to be
undertaken, UCC-11 searches with respect to jurisdictions identified by the
Servicer with respect to the Seller and the Provider Affiliates.
(b) The Seller hereby authorizes the Purchaser to execute as
the Seller's attorney-in-fact and file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relating to all or
any of the Purchased Receivables and Collections with respect thereto with or
without the signature of the Seller. The Seller agrees that a carbon,
photographic or other reproduction of this Agreement or a financial statement is
sufficient as a financing statement.
SECTION 2.6 ELIGIBLE RECEIVABLES.
All determinations of the Servicer under this Agreement
including, without limitation, whether Receivables are Eligible Receivables and
the Eligible Receivable Amounts, shall be conclusive absent manifest error.
SECTION 2.7 OFFSETS.
The parties acknowledge that the Purchaser and the Servicer
have entered into a series of agreements in substantially the form of this
Agreement with other sellers of Receivables ("Other Sellers") and that the
Offset Reserve Account has been established to provide liquidity to the
Purchaser with respect to Rejected Receivables, whether such Receivables were
sold to the Purchaser by the Seller or by Other Sellers. In the event of an
offset with respect to a Receivable purchased by the Purchaser from the Seller
or an Other Seller and such Rejected Receivable is not repurchased by such
Seller or Other Seller in the manner set forth in Section 4.3 herein, or a
comparable provision of any such other agreement, the Servicer will cause the
Trustee to withdraw the Net Value of such Rejected Receivable from the Offset
Reserve Account and deposit it in the Purchase Account. In the event such
Receivable was sold to the Purchaser by an Other Seller, the Purchaser agrees to
enforce the Other Seller's obligation to repurchase such Receivable under the
terms of its agreement with such Other Seller and to cause the amount of such
repurchase by the Other Seller to be deposited in the Offset Reserve Account.
The Servicer
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will maintain a detailed accounting record of all deposits and withdrawals from
the Offset Reserve Account including whether a withdrawal was made with respect
to a Medicare/Medicaid Offset on a Receivable sold to the Purchaser by the
Seller or an Other Seller. For purposes of calculating whether the amount in the
Offset Reserve Account deposited by the Servicer on behalf of the Seller (net of
withdrawals required hereunder with respect to the Seller) is equal to the
Specified Offset Reserve Balance, only withdrawals with respect to a Rejected
Receivable sold to the Purchaser by the Seller will be deemed to be with respect
to the Seller.
SECTION 2.8 ADMINISTRATIVE FEE.
On each Purchase Date, the Seller shall deposit with the
Servicer an amount equal to the Administrative Fee. The Subservicer acknowledges
that such amount may be offset by the Subservicing Fee pursuant to Section 7.5.
Payment of the Net Administrative Fee may be made by application of amounts
otherwise payable to the Seller.
SECTION 2.9 ASSIGNMENT OF AGREEMENT.
The Seller does hereby agree, acknowledge and consent to the
assignment by the Purchaser of all of the Purchaser's right, title, interest and
obligations with respect to this Agreement. The Seller does hereby further agree
to execute and deliver to the Purchaser all documents and amendments presented
to the Seller by the Purchaser in order to effectuate the assignment by the
Purchaser in furtherance of this Section 2.9 consistent with the terms and
provisions of this Agreement, provided that any such amendments shall not modify
or expand the obligations of the Seller under this Agreement.
SECTION 2.10 CONFIDENTIALITY.
Pursuant to the terms of this Agreement, Purchaser will be
given, or will have access to, certain information regarding the business,
operations and financial condition of Seller, the Provider Affiliates and
Coastal Physician Group, Inc. Purchaser hereby agrees that it will instruct its
employees, representatives and agents to treat as strictly confidential all such
information until such time as such information becomes publicly available other
than as a result of a disclosure and breach of the terms of this section. Such
information shall include, without limitation, any and all reports, analyses,
compilations, studies and information developed or prepared by the Company,
clients lists, pricing information, and expense and revenue information, but
shall not include such information, if any, that becomes disclosed to the public
in a manner other than as a result of disclosure by the Seller or its employees
or agents in breach of their obligations hereunder, that was available to the
parties on a nonconfidential basis prior to its disclosure hereunder that is
subsequently rightfully provided to the Purchaser by a third party without
restriction on disclosure (provided that such third party developed or possesses
the information independently of, and not in violation of any agreement with the
Seller, the Provider Affiliates or Coastal Physician Group, Inc.), or that is
required to be disclosed by applicable laws, rules, regulations, court orders,
or judicial or administrative decrees or actions binding upon Purchaser.
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ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.1 CONDITIONS PRECEDENT TO EFFECTIVENESS OF
AGREEMENT.
The effectiveness of this Agreement is subject to the
condition precedent that the Purchaser and the Servicer shall have received on
or before the Closing Date the following, in form and substance satisfactory to
the Purchaser and the Servicer:
(a) With respect to the Seller:
(i) the certificate or articles of organization of the
Seller certified, as of a date no more than ten days prior to the
Closing Date, by the Secretary of State of the Seller's state of
organization;
(ii) the certificate or articles of incorporation of the
Manager certified, as of a date no more than ten days prior to the
Closing Date, by the Secretary of State of the Manager's state of
incorporation;
(iii) a Good Standing Certificate, dated no more than ten
days prior to the Closing Date, from the Secretary of State of the
Seller's state of organization and each state in which the Seller is
required to qualify to do business;
(iv) a Good Standing Certificate, dated no more than ten
days prior to the Closing Date, from the Secretary of State of the
Manager's state of incorporation and each state in which the Manager is
required to qualify to do business;
(v) a certificate of the Secretary or Assistant Secretary
of the Manager (on which certificate the Servicer and the Purchaser may
conclusively rely until such time as the Servicer shall receive from
the Manager a revised certificate meeting the requirements of this
subsection) certifying as of the Closing Date: (A) the names and true
signatures of the officers of the Manager authorized on the Seller's
behalf to sign this Agreement and the Related Documents, (B) a copy of
the Seller's operating agreement in effect as of the date of this
Agreement, (C) a copy of the Manager's bylaws in effect as of the date
of this Agreement, (D) a copy of the resolutions of the Seller
approving this Agreement, the Related Documents and the transactions
contemplated thereby, (E) a copy of the resolutions of the Manager of
the Seller approving this Agreement, the Related Documents and the
transactions contemplated thereby, (F) a copy of the unanimous written
consent of the voting members of the Seller with respect to this
Agreement, the Related Documents and the transactions contemplated
thereby in accordance Section 5.01 of the Seller's
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operating agreement, (G) a copy of the written approval of all of the
Managers of the Seller with respect to this Agreement, the Related
Documents and the transactions contemplated thereby in accordance with
Section 5.01 of the Seller's operating agreement, and (H) a statement
identifying the independent director of the Manager.
(vi) a Manager's Certificate in the form of Exhibit D
hereto;
(vii) certified copies of Requests for Information or
Copies (Form UCC-11) (or a similar search report certified by a party
acceptable to the Purchaser), dated a date no more than ten days prior
to the Closing Date listing all effective financing statements which
name the Seller or the Provider Affiliate (under their present name and
any previous name) as debtor, together with copies of such financing
statements, and searches of applicable federal and state court and
agency dockets and lien records showing all judgment liens affecting
the Seller, the Provider Affiliate or the Eligible Receivables and tax
liens; and
(viii) properly completed original financing statements
(Form UCC-3) executed by the secured party of record necessary to
release all security interests and other rights of any Person in
Receivables previously granted by the Seller, the Provider Affiliate or
the Provider Physician including, without limitation, all such releases
specified by the Seller, the Provider Affiliate or the Provider
Physician prior to the date hereof;
(b) Consents required by, or of, any Person or Governmental
Authority, if any, to the closing of the transactions contemplated hereby, in
form and substance satisfactory to the Purchaser;
(c) Acknowledgment copies of proper financing statements (Form
UCC-1), duly filed, in respect of Purchased Receivables, naming the Seller as
the assignor and the Purchaser as the assignee or other, similar instruments or
documents, as may be necessary or, in the opinion of the Purchaser or the
Servicer, desirable under the UCC of all appropriate jurisdictions or any
comparable law to perfect the Purchaser's ownership interests in all Purchased
Receivables in which an interest may be assigned hereunder;
(d) Fully executed copies of the Lockbox Account Agreement;
(e) The favorable opinion of counsel to the Seller
substantially in the form attached hereto as Exhibit E;
(f) Such other approvals, opinions, documents and instruments,
as the Purchaser or the Servicer may reasonably request;
(g) The Seller shall have paid such closing costs as have
previously been agreed with the Purchaser;
(h) The Seller shall have delivered to the Purchaser or with
respect to each Eligible Payor shall have sent or caused the Provider Affiliates
or Provider Physician to have
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sent each Eligible Payor requested by the Purchaser, a notice substantially in
the form of Exhibit A; and
(i) The Seller shall have entered into the Receivables
Purchase and Contribution Agreement in form and substance satisfactory to the
Purchaser and the Servicer with each Provider Affiliate; and
(j) Each Provider Affiliate that utilizes Provider Physicians
shall have entered into an Independent Contractor (Physician) Agreement
substantially in the form of Exhibit H-1, H-2 and H-3 or a Service Agreement
substantially in the form of Exhibit I.
(k) Acknowledgment copies of proper financing statements (Form
UCC-1), duly filed, in respect to Receivables other than Purchased Receivables,
naming the Seller as the debtor and the Purchaser as the secured party or other,
similar instruments or documents, as may be necessary or, in the opinion of the
Purchaser or the Servicer, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the Purchaser's security
interests in all of Seller's Receivables other than Purchased Receivables.
SECTION 3.2 CONDITIONS PRECEDENT TO ALL PURCHASES.
