PURCHASE AGREEMENT
This Agreement (the "Agreement") dated as of July 14, 1997, by and
between Oak Tree Medical Practice, P.C. with offices at 000-00 Xxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx, XX 00000, (the "Provider"), and PFS VI, Inc., a Delaware
corporation with its offices located at 000 Xxx Xxxxx Xxxxxx Xxxx, Xxxxx 000,
Xxxxx XX 00000 ("Purchaser").
RECITALS
WHEREAS, Purchaser is in the business of providing working capital to
healthcare providers by purchasing the patient accounts receivable of such
providers; and
WHEREAS, the Provider has requested Purchaser to purchase certain of
its patient accounts receivable from time to time, upon the terms and conditions
set forth herein; and
WHEREAS, Purchaser is willing to purchase certain patient accounts
receivable offered by the Provider from time to time, upon the terms and
conditions set forth herein.
NOW THEREFORE, the parties hereto intending to be legally bound hereby,
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
Capitalized terms used herein shall have the following meanings:
(a) Advance. Seventy-five percent (75%).
(b) Assignment. The Xxxx of Sale and Assignment attached
hereto as Exhibit "A".
(c) Batch. A group of Eligible Receivables submitted by the
Provider to Purchaser for purchase.
(d) Business Day. Any day other than (i) a Saturday or Sunday,
or (ii) a day on which banking institutions in the
Commonwealth of Pennsylvania are authorized or obligated by
law or executive order to be closed.
(e) Certificate of Participation. The certificate set forth in
Exhibit "C" hereto, which represents the Provider's interest
in Purchased Receivables equal to 100% of the amounts
collected by Purchaser in excess of the Participation
Threshold Amount.
(f) Claims. Any patient account receivable presently owned or
hereafter acquired by assignment or otherwise, by the
Provider, in connection with the
rendition of bona fide services and related tests, or the sale
or rental of equipment, pharmaceuticals, merchandise or
supplies to patients, in connection with medical care
prescribed by a licensed medical practitioner, for which the
Provider, as assignee of the patient or otherwise, is entitled
to reimbursement by law or under an agreement with a third
Party Obligor, together with all proceeds, accounts and
general intangibles related thereto, and all rights, remedies,
guaranties, and security interests and liens in respect of the
foregoing and purchased by Purchaser pursuant to the terms of
this Purchase Agreement.
(g) Closing Date. Initially, and such subsequent dates on
which purchases are made.
(h) Discount Fee. The amount determined by multiplying the
prime rate as announced by Nations Bank or a bank approved by
PFS VI from time to time plus four percent per annum times the
Outstanding Purchase Amount calculated in advance and due and
payable at each closing and reconciled quarterly based on the
average daily balance
(i) Eligible Receivable. The Third Party Reimbursable Claim
portion which meets Purchaser criteria for Purchase which
together with other such Claims become part of a Batch for
purchase by Purchaser.
(j) Event of Default. Any of the events described in Section
6.01 hereof.
(k) Government Programs. The Medicare Program, Medicaid
Program, Title V Maternal and Child Health Services Block
Grant Program, and the Title XX Social Services Block Grant
Program or any other governmental program which provides
payments to Provider for patient care services.
(l) Governmental Receivable. Any Eligible Receivable
reimbursable by a Government Program.
(m) Ineligible Receivable. means a Receivable (a) with respect
to which all of the representations and warranties set forth
in Section 4.01(b) of this Agreement are not true and correct,
or (b) that remains unpaid by the Third Party Obligor one
hundred eighty (180) days after the date it becomes a
Purchased Receivable, unless it has not been paid due to a
bankruptcy, insolvency or receivership proceeding with respect
to the Third Party Obligor that commenced after such date.
(n) Lock Box Agreement. The Lock Box Agreement referred to in
Section 2.01(d)(ii).
(o) Mandatory Repurchase Date. Two years from the date of the
Initial Closing or subsequent dates as effected by Provider
pursuant to Section 6.03.
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(p) Misdirected Collections. The amount defined in Section
5.01(d) hereof.
(q) Notice. The notice addressed to Third Party Obligors from
the Provider set forth in Exhibit "B" hereto.
(r) Obligor. The entity that is the obligor on a Purchased
Receivable.
(s) Origination Fee. At the initial closing, there will be an
origination fee of three percent (3%) of the first Outstanding
Purchase Balance less $2500.00 previously paid and an
additional three percent (3%) of incremental increases in
Outstanding Purchase Balance.
(t) Outstanding Purchase Amount. The Participation Threshold
Amount set forth on all Assignments less amounts collected by
Purchaser on all Purchased Receivables.
(u) Outstanding Balance. The balance of the Warranted
Collection Value of a Purchased Receivable or Purchased Batch
unpaid from time to time.
(v) Participation Threshold Amount. An amount equal to the
Advance Rate multiplied by the Warranted Collection Value.
(w) Periodic Summary. The report summarizing the purchasing
activity with respect to the Provider's Receivables prepared
by Purchaser on a periodic basis.
(x) Purchaser Collection Account. The account under the
control of Purchaser defined in Section 5.01(b) hereof.
(y) Purchaser Collection Bank. The financial institution
defined in Section 5.01(b) hereof.
(z) Purchased Batch. means a Batch sold and assigned by the
Provider under the terms of this Agreement.
(aa) Purchase Commitment. means the sum of $10,000,000 or
seventy-five percent (75%) of Warranted Collection Value of
Purchased Receivables, whichever is less.
(bb) Purchase Documents. The documents relating to the
transactions contemplated by the Agreement as defined in
Section 2.01(d) hereof.
(cc) Purchase Date. Each date on which any Eligible Receivable
or Batch is purchased by Purchaser pursuant to the terms
hereof.
(dd) Purchase Price. The amounts described in Section 2.03
hereof.
