UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported) July 8,
1999
COASTAL PHYSICIAN GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 001-13460 56-1379244
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
2828 CROASDAILE DRIVE, DURHAM, NC 27705
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code(919)383-0
355
N/A
(Former name or former address, if changed since last report
)
Item 2. - Acquisition of Assets.
Coastal Physician Group, Inc. ("Coastal") acquired the
operations of Sterling Healthcare Group, Inc. ("Sterling")
in a transaction completed on July 8, 1999. Sterling
provided emergency medicine practice management services to
approximately 124 hospitals primarily in the southeastern
United States. Assets acquired were primarily contracts with
hospitals to provide emergency department staffing,
contracts with independent contractor physicians to provide
medical services to emergency departments and accounts
receivable arising from the provision of emergency physician
services. Sterling is a wholly owned subsidiary of FPA
Medical Management, Inc. ("FPA") headquartered in Miami,
Florida. FPA and Sterling were debtors in a jointly
administered Chapter 11 Bankruptcy Proceeding in U.S.
Bankruptcy Court in the District of Delaware (Case No. 98-
1596(PJW)). The assets were acquired pursuant to an Asset
Purchase Agreement in accordance with the Modified Second
Amended Joint Plan of Reorganization of FPA Medical
Management, Inc. and Certain of its Subsidiaries and
Affiliates. In connection with this acquisition, Coastal
paid approximately $69.3 million and assumed certain current
operating liabilities. The transaction will be accounted for
by the purchase method of accounting. Financing was provided
to Coastal by National Century Financial Enterprises, Inc.,
of Dublin, Ohio, through a sale of accounts receivables
acquired from Sterling.
Item 7. Financial Statements and Exhibits.
The following financial statements and exhibits are filed as
part of this report:
(a) Financial Statements of the business acquired:
Coastal has requested and received permission to file an
audited statement of assets acquired and liabilities assumed
on the basis of the allocation of the purchase price as of
the acquisition date. Coastal will also file an audited
statement of revenues and direct expenses for the year ended
December 31, 1998, and an unaudited statement of revenues
and direct expenses for the interim period ended June 30,
1999. These special purpose financial statements will be
filed as soon as practicable, but no later than 60 days
after this report.
(b) Pro Forma Financial Information:
It is impracticable to file the required pro forma financial
information with this report. The required pro forma
financial information will be filed as soon as practicable,
but no later than 60 days after this report.
(c) Exhibits:
Exhibit 2.1 Asset purchase agreement dated May 24, 1999.
Exhibit 2.1(a) Amendment to Asset Purchase Agreement
dated June 21, 1999.
Exhibit 2.1(b) Promissory note and security interest
agreement dated June 4, 1999.
Exhibit 2.1(c) Sales and subservicing agreement dated June
30, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
COASTAL PHYSICIAN GROUP, INC.
(Registrant)
Date: July 23, 1999 By: /S/Steven M. Scott, M.D.
Steven M. Scott, M.D.
President and Chief
Executive Officer
Date: July 23, 1999 By: /S/W. Randall Dickerson
W. Randall Dickerson
Executive Vice
President and Chief
Financial Officer
EXHIBIT INDEX
Sequential
Exhibit Page
Number Description Number
2.1 Asset purchase agreement
dated May 24, 1999.
2.1(a) Amendment to Asset purchase
agreement dated June 21, 1999
2.1(b) Promissory note and security
interest agreement dated
June 4, 1999.
2.1(c) Sales and subservicing agreement
dated June 30, 1999.
Exhibit 2.1
ASSET PURCHASE AGREEMENT
Dated May 24, 1999
among
CPG ACQUISITION CO.
and
STONEYBROOK CAPITAL, LLC,
BUYERS,
and
FPA MEDICAL MANAGEMENT, INC.,
and its direct and indirect subsidiaries, Debtors In
Possession,
and certain Professional Corporations
SELLERS,
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated May 24, 1999, is by and
among CPG Acquisition Co., a North Carolina corporation (the
"Sterling Buyer"), Stoneybrook Capital, LLC, a North
Carolina limited liability company (the "PPM Buyer";
collectively with the Sterling Buyer, the "Buyers") and FPA
Medical Management, Inc., its direct and indirect
subsidiaries and those Professional Corporations listed on
Schedule 3.1 (each a "Seller" and collectively, the
"Sellers") some of which are debtors in possession in
chapter 11 cases commenced on July 19, 1998 and various
dates thereafter through August 7, 1998 (as to each Seller
the "Petition Date"), which are being jointly administered
under Case No. 98-1596 (PJW) (the "Chapter 11 Case") in the
United States Bankruptcy Court for the District of Delaware.
WHEREAS, the Sellers are engaged in the Sterling Business
and the PPM Business and utilize the Assets in the conduct
of such businesses;
WHEREAS, the Buyers desire to purchase all or part of the
Assets from the Sellers and assume certain agreed upon
liabilities of the Sellers;
WHEREAS, the Sellers desire to file the Plan and seek entry
of the Confirmation Order pursuant to which the Sellers will
sell and the Buyers will acquire all or part of the Assets
of the Sellers; and
NOW, THEREFORE, in consideration of the mutual benefits to
be derived from this Agreement and the representation,
warranties, conditions and promises hereinafter contained,
Sellers and Buyers hereby represent, warrant and agree as
follows:
SECTION 1. DEFINITIONS
1.1 Appendix of Defined Terms. Certain terms used in this
Agreement are defined in the Appendix of Defined Terms.
1.2 Accounting Terms. Accounting terms used in this
Agreement which are not otherwise defined shall have the
meaning assigned such terms under GAAP.
1.3 Other Definitional Provisions.
(a) When used in this Agreement, the word "including" shall
have its normal common meaning and any list of items that
may follow such word shall not be deemed to represent a
complete list of the contents of the referent of the
subject.
(b) Unless the context otherwise requires, when used in
this Agreement, the singular shall include the plural, the
plural shall include the singular, and all nouns, pronouns
and any variations thereof shall be deemed to refer to the
masculine, feminine or neuter, as the identity of the Person
or Persons may require.
SECTION 2. SALE AND PURCHASE OF CERTAIN ASSETS.
2.1 Purchase of the Sterling Assets. In reliance on the
representations, warranties and covenants contained herein
and subject to the terms and conditions hereof and pursuant
to, and in accordance with the Plan and the Confirmation
Order, except for the Excluded Sterling Assets, all of which
will be dealt with in accordance with the Plan, on the
Closing Date the Sellers will sell, convey, assign, transfer
and deliver to the Sterling Buyer, and the Sterling Buyer
will purchase from Sellers all of Sellers' right, title and
interest in and to (a) all of the assets, contracts,
properties and rights (including, in the Buyers' sole
discretion, the stock of one or more Sellers which own any
such assets, contracts, properties or rights) used in
Sellers' business of providing physician management services
to hospital emergency departments, urgent care, radiology
and correctional facilities (the "Sterling Business"),
including but not limited to the items listed on Schedule
2.1 attached hereto (all such assets collectively referred
to as the "Sterling Assets"), and (b), jointly with the PPM
Buyer, the D&O Claims, free and clear of any and all liens,
claims (as such term is defined under Section 101(5) of the
Bankruptcy Code), charges, encumbrances, mortgages, pledges,
security interests and other interests, all as contemplated
by Section 363(f) of the Bankruptcy Code (collectively,
"Encumbrances"). The Sterling Buyer shall pay the Sterling
Purchase Price to the Disbursing Agent pursuant to Section
2.3 and the Sellers shall sell the Sterling Assets and,
jointly with the PPM Buyer, the D&O Claims to the Sterling
Buyer, on the terms and subject to the conditions of this
Agreement (the "Sterling Acquisition").
2.2 Purchase of the PPM Assets. In reliance on the
representations, warranties and covenants contained herein
and subject to the terms and conditions hereof and pursuant
to, and in accordance with the Confirmation Order, except
for the Excluded PPM Assets, all of which will be dealt with
in accordance with the Plan, on the Closing Date the Sellers
will sell, convey, assign, transfer and deliver to the PPM
Buyer, and the PPM Buyer will purchase from Sellers all of
Sellers' right, title and interest in and to (a) all of the
assets, contracts, properties and rights used in Sellers'
business of providing primary and specialty care services to
capitated managed care enrollees and fee-for-service
patients (including, in the Buyers' sole discretion, the
stock of one or more Sellers which own any such assets,
contracts, properties or rights) (i) in the Atlanta, Georgia
area (the "Atlanta Business"), including, but not limited
to, the items listed on Schedule 2.2A (the "Atlanta
Assets"), and (ii) in the Charlotte, North Carolina area
(the "Charlotte Business"; and collectively with the Atlanta
Business, the "PPM Business"), including, but not limited
to, the items listed on Schedule 2.2B (the "Charlotte
Assets"; and collectively with the Atlanta Assets, the "PPM
Assets"), and (b), jointly with the Sterling Buyer, the D&O
Claims, free and clear of any and all liens, claims (as such
term is defined under Section 101(5) of the Bankruptcy Code)
and Encumbrances. The PPM Buyer shall pay the PPM Purchase
Price to the Disbursing Agent pursuant to Section 2.3 and
the Sellers shall sell the PPM Assets and, jointly with the
Sterling Buyer, the D&O Claims to the PPM Buyer, on the
terms and subject to the conditions of this Agreement (the
"PPM Acquisition"; collectively with the Sterling
Acquisition, the "Acquisition").
2.3 Purchase Consideration.
(a) On the Closing Date, in consideration of the
Acquisition, (i) the Sterling Buyer shall cause the Cash
Payment to be paid to the Disbursing Agent, (ii) the
Sterling Buyer shall assume the Sterling Assumed Liabilities
(iii) the PPM Buyer shall assume the PPM Assumed Liabilities
and (iv) the PPM Buyer shall cause Pru/Care to waive and
release all of its Administrative Claims in the Chapter 11
Case (collectively, the "Purchase Price").
(b) The Sterling Buyer shall pay the Cash Payment via wire
transfer of immediately available federal funds to such bank
account as Sellers shall have therefore designated in
writing to the Buyers.
(c) The Sterling Buyer and Sellers agree that, for purposes
of Section 1060 of the Internal Revenue Code of 1986, as
amended (the "Code") (and any similar provision of state or
local law), each of them shall report the portion of the
Purchase Price allocated to the Sterling Assets (the
"Sterling Purchase Price") in Schedule 2.3(c) attached
hereto (the "Sterling Allocation") as the portion of the
Purchase Price paid for the Sterling Assets. The Buyers
shall make the Sterling Allocation in their sole discretion
and deliver Schedule 2.3(c) to the Sellers on the Closing
Date. The Sterling Buyer and Sellers shall each prepare
Form 8594 of the Code in a manner consistent with the
Allocation and shall timely file such form 8594 with the
Internal Revenue Service ("IRS"). Neither Sellers nor the
Sterling Buyer shall file any tax return on which such party
takes any position that is inconsistent with the Allocation.
Buyers and Sellers will notify each other as soon as
reasonably practicable of any audit adjustment or proposed
audit adjustment by any taxing authority that affects the
Allocation.
(d) The PPM Buyer and Sellers agree that, for purposes of
Section 1060 of the Code (and any similar provision of state
or local law), each of them shall report the portion of the
Purchase Price allocated to the PPM Assets (the "PPM
Purchase Price") in Schedule 2.3(d) attached hereto (the
"PPM Allocation") as the portion of the Purchase Price paid
for the PPM Assets. The Buyers shall make the PPM
Allocation in their sole discretion on the Closing Date and
deliver Schedule 2.3(d) to Sellers. The PPM Buyer and
Sellers shall each prepare Form 8594 of the Code in a manner
consistent with the Allocation and shall timely file such
form 8594 with the IRS. Neither Sellers nor PPM Buyer shall
file any tax return on which such party takes any position
that is inconsistent with the Allocation. PPM Buyer and
Sellers will notify each other as soon as reasonably
practicable of any audit adjustment or proposed audit
adjustment by any taxing authority that affects the
Allocation.
2.4 Closing. The closing of the Acquisition ("Closing")
shall take place at the offices of White & Case, 200 S.
Biscayne Boulevard, Suite 4900, Miami, Florida at 10:00 a.m.
local time.
2.5 Closing Date. The Closing shall occur on a date
designated by Buyers which is not later than two (2)
Business Days following the later to occur of (a) the
satisfaction by Sellers, or waiver by Buyers, of all of the
conditions set forth in Section 6 hereof, and (b) the
satisfaction by Buyers, or waiver by the Sellers, of all of
the conditions set forth in Section 7 hereof (the "Closing
Date").
2.6 Closing Deliveries. At the Closing, subject to the
satisfaction of the terms and conditions set forth herein,
the Sterling Buyer will pay the Cash Payment in the manner
set forth in Section 2.3(b), the PPM Buyer shall deliver the
Pru/Care Waiver Documents and the Sellers will deliver the
Assets to Buyers. In addition to the foregoing, the Sellers
and Buyers will execute and deliver such other agreements,
instruments, certificates and other documents to be executed
and delivered hereunder or as may be reasonably requested by
any party to consummate the transactions contemplated
hereby, all in form and substance reasonably satisfactory to
the parties hereto and their respective counsel.
2.7 Certain Effects of the Closing.
(a) The Buyers shall either assume, perform, discharge or
pay in full at Closing the Assumed Liabilities. The portion
of such Seller Payables assumed by the Sterling Buyer (the
"Sterling Assumed Liabilities") shall be set forth in the
Sterling Allocation and the portion such Seller Payables
assumed by PPM Buyer (the "PPM Assumed Liabilities") shall
be set forth in the PPM Allocation.
(b) Except for the Assumed Liabilities and Insurance
Obligations, Buyers shall not assume, perform, discharge or
pay, and shall not be responsible for, any Encumbrances,
liabilities or obligations of any nature whatsoever in
connection with the Assets, the Sterling Business, the PPM
Business, Sellers or any predecessor owner of the Assets,
including, without limitation, those items set forth on
Schedule 2.7(b) (collectively, the "Excluded Liabilities").
(c) The Sterling Buyer shall provide insurance coverage
with respect to medical malpractice liabilities of the
Sellers' contracted physicians and other clinical providers
who provide medical services in connection with the Sterling
Business and the PPM Buyer shall provide insurance coverage
with respect to medical malpractice liabilities of the
Sellers' employed physicians and other clinical providers
who provide services in connection with the PPM Business,
all in respect of claims not made as of the Closing and
relating to acts, events or omissions occurring prior to the
Closing involving the Sellers engaged in those of the
aforementioned businesses which are acquired by the Buyers
and their contracted and employed physicians and other
clinical providers (collectively, the "Insurance
Obligations").
2.8 Provisions Applicable to Professional Corporation Which
is Not a Debtor in Possession. With respect to the
Professional Corporation which is a Seller but is not a
debtor in possession in the Chapter 11 Case as specified in
the Plan (the "Non Debtor PC"), the provisions of this
Section 2.8 shall apply notwithstanding any contrary
provisions of this Agreement.
(a) All provisions of this Agreement except those which by
their express terms are applicable only to debtors in
possession in the Chapter 11 Case shall apply to the Non
Debtor PC.
(b) The Non Debtor PC acknowledges that it will not have
any of its obligations and liabilities discharged or
otherwise provided for in the Plan and hereby expressly
affirms and undertakes each of the representations,
warranties, covenants and other obligations of the Sellers
set forth in this Agreement without any qualification or
exception relating in any way to the Chapter 11 Case, the
actions of the Bankruptcy Court or the status of any other
Sellers as debtors in possession in the Chapter 11 Case.
(c) In addition to each representation and warranty of the
Sellers set forth in this Agreement the Non Debtor PC hereby
jointly and severally represents and warrants to Buyers that
prior to the Closing the Non Debtor PC shall have complied
with all applicable bulk sale or other similar legal
requirements which are necessary for the Non Debtor PC to
sell, convey, assign, transfer, and deliver its assets which
are included in the Assets to Buyers free and clear of any
and all liens, claims, charges, encumbrances, mortgages,
pledges, security interests and other interests in or by any
Person, and otherwise in accordance with this Agreement, and
the Non Debtor PC shall deliver documents evidencing such
compliance to Buyers on or before the Closing.
2.9 Provisions Applicable to Professional Corporations.
The Professional Corporation shall sell, convey, assign,
transfer and deliver its Assets which are included in the
assets directly to another professional corporation
designated by the Buyers at Closing. In no event will any
such Assets of a Professional Corporation be conveyed,
assigned, transferred or delivered by a Professional
Corporation to a Person other than a professional
corporation designated by the Buyers in accordance with this
Section 2.9.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
Each Seller hereby jointly and severally represents and
warrants to the Buyers as follows:
3.1 Corporate Organization.
(a) Each Seller (each of which is identified on Schedule
3.1) (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State set forth
opposite its name on schedule 3.1(a) and (ii) subject to the
approval of the Plan and the sale of the Assets in the
Confirmation Order and the occurrence of the Effective Date,
has the corporate power and corporate authority to (A) enter
into this Agreement and the other agreements, documents and
instruments to be executed and delivered by such Seller
pursuant hereto and (B) consummate the transactions
contemplated hereby. Each Seller is duly qualified and in
good standing to transact business as a foreign corporation
in each jurisdiction where the ownership or use of its
properties and the conduct of its business necessitates such
qualification, except such jurisdiction, in which the
failure to be so qualified could not be reasonably expected
to have a Material Adverse Effect.
(b) No Seller is in violation of its charter or by-laws.
The minute books of each Seller, contain an accurate record
of all material corporate action taken by the stockholders
and Board of Directors (and the Committees of such Board)
of each Seller.
(c) All of the outstanding shares of capital stock of each
of the Sellers has been duly authorized and validly issued,
are fully paid and nonassessable.
(d) Except for pledges of certain shares of stock pursuant
to the DIP Credit Agreement and pledges of certain shares of
common stock in favor of the Sellers' prepetition senior
secured bank lenders, all of which will be released and
fully satisfied of record at Closing, all of the outstanding
shares of capital stock of each Seller which is not a
Professional Corporation and other than the Sellers' Parent
are wholly owned, directly or indirectly, by the Sellers'
Parent, free and clear of all liens, encumbrances,
restrictions and claims of every kind. All of the
outstanding shares of capital stock of each Professional
Corporation are subject to the terms of a Succession
Agreement which is a valid binding agreement of the parties
thereto. Except for convertible debentures issued by
Sellers' Parent and employee stock options issued to certain
employees of certain Sellers which provide further issuance
of Common Stock of Sellers' Parent to such employees upon
exercise, no shares of capital stock of any Seller are
reserved for issuance and there are no outstanding options,
warrants, rights, subscriptions, claims, agreements,
obligations, convertible or exchangeable securities or other
commitments, contingent or otherwise, relating to the
capital stock of any Seller or pursuant to which any Seller
is or may become obligated to issue or exchange any shares
of capital stock.
3.2 Authorization.
(a) The execution and delivery of this Agreement and the
documents contemplated hereby (collectively the "Seller
Documents") have been duly authorized and approved by the
Boards of Directors of each Seller. Subject to the entry of
the Confirmation Order by the Bankruptcy Court and the
occurrence of the effective date of the Plan, (1) no other
corporate proceedings or shareholder action on the part of
any Seller will be necessary to authorize the execution and
delivery by Sellers of this Agreement, and the other
agreements to be executed in connection herewith and to
consummate the transactions contemplated hereby or thereby
and (2) each of the Seller Documents will constitute the
valid and binding agreement of Sellers, enforceable against
Sellers in accordance with its respective terms.
(b) Section 15.1 constitutes a valid and binding agreement
of Sellers enforceable against Sellers in the Chapter 11
Case in accordance with its terms (except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights
generally). Subject to the entry of Interim Order, Section
15.2 constitutes a valid and binding agreement of Sellers
enforceable against Sellers in the Chapter 11 Case in
accordance with its terms (except as such enforceability may
be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally).
3.3 Consents and Approvals; No Violations. Except for the
(1) Confirmation Order, (2) the filing by Buyers and Sellers
of a pre-merger notification with the Federal Trade
Commission and the Antitrust Division of the United States
Department of Justice under the HSR Act ("Antitrust
Filing"), and (3) applications for, and procurement of
continuations of, licenses and/or permits, in connection
with applicable state or local law change in control
statutes (the "Permits") (all of the foregoing consents,
applications, approvals and/or Permits, other than the entry
of the Confirmation Order, are referred to as the
"Government Consents"), neither the execution and delivery
by Seller of this Agreement and the other Seller Documents
nor the consummation by Seller of the transactions
contemplated hereby or thereby will (a) violate or conflict
with or result in any breach of any provision of the
certificates of incorporation, articles of incorporation or
by-laws (or similar documents) of any Seller; (b) violate or
conflict in any material respect with any order, injunction,
decree, law, statute, rule, ordinance or regulation
applicable to any Seller or by which any of their respective
properties or assets may be bound; (c) require any filing
with, notification to, or permit, consent or approval of,
any public, governmental or regulatory body, agency or
authority except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect;
(d) result in a violation or breach of, constitute a default
or give rise to any right of termination, cancellation or
acceleration under an agreement, or result in the creation
of an Encumbrance upon any property or asset of any Seller
or by which any properties or assets may be bound of any
Seller; or (e) result in the loss of any license, franchise
or permit, except where such failure could not reasonably be
expected to have a Material Adverse Effect.
3.4 No Other Agreements to Sell the Assets or the Business.
Except for this Agreement, the Succession Agreements and as
may be fully discharged pursuant to the Plan, neither the
Seller nor any of its Affiliates have any legal obligation,
absolute or contingent, to any other person or firm to sell,
assign, transfer or convey all or any part of the Assets,
the Sterling Business or the PPM Business, to issue or sell
any capital stock or any security convertible into or
exchangeable for capital stock of any Seller, or to effect
any merger, consolidation or other reorganization, directly
or indirectly, of any Seller or to enter into any agreement
with respect thereto.
3.5 Financial Information.
Sellers have delivered to Buyers as part of Sellers' three-
year business plan dated December 23, 1998 true, complete
and correct copies of the Sellers' projected consolidated
financial statements (balance sheet, statement of operations
and statement of cash flows) for the calendar years ending
December 31, 1999, December 31, 2000 and December 31, 2001
(the "Projections"). The Projections were prepared in good
faith by the Sellers with the participation of the
management of the Sellers and, except as set forth on
Schedule 3.5, there are no statements or conclusions in any
of the Projections which are based upon or include
information known to the Sellers to be misleading in any
material respect or which fail to take into account material
information known to the Sellers regarding the matters
reported therein.
3.6 Accounts Receivable. Except as set forth on Schedule
3.6, the accounts receivable of the Sellers are owned by
Sellers or the Sellers have been assigned the right to
receive the proceeds thereof and have and shall have arisen
only from bona fide transactions in the ordinary course of
business; provided, that the foregoing shall not be deemed
to be a representation as to the collectibility of such
receivables.
3.7 Compliance with Law.
Each Seller is in compliance in all material respects with
all applicable statutes, regulations, orders, ordinances and
other laws of the United States of America, all state and
local governments and other governmental bodies and
authorities, and agencies of any of the foregoing to which
it is subject in connection with the Assets (including,
without limitation, laws and regulations relating to
Medicare and Medicaid billing procedures, all Environmental,
Health or Safety Laws and the Worker Adjustment and
Retraining Notification Act) the failure of which to comply
with could reasonably be expected to have a Material Adverse
Effect. No Seller has received any notice to the effect
that, or otherwise been advised that, it is not in
compliance with any of such statutes, regulations and
orders, ordinances, other laws or undertakings, and, to the
actual knowledge of any Seller without any independent
investigation, there are not any presently existing
circumstances reasonably likely to result in violations of
any such regulations which could, in any one case or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect.
3.8 Environmental Matters.
(a) To the best knowledge of Sellers, each Seller is, and
at all times has been, in material compliance with, and has
not been and is not in violation of or liable under, any
Environmental Law with respect to the Facilities. No Seller
has any basis to expect, nor has any of them or, to the
knowledge of Seller, any other Person for whose conduct they
are or may be held to be responsible received any actual or
threatened order, notice, or other communication from (1)
any governmental body or private citizen acting in the
public interest, or (2) the current or prior owner or
operator of any Facilities, of any actual or potential
violation or failure to comply with any Environmental Law,
or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any
other properties or assets (whether real, personal, or
mixed) in which any Seller has an interest, or with respect
to any Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported,
used, disposed of, or processed by any Seller, or any other
Person for whose conduct any Seller is or may be held
responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(b) There are no pending or, to the knowledge of any
Seller, threatened claims, Encumbrances, or other
restrictions of any nature, resulting from any
Environmental, Health, and Safety Liabilities or arising
under or pursuant to any Environmental Law, with respect to
or affecting any of the Facilities or any other properties
and assets (whether real, personal, or mixed) in which any
Seller has an interest.
(c) No Seller has knowledge of any basis to expect, nor has
any other Person for whose conduct they are or may be held
responsible, received, any citation, directive, inquiry,
notice, order, summons, warning, or other communication that
relates to Hazardous Activity, Hazardous Materials, or any
alleged, actual, or potential violation or failure to comply
with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect
to any of the Facilities.
(d) No Seller nor, to the knowledge of any Seller, any
other Person for whose conduct any Seller is or may be held
responsible, has any Environmental, Health, and Safety
Liabilities with respect to the Facilities or with respect
to any other properties and assets (whether real, personal,
or mixed) in which any Seller (or any predecessor), has an
interest, or at any property geologically or hydrologically
adjoining the Facilities or any such other property or
assets.
(e) Except as set forth on Schedule 3.8(e), there are no
Hazardous Materials present on or in the Environment at the
Facilities or at any geologically or hydrologically
adjoining property, including any Hazardous Materials
contained in barrels, above or underground storage tanks,
landfills, land deposits, dumps, equipment (whether moveable
or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps,
or any other part of the Facilities or such adjoining
property, or incorporated into any structure therein or
thereon. No Seller or, to the knowledge of any Seller, any
other Person for whose conduct they are or may be held
responsible, has permitted or conducted, or is aware of, any
Hazardous Activity conducted with respect to the Facilities
or any other properties or assets (whether real, personal,
or mixed) in which any Seller has an interest except in
compliance with all applicable Environmental Laws.
(f) There has been no release nor, to the knowledge of any
Seller, threat of release, of any Hazardous Materials at or
from the Facilities or, to the knowledge of any Seller, at
any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced,
imported, used, or processed from or by the Facilities, or
from or by any other properties and assets (whether real,
personal, or mixed) in which any Seller has an interest, or
to the knowledge of any Seller any geologically or
hydrologically adjoining property, whether by any Seller or
any other Person.
(g) Seller has delivered to Buyers true and complete copies
and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by any Seller pertaining
to Hazardous Materials or Hazardous Activities in, on, or
under the Facilities, or concerning compliance by any
Seller, or any other Person for whose conduct any Seller is
or may be held responsible, with Environmental Laws.
3.9 Insurance. Seller has previously provided to Buyers
copies of each insurance policy (including policies
providing medical malpractice, property, casualty,
liability, and workers' compensation coverage and bond and
surety arrangements) to which any Seller has been a party, a
named insured, or otherwise the beneficiary of coverage at
any time within the past three years along with the name,
address, and telephone number of the agent for each such
policy. No notice of cancellation or non-renewal with
respect to, or disallowance of any claim under, any such
policy has been received by any Seller.
3.10 Reorganization Proceedings No Seller has taken any
material action prohibited by the Bankruptcy Code, the
Bankruptcy Rules or order of the Bankruptcy Court in
connection with any Chapter 11 Case.
3.11 Brokers and Finders. Except for Wasserstein Perella &
Co., Inc., Seller has not employed any broker, finder,
consultant or intermediary in connection with the
transactions contemplated by this Agreement who would be
entitled to a broker's, finder's, consultant's or similar
fee or commission in connection therewith or upon the
consummation thereof, or if the Closing does not occur.
Sellers shall bear all costs it incurs in connection with
the transaction contemplated by this Agreement unless
otherwise expressly provided herein.
3.12 Post-Petition Liabilities. Except with respect to the
DIP Facility, no Seller has entered into any agreement to
extend the payment terms of any liabilities incurred after
the Petition Date, beyond the customary and usual payment
terms in existence prior to the Petition Date.
3.13 Lists of Properties, Contracts and Personnel Data.
Schedules 3.13(a) through 3.13(j) hereto contain accurate
lists or, if a list is not reasonably practicable, copies of
the following to the extent related in any way to the
Assets:
(a) Schedule 3.13(a). Qualification. All jurisdictions in
which Sellers are duly qualified to do business as a foreign
corporation.
(b) Schedule 3.13(b). Real Property Leases. (A) A list of
all leases of real property used by each Seller and/or which
any Seller is a party indicating in each such case, the
duration of leases, and number of square feet leased; (B)
all premises occupied by any Seller under rental
arrangements without leases (including in each case the
amount of rent and the type of occupancy); and (C) all
contracts to which any Seller is a party for the purchase of
real property;
(c) Schedule 3.13(c). Intellectual Properties; Computer
Software. (i)(A) All material patents and pending
applications therefor, (B) all registrations of material
trademarks and other marks, all registrations of material
trade names, all pending applications for any such
registrations, and (C) all material copyright registrations
and pending applications therefor; (ii) all material
computer software (including without limitation, all
material computer programs, data bases and documentation
related thereto) owned in whole or in part or used by any
Seller and that relate to the Assets (the "Computer
Software"); (iii) all licenses, assignments and other
agreements relating to any of the foregoing; and (iv) all
Material Systems which are not year 2000 compliant.
(d) Schedule 3.13(d). Other Contracts. All material
agreements, contracts and commitments relating to the
Assets, the Sterling Business or the PPM Business, including
all contracts with physicians, hospitals, urgent care
facilities, radiology facilities or correctional facilities,
not otherwise listed in any other Schedule hereto and any
agreements under which any Seller has limited or restricted
the right to compete with any Person in any respect;
(e) Schedule 3.13(e). Labor Agreements. All material
labor contracts, collective bargaining agreements,
employment agreements, compensation agreements, bonus
agreements, consulting agreements or similar agreements
relating to Seller's officers, directors, employees,
consultants or agents (collectively, the "Personnel");
(f) Schedule 3.13(f). Employee Benefits. All employee
profit-sharing, incentive, savings, deferred compensation,
welfare, pension, retirement, group insurance, bonus,
severance, fringe benefit, stock option, stock purchase,
restricted stock and other employee benefit plans not listed
on any other schedule (oral or written), regardless of
whether any such plan, agreement or arrangement is in
writing or is an "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Security Act of
1974, as amended ("ERISA"), maintained or contributed to (or
to which there is an obligation to contribute) by any Seller
for the benefit of present or former employees, or
directors, of any Seller (collectively, the "Employee
Plans") identifying (i) each such plan which provides any
benefits after termination of employment other than a
Retirement Plan or a Multiemployer Plan (as defined below),
(ii) each such Employee Plan which is an "employee pension
benefit plan" as that term is defined in Section 3(2) of
ERISA other than a Multiemployer Plan ("Retirement Plan"),
and (iii) each such Employee Plan which is a multiemployer
plan within the meaning of Section 3(37) of ERISA
("Multiemployer Plan");
(g) Schedule 3.13(g). Compensation. The names and current
annual rates of compensation of all Personnel whose current
aggregate annual rates of compensation are $50,000 or more,
together with a summary (containing estimates to the extent
necessary) of existing bonuses, additional compensation
(whether current or deferred) and other like benefits or
bonus opportunities, if any, paid or payable to such persons
in the fiscal year ended 1998, or subsequent thereto, other
than those disclosed on Schedule 3.13(e) or 3.13(f);
(h) Schedule 3.13(h). Powers of Attorney. The names of
all persons holding powers of attorney from any Seller;
(i) Schedule 3.13(i). Enrollment. All Medicare, Medicaid,
private insurance and other payors billing or enrollment
numbers or arrangements for all of Seller's independent
contractor physicians and similar billing or enrollment
information for each Seller which has or is required to
obtain billing or enrollment numbers or make similar
arrangements in order to submit bills to Payors and other
Persons for services rendered;
(j) Schedule 3.13(j). Licenses and Permits. All material
governmental or regulatory licenses, permits, consents,
franchises, approvals, authorizations and certificates
(collectively, "Permits") and Government Consents required
to conduct or used by the Seller in the conduct of the
Sterling Business and the PPM Business; and
(k) Schedule 3.13(k). COBRA Beneficiaries. All "covered
employees" (within the meaning of Section 4980B(f)(7) of the
Code) or "qualified beneficiaries" (within the meaning of
Section 4980B(g)(1) of the Code) who are receiving
"continuation coverage" (within the meaning of Section
4980B(f)(2) of the Code) under an Employee Plan or who are
entitled to elect such coverage.