Each Purchase (including the initial Purchase) from the Seller
by the Purchaser shall be subject to the further conditions precedent that:
(a) The representations and warranties of the Seller set forth
in Sections 4.1 and 4.2 are true and correct on and as of such date, before and
after giving effect to such Purchase and to the application of the proceeds
therefrom, as though made on and as of such date;
(b) No event has occurred, or would result from such Purchase
or from the application of the proceeds therefrom, which constitutes an Event of
Seller Default or would constitute an Event of Seller Default, but for the
requirement that notice be given or time elapse or both;
(c) The Seller is in compliance with each of its covenants set
forth herein;
(d) The Termination Date shall not have occurred;
(e) Each Receivable submitted by the Seller for purchase is an
Eligible Receivable;
(f) No default shall have occurred and remain uncured under
the Receivables Purchase and Contribution Agreement;
(g) The Seller shall have taken such other action, including
delivery of approvals, opinions or documents to the Purchaser, as the Purchaser
may reasonably request;
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(h) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D. is the Chairman and Chief Executive
Officer of Coastal Physician Group, Inc. unless prevented by death or disability
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D., unless otherwise agreed by the Purchaser and the
Servicer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND SUBSERVICER
SECTION 4.1 REPRESENTATIONS AND WARRANTIES AS TO THE SELLER
AND COASTAL PHYSICIAN GROUP, INC.
The Seller and Subservicer each represent and warrants to the
Purchaser and the Servicer, as of the date hereof and on each subsequent
Purchase Date, as follows:
(a) The Seller is a limited liability company duly organized,
validly existing and in good standing under the laws of its state of
organization and is duly qualified to do business, and is in good standing in
each jurisdiction in which the nature of its business requires it to be so
qualified;
(b) The Seller has the power and authority to own and convey
all of its properties and assets and to execute and deliver, this Agreement and
the Related Documents and to perform the transactions contemplated hereby and
thereby except as may be limited by bankruptcy, insolvency or similar laws or
general principles of equity, whether considered in a proceeding at law or in
equity;
(c) The execution, delivery and performance by the Seller of
this Agreement and the Related Documents, and the transactions contemplated
thereby, (i) have been duly authorized by all necessary member or other action
on the part of the Seller, (ii) do not contravene or cause the Seller to be in
default under (A) the Seller's certificates or articles of organization or its
operating agreement, (B) any contractual restriction contained in any indenture,
loan or credit agreement, lease, mortgage, security agreement, bond, note, or
other agreement or instrument binding on or affecting the Seller or its property
or (C) any law, rule, regulation, order, writ, judgment, award, injunction, or
decree applicable to, binding on or affecting the Seller or its property and
(iii) do not result in or require the creation of any Adverse Claim upon or with
respect to any of the property of the Seller (other than in favor of the
Purchaser as contemplated hereunder);
(d) This Agreement and the Related Documents have been duly
executed and delivered on behalf of the Seller and each is the legal, valid and
binding obligation of the Seller enforceable against the Seller in accordance
with its terms, except as may be limited by bankruptcy, insolvency or similar
laws or general principles of equity, whether considered in a proceeding at law
or in equity;
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(e) No consent of, or other action by, and no notice to or
filing with, any Governmental Authority or any other party, is required for the
due execution, delivery and performance by the Seller of this Agreement or any
of the Related Documents or for the perfection of or the exercise by the
Purchaser or the Servicer of any of their rights or remedies thereunder other
than compliance with the Federal Assignment of Claims Act and the filing of the
UCC-1 Financing Statements naming the Seller as assignor and the Purchaser as
assignee;
(f) Except as set forth in Schedule 6, there is no pending or
threatened action, suit or proceeding, of a material nature against or affecting
the Receivables, any of the Provider Affiliates, any of the Provider Physicians
or the Seller, its officers or members, or the property of the Seller or any
Provider Affiliate, in any court or tribunal, or before any arbitrator of any
kind or before or by any Governmental Authority (i) asserting the invalidity of
this Agreement or any of the Related Documents, (ii) seeking to prevent the sale
and assignment of any Receivable or the consummation of any of the transactions
contemplated thereby, (iii) seeking any determination or ruling that might
materially and adversely affect (A) the performance by the Seller or the
Subservicer of its obligations under this Agreement or any of the Related
Documents, (B) the validity or enforceability of this Agreement or any of the
Related Documents, (C) the Receivables or the Contracts or (D) the federal
income tax attributes of the Purchases, or (iv) asserting a claim for payment of
money against the Seller or any Provider Affiliate in excess of $100,000 (other
than such judgments or orders in respect of which adequate insurance is
maintained by the Seller or the applicable Provider Affiliate or Provider
Physician for the payment thereof);
(g) No injunction, bankruptcy petition, writ, restraining
order or other order of any material nature adverse to the Seller's Receivables,
the Seller or any of the Provider Affiliates or the conduct of their respective
businesses or which is inconsistent with the due consummation of the
transactions contemplated by this Agreement or the Related Documents has been
issued by or filed with a Governmental Authority;
(h) To the extent applicable to the Seller or the Provider
Affiliate, the Seller has or has confirmed that each of the Provider Affiliates
and Provider Physicians has complied in all material respects with all
applicable laws, rules, regulations, and orders with respect to the Seller
and/or the Provider Affiliates, their respective business and properties and all
Receivables and related Contracts (including without limitation, all applicable
environmental, health and safety requirements) and all restrictions contained in
any indenture, loan or credit agreement, mortgage, security agreement, bond,
note, or other agreement or instrument binding on or affecting the Seller's or
any of the Provider Affiliate's property, and has and maintains all permits,
licenses, authorizations, registrations, approvals and consents of Governmental
Authorities, and all certificates of need for the construction or expansion of
or investment in health care facilities, all Health Facility Licenses,
Accreditations, Medicaid Certifications and Medicare Certifications necessary
for the activities and business of the Seller and each of the Provider
Affiliates as currently conducted and as proposed to be conducted, the
ownership, use, operation and maintenance by each of them of its properties,
facilities and assets and the performance by the Seller of this Agreement and
the Related Documents (hereinafter referred to collectively as "Governmental
Consents") other than as set forth on Schedule 4 attached hereto;
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(i) Other than as set forth on Schedule 4 attached hereto and
without limiting the generality of the prior representation: (A) each Health
Facility License, Medicaid Certification, Medicare Certification, Medicaid
Provider Agreement, Medicare Provider Agreement, Blue Cross/Blue Shield
Contract, each Contract with a Governmental Authority relating to Governmental
Receivables, and each of the Contracts of the Seller and each of the Provider
Affiliates and Provider Physicians is in full force and effect and has not been
amended or otherwise modified, rescinded or revoked or assigned, (B) the Seller
and each Provider Affiliate and Provider Physician is in compliance with the
requirements of Medicaid, Medicare, CHAMPUS and related programs, Blue
Cross/Blue Shield Contracts, all Contracts with Governmental Authorities
relating to Governmental Receivables, and the Contracts, and (C) no condition
exists or event has occurred which, in itself or with the giving of notice or
lapse of time or both, would result in the suspension, revocation, impairment,
forfeiture, non-renewal of any Governmental Consent applicable to the Seller or
any other health care facility owned or operated by the Seller or any of the
Provider Affiliates or Provider Physicians, or such facility's participation in
any Medicaid, Medicare, CHAMPUS or other similar program, Blue Cross/Blue Shield
Contracts, all Contracts with Governmental Authorities relating to Governmental
Receivables or of any Contracts, and there is no claim that such Governmental
Consent, participation or contract is not in full force and effect;
(j) The Seller and each Provider Affiliate have filed on a
timely basis all tax returns (federal, state, and local) required to be filed
and has paid or made adequate provisions for the payment of all taxes,
assessments, and other governmental charges due from the Seller;
(k) The primary business of the Provider Affiliates is the
provision of management and administrative services to physicians, hospitals,
governmental agencies, managed care programs, employers, and other health care
organizations nationwide. The primary business of the Provider Physicians is the
provision of health care services and/or equipment. The Payors' related provider
numbers have been issued to either the Physician Provider or the related
Provider Affiliates and a true and complete list of all provider numbers
assigned by Payors to the Physician Providers and the Provider Affiliates is
maintained by the Seller and the Provider Affiliates at the corporate
headquarters of HBR;
(l) Neither the Seller nor any of the Provider Affiliates or
Provider Physicians (with respect to services rendered or activities under any
Independent Contractor (Physician) Agreement or any Service Agreement) is
required to prepare and submit Medicaid and Medicare cost reports (A) as to
Medicaid, to the state agency, or other HCFA-designated agents or agents of such
state agency, charged with such responsibility or (B) as to Medicare, to the
Medicare intermediary or other HCFA-designated agents charged with such
responsibility. In the event the Seller or any of the Provider Affiliates or
Provider Physicians (with respect to services rendered or activities under any
Independent Contractor (Physician) Agreement or any Service Agreement) become
subject to the requirement of preparing and submitting Medicaid and Medicare
cost reports to the appropriate agencies, the Seller hereby represents and
warrants that it will, to the extent required by applicable law or regulation,
cause each Provider Affiliate and
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Provider Physician to prepare and submit such reports to such agencies on a
timely basis and notify the Purchaser and the Servicer of such requirement;
(m) All information heretofore or hereafter furnished by or on
