collateral or property of the Obligor or any other party directly or indirectly liable for payment of such Receivable and available to be applied thereon), or (ii) all Purchase Price Credits, and (b) with respect to any Participation Interest, (i) all funds which are received from or on behalf of any related Obligor in payment of any amounts owed (including, without limitation, purchase prices, finance charges, interest and all other charges) in respect of such Specified Government Receivable underlying such Participation Interest, or applied to such amounts owed by such Obligor (including, without limitation, payments that the Buyer, the applicable Seller or the Servicer receives from third party payors and applies in the ordinary course of its business to amounts owed in respect of such Specified Government Receivable and net proceeds of sale or other disposition of repossessed goods or other collateral or property of the Obligor or any other party directly or indirectly liable for payment of such Specified Government Receivable and available to be applied thereon), or (ii) all Purchase Price Credits.
“Existing Sellers” means the Original Sellers, Unilab Corporation, a Delaware corporation; Quest Diagnostics Nichols Institute, Inc., a Virginia corporation formerly known as Medical Laboratories Corporation, Inc.; Quest Diagnostics Incorporated, a Nevada corporation formerly known as APL Healthcare Group, Inc.; LabOne, Inc., a Missouri corporation (successor by merger with Central Plains Laboratories, LLC, a Kansas limited liability company); ExamOne World Wide, Inc., a Pennsylvania corporation; LabOne of Ohio, Inc., a Delaware corporation; and Systematic Business Services, Inc., a Missouri corporation.
“Initial Participation Interests”means, with respect to any Seller, all Participation Interests of such Seller that existed as of the close of such Seller’s business on the applicable Existing Cut-Off Date (in the case of each of the Existing Sellers) or the applicable New Seller Cut-Off Date (in the case of any New Seller).
“Initial Private Receivables”means, with respect to any Seller, all Private Receivables of such Seller that existed and was owing to such Seller as of the close of such Seller’s business on the applicable Existing Cut-Off Date (in the case of each of the Existing Sellers) or the applicable New Seller Cut-Off Date (in the case of any New Seller).
“Invoice”means, with respect to any Receivable, any paper or electronic bill, statement or invoice for services rendered by a Seller to an Obligor.
“Joinder Agreement” has the meaning set forth in the preamble.
“New Seller” means any direct or indirect wholly-owned Subsidiary of Quest Diagnostics that hereafter becomes a Seller under this Agreement by executing a Joinder Agreement and complying with the provisions of Article V hereof.
“New Seller Closing Date” means, as to any New Seller, the Business Day on which each of the conditions set forth in Article V has been satisfied.
“New Seller Cut-Off Date” means, with respect to each New Seller, Cut-Off Date immediately preceding its New Seller Closing Date.
“Original Agreement”means the Amended and Restated Receivables Sale Agreement dated as of September 30, 2003 by and among the Original Sellers and the Buyer.
“Original Sellers” means Quest Diagnostics Incorporated, a Delaware corporation; Quest Diagnostics Incorporated, a Michigan corporation; Quest Diagnostics Incorporated, a Maryland corporation; Quest Diagnostics Nichols Institute (formerly known as Quest Diagnostics Incorporated), a California corporation; Quest Diagnostics LLC, a Connecticut limited liability company; Quest Diagnostics LLC, a Massachusetts limited liability company; Quest Diagnostics of Pennsylvania Inc., a Delaware corporation; Quest Diagnostics LLC, an Illinois limited liability company; MetWest Inc., a Delaware corporation; and Quest Diagnostics Clinical Laboratories, Inc., a Delaware corporation.
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“Participation Interest”means, with respect to any Seller, a 100% beneficial interest in such Seller’s right, title and interest, whether now owned or hereafter arising and wherever located, in, to and under each Specified Government Receivable owned by such Seller.
“Previous Agreements”means the Original Agreement and the Existing Agreement.
“Private Receivable” means any Receivable other than a Government Receivable.
“Purchase Price” means, with respect to any purchase of Private Receivables and their Related Assets and any purchase of Participation Interests and their Related Assets from a Seller on any date, the aggregate price to be paid therefor by the Buyer to the applicable Seller in accordance withSection 1.3 of this Agreement on such date, which price shall equal (i) the product of (x) the Unpaid Net Balance of such Private Receivables or the Specified Government Receivables underlying such Participation Interests as of the Applicable Cut-Off Date,multiplied by (y) one minus the Discount Factor then in effect, minus (ii) any Purchase Price Credits to be credited against the Purchase Price otherwise payable in accordance withSection 1.4 of the Agreement.
“Purchase Price Credit” shall have the meaning provided inSection 1.4 hereof.
“Purchase Report” shall have the meaning provided inSection 1.3(c) hereof.
“Receivable” means any Account or Payment Intangible arising from the sale of Clinical Laboratory Services by a Seller, including, without limitation, the right to payment of any interest or finance charges and other amounts with respect thereto;provided, however, that the term“Receivable” shall not include any (a) Excluded JV Receivable or (b) any Government Receivable except a Specified Government Receivable. Rights to payment arising from any one transaction, including, without limitation, rights to payment represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the rights to payment arising from any other transaction.
“Records” means, collectively, all Invoices and all other documents, books, records and other information (including, without limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to any Receivable, Related Asset and/or Obligor other than (i) any Contract related thereto, and (ii) any confidential patient information including, without limitation, test results.
“Related Assets”means (x) with respect to each Receivable, all right, title and interest in and to the following:
(a) (i) all Collections; (ii) all Records; (iii) all Collection Accounts and all cash, balances and instruments therein from time to time therein; (iv) the goods (including returned or repossessed goods), if any, the sale of which by a Seller gave rise to such Receivable; (v) all supporting obligations; and (vi) all liens and security interests, if any, securing payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise; and
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(b)all proceeds and insurance proceeds of the foregoing; and
(y) with respect to any Participation Interest, the rights and assets described in clauses (a) and (b) above with respect to the Specified Government Receivable that is the subject to such Participation Interest.
“Responsible Officer” means, with respect to each Seller, any of its chief executive officer, president, vice president, treasurer or secretary, acting singly.
“Sale Termination Date” means, as to any Seller, the earliest to occur of the following:
(i) the date designated by such Seller to the Buyer upon not less than 15 Business Days’ prior written notice,
(ii) the date on which an Event of Bankruptcy occurs with respect to such Seller;
(iii) the date on which such Seller is unable to satisfy the applicable conditions precedent to each purchase set forth in Article III hereof;
(iv) the date on which a Change in Control occurs with respect to Quest Diagnostics, the Buyer or such Seller; and
(v) the occurrence of the Termination Date under clause (a) or (b) of the definition of such term in the Credit and Security Agreement.
“Seller”means an Original Seller or a New Seller.
“Seller Indemnified Amounts” shall have the meaning provided inSection 7.1(a) hereof.
“Seller Indemnified Party” shall have the meaning provided inSection 7.1(a) hereof.
“Seller Material Adverse Effect”means, with respect to any Seller, the occurrence of any of the following events, circumstances, occurrences, or conditions:
(i) any event, circumstance, occurrence or condition which has caused as of any date of determination any of (a) a material adverse effect, or any condition or event that has resulted in a material adverse effect, on the business, operations, consolidated financial condition or assets of the Sellers, taken as a whole (after taking into account indemnification obligations by third parties that are Solvent to the extent that such third party has not disputed (after notice of claim in accordance with the applicable agreement therefor) liability to make such indemnification payment),
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(ii) any event, circumstance, occurrence or condition which has caused as of any date of determination a material adverse effect on the ability of such Seller to perform its obligations under this Agreement or any other Transaction Document to which such Seller is a party;
(iii) any event, circumstance, occurrence or condition which has caused as of any date of determination a material adverse effect on the validity or enforceability of this Agreement or any other Transaction Document to which such Seller is a party, or the validity, enforceability or collectibility of a material portion of the Receivables sold by such Seller to the Buyer; or
(iv) any event, circumstance, occurrence or condition which has caused as of any date of determination a material adverse effect on the validity, perfection, priority or enforceability of the Buyer’s title to the Private Receivables, Participation Interests and respective Related Assets acquired by the Buyer from such Seller.
