Exhibit 10.3
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SECOND AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
DATED AS OF APRIL 20, 2004
BETWEEN
QUEST DIAGNOSTICS INCORPORATED AND EACH OF ITS DIRECT OR INDIRECT
WHOLLY-OWNED SUBSIDIARIES WHO IS OR HEREAFTER BECOMES A SELLER HEREUNDER,
as the Sellers,
AND
QUEST DIAGNOSTICS RECEIVABLES INC.,
as the Buyer
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TABLE OF CONTENTS
PAGE
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ARTICLE I - CAPITALIZATION OF THE BUYER AND AMOUNTS AND TERMS OF THE PURCHASES.............5
SECTION 1.1. [INTENTIONALLY OMITTED]...................................................5
SECTION 1.2. PURCHASES OF RECEIVABLES..................................................5
SECTION 1.3. PAYMENT FOR THE PURCHASES.................................................2
SECTION 1.4. PURCHASE PRICE CREDIT ADJUSTMENTS.........................................4
SECTION 1.5. PAYMENTS AND COMPUTATIONS, ETC............................................5
SECTION 1.6. TRANSFER OF RECORDS.......................................................5
SECTION 1.7. CHARACTERIZATION; GRANTING CLAUSES........................................5
ARTICLE II - REPRESENTATIONS AND WARRANTIES................................................6
SECTION 2.1. REPRESENTATIONS OF THE SELLERS............................................6
(a) Ownership of such Seller.........................................................6
(b) Existence; Due Qualification; Permits............................................6
(c) Action...........................................................................6
(d) Title to Receivables; Valid Security Interest....................................7
(e) Absence of Change of Control.....................................................7
(f) Noncontravention.................................................................7
(g) No Proceedings...................................................................7
(h) Taxes............................................................................8
(i) Government Approvals.............................................................9
(j) Financial Statements and Absence of Certain Material Adverse Changes.............9
(k) Nature of Receivables...........................................................10
(l) Margin Regulations..............................................................10
(m) Quality of Title................................................................10
(n) Accurate Reports................................................................10
(o) Offices.........................................................................11
(p) Collection Accounts.............................................................11
(q) Eligible Receivables............................................................11
(r) Names...........................................................................11
(s) Credit and Collection Policy....................................................11
(t) Payments to Sellers.............................................................12
(u) Investment Company Act; Public Utility Holding Company Act; Other Restrictions..12
(v) Solvency........................................................................12
(w) ERISA...........................................................................12
(x) Bulk Sales Act..................................................................12
(y) Reliance on Separate Legal Identity.............................................12
ARTICLE III - CONDITIONS OF PURCHASES.....................................................12
SECTION 3.1. CONDITIONS PRECEDENT TO INITIAL PURCHASE.................................12
SECTION 3.2. CONDITIONS PRECEDENT TO ALL PURCHASES....................................13
SECTION 3.3. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES..........................14
ARTICLE IV - COVENANTS....................................................................14
SECTION 4.1. AFFIRMATIVE COVENANTS....................................................14
(a) Compliance With Laws, Etc.......................................................14
(b) Preservation of Existence.......................................................14
(c) Audits..........................................................................14
(d) Keeping of Records and Books of Account.........................................15
(e) Performance and Compliance with Receivables and Contracts.......................15
(f) Location of Records.............................................................15
(g) Credit and Collection Policies..................................................15
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(h) Separate Corporate Existence of the Buyer.......................................15
(i) Collections.....................................................................15
(j) Further Assurances..............................................................16
SECTION 4.2. REPORTING REQUIREMENTS...................................................16
(a) Sales, Liens, Etc...............................................................16
(b) Extension or Amendment of Receivables...........................................16
(c) Change in Business or Credit and Collection Policy..............................17
(d) Change in Payment Instructions to Obligors......................................17
(e) Deposits to Collection Accounts and Collection Account..........................17
(f) Changes to Other Documents......................................................17
(g) Change of Name, State of Organization, or Records Locations.....................17
(h) Mergers, Consolidations and Acquisitions........................................17
(i) Disposition of Receivables and Related Assets...................................18
(j) Receivables Not to be Evidenced by Promissory Notes.............................18
(k) Accounting for Purchases........................................................18
ARTICLE V - JOINDER OF ADDITIONAL SELLERS.................................................18
SECTION 5.1. ADDITION OF NEW SELLERS..................................................18
SECTION 5.2. DOCUMENTATION............................................................18
ARTICLE VI - ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE RECEIVABLES..............19
SECTION 6.1. RIGHTS OF THE BUYER......................................................19
SECTION 6.2. RESPONSIBILITIES OF THE SELLERS..........................................19
(a) Collection Procedures...........................................................19
(b) Performance Under Contract......................................................19
(c) Power of Attorney...............................................................19
SECTION 6.3. FURTHER ACTION EVIDENCING PURCHASES......................................19
SECTION 6.4. APPLICATION OF COLLECTIONS...............................................20
ARTICLE VII - INDEMNIFICATION.............................................................20
SECTION 7.1. INDEMNITIES BY THE SELLERS...............................................20
SECTION 7.2. CONTRIBUTION.............................................................22
ARTICLE VIII - MISCELLANEOUS..............................................................23
SECTION 8.1. WAIVERS AND AMENDMENTS...................................................23
SECTION 8.2. NOTICES, ETC.............................................................23
SECTION 8.3. CUMULATIVE REMEDIES......................................................23
SECTION 8.4. BINDING EFFECT; ASSIGNABILITY............................................23
SECTION 8.5. GOVERNING LAW............................................................24
SECTION 8.6. COSTS, EXPENSES AND TAXES................................................24
SECTION 8.7. SUBMISSION TO JURISDICTION...............................................24
SECTION 8.8. WAIVER OF JURY TRIAL.....................................................24
SECTION 8.9. CAPTIONS AND CROSS REFERENCES; INCORPORATION BY REFERENCE................25
SECTION 8.10. EXECUTION IN COUNTERPARTS................................................25
SECTION 8.11. ACKNOWLEDGMENT AND AGREEMENT.............................................25
SECTION 8.12. NO PROCEEDINGS...........................................................25
ANNEX A - DEFINITIONS.....................................................................30
EXHIBIT A - FORM OF PURCHASE REPORT............................ERROR! BOOKMARK NOT DEFINED.