behalf of the Seller to the Servicer or the Purchaser in connection with this
Agreement and the Related Documents or any transaction contemplated hereby or
thereby is and will be true and complete in all material respects and does not
and will not omit to state a material fact necessary to make the statements
contained therein not misleading;
(n) With respect to the Seller or any of the Provider
Affiliates or Provider Physicians, there has occurred no event which has or is
reasonably likely to have a material adverse effect on the financial condition,
business or operations of the Seller or any Provider Affiliate, including the
Seller's or any Provider Affiliate's ability to perform their obligations under
any Independent Contractor (Physician) Agreement or any Service Agreement, this
Agreement and/or the Related Documents. The Servicer acknowledges that the
Subservicer may continue to experience further deficit cash flows and net losses
through the fourth quarter of 1997 in the absence of gains on asset divestitures
sufficient to offset such negative cash flows and/or losses and the Servicer
deems that this is not a material adverse change to the financial condition;
(o) The Seller is solvent and will not become insolvent after
giving effect to the transactions contemplated by this Agreement; the Seller has
not incurred Debts beyond its ability to pay; the Seller, after giving effect to
the transactions contemplated by this Agreement, will have an adequate amount of
capital to conduct its business in the foreseeable future; and the sales of
Purchased Receivables hereunder are made in good faith and without intent to
hinder, delay or defraud present and future creditors of the Seller;
(p) Each Provider Affiliate will not become insolvent after
giving effect to the transactions contemplated by the Receivables Purchase and
Contribution Agreement or this Agreement; none of the Provider Affiliates have
incurred Debts beyond their respective abilities to pay; each Provider
Affiliate, after giving effect to the transactions contemplated by the
Receivables Purchase and Contribution Agreement and this Agreement, will have an
adequate amount of capital to conduct its businesses in the foreseeable future;
and the sales of health care receivables under the Receivables Purchase and
Contribution Agreement were made in good faith and without intent to hinder,
delay or defraud present and future creditors of the Provider Affiliates;
(q) The consolidated balance sheets of Coastal Physician
Group, Inc. and its consolidated Subsidiaries, if any, as at December 31, 1996,
and the related statements of income and shareholders' equity and its
consolidated Subsidiaries for the fiscal year then ended, audited by KPMG Peat
Marwick, LLP, independent certified public accountant(s), copies of which have
been furnished to the Purchaser and Servicer, fairly present the consolidated
financial condition, business and operations of the Coastal Physician Group,
Inc. and its consolidated Subsidiaries as at such date and the consolidated
results of the operations of Coastal Physician Group, Inc. and its consolidated
Subsidiaries for the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and since December 31, 1996
there has been
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no material adverse change in any such condition, business or operations other
than as set forth as subsequent events in such consolidated financial
statements. The Servicer acknowledges that the Subservicer may continue to
experience further deficit cash flows and net losses through the fourth quarter
of 1997 in the absence of gains on asset divestitures sufficient to offset such
negative cash flows and/or losses and the Servicer deems that this is not a
material adverse change to the financial condition;
(r) Except as described in Section 2.3(a), the Medicare
Lockbox Account and the Commercial Lockbox Account are the only lockbox accounts
maintained by the Seller, the Provider Affiliates and the Provider Physicians
(for services rendered or activities under the Independent Contractor
(Physician) Agreements or Service Agreements), and each Payor of a Purchased
Receivable, if requested by Purchaser, has been directed upon its receipt of the
notice attached as Exhibit A hereto, which notice was mailed on the Closing
Date, and is required to, remit all payments with respect to such Receivable for
deposit in the Commercial Lockbox Account (other than the Payors of Medicaid,
Medicare and CHAMPUS Receivables which have been directed to remit all payments
with respect to such Receivables for deposit in the Medicare Lockbox Account);
(s) The principal place of business and chief executive office
of the Seller are located at the address of the Seller set forth under its
signature below and there are now no, and during the past four months there have
not been, any other locations where the Seller is located (as that term is used
in the UCC) or keeps Records except as set forth in the designated space beneath
its signature line in this Agreement;
(t) The legal name of the Seller is as set forth at the
beginning of this Agreement and except as set forth in the designated space
beneath its signature line in this Agreement the Seller has not changed its name
in the last six years, and during such period, the Seller did not use, nor does
the Seller now use any tradenames, fictitious names, assumed names or "doing
business as" names;
(u) The Receivables of the Seller have been and shall continue
to be duly and validly acquired by the Seller from the Provider Affiliates and,
to the extent applicable, such Receivables have been and shall continue to be
duly and validly acquired by the Provider Affiliates from Provider Physicians,
and have been and will continue to be adjusted to reflect reimbursement policies
of the Payors with respect thereto; in particular, the Eligible Receivable
Amounts of Receivables relating to such Payors do not and shall not exceed
amounts the Seller, any Provider Affiliate, or any Provider Physician is
entitled to receive under any capitation arrangement, fee schedule, discount
formula, cost-based reimbursement, or other adjustment or limitation to the
usual charges of the applicable Provider Affiliate or Provider Physician;
(v) The Receivables of the Provider Affiliates, to the extent
applicable, have been and shall continue to be duly and validly acquired by the
Provider Affiliate from the Provider Physician and have been and will continue
to be adjusted to reflect reimbursement policies of the Payors with respect
thereto;
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(w) No Payor of a Receivable being sold on any Purchase Date
has any claim of a material nature against or affecting the Seller or the
property of the Seller or the property of the applicable Provider Affiliate;
(x) Neither the Seller, the Subservicer, applicable Provider
Physician nor any Provider Affiliate has done or shall do anything to impede or
interfere with the collection by the Purchaser of the Purchased Receivables and
shall not amend, waive or otherwise permit, suffer to exist or agree to any
deviation from the terms or conditions of any Purchased Receivable or any
related Contract;
(y) The Seller, the Subservicer or the applicable Provider
Affiliate or Provider Physician has made and will continue to make all payments
to Payors necessary to prevent any Payor from offsetting any earlier overpayment
to the Seller against any amounts such Payor owes on a Purchased Receivable,
except to the extent prohibited by Contract or by applicable laws, rules or
regulations;
(z) Each Purchase Notice contains a complete and accurate
list of all Eligible Receivables of the Seller as of its date;
(aa) For federal income tax reporting and accounting purposes,
the Seller and each Provider Affiliate will treat the sale of each Purchased
Receivable pursuant to this Agreement and the Related Documents as a sale of, or
absolute assignment of their full right, title and ownership interest in, such
Purchased Receivable to the Purchaser and neither the Seller nor any Provider
Affiliate has in any other manner accounted for or treated the transactions in
Purchased Receivables contemplated hereby or thereby;
(bb) This Agreement and the Related Documents constitute a
valid transfer, assignment, set-over and conveyance to the Purchaser of all
right, title and interest of the Seller and each Provider Affiliate in and to
the Purchased Receivables now existing and hereafter created;
(cc) The Seller and each Provider Affiliate each have valid
business reasons for selling their interests in the Purchased Receivables rather
than obtaining a loan with the Purchased Receivables as collateral; and
(dd) As of the date first above written, the Seller has
contracted to purchase Receivables from the Provider Affiliates included on
Schedule 3 hereto, which identifies the name, address of chief executive office,
and address of each location of each such Provider Affiliate. The Seller is not
doing business under any name or purchasing Receivables from any party other
than those listed on Schedule 3 hereto. Further, one or more but no more than
those names maintained by the Seller or the Provider Affiliates at the corporate
offices of the Servicer are payees on the checks received from Eligible Payors.
Schedule 3 hereto shall be amended with the consent of the Purchaser and the
Servicer to reflect all Provider Affiliates from which the Seller has contracted
to purchase Receivables pursuant to the Receivables Purchase and Contribution
Agreement.
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(ee) The Seller has received from each Provider Affiliate
substantially the same representations and warranties set forth in (a) through
(dd) above and hereby assigns to the Purchaser and Servicer and hereby grants in
favor of the Purchaser and the Servicer a security interest in all of the
Seller's right, title and interest in and to the benefits of such
representations and warranties to the Purchaser and the Servicer.
(ff) The Seller shall be operated in such a manner that it
would not be substantively consolidated in the trust estate of any Affiliate in
the event of a bankruptcy or insolvency of such Affiliate.
(gg) The Seller shall not engage in transactions with any
Affiliate other than having Receivables sold to it and selling those
Receivables; to providing (or arranging for the provision of) services necessary
for the collection of the Receivables and the maintenance of the ownership of
such Receivables and the proceeds thereof; and matters necessarily incident to
or necessary to accomplish the foregoing or which have been conducted on an
arm's-length basis.
(hh) The Seller shall maintain its assets separately from the
assets of any Affiliate (including through the maintenance of a separate bank
account).
(ii) The Seller shall maintain separate financial statements,
books and records from any Affiliate.
(jj) The Seller shall not guarantee the obligations of, or
advance funds to, or accept funds from, any Affiliate for the payment of
expenses or otherwise except by means of capital contributions or pursuant to
contractual documents indicating the consideration for the receipt of such
funds.
(kk) The Seller shall conduct all business correspondence and
other communications in its own name, on its own stationery and through a
separately-listed telephone number.
(ll) The Seller shall not act as an agent of any Affiliate in
any capacity.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF THE SELLER AS TO
PURCHASED RECEIVABLES.