“Specified Government Receivable” means a Government Receivable arising under Medicare or Medicaid for covered services rendered to eligible beneficiaries thereunder.
“Subordinated Loan” means a subordinated revolving loan from a Seller to the Buyer which is evidenced by a Subordinated Note.
“Subordinated Note” means a subordinated promissory note substantially in the form of Exhibit B hereto issued by the Buyer to a Seller, as it may be amended, supplemented, endorsed or otherwise modified from time to time in substitution therefor or renewal thereof in accordance with the Transaction Documents.
The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.
C. Other Terms.All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.
D. Computation of Time Periods.Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.
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EXHIBIT A
PURCHASE REPORT
OF
[INSERT SELLER NAME], AS SELLER
FOR THE PERIOD BEGINNING [DATE] AND ENDING [DATE]
TO: THE BUYER AND THE ADMINISTRATIVE AGENT
| | | | | | | | |
| | Aggregate Unpaid Net Balance of all Private Receivables and Participation Interests sold during the period: | | $ _____________ | | | | A |
| | Aggregate Unpaid Net Balance of all Private Receivables and Participation Interests sold during such period which were not Eligible Receivables or Eligible Participation Interests, as applicable, on the date when sold (“Ineligible Assets”): | | ($ _________) | | | | (B) |
| | Equals:Aggregate Unpaid Net Balance of all Eligible Private Receivables and all Eligible Participation Interest sold during the period (A - B): | | | | $ ___________ | | =C |
| | | | | | | | |
| | Aggregate Unpaid Net Balance of all Private Receivables and Participation Interest (if any) contributed during the period: | | | | | | D |
| | Aggregate Unpaid Net Balance of all Private Receivables and Participation Interest (if any) contributed during such period which were not Eligible Receivables or Eligible Participation Interests, as applicable, on the date when sold: | | ($ ____________) | | | | (E) |
| | Equals:Aggregate Unpaid Net Balance of all Eligible Receivables and Eligible Participation Interests (if any) contributed during the period (D - E): | | | | $ ___________ | | =F |
| | Gross Purchase Price payable during such period with respect to Eligible Receivables and Eligible Participation Interests that were sold by such Seller
Less: Purchase Price Discount during the Period with respect to such Eligible Receivables and Eligible Participation Interests: | | ($ ____________) | | | |
G
(H) |
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| | Equals: Gross Purchase Price Payable during the period with respect to such Eligible Receivables and Eligible Participation Interests (G – H) | | | | $____________ | | =I |
| | Gross Purchase Price payable during such period with respect to Ineligible Assets that were sold by such Seller
Less: Purchase Price Discount during the Period with respect to such Ineligible Assets: | | ($ ____________) | | | | J
(K) |
| | Equals: Gross Purchase Price Payable during the period with respect to such Ineligible Assets (J – K) | | | | $ ___________ | | =L |
| | Sum of (I) + (L)
Less: Total Purchase Price Credits arising during the Period: | | ($ ____________) | | | | M
(N) |
| | Equals: Net Purchase Price payable during the Period (M - N): | | | | $ ___________ | | =O |
| | | | | | | | |
| | Cash Purchase Price Paid to Seller during the Period: | | $ ___________ | | | | P |
| | Subordinated Loans made by Seller during the Period: | | $ ____________ | | | | Q
|
| | Less: Repayments of Subordinated Loans received by the Seller during the Period: | | ($ ____________) | | | | (R)
|
| | Equals: Purchase Price paid in Cash or Subordinated Loans during the period (P + Q - R): | | | | $ ___________ | | =S |
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EXHIBIT B
AMENDED AND RESTATED SUBORDINATED NOTE
(Non-Negotiable)
[Date]
FOR VALUE RECEIVED, the undersigned, Quest Diagnostics Receivables Inc., a Delawarecorporation (the “Buyer”), promises to pay to _______________, a _____________ (the “Seller”), to the extent of the Buyer’s Available Funds and on the terms and subject to the limitations and conditions set forth herein and in the Sale Agreement referred to below, the principal sum of the aggregate unpaid Purchase Price of all Receivables and Participation Interests purchased from time to time by the Buyer from the Seller pursuant to such Sale Agreement, as such unpaid Purchase Price is shown in the records of the Seller. This promissory note (this “Subordinated Note”) amends and restates in its entirety that certain subordinated note dated [Date] made by Buyer in favor of the Seller.
1.Sale Agreement. This is one of the Subordinated Notes described in, and is subject to the terms and conditions set forth in, that certain Third Amended and Restated Receivables Sale Agreement dated as of December 12, 2008, as the same may be amended or otherwise modified from time to time (the “Sale Agreement”), by and between the Seller and certain of its affiliates and the Buyer. Reference is hereby made to the Sale Agreement for a statement of certain other rights and obligations of the Seller and the Buyer.
2.Definitions. Capitalized terms used (but not defined) herein have the meanings attributed thereto in the Sale Agreement or, to the extent not defined therein, in the Fourth Amended and Restated Credit and Security Agreement dated as of June 11, 2008 among Quest Diagnostics Incorporated, as initial Servicer, the Buyer, as borrower, Variable Funding Capital Company LLC, Wachovia Bank, National Association, individually and as VFCC Agent, Gotham Funding Corporation, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., individually, as Gotham Agent and as Administrative Agent (as amended, restated or otherwise modified from time to time, the “Credit and Security Agreement”). In addition, as used herein, the following terms have the following meanings:
Bankruptcy Proceedings: As defined in clause (b) of paragraph 9 hereof.
Bloomberg CP Rate: For each day in a calendar month, the rateper annum determined on the CD equivalent yield basis equal to the composite broker/dealer offered rate for 30-day “A1/P1/F1” rated U.S. asset-backed commercial paper, which rate appears on a Bloomberg L.P. terminal, displayed under the address “ACPB030Y <Index> <Go>” effective as of 10:00 a.m., New York time, on the first Business Day of such month,provided that if no such offered rates appear on such page, the Bloomberg CP Rate for such month will be the arithmetic average (rounded upwards, if necessary, to the next higher 1/100th of 1%) of CP Rates being paid by the Buyer under the Credit and Security Agreement as of the first Business Day of such month.
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Final Maturity Date: The forty-fifth (45th) day following the Final Payout Date.
Senior Interest: All Obligations (under and as defined in the Credit and Security Agreement).
Senior Interest Holders: Collectively, the Agents, the Lenders, the other Affected Parties and the Indemnified Parties.
3.Interest. Prior to the Final Payout Date, the aggregate unpaid Purchase Price owing to the Seller under the Sale Agreement from time to time outstanding shall bear interest at a rateperannum equal to the sum of the Bloomberg CP Rate plus 1%, and from (and including) the Final Payout Date to (but excluding) the date on which the entire aggregate unpaid Purchase Price owing to the Seller under the Sale Agreement is fully paid, the aggregate unpaid Purchase Price owing to the Seller under the Sale Agreement from time to time outstanding shall bear interest at a rateperannum equal to the sum of the Bloomberg CP Rate plus 2%;provided, however, that in no event in excess of the maximum rate permitted by law. In the event that, contrary to the intent of the Seller and the Buyer, the Buyer pays interest hereunder and it is determined that such interest rate was in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal then due hereunder.
4.Interest Payment Dates. Subject to the provisions set forth below, the Buyer shall pay accrued interest on this Subordinated Note from Available Funds (a) on each Settlement Date, and (b) on the date of each principal payment made in cash on a date other than a Settlement Date.