3.14 Assets. The Assets are owned or leased by the Sellers
and constitute substantially all of the assets used by
Sellers in the conduct of the Sterling Business and PPM
Business.
3.15 Tangible Properties. Sellers have good title to all
the Assets and possess and quietly enjoy all premises leased
by them and used in connection with the Assets, the absence
of which could reasonably be expected to have a Material
Adverse Effect. Such premises are not subject to any
easements, rights-of-way, building use or occupancy
restrictions, exceptions, reservations or limitations that
could reasonably be expected to have a Material Adverse
Effect. No Seller has received written notice of any
pending or threatened condemnation proceedings relating to
any of Seller's leased properties and, so far as known to
Seller, there are no such pending or threatened proceedings
which could reasonably be expected to have a Material
Adverse Effect. The plants, structures, tangible
properties, machinery and equipment owned, operated or
leased by any Seller and used in connection with the
business of each Seller are in good operating condition and
repair (ordinary wear and tear excepted) except where the
failure of which could reasonably be expected to have a
Material Adverse Effect.
3.16 Intellectual Properties.
(a) Except as specifically disclosed on Schedules 3.13(c)
or 3.13(d), no Person other than a Seller has an ownership
interest in, rights as a licensee or similar rights to
receive a royalty or similar payment with respect to, any of
the Intellectual Properties listed in Schedule 3.13(c)(i)
where such ownership or other rights by a person other than
a Seller could reasonably be expected to have a Material
Adverse Effect. No intellectual property rights other than
the Intellectual Properties are required to permit the
conduct of the business of the Seller as now conducted, the
absence of which could reasonably be expected to have a
Material Adverse Effect. Seller has good title or similar
enforceable rights to all of the Intellectual Properties
listed on Schedule 3.13(c), the absence of which could
reasonably be expected to have a Material Adverse Effect,
free and clear of any Encumbrance, except as set forth on
Schedule 3.13(c) hereto.
(b) None of the Intellectual Properties listed on Schedules
3.13(c) pursuant to clause (A)(2) of Section 3.13(c) have
been canceled or abandoned or licensed in such a way as
could reasonably be expected to have a Material Adverse
Effect on the validity of such Intellectual Property other
than for such cancellations, abandonments or licenses in the
ordinary course of business consistent with past practice
which individually or in the aggregate could not reasonably
be expected to have a Material Adverse Effect. No Seller is
infringing upon, or otherwise violating, the rights of any
third party with respect to any Intellectual Properties in
such a way as could reasonably be expected to have a
Material Adverse Effect. Except as set forth on Schedule
3.13(c), no proceedings or claims are pending and none have
been received by, instituted or asserted in writing against
any Seller, nor are any proceedings, to any Seller's
knowledge, threatened alleging any such violation, nor does
any Seller know of any valid basis for any such proceeding
or claim. Except as set forth on Schedule 3.13(c), there is
no infringement or other adverse claim against any of the
Intellectual Properties owned and used by any Seller. No
proceedings or claims in which any Seller alleges that any
third party is infringing upon, or otherwise violating any
of the Intellectual Properties are pending, and none have
been served by, instituted or asserted by any Seller, nor
are any proceedings threatened alleging any such violation
or infringement, nor does any Seller know of any valid basis
for any such proceeding or claim that could reasonably be
expected to have a Material Adverse Effect. No Seller has,
prior to the date hereof, divulged, furnished to or made
accessible to any third party any trade secrets or secret
formulas without prior there having obtained an agreement of
confidentiality from such third party.
(c) The Computer Software includes all material computer
software relating to the Assets. Each Seller's use of the
Computer Software does not, to the Sellers' knowledge,
violate or otherwise infringe the rights of any third party.
3.17 ERISA. None of the Sellers have incurred, and, to the
best knowledge of the Sellers after due inquiry, no event
has occurred and no condition or circumstance exists that
could result, directly or indirectly, in, any unsatisfied
liability (including, without limitation, any indirect,
contingent or secondary liability) under Title IV of ERISA
or Section 412 of the Code or Section 302 of ERISA arising
in connection with any Employee Plan covered or previously
covered by Title IV of ERISA or such sections of the Code or
ERISA. No asset or property of any Seller is or may be
subject to any lien arising under Section 412(n) of the Code
or Section 302(f) of ERISA. None of the Sellers have been
or are required to provide any security under Section 307 of
ERISA or Section 401(a)(29) or 412(f) of the Code. None of
the Sellers do maintain or have any obligation to contribute
to any "voluntary employees' beneficiary association" within
the meaning of Section 501(c)(9) of the Code. All
contributions and premiums which any of the Sellers is
required to make or pay under the terms of any Employee
Plans have, to the extent due, been paid in full on a timely
basis. The Sellers have complied in all respects with the
applicable requirements of Part 6 of Subtitle B of Title I
of ERISA and Section 4980B of the Code ("COBRA"), and will
comply with all COBRA obligations arising in connection with
the transactions contemplated hereby, and none of the
Sellers are subject to any liability as a result of any
failure to administer or operate any group health plan in
compliance with COBRA. No litigation or administrative or
other proceeding, audit, examination or investigation is
pending or asserted, or, to the best knowledge of the
Sellers after due inquiry, threatened, anticipated or
expected to be asserted with respect to any Employee Plan or
the assets of any such Employee Plan (other than routine
claims for benefits arising in the ordinary course). The
representations and warranties in this Section 3.17 are
limited to the Assets.
3.18 Sales Tax. No Seller has been or is required to
collect or withhold any state sales taxes in the ordinary
course of business.
3.19 Litigation. Except as set forth on Schedule 3.19
hereto and as will be fully discharged pursuant to the Plan,
there is neither (a) any litigation, proceeding, labor
dispute (other than routine grievance procedures),
arbitration action or governmental investigation or inquiry
of any type, including any inquiry or investigation relating
to billing procedures or practices of the Sellers or any of
their agents, pending or, to the knowledge of any Seller,
threatened against, relating to or affecting (i) the Assets,
(ii) to Seller's knowledge, any Employee Plan or (iii) the
transactions contemplated by this Agreement, nor (b) to the
actual knowledge of any Seller without any independent
investigation, any valid basis for any such litigation,
proceeding, inquiry or investigation for which Seller is not
insured against in the ordinary course of business which if
adversely determined could, in any one case or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. There are no decrees, injunctions or orders of any
court or governmental department or agency outstanding
against any Seller with respect to the Assets.
3.20 Permits. Except as set forth on Schedule 3.13(j), each
Seller has obtained all Permits which are required in
connection with the Assets, the Sterling Business and the
PPM Business, except for those Permits the failure of which
to obtain could not be reasonably expected to have a
Material Adverse Effect. Except as set forth on Schedule
3.13(j), to the knowledge of each Seller, all requisite
Permits are in full force and effect, and no proceedings for
the suspension or cancellation of any Permit is pending or,
threatened, the loss of which could reasonably be expected
to have a Material Adverse effect.
3.21 Transactions with Certain Persons. Except as set forth
on Schedule 3.21 hereto, no officer, director, employee,
agent or Affiliate of any Seller is presently a party to any
transaction with any Seller relating to the Assets,
including without limitation, any contract, agreement or
other arrangement (a) providing for the furnishing of
services by, (d) providing for the rental of real or
personal property from or (c) otherwise requiring payments
to (other than services as officers, directors or employees)
any such person or corporation, partnership, trust or other
entity in which any such person has a substantial interest
as a shareholder, officer, director, trustee or partner.
3.22 Customers, Etc. Except as set forth on Schedule 3.22,
no customer or client of any Seller, including all hospitals
where Sellers conduct the Sterling Business, has informed
any Seller that such customer will not continue its current
business dealings with Sellers with the Buyers following the
consummation of the Acquisition except where such failure to
continue such current business dealings with Buyers does not
involve a hospital customer or client of the Sterling
Business and such failure could not reasonably be expected
to result in a Material Adverse Effect.
3.23 Independent Contractor Status. All physicians who
perform services in the Sterling Business are and have, at
all times during their relationship with the Sterling
Business, been properly classified as independent
contractors and not employees of any Seller for purposes of
all applicable law including, without limitation, for
federal, state and local employment tax purposes.
3.24 Enrollment. Except as set forth on Schedule 3.24, each
physician who performs medical services on behalf of any
Seller as an independent contractor and each Seller which
has physician employees is properly enrolled and able to
submit valid enforceable billings to Medicare, Medicaid,
private insurers and all other Payors.
3.25 Sellers' SEC Reports. From June 30, 1996 through May
15, 1998, the Sellers filed all forms, reports and documents
with the Commission required to be filed by them pursuant to
the federal securities laws and the Commission rules and
regulations thereunder, and all forms, reports, schedules,
statements, registration statements and other documents
filed with the Commission by the Sellers have complied in
form in all material respects with all applicable
requirements of the federal securities laws and the
Commission rules and regulations promulgated thereunder.
Prior to the date of this Agreement, the Sellers have made
available to Buyers true and complete copies of all forms,
reports, registration statements and other filings filed by
the Sellers with the Commission since June 30, 1996 (such
forms, reports, registration statements and other filings,
together with any exhibits, any amendments thereto and
information incorporated by reference therein, are sometimes
collectively referred to as the "Commission Filings").
3.26 Taxes.
(a) Tax Returns. The Sellers have timely filed or caused
to be timely filed with the appropriate taxing authorities
all federal, state, local and other returns, statements,
forms and reports for Taxes ("Returns") that are required to
be filed by, or with respect to, the Sellers on or prior to
the Closing Date. To Sellers' knowledge, the Returns
reflect accurately all liability for Taxes of the Sellers
for the periods covered thereby.
(b) Payment of Taxes. All Taxes and all liabilities of the
Sellers for Taxes for all taxable years or periods that end
on or prior to the Closing Date and, with respect to any
taxable year or period beginning prior to and ending after
the Closing Date, the portion of such taxable year or period
ending on and including the Closing Date, have been timely
paid or adequately disclosed and fully provided for (in the
Plan or otherwise), and shown as a liability in the
Projections.
3.27 Year 2000. All internal computer systems, computer
software or technology that are material to the business,
finances or operations of the Sellers (collectively,
"Material Systems") are (i) able to receive, record, store,
process, calculate, manipulate and output dates from and
after January 1, 2000, time periods that include January 1,
2000 and information that is dependent on or relates to such
dates or time periods, in that same manner and with the same
accuracy, functionality, data integrity and performance as
when dates or time periods prior to January 1, 2000 are
involved and (ii) able to store and output date information
in a manner that is unambiguous as to century (the
circumstances set forth in clauses (i) and (ii),
collectively, "Year 2000 Compliant"). All Material Systems
that are not Year 2000 Compliant as of the date of this
Agreement are set forth on Schedule 3.13(c) of the
Disclosure Schedules.
3.28 FIRPTA. No Seller is a "foreign person" as that term
is defined in the Code, and any Seller will provide Buyers
an affidavit confirming this representation upon Buyers'
request in order to obtain an exemption from withholding
under Section 1445 of the Code.
3.29 Leases. All leases to which any Seller is a party and
which constitutes an Asset are in full force and effect; all
rents and additional rents due on the Closing Date on each
such lease will have been paid or provided for in full; in
each case, the Seller that is lessee has been in peaceable
possession since the commencement of the original term of
such lease and is not in default thereunder and no waiver,
indulgence or postponement of the lessee's obligations
thereunder has been granted by the lessor; and there exists
no event of default or event, occurrence, condition or act
with respect to any such lease (including the purchase of
the Assets hereunder) which, with the giving of notice, the
lapse of time or the happening of any further event or
condition, would become a default under such lease. No
Seller has violated any of the terms or conditions under any
such lease in any material respect, and, to the best
knowledge, information and belief of the Sellers, all of the
covenants to be performed by any other party under any such
lease have been fully performed. The property leased by the
Sellers is in a state of good maintenance and repair and is
adequate and suitable for the purposes for which it is
presently being used. The representations and warranties in
this Section 3.29 shall not apply with respect to any
defaults under any leases to the extent such defaults will
be cured or discharged pursuant to the Plan.
3.30 Full Disclosure.
(a) No material information relating to the Assets provided
by Sellers to Buyers, including, without limitation,
information contained in Sellers' Disclosure Statement with
respect to Sellers' Second Amended Joint Plan of
Reorganization dated February 24, 1999, the Projections, any
Schedule, Exhibit or certificate attached hereto or
delivered pursuant to this Agreement or any document or
statement in writing which has been supplied by or on behalf
of the Sellers or by any of the directors, officers or
agents of any Seller in connection with the transactions
contemplated by this Agreement or any representation or
warranty of the Sellers contained in this Agreement or
disclosed in accordance herewith, to the extent such
information relates to the Assets, contains an untrue
statement of a material fact or omits to state a material
fact required to be stated herein or necessary to make the
statements made, in light of the circumstances under which
they were made, not misleading as of the date made or deemed
made; provided, however, that information contained in any
representation or warranty in this Agreement as of a later
date, provided such date is prior to the date hereof, shall
be deemed to modify the information as of the earlier date.
(b) From time to time prior to the Closing Date, the
Sellers shall promptly supplement or amend information
previously delivered to the Buyers with respect to any
matter hereafter arising which, if existing or occurring at
the date of this Agreement, would have been required to be
set forth or disclosed except where any such matter could
not reasonably be expected to have a Material Adverse
Effect; provided, however, that such supplemental
information shall not be deemed to be an amendment to any
schedule or exhibit hereto.
3.31 Representations and Warranties on Closing Date. The
representations and warranties contained in this Section 3
shall be true and correct in all material respects on and as
of the Closing Date with the same force and effect as though
such representations and warranties had been made on and as
of the Closing Date, except (a) representations and
warranties that were made as of a specific date need be true
in all respects only as of such date and (b) as expressly
permitted by this Agreement to change between the date of
this Agreement and the Closing Date.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyers hereby represents and warrants to Seller as follows:
4.1 Buyers' Organization and Good Standing. Sterling Buyer
is a corporation duly organized and validly existing under
the laws of the State of North Carolina. PPM Buyer is a
limited liability company duly organized and validly
existing under the laws of North Carolina. Each of the
Buyers has all requisite corporate power and authority to
own, operate and lease its properties and carry on its
business as it is now being conducted.
4.2 Formation. Buyers have been formed for the purpose of
consummating the transaction contemplated hereby, and have
yet to commence business operations. Buyers have no
liabilities and will have no material liabilities as of the
Closing Date, other than those incurred in connection with
this Agreement, and the agreements contemplated hereby and
thereby (including certain fees payable to Affiliates of
Buyers), and, as of the Closing Date, will have no material
assets other than capital contributions made in
contemplation of the Acquisition.
4.3 Authority; Execution and Delivery. Buyers have the
full corporate power and authority to enter into this
Agreement. The execution, delivery and performance of this
Agreement and the other agreements contemplated hereby by
Buyers, including without limitation, the purchases
contemplated hereby, have been duly authorized by Buyers.
This Agreement and the other agreements contemplated hereby
have been duly executed and delivered by Buyers and, subject
to Bankruptcy Court approval, constitute the legal, valid
and binding obligations of buyer enforceable against Buyers
in accordance with their respective terms.
4.4 No Brokers. Neither Buyer nor any of their Affiliates
has entered into and neither will enter into any agreement,
arrangement or understanding with any person or firm which
will result in the obligation of Seller or Buyers to pay any
finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
4.5 Consents, No conflicts, Etc. None of the execution,
delivery and performance of this Agreement, the consummation
of the transactions contemplated herein or compliance by
Buyers with any of the provisions hereof will (with or
without the giving of notice or the passage of time) (a)
violate or conflict with any provision of the certificate of
incorporation of Buyers, (b) violate or conflict with any
provision of any note, bond, mortgage, indenture, deed of
trust, or any material license, agreement, or any other
instrument or obligation to which either buyer is a party,
or by which each Buyer may be bound or affected, (c) violate
any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyers or any of its assets or
properties or (d) require the consent, approval, permission
or other authorization of any court, arbitrator or
governmental, administrative, or self-regulatory authority
or any other third party other than the approval of the
Bankruptcy Court, excluding from the foregoing clauses (b),
(c) and (d) violations, conflicts, breaches, or defaults
which, either individually or in the aggregate, would not
materially affect each Buyer.
4.6 Financing. Attached as Exhibit A is a true and correct
copy of the Buyers' financing commitment for the
Acquisition. On the Closing Date, Buyers will be provided
sufficient financing pursuant to the attached financing
commitment to consummate the Acquisition.
4.7 Good Faith Buyers. To the best of Buyers' knowledge,
Buyers are, and at Closing will be, good faith purchasers as
contemplated by Section 363(m) of the Bankruptcy Code.
SECTION 5. CERTAIN COVENANTS AND AGREEMENTS.
5.1 Interim Order. On the Confirmation Date, the Sellers
shall file a motion, in form and substance satisfactory to
the Buyers, or take other appropriate action to obtain an
order of the Bankruptcy Court, which order may be the
Confirmation Order (the "Interim Order") approving certain
terms of this Agreement, including Section 15. Sellers
shall use their best efforts to obtain entry by the
Bankruptcy Court of the Interim Order on the Confirmation
Date.
5.2 The Plan. The Sellers shall take the following actions
with respect to or in contemplation of the Plan:
(a) On the date this Agreement is executed, the Sellers
shall file the Plan with the Bankruptcy Court. The Plan
shall be in substantially the form attached hereto as
Exhibit E, and shall have been approved in form and
substance by the Buyers.
(b) The Sellers shall use their best efforts to obtain, and
shall refrain from taking any action that would materially
impede or result in a revocation of, the entry by the
Bankruptcy Court of an Order, in form and substance
reasonably satisfactory to Buyers, confirming the Plan
pursuant to 1129 of the Bankruptcy Code, and providing for
the effectuation of a sale of the Assets to Buyers pursuant
to Sections 105, 363 and 1141(c) of the Bankruptcy Code and
providing for the assumption and assignment to Buyers of the
Contracts and Leases set forth on Appendix G to the Plan in
accordance with Section 365 of the Bankruptcy Code (the
"Confirmation Order"). In connection therewith, the Sellers
and their counsel shall, among other things, use their best
efforts to cause the Confirmation Order (or one or more
orders entered by the Bankruptcy Court in connection with
confirmation of the Plan (collectively, the "Related
Orders")) to contain findings of fact and conclusions of law
which will be reasonably satisfactory to Buyers and will,
without limitation
(i) determine that all of the requirements for confirmation
of the Plan as specified in the Bankruptcy Code and the
Bankruptcy Rules have been satisfied, including, without
limitation, that the acceptances previously obtained by the
Sellers with respect to their Second Amended Chapter 11 Plan
of Reorganization, dated February 23, 1999, shall constitute
and be deemed to be binding acceptances of the Plan;
(ii) approve and render enforceable against all Persons,
including, without limitation, Claimants and holders of
Equity Rights, all terms and provisions of the Plan;
(iii) provide for the transfer of the Assets to the
Buyers free and clear of any liens, claims, encumbrances,
liabilities, obligations, interests, causes of action,
direct or indirect, known or unknown, absolute or
contingent, including but not limited to product liability,
contractual liability, any employee related liabilities
(including but not limited to wages, benefits, COBRA, or
other liabilities), environmental liabilities, tax
liabilities, other tort claims, any liabilities for or
associated with assets not purchased by Buyers, or any other
liability or potential liability of the Sellers, including,
without limitation, any civil or administrative monetary
claim the United States Department of Justice, the United
States Department of Health and Human Services, TRICARE
Management Activity or any state or Payor has or may have
under the Federal False Claims Act, 31 U.S.C. 3729, et.
seq., the Civil Monetary Penalties Law, 42 U.S.C. 1320a-7a,
the Program Fraud Civil Remedies Act, 31 U.S.C. 3801 et.
seq., the common law theories of payment by mistake, unjust
enrichment, breach of contract and fraud and any other
statute creating causes of action for civil damages or civil
penalties arising out of or relating to Sellers' submission
of claims to Payors for services rendered prior to the
Effective Date;
(iv) provide that the Buyers are good faith purchasers and
entitled to the protections afforded under Sections 363(m)
and (n) of the Bankruptcy Code;
(v) provide for retention of jurisdiction of the Bankruptcy
Court to enforce any order contemplated herein;
(vi) provide that the Buyers are not successors of the
Sellers and will not be deemed successors for any purpose;
(vii) prohibit all Claimants and holders of Equity
Rights from asserting, prosecuting, enforcing or collecting
against or from the Buyers or their property, including,
without limitation, the Assets, any claims, liabilities,
liens, encumbrances, rights, judgments, interests or causes
of action such Claimants and holders of Equity Rights may
have against the Sellers;
(viii) provide that all material Permits and contracts,
leases and other Assets are transferred or assigned to and
assumed by Buyers pursuant to Section 365 of the Bankruptcy
Code;
(ix) require and direct all current and former physician
independent contractors and allied health professionals
(e.g., physician assistants and nurse practitioners) who
contracted with any Sellers, to execute all documents
(including but not limited to an addendum to physician
independent contractor agreement, a billing agreement, and
other related applications and forms) necessary to vest
Buyers with ownership of all existing and future accounts
receivable generated by such Persons and to allow the Buyers
to bill and receive payments relating to Assets from all
third-party payors, including, but not limited to, Medicare,
Medicaid and other federal health care programs as defined
in 42 U.S.C. 1320a-7b(f), Humana, PacifiCare and Pru/Care
(all such third-party payors, the "Payors");
(x) require and direct the Sellers' designated third-party
billing company or companies to promptly submit all
necessary documents and related information described in
Section 5.2(b)(ix) above to all Payors or the Payor's
designated agents;
(xi) require and direct all Payors to accept all enrollment
applications and related documents described in Section
5.2(b)(x) above and to issue new provider numbers to the
Buyers' physician independent contractors and allied health
professionals within 45 days of receipt of such
applications;
(xii) require and direct all Payors to promptly pay all
claims for professional services which were rendered prior
to the date of enrollment by Sellers' physician independent
contractors and/or allied health professionals within the
applicable claims processing guidelines established by such
Payors;
(xiii) require and direct all Payors to continue to make
payments to the Buyers under any existing provider numbers
previously assigned to the Sellers by Payors until any and
all new provider numbers have been issued to the Purchasers
or their independent contractors and/or allied health
professionals by such Payors to Buyers and/or their
independent contractor physicians and allied professionals.
(xiv) determine pursuant to Sections 108 and 105 of the
Bankruptcy Code that in the event any claims for
professional services rendered by the Sellers' physician
independent contractors or allied health professionals have
exceeded any of the applicable claims filing limits during
the period from the Petition Date to the Effective Date,
including, but not limited to, the claims filing limits
specified in 42 U.S.C. 1395w-4(g)(4)(B) or 42 C.F.R.
424.44, the Buyers shall have the greater of ninety (90)
days from the Effective Date or ninety (90) days after the
Payors have issued new provider numbers for any applicable
independent contractor physicians and allied health
professionals contracted with the Buyers, to submit such
claims, and if so submitted, such claims shall be processed
and paid by the applicable Payor the same as any other
timely claim;
(xv) prohibit all Persons from asserting, prosecuting and
collecting from any and all physicians and allied health
professionals contracted with the Buyers any civil or
administrative monetary claim the United States Department
of Justice, the United States Department of Health and Human
Services, TRICARE Management Activity or any state or Payor
has or may have under the Federal False Claims Act, 31
U.S.C. 3729, et. seq., the Civil Monetary Penalties Law, 42
U.S.C. 1320a-7a, the Program Fraud Civil Remedies Act, 31
U.S.C. 3801 et. seq., the common law theories of payment
by mistake, unjust enrichment, breach of contract and fraud
and any other statute creating causes of action for civil
damages or civil penalties arising out of or relating to
Sellers' submission of claims to Payors for services
rendered prior to the Effective Date; and
(xvi) provide for such other and further findings of
facts and conclusions of law reasonably requested by the
Buyers.
Provided, however, that the findings of fact and conclusions
of law required pursuant to Sections 5.2(b)(iii), (viii)
through (xv) may be subject to the right of the parties
affected thereby to object within a time specified by the
Bankruptcy Court and be heard with respect thereto.
(c) The Sellers shall comply in all material respects with
the Bankruptcy Code and all others laws, rules, regulations,
decrees and orders promulgated thereunder in connection with
obtaining the Confirmation Order.
(d) From and after the date hereof, no Seller shall take
any action, or fail to take any action, which might (i)
prevent, materially impede or result in the revocation of
the confirmation of the Plan (as provided in Section 1144 of
the Bankruptcy Code), (ii) prevent or materially impede the
vesting, upon the entry of the Confirmation Order and
consummation of the Acquisition, of the Assets in the Buyers
free and clear of all Encumbrances and claims and interests
of Claimants in accordance with and to the extent provided
in the Plan or (iii) result in the reversal, voidance,
modification or staying of the Interim Order.
5.3 Buyers' Cooperation. Buyers agree to use their
reasonable best efforts to cooperate with the Seller in
their pursuit of the Confirmation Order.
5.4 Best Efforts.
(a) Upon the terms and subject to the conditions herein
provided, each of the Seller and Buyers agrees to use their
best efforts to take, or cause to be taken, any action, and
to do, or cause to be done, all thing necessary, proper or
advisable under applicable laws and regulations, to
consummate and make effective the transactions contemplated
by this Agreement at the earliest practical date, including
all actions necessary to make the HSR Filing and obtain
approval for the Acquisition pursuant to the HSR Act.
(b) From and after the date hereof, Sellers shall assist
the Sterling Buyer in preparing GAAP financial statements
for the prior 3-year period for the Sterling Business and
will use their best efforts to cause all information to be
provided to Buyers and to cause all other things necessary,
proper or advisable to be done to allow for the preparation
and completion of such financial statements as soon as
reasonably possible.
5.5 Hart-Scott-Rodino Act. Each of the parties shall
promptly file any notification and report forms and related
material that they may be required to file with the Federal
Trade Commission and the Antitrust Division of the United
States Department of Justice under the HSR Act, shall use
their best efforts to obtain an early termination of the
applicable waiting period, and shall make any further
filings or information submissions pursuant thereto that may
be necessary, proper or advisable.
5.6 Noncompetition. Except as expressly provided below,
for a period of three years following the Closing Date (the
"Noncompetition Period"), the Sellers will not (i) in any
geographic area where Buyers conduct business during the
Noncompetition Period, engage or participate in directly or
indirectly (whether as a holder of an equity or debt
investment, lender or in any other manner or capacity), or
lend its name(or any part or variant thereof) to, any
business which is, or as a result of Sellers' engagement or
participation would become competitive with the Buyers; (ii)
deal, directly or indirectly, in a competitive manner with
the Assets during the Noncompetition Period; (iii) solicit
any officer, director, employee, or agent of Buyers
following the Closing Date to become an officer, director,
employee or agent of any Seller; or (iv) engage in or
participate in directly or indirectly, any business
conducted under any name that shall be the same as or
similar to the name of the Assets, Buyers, any trade name
used by them or any trade named assigned to Buyers
hereunder.
5.7 Nondisclosure.
(a) Except as otherwise required by order of the Bankruptcy
Court, by law, as disclosed in this Agreement and all
related agreements and documents, upon filing the Plan with
the Bankruptcy Court, neither Sellers nor any of their
Affiliates will, at any time from and after the date of this
Agreement, divulge, furnish to or make accessible to anyone
any knowledge or information with respect to inventions,
discoveries, improvements, formulae or proprietary
information related to the Assets, the Sterling Business or
the PPM Business, including, without limitation, strategic
plans, customer lists, supplier lists, and pricing
arrangements with Payors, hospitals, customers or suppliers
(collectively, "Confidential Information"). Sellers will
deliver all written Confidential Information in its
possession to Buyers on or before the Closing Date without
retaining any copies, summaries or extracts thereof;
provided, however, that Sellers may have access to such
information with reasonable advance notice to Buyers during
normal business hours if such access is required in order
for Sellers to comply with any tax or financial reporting
requirements necessary in connection with the Chapter 11
Case or otherwise required by law, administrative regulation
or court order.
(b) Any information, which (i) at or prior to the time of
disclosure was generally available to the public through no
breach of this covenant, (ii) was available on a
nonconfidential basis prior to its disclosure or (iii) was
made available from a third party provided that such third
party did not obtain or disseminate such information in
breach of any legal obligation known to Seller, shall not be
deemed Confidential Information for purposes hereof, and the
undertakings in this covenant with respect to confidential
information shall not apply thereto.
5.8 Further Assurances. From and after the Closing Date,
from time to time, at Buyers' reasonable request and without
further consideration, Sellers will execute and deliver such
other instruments and take such other action as Buyers may
reasonably request to more effectively convey, transfer to
and vest in Buyers, and to put Buyers in possession and
operating control of all or any part of the Assets.
5.9 Names.
(a) From and after the Closing, Buyers shall possess, to
the exclusion of Seller, or their Affiliates, all rights of
Seller to the names and marks "FPA Medical Management, Inc."
and "FPA", "Sterling", "Sterling Healthcare", and all other
names and marks included on Schedule 3.13(c) hereto or
otherwise included within the Assets and all formatives,
variants or derivatives thereof, and no Seller shall have
any rights whatsoever to the use of such names or any
variants or derivatives of such names in the conduct of any
business.
(b) On the Closing Date, subject to Bankruptcy Court
approval, Sellers shall amend their Corporate Charters to
change their names to names distinctly different in
spelling, sound and meaning from "FPA Medical Management,
Inc.", Sterling Healthcare, Inc. and shall not use the
initials "FPA" or the word "Sterling" in such name. Seller
shall seek Bankruptcy Court authorization to modify the
caption of its Chapter 11 petition to reflect its changed
name and to use the modified caption in all subsequent
pleadings filed with the Bankruptcy Court.
(c) From and after the Closing, Seller agrees that it will
not (i) disclose, as part of any general advertising with
respect to Seller, their successors, assigns or Affiliates,
the relationship between Buyers and Seller or (ii) otherwise
exploit the "FPA" or "Sterling" name or any other names or
marks listed in this Section 5.9 for monetary gain or
otherwise.
5.10 Access to Facilities. Buyers and their employees,
agents, attorneys, consultants, lenders, accountants and
other authorized representatives shall have full access,
upon reasonable notice to Seller, under reasonable
circumstances, during normal business hours and at other
reasonable times, to all properties, books, contracts,
commitments, records, facilities, personnel, customers,
advisors, lenders and others having a business relationship
with Seller in order to permit Buyers and other Persons to
inspect the Assets and any other items relating to the
Sterling Business or the PPM Business. Such investigation
shall include, among other things, the receipt of relevant
financial information, the review of any relevant
contractual obligations of Seller and the conducting of
discussions with the Seller's prior consent (which consent
not to be unreasonably withheld or delayed). Neither Buyer,
nor any Affiliate thereof will at any time from and after
the date of this Agreement, divulge, furnish to or make
accessible to anyone, any knowledge or information with
respect to the Confidential Information except to their
representatives as may be necessary to investigate the
Assets in connection with the transactions contemplated
hereby. Any information, which (a) at or prior to the time
of disclosure was generally available to the public through
no breach of this covenant, (b) was available on a
nonconfidential basis prior to its disclosure or (c) was
made available from a third party provided that such third
party did not obtain or disseminate such information in
breach of any legal obligation known to Buyers, shall not be
deemed to be Confidential Information for purposes hereof,
and the undertaking in this covenant with respect to
Confidential Information shall not apply thereto.