EXHIBIT B - FORM OF SUBORDINATED NOTE..........................ERROR! BOOKMARK NOT DEFINED.
EXHIBIT C - CREDIT AND COLLECTION POLICIES.....................ERROR! BOOKMARK NOT DEFINED.
EXHIBIT D - FORM OF JOINDER AGREEMENT..........................ERROR! BOOKMARK NOT DEFINED.
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SCHEDULE 2.1(0) - SELLERS' FEDERAL TAXPAYER ID NUMBERS AND STATE ORGANIZATIONAL
ID NUMBERS; PRINCIPAL LABORATORIES AND BILLING CENTERS, AND LOCATION(S) WHERE
RECORDS ARE KEPT....................................ERROR! BOOKMARK NOT DEFINED.
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SECOND AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
THIS SECOND AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT (as
amended, supplemented, restated or otherwise modified from time to time, this
"Agreement"), dated as of April 20, 2004 is entered into by and between:
(1) Quest Diagnostics Incorporated, a Delaware corporation ("Quest
Diagnostics"), Quest Diagnostics Incorporated, a Michigan corporation,
Quest Diagnostics Incorporated, a Maryland corporation, 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, MetWest Inc., a Delaware corporation, Quest
Diagnostics LLC, an Illinois limited liability company, Quest Diagnostics
Clinical Laboratories, Inc., a Delaware corporation, Unilab Corporation, a
Delaware corporation ("Unilab"), Quest Diagnostics Nichols Institute, Inc.,
a Virginia corporation formerly known as Medical Laboratories Corporation,
Inc. ("Quest-Nichols"), Quest Diagnostics Incorporated, a Nevada
corporation formerly known as APL Healthcare Group, Inc. ("Quest-Nevada"),
and each of the other direct or indirect, wholly-owned subsidiaries of
Quest Diagnostics who hereafter becomes a party hereto by executing a
joinder agreement in the form of Exhibit D hereto (each, a "Joinder
Agreement"), as sellers, and
(2) Quest Diagnostics Receivables Inc., a Delaware corporation, as
purchaser (the "Buyer"),
and amends and restates in its entirety that certain Amended and Restated
Receivables Sale Agreement dated as of September 30, 2003 by and among the
parties hereto other than Unilab, Quest-Nichols and Quest-Nevada (the "Existing
Agreement"). Unless otherwise indicated, capitalized terms used in this
Agreement are defined in ANNEX A hereto or, if not defined therein, in that
certain Third Amended and Restated Credit and Security Agreement dated as of
April 20, 2004, by and among the Buyer, as borrower, Quest Diagnostics, as
initial servicer, Blue Ridge Asset Funding Corporation, and Atlantic Asset
Securitization Corp., Credit Lyonnais New York Branch, individually and as
Atlantic Agent, and Wachovia Bank, National Association, individually, as Blue
Ridge Agent and as Administrative Agent, as amended, supplemented, restated,
joined or otherwise modified from time to time in accordance with the terms
thereof (the "Credit and Security Agreement").
W I T N E S S E T H :
WHEREAS, Quest Diagnostics owns, directly or indirectly all of the
issued and outstanding Equity Interests of each of the other Sellers;
WHEREAS, the Buyer is a limited purpose corporation, all of the issued
and outstanding Equity Interests of which are owned by Quest Diagnostics;
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WHEREAS, Quest Diagnostics contributed to the Buyer's capital all of
its Receivables in existence as of the Initial Cut-Off Date, together with
all Related Assets associated therewith;
WHEREAS, the Sellers desire to sell Receivables and Related Assets
owned from time to time by the Sellers to the Buyer, and the Buyer is
willing, on the terms and subject to the conditions set forth herein, to
purchase Receivables and Related Assets from the Sellers;
WHEREAS, the Buyer has pledged the Receivables and Related Assets
received from the Sellers hereunder to secure Obligations under the Credit
and Security Agreement, including, without limitation, its obligations to
repay Loans made thereunder; and
WHEREAS, at the request of the Buyer and its assigns, Quest
Diagnostics has agreed to continue to act as Servicer for the Receivables,
although Quest Diagnostics has informed the Buyer and its assigns that it
may, subject to their approval and to satisfaction of the Rating Agency
Condition, if required, transfer that function to an Affiliate;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
CAPITALIZATION OF THE BUYER AND AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. [Intentionally Omitted].
Section 1.2. Purchases of Receivables.
(a) Effective on the Applicable Closing Date for each Seller that has
not already sold or contributed Receivables and Related Assets under the
Existing Agreement, in consideration for the Purchase Price and upon the
terms and subject to the conditions set forth herein, each such Seller does
hereby sell, assign, transfer, set-over and otherwise convey to the Buyer,
without recourse (except to the extent expressly provided herein), and the
Buyer does hereby purchase from such Seller, all of such Seller's right,
title and interest in and to such Seller's Initial Receivables and all
Related Assets with respect thereto.