5.Basis of Computation. Interest accrued hereunder shall be computed for the actual number of days elapsed on the basis of a 360-day year.
6.Principal Payment Dates. Subject to the provisions set forth below, payments of the principal amount of this Subordinated Note shall be made from Available Funds as follows:
(a) The principal amount of this Subordinated Note shall be reduced from time to time in accordance with Section 1.4 of the Sale Agreement;
(b) The entire remaining Unpaid Net Balance of this Subordinated Note shall be paid on the Final Maturity Date.
Subject to the provisions set forth below, the principal amount of and accrued interest on this Subordinated Note may be prepaid from Available Funds on any Business Day prior to the Seller’s Sale Termination Date without premium or penalty.
7.Payments. All payments of principal and interest hereunder are to be made in lawful money of the United States of America.
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8.Enforcement Expenses. In addition to and not in limitation of the foregoing, but subject to the provisions set forth below and to any limitation imposed by applicable law, the Buyer agrees to pay all expenses, including reasonable attorneys’ fees and legal expenses, incurred by the Seller in seeking to collect any amounts payable hereunder which are not paid when due.
9.Provisions Regarding Restrictions on Payment. The Buyer covenants and agrees, and the Seller, by its acceptance of this Subordinated Note, likewise covenants and agrees on behalf of itself and any holder of this Subordinated Note, that the payment of the principal amount of, and interest on, this Subordinated Note is hereby expressly subject to certain restrictions set forth in the following clauses of this paragraph 9:
(a) No payment or other distribution of the Buyer’s assets of any kind or character, whether in cash, securities, or other rights or property, shall be made on account of this Subordinated Note except to the extent such payment or other distribution is permitted under the Sale Agreement and the Credit and Security Agreement and is made from Available Funds;
(b) In the event of (i) the occurrence of such Seller’s Sale Termination Date, or (ii) any dissolution, winding up, liquidation, readjustment, reorganization or other similar event relating to the Buyer, whether voluntary or involuntary, partial or complete, and whether in bankruptcy, insolvency or receivership proceedings, or upon an assignment for the benefit of creditors, or any other marshaling of the assets and liabilities of the Buyer or any sale of all or substantially all of the assets of the Buyer (such proceedings being herein collectively called “BankruptcyProceedings”), the Senior Interest shall first be paid and performed in full and in cash before the Seller shall be entitled to receive and to retain any payment or distribution in respect to this Subordinated Note. In order to implement the foregoing, the Seller hereby irrevocably agrees that the Administrative Agent, in the name of the Seller or otherwise, may demand, sue for, collect, receive and receipt for any and all such payments or distributions, and file, prove and vote or consent in any such Bankruptcy Proceedings with respect to any and all claims of the Seller relating to this Subordinated Note, in each case until the Senior Interests shall have been paid and performed in full and in cash;
(c) In the event that the Seller receives any payment or other distribution of any kind or character from the Buyer or from other source whatsoever, in respect of this Subordinated Note, other than as expressly permitted by the terms of this Subordinated Note, such payment or other distribution shall be received for the sole benefit of the Senior Interest Holders and shall be turned over by the Seller to the Administrative Agent (for the benefit of the Senior Interest Holders) forthwith;
(d) Notwithstanding any payments or distributions received by the Senior Interest Holders in respect of this Subordinated Note, while any Bankruptcy Proceedings are pending, the Seller shall not be subrogated to the then existing rights of the Senior Interest Holders in respect of the Senior Interests until the
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Senior Interests have been paid and performed in full and in cash. Upon the occurrence of the Final Payout Date, the Seller shall be subrogated to the then existing rights of the Senior Interest Holders, if any;
(e) The provisions set forth in this Section 9 are intended solely for the purpose of defining the relative rights of the Seller, on the one hand, and the Senior Interest Holders, on the other hand. Nothing contained in this Subordinated Note is intended to or shall impair, as between the Buyer, its creditors (other than the Senior Interest Holders) and the Seller, the Buyer’s obligation, which is unconditional and absolute, to pay the Seller the principal of and interest on this Subordinated Note as and when the same shall become due and payable in accordance with the terms hereof or to affect then relative rights of the Seller and creditors of the Buyer (other than the Senior Interest Holders);
(f) The Seller shall not, until the Senior Interests have been paid and performed in full and in cash, transfer, pledge or assign, or commence legal proceedings to enforce or collect this Subordinated Note or any rights in respect hereof;
(g) The Seller shall not, without the advance written consent of the Administrative Agent, commence, or join with any other Person in commencing, any Bankruptcy Proceedings with respect to the Buyer until at least one year and one day shall have passed since the Final Payout Date shall have occurred;
(h) If, at any time, any payment (in whole or in part) of any Senior Interest is rescinded or must be restored or returned by a Senior Interest Holder (whether in connection with Bankruptcy Proceedings or otherwise), these provisions shall continue to be effective or shall be reinstated, as the case may be, as though such payment had not been made;
(i) The Seller hereby waives; (i) notice of acceptance of these provisions by any of the Senior Interest Holders; (ii) notice of the existence, creation, non-payment or non-performance of all or any of the Senior Interests; and (iii) all diligence in enforcement, collection or protection of, or realization upon, the Senior Interests, or any thereof, or any security therefor;
(j) These provisions constitute a continuing offer from the holder of this Subordinated Note to all Persons who become holders of, or who continue to hold, Senior Interests; and these provisions are made for the benefit of the Senior Interest Holders, and the Administrative Agent may proceed to enforce such provisions on behalf of each of such Persons.
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10.General.
(a) No failure or delay on the part of the Seller in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power of right preclude any other or further exercise thereof or the exercise of any other power or right. No amendment, modification or waiver of, or consent with respect to, any provision of this Subordinated Note shall in any event be effective unless (i) the same shall be in writing and signed and delivered by the Buyer and the Seller and (ii) all consent required for such actions under the Transaction Documents shall have been received by the appropriate Persons.
(b) The Seller hereby agrees that it will not (i) institute against, join any other Person in instituting against or take any action, direct or indirect, in furtherance or contemplation of instituting against, the Buyer any bankruptcy, insolvency, winding up, dissolution, receivership, conservatorship or other similar proceeding or action or (ii) exercise any right of set-off or recoupment, or assert any counterclaim, against the Buyer, in each case so long as there shall not have elapsed one year and one day since the Final Payout Date has occurred.
(c) The Seller expressly recognizes and agrees that the obligations represented by this Subordinated Note are not secured by any interest in any of the assets of the Buyer, including, without limitation, any Private Receivables, Participation Interests or their respective Related Assets.
11.No Negotiation. This Subordinated Note is not negotiable and may not be pledged except to a Person who covenants in writing, with the Buyer and the Administrative Agent, that such Person will agree not to initiate or join any proceeding of the type described in Section 8.12 of the Sale Agreement. Any purported sale, transfer, assignment, pledge or negotiation of this Subordinated Note shall be void without the prior written consent of the Agents under the Credit and Security Agreement.
12.Governing Law. THIS PROMISSORY NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
13.Captions. Paragraph captions used in this Subordinated Note are for convenience only and shall not affect the meaning or interpretation of any provision of this Subordinated Note.
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14.Attached Schedule. The Seller is hereby authorized by the Buyer to endorse on the schedule attached to this Subordinated Note an appropriate notation evidencing the date and amount of each Subordinated Loan hereunder, as well as the date of each payment with respect thereto,provided that the failure to make such notation shall not affect any obligation of the Buyer hereunder.
QUEST DIAGNOSTICS RECEIVABLES INC.