5.11 Conduct of the Business. The Sellers agree that, as it
relates to the Assets and except as permitted, required or
specifically contemplated by, or otherwise described in,
this Agreement, permitted or contemplated by the Plan or
otherwise consented to or approved in writing by Buyers,
during the period commencing on the date hereof until the
earlier of the Closing or the date on which this Agreement
shall have been terminated pursuant to Section 16.2 hereof:
(a) The Sellers shall conduct their respective operations
only according to their ordinary and usual course of
business consistent with past practice and shall use their
reasonable best efforts to preserve intact their respective
business organization, keep available the services of their
officers and employees and maintain satisfactory
relationships with independent contractors, employees,
licensors, suppliers, distributors, clients, payors, and
others having significant business relationships with any
Seller except where such failure could not reasonably be
expected to have a Material Adverse Effect;
(b) No Seller shall:
(i) make any change in or amendment to its Certificate of
Incorporation or its By-Laws (or comparable governing
documents);
(ii) issue or sell, or authorize to issue or sell, any
shares of its capital stock or any other securities, or
issue or sell, or authorize to issue or sell, any securities
convertible into, or options, warrants or rights to purchase
or subscribe to, or enter into any arrangement or contract
with respect to the issuance or sale of, any shares of its
capital stock or any other securities, or make any other
changes in its capital structure;
(iii) sell or pledge or agree to sell or pledge any
stock or other equity interest owned by it in any other
Person;
(iv) declare, pay or set aside any dividend or other
distribution or payment with respect to, or split, combine,
redeem or reclassify, or purchase or otherwise acquire, any
shares of its capital stock or its other securities;
(v) enter into any contract or commitment with respect to
capital expenditures with a value in excess of, or requiring
expenditures by any Seller in excess of, $10,000, or enter
into contracts or commitments with respect to capital
expenditures with a value in excess of, or requiring
expenditures by the Sellers in excess of, $25,000, in the
aggregate;
(vi) except to the extent required under an Employee Plan as
in effect on the date of this Agreement, increase the
compensation or fringe benefits of any of its directors,
officers or employees or grant any severance or termination
pay not currently required to be paid under existing
Employee Plan or enter into any employment, consulting or
severance agreement or arrangement with any present or
former director, officer or other employee of any Seller, or
establish, adopt, enter into or amend or terminate any
collective bargaining, bonus, savings, profit sharing,
thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, welfare,
employment, fringe benefit, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the
benefit of any directors, officers or employees;
(vii) transfer, lease, license, guarantee, sell,
mortgage, pledge, dispose of, encumber or subject to any
lien, any material assets or incur or modify any
indebtedness or other material liability, other than in the
ordinary course of business, or issue any debt securities or
assume, guarantee or endorse or otherwise as an
accommodation become responsible for the obligations of any
Person or, other than in the ordinary course of business
consistent with past practice, make any loan or other
extension of credit;
(viii) agree to the settlement of any material claim or
litigation included in the Assets or the Assumed
Liabilities;
(ix) accelerate the payment, right to payment or vesting of
any bonus, severance, profit sharing, retirement, deferred
compensation, stock option, insurance or other compensation
or benefits;
(x) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge
or satisfaction of any such claims, liabilities or
obligations in the ordinary course of business and
consistent with past practice;
(xi) enter into any agreement, understanding or commitment
that restrains, limits or impedes the Sellers' ability to
compete with or conduct any business or line of business,
including, but not limited to, geographic limitations on the
Sellers' activities;
(xii) plan, announce, implement or effect any reduction
in force, lay-off, early retirement program, severance
program or other program or effort concerning the
termination of employment of employees of the Sellers,
provided, however, that routine employee terminations for
cause shall not be considered subject to this Section
5.11(b)(xii);
(xiii) (A) take any action, engage in any transaction or
enter into any agreement which would cause any of the
representations or warranties set forth in Section 3 that
are subject to, or qualified by, a "Material Adverse
Effect", or other materiality qualification to be untrue as
of the Closing Date, or any such representations and
warranties that are not so qualified to be untrue in any
material respect;
(xiv) materially modify, amend or terminate any material
contract to which it is a party or waive any of its material
rights or claims except in the ordinary course of business
consistent with past practice; or
(xv) agree, in writing or otherwise, to take any of the
foregoing actions.
5.12 Changes in Representations and Warranties. Between the
date of this Agreement and the Closing Date, Seller shall
not, subject to orders of the Bankruptcy Court, enter into
any transaction, take any action, or knowingly by inaction
permit an event to occur, which would result in any of the
representations and warranties of Seller herein contained
not being true and correct at and as of the Closing Date.
Seller shall promptly give written notice to Buyers upon
becoming aware of (a) any fact which, if known on the date
hereof, would have been required to be set forth or
disclosed pursuant to this Agreement and (b) any impending
or threatened breach in any material respect of any of the
representations and warranties contained in this Agreement
and with respect to the latter shall use all reasonable
efforts to remedy same.
5.13 Mutual Cooperation. The parties hereto will cooperate
with each other, and will use all reasonable efforts (a) to
cause the fulfillment of the conditions to the parties'
obligations hereunder, (b) to remove any Encumbrances
relating to the Assets, (c) to assume and/or assign all
agreements necessary for the transfer of the Assets, (d) to
obtain as promptly as possible and in accordance with
applicable laws (including, but not limited to,
Environmental, Health or Safety Laws) all Permits to be
transferred or reissued to Buyers, (e) and to obtain all
other consents, authorizations, orders or approvals from
each and every third party, whether private or governmental,
required in connection with the transactions contemplated by
this Agreement, including, without limitation, all things
reasonably necessary to have the Interim Order or the
Confirmation Order approved, and (f) to jointly prepare the
Closing Balance Sheet on or no more than two days before the
Closing Date.
5.14 No Solicitation of Other Offers.
(a) The Sellers and each of their respective officers,
directors, employees, representatives, consultants,
investment bankers, attorneys, accountants and other agents
shall immediately cease any discussions or negotiations with
any other parties that may be ongoing with respect to any
Acquisition Proposal. Neither the Sellers nor any of their
Affiliates shall, directly or indirectly, take (and the
Sellers shall not authorize or permit their Affiliates,
officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants or
other agents or Affiliates, to so take) any action to (i)
encourage, solicit, initiate or facilitate the making of any
Acquisition Proposal, (ii) enter into any agreement with
respect to any Acquisition Proposal or enter into any
arrangement, understanding or agreement requiring it to
abandon, terminate or fail to consummate the Acquisition or
any other transactions contemplated by this Agreement or
(iii) participate in any way in discussions or negotiations
with, or, furnish or disclose any information to, any Person
(other than Buyers) in connection with, or take any other
action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal; provided, however, that
the Sellers, in response to an unsolicited Acquisition
Proposal and without limiting its obligations under Section
15.2 hereof, may participate in discussions or negotiations
with or furnish information (pursuant to a confidentiality
agreement with terms not more favorable to such third party
than the terms of the Confidentiality Agreement) to any
third party which makes a Superior Proposal if the Board of
Directors of Sellers' Parent concludes at a valid meeting
that failing to take such action would constitute a breach
of their fiduciary duties. In addition, neither the Board
of Directors of Sellers' Parent nor any Committee thereof
shall (A) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Buyers the approval and
recommendation of the Acquisition contemplated by this
Agreement or (B) approve or recommend, or propose to approve
or recommend, any Acquisition Proposal; provided that the
Board of Directors of Sellers' Parent may recommend an
Acquisition Proposal and in connection therewith withdraw or
modify its approval or recommendation of the Acquisition if
(1) a third party makes a Superior Proposal and (2) all the
conditions to the Company's right to terminate this
Agreement in accordance with Section 16.2(g) hereof have
been satisfied (including the payment of all amounts
required pursuant to Section 15.2 hereof).
(b) In addition to the obligations of the Sellers set forth
in Section 5.14(a), on the date of receipt thereof, the
Sellers shall advise Buyers of any request for information
or of any Acquisition Proposal, or any inquiry, proposal,
discussions or negotiation with respect to any Acquisition
Proposal, the terms and conditions of such request,
Acquisition Proposal, inquiry, proposal, discussion or
negotiation and the Sellers shall promptly provide to Buyers
copies of any written materials received by the Sellers in
connection with any of the foregoing, and the identity of
the Person making any such Acquisition Proposal or such
request, inquiry or proposal or with whom any discussion or
negotiations are taking place. The Sellers shall keep
Buyers fully informed of the status and details (including
amendments or proposed amendments) of any such request or
Acquisition Proposal and keep Buyers fully informed as to
the details of any information requested of or provided by
the Sellers and as to the details of all discussions or
negotiations with respect to any such request, takeover
proposal or inquiry. The Sellers shall promptly provide to
Buyers any non-public information concerning the Sellers
provided to any other Person in connection with any
Acquisition Proposal which was not previously provided to
Buyers.
(c) Immediately following the Closing, the Sellers shall
request each Person which has heretofore executed a
confidentiality agreement in connection with its
consideration of acquiring the Sellers, the Assets or any
portion thereof to return all confidential information
heretofore furnished to such Person by or on behalf of the
Sellers.
5.15 Transfer Tax. The Sellers and Buyers shall cooperate
in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding
any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees and any similar taxes
which become payable in connection with the transactions
contemplated by this Agreement (together with any related
interest, penalties or additions to tax, "Transfer Taxes").
All Transfer Taxes shall be paid by the Sellers and
expressly shall not be a liability of any of the Buyers.
5.16 Interim Financing. On or before June 1,1999 Buyers
shall purchase for an aggregate purchase price of $3,000,000
all of the right, title and interest of the Additional
Lenders in and to the loans made pursuant to the Letter
Agreement and the other rights and obligations thereunder
(except for the fee to be paid pursuant to the last sentence
of paragraph 1 thereof), provided the Additional Lenders
present an offer to sell all of their right, title and
interest thereunder. In the event that the Closing does not
occur as a result of the Buyers' breach of their obligations
under this Agreement, then any and all claims arising from
or relating to the Letter Agreement and any and all liens
and encumbrances granted in connection therewith shall be
waived and released by the Buyers.
SECTION 6. CONDITIONS TO OBLIGATIONS OF BUYERS.
The obligation of Buyers to consummate the transactions
contemplated by this Agreement shall be subject to the
fulfillment, or the waiver in writing by Buyers on or prior
to the Closing Date of each of the following conditions:
6.1 Representation and Warranties. Each of the
representations and warranties of the Sellers contained in
this Agreement shall be true and correct in all material
respects when made and as of the Closing Date, with the same
effect as though such representations and warranties had
been made on and as of the Closing Date (except
representations and warranties that are made as of a
specific date need be true and correct in all material
respects only as of such date) and each of the covenants and
agreements of Sellers to be performed on or prior to the
Closing Date shall have been duly performed in all material
respects.
6.2 Consents. All Government Consents required to
consummate the Acquisition shall have been received on or
prior to the Closing Date and any waiting period (and any
extension thereof) with respect to the HSR Act shall have
expired or been terminated.
6.3 Litigation. Except as will be fully discharged
pursuant to the Plan, there shall not be pending or
threatened any action or proceeding before any federal,
state or foreign court or governmental, administrative or
regulatory authority or agency by any federal, state or
foreign legislative body, court, government or governmental,
administrative or regulatory authority or agency which shall
have remained in effect and which shall have had the effect
of: (i) making illegal, materially delaying or otherwise
directly or indirectly restraining or prohibiting the
Acquisition; (ii) prohibiting or materially limiting the
ownership or operation by the Seller, Buyers or any of their
respective subsidiaries of all of the Assets; or (iii)
requiring divestiture by Buyers of any Assets of the
Sellers.
6.4 Material Adverse Effect. Since March 31, 1999, there
shall not have been any Material Adverse Effect, including,
but not limited to, the exercise of any remedies by any of
the lenders under the DIP Facility which could reasonably be
expected to have a Material Adverse Effect, with respect to
the Sellers, the Assets, the Sterling Business or the PPM
Business which has not been disclosed by Sellers to Buyers.
6.5 No Amendments. The Plan shall not have been amended,
supplemented or modified in any material manner which is not
reasonably satisfactory to Buyers.
6.6 Execution, Amendment or Review of Certain Agreements.
(a) The Sterling Buyer shall have been provided and allowed
reasonable time to review all physician independent
contractor agreements involving the Sterling Business and
shall have determined that such agreements could not
reasonably be expected to have a Material Adverse Effect on
the Sterling Buyer or the Sterling Assets after the Closing.
6.7 Entry of the Interim Order; the Confirmation Order;
Consummation of the Plan.
(a) On or prior to May 28, 1999, the Interim Order shall
have been entered by the Bankruptcy Court and is in form and
substance reasonably satisfactory to Buyers.
(b) On or prior to May 28, 1999, the Confirmation Order and
Related Orders shall have been entered by the Bankruptcy
Court without the waiver of any conditions to the
consummation of the Plan.
(c) The Confirmation Order and the Related Orders shall
include the determinations, findings, provisions and rulings
required by Section 5.2(b)(i)-(xvi).
(d) The Confirmation Order and the Related Orders shall not
have been modified, amended, dissolved, revoked or rescinded
and shall have become and be final and enforceable orders,
in full force and effect, and not subject to any stay or
injunction, and, if any objections have been filed with
respect to any of the orders specified in Section
5.2(b)(iii), (viii) - (xv), such objections shall have been
resolved on terms satisfactory for the Buyers in the sole
discretion.
6.8 Sellers' Performance. On the Closing Date Sellers
shall have delivered to Buyers an officer's certificate
confirming that, all of the obligations of Sellers to be
performed on or before the Closing Date, pursuant to the
terms of this Agreement, shall have been duly performed in
all material respects.
6.9 Instruments of Conveyance and Transfer; Title
Insurance. Sellers shall have delivered to Buyers such
deeds, bills of sale, endorsements, assignments, and other
good and sufficient instruments of conveyance and transfer
(including, without limitation, assignments of any
Intellectual Properties in recordable form), in form and
substance reasonably satisfactory to Buyers and its counsel,
as are effective to vest in buyer good title and all of
Sellers' right to the Assets free and clear of any
Encumbrances.
6.10 No Change in Law. There shall not have been any action
taken or any statute enacted by any governmental authority
which would render the parties unable to consummate the
transactions contemplated herein or make the transactions
contemplated herein illegal or prohibit, or substantially
delay the consummation of the transactions contemplated
herein.
6.11 Post Closing Arrangements. On or prior to May 30,
1999, Buyers shall have entered into agreements with Stephen
J. Dresnick, M.D. and Jack Greenman in the form of Exhibits
B-1 and B-2, respectively.
6.12 Working Capital. The Closing Balance Sheet Working
Capital Amount is greater than 95 percent of the Preclosing
Balance Sheet Working Capital Amount.
SECTION 7. CONDITIONS TO OBLIGATIONS OF SELLER. The
obligation of Seller to consummate the transactions
contemplated hereby shall be subject to the fulfillment, or
the waiver by Seller, on or prior to the Closing Date, of
the following conditions:
7.1 Bankruptcy Court Approval; HSR Approval. The
Confirmation Order shall have been entered and shall not be
subject to a stay and the HSR waiting period shall have
expired.
7.2 Representations and Warranties True at the Closing
Date. The representations and warranties of Buyers
contained in this Agreement shall be deemed to have been
made on and as of the closing Date and shall then be true
and correct in all material respects, and on the Closing
Date Buyers shall have delivered to Seller an officer's
certificate to such effect.
7.3 Buyers' Performance. On the Closing Date, all of the
obligations of Buyers to be performed on or before the
Closing Date, pursuant to the terms of this Agreement, shall
have been duly performed in all material respects by the
Closing Date, and on the Closing Date, Buyers shall have
delivered to Sellers an officer's certificate to such
effect.
7.4 No Change in Law. There shall not have been any action
taken or any statute enacted by any governmental authority
which would render the parties unable to consummate the
transactions contemplated herein to make the transactions
contemplated herein illegal or prohibit, restrict or
substantially delay the consummation of the transactions
contemplated herein.
SECTION 8. NATURE AND SURVIVAL OF REPRESENTATIONS AND
WARRANTIES, ETC.
Sellers' obligation to consummate the sale of the Assets to
Buyers pursuant to this Agreement and comply with Sellers'
obligations contained in this Agreement, unless terminated
in accordance with Section 16.2, shall survive (i) dismissal
of the Chapter 11 Case; or (ii) conversion of the Chapter 11
Case to a case under Chapter 7 of the Bankruptcy Code.
SECTION 9. PAYMENT OF CERTAIN EXPENSES.
In addition to any other amounts payable hereunder, the
Sellers will pay all of their costs and expenses in
connection with the Acquisition, all federal, state, county,
local and foreign Taxes which may be payable by reason of
the purchase and sale of the Assets. Except as otherwise
provided in Section 15 and this Section 9, the Buyers will
pay all of their costs and expenses in connection with the
Acquisition. All filing fees and costs required under the
HSR Act or incurred in pursuing approval of the Acquisition
under the HSR Act shall be paid equally by both Buyers and
Sellers.
SECTION 10. NOTICES, ETC.
All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have
been duly given, if delivered in person or by courier,
telegraphed, telexed or by facsimile transmission or mailed
by certified or registered mail, postage prepaid:
If to Sellers: FPA Medical Management, Inc. and its direct
and indirect subsidiaries
5835 Blue Lagoon Drive
Miami, FL 33126
Attention: Stephen J. Dresnick, M.D.
Telephone: (305) 513-7101
Facsimile: (305) 513-7350
with copy to: Skadden, Arps, Slate, Meagher & Flom
(Illinois)
333 West Wacker Drive
Chicago, IL 60606
Attention: N. Lynn Hiestand, Esq.
Telephone: (312) 407-0700
Facsimile: (312) 407-0411
If to Buyers: Coastal Acquisition Co.
Stoneybrook Capital Acquisition Co., LLC
2828 Croasdaile Drive
Durham, NC 27704
Attention: Steven M. Scott, M.D.
Telephone: (919) 383-0355
Facsimile: (919) 382-9424
with a copy to: White & Case LLP
200 South Biscayne Blvd., Suite 4900
Miami, Florida 33131-2352
Attention: Thomas E Lauria, Esq.
Telephone: (305) 371-2700
Facsimile: (305) 358-5744
Any party may, by written notice to the other, change the
address to which notices to such party are to be delivered
or mailed.
SECTION 11. ENTIRE AGREEMENT; AMENDMENT.
This Agreement and the other agreements referred to herein
and entered into in connection herewith set forth the entire
agreement and understanding of the parties in respect of the
transactions contemplated hereby and supersede all prior
agreements, arrangements and understandings relating to the
subject matter hereof including all such agreements,
arrangements and understandings between Seller and Buyers.
No representation, promise, inducement or statement of
intention has been made by any Seller or Buyer that is not
embodied in this Agreement or the other agreements referred
to herein and entered into in connection herewith, the
Annexes, Schedules or Exhibits hereto, or the written
statements, certificates or other documents delivered
pursuant hereto. This Agreement may be amended or modified
only by a written instrument executed by Buyers and Seller
or by their respective successors and assigns.
SECTION 12. PRESS RELEASES.
Prior to the Closing Date, the Sellers and the Buyers shall
cooperate and mutually agree on the form and content of any
press releases relating to any of the transactions
contemplated by this Agreement.
SECTION 13. GENERAL.
This Agreement: (i) shall be construed and enforced in
accordance with the laws of the State of New York without
giving effect to the choice of law principles thereof; (ii)
shall inure to the benefit of and be binding upon the
successors and assigns of Sellers, including any trustee
appointed pursuant to Section 1104 of the Bankruptcy Code or
appointed or elected pursuant to Sections 701 or 702 of the
Bankruptcy Code and any Affiliate of Buyers who becomes a
successor or assign, nothing in this Agreement, expressed or
implied, being intended to confer upon any other person any
rights or remedies hereunder and, provided, that Sellers may
not assign their rights or obligations hereunder without the
prior written consent of Buyers and Buyers may not assign
its rights or obligations hereunder without the prior
written consent of Sellers, except to an Affiliate of
Buyers; and (iii) may be executed in two or more
counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument. The Section and other headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Any of the terms or conditions of this Agreement
may be waived at any time and from time to time in writing
by the party entitled to the benefits thereof without
affecting any other terms or conditions of this Agreement.
DURING THE CHAPTER 11 CASE, ANY LEGAL ACTION OR PROCEEDING
RELATING TO DISPUTES BETWEEN THE PARTIES HERETO SOLELY
ARISING UNDER THIS AGREEMENT SHALL BE BROUGHT IN THE
BANKRUPTCY COURT AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, SELLER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, AND BUYERS HEREBY ACCEPT, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURT.
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON COVENIENS,
WHICH ANY OF THE, MAY NOW OR HEREAFTER HAVE TO THE BRINGING
OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION.
SECTION 14. SEVERABILITY.
To the extent that any provision of this Agreement shall be
invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provision and of this
Agreement shall be unaffected and shall continue in full
force and effect. In furtherance and not in limitation of
the foregoing, if the duration or geographic extent of, or
business activity covered by, any provision of this
Agreement shall be in excess of that which is enforceable
under applicable law, then such provision shall be construed
to cover only that duration, extent or activities which may
be validly and enforceably covered.
SECTION 15. BREAK-UP FEE/EXPENSES.
15.1 Expenses. Except as otherwise provided in Sections 9
and 15.2, at the Closing the Sellers shall pay the Buyers'
reasonable out-of-pocket costs and expenses (including,
without limitation, filing fees and all fees and expenses of
their legal and financial advisors and all fees and expenses
payable to any of Buyers' potential financing sources) in
connection with the Buyers' due diligence, negotiation,
preparation, execution and delivery of this Agreement and
all other documents or actions contemplated hereby, in an
aggregate amount not to exceed $1.0 million, as previously
agreed and in accordance with that certain letter dated
March 16, 1999 (which amount may be applied as a reduction
to the Cash Payment, if not otherwise paid at the Closing)
and that certain order of the Bankruptcy Court dated March
25, 1999 which was entered in the Chapter 11 Case.
15.2 Break-Up Fee. This Agreement may be terminated by the
Buyers if they become aware that Sellers have materially
breached this Agreement or otherwise failed to perform their
obligation to consummate the Acquisition, by the Buyers or
the Sellers, in the event an Acquisition Proposal is
presented to the Bankruptcy Court for approval or any sale
order and assumption order or any plan of reorganization
other than the Plan is presented to the Bankruptcy Court for
approval (in which event this Agreement will only be
terminated upon Sellers' payment of all amounts due to
Buyers pursuant to this Section 15.2, notwithstanding any
provision to the contrary herein), or by the Buyers or the
Sellers, if the Board of Directors of any Seller shall
propose a chapter 11 plan other than the Plan or accept an
Acquisition Proposal, including executing a letter of intent
or other agreement with respect thereto (in which event,
this Agreement will only be terminated upon Sellers' payment
of all amounts due to Buyers pursuant to Section 15.2,
notwithstanding any provision to the contrary herein);
whereupon the letter agreement described in Section 15.1
shall not apply with respect to the payment of any costs and
expenses of Buyers and, in lieu thereof, Sellers shall, on
the Business Day next succeeding the date of termination,
(i) reimburse Buyers in immediately available funds for all
reasonable out-of-pocket costs and expenses of Buyers
(including, without limitation, filing fees and fees and
expenses of their legal and financial advisors and all fees
and all expenses payable to any of Buyers potential
financing sources) related to the Acquisition, this
Agreement, the transactions contemplated hereby and any
related financing and (ii) pay to Buyers in immediately
available funds an amount equal to $3.15 million.
SECTION 16. AMENDMENT; TERMINATION8.
16.1 Amendment. This Agreement may be amended by the
written agreement of the Seller and Buyers at any time prior
to the Closing Date.
16.2 Termination. This Agreement may be terminated as
follows:
(a) By the mutual consent of the Sellers and Buyers at any
time prior to the confirmation by the Bankruptcy Court of
the Plan;
(b) by the Buyers, if the Interim Order has not been
entered by the Bankruptcy Court on or prior to May 28, 1999;
(c) by the Buyers, if the Confirmation Order shall not have
been approved by the Bankruptcy Court prior to or on May 28,
1999;
(d) by the Buyers, if any of the conditions precedent to
the Closing set forth in Section 6 have not been fulfilled
or waived in all respects by June 15, 1999;
(e) by the Sellers, if any of the conditions precedent to
the Closing set forth in Section 7 have not been fulfilled
or waived in all respects by June 15, 1999;
(f) by the Buyers or the Sellers, if, after approval, the
Confirmation Order, has been reversed, revoked, voided,
substantively modified or stayed by an order of a court of
competent jurisdiction;
(g) by the Buyers, if the Plan, as filed with the
Bankruptcy Court pursuant to Section 5.2, or as amended,
supplemented or modified, is not reasonably satisfactory to
Buyers; and
(h) as provided in Section 15.2.
16.3 Rights of Termination.
(a) The right of termination hereunder may be exercised by
Buyers or the Sellers, as the case may be, only by giving
written notice, signed on behalf of such party by its duly
authorized officer to the other party.
(b) No exercise by either party of its right to terminate
this Agreement pursuant to Section 16.2 shall prejudice that
party's rights and remedies against the other for breach of
obligations under this Agreement or otherwise including,
without limitation, the Buyers' rights pursuant to Section
15.1. Upon the Buyers' exercise of their right to terminate
this Agreement pursuant to Section 15.2, Buyers' sole remedy
shall be to receive the amounts specified in Sections
15.2(i) and 15.2(ii).
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement the day and year first above written.
BUYER:
CPG ACQUISITION CO.
By:
Name: Steven M. Scott, M.D.
Title: President
STONEYBROOK CAPITAL, LLC
By:
Name: Steven M. Scott, M.D.
Title: Manager
SELLER:
FPA MEDICAL MANAGEMENT, INC.
FPA MEDICAL MANAGEMENT OF NORTH CAROLINA, INC.
FPA OF GEORGIA, INC.
FPA MEDICAL GROUP OF GEORGIA, P.C.
STERLING HEALTHCARE GROUP, INC.
MID-LEVEL PRACTITIONERS, INC.
STERLING EMERGENCY TREATMENT ASSOCIATES, INC.
STERLING ANESTHESIA, INC.
STERLING MIAMI, INC.
STERLING CREDENTIALS VERIFICATION SERVICES, INC.
STERLING EMERGENCY MEDICAL CARE, INC.
STERLING RADIOLOGY, INC.
STERLING MEDICAL GROUP OF MICHIGAN, INC.
STERLING MEDNET EMERGENCY SERVICES, INC.
STERLING SUB TEXAS, INC.
STERLING MICHIGAN, P.C.
STERLING HEALTHCARE OF TEXAS, P.A.
STERLING MEDICAL GROUP OF MICHIGAN, P.C.
STERLING HEALTHCARE OF TEXAS, P.A.
STERLING HEALTHCARE MEDICAL CORPORATION
STERLING EMERGENCY TREATMENT ASSOCIATES, INC.
AHI (TEXAS) HEALTHCARE SYSTEMS, INC.
AHI HEALTHCARE SYSTEMS, INC.
AMG MANAGEMENT COMPANY
AMERICAN HEALTH MEDICAL GROUP, DOWNEY, INC.
ARIZONA MANAGED CARE PROVIDERS, LTD.
AVANTI HEALTH SYSTEMS OF TEXAS, INC.
BHP IPA, INC.
BEVERLY HILLS/WEST LOS ANGELES MEDICAL NETWORK, A MEDICAL
GROUP, INC.
CAROLINA HEALTH CARE GROUP, P.C.
CENTURY FAMILY MEDICAL GROUP, INC.
CINCINNATI HEALTH PARTNERS, INC.
COMPREHENSIVE PRIMARY CARE MSO, INC.
CONNEKT, LLC
CORNERSTONE PHYSICIANS CORPORATION
CORNERSTONE PHYSICIANS OF PHOENIX, INC.
FHC IPA, INC.
FHMG/TDMC MEDICAL GROUP, A PROFESSIONAL CORPORATION
FPA/GREGORY MEDICAL GROUP OF NEVADA, LTD.
FPA ACQUISITION CORPORATION
FPA AXMINSTER MEDICAL GROUP, INC.
FPA HOLDING COMPANY OF CALIFORNIA, INC.
FPA INDEPENDENT PRACTICE ASSOCIATION, A MEDICAL CORPORATION
FPA MEDICAL FOUNDATION
FPA MEDICAL GROUP OF ARIZONA, P.C.
FPA MEDICAL GROUP OF CALIFORNIA, INC.
FPA MEDICAL GROUP OF DELAWARE, P.A.
FPA MEDICAL GROUP OF FLORIDA, INC.
FPA MEDICAL GROUP OF KENTUCKY, INC.
FPA MEDICAL GROUP OF NEW JERSEY, A PROFESSIONAL CORPORATION
FPA MEDICAL GROUP OF NORTHERN CALIFORNIA, INC.
FPA MEDICAL GROUP OF PENNSYLVANIA, A MEDICAL CORPORATION
FPA MEDICAL GROUP OF TEXAS, A TEXAS PROFESSIONAL ASSOCIATION
FPA MEDICAL GROUP OF THE GREATER BAY AREA, INC.
FPA MEDICAL GROUP, P.A.
FPA MEDICAL MANAGEMENT OF ARIZONA, INC.
FPA MEDICAL MANAGEMENT OF CALIFORNIA, INC.
FPA MEDICAL MANAGEMENT OF FLORIDA, INC.
FPA MEDICAL MANAGEMENT OF GEORGIA, INC.
FPA MEDICAL MANAGEMENT OF ILLINOIS, INC.
FPA MEDICAL MANAGEMENT OF KENTUCKY, INC.
FPA MEDICAL MANAGEMENT OF LOUISIANA, INC.
FPA MEDICAL MANAGEMENT OF MISSOURI, INC.
FPA MEDICAL MANAGEMENTS OF SOUTH CAROLINA, INC.
FPA MEDICAL MANAGEMENT OF TENNESSEE, INC.
FPA MEDICAL MANAGEMENT OF TEXAS, INC.
FPA MEDICAL MANAGEMENT OF THE MID-ATLANTIC, INC.
FPA SURGICAL CENTER, INC.
FPA WOMEN'S CARE OF GEORGIA, INC.
FAMILY PRACTICE ASSOCIATES OF SOUTHERN CALIFORNIA, A MEDICAL
CORPORATION
FOUNDATION HEALTH IPA, A PROFESSIONAL MEDICAL CORP.
G.P.M. IPA, INC.
GATEWAY IPA, INC.
GATEWAY PHYSICIANS SERVICES, INC.
GOTHAM MANAGEMENT, INC.
GOTHAM MID-TOWN MANAGEMENT, INC.
HAYWARD VESPER MEDICAL GROUP, INC.
HEALTH ONE ASSOCIATES, INC.
HEALTH PARTNERS, INC.
HEALTHCAP-MISSOURI, INC.
HEALTHCAP-NEVADA, INC.
HEALTHCAP, INC.
INTERGROUP IPA, P.C.
MONTEBELLO PHYSICIANS MEDICAL GROUP, INC.
NOVA HEALTHCARE MEDICAL GROUP, INC.
NOVA PHYSICIANS MEDICAL CORPORATION, INC.
OB-GYN MANAGEMENT, INC.
PHYSICIAN NETWORK OF WHITTIER MEDICAL ASSOCIATES, INC.
PHYSICIANS MEDICAL GROUP OF FLORIDA, INC.
PRIMARY CARE MEDICAL GROUP AT LITTLE COMPANY OF MARY
HOSPITAL, INC.
PRIVATE PHYSICIANS GROUP AT STANFORD, A MEDICAL GROUP, INC.
SAN ANTONIO HEALTH PARTNERS, INC.
ST. FRANCIS CARE MEDICAL GROUP
STERLING MEDICAL GROUP OF MICHIGAN, INC.
STERLING PROFESSIONAL EMERGENCY PHYSICIANS, LLC
STERLING REGIONAL EMERGENCY SERVICES, INC.
THE DOCTORS OFFICENTER MEDICAL GROUP OF DALLAS, P.A.
THE DOCTORS OFFICENTER MEDICAL GROUP OF HOUSTON, P.A.
THOMAS-DAVIS MEDICAL CENTERS, P.C.
VIP IPA, A PROFESSIONAL MEDICAL CORPORATION
VMS MEDICAL IPA, INC.
VIRGINIA HEALTH PARTNERS, INC.
VIRGINIA MEDICAL ASSOCIATES, P.C.
Debtors in Possession
By:
Name: Stephen J. Dresnick, M.D.
Title: Chairman, Chief Executive Officer and/or President
of each of the 103 Sellers listed above.