With respect to each Purchased Receivable sold pursuant to
this Agreement (including, without limitation, claims which may be satisfied by
set-off of any amounts due under any Receivable), the Seller represents and
warrants, as of the date hereof and on each subsequent Purchase Date, as
follows:
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(a) Such Receivable is the primary liability of an Eligible
Payor and is recognized by the Eligible Payor as its primary liability;
(b) The Required Information contained in the Purchase Notice
is true and correct;
(c) Such Receivable is not a Defaulted Receivable and has not
become a Paid Receivable;
(d) The Seller has or has caused and confirmed the submission
of all necessary documentation and supplied all necessary information for
payment of such Receivable to the Payor and the fulfillment all other
obligations, in respect thereof, including verification of the eligibility of
the Receivable for payment by such Payor;
(e) Neither the Receivable nor any related Contract has been
satisfied, subordinated or rescinded, or except as disclosed in writing to the
Purchaser, amended in any manner;
(f) The Eligible Receivable Amount set forth in the applicable
Required Information of such Receivable is net of any Contractual Allowance or
other modifications and neither the Receivable nor the related Contract has or
will be compromised, adjusted, extended, satisfied, subordinated, rescinded,
set-off or modified by the Seller, any Provider Affiliate or the Payor, and is
not nor will be subject to compromise, adjustment, extension, satisfaction,
subordination, rescission, set-off, counterclaim, defense, abatement,
suspension, deferment, deductible, reduction, termination or modification,
whether arising out of transactions concerning the Contract or otherwise;
(g) Such Receivable is an account receivable created through
the provision of medically necessary services or merchandise supplied by a
Provider Affiliate or Provider Physician in the ordinary course of its business
and the sales prices of such services or merchandise were usual, customary and
reasonable in the Provider Affiliate's community for such services;
(h) The portion of such Receivables described in subsection
(a) of the definition of Receivable set forth in Article I of this Agreement
constitutes an "account" within the meaning of the UCC and is not evidenced by
an "instrument" within the meaning of the UCC;
(i) Such Receivable has a Net Value which, when added to the
Net Value of all other Receivables of such Payor or in such Payor Class and
which constitute Purchased Receivables hereunder, does not exceed the
Concentration Limits;
(j) Such Receivable (A) has a Purchase Date no later than 180
days from its Billing Date, and (B) is not past the statutory limit for
collection applicable to the Payor;
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(k) The related Contract is, and was at the time of the
services giving rise to the Receivable, in full force and effect and constitutes
the legal, valid and binding obligation of the Payor enforceable against such
Payor in accordance with its terms, such Receivable was created in accordance
with the requirements of any applicable Contract and applicable law (and to the
extent the Receivable is subject to limitations, regulations or restrictions
imposed by HCFA, any Governmental Authority, workers' compensation law or a
related Contract, compliance with respect to each such limitation, regulation or
restriction has been confirmed by Seller's delivery of an opinion of counsel
acceptable to the Purchaser and the Purchaser's legal counsel) and is entitled
to be paid pursuant to the terms of the related Contract (and a copy of any
related Contract to which the Provider Affiliate is a party shall be promptly
delivered to the Purchaser upon the request of the Purchaser) the amount of the
Receivable does not exceed the limitations so imposed, and each Receivable as to
which the fees are so restricted has been clearly identified as being subject to
such restrictions;
(l) Such Receivable is denominated and payable in Dollars of
the United States and, except as otherwise agreed to by the Purchaser and the
Servicer, the Eligible Receivable Amount of such Receivable is not in excess of
$200,000;
(m) Such Receivable is owned by the Seller free and clear of
any Adverse Claim, and the Seller has the right to sell, assign and transfer the
same and interests therein as contemplated under this Agreement and, upon such
sale, the Purchaser has acquired a valid ownership interest in such Receivable,
free and clear of any Adverse Claim;
(n) No consent from the Payor, the Provider Affiliate or any
other Person shall be required to effect the sale of any Purchased Receivables.
No Contract by its term requires any other means for the assignment of Purchased
Receivables, other than as set forth in this Agreement. No notice of assignment
which is inconsistent with the form of Notice to Payor attached hereto as
Exhibit A has been delivered by the Seller or by any other Person to any Payor
with respect to the Purchased Receivables, and neither the Seller nor any other
Person has executed an effective written assignment relating to the Purchased
Receivables which conflicts or is inconsistent with the terms of the Purchase
Assignment delivered to the Purchaser.
(o) There are no proceedings or investigations pending or
threatened before HCFA (confirmed by Seller's delivery of an opinion of counsel
acceptable to the Purchaser and the Purchaser's legal counsel) or any
Governmental Authority (i) asserting the invalidity of such Receivable or such
Contract, (ii) asserting the bankruptcy or insolvency of the related Payor,
(iii) seeking the payment of such Receivable or payment and performance of such
Contract or (iv) seeking any determination or ruling that might materially and
adversely affect the validity or enforceability of such Receivable or such
Contract;
(p) Neither such Receivable nor any related Contract
contravenes in any material respect any laws, rules or regulations applicable
thereto (including, without limitation, laws, rules and regulations relating to
usury, consumer protection, truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and privacy)
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and no party to any such related Contract is in violation of any such law, rule
or regulation in any material respect;
(q) Such Receivable complies with such additional criteria and
requirements (other than those relating to the collectibility of such
Receivables) as the Purchaser may reasonably from time to time specify to the
Seller following 30 days' notice;
(r) The Seller has no knowledge of any fact which should have
led it to expect at the time of sale of such Receivable to the Purchaser that
the Eligible Receivable Amount of such Receivable would not be paid in full; and
(s) The Seller has received, to the extent applicable from
each Provider Affiliate, substantially the same representations and warranties
set forth in (a) through (r) above and hereby assigns to the Purchaser and
Service and hereby grants in favor of the Purchaser and the Servicer a security
interest in all of the Seller's right, title and interest in and to the benefits
of such representations and warranties to the Purchaser and the Servicer.
(t) To the extent such Receivable is generated pursuant to the
terms of a Flat Rate Contract, all payments due and payable under or with
respect to such Flat Rate Contract are current within sixty (60) days of the
then current Purchase Date.
(u) If such Receivable is a Medicare, Medicaid or CHAMPUS
Receivable, the transfer of such Receivable from the Provider Physician, the
Provider Affiliate or the Seller is valid and does not violate any federal or
state law and an opinion to such effect has been delivered to the Purchaser, the
Servicer and the Trustee.
(v) If such Receivable was originated by an individual
Provider Physician, such Provider Physician has executed a supplemental letter
agreement substantially in the form of Exhibit K and has delivered such
agreement to the relevant Provider Affiliate.
The parties acknowledge that some of the foregoing representations and
warranties may have been made only to the best of the Seller's knowledge.
Nevertheless, notwithstanding the Seller's lack of knowledge with respect to an
inaccuracy of a representation and warranty, the parties agree that any such
inaccuracy shall be deemed a breach of the applicable representation or
warranty.
SECTION 4.3 REPURCHASE OBLIGATIONS.
Upon discovery by any party hereto of a breach of any
representation or warranty in this Article IV which materially and adversely
affects the value of a Purchased Receivable or the interests of the Purchaser
therein, the party discovering such breach shall give prompt written notice to
the other parties hereto. Thereafter, on the next Purchase Date, the Purchase
Price for new Purchased Receivables, to the extent sufficient, shall be offset
by the Net Value of such Receivable or the Seller shall, prior to the succeeding
Determination Date, remit to the Purchaser the Net Value of such Receivable or
the Purchaser shall offset the Net Value of such Receivable
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from other amounts due to the Seller hereunder. Such amount so offset or
remitted shall be deemed to be Collections of such Receivable and shall be
deemed to be paid prior to repurchase for the purposes of Section 7.5 (each such
Receivable, a "Rejected Receivable") received and shall be deposited in the
Collection Account. It is understood and agreed that the obligation of the
Seller with respect to any Rejected Receivable pursuant to this Section 4.3 and
the separate right to make a withdrawal from the Offset Reserve Account shall
constitute the sole remedy for the breach of any representation or warranty in
respect of such Receivable; provided, that the foregoing limitation shall not be
construed to limit in any manner the Purchaser's right to (a) in the event the
Seller fails to effect a repurchase as set forth herein above, offset against
any amounts it owes the Seller under this Agreement (including any Purchase
Price), the Net Value of such Rejected Receivable; or (b) declare the
Termination Date to have occurred or to terminate the responsibilities of the
Subservicer hereunder to the extent that such breaches also constitute an Event
of Seller Default. Except as set forth in Section 4.3, the Seller shall have no
right to repurchase or remit funds with respect to any Purchased Receivable.
Upon the repurchase of a Rejected Receivable by the Seller pursuant to this
Section 4.3, the Purchaser shall reconvey all of its right, title and interest
in such repurchased Rejected Receivable to the Seller, pursuant to an assignment
in the form of Exhibit F, and the Seller and the Purchaser shall ▇▇▇▇
conspicuously each invoice evidencing such Rejected Receivable with such legend.
ARTICLE V
GENERAL COVENANTS OF THE SELLER
SECTION 5.1 AFFIRMATIVE COVENANTS OF THE SELLER.
The Seller shall, unless the Purchaser shall otherwise consent
in writing:
(a) Comply in all material respects with all applicable laws,
rules, regulations and orders with respect to it, its business and properties
and all Receivables, related Contracts and Collections with respect thereto;
(b) Preserve and maintain its existence as a limited liability
company, rights, franchises and other privileges in the jurisdiction of its
organization and continue to operate its business in the manner set forth in
Section 4.1(a);
(c) Cause to be delivered to the Purchaser on or before June 1
of each year beginning with June 1, 1998, (i) a Manager's Certificate of the
Seller in the form of Exhibit D, dated the date of such delivery; and (ii) upon
the reasonable request of the Purchaser, an opinion of counsel, in form and
substance satisfactory to the Purchaser, reaffirming as of the date of its
delivery of the opinion of counsel which the Seller delivered to the Purchaser
and the Servicer on the Closing Date pursuant to Section 3.1(e);
(d) Deposit all Collections received in respect of Receivables
into the appropriate Lockbox Account within one Business Day of receipt; and
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(e) Make all payments to each Payor necessary to prevent such
Payor from offsetting a prior overpayment to the Seller against any amount such
Payor owes on a Purchased Receivable except to the extent prohibited by Contract
or by applicable laws, rules or regulations.
(f) Timely, pay the Program Fee and all amounts due to the
Purchaser under Sections 2.3, 4.3, 9.1(a) and (b), and 10.4 of this Agreement.
SECTION 5.2 REPORTING REQUIREMENTS OF THE SELLER.