By: _____________________________________
Name:
Title:
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SCHEDULE TO SUBORDINATED NOTE OF
QUESTDIAGNOSTICSRECEIVABLESINC.
| | | Amount of | | Amount of | | Unpaid | | |
| | | Subordinated | | Principal | | Principal | | Notation |
| Date | | Loan | | Paid | | Balance | | made by |
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EXHIBIT C
CREDIT AND COLLECTION POLICIES
CLIENT COLLECTION POLICY
PURPOSE:The purpose of this policy is to establish consistency of client set-up and collections on a national basis. This policy will significantly improve the control over our accounts receivable as well as reduce write-offs and bad debt. As a result, improved customer service relationships will be experienced.
Pricing Contract
The sales department is responsible for ensuring that all pricing is signed off by the client and the Sales Director. This includes the Client Acknowledgement and Review Process (CARP) and all exclusives for the potential new client. A client will not be activated in the billing system until the necessary approvals are received.
Account Set-up Form
A signed account set-up form must be completed, with a minimum, the following information:
client demographics
fax and telephone numbers
physician office contact person
start date
required provider and license numbers including UPIN’s for each physician
sales representative/territory
billing mix (payor type)
Local sites may require additional information.
Credit Application Process
The sales department is to obtain a completed and signed credit application including preferably three trade references, current laboratory and banking information for each potential client billed accounts (clients that will receive a monthly bill). The completed credit application (Exhibit 1) is to be forwarded to and processed by the credit department or an appropriate designeebeforecredit terms are extended. This form must be submitted at least 3 working days prior to the start date. The potential client will be assigned a credit risk based on the outcome of the credit check. The procedures outlined below will be used to determine the credit worthiness of a potential client.
1. Check for duplicate accounts and/or previous bad debt from the company’s national list of bad debt clients.
2. Contact all credit references to determine the level of risk of a client.
[Signature Page to Third Amended and Restated Receivables Sale Agreement]
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3. To determine the credibility of a client, call:
a. Corporate Commission Office (check for local telephone listing)
Indicates when a business became licensed and the licensee name. This information is important in collection suits.
b. Non Corporation Commission Office (check for local telephone listing)
Same as the Corporate Commission Office, only for non-incorporated businesses
c. D.B.A. Listings (check for local telephone listing)
Provides information on client aliases
d. Board of Medical Examiners (check for local telephone listing)
Informs of any tax liens, malpractice suits . . . anything that would create a financial hardship
4. Request a credit report on the potential client.
The Client Collections Manager will determine credit worthiness and depending on the outcome of the investigation of items 1 through 4 listed above, the following will apply:
Credit references are good to excellent - account is opened with normal credit terms
Credit references are fair - account is closely monitored at the 30 day level
Credit references are questionable - account is required to provide a cash “security” deposit equal to one month activity with close scrutiny of payment on subsequent monthly invoices
Credit references are poor - account is not extended credit terms; account canonly be set up as patient/3rd party billing
Please note, there may be cases when some of the trade references are not received/returned prior to the committed 3 day window established for opening new accounts. The following guidelines should be used in these cases: If there is no bad debt experience with any other Quest Diagnostic’s location, no negative information is displayed on the credit report and no negative information is given by references that provide information within the 3 day window, the account may be opened pending receipt of the remaining references. Once the remaining references are received, indicating a favorable response, the account follows normal collection procedures established in this policy.If however, an account is determined to be a bad risk, the sales representative and district manager are responsible for immediately undertaking one of the following actions:
Billing Account Set-up
Prior to setting up a new client in the billing system the following is required:
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Pricing Contract (includes CARP and exclusives) signed by the client and the Sales Director
A completed account set-up form
An approved credit application
After receipt of the above information, a “Welcome Letter” (Exhibit 2) must be prepared and mailed to the client. The purpose of this letter is to reiterate our billing terms, advise the client of the billing contact person, the phone number, billing office hours and to encourage clients to contact us with issues immediately. The letter also informs the client that requests to transfer balances to the third party or to the patient must be received within 45 days of the invoice date or the client will be responsible for the charges.
The client check list (Exhibit 3) is signed off and kept on file. Throughout the billing account set-up process, the client check list is completed to ensure the account is properly set-up.
New Accounts
New accounts will be set up in a separate print group. If the site’s billing system can not meet this requirement, a mechanism to isolate the first bill for new accounts must be implemented. The first bill will be sent to the client with a copy sent to the sales department. This will allow the sales department to personally review the statement with the client.
All new accounts are contacted after the second billing cycle to ensure statements have been received and that pricing and any other issues are addressed.
| General Collection Activity | | | | |
| | | |
| Collection activity will be focused in the following manner: | | |
| | | | | |
| Site’s Client A/R | | Collection | | Collection |
| > 90 Day Percentage | | Criteria | | Activity |
| 20% or less | | Balances >$1,000 over 60 days | | Telephone contact |
| | | Balances <$999 under 60 days | | Letter series |
| 21% or higher | | Balances >$1,000 over 90 days | | Telephone contact |
| | | Balances <$999 under 90 days | | Letter series |
In addition to the above activity, all accounts will receive a 30 day and 60 day letter/statement.
The Client Aging Report will be given to the collectors after each month-end close. All accounts on the report that meet the above criteria must be contacted within a 30 day period. Full documentation of all conversations are to be recorded in the billing system client comments area for each account or in a paper file.
52
Accounts that are not receiving telephone contact from the Client Collections Department will receive a series of demand letters. (Exhibits 4, 5, 6, 7) The letters will be produced using the following aging criteria:
30 days = “Reminder” Notice preferably printed on the client statement
60 days = Past Due Notice “Second Reminder” letter/statement message
90 days = Demand Letter “Important Notice” letter
(Refer to Additional 90 Day Action)
120 days = Final Notice “Final Notice” letter
(Inactive accounts on Final Notice. If payment is not received within 14 days, send account to the collection agency or attorney.)
(Active accounts no response to Final Notice = Refer to Suspension of Service procedure)
Additional 90 Day Action
When an account reaches the 90 day aging status and repeated calls to the client have proven ineffective, (> 3 attempts) the collector contacts sales to intervene. Sales will schedule a personal appointment with the client within 5 to 7 working days after being notified by the collector that assistance is needed. (As the aging of the client A/R improves, this process should take place at the 60 day status rather than 90 days.)
The collector may negotiate reasonable payment plans at this point, if the client shows a good faith effort to pay a material portion of the balance. Refer to the Monthly Payment Policy.
Monthly Payment Policy
The terms of payment are “payment in full immediately” however, the collector may negotiate a payment plan according to the following guidelines:
Balance less than $2,500 - no payment plan available; payment in full expected
Balance over $2,500 but under $7,500 - payment plan between two and three months withcurrent services paid in full
Balances over $7,500 but under $15,000 - payment plan of four to five months with currentservices paid in full. Collectors will attempt to negotiate a shorter agreement
Balances over $15,000 - six month payment plan with current services paid in full.Collectors will attempt to negotiate a shorter agreement
This action should be taken on anexceptiononly basis. An acceptable payment arrangement will ensure the balance will be paid in full within 60 to 150 days. A copy of the payment plan agreement will be sent to the Sales Representative, Sales Director, and the Billing Manager.
| 1. | The client will be advised that the balance must be paid in full within the prescribed number of months. In addition, the current months charges must also accompany the monthly payment. |
| |
53
| 2. | The client will be advised that they will receive a letter of agreement (Exhibit 8) which must be signed and returned within the next 10 days. If a signed agreement has not been received, the client will be called and a signed faxed copy will be requested. If the client refuses, the client will be advised that services will be suspended as explained in the letter. |
| |
| 3. | The collector will be responsible for verifying that the client has made a payment within the terms of the payment plan. |
| |
| 4. | If a client fails to follow the payment plan, the collector will take immediate steps to suspend service. |
| |
Pricing Disputes
Client Collectors should forward a copy of the aged accounts receivable balance along with a print out of the notes on the account or paper file to the Sales Manager for clients who notify the department (either verbally or through written correspondence) regarding a pricing dispute on their account.