(b) Effective on each Business Day after each Seller's Applicable
Closing Date and prior to the Sale Termination Date, in consideration for
the Purchase Price and upon the terms and subject to the conditions set
forth herein, such Seller does hereby sell, assign, transfer, set-over and
otherwise convey to the Buyer, without recourse (except to the extent
expressly provided herein), and the Buyer does hereby purchase from such
Seller, all of such Seller's right, title and interest in and to such
Seller's Additional Receivables and all Related Assets with respect
thereto.
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(a) (c) It is the intention of the parties hereto that each conveyance
of Receivables made under this Agreement shall constitute an outright "sale
of accounts" (as such terms are used in Article 9 of the UCC) or other
absolute transfer, which is absolute and irrevocable and shall provide the
Buyer with the full benefits of ownership of the Receivables and the
associated Related Assets. Except for the Purchase Price Credits owed
pursuant to Section 1.4, each conveyance of Receivables hereunder is made
without recourse to the applicable Seller; provided, however, that (i) each
Seller shall be liable to the Buyer for all representations, warranties,
covenants and indemnities made by such Seller pursuant to the terms of the
Transaction Documents to which such Seller is a party, and (ii) such
conveyance does not constitute and is not intended to result in an
assumption by the Buyer or any assignee thereof of any obligation of such
Seller or any other Person arising in connection with the Receivables, the
related Contracts and/or other Related Assets or any other obligations of
such Seller. In view of the intention of the parties hereto that the
conveyances of Receivables made hereunder shall constitute outright sales
of such Receivables rather than loans secured thereby, each Seller agrees
that it will, on or prior to its Applicable Closing Date, mark its master
data processing records relating to its Receivables with the following
legend (or the substantive equivalent thereof):
"THE RECEIVABLES DESCRIBED HEREIN, TOGETHER WITH CERTAIN RELATED
ASSETS, ARE THE PROPERTY OF QUEST DIAGNOSTICS RECEIVABLES INC."
Upon the request of the Buyer or the Administrative Agent, each Seller will
file such financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be
necessary or appropriate to perfect and maintain the perfection of the
Buyer's ownership interest in the Receivables and the Related Assets or as
the Buyer or the Administrative Agent may reasonably request.
(d) Nothing herein shall be deemed to preclude Quest Diagnostics from
contributing to the Buyer's capital, in lieu of selling, Receivables
originated by Quest Diagnostics together with the Related Assets associated
therewith, and any such contribution is made with the intention that each
such contribution, if any, will be made with the same intentions as are set
forth in Section 1.2(c) above. No Purchase Price shall be payable in
respect of any contributed Receivable or its associated Related Assets.
Section 1.3. Payment for the Purchases.
(a) The Purchase Price for each purchase of Initial Receivables and
Related Assets from any Seller (other than Quest Diagnostics) either has been
paid pursuant to the Existing Agreement or shall be payable in full pursuant to
this Agreement by the Buyer to such Seller on such Seller's Applicable Closing
Date in one or both of the following manners:
(i) by delivery of immediately available funds, to the extent of the
Buyer's Available Funds; and
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(ii) solely to the extent such Available Funds are insufficient to pay
the full amount of Purchase Price then due and owing, by delivery of a
Subordinated Note made by the Buyer to the applicable Seller (and making a
notation of a Subordinated Loan thereunder), so long as the aggregate
principal amount of Subordinated Loans outstanding at any one time under
such Subordinated Notes does not exceed the lesser of (A) the remaining
unpaid portion of such Purchase Price, and (B) the maximum Subordinated
Loan that could be borrowed without rendering the Buyer's net worth less
than the amount required by Section 7.3(g) of the Credit and Security
Agreement.
The Purchase Price for each purchase of Additional Receivables and Related
Assets shall be due and owing in full by the Buyer to the applicable Seller on
the date of such purchase (except that the Buyer may, with respect to any such
purchase, offset against such Purchase Price any amounts owed by such Seller to
the Buyer hereunder and which have become due but remain unpaid) and shall be
paid to such Seller in the manner provided in the following paragraphs (b), (c)
and (d).
(b) With respect to any purchase of Additional Receivables and Related
Assets from any Seller, the Buyer shall pay the Purchase Price therefor on the
next subsequent Settlement Date in accordance with Section 1.3(d) and in one or
more of the following manners:
(i) by delivery of immediately available funds, to the extent of the
Buyer's Available Funds; and
(ii) solely to the extent such Available Funds are insufficient to pay
the full amount of Purchase Price then due and owing, by delivery of a
Subordinated Note made by the Buyer to the applicable Seller (or by
increasing the aggregate outstanding principal amount outstanding
thereunder), so long as the aggregate principal amount of Subordinated
Loans outstanding at any one time under such Subordinated Note does not
exceed the lesser of (A) the remaining unpaid portion of such Purchase
Price, and (B) the maximum Subordinated Loan that could be borrowed without
rendering the Buyer's net worth less than the amount required by Section
7.3(g) of the Credit and Security Agreement.
Subject to the limitations set forth in Section 1.3(a)(ii) and Section
1.3(b)(ii), each of the Sellers irrevocably agrees to advance each Subordinated
Loan requested by the Buyer on or prior to such Seller's Sale Termination Date.