_____________________________________
Stephen J. Dresnick, M.D., individually as the sole
shareholder of FPA/Meridian Medical Group, P.C. with respect
to the obligation to transfer the PPM Asset listed on
Schedule 2.2.A, Section K
CAROLINA HEALTH CARE GROUP, P.C.
Debtor in Possession
By:
Name: Karen E. Breach, M.D.
Title: President
EXHIBITS AND APPENDIXES
Appendix I Defined Terms
Appendix II Disclosure Schedules
Exhibit A Financing Commitment
Exhibit B Post Closing Arrangements
Exhibit C Excluded Sterling Assets
Exhibit D Excluded PPM Assets
Exhibit E Plan
APPENDIX I - DEFINED TERMS
"Accounting Terms" shall have the meaning set forth in
Section 1.2
"Acquisition" shall have the meaning set forth in Section
2.2
"Acquisition Proposal" shall mean any proposal or offer from
any Person relating to any direct or indirect acquisition or
purchase of substantially all of the Assets or of over 50
percent of the equity securities of any Seller, any merger,
consolidation, business combination, sale of substantially
all the assets, recapitalization, liquidation, dissolution
or similar transaction involving any Seller, or any other
transaction the consummation of which could reasonably be
expected to materially impede, interfere with, prevent or
delay the Acquisition.
"Additional Lenders" means Lehman Commercial Paper Inc. and
Goldman Sachs Credit Partners L.P.
"Administrative Claims" shall have the meaning given such
term in the Plan.
"Administrative Services Agreement" means an agreement
between any Seller that is not a Professional Corporation
and a Professional Corporation pursuant to which such Seller
provides the Professional Corporation all of its
administrative services in exchange for all of the revenues
of the Professional Corporation.
"Affiliate" means, with respect to any Person, any other
Person which, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under
common control with, such Person.
"Agreement" means this Asset Purchase Agreement.
"Antitrust Filing" shall have the meaning set forth in
Section 3.3.
"Assets" means, collectively, the Sterling Assets and the
PPM Assets
"Assumed Liabilities" means Seller Payables and payables of
Health Partners, Inc. and its Affiliates, Cornerstone and
PQC (in an aggregate amount not to exceed $1.75 million) but
shall exclude Excluded Liabilities and Insurance
Obligations; provided that in no event shall Assumed
Liabilities exceed $21 million.
"Atlanta Assets" shall have the meaning set forth in Section
2.2.
"Atlanta Business" shall have the meaning set forth in
Section 2.2.
"Bankruptcy Code" means Title I of the Bankruptcy Reform
Action of 1978, as amended and codified in Title 11 of the
United States Code.
"Bankruptcy Court" means the Bankruptcy Court unit of the
United States District Court for the District of Delaware,
or such other court having jurisdiction over the Chapter 11
Cases or any proceeding relating thereto.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy
Procedure, as the same are applicable to the Chapter 11
Cases.
"Business Day" means a day of the year on which banks are
not authorized to be closed in the City of New York.
"Buyers" means, collectively, the Sterling Buyer and the PPM
Buyer.
"Cash Payment" shall mean an amount equal to $69.3 million
adjusted in accordance with Section 15.1.
"Causes of Action" means any and all actions, causes of
action, suits, accounts, controversies, agreements,
promises, rights to legal remedies, rights to equitable
remedies, rights to payment and claims, whether known,
unknown, reduced to judgment, not reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured and
whether asserted or assertable directly or derivatively, in
law, equity or otherwise.
"Chapter 11 Case" shall have the meaning set forth in the
Preamble to this Agreement.
"Charlotte Assets" shall have the meaning set forth in
Section 2.2.
"Charlotte Business" shall have the meaning set forth in
Section 2.2.
"Claimants" means all creditors, claimants and interest
holders having claims against or interests in the Sellers.
"Closing" shall have the meaning set forth in Section 2.4.
"Closing Balance Sheet" means a balance sheet prepared in
accordance with GAAP as of the Closing Date which includes
the assets, liabilities and owner's equity attributable to
the Sterling Business and, if and to the extent acquired,
the Kansas City Business, Texas Business, Atlanta Business,
Charlotte Business and Florida Business.
"Closing Balance Sheet Working Capital Amount" means an
amount equal to the sum of the account balances for cash,
cash equivalents and accounts receivable which are included
in the Closing Balance Sheet.
"Closing Date" shall have the meaning set forth in Section
2.6.
"Code" shall have the meaning set forth in Section 2.3(c)
"Commission" shall mean the Securities and Exchange
Commission.
"Commission Filings" shall have the meaning set forth in
Section 3.24.
"Computer Software" shall have the meaning set forth in
Section 3.13(c).
"Confidential Information" shall have the meaning set forth
in Section 5.6.
"Confirmation Order" shall have the meaning set forth in
Section 5.2(b).
"Confirmation Date" means the date of entry of the
Confirmation Order.
"Containment" shall have the meaning set forth in Section
3.19(b).
"Contracts" shall have the meaning set forth in Section
5.2(b).
"D&O Claims" means claims or Causes of Action that may be
brought by the Debtors or derivatively in the name of the
Debtors against certain current officers and directors of
the Debtors serving in such capacities as of the
Confirmation Date, namely, Sheldon Derezin, Stephen J.
Dresnick, Kevin M. Ellis, Jack S. Greenman, James A.
Lebovitz, John R. Seitz and Herbert A. Wertheim, provided
that such claims shall not include any claims, which are
covered by applicable insurance, against the seven named
officers and directors.
"Debtors" means FPA Medical Management, Inc., and its direct
and indirect subsidiaries, debtors in possession in the
Chapter 11 Case.
"DIP Credit Agreement" means that certain Revolving Credit
and Guarantee Agreement dated as of July 20, 1998, as
amended, supplemented or otherwise modified from time to
time, among the Debtors, the DIP Agent, and the DIP Lenders,
which was executed by the Debtors in connection with the DIP
Facility and authorized by the Bankruptcy Court.
"DIP Facility" means the $58 million debtor-in-possession
secured financing facility provided to the Debtors by the
DIP Lenders pursuant to the DIP Credit Agreement, as
authorized by the Bankruptcy Court.
"DIP Facility Claim" means all Administrative Claims of the
DIP Agent and the DIP Lenders arising under or pursuant to
the DIP Facility.
"DIP Facility Order" means, collectively, the interim order
that was entered by the Bankruptcy Court on July 20, 1998,
the August 10, 1998 supplemental order, the final order that
was entered by the Bankruptcy Court on August 20, 1998,
authorizing and approving the DIP Facility and the
agreements related thereto and the orders entered by the
Bankruptcy Court on April 7, 1999 authorizing an additional
advance of up to $5 million under the DIP Facility and May
20, 1999 authorizing the May Advance.
"Disbursing Agent" means the party designated to serve as a
disbursing agent under Section 9.3 of the Plan.
"Effective Date" means the Business Day on which all
conditions to the consummation of the Plan have been
satisfied or waived and is the Business Day upon which this
Plan is substantially consummated.
"Employee Plans" shall have the meaning set forth in Section
3.13(f).
"Encumbrances" shall have the meaning set forth in Section
2.1.
"Environmental, Health or Safety Laws" means all federal,
state and local laws, statutes, codes, ordinances, rules,
regulations, Permits, or orders relating to or addressing
the environment, health or safety, including, but not
limited to, any law, statute, code, ordinance, rule,
regulation, Permit or order relating to (i) the use,
handling or disposal of any Contaminant or (ii) workplace or
worker safety and health, as such requirements are
promulgated by the specifically authorized governmental
authority responsible for administering such requirements.
"Contaminant" shall mean any pollutant, hazardous substance,
radioactive substance, toxic substance, hazardous waste,
toxic waste, medical waste, asbestos, PCBs or any hazardous
or toxic constituent thereof and includes, but is not
limited to, any substance defined in or regulated under
Environmental Health or Safety Laws.
"Equity Rights" means all ownership or equity interests in a
Person, including, without limitation, common stock,
preferred stock, warrants, options and convertible debt.
"ERISA" shall have the meaning set forth in Section 3.13(f).
"Excluded PPM Assets" means those assets of Sellers not used
directly in the PPM Business, or that are otherwise rejected
by the PPM Buyer, and, without limiting the foregoing, those
assets listed on Exhibit D.
"Excluded Sterling Assets" means those assets of Sellers not
used directly in the Sterling Business, or that are
otherwise rejected by the Sterling Buyer, and, without
limiting the foregoing, those assets listed on Exhibit C.
"Excluded Liabilities" shall have the meaning set forth in
Section 2.7(b).
"Existing Equity Rights" means the rights of any current or
former holder or owner of any shares of stock or any other
equity securities of the Seller authorized and issued prior
to the Confirmation Date.
"Facilities" means any real property, leaseholds or other
real property interests owned or leased by the Sellers, and
any buildings, plants, structures, or equipment (including
motor vehicles), that are owned or leased both as of the
date hereof and as of the Closing Date.
"GAAP" means generally accepted accounting principles in
effect in the United States consistently applied.
"Government Consents" shall have the meaning set forth in
Section 3.3.
"Hazardous Activity" means the disposal, distribution,
generation, handling, importing, management, manufacturing,
processing, production, refinement, release, storage,
transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous
Materials in, on, under, about, or from the Facilities or
any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or
risk of danger, or poses an unreasonable risk of harm to
persons or property on or off the Facilities, or that may
affect the value of the Facilities, the Assets or the
Seller.
"Hazardous Materials" means any waste or other substance
that is listed, defined, designated, or classified as, or
otherwise determined to be, hazardous, radioactive, or toxic
or a pollutant or a contaminant under or pursuant to any
Environmental, Health or Safety Law, including any mixture
or solution thereof, and specifically including petroleum
and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Insurance Obligations" shall have the meaning set forth in
Section 2.7(c).
"Intellectual Properties" shall have the meaning set forth
in Section 3.15
"Interim Order" shall have the meaning set forth in Section
5.1
"IRS" means the Internal Revenue Service.
"Letter Agreement" means that certain letter agreement dated
May 20, 1000 among FPA Medical Management, Inc., its direct
and indirect subsidiaries party thereto, Lehman Commercial
Paper Inc. and Goldman Sachs Credit Partners L.P. which
letter agreement was approved by the Bankruptcy Court
pursuant to the Order Approving Additional Secured
Postpetition Financing dated May 20, 1999.
"Material Adverse Effect," with respect to any Person, shall
mean any event, change, occurrence, effect, fact or
circumstance having a material adverse effect on (i) the
ability of such Person to perform its obligations under this
Agreement or to consummate the transactions contemplated
hereby or (ii) the business, properties, assets,
liabilities, prospects, results of operations or condition
(financial or otherwise) of such Person and its
subsidiaries, taken as a whole.
"Material Systems" shall have the meaning provided in
Section 3.27.
"May Advance" means an additional advance of up to $3
million under the DIP Facility approved by an order entered
by the Bankruptcy Court on May 20, 1999.
"Multiemployer Plan" shall have the meaning set forth in
Section 3.13(f).
"Non Debtor PC" shall have the meaning set forth in Section
2.8.
"Noncompetition Period" shall have the meaning set forth in
Section 5.6.
"Payors" shall have the meaning set forth in Section
5.2(b)(ix).
"Permits" shall have the meaning set forth in Section 3.3.
"Person(s)" means any individual, corporation, partnership,
firm, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental or
regulatory body or other entity.
"Personnel" shall have the meaning set forth in Section
3.13(e).
"Petition Date" means, as to each Seller, the date on which
such Seller filed its petition commencing its Chapter 11
Case.
"Plan" means the Modified Second Amended Chapter 11 Plan of
Reorganization to be filed by Sellers and Buyers with the
Bankruptcy Court in substantially the form attached hereto
as Exhibit E.
"PPM Acquisition" shall have the meaning set forth in
Section 2.2.
"PPM Allocation" shall have the meaning set forth in Section
2.3(d).
"PPM Assets" shall have the meaning set forth in Section
2.2.
"PPM Assumed Liabilities" shall have the meaning set forth
in Section 2.7(a).
"PPM Business" shall have the meaning set forth in Section
2.2.
"PPM Buyer" means Stoneybrook Capital, LLC, a Delaware
limited liability company.
"PPM Purchase Price" shall have the meaning set forth in
Section 2.3(d).
"Preclosing Balance Sheet Working Capital Amount" means an
amount equal to $106.9 million.
"Professional Corporation" means a corporation which is
owned by a licensed physician, authorized to engage in the
practice of medicine under state and local law and a party
to an Administrative Services Agreement with a Seller and
listed on Schedule 3.1.
"Projections" shall have the meaning set forth in Section
3.5.
"Pru/Care" means the Prudential Insurance Company of
America, a New Jersey mutual insurance company, and its
Affiliates who have business relationships with the PPM
Business.
"Pru/Care Waiver Documents" means a stipulation executed by
Pru/Care and its Affiliates waiving and releasing all
Administrative Claims of Pru/Care and its Affiliates and a
form of order to be entered by the Bankruptcy Court
confirming the waiver and release of all such Administrative
Claims.
"Purchase Price" means the consideration paid by the Buyers
in connection with the Acquisition as set forth in Section
2.3(a)
"Related Orders" shall have the meaning set forth in
Sections 5.2(b)
"Retirement Plan" shall have the meaning set forth in
Section 3.13(f).
"Returns" shall have the meaning set forth in Section
3.25(a).
"Seller" and "Sellers" shall have the meanings set forth in
the Preamble to this Agreement.
"Seller Documents" shall have the meaning set forth in
Section 3.2(a).
"Seller Employees" shall have the meaning set forth in
Section 5.12.
"Seller Payables" means postpetition accounts payable and
other postpetition liabilities of Sellers on the Closing
Date.
"Sellers' Parent" means FPA Medical Management, Inc., a
Delaware corporation.
"Sterling Acquisition" shall have the meaning set forth in
Section 2.1.
"Sterling Allocation" shall have the meaning set forth in
Section 2.3(c).
"Sterling Assets" shall have the meaning set forth in
Section 2.1.
"Sterling Assumed Liabilities" shall have the meaning set
forth in Section 2.7(a).
"Sterling Business" shall have the meaning set forth in
Section 2.1.
"Sterling Buyer" means CPG Acquisition Co., a Delaware
corporation.
"Sterling Purchase Price" shall have the meaning set forth
in Section 2.3(c)
"Succession Agreement" means an agreement between a
Professional Corporation and all of the shareholders of such
Professional Corporation in the form or forms previously
provided to Buyers pursuant to which all shareholders of the
Professional Corporation are obligated to sell their stock
to such Professional Corporation upon their death,
disability, retirement, termination of employment and
certain other enumerated events and thereafter the stock of
such Professional Corporation must be issued to another
Person who is an employee, director or consultant of
Sellers' Parent and eligible under state and local law to be
a shareholder of such Professional Corporation.
"Superior Proposal" shall mean a bona fide proposal made by
a third party to acquire all of the stock of one or more
Sellers or a sale of all of the Assets (i) on terms which a
majority of the members of the Board of Directors of the
Sellers' Parent determines in its good faith reasonable
judgment to be more favorable to the Sellers and their
stockholders than the transactions contemplated hereby, (ii)
for which financing is then available and (iii) which is not
subject to any financing or due diligence condition.
"Taxes" means all taxes, assessments, charges, duties, fees,
levies or other governmental charges including, without
limitation, all Federal, state, local, foreign and other
income, franchise, profits, capital gains, capital stock,
transfer, sales, use, occupation, property, excise,
severance, windfall profits, stamp, license, payroll,
withholding and other taxes, assessments, charges, duties,
fees, levies or other governmental charges of any kind
whatsoever (whether payable directly or by withholding and
whether or not requiring the filing of a Return), all
estimated taxes, deficiency assessments, additions to tax,
penalties and interest and shall include any liability for
such amounts as a result either of being a member of a
combined, consolidated, unitary or affiliated group or of a
contractual obligation to indemnify any person or other
entity.
"Transfer Taxes" shall have the meaning set forth in Section
5.14.
"Welfare Plan" shall have the meaning set forth in Section
3.16(b).
"Year 2000 Compliant" shall have the meaning set forth in
Section 3.26.
APPENDIX II
DISCLOSURE SCHEDULES
Schedule
Description
2.1
Sterling Assets
2.2A
Atlanta Assets
2.2B
Charlotte Assets
2.3(c)
Sterling Allocation
2.3(d)
PPM Allocation
2.7(b)
Excluded Liabilities
3.1
List of Sellers and States of Incorporation
3.5
Projections
3.6
Accounts Receivable
3.8(e)
Hazardous Materials
3.13(a)
Qualification
3.13(b)
Real Property Leases
3.13(c)
Intellectual Properties/Computer Software
3.13(d)
Other Contracts
3.13(e)
Labor Agreements
3.13(f)
Employee Benefit Plans
3.13(g)
List of annual rates of personnel
3.13(h)
Powers of Attorney
3.13(i)
Enrollment
3.13(j)
Licenses and Permits
3.13(k)
COBRA Beneficiaries
3.19
Pending Litigation
3.21
Transactions with Insiders
3.22
Customer Disclosures
3.24
Enrollment Disclosures
Exhibit A
FINANCING COMMITMENT
[TO BE PROVIDED BY BUYERS]
Exhibit B
POST CLOSING AGREEMENT
[TO BE PROVIDED BY BUYERS]
Exhibit C
EXCLUDED STERLING ASSETS
[TO BE PROVIDED BY BUYERS]
Exhibit D
EXCLUDED PPM ASSETS
[TO BE PROVIDED BY BUYERS]
Exhibit E
PLAN
[TO BE PROVIDED BY BUYERS]
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
1.1 Appendix of Defined Terms. 1
1.2 Accounting Terms 1
1.3 Other Definitional Provisions. 1
SECTION 2. SALE AND PURCHASE OF CERTAIN ASSETS 2
2.1 Purchase of the Sterling Assets 2
2.2 Purchase of the PPM Assets 2
2.3 Purchase Consideration 3
2.4 Closing 3
2.5 Closing Date 3
2.6 Closing Deliveries 4
2.7 Certain Effects of the Closing 4
2.8 Provisions Applicable to Professional Corporations
Which Are Not Debtors in Possession 4
2.9 Provisions Applicable to Professional Corporations
5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER
5
3.1 Corporate Organization 5
3.2 Authorization 6
3.3 Consents and Approvals; No Violations 6
3.4 No Other Agreements to Sell the Assets or the Business
7
3.5 Financial Information 7
3.6 Accounts Receivable 7
3.7 Compliance with Law 7
3.8 Environmental Matters 8
3.9 Insurance 9
3.10 Reorganization Proceedings 9
3.11 Brokers and Finders 9
3.12 Post-Petition Liabilities 10
3.13 Lists of Properties, Contracts and Personnel Data 10
3.14 Assets 11
3.15 Tangible Properties 11
3.16 Intellectual Properties 12
3.17 ERISA 13
3.18 Sales Tax 13
3.19 Litigation 13
3.20 Permits 13
3.21 Transactions with Certain Persons 14
3.22 Customers, Etc. 14
3.23 Independent Contractor Status 14
3.24 Enrollment 14
3.25 Sellers' SEC Reports 14
3.26 Taxes 15
3.27 Year 2000 15
3.28 FIRPTA 15
3.29 Leases 15
3.30 Full Disclosure 16
3.31 Representations and Warranties on Closing Date 16
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER 16
4.1 Buyers' Organization and Good Standing 16
4.2 Formation 16
4.3 Authority; Execution and Delivery 17
4.4 No Brokers 17
4.5 Consents, No conflicts, Etc. 17
4.6 Financing 17
4.7 Good Faith Buyers 17
SECTION 5. CERTAIN COVENANTS AND AGREEMENTS 17
5.1 Interim Order 17
5.2 The Plan 18
5.3 Buyers' Cooperation 21
5.4 Best Efforts 21
5.5 Hart-Scott-Rodino Act 21
5.6 Noncompetition 21
5.7 Nondisclosure 22
5.8 Further Assurances 22
5.9 Names 22
5.10 Access to Facilities 23
5.11 Conduct of the Business 23
5.12 Changes in Representations and Warranties 25
5.13 Mutual Cooperation 26
5.14 No Solicitation of Other Offers 26
5.15 Transfer Tax 27
SECTION 6. CONDITIONS TO OBLIGATIONS OF BUYERS 27
6.1 Representation and Warranties 28
6.2 Consents 28
6.3 Litigation 28
6.4 Material Adverse Effect 28
6.5 No Amendments 28
6.6 Execution, Amendment or Review of Certain Agreements
28
6.7 Entry of the Interim Order; the Confirmation Order;
Consummation of the Plan 28
6.8 Sellers' Performance 29
6.9 Instruments of Conveyance and Transfer; Title Insurance
29
6.10 No Change in Law 29
6.11 Post Closing Arrangements 29
6.12 Working Capital 29
SECTION 7. CONDITIONS TO OBLIGATIONS OF SELLER 29
7.1 Bankruptcy Court Approval; HSR Approval 29
7.2 Representations and Warranties True at the Closing Date
29
7.3 Buyers' Performance 30
7.4 No Change in Law 30
SECTION 8. NATURE AND SURVIVAL OF REPRESENTATIONS AND
WARRANTIES, ETC 30
SECTION 9. PAYMENT OF CERTAIN EXPENSES 30
SECTION 10. NOTICES, ETC 30
SECTION 11. ENTIRE AGREEMENT; AMENDMENT 31
SECTION 12. PRESS RELEASES 31
SECTION 13. GENERAL 32
SECTION 14. SEVERABILITY 32
SECTION 15. BREAK-UP FEE/EXPENSES 32
15.1 Expenses 32
15.2 Break-Up Fee 33
SECTION 16. Amendment; Termination 33
16.1 Amendment 33
16.2 Termination 33
16.3 Rights of Termination 34
Exhibit 2.1(a)
AMENDMENT NO. 1 TO
ASSET PURCHASE AGREEMENT
This Amendment No. 1 to that certain Asset Purchase
Agreement dated May 24, 1999 by and between CPG Acquisition
Co., a North Carolina corporation, Stoneybrook Capital, LLC,
a North Carolina limited liability company and FPA Medical
Management, Inc., and its direct and indirect subsidiaries
and debtors in possession (the "Agreement"), is made and
entered into as of the 21st day of June, 1999.
WITNESSETH
WHEREAS, the parties have agreed to amend the Agreement and
wish to reduce the terms of their agreement to writing as
herein provided.
NOW, THEREFORE, in consideration of the premises herein and
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties
agree as herein set forth.
1. Section 2.1 of the Agreement shall be amended by
inserting the following new last sentence:
In the event the Closing occurs prior to the maturity date
of the Additional Loan (as such term is defined in that
certain Letter Agreement dated June 18, 1999 between Sellers
and Coastal Physician Group, Inc. (the "Letter Agreement"))
as provided in paragraph 3 of the Letter Agreement all cash
and cash equivalent assets on hand in any accounts relating
to the Sterling Business or otherwise relating to the
Sterling Business shall constitute Sterling Assets.
2. Section 2.5 is deleted in its entirety and replaced by
the following new section:
2.5 Closing Date. The Closing shall occur on July 1, 1999
if all of the conditions set forth in Section 6 hereof have
been satisfied by Sellers or waived by Buyers, and all of
the conditions set forth in Section 7 hereof have been
satisfied by Buyers or waived by the Sellers.
3. Section 5 of the Agreement shall be amended by
inserting the following subsection:
5.17 Additional Loan.
(a) From and after the date of disbursement of the
Additional Loan through the date of repayment thereof, the
Additional Lender shall approve, in its sole discretion, any
disbursement of the proceeds of the Additional Loan and, in
its reasonable discretion, any other cash disbursements of
the Sellers and no Sellers shall make disbursements of such
proceeds or cash without the express prior approval of the
Additional Lender or the entry of an order by the Bankruptcy
Court approving such disbursement after notice to Buyers.
From and after the date of funding the Additional Loan the
Additional Lender and its Affiliates shall be provided full
and complete access to all information reasonably relating
to the Sellers' bank accounts, investment accounts, cash
journals and other records regarding the cash, accounts
receivable or cash equivalent assets of the Sellers in order
to monitor the receipt of cash by the Sellers and to control
the disbursement of cash by the Sellers as herein provided.
Sellers shall cause their senior management personnel who
have not been offered employment by the Buyers or their
Affiliates to vacate the Debtors' offices at 5835 Blue
Lagoon Drive, Miami, Florida as soon as reasonably possible
and in no event later than July 1, 1999.
(b) In the event the Closing occurs prior to the maturity
date of the Additional Loan as provided in paragraph 3 of
the Letter Agreement, the full amount otherwise due to the
Additional Lender with respect to the Additional Loan,
including the interest and Financing Fee, shall be waived by
the Additional Lender and the Additional Loan fully
satisfied without payment or action by the Debtors.
(c) All capitalized terms used but not specifically defined
in this subsection shall have the meaning given such terms
in the Letter Agreement.
4. Sections 16.2(d) and Section 16.2(e) are amended
by deleting "June 15, 1999" and inserting "July 1, 1999" in
lieu thereof.
5. The definition of "Assumed Liabilities" in
Appendix I shall be amended to include the following new
last sentence:
In the event the Closing does occur the definition of
"Assumed Liabilities" shall be amended by deleting "$21
million" and inserting "$16 million" in lieu thereof;
provided, however, that if less than all of the Additional
Loan is utilized to satisfy Assumed Liabilities, an amount
equal to $21 million reduced by the amount of the Additional
Loan which is utilized to satisfy Assumed Liabilities
(including the payable obligations referred to in paragraph
1 of the Letter Agreement) shall be inserted in lieu of $16
million.
6. The definition of "Seller Payables" in Appendix I is
amended by deleting "the Closing Date" and inserting "June
21, 1999" in lieu thereof.
7. All remaining provisions of the Agreement not
inconsistent with the above and foregoing Amendment are
herewith ratified and confirmed, and shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment to the Agreement on the day and year first above
written.
CPG ACQUISITION CO.
By:
Name: Steven M. Scott, M.D.
Title: President
STONEYBROOK CAPITAL, LLC
By:
Name: Steven M. Scott, M.D.
Title: Manager
SELLER:
FPA MEDICAL MANAGEMENT, INC.
FPA MEDICAL MANAGEMENT OF NORTH CAROLINA, INC.
FPA OF GEORGIA, INC.
FPA MEDICAL GROUP OF GEORGIA, P.C.
STERLING HEALTHCARE GROUP, INC.
MID-LEVEL PRACTITIONERS, INC.
STERLING EMERGENCY TREATMENT ASSOCIATES, INC.
STERLING ANESTHESIA, INC.
STERLING MIAMI, INC.
STERLING CREDENTIALS VERIFICATION SERVICES, INC.
STERLING EMERGENCY MEDICAL CARE, INC.
STERLING RADIOLOGY, INC.
STERLING MEDICAL GROUP OF MICHIGAN, INC.
STERLING MEDNET EMERGENCY SERVICES, INC.
STERLING SUB TEXAS, INC.
STERLING MICHIGAN, P.C.
STERLING HEALTHCARE OF TEXAS, P.A.
STERLING MEDICAL GROUP OF MICHIGAN, P.C.
STERLING HEALTHCARE OF TEXAS, P.A.
STERLING HEALTHCARE MEDICAL CORPORATION
STERLING EMERGENCY TREATMENT ASSOCIATES, INC.
AHI (TEXAS) HEALTHCARE SYSTEMS, INC.
AHI HEALTHCARE SYSTEMS, INC.
AMG MANAGEMENT COMPANY
AMERICAN HEALTH MEDICAL GROUP, DOWNEY, INC.
ARIZONA MANAGED CARE PROVIDERS, LTD.
AVANTI HEALTH SYSTEMS OF TEXAS, INC.
BHP IPA, INC.
BEVERLY HILLS/WEST LOS ANGELES MEDICAL NETWORK, A MEDICAL
GROUP, INC.
CAROLINA HEALTH CARE GROUP, P.C.
CENTURY FAMILY MEDICAL GROUP, INC.
CINCINNATI HEALTH PARTNERS, INC.
COMPREHENSIVE PRIMARY CARE MSO, INC.
CONNEKT, LLC
CORNERSTONE PHYSICIANS CORPORATION
CORNERSTONE PHYSICIANS OF PHOENIX, INC.
FHC IPA, INC.
FHMG/TDMC MEDICAL GROUP, A PROFESSIONAL CORPORATION
FPA/GREGORY MEDICAL GROUP OF NEVADA, LTD.
FPA ACQUISITION CORPORATION
FPA AXMINSTER MEDICAL GROUP, INC.
FPA HOLDING COMPANY OF CALIFORNIA, INC.
FPA INDEPENDENT PRACTICE ASSOCIATION, A MEDICAL CORPORATION
FPA MEDICAL FOUNDATION
FPA MEDICAL GROUP OF ARIZONA, P.C.
FPA MEDICAL GROUP OF CALIFORNIA, INC.
FPA MEDICAL GROUP OF DELAWARE, P.A.
FPA MEDICAL GROUP OF FLORIDA, INC.
FPA MEDICAL GROUP OF KENTUCKY, INC.
FPA MEDICAL GROUP OF NEW JERSEY, A PROFESSIONAL CORPORATION
FPA MEDICAL GROUP OF NORTHERN CALIFORNIA, INC.
FPA MEDICAL GROUP OF PENNSYLVANIA, A MEDICAL CORPORATION
FPA MEDICAL GROUP OF TEXAS, A TEXAS PROFESSIONAL ASSOCIATION
FPA MEDICAL GROUP OF THE GREATER BAY AREA, INC.
FPA MEDICAL GROUP, P.A.
FPA MEDICAL MANAGEMENT OF ARIZONA, INC.
FPA MEDICAL MANAGEMENT OF CALIFORNIA, INC.
FPA MEDICAL MANAGEMENT OF FLORIDA, INC.
FPA MEDICAL MANAGEMENT OF GEORGIA, INC.
FPA MEDICAL MANAGEMENT OF ILLINOIS, INC.
FPA MEDICAL MANAGEMENT OF KENTUCKY, INC.
FPA MEDICAL MANAGEMENT OF LOUISIANA, INC.
FPA MEDICAL MANAGEMENT OF MISSOURI, INC.
FPA MEDICAL MANAGEMENTS OF SOUTH CAROLINA, INC.
FPA MEDICAL MANAGEMENT OF TENNESSEE, INC.
FPA MEDICAL MANAGEMENT OF TEXAS, INC.
FPA MEDICAL MANAGEMENT OF THE MID-ATLANTIC, INC.
FPA SURGICAL CENTER, INC.
FPA WOMEN'S CARE OF GEORGIA, INC.
FAMILY PRACTICE ASSOCIATES OF SOUTHERN CALIFORNIA, A MEDICAL
CORPORATION
FOUNDATION HEALTH IPA, A PROFESSIONAL MEDICAL CORP.
G.P.M. IPA, INC.
GATEWAY IPA, INC.
GATEWAY PHYSICIANS SERVICES, INC.
GOTHAM MANAGEMENT, INC.
GOTHAM MID-TOWN MANAGEMENT, INC.
HAYWARD VESPER MEDICAL GROUP, INC.
HEALTH ONE ASSOCIATES, INC.
HEALTH PARTNERS, INC.
HEALTHCAP-MISSOURI, INC.
HEALTHCAP-NEVADA, INC.
HEALTHCAP, INC.
INTERGROUP IPA, P.C.
MONTEBELLO PHYSICIANS MEDICAL GROUP, INC.
NOVA HEALTHCARE MEDICAL GROUP, INC.
NOVA PHYSICIANS MEDICAL CORPORATION, INC.
OB-GYN MANAGEMENT, INC.
PHYSICIAN NETWORK OF WHITTIER MEDICAL ASSOCIATES, INC.
PHYSICIANS MEDICAL GROUP OF FLORIDA, INC.
PRIMARY CARE MEDICAL GROUP AT LITTLE COMPANY OF MARY
HOSPITAL, INC.
PRIVATE PHYSICIANS GROUP AT STANFORD, A MEDICAL GROUP, INC.
SAN ANTONIO HEALTH PARTNERS, INC.
ST. FRANCIS CARE MEDICAL GROUP
STERLING MEDICAL GROUP OF MICHIGAN, INC.
STERLING PROFESSIONAL EMERGENCY PHYSICIANS, LLC
STERLING REGIONAL EMERGENCY SERVICES, INC.