| 1. | Collectors should request a good faith payment of the full amount of testing not in dispute while the pricing dispute is being resolved. |
| |
| 2. | The Client Collectors will note sales involvement on the billing comment screen or in a paper file and they will mark their calendars for follow up in 2 weeks. |
| |
| 3. | The Sales Manager will forward the information to the appropriate Sales Representative for handling. Response to disputes must be resolved within 2 weeks. |
| |
| 4. | If there is no response received by the end of the 2 week period, a follow up form will be sent by the Client Collector to the Sales Manager and the Client Collections Manager informing them of the situation. |
| |
| 5. | The Sales Manager will be responsible for resolving the problem within a reasonable amount of time, usually 1 to 2 weeks. |
| |
| 6. | If there is no resolution after the specified time period, the Client Collections Manager will contact the Operations Leader and Commercial Leader for resolution within a reasonable amount of time, usually 1 to 2 weeks. |
| |
| 7. | If there is no resolution after the specified time period, the Client Collections Manager will contact the Billing Leader for resolution. |
| |
The follow up procedure will be documented on a Microsoft Excel spread sheet. (Exhibit 9)
Suspension of Service
A Suspension of Service Notice (Exhibit 10) is produced by the collector when all other collection activity has been exhausted. The Suspension Notice is processed and signed after all documentation has been reviewed by the Client Collections Manager, the Billing Manager and the Commercial Leader or his/her designee. The Suspension of Service Notice is to be returned to the collector within 5 days of issuance. The Suspension Notice is copied to the following personnel:
Commercial Leader
Operations Leader
54
Once the Suspension of Service Notice is returned, the client is sent a Suspension of Service letter (Exhibit 11) indicating that laboratory services will cease after 5 business days, unless a signed contract stipulates otherwise. The reason that the client is given 5 days notice is to allow for the client to secure laboratory services from another provider. The Database Manager deactivates the account number in the lab and billing system and flags it as a Bad Debt account.
Approximately 7 to 10 working days after the client has received their final bill, the account is referred to a commercial collection agency or attorney, if payment in full is not received. Correspondence with the agency is maintained by one designated individual in the Client Collections Department. Progress reports are produced by the agency at a minimum of once a month. The Client Collections Manager will evaluate which accounts need legal intervention based on collection probability and court costs.
Service on a bad debt account may not be resumed without prior written approval by the Commercial Leader, Operations Leader and the Billing ManagerAND payment in full of undisputed amounts or an arrangement to pay-off in full undisputed amounts. Additionally, a plan to resolve disputed amounts must be developed and approved by the Commercial Leader, Operations Leader and the Billing Manager.
Write off and Referral to Collection Agency or Attorney
Accounts deemed uncollectible are written off the billing system. This will take place at the time the account is referred to the outside collection agency or placed with the attorney.
Bankruptcy
Bankruptcy notices received by the site must be kept on file. The site is responsible for filing a claim with the bankruptcy trustee for amounts outstanding as of the bankruptcy date but must cease collection efforts against the customer for pre-bankruptcy amounts. The site may extend credit terms to the client, provided the client remains current on all charges incurredafter the bankruptcy date. The bankruptcy trustee must be notified immediately, if the client defaults on current payment terms.
55
PATIENT COLLECTION POLICY
PURPOSE:The purpose of this policy is to establish consistency for patient collections on a national basis. This policy will significantly improve the control over our accounts receivable through automation, as well as monitoring write-offs and bad debt through improved dunning messages and cycles. As a result, accelerated cash flow and improved efficiencies will be experienced. No bills need to be sent for balances that are less than $5.00.
Billing Dunning Cycles
The length of the billing dunning cycles must not extend past 30 days for each cycle. This time period is sufficient for a patient to make a payment or contact the billing correspondence department, either through a telephone call, fax or by mail, before the next bill is generated.
The optimum billing cycle is between 20 and 25 days.
Billing dunning messages should be clear and concise, focusing on receiving payment. Each subsequent dunning cycle message must be stronger than the previous message urging the patient to either make a payment or contact the billing department. Headline phrases such as “IMPORTANT NOTICE”, “URGENT MESSAGE” and “FINAL NOTICE” are appropriate for collection of delinquent patient accounts and should be used to expedite payment.
Number of Billing Dunning Cycles
A maximum number of 4 letters/statements series (1 original, 2 follow-up and 1 pre-collection letter) can be sent to a patient during a normal billing process. For example, if a 30 day dunning cycle is incorporated using the 4 letter/statement series, a patient will be eligible for write off and submission to a collection agency at 120 days.
Payment Plans
Patients who experience difficulty making payments in full on their accounts, may be eligible for relief from payment of some or all of the amounts under the Business Units indigent payment policy or may be placed on payment plans. A payment plan to recover the total payment must be set up ensuring that accounts are paid in full within a reasonable amount of time. The Billing Manager is responsible for monitoring the sub-bill code(s)/FSC(s) containing patient payment plans.
Each payment plan that is established must focus on receiving full payment in the least amount of time possible. Depending upon the outstanding balance, payment terms should not exceed 90 days for total payment. Shorter time limits should be negotiated between the customer service correspondent and the patient. An acceptable payment plan will ensure the balance will be paid in full within 30 to 90 days.
Payment plans should be used on anexceptiononly basis, after the customer service correspondent has exhausted all efforts to have the patient pay in full.
56
For patients who default on payment plans, there needs to be a mechanism in place to transfer patients immediately to the collection agency.
Automated Collection Agency Transfers
Once a patient account completes the patient dunning cycle process, with a balance remaining (maximum of 120 days) the record transfers into the collection agency sub-bill code/FSC using a HCFA 1500 file format. Accounts transferred to collection should be written off the A/R system.
Placements with the collection agencies are made either weekly or monthly depending on volume and should be transmitted electronically via modem or by magnetic tape.
Regular placements are to be made with the approved contracted national agency. Additional placements may also be made with another approved contracted national agency or a local agency. The splitting of patient claims may foster competitive collection practices between agencies.
Local collection agency rates must be negotiated to match approved national collection agency rates.
The Collection Manager must monitor the collection agencies’ performances through the monthly review of reports and management of cash recoveries and commissions. Selecting replacement agencies for the weaker performer is essential in maximizing cash collection recoveries.
Automated Payment Remittance
Payments received from patients, whose accounts have been placed with a collection agency, must be reported either weekly or monthly to the agency for processing, depending on the volume of payments received. Transmission of payments to the agencies via modem eliminates the need for manual intervention through report generation and processing.
57
Quest Diagnostics Incorporated - (Lab Name)
APPLICATION FOR CREDIT
This agreement for the extension of credit between Quest Diagnostics Incorporated of (Lab Name) (“Quest Diagnostics”) and the customer named below (“Customer”).
In consideration of Quest Diagnostics extending credit to the Customer, and for other good and valuable consideration, the receipt of which is hereby acknowledged, Customer, agrees to pay all costs of collection, including, but not limited to, reasonable attorney’s fees and court costs, incurred by Quest Diagnostics in collecting any delinquent account. Customer agrees and represents that all services it anticipates requesting from Quest Diagnostics are for business and not personal uses.
If at any time Quest Diagnostics deems the Customer to be insolvent, Quest Diagnostics reserves the right to require payment in advance, or such other security or guarantee of prompt payment of invoices as may be appropriate. Customer shall provide adequate assurances of ability to pay within thirty (30) days of any such request. If Customer fails to comply with the terms of payment, or with any other terms of its agreement with Quest Diagnostics, Quest Diagnostics has the right to withhold further services or cancel any services requested but not yet rendered, and all unpaid accounts shall be due and payable without prejudice to any other rights and claims for damages Quest Diagnostics may have.