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(ee) Purchased Receivable. Any Eligible Receivable sold and
assigned to Purchaser by the Provider pursuant to the terms of
this Agreement.
(ff) Purchased Receivable File. The documents described in
Section 2.01(d) hereof.
(gg) Receivable. Any right to receive payments from Obligors
due on or with respect to the patient accounts receivable of
the Provider.
(hh) Receivables Management Agreement. The Agreement of even
date between Provider and Purchaser whereby under certain
circumstances, Purchaser will provide services (as defined
therein) with respect to Claims.
(ii) Repurchase Price. The price for a Repurchased Receivable
set forth in Section 2.07 hereof.
(jj) Repurchased Receivable. Any Receivable repurchased by the
Provider as defined in Section 2.07 hereof.
(kk) Settlement Date. The date defined in Section 2.06 hereof.
(ll) Substitute Receivable. has the meaning ascribed to it in
Section 2.07 of this Agreement.
(mm) Third Party Obligor. An obligor described in Section
2.01(a) hereof.
(nn) UCC. The Uniform Commercial Code as in effect in the
applicable jurisdiction.
(oo) Warranted Collection Value. With respect to any Purchased
Batch or individual Receivable an amount equal to the expected
net patient reimbursement value of all invoices in the
Purchased Batch or of an individual Receivable, as appropriate
as set forth in the respective Assignments and represented to
Purchaser by the Provider to be accurate.
ARTICLE II
PURCHASE AND ASSIGNMENT
Section 2.01 Agreement to Purchase and to Assign.
(a) From time to time and upon the terms and conditions
provided herein, the Provider agrees to sell and assign to
Purchaser as absolute owner, and Purchaser agrees to purchase
from the Provider, all the Provider's rights, title and
interest in and to Batches of Eligible Receivables Provider
shall provide Purchaser with access to all books and records
related to the foregoing.
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(b) From time to time during the term of this Agreement, the
Provider shall submit to Purchaser a list of Eligible
Receivables that the Provider is selling to Purchaser,
together with any information relating thereto requested by
Purchaser.
(c) Purchaser shall specify on the Assignment each Eligible
Receivable that it is purchasing from Provider and included in
a Batch.
(d) No later than five (5) Business Days after receipt of an
Assignment, the Provider shall notify Purchaser of its
acceptance of the Assignment by returning one executed
counterpart of the Assignment together with fully executed
copies of the following documents with respect to each
Eligible Receivable (collectively such documents are herein
referred to as a "Purchased Receivable File"):
(i) A duplicate invoice or electronic file format
relating to each Eligible Receivable;
(ii) A Notice signed by the Provider and addressed to
each Third Party Obligor of an Eligible Receivable
(other than a Governmental Receivable), directing
each Third Party Obligor to make payment thereof to
the Purchaser Lock Box.;
(iii) A file-stamped acknowledgment copy of a UCC-1
financing statement that names the Provider as Seller
and Purchaser as Purchaser or secured party, as
appropriate, that identifies the Eligible Receivables
as the collateral covered thereby, that is signed by
the Provider and Purchaser, if required by the
applicable UCC, and that otherwise is in form and
substance appropriate and sufficient and has been
filed in all filing offices where a financing
statement should be filed under the UCC to perfect a
security interest in the Provider's accounts and
general intangibles.
(iv) Such releases or intercreditor agreement as
Purchaser may require in respect of the Purchased
Receivables, in form and substance acceptable to
Purchaser, signed by any and all third parties
claiming an interest in such Purchased Receivables;
(v) Such other documents as may be reasonably
requested by Purchaser.
Section 2.02 Warranted Collection Value.
The Assignment shall also specify the Warranted Collection Value for a
Batch. The Purchase Price for a Purchased Batch shall be in an amount
and payable as set forth in Section 2.03 below.
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Section 2.03 Payment of Purchase Price.
At the time of the Assignment, Purchaser shall pay to Provider with
respect to a Purchased Batch, (a) in immediately available funds an
amount equal to the Participation Threshold amount minus the Discount
Fee; plus (b) the residual interest of Provider represented by the
Certificate of Participation (the "COP"). The amounts due to the
Provider under the COP shall be paid on the next Settlement Date
occurring after the date of collection. The Purchase Price shall be
subject to offset against any amounts owed by the Provider to Purchaser
under any provision of this Agreement.
Upon the payment of the amount described in (a) and (b) above the
Provider shall have sold to Purchaser all of its tight, tide and
interest in and to the Eligible Receivables constituting such Purchase
Batch and any Substitute Receivables as provided in Section 2.07
hereof. Purchaser shall become the absolute owner of such Purchased
Batch and of all the proceeds thereof, shall enjoy all the Provider's
rights and remedies with respect to the Purchased Batch and shall
become subrogated to the Provider with respect to the Provider's rights
under any guaranty, assignment or security for the payment of any
Purchased Receivable, except as limited by Medicare and Medicaid laws.
Section 2.04 Purchase Dates.
The first Purchase Date is the date set forth in the Assignment.
Subsequent purchases may be made on any Business Day in accordance with
the terms and conditions hereof.
Section 2.05 Obligation to Purchase.
Notwithstanding anything to the contrary set forth in this Agreement,
Purchaser shall not be required to purchase any Batch if at the time it
is offered by the Provider, the aggregate Outstanding Purchase Amount
of all Purchased Batches (determined as of the last day in the period
covered by the most recent Periodic Summary) exceeds or as a result of
the purchase of such Batch would exceed the Purchase Commitment, or if
Purchaser reasonably believes that any of the Eligible Receivables
included in such Batch are or may become Ineligible Receivables.
Further, Purchaser shall have no obligation to purchase any Eligible
Receivables (a) at any time an Event of Default has occurred and
remains unremedied, or (b) after the date this Agreement is terminated
pursuant to Section 6.03.
Section 2.06 Periodic Settlement.