The Seller shall furnish, or cause to be furnished, to the
Purchaser:
(a) As soon as available, and in any event within 45 days
after the end of each of the first three quarters of its fiscal year a
consolidated financial statement of Coastal Physician Group, Inc. and its
consolidated Subsidiaries (including the Seller and each Provider Affiliate), if
any, as of the end of such quarter, for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, certified by the
chief financial officer/member or chief accounting officer/member of Coastal
Physician Group, Inc.;
(b) As soon as available and in any event within 120 days
after the end of its fiscal year, a copy of the consolidated financial statement
of Coastal Physician Group, Inc. and its consolidated Subsidiaries (including
the Seller and each Provider Affiliate), if any, as of the end of such year and
the related consolidated statements of income and retained earnings, and of cash
flow, of Coastal Physician Group, Inc. and its consolidated Subsidiaries
(including the Seller and each Provider Affiliate), if any, for such year, in
each case audited by a firm of independent public accountants reasonably
acceptable to the Servicer;
(c) Promptly after the sending or filing thereof, copies of
all reports which the Seller or Provider Affiliates file with any Governmental
Authority as they relate to the Seller's Receivables or send to any of the
security holders of Coastal Physician Group, Inc. (in their capacity as security
holders only) and a copy of the annual report of Coastal Physician Group, Inc.;
(d) As soon as possible and in any event within five days
after the occurrence of an Event of Seller Default (including without limitation
a material adverse change in the financial condition of the Seller or the
Subservicer as determined by the Servicer; the Servicer acknowledges that the
Coastal Physician Group, Inc. may continue to experience further deficit cash
flows and net losses through the fourth quarter of 1997 in the absence of gains
on asset divestitures sufficient to offset such negative cash flows and/or
losses and the Servicer deems that this is not a material adverse change to the
financial condition) or each event which, with the giving of notice or lapse of
time or both, would constitute an Event of Seller Default, the statement of the
chief executive officer/member of the Seller setting forth complete details of
such Event of Seller Default and the action which the Seller has taken, is
taking and proposes to take with respect thereto; and
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(e) So long as Coastal Physician Group, Inc. including its
successors or assigns, is a reporting company under the Securities Exchange Act
of 1934, as amended, copies of all public announcements, 10-K, 10-Q, 8-K and
other similar reports shall be delivered to the Purchaser contemporaneously with
the delivery of such reports, to the public and/or any Governmental Authority;
(f) Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the Contracts or the
condition or operations, financial or otherwise, of the Seller, or the Provider
Affiliates, if any, to the extent permissible under applicable law as the
Purchaser may, from time to time, reasonably request.
SECTION 5.3 NEGATIVE COVENANTS OF THE SELLER.
The Seller shall not, without the written consent of the
Purchaser and the Servicer:
(a) Sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse Claim upon or
with respect to, any Receivable or related Contract with respect thereto, or,
upon or with respect to the Lockbox Account, the Seller Credit Reserve Account,
the Offset Reserve Account, the Collection Account, or any other account in
which any Collections of any Receivable are deposited, or assign any right to
receive income in respect of any Purchased Receivable;
(b) Extend, amend or otherwise modify the terms of the
Receivables Purchase and Contribution Agreement, any Purchased Receivable, or
amend, modify or waive any term or condition of any Contract related thereto or
in any manner impede or interfere with the collection of such Purchased
Receivable;
(c) Make any material change in the character of its business
or engage in any business other than as expressly permitted in its organization
documents as of the date of this Agreement;
(d) Make any change in its instructions to Payors regarding
payments to be made to the Seller or the applicable Provider Affiliate, or
payments to be deposited to the Lockbox Account;
(e) Be the subject of or have the Person(s) controlling,
directly or indirectly, the Seller be the subject of a merger or merge with or
into or consolidate with or into, or convey, transfer, lease or otherwise
dispose of all or substantially all of its assets (whether now owned or
hereafter acquired) except as set forth on Schedule 7, or acquire all or
substantially all of the assets or capital stock or other ownership interest of,
any Person;
(f) Make any change to (i) the location of its chief executive
office or the location of the office where Records are kept or (ii) its company
name or use of any tradenames, fictitious names, assumed names or "doing
business as" names; or
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(g) Prepare any financial statements which shall account for
the transactions contemplated hereby in any manner other than as a sale of the
Purchased Receivables by the Seller to the Purchaser, and will not in any other
respect account for or treat the transactions contemplated hereby (including but
not limited to, for accounting, tax and reporting purposes) in any manner other
than as a sale of the Purchased Receivables by the Seller to the Purchaser.
It is understood and agreed that the obligation of the Seller
to comply with the covenants set forth in this Section 5.3 shall be subject to
the Seller's obligation to comply with any order or directive of a Governmental
Authority of competent jurisdiction and that compliance with such order or
directive shall not constitute a breach of such covenant; provided, that the
foregoing shall not be construed to limit in any manner the Purchaser's right to
declare the Termination Date to have occurred to the extent that such
noncompliance with such covenant (whether or not resulting from such an order or
directive) shall constitute, or contribute to the determination of, an Event of
Seller Default.
ARTICLE VI
ACCOUNTS ADMINISTRATION
SECTION 6.1 COLLECTION ACCOUNT.
The Purchaser and the Servicer acknowledge that certain
amounts deposited in the Collection Account may relate to Receivables other than
Purchased Receivables and that such amounts continue to be owned by the Seller.
All such amounts shall be returned to the Seller in accordance with Section 6.3.
SECTION 6.2 DETERMINATIONS OF THE SERVICER.
On each Determination Date, the Servicer will determine:
(a) the Net Value of all Purchased Receivables as of the prior
Determination Date plus the Net Value of all Purchased Receivables purchased on
the prior Purchase Date (the "Prior Net Value Amount");
(b) the amount of Collections on the Purchased Receivables
received since the prior Determination Date (the "Paid Receivables Amount");
(c) the Net Value of all Purchased Receivables as of the
current Determination Date (the "Current Net Value Amount");
(d) an amount equal to (i) the Prior Net Value Amount minus
(ii) the Paid Receivables Amount minus (iii) the Current Net Value Amount (but
not less than zero) (the "Credit Deficiency"); and
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(e) the Net Value of Purchased Receivables which became
Rejected Receivables since the prior Determination Date and which have not been
repurchased or offset in the manner set forth in Section 4.3 or Section 2.7 (the
"Rejected Amount").
The Servicer's determinations of the foregoing amounts shall be conclusive in
the absence of manifest error. The Servicer shall notify the Seller and the
Purchaser of such determinations.
SECTION 6.3 DISTRIBUTIONS FROM ACCOUNTS.
(a) No later than 11:00 a.m. on each Determination Date,
following the determinations set forth in Section 6.2, the Servicer will notify
the Trustee of such determinations and will cause the Trustee to withdraw in the
following priority:
(i) the Paid Receivables Amount from the Collection
Account and deposit such amount in the Purchase Account;
(ii) the Credit Deficiency, if any, from the Seller Credit
Reserve Account and deposit such amount in the Purchase Account;
(iii)the Rejected Amount, if any, from the Collection
Account and deposit it in the Purchase Account; and
(iv) the remaining amount from the Collection Account and
deposit it in the Seller Credit Reserve Account and/or the Offset
Reserve Account at the Servicer's sole discretion.
(b) Until the Termination Date on each Purchase Date
following the Purchase on such date, the Servicer shall cause the Trustee to
withdraw (i) all amounts deposited hereunder (net of withdrawals required
hereunder) from the Seller Credit Reserve Account in excess of the Specified
Credit Reserve Balance and (ii) all amounts deposited hereunder (net of
withdrawals required hereunder) from the Offset Reserve Account in excess of
the Specified Offset Reserve Balance and shall pay such amounts by wire
transfer to the Seller.
SECTION 6.4 ALLOCATION OF MONEYS FOLLOWING TERMINATION DATE.
(a) Following the Termination Date, the Servicer shall cause
the Trustee to the extent funds deposited hereunder (net of withdrawals required
hereunder) are sufficient, to withdraw an amount equal to the unpaid Program Fee
from the Offset Reserve Account or the Seller Credit Reserve Account on each
Purchase Date and deposit it in the Equity Account. To the extent that such
funds do not equal the Program Fee, the Seller shall deposit in the Equity
Account the balance of the Program Fee within five Business Days following
demand therefor.
(b) On the first Determination Date on which the aggregate Net
Value of all Purchased Receivables (other than Defaulted Receivables) (i) is
less than 10% of the aggregate Net Value of Purchased Receivables (other than
Defaulted Receivables) on the Termination Date
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and (ii) is less than the aggregate amounts deposited hereunder (net of
withdrawals required hereunder other than as set forth in this Section 6.4(b))
and remaining in the Seller Credit Reserve Account and the Offset Reserve
Account, the Servicer shall cause the Trustee to withdraw an amount equal to
such aggregate Net Value from such accounts and deposit it in the Purchase
Account. Thereupon the Servicer shall cause the Trustee to disburse an amount
equal to the aggregate remaining amounts held in the Collection Account, the
Seller Credit Reserve Account and the Offset Reserve Account to the Seller and
all interests of the Purchaser in all Purchased Receivables owned by the
Purchaser shall be reconveyed by the Purchaser to the Seller. Following such
disbursement and reconveyance, this Agreement, except Section 9.1, shall be
deemed terminated and the Purchaser shall release and shall cause the Trustee to
release all of their respective interests in the Receivables of the Seller.
SECTION 6.5 ACCOUNTING.
The Servicer shall make all determinations of actual and
required amounts in each of the accounts established pursuant to this Agreement,
maintain detailed accounting records of all deposits and withdrawals for each
such account, including the Seller and the Receivables with respect to which
such deposits and withdrawals were made and notify the Trustee as to such
determinations.
ARTICLE VII
APPOINTMENT OF THE SUBSERVICER
AND SUCCESSOR SERVICER
SECTION 7.1 APPOINTMENT OF THE SUBSERVICER.
The Servicer and the Purchaser hereby appoint Coastal
Physician Group, Inc. to act as Subservicer hereunder, and Coastal Physician
Group, Inc. accepts such appointment. The Subservicer shall service the
Purchased Receivables and enforce the Purchaser's respective rights and
interests in and under each Receivable and each related Contract and shall serve
in such capacity, including, in the event the Servicer has resigned or been
terminated, until the termination of its responsibilities pursuant to Section
7.9, 7.11, or 8.1. The Subservicer hereby agrees to perform the duties and
obligations with respect thereto set forth herein. Notwithstanding any term or
provision hereof to the contrary, the Seller, the Subservicer, and the Purchaser
hereby acknowledge and agree that the Servicer acts as agent hereunder for the
Purchaser and has no duties or obligations to, will incur no liabilities or
obligations to, and does not act as an agent in any capacity for, the Seller or
the Subservicer.
SECTION 7.2 ADDITIONAL SUBSERVICERS.