Customer states that it believes that it is financially able to meet any commitments it may make and that it expects to pay Quest Diagnostics’ invoices according to the following terms: [insert terms]
Customer provides the following information and represents that it is true and accurate to the best of its knowledge:
Legal Name
d.b.a. | | | | |
| | | | | |
| | | | | |
| Address | Street | City | State | Zip |
| | | | | |
| | Sole Owner | Corporation | Partnership |
| Telephone | | | | |
| | | | | |
If customer is a corporation, including a professional corporation, give the names and addresses of its officers, if a sole owner, give name and social security number of owner and spouse, if partnership, give names and addresses of all partners:
| Name | Address | Title | SSN |
| | | | |
| | | | |
| Name | Address | Title | SSN |
| | | | |
| Current Clinical Laboratory: | | | |
| | | | |
| | | | |
58
(This is for informational purposes only. The client’s current laboratory will not be contacted as a reference)
Credit References:
| Company Name | Address | City | State | Zip | Phone |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Bank Information: | | | | | |
| | | | | | |
| Name | Address | Phone | Checking Account Number |
| | | | | | |
Dated: ___________________, ________Purchase Order # ____________Contract Attached
| CUSTOMER | | Quest Diagnostics Incorporated - (Lab Name) |
| | | |
| By: _________________________________________________ | | By: _________________________________________________ |
| | | |
| ____________________________________________________ | | Title: _________________________________________________ |
| | | |
SIGNATURE OF OWNER, OFFICER OR PARTNER
Revised 1/97
59
(Exhibit 2)
Quest Diagnostics Incorporated
[DATE]
[NAME]
[ADDRESS]
ATTENTION: [NAME]
DEAR [NAME]
We would like to take this opportunity to welcome you to Quest Diagnostics Incorporated (Quest Diagnostics).
Statements are mailed the first week of each month and payment is due upon receipt. If you do not receive your statement, please contact us. Please note, our office needs to be notified of any transfers to patient or third party within 45 days of the statement date, or you will be responsible for payment of these services.
Your billing representative is [insert name]. He/She can be reached directly at[insert phone number]. Our billing department hours are 8:00 a.m. to 6:00 p.m., Monday through Friday.
As always, Quest Diagnostics strives for quality customer service and satisfaction. If at any time during our relationship you have questions or concerns regarding your billing, please do not hesitate to call us.
We look forward to a long relationship and feel confident you will be pleased with our service. Thank you for making Quest Diagnostics your choice of laboratories.
Sincerely yours,
NAME
Billing Manager
cc: Commercial Leader
[Signature Page to Third Amended and Restated Receivables Sale Agreement]
(Exhibit 3)
Quest Diagnostics
CLIENT CHECKLIST
DATE RECEIVED: ______________________________
DATE COMPLETED: ____________________________
AUTHORIZED APPROVAL : ____________________________________
PRICING SIGNOFF & CARP EXCLUSIVES
CHECK FOR DUPLICATE ACCOUNTS/
(INTERNALLY AND OTHER QUEST DIAGNOSTICS SITES)
CHECK FOR PREVIOUS BAD DEBT
CHECK CREDIT REFERENCES
VERIFY LICENSE OF EACH PHYSICIAN/CUSTOMER
VERIFY BUSINESS STANDINGS
D & B CREDIT REPORTS
ACCOUNT SET UP
WELCOME LETTER SENT
61
(Exhibit 4)
REMINDER
[ DATE ]
[NAME]
[ADDRESS]
RE: ACCOUNT NUMBER:
BALANCE OWED:
DEAR [INSERT NAME]
This letter is a reminder that our payment terms are NET DUE UPON RECEIPT of invoice. We have not yet received full payment for last month’s invoice. If adjustments were submitted after the 20th of last month, in the amount of the past due balance, you may disregard this letter.
All charges that should be billed to your patients or your patients’ insurance, need to be submitted within 45 days of the invoice date, or you will be responsible for payment of these charges.
Thank you for your prompt attention in this matter.
Sincerely,
[YOUR NAME]
Collections Department
[INSERT NUMBER]
62
(Exhibit 5)
SECOND REMINDER
[ DATE ]
[NAME]
[ADDRESS]
RE: ACCOUNT NUMBER:
BALANCE OWED:
DEAR [INSERT NAME]
This is our second reminder that your account balance with us is past due. Our credit terms are NET DUE UPON RECEIPT of invoice.
In order to continue our current working relationship, we must receive payment in full by [DATE]. In the future, we expect that you will remain current with your payments.
If you have a dispute regarding the amount owed or if you would like to request a payment arrangement, please contact me immediately.
Thank you for your prompt attention in this matter.
Sincerely,
[YOUR NAME]
Collections Department
[INSERT NUMBER]
cc: Sales Director
63
(Exhibit 6)
IMPORTANT NOTICE
[ DATE ]
[NAME]
[ADDRESS]
RE: ACCOUNT NUMBER:
BALANCE OWED:
DEAR [INSERT NAME]
A review of our records indicate that your account is seriously past due. Our payment terms are NET DUE UPON RECEIPT of invoice.
Previous attempts to collect this debt have failed. To prevent further collection actions against you, such as discontinuing laboratory services, we must receivepayment in full by [ DATE ].
Thank you for your prompt attention in this matter.
Sincerely,
[YOUR NAME]
Collections Department
[ INSERT NUMBER]
64
(Exhibit 7)
FINAL NOTICE
[ DATE ]
[NAME]
[ ADDRESS]
| RE: ACCOUNT NUMBER: |
| BALANCE OWED: |
DEAR [INSERT NAME]
Our previous requests for payment on your seriously delinquent account have been ignored. We have been unsuccessful in our attempts to amicably settle the balance owed. Therefore, you have forced us to take stronger collection measures.
If we do not receive the BALANCE OWED by [ DATE ], we will begin proceedings to stop laboratory service to your account, after which your account will be sent to our attorney for legal action.
Sincerely,
[YOUR NAME]
Collections Department
[INSERT NUMBER]
65
(Exhibit 8)
PAYMENT PLAN
[ DATE ]
[CLIENT NAME]
[CLIENT ADDRESS]
[CITY, STATE ZIP]
RE: ACCOUNT NUMBER: XXXXX
BALANCE OWED: [AMOUNT]
Dear [ CLIENT NAME ]:
Per our telephone conversation, the following payment plan has been established for your account:
[AMOUNT] due by [ DATE ]
[AMOUNT] per month plus current charges until [DATE]
Please note that failure to follow this payment plan will cause your account to be in default. Further collection procedures will ensue including termination of laboratory services and referring your account to a collection agency or to legal counsel.
Sincerely,
[YOUR NAME]
Collections Department | | |
| |
[INSERT NUMBER]
I have read and will abide by the terms set above. | | |
| |
| |
| | | |
| Name | Date | |
| [Sign and return by mail or fax to [insert number] | | |
| |
| cc: Sales Department | | |
66
(Exhibit 9)
| Adjusters/ | | | | | | | | $ | | | | Sales/ASR | | Date | | Sales Mgr | | Date | | CL/OL | | Date | | |
| Collectors | | | | Client | | Client | | In | | Key | | Initial | | Response | | Initial | | Response | | Initial | | Response | | RCG |
| Initials | | Rep/ASR | | Number | | Name | | Question | | Code | | Date | | Required | | Date | | Required | | Date | | Required | | Date |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Key*: | | P = Pricing Dispute | | O = Other Reason Code | | A = Placed with C.A./Atty |
| | | C = Collection Efforts | | I = Need Billing Info | | |
| | | S = Suspended Service | | N = Client Needs Visit | | |
67
(Exhibit 10)
Date of Notice: __________________________
SUSPENSION OF SERVICE
The client listed below has not made satisfactory payments to their account(s) and it is recommended that laboratory services bepermanently suspended.