Purchaser shall regularly issue to Provider a Periodic Summary which
shall set forth the total amounts received with respect to Purchased
Receivables in that period. The Periodic Summary shall also set forth
the Warranted Collection Value for Batches purchased during that period
reduced by the amount of any Ineligible Receivables reassigned to
Provider during that period or any other amounts set off by Purchaser
under the terms hereof. The Periodic Summary shall also set forth any
amounts received during that period not allocable to Purchased
Receivables. Any net settlement due to the Provider will be credited to
the Provider on the next succeeding Business Day (the "Settlement
Date").
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Section 2.07 Ineligible Receivables.
If a Purchased Receivable becomes, an Ineligible Receivable, the
Provider shall cure such breach within five days of the earlier of
notification to, or discovery by, the Provider of the breach. If such
breach is not so cured, within seven days of the original notification
or discovery of the breach, the Provider shall substitute for the
Ineligible Receivables one or more other Eligible Receivable
("Substitute Receivable") (and the Provider shall deliver to Purchaser
an executed Assignment relating to such Receivable together with the
Purchased Receivable File with respect to each such Receivable). The
aggregate Warranted Collection Value of the Substitute Receivable shall
be equal to or greater than that of the Ineligible Receivable. Upon
substitution, each Substitute Receivable shall be treated as the
Purchased Receivable it replaced for all purposes. In the event that
sufficient Substitute Receivables are not provided by the Provider
within such time, the Provider, upon demand, shall repurchase such
Ineligible Receivable (which upon repurchase shall become a
"Repurchased Receivable") from Purchaser at a repurchase price (the
"Repurchased Price") equal to the Outstanding Purchase Amount with
respect to such Ineligible Receivable, plus interest calculated at 14%
per annum since the Purchase Date Upon remittance of the Repurchase
Price, Purchaser shall reassign the Ineligible Receivable to the
Provider free and clear of any liens and encumbrances arising by,
through or under Purchaser or its assigns without any representation,
warranty or recourse whatsoever, and Purchaser shall execute such
documents as are appropriate as are requested by Provider in connection
thereto. In addition to all other rights and remedies available to
Purchaser at law or in equity, Purchaser may offset against any amounts
it owes the Provider under this Agreement any amounts due Purchaser
with respect to a Repurchased Receivable. If after receipt of all or
any part of the Repurchase Price for any Repurchased Receivable,
Purchaser is compelled to surrender such payment to any person or
entity because such payment is determined to be void or voidable as a
preference, impermissible set off, or a diversion of trust funds, this
Agreement shall continue in full force and the Provider shall be liable
to Purchaser for, and shall indemnify and hold Purchaser harmless for,
the amount of such payment surrendered. The provisions of this Section
2.07 shall be and remain effective notwithstanding any contrary action
which may have been taken by Purchaser in reliance upon such payment,
and any such contrary action so taken shall be without prejudice to
Purchaser's rights under this Agreement and shall be deemed to have
been conditioned upon such payment having become final and irrevocable.
The provisions of this Section 2.07 shall survive the termination of
this Agreement.
Section 2.08 Disclaimer of Right of Repurchase.
Except as set forth in Section 2.07, or Section 6.03 the Provider shall
have no right to repurchase any Purchased Receivable from Purchaser.
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ARTICLE III
SECURITY INTEREST
Section 3.01 Security Interest.
In the event that, contrary to the mutual intent of the Provider and
Purchaser, the purchase of the Purchased Receivables is not
characterized as a sale, the Provider shall, effective as of the date
hereof, be deemed to have granted and the Provider does hereby grant to
Purchaser a first priority security interest in and to any and all the
Purchased Receivables (and any Substitute Receivables as provided in
Section 2.07) and the proceeds thereof to secure the repayment of all
amounts advanced to the Provider hereunder with accrued interest
thereon equal to the Discount Fee and this Agreement shall be deemed to
be a security agreement. With respect to such grant of a security
interest, Purchaser may at its option exercise from time to time any
and all rights and remedies available to it under the UCC or otherwise.
The Provider agrees that five days shall be reasonable prior notice of
the date of any public or private sale or other disposition of all or
part of the Purchased Receivables. The Provider agrees to notify
Purchaser in writing thirty (30) days prior to any change in any such
location. The exact name of the Provider is as set forth at the
beginning of this Agreement, and except as set forth on Exhibit "D"
hereof, the Provider has not changed its name in the last five years,
and during such period the Provider did not use, nor does the Provider
now use any fictitious or trade name. The Provider shall notify
Purchaser, in writing, 30 days prior to any name change.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PROVIDER AND
Purchaser
Section 4.01 Representations and Warranties of Provider.
Provider represents and warrants to Purchaser as follows:
(a) With respect to the Provider, as of the date hereof and as
of the date of each purchase of Eligible Receivables:
(i) If a corporation or a partnership, the Provider
is duly organized, validly existing and in good
standing as such under the laws of the jurisdiction
of its organization, and has all the power and
authority necessary to carry on its business as now
conducted and to enter into and perform this
Agreement, the Assignments and all other documents
now or hereafter executed in connection herewith
(collectively, the "Purchase Documents"). The
execution, delivery and performance by the Provider
of the Purchase Documents have been duly authorized
by all appropriate action on behalf of the Provider.
If a sole proprietorship, the Provider has the
necessary power and capacity under applicable law to
carry on its
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business as now conducted and to enter into and
perform the Purchase Documents.
(ii) When executed and delivered, the Purchase
Documents will be legal, valid and binding
obligations of the Provider, enforceable against the
Provider in accordance with their respective terms.
Upon the filing of financing statements in all
appropriate jurisdictions and notification to the
applicable Third Party Obligors, any security
interest in favor of Purchaser granted under Section
3.01 of this Agreement will be perfected.