THE DOCTORS OFFICENTER MEDICAL GROUP OF DALLAS, P.A.
THE DOCTORS OFFICENTER MEDICAL GROUP OF HOUSTON, P.A.
THOMAS-DAVIS MEDICAL CENTERS, P.C.
VIP IPA, A PROFESSIONAL MEDICAL CORPORATION
VMS MEDICAL IPA, INC.
VIRGINIA HEALTH PARTNERS, INC.
VIRGINIA MEDICAL ASSOCIATES, P.C.
Debtors in Possession
By:
Name: Stephen J. Dresnick, M.D.
Title: Chairman, Chief Executive Officer and/or President
of each of the 103 Sellers listed above.
CAROLINA HEALTH CARE GROUP, P.C.
Debtor in Possession
By:
Name: Karen E. Breach, M.D.
Title: President
Exhibit 2.1(b)
PROMISSORY NOTE
AND
SECURITY AGREEMENT
City of Dublin
State of Ohio
June 4, 1999
1. PROMISE TO PAY. For value received, receipt of
which is hereby acknowledged, COASTAL PHYSICIAN GROUP, INC.,
a Delaware corporation, and its direct and indirect
subsidiaries, as more fully set forth on Schedule 1 attached
hereto (hereinafter collectively the "BORROWER"), promises
to pay to the order of NPF CAPITAL, INC., an Ohio
corporation, its successors and assigns (hereinafter
"LENDER"), the principal sum of THREE MILLION FOURTEEN
THOUSAND SIX HUNDRED EIGHTY-SEVEN AND 50/100 DOLLARS
($3,014,687.50) together with interest thereon at the rate
set forth below on the unpaid interest and principal balance
acquired from the date hereof, with such balance due and
payable in monthly installments pursuant to the terms and
conditions hereof (the "Note").
2. TERM. The Term of this Note shall be until the
earlier of July 31, 1999 or such time as BORROWER (or
certain of its direct and/or indirect subsidiaries) and
LENDER or any of its affiliates or parent, enter into
certain Sale and Subservicing Agreements (the "Sale
Agreement") in connection with the purchase by LENDER or its
affiliates of accounts receivable acquired by BORROWER or
certain of its direct and/or indirect subsidiaries of
certain assets of FPA Medical Management, Inc. ("FPA")
pursuant to that certain Asset Purchase Agreement, dated May
24, 1999 among CPG Acquisition Co., Stoneybrook Capital, LLC
and FPA ("Asset Purchase Agreement").
3. RATE OF INTEREST AND ITS CALCULATION . The interest
rate shall be TWELVE PERCENT (12%) for the first FORTY-FIVE
days (45) of this Note and FOURTEEN PERCENT for the balance
of the Term. Interest on this Note shall be computed on the
basis of a 360-day year and charged for the actual days
elapsed.
4. PAYMENT OF INTEREST Interest payments shall be payable
on June 30, 1999, July 15, 1999 and on July 31, 1999.
5. PAYMENT OF PRINCIPAL The principal in the amount of
THREE MILLION FOURTEEN THOUSAND SIX HUNDRED EIGHTY-SEVEN AND
50/100 DOLLARS ($3,014,687.50) together with all accrued and
unpaid interest hereunder and all sums which are owed to
LENDER under the terms and provisions of this Note
including, but not limited to, late charges, fees, costs of
any kind or nature and/or advancements of any kind or nature
made by LENDER for the protection of the liens against or
security interest in the assets which is the security for
this Note shall be payable in full on or before July 31,
1999.
6. METHOD OF PAYMENT. BORROWER shall pay LENDER, in
lawful money of the United States of America, at 6125
Memorial Drive, Dublin, Ohio 43017, Attention: Lance K.
Poulsen or at such other place as the LENDER may designate
in writing.
7. LEGAL FEES. BORROWER shall pay all of LENDER's
reasonable legal fees and expenses related to the
negotiation and drafting of this Promissory Note and
Security Agreement ("Agreement"), the creation and filing of
all appropriate UCCs and all other legal activity and
documentation related to this Agreement.
8. PREPAYMENT. BORROWER may prepay the interest and
principal balance outstanding, in whole or in part, at any
time and without penalty. Any partial prepayment shall
first be applied in reduction of interest outstanding, if
any, and second in reduction of the principal balance of
this Note.
9. LATE CHARGE. A late charge of EIGHTEEN PERCENT (18%)
per annum shall be assessed on each payment not received
within ten (10) calendar days of its due date, including all
regular installments until such amounts are paid in full.
10. GRANT OF SECURITY INTEREST BY THE BORROWER. As
security for the performance of the BORROWER's obligations
hereunder, the BORROWER hereby grants to LENDER and its
successors and assigns, a security interest in all of the
BORROWER's assets and agrees to perfect such security
interests by executing and filing UCC-1 Financing
Statements, acceptable to the LENDER, and the required
filing agencies in North Carolina and all other appropriate
jurisdictions. Said security interest shall be in what is
sometimes be collectively referred to herein as the
"Collateral" includes, but is not limited to the following:
(a) all BORROWER's right, title and interest to repayment of
those loans purchased by BORROWER from the Additional
LENDERs (as defined in the Asset Purchase Agreement) in
accordance with Section 5.16 of the Asset Purchase Agreement
together with any other rights of BORROWER under such loans;
(b) all real property owned or leased by the BORROWER; (the
"Premises");
(c) all of BORROWER's right, title and interest in all
buildings, structures, improvements, parking areas,
machinery, equipment, fixtures, furniture and articles of
property now owned or hereafter acquired by the BORROWER
located on the Premises, and used or acquired for use in the
business of the BORROWER, together with any and all
accessions thereto and all substitutions and replacements
thereof and parts therefor and which are now or hereafter
attached to the Premises, or used or adapted for use in the
operation of the BORROWER's business, all of which property
mentioned in this paragraph shall be referred to as the
"Improvements";
(d) all proceeds of positive cost report settlements;
(e) all cash payments, including but not limited to the
purchase price, that the BORROWER may be entitled to
pursuant to the terms and provisions of the Sale Agreement
and Medicare, Medicaid and other governmental program
reimbursements;
(f) all compensation, awards, damages, rights of action and
proceeds, including interest thereon and/or the proceeds of
any policies of insurance therefor, to which BORROWER is
entitled, arising out of or relating to a taking or damaging
of the Premises or Improvements thereon by reason of any
public or private improvement, condemnation proceeding, sale
or transfer in lieu of condemnation, or fire, earthquake or
other casualty, or any injury to or decrease in the value of
the Premises or the Improvements for any reason whatsoever;
(g) all the right, title and interest of the BORROWER in, to
and under any leases, including extensions, renewals and
subleases thereof, now or hereafter affecting the Premises
including, without limitation, all rents, issues, profits
and other revenues and income therefrom and from the
renting, leasing or bailment of Improvements and equipment,
all guaranties of tenants' performance under such leases,
and all rights and claims of any kind that the BORROWER may
have against any tenant under the leases or in connection
with the termination or rejection of the leases in a
bankruptcy or insolvency proceeding;
(h) all causes of action OF BORROWER pertaining to or
affecting the Premises or the Improvements, including,
without limitation, all options or contracts to acquire
other property for use in connection with the operation or
development of the Premises or Improvements, management
contracts, service or supply contracts, deposits, bank
accounts, general intangibles (including, without
limitation, trademarks, trade names and symbols), permits,
licenses, franchises and certificates, and all commitments
or agreements, now or hereafter in existence, intended by
the obligor thereof to provide the BORROWER with proceeds to
satisfy the Note evidenced hereby or improve the BORROWER's
interest in the Premises or Improvements, and the right to
receive all proceeds due under such commitments or
agreements including refundable deposits and fees;
(i) all books, records, surveys, reports and other documents
related to the Premises, the Improvements or other items of
collateral described herein;
(j) all of the BORROWER's accounts (the term "accounts"
means any right to payment for goods sold or leased or for
services rendered which is not evidenced by an instrument or
chattel paper, whether or not it has been earned by
performance), accounts receivable, contract rights,
instruments, documents, chattel paper, general intangibles
(including, without limitation, choses in action, tax
refunds and insurance proceeds), and other receivables of
the BORROWER, any other obligations or rights of the
BORROWER to receive any payments in money or kind; all
guarantees of the foregoing and security therefor; all cash
or non-cash proceeds of the foregoing; all of the right,
title and interest of the BORROWER in and with respect to
the goods, services or other property which gave rise to or
which secure any of the foregoing, and insurance policies
and proceeds relating thereto, and all of the rights of the
BORROWER as an unpaid seller of goods or services,
including, without limitation, the rights of stoppage in
transit, replevin, reclamation and resale; and all of the
foregoing, whether now existing or hereafter created or
acquired;
(k) all goods, merchandise and other personal property now
owned or hereafter acquired by the BORROWER which are held
for sale or lease, or are furnished or to be furnished under
any contract of service or are raw materials, work-in-
process, supplies of materials used or consumed in the
BORROWER's business, and all products thereof, and
substitutions, replacements, additions or accessions
therefor and thereto; all cash or non-cash proceeds of all
of the foregoing, including insurance proceeds;
(l) all machinery, equipment, furniture and fixtures of the
BORROWER, now owned or hereafter acquired by the BORROWER,
and used or acquired for use in the business of the
BORROWER;
(m) all additions, accessions, replacements, substitutions,
proceeds and products of the real and personal property,
tangible and intangible, described herein; and
(n) all products and proceeds of any and all of the
foregoing.
It is the BORROWER's express intention that the continuing
security interest granted hereby, in addition to covering
all present obligations of the BORROWER to the LENDER and
its affiliates pursuant to the Obligations arising
hereunder, shall extend to all future obligations of the
BORROWER to the LENDER intended as replacements or
substitutions for said Obligations arising hereunder,
whether or not such Obligations are reduced or entirely
extinguished and thereafter increased or reincurred.
It is the intention of the parties hereto that this Note
shall constitute a security agreement under the Uniform
Commercial Code and any other applicable law and the LENDER
shall have the rights and remedies of a secured party
thereunder. The BORROWER further agrees to deliver any
financing statement or additional document the LENDER may
reasonably request to perfect or evidence the LENDER'S
security interest granted herein.
The security interests granted herein is expressly made
subject and subordinate to the security interests and/or
rights of affiliates of LENDER to purchase accounts
receivable pursuant to those certain Sale and Subservicing
Agreements previously entered into with Coastal Receivables,
LLC, Coastal Correctional Healthcare, Inc., Coastal
Government Services, Inc., and the security interests
granted herein are subject and subordinate to the security
interests granted by Coastal Physician Group, Inc. to NPF X,
Inc. to secure obligations under loans made or to be made to
Coastal Physician Group, Inc. under the terms of loan
agreements and promissory notes by and between NPF X, Inc.
and Coastal Physician Group, Inc.
11. ADDITIONAL SECURITY. Any and all deposits or other
sums at any time credited by LENDER or due to BORROWER from
LENDER arising hereunder shall at all times constitute
additional security for the Obligations arising hereunder
and may be set off against any such Obligations then in
default. Any and all instruments, documents, policies,
certificates of insurance, securities, goods, accounts
receivable, choses in action, chattel paper, cash, property
and the proceeds thereof owned by the BORROWER or in which
the BORROWER has an interest, which now or hereafter are at
any time in the possession or control of the LENDER or in
transit by mail or carrier to or from the LENDER, or in
possession of any third party acting in the LENDER's behalf,
without regard to whether the LENDER received the same in
pledge for safekeeping, as agent for collection or
transmission or otherwise, or whether the LENDER has
conditionally released the same, shall constitute additional
security for the Obligations arising hereunder and may be
applied at any time to any Obligations arising hereunder
which are then in default.
12. CROSS COLLATERALIZATION. It is the BORROWER's express
intention that the security interest hereby granted and all
of the collateral pledged by the BORROWER to the LENDER,
whether pursuant hereto, or to any other agreement of any
kind or nature between such parties shall secure the prompt
and full payment and complete performance of any and all
obligations of the BORROWER to the LENDER and its affiliates
whether arising hereunder, or pursuant to any other
agreement of any kind or nature between such parties. For
purposes of this paragraph, the term "LENDER" includes any
and all affiliates of LENDER and the term "BORROWER" shall
include BORROWER and any of its direct or indirect
subsidiaries, including without limitation subsidiaries
created or acquired after the date hereof. In addition, the
term "collateral" is used in its most comprehensive sense,
and includes, without limitation, the security provided
hereunder and defined herein, as well as any and all
security or property of any kind or nature, pledged by the
BORROWER to the LENDER pursuant to any other agreement, of
any kind or nature, between such parties. Further, the term
"obligations" is used in its most comprehensive sense, and
includes, without limitation, all forbearances, all
indebtedness, debts and liabilities (including principal,
interest, late charges, collection costs, attorneys' fees
and the like), the obligations arising hereunder, and
defined herein, as well as any and all other obligations of
the BORROWER to the LENDER of any kind or nature, whether
real, personal, tangible or intangible, absolute or
contingent, liquidated or unliquidated, direct or indirect,
whether evidenced by note, pledge or otherwise, and any and
all renewals of or substitutions therefor, whether in the
form of principal, interest, debt, liability, charge or
otherwise, and whether now existing or hereafter arising.
Additionally, BORROWER hereby affirmatively acknowledges
that said security interest includes, but is in no way
limited to, all of BORROWER's right, title and interest in
any and all amounts due BORROWER as the Additional LENDER as
defined in the Asset Purchase Agreement.
13. DEFAULT. At the option of LENDER and without notice,
the entire unpaid balance shall become immediately due and
payable upon the occurrence of any of the following
(collectively referred to herein as "Default"):
a) Default in the payment when due of the interest and/or
principal hereunder or default in the performance of any
obligation to LENDER by BORROWER, any endorser or other
guarantor, including, but not necessarily limited to, breach
of any covenant, obligation, agreement, representation or
warranty. In the event of written notice of default under
this Note and non-payment of any installment of principal or
interest within ten (10) days following receipt of such
notice, such installment shall bear interest at the rate of
EIGHTEEN PERCENT (18%) per annum until paid, or, if
following a default, LENDER accelerates the balance due
hereunder, any unpaid balance shall bear interest at the
rate of EIGHTEEN PERCENT (18%) per annum at the time of
default, transfer or expiration, until this Note has been
paid in full.
b) The failure of the BORROWER to perform or observe any
obligation, covenant, agreement, representation or warranty
contained herein.
c) The default of the BORROWER and/or any of BORROWER'S
direct or indirect subsidiaries under any agreements and/or
instruments with the LENDER and/or any of LENDER'S
affiliates.
d) The sale or transfer by BORROWER, without LENDER'S prior
written consent, of all or any part of the Collateral
subject to the Security Interest other than sales of
accounts receivable by certain subsidiaries of Coastal
Physician Group, Inc. to Coastal Receivables, LLC under the
Receivables Purchase and Contribution Agreement among such
parties and the sales of (and grants of security interests
in) accounts receivable of coastal Receivables, LLC, Coastal
Government Services, Inc. and Coastal Correctional
Healthcare, Inc. under existing Sale and Subservicing
Agreements between such parties and affiliates of LENDER. A
"sale or transfer" means the conveyance of any right, title
or interest therein; whether legal, beneficial or equitable;
whether voluntary, involuntary or by operation of law;
whether by outright sale, installment sale contract,
assignment, or transfer of any beneficial interest therein,
or by any other method of conveyance of property interest.
Consent to one such transaction shall not be deemed to be a
waiver of the right to require such consent to future or
successive transactions.
e) Dissolution or insolvency of, appointment of a receiver
of any of the property of, assignment for the benefit of
creditors by, commencement of any proceedings under any
bankruptcy or insolvency, including but not limited to the
filing of a Chapter 7 or Chapter 11 petition under the
Bankruptcy Code laws, by or against BORROWER, any endorser
or other guarantor thereof or attachment, garnishment or
creation of a lien against or security interest in any of
the Collateral (as defined in the Loan Agreement) pledged by
BORROWER under the Loan Agreement except as in existence as
of the date of this Note. BORROWER consents to the
acceptance of security or substituted security for this
Note, and waives presentment, demand and protest and the
right to assert any statute of limitations.
14. BINDING EFFECT; ASSIGNABILITY. This Note shall be
binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
BORROWER may not assign any of its rights and obligations
hereunder or any interest herein without the prior written
consent of LENDER. LENDER may, at any time, without the
consent of BORROWER, assign any of its rights and
obligations hereunder or interests herein to any affiliate
of LENDER.
15. EFFECT OF NOTE PROCEEDS. LENDER and BORROWER
acknowledge that the proceeds of this Note shall be used by
BORROWER's subsidiary, CPG Acquisition Co., to purchase all
of the right, title and interest of the Additional LENDERs
in accordance with Section 5.16 of the Asset Purchase
Agreement. Moreover, said Asset Purchase Agreement
contemplates a cash portion of the sale price for the
Sterling Assets (as defined in the Asset Purchase Agreement)
of $69,300,000 (Sixty Nine Million Three Hundred Thousand
dollars). The Parties thereto and hereto recognize that
said cash portion of the sale price for the Sterling Assets
shall be reduced by the amount of $3,000,000 to recognize
the purchase of the loan of the Additional Lenders, thereby
leaving net cash portion of the sale price under the Asset
Purchase Agreement for the Sterling Assets of $66,300,000
(Sixty Six Million Three Hundred Thousand Dollars) BORROWER
hereby pledges and covenants that any agreements it enters
into related to the acquisition of the Sterling Assets shall
accurately reflect said adjustment. Moreover, BORROWER
hereby acknowledges that the outstanding balance of this
Note shall be paid in full from the LENDER and its
affiliates' advances on their financial commitments to
BORROWER related to BORROWER's acquisition of such assets
(resulting in a reduction of the cash funded at closing of
$3,000,000 (Three Million Dollars)).
16. SEVERABILITY. Each section, part, term and/or
provision of this Note shall be considered severable, and if
for any reason any section, part, term and/or provision
herein is determined to be invalid and contrary to, or in
conflict with, any existing or future law or regulation,
such shall not impair the operation of or affect the
remaining portions, sections, parts, terms and/or provisions
of this Note, and the latter will continue to be given full
force and effect and bind the parties hereto; and said
invalid sections, parts, terms, and/or provisions shall be
deemed not part of this Note.
17. CAPTIONS. Any captions and headings herein are intended
solely for the convenience of the parties, and none shall be
deemed to affect the meaning or construction of any
provision hereof.
18. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED
TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF OHIO.
BORROWER HEREBY SUBMITS 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 WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS
THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5)
BUSINESS DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN
THE U.S. MAILS, POSTAGE PREPAID. THE BORROWER 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 LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST
THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION. BORROWER HEREBY AGREES 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 AGREES NOT TO
INSTITUTE ANY ACTION IN ANY OTHER FORUM. BORROWER 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 NOTE. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL
BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
[SIGNATURES ON THE FOLLOWING PAGES]
IN WITNESS WHEREOF, BORROWER, having read and
understood all of the provisions of this Note and intending
to be legally bound hereby, has duly executed, sealed and
delivered this Note as of the day and year first written
above.
BORROWERS:
COASTAL PHYSICIAN GROUP, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL PHYSICIAN SERVICES, INC.
By:
Name: Steven M. Scott, M.D.
Title:
HEALTHCARE BUSINESS RESOURCES, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL PHYSICIAN NETWORKS, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL PHYSICIAN GROUP OF FLORIDA, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL GOVERNMENT SERVICES MANAGEMENT GROUP, INC.
By:
Name: Steven M. Scott, M.D.
Title:
CHG PROPERTIES, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL SPC MEMBER CORP.
By:
Name: Steven M. Scott, M.D.
Title:
BETTER HEALTH PLAN, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL PHYSICIAN SERVICES OF THE SOUTHEAST, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL PHYSICIAN SERVICES OF THE WEST, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL PHYSICIANS SERVICES OF FLORIDA, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL PRACTICE SERVICES OF THE NORTHEAST, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL PHYSICIAN SERVICES OF THE MIDWEST, INC.
By:
Name: Steven M. Scott, M.D.
Title:
PREMIER CREDENTIALING RESOURCES, INC.
By:
Name: Steven M. Scott, M.D.
Title:
MEDSTAFF NATIONAL MEDICAL STAFFING, INC.
By:
Name: Steven M. Scott, M.D.
Title:
FIRSTCOLLECT, INC.
By:
Name: Steven M. Scott, M.D.
Title:
SPECIALTY SERVICES GROUP, INC.
By:
Name: Steven M. Scott, M.D.
Title:
PHYSICIANS PLANNED GROUP
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL GOVERNMENT SERVICES, INC.
By:
Name: Steven M. Scott, M.D.
Title:
SIGNUM PRIMARY CARE, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL CORRECTIONAL HEALTHCARE, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL RECEIVABLES, LLC
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL EMERGENCY SERVICES OF DADE COUNTY, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL EMERGENCY SERVICES OF
FT. LAUDERDALE, INC.
By:
Name: Steven M. Scott, M.D.
Title:
SUNLIFE OB-GYN SERVICES OF MARYLAND, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL EMERGENCY SERVICES OF HOLLYWOOD, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL EMERGENCY SERVICES OF ORLANDO, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL PHYSICIAN SERVICES OF ORLANDO, INC.
By:
Name: Steven M. Scott, M.D.
Title:
SUNLIFE OB-GYN SERVICES OF HOLLYWOOD FLORIDA, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL PHYSICIAN SERVICES OF SOUTH FLORIDA, INC.
By:
Name: Steven M. Scott, M.D.
Title:
COASTAL PHYSICIANS SERVICES OF BROWARD COUNTY, INC.
By:
Name: Steven M. Scott, M.D.
Title:
BHP ACQUISITION COMPANY
By:
Name: Steven M. Scott, M.D.
Title:
PEDIATRIC CONSULTANTS OF BROWARD COUNTY, INC.
By:
Name: Steven M. Scott, M.D.
Title:
CPG ACQUISITION CO.
By:
Name: Steven M. Scott, M.D.
Title:
SCHEDULE 1
Coastal Physician Group, Inc. Subsidiaries
Coastal Physician Services, Inc.
Healthcare Business Resources, Inc.
Coastal Physician Networks, Inc.
Coastal Physician Group of Florida, Inc.
Coastal Government Services Management Group, Inc.
CHG Properties, Inc.
Coastal SPC Member Corp.
Better Health Plan, Inc.
Coastal Physician Services of the Southeast, Inc.
Coastal Physician Services of the West, Inc.
Coastal Physicians Services of Florida, Inc.
Coastal Practice Services of the Northeast, Inc.
Coastal Physician Services of the Midwest, Inc.
Premier Credentialing Resources, Inc.
Medstaff National Medical Staffing, Inc.
Firstcollect, Inc.
Specialty Services Group, Inc.
Physicians Planned Group
Coastal Government Services, Inc.
Signum Primary Care, Inc.
Coastal Correctional Healthcare, Inc.
Coastal Receivables, LLC
Coastal Emergency Services of Dade County, Inc.
Coastal Emergency Services of Ft. Lauderdale, Inc.
Sunlife OB-Gyn Services of Maryland, Inc.
Coastal Emergency Services of Hollywood, Inc.
Coastal Emergency Services of Orlando, Inc.
Coastal Physician Services of Orlando, Inc.
Sunlife Ob-Gyn Services of Hollywood Florida, Inc.
Coastal Physician Services of South Florida, Inc.
Coastal Physicians Services of Broward County, Inc.
BHP Acquisition Company
Pediatric Consultants of Broward County, Inc.
CPG Acquisition Co.
Exhibit 2.1(c)
SALE AND SUBSERVICING AGREEMENT
Dated as of June 30, 1999
by and among
PHYAMERICA RECEIVABLES LLC,
as Seller,
COASTAL PHYSICIAN GROUP, INC.,
as Subservicer,
NPF XII, INC.,
as Purchaser,
and
NATIONAL PREMIER FINANCIAL SERVICES, INC.,
as Servicer
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 2
Section 1.1 Certain Defined Terms
Section 1.2 Other Terms
ARTICLE II PURCHASE AND SALE; ESTABLISHMENT OF ACCOUNTS
Section 2.1 Purchase and Sale
Section 2.2 Conveyance of Receivables
Section 2.3 Establishment of Accounts; Conveyance of
Interests Therein;
Investment
Section 2.4 Grant of Security Interest
Section 2.5 Further Action Evidencing Purchases
Section 2.6 Eligible Receivables
Section 2.7 Offsets
Section 2.8 Administrative Fee
Section 2.9 Assignment of Agreement
Section 2.10 Confidentiality
ARTICLE III CONDITIONS OF PURCHASES
Section 3.1 Conditions Precedent to Effectiveness of
Agreement
Section 3.2 Conditions Precedent to All Purchases
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND SUBSERVICER
Section 4.1 Representations and Warranties as to the Seller
and Coastal
Section 4.2 Representations and Warranties of the Seller as
to Purchased Receivables
Section 4.3 Repurchase Obligations
ARTICLE V GENERAL COVENANTS OF THE SELLER
Section 5.1 Affirmative Covenants of the Seller
Section 5.2 Reporting Requirements of the Seller
Section 5.3 Negative Covenants of the Seller
ARTICLE VI ACCOUNTS ADMINISTRATION
Section 6.1 Collection Account
Section 6.2 Determinations of the Servicer
Section 6.3 Distributions from Accounts
Section 6.4 Allocation of Moneys following Termination Date
Section 6.5 Accounting
ARTICLE VII APPOINTMENT OF THE SUBSERVICER
Section 7.1 Appointment of the Subservicer
Section 7.2 Additional Subservicers
Section 7.3 Duties and Responsibilities of the Subservicer
Section 7.4 Authorization of the Servicer
Section 7.5 Subservicing Fee; Subservicing Expenses
Section 7.6 Annual Statement as to Compliance
Section 7.7 Transfer of Servicing Between Subservicer and
Servicer
Section 7.8 Subservicer Not to Resign
Section 7.9 Appointment of the Successor Subservicer
Section 7.10 Duties of the Subservicer to the Successor
Servicer
Section 7.11 Effect of Termination or Resignation
ARTICLE VIII EVENTS OF SELLER DEFAULT
Section 8.1 Events of Seller Default
ARTICLE IX INDEMNIFICATION
Section 9.1 Indemnities by the Seller
Section 9.2 Security Interest
ARTICLE X MISCELLANEOUS
Section 10.1 Notices, Etc.
Section 10.2 Remedies
Section 10.3 Binding Effect; Assignability
Section 10.4 Costs, Expenses and Taxes
Section 10.5 No Proceedings
Section 10.6 Amendments; Waivers; Consents
Section 10.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL
Section 10.8 Execution in Counterparts; Severability
Schedule 1 Ineligible Medicaid States
Schedule 2 Ineligible Blue Cross/Blue Shield Plans
Schedule 3 List of Provider Affiliates and Addresses of
the Provider Affiliates
Schedule 4 Names Under Which the Seller is Doing
Business and Addresses at Which the Seller Does Business
Schedule 5 Disclosures by the Seller and the Provider
Affiliates Regarding HCFA Matters
Schedule 6 Additional Subservicers
Schedule 7 Litigation Disclosure
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 Form of Physician Independent Contractor
(Physician) Agreement and Addendum
Exhibit I Form of Management Services Agreement
SALE AND SUBSERVICING AGREEMENT (the "Agreement"),
dated as of June 30, 1999, by and among PHYAMERICA
RECEIVABLES LLC, a Delaware limited liability company, as
Seller (as such, together with its successors and permitted
assigns, the "Seller"), COASTAL PHYSICIAN GROUP, INC., a
Delaware corporation, as Subservicer hereunder (as such,
together with its successors and permitted assigns, the
"Subservicer"), NPF XII, 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, the Provider Physicians and/or the
Provider PCs;
WHEREAS, the Purchaser is a special purpose entity
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 Coastal Physician Group, Inc. has
been requested and is willing to act as the Subservicer; and
WHEREAS, the Seller acknowledges and consents to
the Purchaser's anticipated assignment to an affiliate of
all its right, title, interest and obligations with respect
to this Agreement.
NOW, THEREFORE, the parties agree as follows:
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, and 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.
"Asset Purchase Agreement" means that certain
Asset Purchase Agreement dated May 24, 1999 by and among CPG
Acquisition Co. and Stoneybrook Capital, LLC, as Buyers, and
FPA Medical Management, Inc. and its direct and indirect
subsidiaries and certain Professional Corporations set forth
on Schedule 3.1 thereto, as Sellers.
"Base Rate" means, as of any Purchase Date, a
percentage equal to 10.80% per annum.
"Billed Amount" means, with respect to any
Receivable the amount billed or billable to the related
Payor with respect thereto, for the provision of medical
services or products prior to the related Purchase Date,
prior to the application of any Contractual Allowance.
"Billing Date" means the earlier of (a) the date
on which the claim with respect to a Receivable was
submitted to the related Payor; (b) 60 days from the
Discharge Date; or (c) 60 days from the Service Date if
Discharge Date is inapplicable, 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.
"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.
"CHAMPVA" means the Civilian Health and Medical
Program of the Veterans Administration, a program of medical
benefits covering (a) the dependents of veterans who have
been rated by the Veterans Administration ("VA") as having a
total and permanent disability, (b) the survivors of
veterans who died from VA-rated service-connected
conditions, or (c) those who at the time of death, were
rated permanently and totally disabled from a VA-rated
service-connected condition.
"CHAMPVA Receivables" means a Receivable payable
pursuant to CHAMPVA.
"CHAMPVA Regulations" means collectively, all
regulations of the Civilian Health and Medical Program of
the Veterans Administration, including (a) all federal
statutes (whether set forth in 38 USC 1713 or elsewhere)
affecting CHAMPVA; and (b) all applicable provisions of all
rules, regulations (including 38 CFR 17), 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 CHAMPVA, 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 July 6, 1999.
"Coastal Physician Group, Inc." is a Delaware
corporation and owner, directly or indirectly, of the
Manager, each Provider Affiliate and 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).
"Concentration Limits" means: the following
expressed as a percentage or Dollar amount of the aggregate
Net Value of the Purchased Receivables then outstanding:
(a) Receivables payable by Blue Cross and Blue
Shield Payors - 15%;
(b) Receivables for which any one commercial
insurer, Provider Payor, HMO/PPO or other similar managed
care program is Payor during the time such Payor has a
claims paying ability and/or long-term debt rating of "BBB-"
or better but less than "A-" from DCR, or, if not rated by
DCR, an equivalent rating from either A.M. Best, or any two
of either, Fitch IBCA, S & P or Moody's - 2%;
(c) Receivables for which any one commercial
insurer, Provider Payor, HMO/PPO or other similar managed
care program is Payor during the time such Payor is unrated
or which has a claims paying ability and/or long-term debt
rating of below "BBB-" from DCR, or, if not rated by DCR, an
equivalent rating from either A.M. Best, or any two of
either, Fitch IBCA, S & P or Moody's - .50%;
(d) Receivables payable by all commercial
insurers, Provider Payors, HMO's/PPO's or other similar
managed care programs during the time such Payors are
unrated or which have a claims paying ability and/or long-
term debt rating of "BBB-" or below from DCR, or, if not
rated by DCR, an equivalent rating from either A.M. Best, or
any two of either, Fitch IBCA, S & P or Moody's - 6%; and
(e) Receivables payable by all commercial
insurers, Provider Payors, HMO's/PPO's or other similar
managed care programs during the time such Payors are
unrated or which have a claims paying ability and/or long-
term debt rating below "BBB-" from DCR, or, if not rated by
DCR, an equivalent rating from either A.M. Best, or any two
of either, Fitch IBCA, S & P or Moody's - 2%.
"Confirmation Order" means the Findings of Fact,
Conclusions of Law and Order under 11 U.S.C. 1129(a) and
(b) and Fed. R. Bankr. P. 3020 Confirming the Second Amended
Joint Plan of Reorganization of FPA Medical Management,
Inc., and certain of its subsidiaries and affiliates, as
modified, entered May 26, 1999 in the case of In re FPA
Medical Management, Inc., et al., in the United States
Bankruptcy Court for the District of Delaware, Case No. 98-
1596 (PJW).