The Subordinated Loans owing to each Seller shall be evidenced by, and shall be
payable in accordance with the terms and provisions, of its Subordinated Note
and shall be payable solely from Available Funds. Each Seller is hereby
authorized by the Buyer to endorse on the schedule attached to its Subordinated
Note an appropriate notation evidencing the date and amount of each Subordinated
Loan thereunder, 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 thereunder.
(c) On each Monthly Reporting Date after its Applicable Closing Date,
each Seller shall (or shall require the Servicer to) deliver to the Buyer and
the Administrative Agent a report in substantially the form of Exhibit A hereto
(each such report being herein called a
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"Purchase Report") with respect to the Receivables sold by such Seller to the
Buyer during the Settlement Period then most recently ended. Each such Purchase
Report shall list the applicable Seller separately and shall specify, as
applicable: (i) the Initial Receivables and/or Additional Receivables sold by
such Seller during the Settlement Period then most recently ended, and (ii) the
amount of the Receivables described in the foregoing clause (i) that were
Eligible Receivables on the date they were acquired by the Buyer.
(d) Although the Purchase Price for each purchase of Additional
Receivables and Related Assets shall be due and payable in full by the Buyer to
the applicable Seller on the date of such purchase, settlement of the Purchase
Price between the Buyer and such Seller shall be effected on Settlement Dates
with respect to all purchases within the same Settlement Period and based on the
information contained in the Purchase Report delivered for such Settlement
Period pursuant to Section 1.3(c). Although cash settlements shall be effected
on Settlement Dates, increases or decreases in the Subordinated Loans shall be
deemed to have occurred and shall be effective as of the last Business Day of
the Settlement Period to which such settlement relates.
Section 1.4. Purchase Price Credit Adjustments. If as of the last day
of any Settlement Period:
(a) the outstanding aggregate balance of the Net Receivables
originated by any Seller as reflected in the preceding Purchase Report (net of
any positive adjustments) has been reduced for any of the following reasons:
(i) as a result of any rejected services, any cash discount or any
other adjustment by the applicable Seller or any Affiliate thereof
(regardless of whether the same is treated by such Seller or Affiliate as a
write-off), or as a result of any surcharge or other governmental or
regulatory action, or
(ii) as a result of any setoff or breach of the underlying agreement
in respect of any claim by the Obligor thereof (whether such claim arises
out of the same or a related or an unrelated transaction), or
(iii) on account of the obligation of the applicable Seller or any
Affiliate thereof to pay to the related Obligor any rebate or refund, or
(iv) as a result of any Unpaid Net Balance of any Receivable on the
date of its sale or contribution proving to have been less on such date
than the amount reflected on the applicable Purchase Report, or
(b) any of the representations or warranties of the applicable Seller
set forth in Section 2.1(d), (k) or (m) was not true when made with respect to
any Receivable originated by it, or any of the representations or warranties of
the applicable Seller set forth in Section 2.1(m) is no longer true with respect
to any Receivable originated by it,
then, in such event, the Buyer shall be entitled to a credit (each, a "Purchase
Price Credit") against the Purchase Price otherwise payable hereunder equal to
(A) the amount of such reduction, cancellation or overstatement, in the case of
the preceding clauses (a)(i), (a)(ii), (a)(iii) and (a)(iv), and (B) in the full
amount of the Unpaid Net Balance of such Receivable in the case of the preceding
clause (b). If such Purchase Price Credit exceeds the original Unpaid Net
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Balance of the Receivables to be sold by the applicable Seller on the date of a
purchase, then the applicable Seller shall pay the remaining amount of such
Purchase Price Credit in cash not later than the next Settlement Date; provided
that if such Seller's Sale Termination Date has not occurred, such Seller shall
be allowed to deduct the remaining amount of such Purchase Price Credit from any
Indebtedness owed to it under its Subordinated Note.
Section 1.5. Payments and Computations, Etc. All amounts to be paid or
deposited by the Buyer hereunder shall be paid or deposited in accordance with
the terms hereof on the day when due in immediately available funds to the
account of the applicable Seller designated from time to time by such Seller or
as otherwise directed by such Seller. In the event that any payment owed by any
Person hereunder becomes due on a day that is not a Business Day, then such
payment shall be made on the next succeeding Business Day. If any Person fails
to pay any amount hereunder when due, such Person agrees to pay, on demand,
interest on the past due amount at the Default Rate until paid in full;
provided, however, that such interest shall not at any time exceed the maximum
rate permitted by applicable law. All computations of interest payable hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed.
Section 1.6. Transfer of Records.
(a) In connection with the purchases of Receivables hereunder, each
Seller hereby sells, transfers, assigns and otherwise conveys to the Buyer all
of such Seller's right and title to and interest in the Records relating to all
Receivables sold hereunder, without the need for any further documentation in
connection with any purchase. In connection with such transfer, each Seller
hereby grants to each of the Buyer, the Administrative Agent and the Servicer an
irrevocable, non-exclusive license to use, without royalty or payment of any
kind, all software used by such Seller to account for its Receivables, to the
extent necessary to administer such Receivables following replacement of Quest
Diagnostics (or any of its Affiliates) as the Servicer, whether such software is
owned by such Seller or is owned by others and used by such Seller under license
agreements with respect thereto, provided that should the consent of any
licensor of such Seller to such grant of the license described herein be
required, such Seller hereby agrees that upon the request of the Buyer, the
Servicer or the Administrative Agent, such Seller will use its reasonable
efforts to obtain the consent of such third-party licensor. The license granted
hereby shall be irrevocable, and shall terminate on the date this Agreement
terminates in accordance with its terms.