(iii) The execution, delivery and performance of the
Purchase Documents will not violate any provision of
law or regulation or any order or decree of any court
or governmental agency, or violate any provision of
the Provider's organizational documents (if a
corporation or partnership) or any agreement to which
the Provider in a party or by which any of its assets
are bound, and will not be in conflict with, result
in a breach of, or constitute a default under, any
such agreement or result in the creation of any lien
or security interest upon any of the Provider's
assets, except in favor of Purchaser.
(iv) The Provider has all permits, licenses,
accreditation, certifications, authorizations,
approvals, consents and agreements of all Third Party
Obligors, governmental agencies and
instrumentalities, accreditation agencies and any
other person, necessary or required for the Provider
to own the assets that it now owns, to carry on its
business as now conducted, to execute, deliver and
perform the Purchase Documents, and to receive
payments from Third Party Obligors; and the Provider
has not been notified by any such Third Party
Obligor, governmental agency or instrumentality,
accreditation agency or any other person, during the
immediately preceding twenty-four (24) month period,
that such party has rescinded or not renewed, or
intends to rescind or not renew, and such permit,
license, accreditation, certification, authorization,
approval, consent or agreement granted by it to the
Provider or to which it and the Provider are parties.
(v) There are no actions, suits or proceedings
pending or threatened against the Provider before any
court, government agency or other tribunal, which
could materially and adversely affect its ability to
perform under the Purchase Documents, and the
Provider is not currently subject to, and does not
intend to file, any bankruptcy or insolvency
proceeding.
(b) With respect to the Purchased Receivables or a Purchased
Batch, as of the date such Batch or Eligible Receivables are
purchased:
(i) Each Purchased Receivable File is complete and
correct and all documents, attestations and
agreements relating to the Purchased
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Receivables that have been delivered to Purchaser
with respect to each Purchased Receivable are true
and correct, each Purchased Receivable has been
billed to the applicable Third Party Obligor, all
requested supporting claim documents with respect to
such Purchased Receivable have been delivered to the
Third Party Obligor, all information set forth in the
xxxx and supporting claim documents is true, complete
and correct, and if additional information is
requested by the Third party Obligor, the Provider
will provide the same, and if any error has been
made, the Provider will promptly correct the same
and, if necessary, rebill such Purchased Receivable.
(ii) There is no security interest or lien in favor
of any third party, nor any recording or filing
against the Provider, as debtor, covering or
purporting to cover any interest of any kind in any
Purchased Receivable, except as has been released by
each party holding such adverse interest. Upon
payment of the Purchase price with respect to a
Purchased Batch or Purchased Receivable, all right,
title and interest of the Provider with respect
thereto shall be vested in Purchaser, free and clear
of any lien, security interest, claim or encumbrance
of any kind, and the Provider agrees to defend the
same against the claims of all persons.
(iii) Each Purchased Receivable (A) is payable, in an
amount not less than its Warranted Collection Value,
by the Third Party Obligor identified by the Provider
as being obligated to do so, and is recognized as
such by the Third Party Obligor, and such Third Party
Obligor is obligated to pay the full Warranted
Collection Value without dispute, reduction in amount
for any reason whatsoever, offset, defense or
counterclaim, (B) is based on an actual and bona fide
rendition of services or the sale or rental of
equipment, merchandise and supplies to the patient by
the Provider in the ordinary course of business, (C)
is denominated and payable only in lawful currency of
the United States, and (D) is an account receivable
or general intangible within the meaning of the UCC
of the state in which the Provider has its principal
place of business, or is a right to payment under a
policy of insurance or proceeds thereof, and is not
evidenced by any instrument or chattel paper. There
is no payor other than the Third Party Obligor
identified by the Provider as the payor primarily
liable on any Purchased Receivable.
(iv) No Purchased Receivable (A) is subject to any
action, suit, proceeding or dispute (pending or
threatened), set-off, counterclaim, defense,
abatement, suspension, deferment, deductible,
reduction or termination by the Third Party Obligor,
or (B) was billed to the appropriate Third party
Obligor later than the sixty-first (61st) day prior
to the last day such Purchased Receivable could have
been billed to be eligible for payment under any
agreement, statute, rule or regulation applicable to
such Third Party Obligor.
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(v) The Provider does not have any guaranty of,
letter of credit providing credit support for, or
collateral security for, any Purchased Receivable,
other than any such guaranty, letter of credit or
collateral security as has been assigned to
Purchaser, and any such guaranty, letter of credit or
collateral security is not subject to any lien in
favor of any other person.
(vi) The services provided or equipment, merchandise
and supplies sold or rented and reflected by each
Purchased Receivable were medically necessary for the
patient, and the patient has received such services.
(vii) The fees charged for the services or equipment,
merchandise and supplies sold or rented constituting
the basis for the Purchased receivables are
consistent with the usual, customary and reasonable
fees charged by other similar medical service
providers in the Provider's community or the
community in which the patient resides, whichever is
less, for the same or similar service.
(viii) The Third Party Obligor with respect to each
Purchased Receivable is (A) not currently the subject
of any bankruptcy, insolvency or receivership
proceeding, nor is it unable to make payments on its
obligations when due, (B) located in the United
States, and (C) one of the following: (a) a party
which in the ordinary course of its business or
activities agrees to pay for healthcare services
received by individuals, including, without
limitation, commercial insurance companies and
non-profit insurance companies (such as Blue Cross
and Blue Shield) issuing health, personal injury,
workmen's compensation or other types of insurance,
employers or unions which self-insure for employee or
member health insurance, prepaid healthcare
organizations, preferred provider organizations,
health maintenance organizations or any other similar
person, (b) a state, an agency or instrumentality of
a state or a political subdivision of a state, or (c)
the United States or an agency or instrumentality of
the United States.
(ix) The sale of Purchased Receivables hereunder is
made in good faith and without intent to hinder,
delay or defraud present or future creditors of the
Provider.