"Contract" means an agreement (or agreements),
pursuant to, or under which, a Payor shall be obligated to
pay the Seller, a Provider Affiliate, a Provider Physician
or a Provider PC for services rendered or merchandise sold
to patients of such Provider Affiliate, Provider Physician
or Provider PC.
"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 current
reimbursement schedules by Payor Class by which the amount
of charges billed or billable 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, a Provider Physician or a
Provider PC.
"Credit Deficiency" has the meaning specified in
Section 6.2(d).
"Current Net Value Amount" has the meaning
specified in Section 6.2(c).
"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, 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.
"Determination Date" means the Business Day
preceding the Purchase Date of each week.
"Discharge Date" means, with respect to any
Receivable, the date of discharge by a Seller of the related
patient, in the case of an in-patient and the Billing Date,
in the case of an out-patient and a Receivable originated by
a nursing home.
"Dollar" and "$" means lawful money of the United
States of America.
"DRG Code" means the Diagnosis Related Group code
assigned by HCFA.
"D&P" means Duff & Phelps Credit Rating Co., its
successors and assigns.
"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) during such time as the Subservicer is the
Subservicer hereunder, (A) Medicare, (B) Medicaid plans
other than those administered by the states listed on
Schedule 1, (C) CHAMPUS or (D) CHAMPVA; (iv) a 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; or (v) a Provider
Payor provided that a Provider Payor shall not be an
Eligible Payor without the consent of the Servicer;
(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.
"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.
"Governmental Authority" means the United States
of America, federal, any state, local or other political
subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative
functions thereof or pertaining thereto.
"Governmental Consents" has the meaning specified
in Section 4.1(h).
"Governmental Receivable" means a Receivable
generated under a written Contract with a Governmental
Authority.
"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.
"HMO" means a health maintenance organization.
"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 and all addenda thereto between (i) a
Provider Physician and (ii) either Sterling Healthcare
Group, Inc., its affiliates or assigns ("Sterling"), a
Provider Affiliate; or a Provider PC which is substantially
in the form of Exhibit H hereto (or similar form acceptable
to the Servicer), providing for, among other things, the
transfer and assignment of Receivables from the Provider
Physician to Sterling, a Provider Affiliate or a Provider
PC.
"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, a Provider Affiliate, a
Provider PC and/or a Provider Physician, as appropriate, 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 PhyAmerica Member Corp., a
Delaware corporation, which is the corporate manager of the
Seller and has been 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 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 Chairman of the
Board, 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.
"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
provider under which the health care provider 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 a Medicaid Provider Agreement.
"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 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
provider under which the health care provider agrees to
provide services or merchandise for Medicare patients in
accordance with the terms of the agreement and Medicare
Regulations.
"Medicare Receivable" means a Receivable payable
pursuant to a Medicare Provider Agreement.
"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) 97%; 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, the Net Value of a Defaulted Receivable
shall be zero and 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.
"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
Shield Payors; (e) CHAMPUS Payors; (f) CHAMPVA Payors; (g)
HMO and PPO Payors; and (h) Provider 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.
"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 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.
"Provider Affiliate" means an Affiliate of the
Seller, listed on Schedule 3 attached hereto, wholly,
directly or indirectly, owned or controlled by Coastal
Physician Group, Inc., a Delaware corporation, which has
contracted to sell, transfer and assign its Receivables,
directly and indirectly, to the Seller.
"Provider Payor" means any medical services
provider reimbursed by an HMO, PPO or managed care program,
commercial insurer, Medicare, Medicaid, CHAMPUS or CHAMPVA
organized under the laws of any jurisdiction in the United
States, having its principal office in the United States.
"Provider PC" means (i) PhyAmerica Emergency
Services Medical Corporation, a California professional
corporation; (ii) PhyAmerica Emergency Services of
Louisiana, a Professional Medical Corporation, a Louisiana
professional corporation; (iii) Emergency Treatment
Associates, John G. Keene, M.D. and Robert W. Strauss, M.D.,
P.C., a New York professional corporation; (iv) Columbia
Emergency Services, P.C., a New York professional
corporation; (v) Rhinebeck Emergency Services, P.C., a New
York professional corporation; (vi) Beacon Emergency
Physicians, P.C., a New York professional corporation; (vii)
PhyAmerica Emergency Services of Texas, P.A., a Texas
professional association; and (viii) Passaic Emergency
Physicians, P.C., a New Jersey professional corporation, all
of which are professional corporations or professional
associations that have entered into a Service Agreement (or
similar agreement acceptable to the Servicer), directly or
indirectly, with SHG/PhyAmerica Physician Services, Inc., a
North Carolina corporation, whereby the Provider PC sells,
transfers and assigns its Receivables, directly or
indirectly, to SHG/PhyAmerica Physician Services, Inc., a
North Carolina corporation.
"Provider Physician" means a healthcare provider
that is either an individually licensed physician or group
of physicians operating as a business that has entered into
an Independent Contractor (Physician) Agreement or a Service
Agreement (or similar agreement acceptable to the Servicer)
whereby the Provider Physician sells, transfers and assigns
its Receivables, directly or indirectly, to a Provider
Affiliate or a Provider PC.
"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 XII -
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 Purchaser's request
substantially in the form of Exhibit C.
"Purchase Commitment" means an amount not to
exceed $95,000,000.
"Purchase Date" means the Closing Date and
thereafter, Tuesday of each week or the preceding 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
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 hereunder, including a
Rejected Receivable prior to its repurchase.
"Purchaser" means NPF XII, 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.
"Receivable" means (a) an account receivable
billed or billable to a Payor arising from the provision of
health care services (and any services or sales ancillary
thereto) by the Seller, a Provider Affiliate, a Provider
Physician or a Provider PC, including the right to payment
of any interest or finance charges and other obligations of
such Payor with respect thereto;
(b) a health-care-insurance receivable billed or
billable to a Payor arising from the provision of health
care services (and any services or sales ancillary thereto)
by the Seller, a Provider Affiliate, a Provider Physician or
a Provider PC, including the right to payment of any
interest or finance charges and other obligations of such
Payor with respect thereto;
(c) all security interests or liens and property
subject thereto from time to time purporting to secure
payment by the Payor;
(d) 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;
(e) all Collections with respect to any of the
foregoing;
(f) all Records with respect to any of the
foregoing; and
(g) all proceeds of any of the foregoing.
"Receivables Purchase and Contribution Agreement"
means that certain agreement dated as of June 30, 1999 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, the Provider Physicians, the
Provider PCs 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, in respect of a
Receivable, written confirmation received by the Servicer
from the Subservicer or the related Payor of the amount paid
on a patient 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 patient account number, if applicable and (f) the
RVUs, if applicable.
"S & P" means Standard & Poor's Corporation, and
its successors and assigns.
"Seller" means PhyAmerica 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 and all
amendments thereto between (i) SHG/PhyAmerica Physician
Services, Inc., a North Carolina corporation and (ii) a
Provider PC substantially in the form of Exhibit I,
providing for, among other things, the transfer and
assignment of Receivables, directly or indirectly, to
SHG/PhyAmerica Physician Services, Inc., a North Carolina
corporation.
"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" means any officer of the
Manager or 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
furnished to the Purchaser and the Servicer by the
Subservicer, 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 6.50% of the Net
Value of 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.
"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 (i)
Defaulted Receivables (net of recoveries including amounts
that have been deducted from the Seller Credit Reserve
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 for the Seller.
"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.
"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
30, 2003 or (b) the date of declaration or automatic
occurrence of the Termination Date pursuant to Section 8.1.
"Trustee" means Bank One, NA, 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, all right, title and interest of the Seller in and
to the Purchased 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, a CHAMPVA Receivable or other
Governmental Receivable, the Provider Affiliate, the
Provider Physician, the Provider PC, the Seller, and/or the
Subservicer hereunder, as the case may be, 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, if any,
of the Eligible 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, if any of Eligible Receivables, the Servicer will
determine the Purchase Price in accordance with the
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 (other than 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,
(v) pay to the Seller the Purchase Price for all Purchased
Receivables purchased on such Purchase Date, (w) deposit the
Program Fee in the Equity Account, (x) make a deposit in the
amount set forth in (B) above, if any, in the Seller Credit
Reserve Account, (y) make a deposit in the amount set forth
in (C) above, if any, in the Offset Reserve Account, and (z)
pay to the Servicer the Net Administrative Fee. In the
event the Purchase Price is zero on any Purchase Date, the
Purchaser shall only be required to make deposits specified
in (w), (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 Purchased Receivables purchased
on any Purchase Date is less than the Program Fee (including
where no Receivables are purchased on such Purchase Date),
in order to satisfy the Seller's obligation to pay the
Program Fee on such Purchase Date, the Servicer shall cause
(i) an amount equal to the Net Value of Purchased
Receivables purchased on such Purchase Date to be deposited
in the Equity Account; and (ii) the Trustee to withdraw from
the Seller Credit Reserve Account and deposit in the Equity
Account, an amount equal to the Program Fee on such Purchase
Date minus the Net Value of Purchased Receivables purchased
on such Purchase Date to the extent funds deposited
hereunder (net of withdrawals required hereunder) in the
Seller Credit Reserve Account are in excess of the Specified
Credit Reserve Balance. To the extent funds deposited
hereunder (net of withdrawals required hereunder) in the
Seller Credit Reserve Account do not exceed the Specified
Credit Reserve Balance, in order to satisfy the Seller's
obligation to pay the Program Fee on such Purchase Date (i)
the Servicer shall cause an amount equal to the Net Value of
Purchased Receivables purchased on such Purchase Date to be
deposited in the Equity Account; and (ii) the Seller shall,
upon demand, promptly pay to the Purchaser an amount equal
to the Program Fee on such Purchase Date minus the Net Value
of Purchased Receivables purchased on such Purchase Date and
the Purchaser shall deposit such funds 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, Provider PC, and Provider
Physician, as the case may be, 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, Provider PC and/or Provider Physician to
(i) mark 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) mark 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. Prior to the execution and
delivery of this Agreement, the Seller shall (i) establish
and maintain at the Seller's expense (A) accounts in the
name of the Seller, the names of the Provider Affiliates,
the names of the Provider PCs and/or the names of the
Provider Physicians, as the case may be, with depository
institutions satisfactory to the Purchaser (the "Medicare
Lockbox Accounts") into which each Provider Affiliate,
Provider PC, and Provider Physician will be required to
direct (x) all Collections in respect of Medicaid, Medicare,
CHAMPUS, CHAMPVA and Governmental Receivables payable to
such Provider Affiliate, Provider PC, or Provider Physician
and (y) all such amounts received shall be transferred or
"swept" from such Medicare Lockbox Accounts on a daily basis
to the Collection Account, and (B) accounts in the name of
the Servicer into which all Collections in respect of other
Receivables shall be deposited (the "Commercial Lockbox
Accounts"); 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 Accounts and the
Commercial Lockbox Account are referred to collectively in
this Agreement as the "Lockbox Account") and (ii) enter into
the Lockbox Account Agreement. The provisions of the
Lockbox Account Agreement described in the definition
thereof governing the Commercial Lockbox Account may not be
amended without the consent of the Trustee. The Seller
hereby agrees to and hereby agrees to cause the Provider
Affiliates, the Provider PCs and the Provider Physicians to
direct each Payor of an Eligible Receivable to remit all
payments with respect to such Receivable for deposit in the
Commercial Lockbox Account (other than the Payors of
Medicaid, Medicare, CHAMPUS, CHAMPVA and Governmental
Receivables, as to which the Provider Affiliates, the
Provider PCs and the Provider Physicians shall direct such
Payors to remit all payments with respect to such
Receivables for deposit in the appropriate Medicare Lockbox
Accounts) by delivering to such Payor a notice attached as
Exhibit A hereto. The Seller further agrees not to change
and to cause the Provider Affiliates, the Provider PCs and
the Provider Physicians not to change such directive to
Payors without the prior written consent of the Purchaser
and the Servicer. The Seller agrees to cause the Provider
Affiliates, the Provider PCs and the Provider Physicians to
not terminate the Medicare Lockbox Account Agreement without
first providing the Purchaser and the Servicer with written
notice. The Seller agrees to cause the Provider Affiliates,
the Provider PCs and the Provider Physicians to direct that
payments deposited in the Medicare Lockbox Accounts be swept
from the Medicare Lockbox Account to the Collection Account
on a daily basis. The Seller hereby agrees to cause the
Provider Affiliates, the Provider PCs and the Provider
Physicians to not direct the custodian thereof to modify
such sweep order without first providing the Purchaser with
written notice. In the event the Seller, any Provider
Affiliate, any Provider PC or a material number, in the sole
discretion of the Purchaser, of Provider Physicians,
terminate the Medicare Lockbox Accounts, change the sweep
order with respect to the Medicare Lockbox Accounts or the
Payors receive any instruction whatsoever indicating that
Collections with respect to the Eligible Receivables should
be sent to any location other than the Lockbox Account, 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).
(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 XII - Seller Credit Reserve Account"
(the "Seller Credit Reserve Account") and "NPF XII - Offset
Reserve Account" (the "Offset Reserve Account").
(c) Collection Account. The Purchaser has
established and shall maintain a trust account with the
corporate trust department of the Trustee titled "NPF XII -
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. Any Collections in respect of Purchased
Receivables held 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. In the event
Collections in respect of Purchased Receivables held by the
Seller (whether in the Lockbox Account or otherwise) shall
not be remitted to the Collection Account not later than the
first Business Day following the day of receipt, 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,
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 anything to the contrary
herein, 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. 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 the
Purchased Receivables; all Receivables 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 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; to enable the Purchaser to
exercise or enforce any of its rights hereunder or under any
Purchase Assignment; or that may be necessary or appropriate
to comply with revisions to Article 9 of the Uniform
Commercial Code. Without limiting the generality of the
foregoing, the Seller will, upon the reasonable 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
reasonably request and at the Purchaser's reasonable request
undertake, or cause to be undertaken, UCC-11 searches with
respect to jurisdictions identified by the Servicer with
respect to the Seller, the Provider Affiliates, the Provider
Physicians or the Provider PCs.
(b) The Seller hereby authorizes the Purchaser to
act as the Seller's attorney in fact and to file one or more
financing statements, amendments or continuation statements,
and amendments thereto and assignments thereof, relating to
all or any of the Receivables and Collections with respect
thereto without the signature of the Seller.
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 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 (including the
Purchase Price to the extent allocable 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 Coastal
Physician Group, Inc., such as 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 Purchaser 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.
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 state
of the Seller's 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 its
state of incorporation;
(iii) a Good Standing Certificate, dated no more
than ten days prior to the Closing Date, from the respective
Secretary of State of its 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 respective
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 its
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 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,
the Provider Affiliates, the Provider PCs, the Manager or
SHG/PhyAmerica Physician Services, Inc. (under their present
names and any previous names) as debtor, together with
copies of such financing statements. Searches of applicable
federal and state court and agency dockets and lien records
showing all tax liens and judgment liens affecting the
Seller, Emergency Treatment Associates, John G. Keene, M.D.
and Robert W. Strauss, M.D., P.C., a New York professional
corporation, Columbia Emergency Services, P.C., a New York
professional corporation, Rhinebeck Emergency Services,
P.C., a New York professional corporation, Beacon Emergency
Physicians, P.C., a New York professional corporation, and
Passaic Emergency Physicians, P.C., a New Jersey
professional corporation;
(viii) acknowledgment copies of proper financing
statements (Form UCC-3), if any, necessary to release all
security interests and other rights of any Person in
Purchased Receivables previously granted by the Seller or
any Provider Affiliate or any Provider PC including, without
limitation, all such releases specified by the Seller prior
to the date hereof;
(ix) a copy of the Confirmation Order (which provides,
in paragraph number 7 of the decrees, that the assets
acquired by certain Affiliates of Coastal Physician Group,
Inc. pursuant to the Asset Purchase Agreement have been
transferred free and clear of any liens or claims);
(x) a copy of the fully executed Receivables Purchase
and Contribution Agreement and consummation thereof;
(xi) a copy of the fully executed Service Agreements
and consummation thereof;
(xii) a copy of all of the fully executed
Independent Contractor (Physician) Agreements and
consummation thereof;
(xiii) a copy of the fully executed assignment
documents properly assigning the Independent Contractor
(Physician) Agreements from Sterling to the Provider
Affiliates and/or the Provider PCs and consummation thereof;
and
(xiv) a copy of the fully executed Asset Purchase
Agreement and consummation thereof.
(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 Purchaser
or with respect to each Eligible Payor shall have sent or
caused the Provider Affiliates, Provider Physicians or the
Provider PCs to have sent each Eligible Payor a notice
substantially in the form of Exhibit A.
(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.
(j) Each Provider Affiliate that utilizes
Provider Physicians shall have entered into Independent
Contractor (Physician) Agreements with Provider Physicians
substantially in the form of Exhibit H.
(k) Each Provider PC shall have entered into a
Service Agreement with a SHG/PhyAmerica Physician Services,
Inc., a North Carolina corporation, substantially in the
form of Exhibit I.
(l) 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 pursuant to
Section 9.2 hereof.
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; and
(h) Steven M. Scott, M.D. is the Chairman and
Chief Executive Officer of Coastal Physician Group, Inc.
unless prevented by death or disability of Steven M. Scott,
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 Coastal Physician Group, Inc.
hereunder represent and warrant 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 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 certificate
or articles of organization or 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 equity;
(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;
(f) Except at set forth on Schedule 7 attached
hereto, 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 PCs, the Seller or its members, the Manager,
Coastal Physician Group, Inc., SHG/PhyAmerica Physician
Services, Inc., a North Carolina corporation, their officers
or directors, or any of their property, 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 any of the
Provider Affiliates, any of the Provider PCs, the Seller or
its members, the Manager, Coastal Physician Group, Inc., or
SHG/PhyAmerica Physician Services, Inc., a North Carolina
corporation, in excess of $100,000 (other than such
judgments or orders in respect of which adequate insurance
is maintained by such parties for the payment thereof);
(g) No injunction, bankruptcy petition, writ,
restraining order or other order of any material nature
adverse to the Receivables, any of the Provider Affiliates,
any of the Provider PCs, the Seller or its members, the
Manager, Coastal Physician Group, Inc., or SHG/PhyAmerica
Physician Services, Inc., a North Carolina corporation, or
the conduct of their respective businesses or which is
inconsistent with the due consummation of the transactions
contemplated by this Agreement has been issued by or filed
with a Governmental Authority;
(h) To the extent applicable to the Seller, the
Provider Affiliates or the Provider PCs, other than as set
forth on Schedule 5, the Seller, the Provider Affiliates and
the Provider PCs have complied in all material respects with
all applicable laws, rules, regulations, and orders with
respect to them, their 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 them or their respective property,
and have and maintain all applicable permits, licenses,
authorizations, registrations, approvals and consents of
Governmental Authorities, and all applicable certificates of
need for the construction or expansion of or investment in
health care facilities, all applicable Health Facility
Licenses, Accreditations, Medicaid Certifications and
Medicare Certifications necessary for their respective
activities and businesses as currently conducted and as
proposed to be conducted, the ownership, use, operation and
maintenance by each of them of their respective properties,
facilities and assets and the performance by them of this
Agreement and the Related Documents (hereinafter referred to
collectively as "Governmental Consents") other than as set
forth on Schedule 5 attached hereto;
(i) Other than as set forth on Schedule 5 hereto
and without limiting the generality of the prior
representation: (A) each applicable Health Facility
License, Medicaid Certification, Medicare Certification,
Medicaid Provider Agreement, Medicare Provider Agreement,
each of the applicable Blue Cross/Blue Shield Contracts,
each Contract with a Governmental Authority relating to
Governmental Receivables, and each of the Contracts of the
Seller, the Provider Affiliates and the Provider PCs and
their Affiliates is in full force and effect and has not
been amended or otherwise modified, rescinded or revoked or
assigned, (B) the Seller, the Provider Affiliates and the
Provider PCs and their Affiliates are in material compliance
with the applicable requirements of Medicaid, Medicare,
CHAMPUS, CHAMPVA and related programs, the Blue Cross/Blue
Shield Contracts, and the Contract with a Governmental
Authority relating to Governmental Receivables 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, any of the Provider Affiliates or
any of the Provider PCs or any other health care facility
owned or operated by them or any of their Affiliates, or
such provider's participation in any Medicaid, Medicare,
CHAMPUS, CHAMPVA or other similar program, any Blue
Cross/Blue Shield Contracts or any Contract with a
Governmental Authority relating to Governmental Receivables
and there is no claim that such Governmental Consent,
participation or contract is not in full force and effect;
(j) The Seller, the Provider Affiliates and the
Provider PCs have filed on a timely basis all applicable tax
returns (federal, state, and local) required to be filed and
have paid or made adequate provisions for the payment of all
applicable taxes, assessments, and other governmental
charges due from them;
(k) The primary business of the Provider
Affiliates and Provider PCs 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 or will be issued to either the
Physician Provider or the related Provider Affiliates or
Provider PCs and a true and complete list of all provider
numbers assigned by Payors to the Physician Providers and
the Provider Affiliates and Provider PCs is maintained by
the Seller and the Provider Affiliates and the Provider PCs
at the corporate headquarters of Coastal Physician Group,
Inc.;
(l) Neither the Seller nor any of the Provider
Affiliates, Provider PCs or Provider Physicians (with
respect to services rendered or activities under any
Independent Contractor (Physician) Agreement) is required to
prepare or submit Medicaid or 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, any of the
Provider Affiliates, any of the Provider PCs or any of the
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, Provider PC and 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 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 Coastal Physician Group,
Inc., the Seller, the Provider Affiliates and the Provider
PCs, there has occurred no event which has or is reasonably
likely to have a material adverse effect on their financial
condition, business or operations, including their ability
to perform their obligations under this Agreement;
(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. Each Provider Affiliate and
each Provider PC 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 or Provider PCs have incurred
Debts beyond their respective abilities to pay. Each
Provider Affiliate and Provider PC, 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 or the Provider PCs;
(p) The consolidated balance sheets of Coastal
Physician Group, Inc. and its Subsidiaries as at December
31, 1998, and the related statements of income and
shareholders' equity for the fiscal year then ended,
prepared by KPMG Peat Marwick, 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 Coastal
Physician Group, Inc. and its Subsidiaries as at such date
and the consolidated results of the operations of Coastal
Physician Group, Inc. and its Subsidiaries for the period
ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and
since December 31, 1998, there has been no material adverse
change in any such condition, business or operations;
(q) The Medicare Lockbox Account and the
Commercial Lockbox Account are the only lockbox accounts
maintained by the Seller, the Provider Affiliates, the
Provider PCs or the Provider Physicians (for services
rendered or activities under the Independent Contractor
(Physician) Agreements or Service Agreements) and each Payor
of an Eligible Receivable 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, CHAMPUS, CHAMPVA and Governmental
Receivables which have been directed to remit all payments
with respect to such Receivables for deposit in the Medicare
Lockbox Account);
(r) 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;
(s) The legal name of the Seller is as set forth
at the beginning of this Agreement and except for the Seller
changing its name from Phymerica Receivables LLC to
PhyAmerica Receivables LLC evidenced by the Amendment to its
Articles of Organization filed with the Secretary of State
of Delaware on June 22, 1999, 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. The legal name of each of the Provider
Affiliates and Provider PCs is as set forth on Schedule 3
hereto. None of the Provider Affiliates or Provider PCs
have changed their legal name in the last six years, and
during such period, did not use, nor do they now use any
tradenames, fictitious names, assumed names or "doing
business as" names;
(t) The Receivables of the Seller have been and
shall continue to be duly and validly acquired by the Seller
from the Provider Affiliates or SHG/PhyAmerica Physician
Services, Inc., a North Carolina corporation, as the case
may be, and to the extent applicable, such Receivables have
been and shall continue to be duly and validly acquired by
the Provider Affiliates or the Provider PCs from the
Provider Physicians and have been and will continue to be
adjusted to reflect reimbursement policies of the Payors
with respect thereto, including but not limited to, the
Eligible Receivable Amounts of Receivables relating to such
Payors do not and shall not exceed amounts the Seller, any
Provider Affiliate, any Provider PC 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, Provider
PC, Provider Physician or the Seller;
(u) No Payor of an Eligible 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
or Provide PC;
(v) Neither the Seller, the Subservicer, the
Provider Affiliates, or the Provider PCs, has done and nor
shall any of them do anything to impede or interfere with
the collection by the Purchaser of the Purchased Receivables
and nor shall any of them 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;
(w) The Seller, the Subservicer, the applicable
Provider Affiliates, or the applicable Provider PCs has made
and will continue to make all payments to Payors necessary
to prevent any Payor from offsetting any earlier overpayment
to the Seller, the Provider Affiliates or the Provider PCs
against any amounts such Payor owes on a Purchased
Receivable except to the extent prohibited by Contract or by
applicable laws, rules and regulations;
(x) Each Purchase Notice contains a complete and
accurate list of all Eligible Receivables of the Seller as
of its date;
(y) For federal income tax reporting and
accounting purposes, the Seller, each Provider Affiliate and
each Provider PC will treat the sale of each Purchased
Receivable pursuant to this Agreement and the Related
Documents as a sale of, or absolute assignment of its full
right, title and ownership interest in, such Purchased
Receivable to the Purchaser and such parties have not in any
other manner accounted for or treated the transactions in
Purchased Receivables contemplated hereby;
(z) 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, each Provider Affiliate and each Provider PC
in and to the Purchased Receivables now existing and
hereafter created;
(aa) The Seller, each of the Provider Affiliates
and each of the Provider PCs has valid business reasons for
selling its interests in the Purchased Receivables rather
than obtaining a loan with the Purchased Receivables as
collateral;
(bb) As of the date first above written, the
Provider Affiliates and the Provider PCs are doing business
under the names and at the locations set forth on Schedule 3
hereto. The Provider Affiliates and the Provider PCs are
not doing business under any names or at any locations other
than those set forth on Schedule 3 hereto. As of the date
first above written, the Seller is doing business under the
names and at the locations set forth on Schedule 4 hereto.
The Seller is not doing business under any names or at any
locations other than those set forth on Schedule 4 hereto.
The names set forth on Schedule 3 and Schedule 4 hereto are
payees on the checks received from Eligible Payors.
Schedule 3 hereto shall be amended by the Seller 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;
(cc) The Seller has received from each Provider
Affiliate and each Provider PC substantially the same
representations and warranties set forth in (a) through (bb)
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;
(dd) 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;
(ee) The Seller shall not engage in transactions
with any Affiliate other than having Receivables sold to it
and selling those Receivables; 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;
(ff) The Seller shall maintain its assets
separately from the assets of any Affiliate (including
through the maintenance of a separate bank account);
(gg) The Seller shall maintain separate financial
statements, books and records from any Affiliate;
(hh) 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;
(ii) 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; and
(jj) 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:
(a) Such Receivable is the primary liability of
an Eligible Payor and is or will be 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 or confirmed or
has caused the confirmation of the submission of all
necessary documentation and has or will supply 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 the 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 any Provider PC or 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, a
Provider PC or a Provider Physician in the ordinary course
of its business and the sales prices of such services or
merchandise were usual, customary and reasonable in their
respective community for such services;
(h) The portion of such Receivable described in
subsections (a) and (b) 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 150 days from its Billing Date, (B) with respect
to all Purchases following the initial Purchase, the claim
with respect to the related Receivable must be submitted to
the related Payor no later than 30 days after the Discharge
Date of the patient to whom the health care services giving
rise to the Receivable were rendered and (C) is not past the
statutory limit for collection applicable to the Payor;
(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 the Contract and
applicable law (including without limitation, 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 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, the
Provider PC or the Provider Physician is a party shall be
promptly delivered to the Purchaser upon the reasonable
request of the Purchaser, the amount of the Eligible
Receivable does not exceed the limitations so imposed, and
each Receivable 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
by the Purchaser and the Servicer, the Eligible Receivable
Amount of such Receivable is not in excess of $150,000;
(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
Affiliates, the Provider PCs, the Provider Physicians 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) Other than as set forth on Schedule 5 hereto,
there are no procedures 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 the 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) and no party to 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
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;
(s) The Seller has received, to the extent
applicable from each Provider Affiliate or each Provider PC,
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;
(u) If such Receivable is a Medicare, Medicaid,
CHAMPUS, CHAMPVA or other Governmental Receivable, the
transfer of such Receivable from the Provider Physician, the
Provider Affiliate, the Provider PC 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; and
(v) If such Receivable was originated by an
individual Provider Physician, such Provider Physician has
executed an Independent Contractor (Physician) Agreement
substantially in the form of Exhibit H and has delivered
such agreement to the relevant Provider Affiliate or
Provider PC.
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; provided, however, the
Purchaser's failure to give such prompt written notice shall
not constitute a waiver of such breach or in any way
"impair" the Servicer's or Purchaser's right or remedies
hereunder. 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 from other amounts due to the Seller
hereunder. Such amount shall be deemed to be Collections of
such Receivable (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 shall constitute the
sole remedy by the Purchaser against the Seller 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; (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 or (c) assert claims
for fraud, conversion, or other tortious conduct against the
Seller or the Sellers Affiliates. 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 mark 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 existence, 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 July 31 of each year beginning with July 31, 2000,
(i) a Manager's Certificate of the Seller in the form of
Exhibit D, dated the date of such delivery; and (ii) upon
reasonable request of 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 Purchased Receivables into the appropriate Lockbox
Account within one Business Day of receipt;
(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, regulations or decrees; and
(f) Timely, pay the Program Fee and all amounts
due to the Purchaser under Sections 2.2, 2.3, 4.3, 6.4,
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, each Provider Affiliate,
and each Provider PC), 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, each Provider Affiliate and each Provider PC), 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, each Provider Affiliate
and each Provider PC), 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, the Provider
Affiliates, the Provider PCs or Coastal Physician Group,
Inc. 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
(if any) 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 Coastal Physician
Group, Inc., as determined by the Servicer) 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 a manager or the chief executive officer of the Manager
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;
(e) On or before the tenth Business Day following
the 45th day and 90th day of each calendar quarter
commencing on the first full calendar quarter immediately
following the Closing Date, federal tax lien search results
in all applicable jurisdictions with respect to the Seller,
the Provider Affiliate and/or the Provider PC upon the
reasonable request of the Purchaser or the Servicer. In the
event Seller fails to timely deliver such search results,
the Purchaser or the Servicer may cause such searches to be
completed at the Seller's sole expense;
(f) 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
three (3) business days prior to the delivery of such
reports to the public and/or any Governmental Authority; and
(g) 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, the Provider
Affiliates, the Provider Physicians, the Provider PCs,
Coastal Physician Group, Inc. or any of its Subsidiaries 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 or
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, the Provider
Affiliates, the Provider Physicians or the Provider PCs 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), 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
(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 all 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
(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 pay such amount by check or wire transfer to the
Seller.
(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 check or 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 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 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 to the Seller funds in an amount equal
to the amount held in the Collection Account, the Seller
Credit Reserve Account and the Offset Reserve Account
related 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 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 Receivables, provided,
that (a) to the extent required by law, the Subservicer, the
Provider Affiliates, the Provider Physicians and/or the
Provider PCs shall continue to perform their obligations
with respect to collections of Medicaid Receivables,
Medicare Receivables, CHAMPUS Receivables, CHAMPVA
Receivables and other Governmental 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.
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, CHAMPUS
Receivables, CHAMPVA Receivables and other Governmental
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, CHAMPVA Receivables and other Governmental
Receivables (to the extent required by applicable law to be
paid to the Seller, the Subservicer, a Provider Affiliate, a
Provider Physician or a Provider PC) 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;
(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 organization, and qualifying and
remaining qualified in good standing as a foreign
organization 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,
the Provider Affiliates, and the Provider PCs 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 or the
Provider PC 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, employees or other persons acting
on behalf of the Subservicer 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 Provider PC 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 anything herein to the
contrary, all collection functions in respect of Medicaid
Receivables, Medicare Receivables, CHAMPUS Receivables,
CHAMPVA Receivables and other Governmental Receivables shall
be performed in accordance with Medicaid Regulations,
Medicare Regulations, CHAMPUS Regulations and CHAMPVA
Regulations.
(d) Notwithstanding any other provision herein to
the contrary, the Subservicer shall undertake and complete
upon the reasonable 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.