Account Number(s): ___________________________________
Account Name: _______________________________________
Account Address: _____________________________________
_____________________________________
_____________________________________
Sales/Serv Rep: ______________________________________
Amount(s) Owed: $___________________________________
Approvals for Suspension of Service:
(Forward to Collections Department when complete)
| Collections Manager: _______________________________________________________________________________________ | |
| | | | |
| Approved __________ | Denied __________ | Date __________ | | |
| | | | | |
| Billing Manager: ___________________________________________________________________________________________ | |
| | | | |
| Approved __________ | Denied __________ | Date __________ | | |
| | | | | |
| Commercial Leader: ________________________________________________________________________________________ | |
| | | | |
| Approved __________ | Denied __________ | Date __________ | | |
| | | | | |
| | | | | |
*************************************************************************************
* Activation Date for Suspension of Service: ____________________*
*************************************************************************************
Routing List:
| Commercial Leader | _____ | | Sales/Serv Rep | _____ | | Collections Mgr | _____ |
| Operations Leader | _____ | | Logistics Manager | _____ | | Controller | _____ |
| Billing Manager | _____ | | Director of Client Svs | _____ | | Database Manager | _____ |
| Purchasing | _____ | | | | | | |
68
(Exhibit 11)
SUSPENSION OF SERVICE NOTICE
Mailed Certified - Return Receipt Requested
[ DATE ]
[ CLIENT NAME ]
[ ADDRESS ]
[ CITY, STATE ZIP]
RE: ACCOUNT NUMBER: XXXXX
BALANCE OWED: AMOUNT
Dear [ CLIENT NAME ]:
Since you have not complied with our requests for full payment on your account, laboratory services will be permanently suspended effective [DATE].
A final bill will be printed containing all charges up through the suspension date and will be sent to you, by certified mail. If payment in full is not received within 10 days, your account will be referred to our collection agency or to our attorney for further legal action.
Sincerely,
[ YOUR NAME ]
Collections Department
[INSERT NUMBER]
cc: Sales Department
69
EXHIBIT D
FORM OF JOINDER AGREEMENT
--------
JOINDER AGREEMENT
THIS JOINDER AGREEMENT is executed and delivered by _______________________, a _______________ (“New Seller”) in favor of Quest Diagnostics Receivables Inc., a Delaware corporation, as purchaser (the “Buyer”), with respect to that certain Third Amended and Restated Receivables Sale Agreement dated as of December 12, 2008 by and between Quest Diagnostics Incorporated and certain of its wholly-owned subsidiaries from time to time party thereto as “Sellers” and the Buyer (as amended, supplemented, joined, restated and/or otherwise modified from time to time, the“Sale Agreement”). Capitalized terms used and not otherwise defined herein are used with the meanings attributed thereto in the Sale Agreement.
Subject to receipt of counterparts hereof signed by the Administrative Agent and the Buyer, by its signature below, New Seller hereby absolutely and unconditionally agrees to become a party to the Sale Agreement as a Seller thereunder and to be bound by the provisions thereof, including, without limitation, the provisions of Section 8.12 thereof.
Attached hereto [is/are] [an] amended and restated version[s] of [Exhibit C and] Schedule 2.1(o) to the Sale Agreement. After giving effect to the amendment[s] and restatement[s] embodied therein, each of the representations and warranties contained in Article II of the Sale Agreement will be true and correct as to New Seller.
The“Responsible Officers” of the New Seller will be any of its __________, _________ or ______________, acting singly.
Delivered herewith are each of the documents, certificates and opinions required to be delivered by New Seller pursuant to Article V of the Sale Agreement.
The provisions of Article VIII of the Sale Agreement are incorporated in this Joinder Agreement by this reference with the same force and effect as if set forth in full herein except that references in such Article VIII to “this Agreement” shall be deemed to refer to “this Joinder Agreement and to the Sale Agreement is modified by this Joinder Agreement.”
Please acknowledge your consent to New Seller’s joinder in the Sale Agreement by signing the enclosed copy hereof in the appropriate space provided below and faxing a copy of such counterpart to (a) the Administrative Agent, at fax no. (212) 782-6998, Attention: Securitization Group, and (b) to New Seller at the fax no. set forth below its signature hereto.
70
IN WITNESS WHEREOF,New Seller has executed this Joinder Agreement as of the ___ day of _______________.
| By: ________________________________________ |
| Title: |
| [Address for Notices, including fax no.] |
Each of the undersigned hereby consents
to New Seller’s joinder in the Sale Agreement:
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as Gotham Agent and Administrative Agent
| By: ________________________________ |
| Name: |
| Title: |
| |
| |
| CALYON NEW YORK BRANCH, as Atlantic Agent |
| |
| |
| By: ________________________________ |
| Name: |
| Title: |
| |
| |
| QUEST DIAGNOSTICS RECEIVABLES INC., as Buyer |
| |
| |
| By: ________________________________ |
| Name: |
| Title: |
71
SCHEDULE 2.1(o)
SELLERS’ FEDERAL TAXPAYER ID NUMBERS; CHIEF EXECUTIVE OFFICE
ADDRESSES; PRINCIPAL LABORATORIES AND
BILLING CENTERS, AND
LOCATION(S) WHERE RECORDS ARE KEPT
| A.Corporate Offices | | | | | | | | |
| |
| Location | | Federal EIN | | Legal Name of Seller | | Fictitious Name | | Prior Legal Name1 |
| | | | | | | (DBA) | | |
| 3 Giralda Farms | | 16-1387862 | | Quest Diagnostics | | N/A | | N/A |
| Madison, NJ 079402 | | | | Incorporated (DE)3 | | | | |
| |
| 3 Giralda Farms | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Madison, NJ 07940 | | | | Laboratories, Inc. (DE) | | | | |
B. Clinical Laboratory Business
(1) Principal Laboratories4
| Location | | Federal EIN | | Legal Name of Seller | | Fictitious Name | | Prior Legal Name1 |
| | | | | | | (DBA) | | |
| 3714 Northgate Boulevard | | 71-0897031 | | Unilab Corporation (DE) | | Quest Diagnostics | | N/A |
| Sacramento, CA 95834 | | | | | | | | |
| |
| 967 Mabury Road | | 71-0897031 | | Unilab Corporation (DE) | | Quest Diagnostics | | N/A |
| San Jose, CA 95133 | | | | | | | | |
| |
| 33608 Ortega Highway | | 95-2701802 | | Quest Diagnostics Nichols | | Nichols Institute | | Quest Diagnostics |
| San Juan Capistrano, CA 92675 | | | | Institute (CA) | | | | Incorporated (CA); |
| | | | | | | | | N/A |
1 No prior legal names within the past five years, except Quest Diagnostics Nichols Institute, a California corporation and the merger of Central Plains Laboratories, LLC, which merged into LabOne, Inc.
2 This location has served as the chief executive office of each Seller since October 2007. The prior executive office (1290 Wall Street West, Lyndhurst, NJ 07071) serves as an administrative office for certain non-billing related functions.
3 State designations represent the states in which entity is incorporated or organized. These designations are not part of the legal corporate name, but are included here for reference purposes only.