(b) Each Seller (i) shall take such action requested by the Buyer
and/or the Administrative Agent, from time to time hereafter, that may be
necessary or reasonably appropriate to ensure that the Buyer has an enforceable
ownership interest in the Records relating to the Receivables purchased from
such Seller hereunder, and (ii) shall use its reasonable efforts to ensure that
the Buyer and the Servicer each has an enforceable right (whether by license or
sublicense or otherwise) to use all of the computer software used to account for
the Receivables and/or to recreate such Records.
Section 1.7. Characterization; Granting Clause.
(a) If, notwithstanding the intention of the parties expressed in
Section 1.2(c), any sale by any of the Sellers to the Buyer of Receivables
hereunder shall be characterized as a secured loan and not a sale, then this
Agreement shall be deemed to constitute a security
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agreement under the UCC and other applicable law. For this purpose and without
being in derogation of the parties' intention that each sale of Receivables
hereunder shall constitute a true sale thereof, each of the Sellers hereby
grants to the Buyer a duly perfected security interest in all of such Seller's
right, title and interest in, to and under all of such Seller's Receivables now
existing and hereafter arising, and in all Related Assets with respect thereto,
which security interest shall be prior to all other Liens thereto. After the
occurrence of a Seller's Sale Termination Event, the Buyer and its assigns shall
have as against the applicable Seller, in addition to the rights and remedies
which they may have under this Agreement, all other rights and remedies provided
to a secured creditor after default under the UCC and other applicable law,
which rights and remedies shall be cumulative.
(b) Each Seller hereby covenants and agrees to do all things necessary
under each of its Contracts to facilitate collection of the Receivables arising
thereunder by the Buyer and its assigns.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations of the Sellers. In order to induce the
Buyer to enter into this Agreement and to make purchases and accept the
contributions hereunder, each Seller hereby makes the following representations
and warranties, as to itself, as of the date of each sale or contribution by it
hereunder:
(a) Ownership of such Seller. Quest Diagnostics owns, directly or
indirectly, all the issued and outstanding Equity Interests of each of the other
Sellers, and all of such Equity Interests are fully paid and non-assessable.
(b) Existence; Due Qualification; Permits. Such Seller: (i) is a
corporation or limited liability company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization; (ii) has
all requisite corporate or other power and authority, and has all governmental
licenses, authorizations, consents and approvals necessary to own its Property
and carry on its business as now being conducted; (iii) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary; and (iv) is in
compliance with all Requirements of Law, except, in the case of clauses (i),
(ii), (iii) and (iv) where the failure thereof individually or in the aggregate
could not reasonably be expected to have a Seller Material Adverse Effect. Such
Seller holds all governmental permits, licenses, authorizations, consents and
approvals necessary for such Seller to own, lease, and operate its Properties
and to operate its businesses as now being conducted (collectively, the
"Permits"), except for Permits the failure of which to obtain would not have a
Seller Material Adverse Effect. None of the Permits has been modified in any way
that is reasonably likely to have a Seller Material Adverse Effect. All Permits
are in full force and effect except where the failure to be in full force and
effect would not have a Seller Material Adverse Effect.
(c) Action. Such Seller has all necessary corporate or other entity
power, authority and legal right to execute, deliver and perform its obligations
under each Transaction Document to which it is a party and to consummate the
transactions herein and therein contemplated; the execution, delivery and
performance by such Seller of each Transaction Document to which it is a party
and the consummation of the transactions herein and therein
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contemplated have been duly authorized by all necessary corporate or other
entity action on its part; and this Agreement has been duly and validly executed
and delivered by such Seller and constitutes, and each of the other Transaction
Documents to which it is a party when executed and delivered by such Seller will
constitute, its legal, valid and binding obligation, enforceable against such
Seller in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws of general applicability from time to time in effect
affecting the enforcement of creditors' rights and remedies and (ii) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) Title to Receivables; Valid Security Interest. Each such
Receivable originated by such Seller has been transferred to the Buyer free and
clear of any Lien except as created hereby or by the other Transaction
Documents. Without limiting the foregoing, such Seller has delivered to the
Administrative Agent (as the Buyer's assignee) in form suitable for filing all
financing statements or other similar instruments or documents necessary under
the UCC of all appropriate jurisdictions to perfect the Buyer's ownership
interest in such Receivable and the Administrative Agent's collateral assignment
thereof. This Agreement creates a valid security interest in each such
Receivable and its Related Assets in favor of the Buyer, and, upon filing of the
financing statements described in the preceding sentence, together with UCC
termination statements delivered hereunder, such security interest will be a
first priority perfected security interest.
(e) Absence of Change of Control. No Change of Control has occurred.
(f) Noncontravention.
(i) None of the execution, delivery and performance by such Seller of
any Transaction Document to which it is a party nor the consummation of the
transactions herein and therein contemplated will (A) conflict with or result in
a breach of, or require any consent (which has not been obtained and is in full
force and effect) under, any Organic Document of such Seller or any applicable
Requirement of Law or any order, writ, injunction or decree of any Governmental
Authority binding on such Seller, or any term or provision of any Contractual
Obligation of such Seller or (B) constitute (with due notice or lapse of time or
both) a default under any such Contractual Obligation, or (C) result in the
creation or imposition of any Lien (except for the Liens created pursuant to the
Transaction Documents) upon any Property of such Seller pursuant to the terms of
any such Contractual Obligation, except with respect to each of the foregoing
which could not reasonably be expected to have a Seller Material Adverse Effect
and which would not subject the Buyer or its assigns to any material risk of
damages or liability to third parties.