The Subservicer may, with the prior consent of the Purchaser
and the Servicer, which consent shall not be unreasonably withheld, subcontract
with a subservicer (each such servicer, an "Additional Subservicer") for
collection, servicing or administration of the
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Receivables, provided, that (a) to the extent required by applicable law, the
Provider Physician, Provider Affiliate and/or the Subservicer shall continue to
perform its obligations with respect to collections of Medicaid Receivables,
Medicare Receivables and CHAMPUS Receivables, (b) the Subservicer shall remain
liable for the performance of the duties and obligations of the Additional
Subservicer pursuant to the terms hereof and (c) any subservicing agreement that
may be entered into and any other transactions or services relating to the
Purchased Receivables involving an Additional Subservicer (each such agreement,
an "Additional Subservicing Agreement") shall be deemed to be between the
Additional Subservicer and the Subservicer alone and the Purchaser and Servicer
shall not be deemed parties thereto and shall have no obligations, duties or
liabilities with respect to the Additional Subservicer. The Purchaser does
hereby consent (which consent may be withdrawn by the Purchaser at any time upon
sixty (60) days written notice) to the Additional Subservicers identified on
Schedule 5 subject to the Servicer's review and acceptance of the applicable
Additional Subservicing Agreements.
SECTION 7.3 DUTIES AND RESPONSIBILITIES OF THE SUBSERVICER.
(a) The Subservicer shall conduct the servicing,
administration and collection of the Purchased Receivables and shall take, or
cause to be taken, all such actions as may be necessary or advisable to service,
administer and collect each Purchased Receivable, from time to time, all in
accordance with (i) customary and prudent servicing procedures for health care
receivables of a similar type, and (ii) all applicable laws, rules and
regulations.
(b) The duties of the Subservicer shall include, without
limitation:
(i) monitoring the preparation and submission of claims
to, and post-billing liaison with, Eligible Payors;
(ii) arranging for the direct remittance of all
Collections on Purchased Receivables to the Commercial Lockbox Account
(other than Collections with respect to Medicaid Receivables, Medicare
Receivables and CHAMPUS Receivables, in respect of which it shall
arrange for the direct remittance of such Collections to the Medicare
Lockbox Account or as otherwise provided in Section 2.3);
(iii) remitting any Collections with respect to Medicaid
Receivables, Medicare Receivables, CHAMPUS Receivables and Governmental
Receivables (to the extent required by applicable law to be paid to the
Seller, Subservicer, the Provider Affiliate or a Provider Physician) it
may receive directly for deposit in the Medicare Lockbox Account or as
otherwise provided in Section 2.3 and remitting any Collections on
other Purchased Receivables it may receive (all such funds received by
the Subservicer shall be held by the Subservicer in Trust for the
benefit of the Purchaser) directly for deposit in the Commercial
Lockbox Account, in each case no later than by the end of the day after
the receipt thereof or the following Business Day if the day after
receipt thereof is not a Business Day;
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(iv) maintaining, or causing to be maintained, all
necessary Servicing Records with respect to the Purchased Receivables
and promptly delivering such reports to the Purchaser or the Servicer
in respect of the servicing of the Purchased Receivables (including
information relating to its performance under this Agreement) as may be
required hereunder or as the Purchaser or the Servicer may reasonably
request;
(v) maintaining and implementing administrative and
operating procedures (including, without limitation, an ability to
recreate Servicing Records evidencing the Purchased Receivables in the
event of the destruction of the originals thereof) and keeping and
maintaining all documents, books, records and other information
reasonably necessary or advisable for the collection of the Purchased
Receivables (including, without limitation, records adequate to permit
the identification of each new Purchased Receivable and all Collections
of and adjustments to each existing Purchased Receivable);
(vi) identifying each Purchased Receivable clearly and
unambiguously in its Servicing Records to reflect that such Purchased
Receivable is owned by the Purchaser;
(vii) complying in all material respects with all
applicable laws, rules, regulations and orders with respect to it, its
business and properties and all Purchased Receivables and related
Contracts and Collections with respect thereto;
(viii) preserving and maintaining its existence, rights,
franchises and privileges in the jurisdiction of its incorporation or
organization, and qualifying and remaining qualified in good standing
as a foreign corporation or other entity, and qualifying to and
remaining authorized to perform obligations as Subservicer (including
enforcement of collection of Purchased Receivables on behalf of the
Purchaser) in each jurisdiction where the failure to preserve and
maintain such existence, rights, franchises, privileges and
qualification would materially adversely affect (A) the rights or
interests of the Purchaser in the Purchased Receivables, (B) the
collectibility of any Purchased Receivable or (C) the ability of the
Subservicer to perform its obligations hereunder or under the
Contracts;
(ix) any time and from time to time at reasonable
intervals upon notice to the Subservicer and during regular business
hours, permitting the Purchaser, the Servicer or any of their agents or
representatives, (A) to examine and make copies of and abstracts from
all Servicing Records, and (B) to visit the offices and properties of
the Subservicer and the Provider Affiliates for the purpose of
examining such Servicing Records, and to discuss matters relating to
the Receivables or the Subservicer's performance under this Agreement
with any officer, member or employee of the Subservicer or the Provider
Affiliate having knowledge of such matters;
(x) at the request of the Servicer, maintaining at its
own expense, a blanket fidelity bond with broad coverage, with
responsible companies acceptable to the Servicer, on all officers,
members, employees or other persons acting on behalf of the Subservicer
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in any capacity with regard to the Purchased Receivables, including
those handling funds, money, documents and papers relating to the
Purchased Receivables. Any such fidelity bond shall protect and insure
the Subservicer (and through the Subservicer, the Servicer and the
Purchaser) against losses commonly protected against by bonds of a
similar type, including forgery, theft, embezzlement, fraud, and
negligent acts of such persons and shall be maintained at a level
acceptable to the Servicer. No provision of this Section requiring such
fidelity bond shall diminish or relieve the Subservicer from its duties
and obligations as set forth in this Agreement. Any amounts received
under any such bond with respect to Purchased Receivables shall be
deposited by the Subservicer in the Collection Account and treated in
the same manner as Collections with respect to such Purchased
Receivables. Upon request of the Purchaser or the Servicer, the
Subservicer shall cause to be delivered to the Purchaser and the
Servicer a certification evidencing coverage under such fidelity bond.
Promptly upon receipt of any notice from the surety or the insurer that
such fidelity bond has been terminated or modified in a materially
adverse manner, the Subservicer shall notify the Servicer of any such
termination or modification;
(xi) monitoring all actions, suits, proceedings, disputes,
offsets, deductions, defenses or counterclaims that may be asserted by
a Payor or Governmental Authority with respect to any Provider
Affiliate or Purchased Receivable;
(xii) notifying the Purchaser and the Servicer of any
action, suit, proceeding, dispute, offset, deduction, defense or
counterclaim that is or may be asserted by a Payor or Governmental
Authority with respect to any Purchased Receivable; and
(xiii) providing the Purchaser and the Servicer with a
report on each Determination Date in the form of Exhibit G.
(c) Notwithstanding any other provision herein to the
contrary, (i) all collection functions in respect of Medicaid Receivables,
Medicare Receivables and CHAMPUS Receivables shall be performed in accordance
with Medicaid Regulations, Medicare Regulations and CHAMPUS Regulations, and
(ii) all collection functions in respect of Governmental Receivables shall be
performed in accordance with applicable rules and regulations of the applicable
Governmental Authority, except as set forth on Schedule 4 attached hereto.
(d) Notwithstanding any other provision herein to the
contrary, the Subservicer shall undertake and complete upon request of the
Servicer, and shall confirm such undertaking and completion, whatever actions,
filings or notices necessary to comply with the Federal Assignment of Claims Act
to the extent such law is applicable to the sale, transfer and assignment of
Governmental Receivables.
(e) The Purchaser shall not have any obligation or
liability with respect to any Purchased Receivables or related Contracts, nor
shall it be obligated to perform any of the obligations of the Subservicer
hereunder.
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SECTION 7.4 AUTHORIZATION OF THE SERVICER.
The Seller hereby authorizes the Servicer (including any
successors thereto) to take any and all reasonable steps in its name and on its
behalf necessary or desirable and not inconsistent with the sale of the
Purchased Receivables to the Purchaser, in the determination of the Servicer to
collect all amounts due under any and all Purchased Receivables and process all
Collections and related Remittance Advices within five Business Days of receipt
thereof. Further, the Servicer is authorized, to the extent permitted under and
in compliance with applicable law and regulations, to commence proceedings with
respect to enforcing payment of such Purchased Receivables and the related
Contracts, and adjusting, settling or compromising the account or payment
thereof, to the same extent as the Seller could have done if it had continued to
own such Receivable. The Seller shall furnish the Servicer (and any successors
thereto) with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder, and shall cooperate with the Servicer to the fullest extent in
order to ensure the collectibility of the Purchased Receivables. Notwithstanding
any other provision herein to the contrary, the Servicer shall have the absolute
and unlimited right to direct the Subservicer (who shall be obligated to cause
the applicable Provider Affiliate) to commence or settle any legal action to
enforce collection of any Purchased Receivable or to foreclose upon, repossess
or take any other action which the Servicer reasonably deems necessary or
advisable with respect thereto. In no event shall the Subservicer be entitled to
make the Purchaser or the Servicer a party to any litigation without such
party's express prior written consent.
SECTION 7.5 SUBSERVICING FEE; SUBSERVICING EXPENSES.
On each Purchase Date, the Subservicer shall be paid a
subservicing fee by the Servicer for its performance as Subservicer hereunder
(the "Subservicing Fee") from the Servicer's own funds in an amount equal to
8.5% of the Collections, if any, with respect to Purchased Receivables that were
received by the Servicer during the period from the prior Determination Date to
such Determination Date; provided that, if Coastal Physician Group, Inc. ceases
to be Subservicer hereunder, the Servicer's obligation to pay the Subservicing
Fee shall terminate. The Servicer shall have no obligation for the payment of
any fees due under any Additional Subservicer Agreement. The Servicer shall
offset the Subservicing Fee from the Administrative Fee to be deposited with the
Servicer on such Purchase Date. In the event the Subservicing Fee is greater
than the Administrative Fee to be deposited on such Purchase Date, the Servicer
shall pay to the Subservicer an amount equal to the Net Subservicing Fee for
such Purchase Date. The Subservicer shall be required to pay for all expenses
incurred by the Subservicer in connection with its activities hereunder
(including any payments to accountants, counsel or any other Person) and shall
not be entitled to any payment or reimbursement therefor.