(x) The insurance policy, contract or other
instrument obligating a Third Party Obligor to make
payment with respect to any Purchased Receivable (A)
does not contain any provision prohibiting the
transfer of such payment obligation from the patient
to the Provider, or from the Provider to Purchaser
(B) has been duly authorized and, together with the
applicable Purchased Receivable, constitutes the
legal, valid and binding obligation of the Third
Party Obligor in accordance with its terms, (C)
together with the applicable Purchased Receivable,
does not
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contravene in any material respect any requirement of
law applicable thereto, and (D) was in full force and
effect and applicable to the patient at the time the
services constituting the basis for the Purchased
Receivable were performed.
(xi) The representations, warranties and statements
made by the Provider in the Purchase Documents, any
financial information with respect to the Provider
delivered to Purchaser or any other related
documents, including, without limitations, with
respect to the description of the Purchased
Receivables in the Assignments, do not contain any
untrue statement of material fact or omit to state a
material fact necessary to make the statement made
not misleading.
None of the foregoing representations and warranties shall be deemed to
constitute a guaranty by the Provider that the Purchased Receivables will be
collected by Purchaser.
Section 4.02 Covenants of Provider.
The Provider covenants and agrees with Purchaser as follows:
(a) In connection with the initial purchase of Eligible
Receivables or a Batch by Purchaser, the Provider will execute
such financing statements under the UCC naming Purchaser as
secured party as Purchaser may reasonably request with respect
to any such Eligible Receivables or Batch that may be
purchased pursuant to this Agreement. From time to time, upon
request, the Provider will provide Purchaser with any
additional information, will execute and deliver to Purchaser
any additional agreements, instruments, documents or financing
statements and will take all actions deemed by Purchaser as
necessary or desirable to effectuate the provisions of the
Purchase Documents, to evidence, protect and perfect the
assignment of the title to the Purchased Receivables and to
facilitate the collection of the Purchased Receivables.
(b) Each of Purchaser and its agents and representatives are
hereby irrevocably constituted and designated as the
Provider's attorneys-in-fact, which irrevocable power of
attorney is coupled with an interest, (i) to endorse or sign
the Provider's name to financing statement remittances,
invoices, assignments, checks, drafts or other instruments or
documents in respect of the Purchased Receivables, (ii) to
notify Third Party Obligors to make payments on the Purchased
Receivables directly pursuant to and subject to the terms and
provisions of Section 5.01(b) hereof, and (iii) to bring suit
in the Provider's name and to settle or compromise such
Purchased Receivables as Purchaser may, in its discretion,
deem appropriate.
(c) The Provider will pay on demand all Purchaser's costs and
expenses, including, without limitation, reasonable attorneys'
fees and expenses, interest expenses which may be expended or
incurred by Purchaser in enforcing or
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attempting to enforce any of Purchaser's rights against the
Provider under the Purchase Documents.
(d) The Provider shall keep its books and accounts in
accordance with generally accepted accounting principals and
shall make a notation on its books and records, including any
computer files, to indicate which Claims have been sold to
Purchaser. Purchaser or its designated representatives from
time to time may verify the Purchased Receivables, inspect,
check, take copies of or extracts from the Provider's books,
records and files, and the Provider will make the same
available to Purchaser or such representatives at any
reasonable time for such purposes.
(e) The Provider agrees that Purchaser will be permitted to
have at least one of its agents or representatives physically
present in the Provider's administrative offices during normal
business hours to assist the Provider in performing its
obligations under this Agreement, including its obligations
with respect to the collection of Purchased Receivables
pursuant to Section 5.01 herein.
(f) So long as this Agreement is in effect the Provider will
deliver to Purchaser, (i) within forty-five (45) days after
the end of each fiscal quarter, the Provider's consolidated
financial statements for such period and for that portion of
its fiscal year through the end of such period, (ii) within
ninety (90) days after the end of the Provider's fiscal year,
the Provider's audited annual consolidated financial
statements for such year (or if such statements are not
audited, statements certified by the Provider's chief
financial officer and (iii) promptly upon request, such other
information concerning the Provider as Purchaser may from time
to time request, including Medicare cost reports and audits.
(g) The Provider shall promptly notify Purchaser in the event
of any action, suit, proceeding, dispute, offset, deduction,
defense or counterclaim that is or may be asserted by a Third
Party Obligor with respect to any Purchased Receivable. The
Provider shall make all payments to the Third Party Obligors
necessary to prevent the Third Party Obligors from offsetting
any earlier overpayment to the Provider against any amounts
the Third Party Obligors owe on any Purchased Receivables.
(h) The Provider shall do nothing to impede or interfere with
the collection of the Purchased Receivable (as provided in
this Agreement), and shall not amend, waive or otherwise
permit or agree to any deviation from the terms or conditions
of any Purchased Receivable. The Provider shall not purport to
sell, assign or grant a security interest in any Purchased
Receivable after it has been sold to Purchaser.
(i) The Provider shall treat the assignment of Purchased
Receivables pursuant to this Agreement as a sale for all
purposes, including tax and accounting.
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(j) Any payment on a Purchased Receivable remitted directly to
Provider shall be immediately transmitted to Purchaser or its
designee.
(k) Provider shall use its best efforts to make collections on
all Purchased Receivables for the benefit of Purchaser. In the
event of a default, Purchaser may at its option assume
responsibilities for servicing pursuant to the terms of the
Claims Management Agreement.
Section 4.03 Representations and Warranties of Purchaser.
Purchaser represents and warrants to Provider as follows:
(a) Purchaser has been duly organized, is validly existing and
in good standing as a corporation under the laws of the
Commonwealth of Pennsylvania with full corporate power and
authority to own its properties and to transact the business
in which it is now engaged.