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 as the case may be, 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 anything to the contrary contained herein,
the Servicer shall have the absolute and unlimited right to
direct the Subservicer (who shall be obligated to cause the
applicable Provider Affiliate and Provider PC) 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 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 8.50% 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 July 31 of each year beginning
with July 31, 2000, a Manager's Certificate stating, as to
each signer thereof, that (a) a review of the activities of
the Subservicer during the preceding calendar year 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 office/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 shall assume the
servicing responsibilities of Subservicer in respect of such
Purchased Receivables. The Subservicer shall thereupon
provide or cause the Provider Affiliates, Provider Physician
and/or Provider PC 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.
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 Servicer
(but not in any other capacity) under this Agreement except
with respect to Medicaid Receivables, Medicare Receivables,
CHAMPUS Receivables, CHAMPVA Receivables and other
Governmental Receivables 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,
CHAMPUS, CHAMPVA and other Governmental 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.
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 shall materially fail to perform
or observe any term, covenant or agreement contained in this
Agreement or any Related Document;
(b) The Subservicer shall materially fail to
perform or observe any term, covenant or agreement contained
in this Agreement;
(c) 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;
(d) 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;
(e) Except as set forth on Schedule 7, 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 the Seller,
any of the Provider Affiliates, any of the Provider PCs or
any of their Affiliates shall remain unpaid, unstayed on
appeal, undischarged, unbonded or undismissed for a period
of 30 days or more;
(f) 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;
(g) 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, any Provider Affiliate or any
Provider PC other than a lien that does not materially
adversely affect the financial condition of the Seller, the
Provider Affiliate or the Provider PC, as the case may be,
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;
(h) 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;
(i) The Servicer shall have reasonably determined
that any event which materially adversely affects the
collectibility of the Receivables has occurred, or that any
other event which materially adversely affects the financial
condition of the Seller or the Subservicer, 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 has occurred;
(j) 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
Coastal Physician Group, Inc. such that Coastal Physician
Group, Inc.'s reported consolidated shareholders' equity is
less than negative $71,000,000, 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 and SHG/PhyAmerica Physician
Services, Inc., a North Carolina corporation, 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;
(k) A deterioration has taken place in the
quality of servicing of Purchased Receivables or other
Receivables serviced by the Seller which the Servicer, in
its reasonable discretion, determines to be material;
(l) 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;
(m) The Lockbox Account Agreement or the Related
Documents (with the exception of the Independent Contractor
(Physician) Agreements) shall have been amended or
terminated without the written consent of the Purchaser and
the Servicer;
(n) 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 (14) consecutive days;
(o) 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;
(p) A Principal Amortization Event shall have
been declared; or
(q) Coastal Physician Group, Inc. fails to file
with the appropriate governmental filing office(s), within
twenty (20) days of the Closing Date, form 10-K and Form 10-
Q with respect to the fiscal year ending December 31, 1998
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
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. 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 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.
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 the Subservicer's representations, warranties,
covenants or obligations under this Agreement or Related
Documents or the ownership of the Purchased Receivables or
in respect of any of the Seller's Receivable 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. Without
limiting or being limited by the foregoing, the Seller and
the 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:
(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 2.2, 2.3,
4.3, 5.1(f), 6.4, 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.
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 their 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 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 to 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 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
thereunto duly authorized, as of the date first above
written.
PHYAMERICA RECEIVABLES LLC, as Seller
By: PhyAmerica Member Corp., its Manager
By:
Name: Steven M. Scott, M.D.
Title: President
Address at which the chief executive office is located:
Address: 2828 Croasdaile Drive
Durham, NC 27705
Attention: Steven M. Scott, M.D.
Phone number: (919) 383-0355
Telecopier number: (919) 383-9226
Additional names under which Seller does business:
Additional locations at which Provider Affiliates and
Provider PCs do business and additional locations at which
Records are maintained:
544 E 1st Ave.
Ashland, AL 36251
1330 Hwy. 231 S
Troy, AL 36081
201 Pine St. NW
Hartselle, AL 35640
1874 Beltline Rd SW
Decatur, AL 35609-2211
224 E Matthews
Jonesboro, AR 72401-3156
6501 N 19th Ave.
Phoenix, AZ 85015-1690
515 N Mesa Dr.
Mesa, AZ 85201-5989
1947 E Thomas Rd
Phoenix, AZ 85016-7710
3838 N Campbell Ave.
Tucson, AZ 85719-1497
624 E Elder St.
Fallbrook, CA 92028-3099
400 N. Clyde Morris Blvd.
Daytona Beach, FL 32114
264 S Atlantic Ave.
Ormond Beach, FL 32176-8192
1401 W Seminole Blvd.
Sanford, FL 32771-6737
3100 Douglas Rd
Coral Gables, FL 33134-6990
5000 W Oakland Park Blvd.
Ft. Lauderdale, FL 33313-1585
1000 MarWalt Dr.
Ft. Walton Beach, FL 32547-6795
818 Main Ln.
Orlando, FL 32801
151 Redstone Ave. SE
Crestview, FL 32539
6000 49th St. N.
St. Petersburg, FL 33709-2145
Hwy. 20 W
Palatka, FL 32177
2190 Hwy. 85 N
Niceville, FL 32578-1053
200 N Lakemont Ave.
Winter Park, FL 32792-3273
3651 Wheeler Rd., 4th Floor
Augusta, GA 30909
3651 Wheeler Rd.
Augusta, GA 30909
201 Hospital Rd
Canton, GA 30114-2408
60 Hospital Rd
Newnan, GA 30263-1210
3100 Kemble Ave.
Brunswick, GA 31520-4211
2000 Dan Proctor Dr.
St. Mary's, GA 31558-3799
120 Gordon St.
Washington, GA 30673
4643 Waimea Canyon Dr.
Waimea, HI 96796
695 N Kellog St.
Galesburg, IL 61401-2807
605 N 12th St.
Mt. Vernon, IL 62864-2899
210 W Walnut St.
Canton, IL 61520-2497
201 S 14th St.
Herrin, IL 62948-3631
718 Glenview Ave.
Highland Park, IL 60035-2497
405 W Jackson St.
Carbondale, IL 62901-2904
530 Park Ave. E
Princeton, IL 61356-2598
9600 Gross Point Rd
Skokie, IL 60076-1257
503 N Maple St.
Effingham, IL 62401-2099
320 N Section St.
Sullivan, IN 47882-1239
1451 N Gardner
Scottsburg, IN 47170-7751
3901 S 7th St.
Terre Haute, IN 47802-5709
1 King's Daughters' Dr.
Madison, IN 47250-3357
1801 Ashley Cir.
Bowling Green, KY 42104-3384
50 Sterling Ave.
Mt. Sterling, KY 40353-1100
2000 Holiday Ln.
Fulton, KY 42041
Eastern Bypass
Richmond, KY 40476
1099 Medical Center Cir.
Mayfield, KY 42066
150 N Eagle Creek Drive
Lexington, KY 40509-1807
1020 Fertitta Blvd.
Leesville, LA 71446-4697
6000 Bullard Ave.
New Orleans, LA 70128-2898
1125 Marguerite St.
Morgan City, LA 70380-1855
9000 Franklin Square Dr.
Baltimore, MD 21237-3901
900 Caton Ave.
Baltimore, MD 21229
1900 Columbus Ave.
Bay City, MI 48708-6880
818 Riverside Ave.
Adrian, MI 49221-1446
500 E. Pottawatamie
Tecumseh, MI 49286-2097
13101 Sims Hwy.
Morenci, MI 49256-1099
458 Cross St.
Hudson, MI 49247
2727 E. Beecher
Adrian, MI 49221
4000 Coopers St.
Jackson, MI 49201
N10561 Grand View Ln.
Ironwood, MI 49938-9359
72 S State St.
Shelby Village, MI 49455-1299
461 W Huron
Pontiac, MI 48341-1651
200 Hemlock
Tawas City, MI 48764
601 E 14th St.
Sedalia, MO 65301-5972
1000 E Walnut Lawn
Springfield, MO 65807
Hwy. 61 S
Crystal City, MO 63019-0350
800 S Ash St.
Nevada, MO 64772-3299
1100 Kentucky Ave.
West Plains, MO 65775-2029
1000 W 10th St.
Rolla, MO 65401-2905
2nd & Washington Streets
Booneville, MS 38829
200 Hwy. 30 W
New Albany, MS 38652
1105 Earl Frey Blvd.
Amory, MS 38821-5516
300 S Washington Ave.
Greenville, MS 38701-4719
Hwy. 51 N
Brookhaven, MS 39601
220 Hwy. 12 W
Kosciusko, MS 39090
211 Pennington Ave.
Passaic, NJ 07055-4698
4988 State Hwy. 30
Amsterdam, NY 12010-7520
105 Marys Ave.
Kingston, NY 12401-5894
35 North Rd
Poughkeepsie, NY 12601-1399
366 Broadway
Amityville, NY 11701
71 Prospect Ave.
Hudson, NY 12534-2907
10 Springbrook Ave.
Rhinebeck, NY 12572
60 Delavan Ave.
Beacon, NY 12508-2052
618 S Main St.
Reidsville, NC 27320-5094
207 Old Lexington Rd.
Thomasville, NC 27360-3428
420 N Center St.
Hickory, NC 28601-5033
509 N Bright Leaf Blvd.
Smithfield, NC 27577-4407
566 Ruin Creek Rd
Henderson, NC 27536-2957
1805 Ruin Creek Rd.
Henderson, NC 27536
288 S Ridgecrest Ave.
Rutherfordton, NC 28139-3097
607 Beaman St.
Clinton, NC 28328-2697
485 W Market St.
Tiffin, OH 44883
110 E Howard St.
Willard, OH 44890-1611
11558 SR 111
Paulding, OH 45879
2600 Navarre Ave.
Oregon, OH 43616-3297
1761 Beall Ave.
Wooster, OH 44691-2399
305 S 5th
Enid, OK 73701-5899
300 Ridge Medical Plaza
Edgefield, SC 29824
222 S Herlong Ave.
Rock Hill, SC 29732-1190
322 W South St.
Union, SC 29379-2839
US Hwy. 43 S
Lawrenceburg, TN 38464
700 W Maple St.
Fayetteville, TN 37334-3202
2545 N. Washington Ave.
Brownsville, TN 38012
400 Tickle St.
Dyersburg, TN 38024-3120
214 Lakeview Dr.
Somerville, TN 38068-9737
367 Hospital Blvd.
Jackson, TN 38305-2081
200 W Church St.
Lexington, TN 38351-2014
161 Hospital Dr.
McKenzie, TN 38201-1629
705 E Poplar Ave.
Selmer, TN 38375-1828
161 Mount Pelia Rd
Martin, TN 38237-3811
1559 Sparta Rd
McMinnville, TN 37110-1399
132 Hospital Dr.
Angleton, TX 77515-4197
300 E Crockett
Cleveland, TX 77327-4029
1604 Rock Prairie Rd
College Station, TX 77845-8345
1020 Kerrville Rd
Fredericksburg, TX 78624
2727 W. Halcombe Blvd.
Houston, TX 77025
1401 E 8th St.
Weslaco, TX 78596-6640
504 Lipscomb
Bonham, TX 75418-4096
1313 Herman Dr.
Houston, TX 77004
1300 Binz
Houston, TX 77004
709 Medical Center Blvd.
Webster, TX 77598
5556 Gasmer
Houston, TX 77035
801 Bedell Ave.
Del Rio, TX 78840-4185
600 W Ridge Rd
Wytheville, VA 24382-1099
1325 Locust Ave.
Fairmont, WV 26554-1482
COASTAL PHYSICIAN GROUP, INC., as Subservicer
By:
Name: Steven M. Scott, M.D.
Title: President
Address at which the chief executive office is located:
Address: 2828 Croasdaile Drive
Durham, NC 27705
Attention: Steven M. Scott, M.D.
Phone number: (919) 383-0355
Telecopier number: (919) 383-9226
NPF XII, INC.
By:
Name: Lance K. Poulsen
Title: President
Address: 6125 Memorial Drive
Dublin, OH 43017
Attention: Donald H. Ayers
Phone number: (614) 764-9944
Telecopier number: (614) 764-0602
NATIONAL PREMIER FINANCIAL
SERVICES, INC.
By:
Name: Lance K. Poulsen
Title: President
Address: 6125 Memorial Drive
Dublin, OH 43017
Attention: Lance K. Poulsen
Phone number: (614) 764-9944
Telecopier number: (614) 764-0602
SCHEDULE 1
INELIGIBLE MEDICAID STATES
None. This Schedule 1 may be unilaterally amended
from time to time by the Servicer without the consent of any
of the other parties hereto.
SCHEDULE 2
INELIGIBLE BLUE CROSS/BLUE SHIELD PLANS
None. This Schedule 2 may be unilaterally amended
from time to time by the Servicer without the consent of any
of the other parties hereto.
SCHEDULE 3
NAMES OF PROVIDER AFFILIATES
AND ADDRESSES AT WHICH PROVIDE AFFILIATES
RE IS DOING BUSINESS
NAMES OF PROVIDER AFFILIATES
ADDRESSES AT WHICH
PROVIDER AFFILIATES ARE DOING BUSINESS
1.
PhyAmerica Receivables LLC
2828 Croasdaile Drive
Durham, NC 22705
(Durham County, NC)
2.
Ashland Emergency Services, LLC
544 E 1st Ave.
Ashland, AL 36251
(Clay County, AL)
3.
Troy Emergency Services, LLC
1330 Hwy. 231 S
Troy, AL 36081
(Pike County, AL)
4.
Hartselle Emergency Services, LLC
201 Pine St. NW
Hartselle, AL 35640
(Morgan County, AL)
5.
Decatur Emergency Services II, LLC
1874 Beltline Rd SW
Decatur, AL 35609-2211
(Morgan County, AL)
6.
Wynne Emergency Services, LLC
310 S Falls Blvd.
Wynne, AR 72396-3013
(Cross County, AR)
7.
Jonesboro Emergency Services, LLC
224 E Matthews
Jonesboro, AR 72401-3156
(Craighead County, AR)
8.
Phoenix Emergency Services I, LLC
6501 N 19th Ave.
Phoenix, AZ 85015-1690
(Maricopa County, AZ)
9.
Mesa Emergency Services, LLC
515 N Mesa Dr.
Mesa, AZ 85201-5989
(Maricopa County, AZ)
10.
Phoenix Emergency Services II, LLC
1947 E Thomas Rd
Phoenix, AZ 85016-7710
(Maricopa County, AZ)
11.
Tucson Emergency Services, LLC
3838 N Campbell Ave.
Tucson, AZ 85719-1497
(Pima County, AZ)
12.
PhyAmerica Emergency Services Medical Corporation (this
professional corporation will enter into a management
services agreement with SHG/PhyAmerica Physician Services,
Inc.)
624 E Elder St.
Fallbrook, CA 92028-3099
(San Diego County, CA)
13.
Daytona Beach Emergency Services, LLC
400 N. Clyde Morris Blvd.
Daytona Beach, FL 32114
(Volusia County, FL)
14.
Ormond Beach Emergency Services, LLC
264 S Atlantic Ave.
Ormond Beach, FL 32176-8192
(Volusia County, FL)
15.
Sanford Emergency Services, LLC
1401 W Seminole Blvd.
Sanford, FL 32771-6737
(Seminole County, FL)
16.
Coral Gables Emergency Services, LLC
3100 Douglas Rd
Coral Gables, FL 33134-6990
(Dade County, FL)
17.
Lauderdale Lakes Emergency Services, LLC
5000 W Oakland Park Blvd.
Ft. Lauderdale, FL 33313-1585
(Broward County, FL)
18.
Ft. Walton Beach Emergency Services, LLC
1000 MarWalt Dr.
Ft. Walton Beach, FL 32547-6795
(Okaloosa County, FL)
19.
Orlando Emergency Services, LLC
818 Main Ln.
Orlando, FL 32801
(Orange County, FL)
20.
Crestview Emergency Services, LLC
151 Redstone Ave. SE
Crestview, FL 32539
(Okaloosa County, FL)
21.
St. Petersburg Emergency Services, LLC
6000 49th St. N.
St. Petersburg, FL 33709-2145
(Pinellas County, FL)
22.
Palatka Emergency Services, LLC
Hwy. 20 W
Palatka, FL 32177
(Putnam County, FL)
23.
Niceville Emergency Services, LLC
2190 Hwy. 85 N
Niceville, FL 32578-1053
(Okaloosa County, FL)
24.
Winter Park Emergency Services, LLC
200 N Lakemont Ave.
Winter Park, FL 32792-3273
(Orange County, FL)
25.
Augusta Emergency Services I, LLC
3651 Wheeler Rd., 4th Floor
Augusta, GA 30909
(Richmond County, GA)
26.
Augusta Emergency Services II, LLC
3651 Wheeler Rd.
Augusta, GA 30909
(Richmond County, GA)
27.
Canton Emergency Services I, LLC
201 Hospital Rd
Canton, GA 30114-2408
(Cherokee County, GA)
28.
Newnan Emergency Services, LLC
60 Hospital Rd
Newnan, GA 30263-1210
(Coweta County, GA)
29.
Brunswick Emergency Services, LLC
3100 Kemble Ave.
Brunswick, GA 31520-4211
(Glynn County, GA)
30.
2000 Dan Proctor Dr.
St. Mary's, GA 31558-3799
(Camden County, GA)
31.
Washington Emergency Services, LLC
120 Gordon St.
Washington, GA 30673
(Wilkes County, GA)
32.
Waimea Emergency Services, LLC
4643 Waimea Canyon Dr.
Waimea, HI 96796
(Kauai County, HI)
33.
Galesburg Emergency Services, LLC
695 N Kellog St.
Galesburg, IL 61401-2807
(Knox County, IL)
34.
Mt. Vernon Emergency Services, LLC
605 N 12th St.
Mt. Vernon, IL 62864-2899
(Jefferson County, IL)
35.
Canton Emergency Services II, LLC
210 W Walnut St.
Canton, IL 61520-2497
(Fulton County, IL)
36.
Herrin Emergency Services, LLC
201 S 14th St.
Herrin, IL 62948-3631
(Williamson County, IL)
37.
Highland Park Emergency Services, LLC
718 Glenview Ave.
Highland Park, IL 60035-2497
(Lake County, IL)
38.
Carbondale Emergency Services, LLC
405 W Jackson St.
Carbondale, IL 62901-2904
(Jackson County, IL)
39.
Princeton Emergency Services, LLC
530 Park Ave. E
Princeton, IL 61356-2598
(Bureau County, IL)
40.
Skokie Emergency Services, LLC
9600 Gross Point Rd
Skokie, IL 60076-1257
(Cook County, IL)
41.
Effingham Emergency Services, LLC
503 N Maple St.
Effingham, IL 62401-2099
(Effingham County, IL)
42.
Sullivan Emergency Services, LLC
320 N Section St.
Sullivan, IN 47882-1239
(Sullivan County, IN)
43.
Scottsburg Emergency Services, LLC
1451 N Gardner
Scottsburg, IN 47170-7751
(Scott County, IN)
44.
Terre Haute Emergency Services, LLC
3901 S 7th St.
Terre Haute, IN 47802-5709
(Vigo County, IN)
45.
Madison Emergency Services, LLC
1 King's Daughters' Dr.
Madison, IN 47250-3357
(Jefferson County, IN)
46.
Bowling Green Emergency Services, LLC
1801 Ashley Cir.
Bowling Green, KY 42104-3384
(Warren County, KY)
47.
Mt. Sterling Emergency Services, LLC
50 Sterling Ave.
Mt. Sterling, KY 40353-1100
(Montgomery County, KY)
48.
Fulton Emergency Services, LLC
2000 Holiday Ln.
Fulton, KY 42041
(Fulton County, KY)
49.
Richmond Emergency Services, LLC
Eastern Bypass
Richmond, KY 40476
(Madison County, KY)
50.
Mayfield Emergency Services, LLC
1099 Medical Center Cir.
Mayfield, KY 42066
(Graves County, KY)
51.
Lexington Emergency Services I, LLC
150 N Eagle Creek Drive
Lexington, KY 40509-1807
(Fayette County, KY)
52.
PhyAmerica Emergency Services of Louisiana, a Professional
Medical Corporation
1020 Fertitta Blvd.
Leesville, LA 71446-4697
(Vernon Parish, LA)
53.
6000 Bullard Ave.
New Orleans, LA 70128-2898
(Orleans Parish, LA)
54.
1125 Marguerite St.
Morgan City, LA 70380-1855
(St. Mary Parish, LA)
55.
Baltimore Emergency Services I, LLC
9000 Franklin Square Dr.
Baltimore, MD 21237-3901
(Independent City of Baltimore, MD)
56.
Baltimore Emergency Services II, LLC
900 Caton Ave.
Baltimore, MD 21229
(Independent City of Baltimore, MD)
57.
Bay City Emergency Services, LLC
1900 Columbus Ave.
Bay City, MI 48708-6880
(Bay County, MI)
58.
Adrian Emergency Services, LLC
818 Riverside Ave.
Adrian, MI 49221-1446
(Lenawee County, MI)
59.
500 E. Pottawatamie
Tecumseh, MI 49286-2097
(Lenawee County, MI)
60.
13101 Sims Hwy.
Morenci, MI 49256-1099
(Lenawee County, MI)
61.
458 Cross St.
Hudson, MI 49247
(Lenawee or Hillsdale County, MI)
62.
Lansing Emergency Services, LLC
2727 E. Beecher
Adrian, MI 49221
(Lenawee County, MI)
63.
4000 Coopers St.
Jackson, MI 49201
(Jackson County, MI)
64.
Ironwood Emergency Services, LLC
N10561 Grand View Ln.
Ironwood, MI 49938-9359
(Gogebic County, MI)
65.
Shelby Emergency Services, LLC
72 S State St.
Shelby Village, MI 49455-1299
(Oceana County, MI)
66.
Pontiac Emergency Services, LLC
461 W Huron
Pontiac, MI 48341-1651
(Oakland County, MI)
67.
Tawas City Emergency Services, LLC
200 Hemlock
Tawas City, MI 48764
(Iosco County, MI)
68.
Sedalia Emergency Services, LLC
601 E 14th St.
Sedalia, MO 65301-5972
(Pettis County, MO)
69.
Springfield Emergency Services I, LLC
1000 E Walnut Lawn
Springfield, MO 65807
(Greene County, MO)
70.
Springfield Emergency Services II, LLC
1000 E Walnut Lawn
Springfield, MO 65807
(Greene County, MO)
71.
Crystal City Emergency Services, LLC
Hwy. 61 S
Crystal City, MO 63019-0350
(Jefferson County, MO)
72.
Nevada Emergency Services, LLC
800 S Ash St.
Nevada, MO 64772-3299
(Vernon County, MO)
73.
West Plains Emergency Services, LLC
1100 Kentucky Ave.
West Plains, MO 65775-2029
(Howell County, MO)
74.
Rolla Emergency Services, LLC
1000 W 10th St.
Rolla, MO 65401-2905
(Phelps County, MO)
75.
Booneville Emergency Services, LLC
2nd & Washington Streets
Booneville, MS 38829
(Prentiss County, MS)
76.
New Albany Emergency Services, LLC
200 Hwy. 30 W
New Albany, MS 38652
(Union County, MS)
77.
Amory Emergency Services I, LLC
1105 Earl Frey Blvd.
Amory, MS 38821-5516
(Monroe County, MS)
78.
Amory Emergency Services II, LLC
1105 Earl Frey Blvd.
Amory, MS 38821-5516
(Monroe County, MS)
79.
Greenville Emergency Services, LLC
300 S Washington Ave.
Greenville, MS 38701-4719
(Washington County, MS)
80.
Brookhaven Emergency Services, LLC
Hwy. 51 N
Brookhaven, MS 39601
(Lincoln County, MS)
81.
Kosciusko Emergency Services, LLC
220 Hwy. 12 W
Kosciusko, MS 39090
(Attala County, MS)
82.
Passaic Emergency Physicians, P.C.
211 Pennington Ave.
Passaic, NJ 07055-4698
(Passaic County, NJ)
83.
Amsterdam Emergency Physicians, P.C.
4988 State Hwy. 30
Amsterdam, NY 12010-7520
(Montgomery County, NY)
84.
Ulster Emergency Physicians, P.C.
105 Marys Ave.
Kingston, NY 12401-5894
(Ulster County, NY)
85.
Emergency Treatment Associates, John G. Keene, M.D. and
Robert W. Strauss, M.D., P.C. (will enter into a management
services agreement with SHG/PhyAmerica Physicians Services,
Inc.
35 North Rd
Poughkeepsie, NY 12601-1399
(Dutchess County, NY)
86.
PhyAmerica Medical Services of New York, P.C.
366 Broadway
Amityville, NY 11701
(Suffolk County, NY)
87.
Columbia Emergency Services, P.C. (will enter into a
management services agreement with SHG/PhyAmerica Physicians
Services, Inc.
71 Prospect Ave.
Hudson, NY 12534-2907
(Columbia County, NY)
88.
Rhinebeck Emergency Services, P.C. (will enter into a
management services agreement with SHG/PhyAmerica Physicians
Services, Inc.
10 Springbrook Ave.
Rhinebeck, NY 12572
(Dutchess County, NY)
89.
Beacon Emergency Physicians, P.C. (will enter into a
management services agreement with SHG/PhyAmerica Physicians
Services, Inc.
60 Delavan Ave.
Beacon, NY 12508-2052
(Dutchess County, NY)
90.
Reidsville Emergency Services, LLC
618 S Main St.
Reidsville, NC 27320-5094
(Rockingham County, NC)
91.
Thomasville Emergency Services I, LLC
207 Old Lexington Rd.
Thomasville, NC 27360-3428
(Davidson County, NC)
92.
Hickory Emergency Services, LLC
420 N Center St.
Hickory, NC 28601-5033
(Catawba County, NC)
93.
Smithfield Emergency Services, LLC
509 N Bright Leaf Blvd.
Smithfield, NC 27577-4407
(Johnston County, NC)
94.
Henderson Emergency Services I, LLC
566 Ruin Creek Rd
Henderson, NC 27536-2957
(Vance County, NC)
95.
Henderson Emergency Services II, LLC
1805 Ruin Creek Rd.
Henderson, NC 27536
(Vance County, NC)
96.
Rutherfordton Emergency Services, LLC
288 S Ridgecrest Ave.
Rutherfordton, NC 28139-3097
(Rutherford County, NC)
97.
Clinton Emergency Services, LLC
607 Beaman St.
Clinton, NC 28328-2697
(Sampson County, NC)
98.
Tiffin Emergency Services, LLC
485 W Market St.
Tiffin, OH 44883
(Seneca County, OH)
99.
Willard Emergency Services, LLC
110 E Howard St.
Willard, OH 44890-1611
(Huron County, OH)
100.
Paulding Emergency Services, LLC
11558 SR 111
Paulding, OH 45879
(Paulding County, OH)
101.
Oregon Emergency Services, LLC
2600 Navarre Ave.
Oregon, OH 43616-3297
(Lucas County, OH)
102.
Wooster Emergency Services, LLC
1761 Beall Ave.
Wooster, OH 44691-2399
(Wayne County, OH)
103.
Enid Emergency Services, LLC
305 S 5th
Enid, OK 73701-5899
(Garfield County, OK)
104.
Edgefield Emergency Services, LLC
300 Ridge Medical Plaza
Edgefield, SC 29824
(Edgefield County, SC)
105.
Rock Hill Emergency Services, LLC
222 S Herlong Ave.
Rock Hill, SC 29732-1190
(York County, SC)
106.
Union Emergency Services, LLC
322 W South St.
Union, SC 29379-2839
(Union County, SC)
107.
Lawrenceburg Emergency Services, LLC
US Hwy. 43 S
Lawrenceburg, TN 38464
(Lawrence County, TN)
108.
Fayetteville Emergency Services, LLC
700 W Maple St.
Fayetteville, TN 37334-3202
(Lincoln County, TN)
109.
McKenzie Emergency Services, LLC
2545 N. Washington Ave.
Brownsville, TN 38012
(Haywood County, TN)
110.
400 Tickle St.
Dyersburg, TN 38024-3120
(Dyer County, TN)
111.
214 Lakeview Dr.
Somerville, TN 38068-9737
(Fayette County, TN)
112.
367 Hospital Blvd.
Jackson, TN 38305-2081
(Madison County, TN)
113.
200 W Church St.
Lexington, TN 38351-2014
(Henderson County, TN)
114.
161 Hospital Dr.
McKenzie, TN 38201-1629
(Carroll County, TN)
115.
705 E Poplar Ave.
Selmer, TN 38375-1828
(McNairy County, TN)
116.
161 Mount Pelia Rd
Martin, TN 38237-3811
(Weakley County, TN)
117.
McMinnville Emergency Services, LLC
1559 Sparta Rd
McMinnville, TN 37110-1399
(Warren County, TN)
118.
PhyAmerica Emergency Services of Texas, P.A. (this
professional corporation will enter into a management
services agreement with SHG/PhyAmerica Physician Services,
Inc.)
132 Hospital Dr.
Angleton, TX 77515-4197
(Brazoria County, TN)
119.
300 E Crockett
Cleveland, TX 77327-4029
(Liberty County, TX)
120.
1604 Rock Prairie Rd
College Station, TX 77845-8345
(Brazos County, TX)
121.
1020 Kerrville Rd
Fredericksburg, TX 78624
(Gillespie County, TX)
122.
2727 W. Halcombe Blvd.
Houston, TX 77025
(Harris County, TX)
123.
1401 E 8th St.
Weslaco, TX 78596-6640
(Hidalgo County, TX)
124.
504 Lipscomb
Bonham, TX 75418-4096
(Fannin County, TX)
125.
1313 Herman Dr.
Houston, TX 77004
(Harris County, TX)
126.
1300 Binz
Houston, TX 77004
(Harris County, TX)
127.
709 Medical Center Blvd.
Webster, TX 77598
(Harris County, TX)
128.
5556 Gasmer
Houston, TX 77035
(Harris County, TX)
129.
801 Bedell Ave.
Del Rio, TX 78840-4185
(Val Verde County, TX)
130.
Wytheville Emergency Services, LLC
600 W Ridge Rd
Wytheville, VA 24382-1099
(Wythe County, VA)
131.
Fairmont Emergency Services, LLC
1325 Locust Ave.
Fairmont, WV 26554-1482
(Marion County, WV)
SCHEDULE 4
NAMES UNDER WHICH THE SELLER IS DOING BUSINESS
AND ADDRESSES AT WHICH THE SELLER DOES BUSINESS
SCHEDULE 5
DISCLOSURES BY THE SELLER AND THE PROVIDER AFFILIATES
REGARDING HCFA MATTERS
SCHEDULE 6
ADDITIONAL SUBSERVICERS
None.
SCHEDULE 7
LITIGATION DISCLOSURE
EXHIBIT A
[ON SELLER LETTERHEAD]
[Seller Name]
EIN #_____________
PROVIDER #_____________
NOTICE TO PAYOR
Provider Relations:
[Seller Name] is pleased to announce that it has become
a participant in a Health Care Receivables Funding Program
serviced by National Premier Financial Services, Inc. and
operated by an affiliate thereof (together, "NPF"). This
specialized program provides funding for selected companies
throughout the United States. As part of this program, we
will continue to service our accounts receivable (the
"Receivables"), and we will sell to NPF from time to time
certain of our Receivables of which you are the obligor. In
this regard, a security interest in the Receivables has been
granted to a trustee unaffiliated with NPF. (For the name
and address of the trustee, or any other information you
need about the program, please contact NPF at the address
and phone number below.)
We have established a lockbox for collection of the
Receivables. Accordingly, you are hereby instructed to
remit all payments on all Receivables of which you are, or
have been, the obligor to:
[Seller Name]
Dept. L - [Box #]
Columbus, Ohio 43260-[Box #]
Please address any questions to:
National Premier Financial Services, Inc.
Dept. L - [Box #]
6125 Memorial Drive
Dublin, Ohio 43017
1-800-899-6737
Payment of the Receivables in this manner will operate
to discharge your obligation with respect thereto (to the
extent of such payment), whether or not ownership has been
transferred to NPF. Any prior notice of an assignment of
any interest in our Receivables previously delivered to you
is hereby superseded by this notice and all prior notices of
such assignment are hereby revoked. Thank you for your
cooperation.