(ii) Such Seller is not in default under any material contract or
agreement to which it is a party or by which it is bound, nor, to such Seller's
knowledge, does any condition exist that, with notice or lapse of time or both,
would constitute such default, excluding in any case such defaults that are not
reasonably likely to have a Seller Material Adverse Effect.
(g) No Proceedings. Except as described in Quest Diagnostics' Form
10-K for the fiscal year ended December 31, 2003 and all filings made with the
SEC under the Exchange Act by such Seller prior to the date of this Agreement,
copies of which have been provided to the Buyer and the Administrative Agent or
made available on EDGAR:
7
(i) There is no Proceeding (other than any qui tam Proceeding, to
which this Section is limited to the best of such Seller's knowledge)
pending against, or, to the knowledge of such Seller, threatened in writing
against or affecting, such Seller or any of its Properties before any
Governmental Authority that, if determined or resolved adversely to such
Seller, could reasonably be expected to have a Seller Material Adverse
Effect.
(ii) There is (A) no unfair labor practice complaint pending against
any Seller or, to the best knowledge of such Seller, threatened against
such Seller, before the National Labor Relations Board or any other
Governmental Authority, and no grievance or arbitration proceeding arising
out of or under any collective bargaining agreement is so pending against
such Seller or, to the best knowledge of such Seller after due inquiry,
threatened against such Seller, (B) no strike, labor dispute, slowdown or
stoppage pending against such Seller or, to the best knowledge of such
Seller, after due inquiry, threatened against such Seller and (C) to the
best knowledge of such Seller after due inquiry, no union representation
question existing with respect to the employees of such Seller and, to the
best knowledge of such Seller, no union organizing activities are taking
place, except such as would not, with respect to any matter specified in
clause (A), (B) or (C) above, individually or in the aggregate, have a
Seller Material Adverse Effect.
(h) Taxes.
(i) Except as would not have a Seller Material Adverse Effect: (A) all
tax returns, statements, reports and forms (including estimated Tax or
information returns) (collectively, the "Tax Returns") required to be filed
with any taxing authority by, or with respect to, such Seller have been
timely filed in accordance with all applicable laws; (B) such Seller has
timely paid or made adequate provision for payment of all Taxes shown as
due and payable on Tax Returns that have been so filed, and, as of the time
of filing, each Tax Return was accurate and complete and correctly
reflected the facts regarding income, business, assets, operations,
activities and the status of such Seller (other than Taxes which are being
contested in good faith and for which adequate reserves are reflected on
the financial statements delivered hereunder); and (C) such Seller has made
adequate provision for all Taxes payable by such Seller for which no Tax
Return has yet been filed.
(ii) Except as described in Quest Diagnostics' Form 10-K for the
fiscal year ended December 31, 2003 and all filings made with the SEC under
the Exchange Act by such Seller prior to the date of this Agreement, copies
of which have been provided to the Buyer and the Administrative Agent: (A)
as of the date hereof such Seller is not a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code other than an
affiliated group of corporations of which Quest Diagnostics is the common
parent; and (B) there are no material tax sharing or tax indemnification
agreements under which such Seller is required to indemnify another party
for a material amount of Taxes other than, in the case of Quest
Diagnostics, the tax indemnity contained in the Merger
8
Agreement dated as of August 16, 1999, between Glaxo Smith Kline (formerly
known as Smith Kline Beecham) and Quest Diagnostics.
(i) Government Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority or any
securities exchange are necessary for the execution, delivery or performance by
such Seller of the Transaction Documents to which it is a party or for the
legality, validity or enforceability hereof or thereof or for the consummation
of the transactions herein and therein contemplated, except for filings and
recordings in respect of the Liens created pursuant to the Transaction Documents
(all of which have been duly made or delivered to the Administrative Agent for
filing or may be prepared for filing by the Buyer or the Administrative Agent in
accordance with the terms of the Transaction Documents) and except for consents,
authorizations and filings that have been obtained or made and are in full force
and effect or the failure of which to obtain would not have a Seller Material
Adverse Effect.
(j) Financial Statements and Absence of Certain Material Adverse
Changes.
(i) The information, reports, financial statements, exhibits and
schedules furnished in writing by such Seller to the Administrative Agent
or any of the Lenders in connection with the negotiation, preparation or
delivery of the Transaction Documents, including Quest Diagnostics' Annual
Report on Form 10-K for the year ended December 31, 2003 and all filings
made with the SEC under the Exchange Act by such Seller prior to the date
of this Agreement, copies of which have been provided to the Buyer and the
Administrative Agent or made available on EDGAR, but in each case excluding
all projections, whether prior to or after the date of this Agreement, when
taken as a whole, do not, as of the date such information was furnished,
contain any untrue statement of material fact or omit to state a material
fact necessary in order to make the statements herein or therein, in light
of the circumstances under which they were made, not materially misleading.
The projections and pro forma financial information furnished at any time
by such Seller to the Buyer, the Administrative Agent or any Lender
pursuant to the Transaction Documents have been prepared in good faith
based on assumptions believed by such Seller and/or Quest Diagnostics to be
reasonable at the time made, it being recognized that such financial
information as it relates to future events is not to be viewed as fact and
that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount and no Seller, however, makes any representation as to the
ability of any Seller to achieve the results set forth in any such
projections. Each Seller understands that all such statements,
representations and warranties shall be deemed to have been relied upon by
the Buyer as a material inducement to entering into this Agreement and
making any Purchase hereunder and by the Agents and the Lenders as a
material inducement to make each extension of credit under the Credit and
Security Agreement.