(b) The purchase by Purchaser of the Purchased Receivables
pursuant to this Agreement and the consummation of the
transactions herein contemplated will not conflict with or
result in a breach of any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which
Purchaser is a party or by which it is bound or to which any
of the property or assets of Purchaser is subject nor will
such action result in any violation of the provisions of the
Certificate of Incorporation or the Bylaws of Purchaser or of
any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over Purchaser
or any of its properties or assets; and no consent, approval,
authorization, order, registration or qualification of or with
any court or any such regulatory authority or other
governmental agency or body is required for the purchase by
Purchaser of the Receivables hereunder.
(c) This Agreement has been duly authorized, executed and
delivered by Purchaser and constitutes the valid and legally
binding obligation of Purchaser enforceable against Purchaser
in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium or other
laws and subject as to enforceability to general principles of
equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(d) Purchaser shall provide Provider with a copy of any Notice
of Default received by Purchaser from any of its lenders or
creditors. Purchaser shall use its best efforts to prevent any
of its creditors from interfering with Provider's quiet
enjoyment of its rights and benefits hereunder.
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ARTICLE V
COLLECTIONS
Section 5.01 Non Government Receivables.
(a) Purchaser Collection Account. Contemporaneously with the
execution of this Agreement, Purchaser shall open a lock box
(the "Purchaser Lock Box") the fees of which shall be paid by
Provider for the receipt of all sums representing payments on
all Receivables other than Governmental Receivables. The
Provider shall direct that all payments of Receivables other
than Governmental Receivables be made to the Purchaser Lock
Box. All payments of Receivables received at the Purchaser
Lock Box shall be deposited to the Purchaser Collection
Account at the Purchaser Collection Bank. All payments of
Receivables received by the Provider shall be held in trust
for Purchaser and shall be mailed to the Purchaser Collection
Account. The Collection Account shall be in the name of and
under the exclusive control of Purchaser, and the Provider
shall have no right or interest in the Purchaser Collection
Account. All payments of Purchased Receivables will be deemed
to have been collected by Purchaser when deposited to the
Purchaser Collection Account, and shall be applied to the
reduction of the Outstanding Purchase Amount as of the date of
deposit.
The Purchaser Collection Account shall be at a bank to be
designated by Purchaser.
(b) Funds deposited to the Purchaser Collection Account that
do not represent payments of Purchased Receivables shall be
remitted to the Provider on each Settlement Date, provided
that Purchaser shall have the right, in the Event of Default,
to deduct from such funds and to retain any amounts owed by
the Provider under the terms of this Agreement.
(c) All accounts with respect to Non-Governmental Receivables
received directly by Provider from Third Party Obligors or
made other than as provided in the Notice set forth in Exhibit
"B" hereto ("Misdirected Collections") shall be remitted by
Provider directly to the Purchaser Collection Account on the
Business Day following Provider's receipt thereof and shall be
held in trust for Purchaser, until such time, as remittance is
made by Provider to Purchaser.
Section 5.02 Government Receivables.
(a) Provider Collection Account. Provider shall maintain a
lock box or P O Box ("Lock Box") the fees of which shall be
paid by Provider and an account (the "Provider Collection
Account"). Payments with respect to the Government Receivables
will be made to the Lock Box. Collections with respect to the
Governmental Receivables shall be deposited in the Provider
Collection Account at the Provider Collection Bank (as defined
below). Collections with respect to
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the Government Receivables will be transferred when they
become immediately available funds to an account designated by
Purchaser.
The Provider Collection Account shall be maintained at a
financial institution that is insured by the Federal Deposit
Insurance Corporation (the "Provider Collection Bank") and
shall be in the name of and under the control of the Provider.
The Provider shall transmit to Purchaser daily, either
electronically or by hard copy, information relating to the
identification of all sums deposited in the Provider
Collection Account until all Purchased Receivables sold
hereunder have been collected. It is understood that the
Provider Collection Bank shall act solely as the agent of the
Provider.
(b) Purchaser Collection Account. Contemporaneously with the
execution of this Agreement, Purchaser shall open a lock box
(the "Purchaser Lock Box") for the direct receipt of all sums
representing payments on all Receivables other than
Governmental Receivables and for the deposit or transfer by
Provider of sums representing payments on Government
Receivables paid to the Provider Collection Account. The
Provider shall direct that all payments of Receivables other
than Governmental Receivables be made to the Purchaser Lock
Box. The Provider shall transfer to, or deposit in, on a daily
basis, as funds become available, all sums collected in the
Provider Collection Account to the Purchaser Collection
Account. Standing instructions shall be issued by the Provider
to the Provider Collection Bank. Any change in such
instructions without the written consent of Purchaser shall be
an event of default. All payments of Receivables received at
the Purchaser Lock Box shall be deposited to the Purchaser
Collection Account at the Purchaser Collection Bank. All
payments of Receivables received by the Provider shall be held
in trust for Purchaser and shall be deposited to the Purchaser
Collection Account on the date of receipt. The Collection
Account shall be in the name of and under the exclusive
control of Purchaser, and the Provider shall have no right or
interest in the Purchaser Collection Account. All payments of
Purchased Receivables will be deemed to have been collected by
Purchaser when deposited to the Purchaser Collection Account,
and shall be applied to the reduction of the Outstanding
Purchase Amount as of the date of deposit.
(c) Funds deposited to the Purchaser Collection Account that
do not represent payments of Purchased Receivables shall be
remitted to the Provider on each Settlement Date, provided
that Purchaser shall have the right to deduct from such funds
and to retain any amounts owed by the Provider under the terms
of this Agreement.
(d) It is the intent of the parties to comply with the
relevant rules and regulations of the Health Care Financing
Administration with respect to the financing of accounts
receivable, without limiting the rights of Purchaser
hereunder.
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ARTICLE VI
EVENTS OF DEFAULT, TERMS AND TERMINATION
Section 6.01 Events of Default.