THESE INSTRUCTIONS SHALL NOT BE CHANGED WITHOUT WRITTEN
NOTICE FROM NPF
[SELLER NAME]
By:
Name:
Its:
EXHIBIT B
LOCKBOX ACCOUNT AGREEMENT
[Varies from Seller to Seller. Both the Medicare Lockbox
Account and the Commercial Lockbox Account must, however,
include provisions that:
(1) all Collections in the Lockbox Account shall be
remitted directly to the Collection Account within one
Business Day of receipt; and
(2) are otherwise satisfactory to the Purchaser and the
Servicer]
EXHIBIT C
FORM OF PURCHASE ASSIGNMENT
THIS PURCHASE ASSIGNMENT, dated as of
____________________, 19___ between [Seller] (the "Seller"),
NPF XII, Inc. (the "Purchaser") and National Premier
Financial Services, Inc. (the "Servicer").
1. We refer to the Sale and Subservicing Agreement
(the "Sale Agreement"), dated as of ______________, 199___
by and among [Seller], the Subservicer, the Purchaser, and
the Servicer. All provisions of such Sale Agreement are
incorporated by reference. All capitalized terms shall have
the meanings set forth in the Sale Agreement.
2. The Seller does hereby sell, transfer, assign, set
over and convey to the Purchaser, without recourse, all
right, title and interest of the Seller in and to the
Receivables listed on Schedule 1 hereto (each, a "Purchased
Receivable") and the Purchaser does hereby purchase each
such Purchased Receivable.
3. The Seller does hereby certify:
(i) the representations and warranties of the Seller
set forth in Section 4.1 and 4.2 of the Agreement, are true
and correct on and as of the date, hereof, before and after
giving effect to the Purchase of the Purchased Receivables
evidenced hereby and to the application of the proceeds
therefrom, as though made on and as of such date;
(ii) 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; and
(iii) the Seller is in compliance with each of its
covenants set forth in the Sale Agreement.
4. The Purchase Price for the Purchased Receivables
sold and purchased hereby is $_______________.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above
written.
[SELLER]
By
Name:
Title:
NPF XII, INC.
By
Name:
Title:
NATIONAL PREMIER FINANCIAL
SERVICES, INC.
By
Name:
Title:
EXHIBIT D
FORM OF MANAGER'S CERTIFICATE
FOR THE SELLER
I hereby certify that I am a duly elected
[Officer] of PhyAmerica Member Corp., the manager of
PhyAmerica Receivables LLC (in its capacity as Seller, the
"Seller") and Coastal Physician Group, Inc. (in its capacity
as Subservicer, the "Subservicer") and all requisite
knowledge of the matters set forth below, and further
certify as follows:
1. There has been no change of the Seller's legal
name, identity or corporate structure within the six month
period preceding the execution date hereof.
2. No proceedings looking toward merger, liquidation,
dissolution or bankruptcy of the Seller are pending or
contemplated.
3. There is no litigation pending, or to my
knowledge, threatened, which, if determined adversely to the
Seller, would adversely affect (i) the execution, delivery
or enforceability of the Sale and Subservicing Agreement
(the "Sale Agreement"), dated as of ________________, 199___
by and among the Seller, NPF XII, Inc., as Purchaser (the
"Purchaser"), and National Premier Financial Services, Inc.,
as Servicer (the "Servicer"), or the sale or servicing of
the Receivables as provided therein, and (ii) the execution,
delivery or enforceability of the Lockbox Account Agreement
(the "Lockbox Account Agreement"), dated as of
_____________, 199___, by and among the Seller, the Servicer
and/or [the lockbox bank].
4. With respect to the Sale Agreement and the Lockbox
Account Agreement, the Seller has complied with all the
agreements by which it is bound and has satisfied all the
conditions on its part to be performed or satisfied prior to
the Closing Date.
5. No Event of Seller Default or other event of
default in the performance of any of the Seller's covenants
or agreements under the Sale Agreement or the Lockbox
Account Agreement has occurred and is continuing, nor has an
event occurred which with the passage of time or notice or
both would become such an event of default.
6. The Seller is not a party to, or governed by, any
contract, indenture, mortgage, loan agreement, note, lease,
deed of trust or other instrument which restricts the
Seller's ability to sell or service health care receivables
or consummate any of the transactions contemplated by the
Sale Agreement.
7. Independent certified public accountants for the
Seller will treat the transfer to the Purchaser of the
Seller's interests in the Receivables as a sale, pursuant to
generally accepted accounting principles.
8. For tax and reporting purposes, the Seller will
treat the transfer to the Purchaser of the Seller's
interests in the Receivables as a sale.
9. The transfer to the Purchaser of the Seller's
interests in the Receivables will be made (a) in good faith
and without intent to hinder, delay, or defraud present or
future creditors, and (b) in exchange for reasonably
equivalent value and fair consideration.
10. On the date hereof, the Seller (a) was solvent,
and as a result of the transfer to the Purchaser of the
Seller's interests in the Receivables will not become
insolvent; (b) was paying its Debts, if any, as they
matured; (c) neither intended to incur, nor believed that it
would incur, Debts beyond its ability to pay as they mature;
and (d) after giving effect to the transfer to the Purchaser
of the Seller's interests in the Receivables, will have an
adequate amount of capital to conduct its business and
anticipates no difficulty in continuing to do so for the
foreseeable future.
11. The Seller has and maintains [if applicable: its
status as an organization exempt from federal taxation under
Section 501(c) (3) of the Internal Revenue Code,] all
material 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, Medicare
Certifications and necessary for (a) the activities and
business of the Seller and each of its Subsidiaries as
currently conducted, (b) the ownership, use, operation and
maintenance by each of them of its respective properties,
facilities and assets, and (c) the performance by the Seller
of the Agreement.
12. Without limiting the generality of the foregoing
paragraph: (a) each Health Facility License, the Medicaid
Certification, Medicare Certification, Medicaid Provider
Agreement, Medicare Provider Agreement, and the Blue
Cross/Blue Shield Contracts of the Seller and each
Subsidiary are in full force and effect and have not been
amended or otherwise modified, rescinded or revoked or
assigned, (b) the Seller and each Subsidiary are in
compliance with the requirements of Medicaid, Medicare,
CHAMPUS, CHAMPVA and related programs, and Blue Cross/Blue
Shield 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
Subsidiary, or such facility's participation in any
Medicaid, Medicare, CHAMPUS, CHAMPVA or other similar
program, or of any Blue Cross/Blue Shield contract and there
is no claim that any such Governmental Consent,
participation or contract is not in full force and effect.
13. No UCC financing statements, federal or state tax
liens or judgments with respect to the Purchased Receivables
have been filed nor shall be filed from and after the date
and time of the UCC search results provided by the Seller in
accordance with Section 3.1(a)(v) of the Sale Agreement.
14. The officers listed on the attached schedule are
designated as Servicing Officers with respect to the duties
and obligations of the Seller under the Sale Agreement.
All capitalized terms used herein that are not
otherwise defined shall have the respective meanings
ascribed thereto in the Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name
and affixed the seal of the Seller this _____ day of
__________________, 199___.
By
Name:
Title:
SCHEDULE OF SERVICING OFFICERS
Name Signature
EXHIBIT E
FORM OF OPINION OF COUNSEL FOR THE SELLER
[Closing Date]
NPF XII, Inc.
6125 Memorial Drive
Dublin, Ohio 43017
National Premier Financial Services, Inc.
6125 Memorial Drive
Dublin, Ohio 43017
Re: NPF XII, Inc. - Sale and Subservicing Agreement
Gentlemen and Ladies:
We have acted as legal counsel to
________________________________, a ___________ corporation
(the "Seller") in connection with the transactions
contemplated by that certain Sale and Subservicing Agreement
(the "Sale Agreement"), dated as of __________________,
1999, by and among the Seller, NPF XII, Inc., an Ohio
corporation (the "Purchaser") and National Premier Financial
Services, Inc., an Ohio corporation (the "Servicer"). All
references herein to the Seller shall refer to the Seller in
its capacity as Seller under the Sale Agreement. This
opinion is being delivered at the Seller's request pursuant
to Section 3.1(e) of the Sale Agreement.
Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed thereto in the Sale
Agreement.
In this connection, we have examined the
following:
i) An executed copy of the Sale Agreement and all
exhibits and attachments thereto;
ii) An executed copy of the Lockbox Account Agreement
and all exhibits and attachments thereto;
iii) The form of Purchase Assignment and the form of
Repurchase Assignment;
iv) Copies of the UCC-1 financing statements executed
by the Seller as assignor/debtor and naming the Purchaser as
assignee/secured party relating to the Purchased Receivables
(the "Financing Statements"), copies of which are attached
hereto as Annex 1A;
v) Copies of the UCC-1 financing statements executed
by the Seller as debtor and naming the Purchaser as secured
party relating to the Receivables (other than Purchased
Receivables) (the "Collateral Obligation Financing
Statements"), copies of which are attached hereto as Annex
1B;
vi) The results of the searches (the "Searches")
conducted by the Secretary of State of __________________
[and the County Recorder, ________________ County,
_______________, as of _______________, 1999], certified by
such filing offices on Form UCC-11, as to financing
statements on Form UCC-1 on file with such offices and
naming the Seller as "debtor" as of such date, copies of
which are attached hereto as Annex 2A;
vii) [Add if applicable] [Executed copies of
appropriate releases of all outstanding financing statements
relating to security interests in accounts of the Seller in
favor of third parties which are reflected on the Searches
and which shall be released at closing] (the "Releases")
copies of which are attached hereto as Annex 2B; and
viii) Such other documents, records and papers as
we have deemed necessary and relevant as a basis for this
opinion.
The Sale Agreement, the Lockbox Account Agreement, the
Purchase Assignments and the Repurchase Assignments are
hereinafter collectively referred to as the "Agreements."
As to various questions of fact material to our
opinions set forth below, we have relied upon certificates
of officers of the Seller, copies of which are attached
hereto as Annex 3. Nothing has come to our attention in the
course of our representation of the Seller which leads us to
believe that any representations set forth in any of the
foregoing certificates are inaccurate or incomplete in any
material respect.
In connection with the opinions set forth below,
we have assumed, with your agreement, that each party to the
Agreements other than the Seller has executed and delivered
such Agreements and has the corporate power and authority to
enter into and perform its obligations thereunder, and that
the execution, delivery and performance of each Agreement by
each party thereto other than the Seller will not breach,
contravene, conflict with, or constitute a violation of any
provision of the articles of incorporation or bylaws or
other organizational documents of such party, any indenture,
mortgage, deed of trust, loan agreement or other agreement
or instrument to which such party is bound or to which any
of its property or assets is subject, or constitute a
violation of any law, statute, rule, regulation, order,
writ, judgment, award, injunction or decree of any
Governmental Authority as to any such party.
In connection with the opinions set forth below
which deal with the perfection and priority of security
interests, we have assumed that no financing statements
relating to the Seller or the Purchased Receivables have
been misindexed or misfiled in the appropriate filing
offices covered by the Searches.
We have also assumed that all documents, submitted
to us as originals are complete and authentic, that all
copies of documents submitted to us conform in all respects
to the originals thereof, including all amendments or
modifications thereto; and that all signatures of parties,
other than those of the Seller and its authorized officers,
to the respective documents are genuine. We have also
assumed that all documents or copies thereof examined by us
have been or will be duly, validly and properly authorized,
executed, acknowledged and delivered by all parties thereto
other than the Seller.
As you have agreed, for purposes solely of
ascertaining the existence of security interests perfected
by the filing of UCC financing statements, we have limited
our investigation to an examination of the Searches, which
indicate that there are no filed financing statements naming
the Seller as debtor and relating to the Seller's
Receivables [, other than those which will be terminated by
the filing of the Releases]. We express no opinion as to
the accuracy or completeness of the Searches.
For purposes of the opinion expressed in the first
sentence of Paragraph 4 below, we have assumed, with your
consent, that the description of "Purchased Receivables" set
forth in the Sale Agreement accurately and completely
describes all of the Seller's Purchased Receivables being
transferred to the Purchaser pursuant to the Sale Agreement.
For purposes of the opinions expressed in
Paragraphs 5 and 6 below, with your agreement we have
assumed that all transfers of Purchased Receivables will
have occurred in accordance with the terms and conditions
set forth in the Agreements.
In addition to the foregoing, in rendering the
opinions set forth herein we have acted only as attorneys
licensed to practice in the State of _____________. We
therefore express no opinions as to the effect of any laws
other than federal laws of the United States of America and
the laws of the State of _____________. In this regard, we
note that the Agreements are governed by the laws of the
State of Ohio. We have assumed, for purposes of issuing
this letter, that insofar as the laws of any such other
jurisdiction are applicable to the matters set forth below,
such laws (including applicable conflict of laws provisions)
are identical to and will be interpreted in all respects in
the same manner as the laws of the State of
_________________.
On the basis of the foregoing and subject to the
limitations, qualifications and exceptions set forth herein,
we are of the opinion as of the date hereof that:
1. The Seller is a [not-for-profit] corporation
duly incorporated and validly existing under the laws of the
State of __________________, is in good standing under the
laws of the State of [state of incorporation] and is duly
qualified to do business, and is in good standing in each
jurisdiction in which it maintains an office and has the
corporate power and authority to own, lease and operate its
properties and to conduct its business as now conducted.
The Seller has made all filings with, and has obtained all
necessary or appropriate approvals from federal and State of
________________ Governmental Authorities which are
necessary to permit the Seller to own, lease and operate its
properties and to lawfully conduct its business as presently
conducted, and to consummate the transactions contemplated
by the Sale Agreement.
2. The Seller has the corporate power and
authority to execute, deliver and perform each of the
Agreements. The execution, delivery and performance of the
Agreements have been duly authorized by all necessary
corporate action of the Seller and each of such Agreements
constitutes a legal, valid and binding obligation of Seller,
enforceable against the Seller in accordance with its terms.
3. The execution and delivery of, and the
performance of the Seller's obligations under, each of the
Agreements does not and will not (a) violate any provision
of the Seller's articles of incorporation or bylaws, (b)
violate any statute, law, ordinance, rule or regulation of
the United States of America or the State of ______________
binding on the Seller, (c) violate any orders, judgments,
writs or decrees known to us to which the Seller is subject
in any respect, or (d) violate or create a breach or default
under any loan agreement, indenture, note, evidence of
indebtedness, mortgage, financing agreement, bond, debenture
or similar agreement or instrument relating to obligations
of the Seller for borrowed money or for the deferred
purchase price of property or services payable more than one
year from the date of incurrence thereof or on demand or
relating to obligations of the Seller under capital leases
which is presently in effect and known to us and to which
the Seller is a party or its property is subject.
4. The Purchased Receivables constitute
"accounts" and "general intangibles" within the meaning of
the UCC. The Seller is "located" in the State of
____________________ for purposes of Section 9-103(3)(b) of
the UCC such that the laws (including the conflict of law
rules) of the State of ___________________ govern the
perfection of security interests in accounts and general
intangibles of the Seller and the sale of accounts by the
Seller. The transfers of the Purchased Receivables are
"true sales" of the Purchased Receivables to the Purchaser.
In the event, however, that a court of competent
jurisdiction were to hold that the transaction evidenced by
the Sale Agreement constitutes a loan and not a purchase and
sale, then the Sale Agreement creates a first priority
perfected valid security interest in favor of the Purchaser.
5. If the transfers of the Purchased Receivables
from the Seller to the Purchaser pursuant to the Sale
Agreement constitute a "true sale" of the Purchased
Receivables to the Purchaser, the execution and delivery of
the Sale Agreement and the Purchase Assignments in
accordance with the Sale Agreement, and
(i) upon the proper filing of the Financing
Statements [and the Releases] in the UCC filing offices of
the Secretary of State of ______________, [and in the UCC
filing offices of the County Recorder of _____________
County,] and
(ii) upon the delivery to the Payors of such
Purchased Receivables of the notices in the form of the
notices on Exhibit A to the Sale Agreement (assuming no
prior such notice has been delivered to any such Payor by
any person claiming an interest in the Purchased
Receivables, and we hereby advise you that we have no
knowledge that the Seller has previously delivered any such
prior notice to any such Payor, made any such assignment
thereof or granted any such lien or encumbrance thereupon),
and
(iii) upon the execution and delivery of the
Purchase Assignments in accordance with the Sale Agreement
(assuming that the Seller has not previously assigned, for
security or otherwise, such Purchased Receivables or granted
any lien or encumbrance in them, and we hereby advise you
that we have no knowledge that the Seller has previously
made any such assignment thereof or granted any such lien or
encumbrance thereupon),
are effective under the laws of the State of _____________
to vest title thereto in the Purchaser, and all necessary
steps have been taken under the laws of the State of
_______________ to protect the Purchaser's ownership
interest in the Purchased Receivables now existing, and
hereafter created, against creditors of, or subsequent
Purchasers from, the Seller, provided that:
(x) if the transfers of the Purchased Receivables
are deemed to be subject to Article 9 of the UCC or
previously filed financing statements, priority may be
subject to financing statements effective as a result of
Section 9-401(2) of the UCC, or
(y) if the Purchased Receivables are deemed to be
interests or claims "in or under any policy of insurance"
under 9-104(g) of the UCC, priority may be subject to [in
English rule states: prior notices to payors of such
policies] [in American rule states: prior sales of such
Purchased Receivables].
The filing of the Financing Statements in the filing offices
identified in paragraph 5(i) above are the only filings
required to be made in the State of _____________ to
evidence, provide notice to third parties with respect to,
or otherwise perfect the Purchaser's ownership interest in
the Purchased Receivables under any applicable law of the
State of ____________. No other filings, either in the
filing offices identified in paragraph 5(i) or in any other
filing offices in the State of ________________, are
required or are advisable to be made to evidence, provide
notice to third parties with respect to, or otherwise
perfect the Purchaser's ownership interest, or to establish
the priority of the Purchaser's interest with respect to
such Purchased Receivables.
6. If the transfers of the Purchased Receivables
from the Seller to the Purchaser pursuant to the Sale
Agreement and Purchase Assignments do not constitute a "true
sale" of the Purchased Receivables to the Purchaser, the
Sale Agreement and the Purchase Assignments create a valid
security interest in favor of the Purchaser in the Purchased
Receivables from time to time transferred to the Purchaser
pursuant to the Sale Agreement and the Purchase Assignments
in accordance with the Sale Agreement, which security
interest will constitute
(i) upon the proper filing of the Financing
Statements in the UCC filing offices of the Secretary of
State of ______________, [and in the UCC filing offices of
the County Recorder of ___________ County,] and
(ii) upon the delivery to the Payors of such
Purchased Receivables of the notices in the form of the
notices on Exhibit A to the Sale Agreement (assuming that no
prior such notice has been delivered to any such Payor by
any person claiming an interest in the Purchased Receivables
and we hereby advise you that we have no knowledge that the
Seller has previously delivered any such prior notice to any
such Payor, made any assignment thereof or granted any lien
or encumbrance thereupon), and
(iii) upon the execution and delivery of the
Purchase Assignments in accordance with the Sale Agreement
(assuming that the Seller has not previously assigned, for
security or otherwise, such Purchased Receivables or granted
any lien or encumbrance in them, and we hereby advise you
that we have no knowledge that the Seller has previously
made any such assignment thereof or granted any such lien or
encumbrance thereupon),
a security interest (perfected under the UCC and under other
appropriate law to the extent applicable) in the Seller's
right, title and interest in, to and under the Purchased
Receivables and the proceeds thereof now existing, and
hereafter created, prior and senior to all other liens,
provided that:
(x) if the granting of a security interest in the
Purchased Receivables is deemed to be subject to Article 9
of the UCC or previously filed financing statements,
priority may be subject to financing statements effective as
a result of Section 9-401(2) of the UCC, or
(y) if the Purchased Receivables are deemed to be
interests or claims "in or under any policy of insurance"
under 9-104(g) of the UCC, priority may be subject to [in
English rule states: prior notices to payors of such
policies] [in American rule states: prior sales of such
Purchased Receivables].
The filing of the Financing Statements in the filing offices
identified in paragraph 6(i) above are the only filings
required to be made in the State of _______________ to
evidence, provide notice to third parties with respect to,
or otherwise perfect the Purchaser's security interest in
the Purchased Receivables under any applicable law of the
State of _______________. No other filings, either in the
filing offices identified in paragraph 6(i) or in any other
filing offices in the State of ________________, are
required or are advisable to be made to evidence, provide
notice to third parties with respect to, or otherwise
perfect the Purchaser's security interest, or to establish
the priority of the Purchaser's interest with respect to
such Purchased Receivables.
7. The Sale Agreement creates a valid security
interest in favor of the Purchaser in the Receivables (other
than Purchased Receivables) of the Seller, as security for
the obligations of the Seller enumerated in Section 9.2 of
the Sale Agreement, which security interest will constitute,
upon the proper filing of the Collateral Obligation
Financing Statements in the UCC filing offices of the
Secretary of State of __________, [and in the UCC filing
offices of the County Recorder of __________ County,] a
security interest perfected under the UCC (and under other
appropriate law to the extent applicable) in the Seller's
right, title and interest in, to and under the Receivables
(other than Purchased Receivables) and the proceeds thereof
now existing, and hereafter created, prior and senior to all
other liens, subject to:
(x) if the granting of a security interest in the
Receivables (other than Purchased Receivables) is deemed to
be subject to Article 9 of the UCC, or previously filed
financing statements, priority may be subject to financing
statements effective as a result of Section 9-401(2) of the
UCC, or
(y) if the Receivables (other than Purchased
Receivables) are deemed to be interests or claims "in or
under any policy of insurance" under 9-104(g) of the UCC,
priority may be subject to [in English rule states: prior
notices to payors of such policies] [in American rule
states: prior sales of such Receivables].
The filing of the Collateral Obligation Financing Statements
in the filing offices identified in this paragraph 7 above
are the only filings required to be made in the State of
__________ to evidence, provide notice to third parties with
respect to, or otherwise perfect the Purchaser's security
interest in the Receivables (other than Purchased
Receivables) under any applicable law of the State of
____________. No other filings, either in the filing
offices identified in this paragraph 7 or in any other
filing office in the State of ___________ are required or
are advisable to be made to evidence, provide notice to
third parties with respect to, or otherwise perfect the
Purchaser's security interest, or to establish the priority
of the Purchaser's security interest with respect to such
Receivables (other than Purchased Receivables).
8. A State of ______________ court and federal
court sitting in the State of __________________________
would give effect to the choice of law provisions of the
Agreements, except that such court may apply State of
_______________ law to (a) certain remedial and procedural
rights, (b) matters of public policy, (c) matters pertaining
to the perfection and priority of security interests, and
(d) matters as to which Ohio law cannot be proven to such
court to be sufficiently authoritative or certain for such
court to rely on it.
9. No consent of, or other action by, and no
notice to or filing with, or licensing by any federal or
State of ______________ Governmental Authority or any other
party (except for those consents required under Section 3.1
of the Sale Agreement which have been provided by the Seller
to the Purchaser) is required for the due execution,
delivery and performance by the Seller of the Agreements or
any other agreement, document or instrument to be delivered
thereunder or for the perfection of or the exercise by the
Seller, the Purchaser or the Servicer of any of their rights
or remedies thereunder. The transactions contemplated by
the Agreements will not cause the Purchaser to be subjected
to any obligation to pay any transfer tax to any
Governmental Authority in the State of ___________________,
including without limitation any transfer, sales, use, added
value, documentary stamp or other similar transfer tax
[other than __________________ (describe any such taxes
which are applicable)].
10. To the best of our knowledge, there are no
actions or proceedings against or affecting the Seller or
any of its assets, pending or threatened, before any
Governmental Authority (including, without limitation, any
federal or state court of competent jurisdiction) (i) which
seek to affect the enforceability of the Agreements or the
transactions contemplated thereby, or (ii) which, if
determined adversely, would materially and adversely affect
the ability of the Seller to perform its obligations under
the Agreements.
Our opinions set forth herein are subject to the
following qualifications and exceptions:
(a) The effect of certain laws governing bankruptcy,
reorganization, fraudulent conveyance, moratorium and
insolvency and relating to or affecting the enforcement of
creditors' rights generally, including, but not limited to,
the right to take or retain personal property encumbered by
the Sale Agreement, the Financing Statements and the
Purchase Assignments;
(b) The application of general principles of equity
(regardless of whether considered in a proceeding in equity
or law);
(c) Standards of commercial reasonableness and good faith;
(d) In the case of proceeds, perfection of security
interests is limited to the extent set forth in Section 9-
306 of the UCC;
(e) Continuation of perfection in any proceeds which are
subject to a security interest or in any after acquired
property may, if such proceeds or after acquired property
consist of property of a type in which a perfected security
interest cannot be obtained by filing a financing statement,
require additional compliance with applicable provisions of
the UCC and we express no opinion as to the perfection,
priority and effectiveness of any security interest in any
proceeds of the Purchased Receivables initially subject to
the security interest or after acquired property to the
extent that perfection, priority or effectiveness depends
upon additional compliance with the UCC. Any change (from
one state to another state) in the location of the Seller's
place of business or chief executive offices to a location
outside of the State of _______________, or any change in
the name, identity or corporate structure of the Seller that
would make a filed financing statement seriously misleading,
may result in the lapse of perfection of the security
interest to the extent that perfection is dependent on
filing unless new and appropriate financing statements are
filed in a timely manner; and
(f) In the case of collateral (as such term is defined in
Article 9 of the UCC) in which a debtor (as such term is
defined in Article 9 of the UCC) has no present rights, a
security interest will be created therein only when the
debtor acquires rights to such collateral.
In addition to the foregoing exceptions, we hereby
advise you that, because a portion of the Purchased
Receivables are Medicaid and Medicare Receivables, in
accordance with 42 U.S.C. Sections 1396a(a)(32) (Medicaid)
and 1395g(c) (Medicare), the regulations promulgated
thereunder and the court decisions with respect thereto, it
is unlikely (i) that payments on Medicaid or Medicare
Receivables will be made to any party other than the Seller
to which they are due or an assignee qualified under such
sections and regulations, or (ii) that payment of the
Medicaid or Medicare Receivables sold to the Purchaser will
be directly enforceable by the Purchaser or the Servicer
against the federal government or any agency or
instrumentality thereof, notwithstanding that the Purchaser
has obtained title to or maintains a perfected security
interest in such Purchased Receivables; provided, however,
that with respect to both the foregoing clauses (i) and (ii)
we hereby advise you that the Subservicer may collect and
enforce payment on Medicaid and Medicare Receivables on
behalf of the Purchaser, its assigns, and the Servicer, as
provided in the Sale Agreement.
Our opinions expressed herein are limited to those
matters expressly set forth herein, and no opinion may be
implied or inferred beyond the matters expressly stated
herein. Further, the opinions expressed herein are being
rendered solely in connection with the consummation of the
transactions contemplated by the Agreements to which Seller
is a party, and may not be relied upon for any other
purpose.
Our opinions are rendered only as of the date
hereof and we assume no obligation to update or supplement
this opinion to reflect any facts or circumstances that may
hereafter occur or to reflect the applicability of any laws
that may affect the transactions contemplated by the Sale
Agreement after the date hereof.
In addition to the foregoing, this letter may not
be distributed to, furnished to or relied upon by any person
other than the addressees, the Trustee, and Duff & Phelps
Credit Rating Co. without the express written consent of
this firm, provided, however, that any assignee of the
Purchaser pursuant to the Sale Agreement may likewise rely
upon this opinion as if named as an addressee herein.
Very truly yours,
ANNEX 1A
TO OPINION OF
COUNSEL FOR
THE SELLER
ANNEX 1B
TO OPINION OF
COUNSEL FOR
THE SELLER
ANNEX 2A
TO OPINION OF
COUNSEL FOR
THE SELLER
ANNEX 2B
TO OPINION OF
COUNSEL FOR
THE SELLER
ANNEX 3
TO OPINION OF
COUNSEL FOR
THE SELLER
EXHIBIT F
[FORM OF REPURCHASE ASSIGNMENT]
REPURCHASE ASSIGNMENT, dated as of ________________,
199___ between [Seller] (the "Seller"), NPF XII, Inc. (the
"Purchaser"), and National Premier Financial Services, Inc.
(the "Servicer").
We refer to the Sale and Subservicing Agreement (the
"Sale Agreement"), dated as of __________________, 199___,
by and among the Seller, the Subservicer, the Purchaser, and
the Servicer. All provisions of such Agreement are
incorporated by reference. All capitalized terms shall have
the meanings set forth in the Sale Agreement.
Pursuant to Section 4.3 of the Agreement, the Purchaser
does hereby sell, transfer, assign, set over and convey to
the Seller, without recourse of warranty, express or
implied, all right, title and interest of the Purchaser in
and to the Receivables listed on Schedule 1 hereto (each, a
"Repurchased Receivable") and the Seller does hereby
purchase each such Purchased Receivable. All liens created
by the Purchaser have been released as of the date hereof.
The Purchase Price for each Repurchased Receivable
shall be its Net Value as set forth on Schedule 1 hereto.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above
written.
[SELLER]
By
Name:
Title:
NPF XII, INC.
By
Name:
Title:
NATIONAL PREMIER FINANCIAL
SERVICES, INC.
By
Name:
Title:
SCHEDULE 1
TO EXHIBIT F
REPURCHASE
ASSIGNMENT
EXHIBIT G
NATIONAL PREMIER FINANCIAL SERVICES, INC.
Sale and Subservicing Agreement
Section 6.2 Determinations of the Servicer
Determination Date: _____________, 199___
(1) Section 6.2(a) Prior Net Value Amount
Net Value of Purchased Receivables as of the prior
Determination Date plus the Net Value of all Purchased
Receivables purchased on
the prior Purchase Date
(2) Section 6.2(b) Paid Receivables Amount
The amount of Collections on all Purchased Receivables
received
since the prior Determination Date
(3) Section 6.2(c) Current Net Value Amount
Net Value of all Purchased Receivables as of the
current
Determination Date
(4) Section 6.2(d) Credit Deficiency
Prior Net Value Amount
minus
Paid Receivables Amount ( )
minus
Current Net Value Amount ( )
Total
(5) Section 6.2(e) Rejected Amount
Net Value of Purchased Receivables which became
Rejected
Receivables since the prior Determination Date and
which have
not yet been repurchased or offset
SCHEDULE 1
TO EXHIBIT G
Date: , 199___
Bank One, N.A., as Trustee
Attn.: Global Corporate Trust Services
100 E. Broad Street, OH1-0181
Columbus, Ohio 43215
Attention:
Please make the following distributions from
accounts in accordance with Section 6.3 of the Sale and
Subservicing Agreement for [SELLER]:
(1) Deposit in the Purchase Account
(a) From the Collection Account:
Paid Receivables Amount
(b) From the Seller Credit
Reserve Account: Credit Deficiency
(c) From the Collection Account:
Rejected Amount
(2) Pay by check to [SELLER] the balance
in the Collection Account after such distributions
NATIONAL PREMIER FINANCIAL
SERVICES, INC.
By:
Title:
EXHIBIT H
FORM OF INDEPENDENT CONTRACTOR (PHYSICIAN) AGREEMENT
INCLUDING ADDENDUM
EXHIBIT I
FORM OF MANAGEMENT SERVICES AGREEMENT
1 All references to "State of ______________" in this
form of opinion shall refer to the state of the present
location of the Provider.
2 UCC searches certified on form UCC-11 by the
appropriate government officials should be dated within ten
(10) days of the closing of the transaction.
3 As to assignments of accounts and intangibles, if the UCC
is not applicable because of Section 9-104, most
jurisdictions follow either the so-called "American rule"
(which in general provides that the transfer of an interest
therein is made effective by a written assignment, with
priority being granted to the assignment which is first in
time) or the so-called "English rule" (which in general
provides that the transfer of an interest therein is only
effective if notice is given to the payor). Counsel should
choose one approach or the other in completing paragraph
5(y) or, if the law in the jurisdiction is unsettled,
counsel may include both as exceptions (i.e., by indicating
in paragraph 5(y) "prior notices to payors of such policies
or prior sales of such Purchased Receivables").
4 [The opinion may also set forth such other exceptions
or vary the foregoing language to the extent that such
exceptions or variations are not materially inconsistent
with the protections intended to be afforded by the
foregoing language or are required by the laws of a
jurisdiction other than Ohio, in either case in the sole
reasonable judgment of the Servicer, upon the advice of
counsel.]