(ii) From December 31, 2003 through and including the date of this
Agreement, there has been no material adverse change in Quest Diagnostics'
consolidated financial condition, business or operations. Since the date of
this
9
Agreement, there has been no material adverse change in Quest Diagnostics'
consolidated financial condition, business or operations that has had, or
would reasonably be expected to have, a material adverse effect upon its
ability to perform its obligations, as a Seller or, if applicable, as
Servicer, under the Transaction Documents when and as required, or a
material adverse effect on the collectibility of any material portion of
the Receivables.
(iii) Since such Seller's Applicable Closing Date, no event has
occurred which would have a Seller Material Adverse Effect.
(k) Nature of Receivables. Each Receivable constitutes an "Account" or
a "Payment Intangible."
(l) Margin Regulations. The use of all funds obtained by such Seller
under this Agreement or any other Transaction Document to which it is a party
will not conflict with or contravene any of Regulation T, U or X.
(m) Title to Receivables and Quality of Title.
(i) Upon issuance of its shares of capital stock to Quest Diagnostics
(in the case of contributed Initial Receivables and any Receivables that
Quest Diagnostics, in its sole discretion, may elect to contribute
thereafter) and payment of the applicable Purchase Price for each purchased
Receivable in one or both of the manners permitted by this Agreement, the
Buyer will have irrevocably obtained all good title to such Receivable and
its Related Assets (other than any Related Asset constituting a Contract
that contains a prohibition on assignment, in which case the Buyer has
obtained a valid and perfected first priority perfected security interest
in the applicable Seller's right to receive payments thereunder to the
extent contemplated by Section 9-406 of the UCC of the applicable
jurisdiction), and the Buyer has the legal right to sell and encumber, each
such Receivable and its Related Assets. Without limiting the foregoing,
there have been duly filed all financing statements or other similar
instruments or documents necessary under the UCC of all appropriate
jurisdictions to perfect the Buyer's ownership interest in such Receivable.
(ii) No financing statement or other instrument similar in effect
covering any portion of the Collateral is on file in any recording office
except such as may be filed (A) in favor of a Seller in accordance with the
Contracts, (B) in favor of the Buyer and its assigns in connection with
this Agreement, (C) in favor of the Administrative Agent in accordance with
the Credit and Security Agreement, (D) in connection with any Lien arising
solely as the result of any action taken by the Administrative Agent or one
of the Secured Parties, or (E) which shall be terminated or amended
pursuant to the UCC termination statements or amendments delivered
hereunder.
(n) Accurate Reports. No Purchase Report prepared by such Seller, or
to the extent information therein was supplied by such Seller, no other
information, exhibit, schedule or information concerning the Receivables
originated by such Seller furnished or to be furnished
10
verbally or in writing before or after the date of this Agreement, by or on
behalf of such Seller to the Buyer or any of its assigns pursuant to this
Agreement was or will be inaccurate in any material respect as of the date it
was or will be dated or (except as otherwise disclosed to the Buyer and the
Administrative Agent at such time) as of the date so furnished, or contained or
(in the case of information or other materials to be furnished in the future)
will contain any material misstatement of fact or omitted or (in the case of
information or other materials to be furnished in the future) will omit to state
a material fact or any fact necessary to make the statements contained therein
not materially misleading in light of the circumstances made or presented.
(o) Offices. The principal laboratories and billing centers of such
Seller are located at the respective addresses set forth on Schedule 2.1(o)
hereto or its Joinder Agreement, as applicable, and the offices where such
Seller keep all books, records and documents evidencing the Receivables
originated by it (other than books, records and documents that are stored
off-site with respect to Receivables which are no longer outstanding or which
have been written-off), the related material Contracts and all purchase orders
and other agreements related to such Receivables are located at the addresses
specified in Schedule 2.1(o) hereto or its Joinder Agreement (or at such other
locations, notified to the Buyer in accordance with Section 4.3(g), in
jurisdictions where all action required by Section 4.3(g) has been taken and
completed).
(p) Collection Accounts. Such Seller has instructed all Obligors
thereon to pay all Collections either directly by mail addressed to a Lockbox
listed on Schedule 6.1(o) to the Credit and Security Agreement which is subject
to a Collection Account Agreement, or by wire transfer or other electronic funds
transfer directly to a Collection Account listed on Schedule 6.1(o) to the
Credit and Security Agreement which is subject to a Collection Account
Agreement. Such Seller has instructed each bank maintaining a Lockbox or
Collection Account to sweep all collected funds received therein each Business
Day to a Collection Account in the name of the Buyer which is subject to a
Collection Account Agreement. The Buyer will cause each of the Collection
Accounts that is currently in the name of a Seller to be transferred to it and
into its own name within a reasonable period of time after the initial Advance
under the Credit and Security Agreement, and each Seller agrees to cooperate
fully with the Buyer in effecting such transfers.
(q) Eligible Receivables. Each Receivable originated by such Seller
that is included as an Eligible Receivable on any Purchase Report was an
Eligible Receivable on the date on which it was sold or contributed to the Buyer
pursuant hereto.
(r) Names. Except as set forth on Schedule 2.1(o), in the five years
preceding such Seller's Applicable Closing Date, such Seller has not used any
legal names, trade names or assumed names other than the name in which it has
executed this Agreement.