All of the Provider's obligations to Purchaser hereunder, at
Purchaser's option, shall be due and payable without notice or demand
upon termination of this Agreement. This Agreement may be terminated by
Purchaser upon five (5) business days prior written notice of the
occurrence of, and the Provider's failure to cure within such period,
any one or more of the following events of default ("Events of
Default"):
(a) If the Provider shall fail to pay when due any amounts
owing to Purchaser hereunder or under the Standby Claims
Management Agreement;
(b) If the Provider fails to observe or perform any of the
covenants or agreement contained in this Agreement or under
the Standby Claims Management Agreement;
(c) If any representation, warranty or statement of fact made
to Purchaser at any time by the Provider is false or
misleading in any material respect;
(d) If any material obligation of the Provider to any person
becomes or is declared to be in default and the obligee
initiates action with respect to collateral securing such
obligations.
(e) If the Provider shall become insolvent, fail to meet its
debts as they mature, and as a result of such failure the
obligee initiates action with respect to collateral securing
such obligations, or a meeting of creditors or have a
creditors' committee appointed, file or have filed against it
a petition in bankruptcy, arrangement or reorganization, or if
the Provider suspends or discontinues doing business for any
reason, or if the Provider makes an assignment for the benefit
of creditors, or if a receiver or trustee of any kind is
appointed for it or any of its property; or
(f) If, in the opinion of Purchaser, a material adverse change
in the financial condition, business, operations or control of
the Provider shall have occurred, or any other event or
circumstance shall have occurred which give reasonable grounds
for Purchaser to conclude that the Provider may not or will
not be able to perform its obligations hereunder.
Section 6.02 Remedies and Provider's Waiver of Jury Trial.
(a) Each of Purchaser's rights and remedies under this
Agreement is not intended to be exclusive, and such rights and
remedies are in addition to and not by way of limitation of
any other rights or remedies Purchaser may have under
applicable law (except as those rights are limited by the
application of the
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Medicare and Medicaid laws). Purchaser shall have the right,
in Purchaser's sole discretion, to determine which rights and
remedies, and in which order any of the same, are to be
exercised. No act, failure or delay by Purchaser shall
constitute a waiver of any of Purchaser's rights and remedies.
No single or partial waiver by Purchaser of any provision of
this Agreement, or breach or default hereunder, or of any
right or remedy which Purchaser may have, shall operate as a
waiver of the same or any other provision, breach, default,
right or remedy on a future occasion. The Provider waives
presentment, notice of dishonor, protest and notice of all
instruments included in or evidencing any of the Provider's
obligations to Purchaser and of any and all notices or demands
whatsoever except as expressly provided for herein. The net
proceeds resulting from the exercise of any of Purchaser's
rights or remedies shall be applied to the payment of the
Provider's obligations to Purchaser in such order as Purchaser
may elect. The Provider shall remain liable to Purchaser for
any deficiency.
(b) Waiver of Jury Trial and Jurisdiction. It is agreed that
all disputes will be resolved via arbitration pursuant to
Section 14 (i). Notwithstanding that, would, for any reason,
the arbitration clause be defaulted, the provider hereby
waives all rights to a trial by jury in the event of any
litigation with respect to any matter connected with the
purchased receivables, and the provider hereby irrevocably
consents to the jurisdiction of the state courts of the
Commonwealth of Pennsylvania and of the federal courts located
in the eastern district of the Commonwealth of Pennsylvania in
connection with any action or proceeding arising out of or
relating to the purchased receivables. In any such litigation,
the provider waives personal service of any summons, complaint
or other process and agrees that service thereof may be made
by certified or registered mail directed to the provider at
the provider's address set forth herein. Within 30 days after
such mailing, the provider shall appear in answer to such
summon, complaint or other process, failing which the provider
shall be deemed in default and judgment may be entered by
Purchaser against the provider for the amount of the claim and
other relief requested therein.
Section 6.03 Term and Termination.
This Agreement shall continue in full force and effect for two years
from the date of the initial closing provided that Purchaser shall have
the right to terminate this Agreement immediately at any time upon the
occurrence of any Event of Default. Purchaser shall have no further
obligation to purchase Eligible Receivables, and may require the
Provider to repurchase all Purchased Batches for an amount equal to the
aggregate Outstanding Purchase Amount. However, termination shall not
relieve or discharge the Provider from its duties, obligations or
covenants under this Agreement until the aggregate Outstanding Purchase
Amount with respect to Purchased Batches is zero and all of the
Provider's obligations hereunder have been satisfied or paid in full,
and all of the terms, provisions and conditions of this Agreement shall
remain in full force and effect until such time. If after receipt of
any payment of all or any part of the Provider's indebtedness
hereunder, Purchaser is for any reason compelled to surrender such
payment to any person or entity, because such payment is determined to
be void or
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voidable as a preference, impermissible setoff, or a diversion of trust
funds, this Agreement shall continue in full force and the Provider
shall be liable to Purchaser for, and shall indemnify and hold
Purchaser harmless for, the amount of such payment surrendered. The
provisions of this Section shall be and remain effective
notwithstanding any contrary action which may have been taken by
Purchaser in reliance upon such payment, and any such contrary action
so taken shall be without prejudice to Purchaser's rights under this
Agreement and shall be deemed to have been conditioned upon such
payment having become final and irrevocable. The provisions of this
Section shall survive the termination of this Agreement. Upon
remittance of the aggregate Outstanding Purchase Amount plus all other
amounts payable to Purchaser by Provider hereunder, Purchaser shall
reassign the outstanding Purchased Receivables to the Provider free and
clear of all liens and encumbrances arising by, through or under
Purchaser or its assigns, otherwise the reassignment shall be without
any representation, warranty or recourse whatsoever, and Purchaser
shall have no further obligation to the Provider with respect to such
documents as are appropriate as requested by Provider in connection
thereto.