SECTION 7.6 ANNUAL STATEMENT AS TO COMPLIANCE.
The Subservicer shall deliver to the Purchaser and the
Servicer on or before June 1 of each year beginning with June 1, 1998, an
Officer's Certificate stating, as to each signer thereof, that (a) a review of
the activities of the Subservicer during the preceding calendar year
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and of performance under this Agreement has been made under such
officer/member's supervision; (b) to the best of such officer/member's
knowledge, based on such review, the Subservicer has fulfilled all its
obligations as Subservicer under this Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer/member and the nature and status
thereof.
SECTION 7.7 TRANSFER OF SERVICING BETWEEN SUBSERVICER AND
SERVICER.
(a) Upon determination by the Servicer that greater than 10%
of the Purchased Receivables remain outstanding for greater than 120 days after
their respective Billing Date, the Servicer may immediately give notice to the
Subservicer that the Servicer will assume servicing of such portion of the
Purchased Receivables that remain outstanding for greater than 120 days after
their respective Billing Date. Thereupon, the Servicer may assume the servicing
responsibilities of Subservicer in respect of such Purchased Receivables. The
Subservicer shall thereupon provide or cause the Provider Affiliates to provide
the Servicer with all information, documents and records (including original
copies of documents), to the extent required by the Servicer to perform its
duties (including such records stored electronically on computer tapes, magnetic
discs and the like as may be reasonably requested by the Servicer).
(b) Notwithstanding the provisions of the preceding clause
(a), the Subservicer shall maintain ongoing payment records with respect to each
Purchased Receivable serviced by the Servicer.
(c) The Subservicer shall pay all reasonable fees and costs of
the Servicer in connection with its duties under this Section 7.7 in excess of
the Subservicing Fee paid to and received by the Servicer hereunder less the
aggregate amount of Administrative Fees paid.
SECTION 7.8 SUBSERVICER NOT TO RESIGN.
The Subservicer shall not resign from the obligations and
duties hereby imposed on it except upon determination that (a) the performance
of its duties hereunder has become impermissible under applicable law and (b)
there is no reasonable action which the Subservicer could take to make the
performance of its duties hereunder permissible under applicable law. Any such
determination permitting the resignation of the Subservicer shall be evidenced
as to clause (a) above by an opinion of counsel to such effect delivered to the
Purchaser and the Servicer. No such resignation shall become effective until the
Servicer shall have assumed the responsibilities and obligations of the
Subservicer in accordance with Section 7.9.
SECTION 7.9 APPOINTMENT OF THE SUCCESSOR SUBSERVICER.
In connection with the termination of the Subservicer's
responsibilities under this Agreement pursuant to Section 8.1, the Servicer may,
in its discretion, except with respect to Section 8.1(c) in which case the
Servicer shall, (a) succeed to and assume all of the Subservicer's
responsibilities, rights, duties and obligations as Subservicer (but not in any
other capacity) under this Agreement except with respect to Medicaid
Receivables, Medicare Receivables, CHAMPUS
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Receivables and Governmental Receivables to the extent required by applicable
law; or (b) require the Subservicer to continue to act as Subservicer for all of
its outstanding Purchased Receivables at the time of the Event of Seller
Default.
SECTION 7.10 DUTIES OF THE SUBSERVICER TO THE SUCCESSOR
SERVICER.
At any time following the succession of the Servicer to the
responsibilities of Subservicer under Section 7.9(a):
(a) The Subservicer agrees that it will terminate its
activities as Subservicer hereunder, except its collection functions in respect
of Medicaid, Medicare and CHAMPUS Receivables, in a manner acceptable to the
Servicer so as to facilitate the transfer of servicing to the Servicer
including, without limitation, timely delivery (i) to the Servicer of any funds
that were required to be remitted to the Servicer for deposit in the Collection
Account, and (ii) to the Servicer, at a place selected by the Servicer, of all
information, documents and records (including original copies of documents), to
the extent required by the Servicer to perform its duties under the Agreement
(including such records stored electronically on computer tapes, magnetic discs
and the like as may be reasonably requested by the Servicer). The Subservicer
shall account for all funds and shall execute and deliver such instruments and
do such other things as may reasonably be required to more fully and definitely
vest and confirm in the Servicer all rights, powers, duties, responsibilities,
obligations and liabilities of the Subservicer.
(b) The Subservicer shall terminate each Additional
Subservicing Agreement that may have been entered into and the Servicer shall
not be deemed to have assumed any of the Subservicer's interest therein or to
have replaced the Subservicer as a party to any such Additional Subservicing
Agreement.
(c) Notwithstanding any termination of the Seller as
Subservicer hereunder, the Seller agrees that it will continue to follow the
procedures set forth in Section 7.3(b)(iii) with respect to Collections on
Purchased Receivables.
SECTION 7.11 EFFECT OF TERMINATION OR RESIGNATION.
Any termination or resignation of the Subservicer under this
Agreement shall not affect any claims that the Purchaser or the Servicer may
have against the Subservicer for events or actions taken or not taken by the
Subservicer arising prior to any such termination or resignation.
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ARTICLE VIII
EVENTS OF SELLER DEFAULT
SECTION 8.1 EVENTS OF SELLER DEFAULT.
If any of the following events (each, an "Event of Seller
Default") shall occur and be continuing:
(a) The Seller or Subservicer shall materially fail to perform
or observe any term, covenant or agreement contained in this Agreement or any
Related Document;
(b) A default shall have occurred and be continuing under any
instrument or agreement evidencing, securing or providing for the issuance of
Debt of the Seller;
(c) The Seller shall generally not pay any of its respective
Debts as such Debts become due, or shall admit in writing its inability to pay
its Debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Seller
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or any of its Debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property, or any of
the actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Seller shall take any company action to authorize
any of the actions set forth in this subsection;
(d) Except as set forth on Schedule 6, judgments or orders for
the payment of money (other than such judgments or orders in respect of which
adequate insurance is maintained for the payment thereof) against the Seller or
in excess of $100,000 in the aggregate against any of the Provider Affiliates
shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed
for a period of 30 days or more;
(e) There is a material breach of any of the representations
and warranties of the Seller set forth in Sections 4.1 or 4.2 that, if curable,
has remained uncured for a period of 30 days;
(f) Any Governmental Authority (including the Internal Revenue
Service or the Pension Benefit Guaranty Corporation) shall file notice of a lien
with regard to any of the assets of the Seller or any Provider Affiliate or with
regard to the Seller other than a lien that does not materially adversely affect
the financial condition of the Seller or the Subservicer's ability to perform as
Subservicer and that (1) is limited by its terms to assets other than
Receivables or (2) remains undischarged for a period of 30 days;
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(g) As of the first day of any month, the aggregate Net Value
of Purchased Receivables which became Defaulted Receivables or Rejected
Receivables (other than those with respect to which a withdrawal has previously
been made from the Offset Reserve Account and those which the Seller has
repurchased pursuant to Section 4.3 of this Agreement) during the prior
three-month period shall exceed 10% of the average aggregate Net Values of all
Purchased Receivables then owned by the Purchaser (other than Defaulted
Receivables) at the end of each of such three months;
(h) The Servicer shall have reasonably determined that any
event which with the passage of time will result in a breach under Section
8.1(g), or that any other event which materially adversely affects the financial
condition of the Coastal Physician Group, Inc. such that the Coastal Physician
Group, Inc.'s reported consolidated shareholders' equity is less than negative
$30,000,000, unless otherwise approved by the Servicer, or that any other event
which materially adversely affects the ability of the Seller to purchase from
the Provider Affiliates, the ability of the Subservicer to collect Purchased
Receivables in its capacity as Subservicer or the ability of the Seller or
Subservicer to perform hereunder or under any Related Document has occurred;
provided, however, that the Servicer acknowledges that the Coastal Physician
Group, Inc. may continue to experience further deficit cash flows and net losses
through the fourth quarter of 1997 in the absence of gains on asset divestitures
sufficient to offset such negative cash flows and/or losses and the Servicer
deems that this is not a material adverse change to the financial condition
(i) The Servicer shall have reasonably determined that a
deterioration has taken place in the quality of servicing of Purchased
Receivables or other Receivables serviced by the Seller such that (a)
Receivables are billed, on average, 30 days or longer past the date of service,
or (b) the average age of Purchased Receivables exceeds 120 days;
(j) This Agreement and the Related Documents shall for any
reason cease to evidence the transfer to the Purchaser (or its assignees or
transferees) of the legal and equitable title to, and ownership of, the
Purchased Receivables;
(k) The Lockbox Account Agreement or any Receivables Purchase
and Contribution Agreement shall have been amended or terminated without the
written consent of the Purchaser and the Servicer;
(l) The amount deposited hereunder (net of withdrawals
required hereunder) in the Seller Credit Reserve Account has remained at less
than the Specified Credit Reserve Balance for fourteen consecutive days;
(m) The amount deposited hereunder (net of withdrawals
required hereunder) in the Offset Reserve Account has remained at less than the
Specified Offset Reserve Balance for fourteen consecutive days;
(n) A Principal Amortization Event shall have been declared;
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(o) The Subservicer fails to consummate, or the Seller fails
to facilitate, the disposition of the Subservicer's interest, directly or
indirectly, in the assets and/or stock of the business entities identified on
Schedule 7 within the time period set forth in Schedule 7.
(p) Coastal Physician Group, Inc. fails to file with the
appropriate governmental filing office(s), within three (3) Business Days of the
Closing Date, form 10-K and Form 10-Q with respect to the fiscal year ending
December 31, 1996 and subsequent events subject to disclosure.
then and in any such event, the Servicer shall, by notice to the Seller and the
Purchaser, declare that an Event of Seller Default shall have occurred, and the
Termination Date shall thereupon forthwith occur, without demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Seller and the Purchaser shall make no further Purchases from the Seller
provided, that, if an event of the kind described in 8.1(c) occurs with regard
to the Seller, an Event of Seller Default shall be deemed to have occurred
automatically. Upon any such declaration or automatic occurrence, the Purchaser
and the Servicer shall have, in addition to all other rights and remedies under
this Agreement, all other rights and remedies provided under the UCC and other
applicable law, which rights shall be cumulative.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 INDEMNITIES BY THE SELLER.