4 Excludes the former regional laboratories that have been downsized to STAT laboratories or closed.
| Location | | Federal EIN | | Legal Name of Seller | | Fictitious Name | | Prior Legal Name1 |
| | | | | | | (DBA) | | |
| 7600 Tyrone Avenue | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Van Nuys, CA 914055 | | | | Laboratories, Inc. (DE) | | | | |
| |
| 8403, 8401 and 8511 Fallbrook Avenue | | 71-8097031 | | Unilab Corporation (DE) | | Quest Diagnostics | | N/A |
| West Hills, CA 913046 | | | | | | | | |
| |
| 695 South Broadway | | 33-0363116 | | MetWest Inc. (DE) | | Quest Diagnostics | | N/A |
| Denver, CO 80209 | | | | | | | | |
| |
| 3 Sterling Drive | | 06-0460613 | | Quest Diagnostics LLC (CT) | | N/A | | N/A |
| Wallingford, CT 06492 | | | | | | | | |
| |
| 10200 Commerce Parkway | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Miramar, FL 33025-3938 | | | | Laboratories, Inc. (DE) | | | | |
| |
| 4225 East Fowler Avenue | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Tampa, FL 33617 | | | | Laboratories, Inc. (DE) | | | | |
| |
| 1777 Montreal Circle | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Tucker, GA 30084 | | | | Laboratories, Inc. (DE) | | | | |
| |
| 1355 Mittel Boulevard | | 36-4257926 | | Quest Diagnostics LLC (IL) | | N/A | | N/A |
| Wood Dale, IL 601917 | | | | | | | | |
| |
| 10101 Renner Boulevard | | 43-1039532 | | LabOne, Inc. (MO)8 | | Quest Diagnostics | | successor by merger |
| Lenexa, KS 66219 | | | | | | | | with Central Plains |
| | | | | | | | | Laboratories, LLC, a |
| | | | | | | | | Kansas limited |
| | | | | | | | | liability company |
5 This location is not a regional laboratory. It only conducts clinical trial operations and performs SAMHSA drug testing.
6 The 8401 Fallbrook Avenue facility conducts clinical laboratory operations; the 8403 Fallbrook facility serves as a cytology laboratory; and the 8511 Fallbrook Avenue facility serves as a revenue service center.
7 All services performed in Illinois are now billed using the EIN of Quest Diagnostics LLC (IL).
8 Operates a regional clinical laboratory in Lenexa, KS; through subsidiaries (see C. “Risk Assessment” below) provides health screening and risk assessment services to life insurance subsidiaries, including clinical laboratory testing performed at the Lenexa, KS facility by LabOne, Inc. In 2007, Central Plains Laboratories, LLC merged into LabOne, Inc. and the facility in Hays, KS was downsized.
| Location | | Federal EIN | | Legal Name of Seller | | Fictitious Name | | Prior Legal Name1 |
| | | | | | | (DBA) | | |
| 4648 S. Interstate10 Service Road | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Metairie, LA 70001-1225 | | | | Laboratories, Inc. (DE) | | | | |
| |
| 415 Massachusetts Ave. | | 04-3248020 | | Quest Diagnostics LLC (MA) | | N/A | | N/A |
| Cambridge, MA 02139 | | | | | | | | |
| |
| 1901 Sulphur Spring Road | | 52-0890739 | | Quest Diagnostics | | N/A | | N/A |
| Baltimore, MD 21227 | | | | Incorporated (MD) | | | | |
| |
| 4444 Giddings Road | | 38-1882750 | | Quest Diagnostics | | N/A | | N/A |
| Auburn Hills, MI 48326 | | | | Incorporated (MI) | | | | |
| |
| 2040 Concourse Drive | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| St. Louis, MO 631469 | | | | Laboratories, Inc.(DE) | | | | |
| |
| One Malcolm Avenue | | 16-1387862 | | Quest Diagnostics | | N/A | | N/A |
| Teterboro, NJ 07608 | | | | Incorporated (DE) | | | | |
| |
| 4230 Burnham Ave | | 88-0099333 | | Quest Diagnostics | | N/A | | N/A |
| Las Vegas, NV 89119 | | | | Incorporated (NV) | | | | |
| |
| 575 Underhill Boulevard | | 38-2084239/ | | Quest Diagnostics Clinical | | N/A | | N/A |
| Syosset, NY 11791 | | 23-277394110 | | Laboratories, Inc. (DE) | | | | |
| |
| 6700 Steger Drive | | 20-0310967 | | LabOne of Ohio, Inc. (DE) | | Quest Diagnostics | | N/A |
| Cincinnati, OH 4523711 | | | | | | | | |
| |
| 6600 S. W. Hampton St. | | 33-0363116 | | MetWest Inc. (DE) | | Quest Diagnostics | | N/A |
| Portland, OR 97223 | | | | | | | | |
9 During the summer of 2008, this facility was downsized and testing transitioned to the Lenexa, KS facility.
10 Receivables generated from the Syosset laboratory are billed under the 23-2773941 EIN.
11 Testing previously performed at the facility located at 2277 Thunderstick Drive, Lexington, KY was transitioned to the Cincinnati facility in late 2006.
| Location | | Federal EIN | | Legal Name of Seller | | Fictitious Name | | Prior Legal Name1 |
| | | | | | | (DBA) | | |
| 900 Business Center Drive | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Horsham, PA 19044 | | | | Laboratories, Inc. (DE) | | | | |
| |
| 4 Parkway Center | | 22-3137283 | | Quest Diagnostics of | | N/A | | N/A |
| 875 Greentree Road | | | | Pennsylvania Inc. (DE) | | | | |
| Pittsburgh, PA 15220 | | | | | | | | |
| |
| 525 Mainstream Drive | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Nashville, TN 37228 | | | | Laboratories, Inc. (DE) | | | | |
| |
| 4770 Regent Boulevard | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Irving, TX 75063 | | | | Laboratories, Inc. (DE) | | | | |
| |
| 5850 Rogerdale Road | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Houston, TX 77072 | | | | Laboratories, Inc. (DE) | | | | |
| |
| 14225 Newbook Drive | | 54-0854787 | | Quest Diagnostics Nichols | | N/A | | N/A |
| Chantilly, VA 20153 | | | | Institute, Inc. (VA) | | | | |
| |
| 1737 Airport Way South, Suite 200 | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Seattle, WA 98134 | | | | Laboratories, Inc. (DE) | | | | |
| |
| (2) Laboratory Billing Centers | | | | | | | | |
| |
| National Revenue Service Center | | 16-1387862 | | Quest Diagnostics | | N/A | | N/A |
| 2750 Monroe Blvd | | | | Incorporated (DE) | | | | |
| Norristown, PA 19403 | | | | | | | | |
| |
| Revenue Service Center | | 71-0897031 | | Unilab Corporation (DE) | | Quest Diagnostics | | |
| 8511 Fallbrook Avenue | | | | | | | | |
| West Hills, CA 91304 | | | | | | | | |
| |
| |
| (3) Laboratory Data Center (IT) | | | | | | | | |
| |
| 400 Egypt Road | | 38-2084239 | | Quest Diagnostics Clinical | | N/A | | N/A |
| Norristown, PA 19403 | | | | Laboratories, Inc. (DE) | | | | |
77
| Location | | Federal EIN | | Legal Name of Seller | | Fictitious Name | | Prior Legal Name1 |
| | | | | | | (DBA) | | |
| C. Risk Assessment Facilities | | | | | | | | |
| |
| (1) Laboratories/Operations | | | | | | | | |
| |
| |
| 10101 Renner Boulevard | | 43-1039532 | | LabOne, Inc. (MO) | | Quest Diagnostics | | |
| Lenexa, KS 6621912 | | | | | | | | |
| |
| (2) Billing Centers | | | | | | | | |
| |
| 800 NW Chipman Road | | 43-1336549 | | Systematic Business | | N/A | | |
| Lee’s Summit, MO 64063 | | | | Services, Inc. (MO) | | | | |
| |
| 1020 Laurel Oak Road #300 | | 23-2057350 | | ExamOne World Wide, Inc. | | N/A | | |
| Voorhees, NJ 08043 | | | | (PA) | | | | |
12 This facility also serves as a clinical laboratory (see also listing above).
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