ARTICLE VII
INDEMNIFICATION
Section 7.01 Indemnity by Provider.
Neither this Agreement nor any Assignment shall constitute an
assumption by Purchaser of any obligation to a Third Party Obligor or a patient.
The Provider shall indemnify and hold harmless Purchaser, and its officers,
directors and agents, from and against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
of any kind or nature whatsoever (including reasonable attorney's fees) which
may be imposed on, incurred by or asserted against any of them in any way
relating to or arising out of any breach by the Provider of any representation,
warranty or covenant contained in any Purchase Documents. The indemnity
contained in this Section 7.01 shall survive the termination of this Agreement.
Any amount payable by the Provider to Purchaser under any provision of this
Agreement shall be paid without any deduction or setoff of any kind.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Notices, Etc.
All notices, demands, instructions and other communications required or
permitted to be given or to be made upon any party hereto shall be in
writing and shall be deemed to be given for purposes of this Agreement
when delivered by facsimile transmission, overnight delivery service,
registered or certified mail, postage prepaid to the address (or to
their respective facsimile number) indicated below or from time to time
furnished by notice to the other party:
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If to Provider:
Oak Tree Medical Practice, P. C.
000-00 Xxxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxxxx, XX 00000
Telephone No: (000) 000-0000
Telecopier No: (000) 000-0000
If to Purchaser:
PFS VI, Inc.
000 Xxx Xxxxx Xxxxxx Xx., Xxxxx 000
Xxxxx, XX 00000
Telephone No.: 000-000-0000
Telecopier No.: 610-687-6536
Section 8.02 Successors and Assigns.
This Agreement shall be binding upon Provider and Purchaser and their
respective successors and assigns and shall inure to the benefit of
Provider and Purchaser and their respective successors and assigns;
provided that Provider shall not assign any of its rights or
obligations hereunder without the prior written consent of Purchaser.
The Provider acknowledges that Purchaser may assign, pledge or transfer
its rights hereunder and its interest in the Purchase Documents and the
Purchased Receivables to another party, including collateral security
for any indebtedness of Purchaser.
Section 8.03 Severability Clause.
If any provision of this Agreement is held to be invalid, illegal or
unenforceable for any reason or in any respect whatsoever, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been
contained herein.
Section 8.04 Amendments; Governing Law.
This Agreement and the rights and obligations of the parties hereunder
(i) may be changed only by an instrument in writing signed by Purchaser
and the Provider (ii) shall be construed in accordance with and
governed by the laws of Pennsylvania.
Section 8.05 Further Assurances.
Provider agrees to do such further acts and things and to execute and
deliver to Purchaser such additional assignments, agreements, powers
and instruments as are required by Purchaser to carry into effect the
purpose of this Agreement or to better assure and confirm unto
Purchaser its rights, powers and remedies hereunder.
Section 8.06 Counterparts
This Agreement may be executed in any number of copies, and by the
different parties hereto on the same or separate counterparts, each of
which shall be deemed to be an original instrument.
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Section 8.07 Headings.
Section headings used in this Agreement are for convenience of
reference only and shall not affect the construction or interpretation
of this Agreement.
Section 8.08 Waiver.
No delay or omission to exercise any right, power or remedy accruing to
any party hereto shall impair any such right, power or remedy of such
party nor shall it be construed to be a waiver of any such right, power
or remedy nor constitute any course of dealing or performance
hereunder. No waiver shall be effective unless it is in writing and is
received by the waiving party.
Section 8.09 Arbitration.
Arbitration. Any dispute, controversy and/or claim arising out of this
Agreement or breach thereof, shall be resolved, settled and/or
adjudicated through Arbitration administered by and pursuant to the
appropriate rules and procedures of the American Arbitration
Association ("AAA"), Commonwealth of Pennsylvania, and judgment on
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
Section 8.10 Attorney's Fees.
If any action, suit or other proceeding is instituted concerning or
arising out of this Agreement, the prevailing party shall recover from
the non-prevailing party all of such party's costs, including any
reasonable attorney's fees incurred in each and every action, suit or
other proceeding, including any and all appeals or petitions therefrom.
As used herein, "prevailing party" shall mean the party entitled to
recover its cost of such action, suit or proceeding, whether or not the
suit proceeds to final judgment and/or the party receiving an award by
a decision of the AAA.
Section 8.11 References.
All references to "Section" contained herein are, unless specifically
indicated otherwise, references to sections of this Agreement. Whenever
herein the singular number is used, the same shall include the plural
where appropriate, and words of any gender shall include each other
gender where appropriate.
Section 8.12 Representations to Survive this Agreement
The representations, warranties and covenants of the Provider contained
herein shall survive the purchase of the Purchased Receivables and the
termination of this Agreement.
Section 8.13 Assignment of Purchaser's Interest.
The Provider hereby acknowledges that Purchaser shall have the right to
sell, assign, transfer and create a security interest in any or all of
the Purchased Receivables conveyed to it hereunder including any
security agreement referred to in Section 4.02(j)) or any security
interest referred to in Section 3.01 hereof; provided that same shall
be limited to sources of funding for the Purchased Receivables
hereunder, shall be limited to financial institutions and accredited
investors and shall provide that any lien or security interest is
released if Purchaser is required to convey or reconvey any Purchased
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Receivables to Provider. Any such assignment shall accept or recognize
the Provider's rights under the COPs.
IN WITNESS WHEREOF, Provider and Purchaser have caused this Agreement
to be duly executed by their duly authorized officers, all on the date and year
first above
written.
Provider PFS VI, INC
By: /s/ XXXX XXXXXXXX By: /s/ XXXXXX XXXXX
------------------------- -------------------------
Name: Xxxx Xxxxxxxx Name: Xxxxxx Xxxxx
------------------------- -------------------------
Title: COO Title: President
------------------------- -------------------------
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