(a) Without limiting any other rights that the Purchaser, the
Servicer, or any director, officer, member, employee, agent, successor or assign
of either such party (each an "Indemnified Party") may have hereunder or under
applicable law, the Seller hereby agrees to indemnify each Indemnified Party
from and against any and all claims, losses, liabilities, obligations, damages,
penalties, actions, judgments, suits, and related costs and expenses of any
nature whatsoever, including reasonable attorneys' fees and disbursements (all
of the foregoing being collectively referred to as "Indemnified Amounts") which
may be imposed on, incurred by or asserted against an Indemnified Party in any
way arising out of or relating to any breach of the Seller's or Subservicer's
representations, warranties, covenants or obligations under this Agreement or
the Related Documents or the ownership of the Purchased Receivables or in
respect of any of the Seller's Receivables or any of the Seller's Contracts,
excluding, however, (i) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party or (ii)
recourse for unpaid Purchased Receivables absent fraud or misrepresentation.
Without limiting or being limited by the foregoing, the Seller and Subservicer
shall pay, jointly and severally, on demand to each Indemnified Party any and
all amounts necessary to indemnify such Indemnified Party from and against any
and all Indemnified Amounts relating to or resulting from:
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(A) reliance on any representation or warranty made or deemed
made by the Seller (or any of its officers or members) under or in
connection with this Agreement (except with respect to a Purchased
Receivable, as to which the Purchaser's remedies are set forth in
Section 4.3), any report or any other information delivered by the
Seller pursuant hereto, which shall have been incorrect in any material
respect when made or deemed made or delivered;
(B) the failure by the Seller to comply with any term,
provision or covenant contained in this Agreement, or any agreement
executed by it in connection with this Agreement or with any applicable
law, rule or regulation with respect to any Purchased Receivable, the
related Contract, or the nonconformity of any Purchased Receivable or
the related Contract with any such applicable law, rule or regulation;
or
(C) the failure to vest and maintain vested in the Purchaser,
or to transfer to the Purchaser, legal and equitable title to and
ownership of the Receivables which are, or are purported to be,
Purchased Receivables, together with all Collections in respect
thereof, free and clear of any Adverse Claim (except as permitted
hereunder) whether existing at the time of the Purchase of such
Receivable or at any time thereafter.
(b) Any Indemnified Amounts subject to the indemnification
provisions of this Section shall be paid to the Indemnified Party within five
Business Days following demand therefor, together with interest at the lesser of
12% per annum or the highest rate permitted by law from the date of demand for
such Indemnified Amount.
SECTION 9.2 SECURITY INTEREST.
The Seller hereby grants to the Purchaser a first priority
perfected security interest in the Seller's right, title and interest in, to and
under all of the Seller's Receivables not sold to the Purchaser hereunder,
including all rights to payments under any related Contracts or other agreements
with all Payors, and all the Collections, Records and proceeds thereof, as
security for the timely payment and performance of any and all obligations the
Seller or the Subservicer may owe the Purchaser under Sections 2.3, 4.3, 5.1(f),
6.6, 9.1(a) and (b), and 10.4, but excluding recourse for unpaid Purchased
Receivables. This Section 9.2 shall constitute a security agreement under the
UCC and any other applicable law and the Purchaser shall have the rights and
remedies of a secured party thereunder. Such security interest shall be further
evidenced by Seller's execution of appropriate UCC-1 financing statements
prepared by and acceptable to the Purchaser, and such other further assurances
that may be reasonably requested by the Purchaser from time to time.
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ARTICLE X
MISCELLANEOUS
SECTION 10.1 NOTICES, ETC.
All notices and other communications provided for hereunder
shall, unless otherwise stated herein, shall be in writing and mailed or
telecommunicated, or delivered as to each party hereto, at its address set forth
under its name on the signature pages hereof or at such other address as shall
be designated by such party in a written notice to the other parties hereto. All
such notices and communications shall not be effective until received by the
party to whom such notice or communication is addressed.
SECTION 10.2 REMEDIES.
No failure on the part of the Purchaser or the Servicer to
exercise, and no delay in exercising, any right hereunder or under any Purchase
Assignment shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 10.3 BINDING EFFECT; ASSIGNABILITY.
This Agreement shall be binding upon and inure to the benefit
of the Seller, the Subservicer, the Purchaser, the Servicer and their respective
successors and permitted assigns. Neither the Seller nor the Subservicer may
assign any of its rights and obligations hereunder or any interest herein
without the prior written consent of the Purchaser and the Servicer. The
Purchaser may, at any time, without the consent of the Seller or the
Subservicer, assign any of its rights and obligations hereunder or interest
herein to any Person. Any such assignee may further assign at any time its
rights and obligations hereunder or interests herein without the consent of the
Seller or the Subservicer. Without limiting the generality of the foregoing, the
Seller acknowledges that the Purchaser has assigned its rights hereunder to the
Trustee for the benefit of third parties. This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms, and shall remain in full force and effect until its termination,
provided, that the rights and remedies with respect to any breach of any
representation and warranty made by the Seller or the Servicer pursuant to
Article IV and the indemnification and payment provisions of Article IX shall be
continuing and shall survive any termination of this Agreement.
SECTION 10.4 COSTS, EXPENSES AND TAXES.
(a) In addition to the rights of indemnification under Article
IX, the Seller agrees to pay upon demand, all reasonable costs and expenses in
connection with the administration (including periodic auditing, modification
and amendment) of this Agreement, and the other documents to be delivered
hereunder, including without limitation: (i) the
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reasonable fees and out-of-pocket expenses of counsel for the Purchaser or the
Servicer with respect to (A) advising the Purchaser as to its rights and
remedies under this Agreement or (B) the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Purchase
Assignment or the other documents to be delivered hereunder; and (ii) any and
all stamp, sales, excise and other taxes (other than income and franchise taxes
applicable to the Purchaser) and fees payable or determined to be payable in
connection with the execution, delivery, filing or recording of this Agreement,
each Purchase Assignment or the other agreements and documents to be delivered
hereunder, and agrees to indemnify and save each Indemnified Party from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
(b) If the Seller or the Subservicer fails to pay any Lockbox
Agreement fees or to pay or perform any agreement or obligation contained
herein, the Purchaser may, or may direct the Servicer to, (but shall not be
required to) itself pay or perform, or cause payment or performance of, such
agreement or obligation, and the expenses of the Purchaser or the Servicer
incurred in connection therewith shall be payable by the party which has failed
to so perform upon the Purchaser's or the Servicer's demand therefor.
SECTION 10.5 NO PROCEEDINGS.
The Seller and the Subservicer each hereby agree that it will
not, directly or indirectly, institute, or cause to be instituted, against the
Purchaser any proceeding of the type referred to in Section 8.1(c) so long as
there shall not have elapsed one year plus one day since the date on which this
Agreement shall be deemed terminated in accordance with Section 6.4(b).
SECTION 10.6 AMENDMENTS; WAIVERS; CONSENTS.
No modification, amendment or waiver of, or with respect to,
any provision of this Agreement, and all other agreements, instruments and
documents delivered pursuant hereto or thereto, nor consent to any departure by
the Seller or the Subservicer from any of the terms or conditions thereof, shall
be effective unless it shall be in writing and signed by each of the parties
hereto. Any waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No consent to or demand on the Seller or
the Subservicer in any case shall, in itself, entitle it to any other consent or
further notice or demand in similar or other circumstances. This Agreement, the
Related Documents and the documents referred to therein embody the entire
agreement among the Seller, the Subservicer, the Purchaser and the Servicer, and
supersede all prior agreements and understandings relating to the subject
hereof, whether written or oral.
SECTION 10.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF OHIO, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF
THE INTERESTS OF THE PURCHASER IN THE
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PURCHASED RECEIVABLES OR REMEDIES HEREUNDER OR THEREUNDER, IN RESPECT THEREOF,
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF OHIO.
(b) THE SELLER AND THE SUBSERVICER HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF OHIO AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE SOUTHERN DISTRICT OF OHIO, AND EACH WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH
ON THE SIGNATURE PAGE HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE
PREPAID. THE SELLER AND THE SUBSERVICER EACH HEREBY WAIVES ANY OBJECTION BASED
ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT
OF THE PURCHASER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF THE PURCHASER TO BRING ANY ACTION OR PROCEEDING AGAINST THE
SELLER OR ITS PROPERTY, OR THE SUBSERVICER OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION. THE SELLER AND THE SUBSERVICER EACH HEREBY AGREE THAT THE
EXCLUSIVE AND APPROPRIATE FORUMS FOR ANY DISPUTE HEREUNDER ARE THE COURTS OF THE
STATE OF OHIO AND THE UNITED STATES DISTRICT COURT LOCATED IN THE SOUTHERN
DISTRICT OF OHIO AND AGREE NOT TO INSTITUTE ANY ACTION IN ANY OTHER FORUM.
(c) THE SELLER, AND THE SUBSERVICER EACH HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 10.8 EXECUTION IN COUNTERPARTS; SEVERABILITY.
This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement. In case
any provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers/members thereunto duly authorized, as
of the date first above written.
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COASTAL RECEIVABLES LLC, as Seller
By: COASTAL SPC MEMBER CORP., its Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Title: President
Address at which the chief executive office
is located:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Phone number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇
Additional locations at which Records are
maintained:
____________________________________________
____________________________________________
____________________________________________
Additional names under which, and locations
at which, Seller does business:
____________________________________________
____________________________________________
____________________________________________
COASTAL PHYSICIAN GROUP, INC., as
Subservicer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Title: President
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59
NPF XI, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Phone number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇
NATIONAL PREMIER FINANCIAL
SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇
56