(s) Credit and Collection Policy. With respect to the Receivables
originated by such Seller, such Seller has complied in all material respects
with its applicable Credit and Collection Policy, and no change has been made to
such Credit and Collection Policy since the date of this Agreement which would
be reasonably likely to materially and adversely affect the collectibility of
the Receivables originated by such Seller or decrease the credit quality of any
newly created Receivables originated by such Seller except for such changes as
to which the Administrative Agent has received the notice required under Section
7.2(h) of the Credit and Security Agreement and has given its prior written
consent thereto (which consent shall not be unreasonably withheld or delayed).
11
(t) Payments to Sellers. With respect to each Receivable sold or
contributed to the Buyer by such Seller under this Agreement, the Buyer has
given reasonably equivalent value to such Seller in consideration for such
Receivable and the Related Assets with respect thereto and no such transfer is
or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11
U.S.C. 'SS''SS' 101 et seq.), as amended.
(u) Investment Company Act; Public Utility Holding Company Act; Other
Restrictions. Such Seller is not an "investment company", or a company
"controlled" by an "investment company", within the meaning of the United States
Investment Company Act of 1940, as amended. Seller is not a "holding company",
or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding
company", within the meaning of the United States Public Utility Holding Company
Act of 1935, as amended. Such Seller is not subject to regulation under any law
or regulation which limits its ability to incur Indebtedness, other than
Regulation X of the Board of Governors of the Federal Reserve System.
(v) Solvency. As of the date of each sale or contribution by such
Seller hereunder, after giving effect thereto, such Seller is and will be
Solvent.
(w) ERISA. No ERISA Event has occurred or is reasonably expected to
occur which could have a Seller Material Adverse Effect. The present value of
all accumulated benefit obligations of all underfunded Pension Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $20.0 million the fair market value
of the assets of all such underfunded Pension Plans of the Sellers. Each ERISA
Entity is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code with respect to each Employee Benefit Plan.
Using actuarial assumptions and computation methods consistent with subpart 1 of
subtitle E of Title IV of ERISA, the aggregate liabilities of any of each ERISA
Entity to all Multiemployer Plans in the event of a complete withdrawal
therefrom, as of the close of the most recent fiscal year of each such
Multiemployer Plan, would not result in a Seller Material Adverse Effect. All
Foreign Plans are in substantial compliance with all Requirements of Law (other
than to the extent such failure to comply would not reasonably be expected to
have a Seller Material Adverse Effect).
(x) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(y) Reliance on Separate Legal Identity. Such Seller is aware that the
Lenders, the Liquidity Banks and the Agents are entering into the Transaction
Documents in reliance upon the Buyer's identity as a legal entity separate from
such Seller and any of its other Affiliates.
ARTICLE III
CONDITIONS OF PURCHASES
Section 3.1. Conditions Precedent to the Initial Purchase under this
Agreement. The initial purchase from each Seller on or after April 20, 2004 is
subject to the conditions precedent that (1) the Buyer shall have executed and
delivered a Subordinated Note in favor of each such Seller, and (2) the Buyer
shall have received, on or before each Seller's Applicable Closing Date, the
following, each (unless otherwise indicated) dated such Seller's Applicable
12
Closing Date, and each in form, substance and date reasonably satisfactory to
the Buyer and the Administrative Agent:
(a) A copy of the resolutions of such Seller's board of directors,
board of managers, general partners or analogous Persons of such Seller
approving the Transaction Documents to be delivered by it and the
transactions contemplated hereby and thereby, certified by a Responsible
Officer of such Seller;
(b) A good standing certificate for such Seller issued as of a recent
date by the Secretary of State of the state of its formation;
(c) A certificate of a Responsible Officer of such Seller certifying
the names and true signatures of the officers, partners, managers or
members authorized on such Seller's behalf to sign the Transaction
Documents to be delivered by it, on which certificate the Buyer and the
Servicer (if the Servicer is not such Seller) may conclusively rely until
such time as the Buyer and the Servicer shall receive from such Seller a
revised certificate meeting the requirements of this subsection (c);
(d) Recently certified copies of such Seller's Organic Document or a
certificate of a Responsible Officer that there have been no changes
therein since the date of the Existing Agreement;
(e) Copies of the proper financing statements (Form UCC-1 or UCC-3)
necessary to continue the perfection of the Liens under the Existing
Agreement and give effect to the amendments embodied in this Agreement;
(f) Evidence (i) of the execution and delivery by each of the parties
thereto of each of the other Transaction Documents to be executed and
delivered in connection herewith and (ii) that each of the conditions
precedent to the execution, delivery and effectiveness of such other
Transaction Documents has been satisfied to the Buyer's satisfaction; and
(g) One or more opinions of such Seller's counsel in form and
substance reasonably satisfactory to the Agents covering the matters
referenced in Exhibit 5.1(h) to the Credit and Security Agreement, the
treatment of the transactions evidenced hereby as true sales and certain
related bankruptcy matters.
Section 3.2. Conditions Precedent to All Purchases. Each purchase
shall be subject to the further conditions precedent that:
(a) Such Seller's Sale Termination Date shall not have occurred;
(b) The Buyer (or its assigns) shall have received such other
approvals, opinions or documents as it may reasonably request; and
(c) On the date of such purchase, each of the representations and
warranties of such Seller set forth in Article II hereof are true and
correct on and
13
as of the date of such purchase (and after giving effect thereto) as though
made on and as of such date except to the extent it relates to an earlier
date.
Section 3.3. Reaffirmation of Representations and Warranties. Each
Seller, by accepting the Purchase Price related to each purchase of such
Seller's Receivables and Related Assets, shall be deemed to have certified that
the representations and warranties of such Seller contained in Article II are
true and correct as to such Seller on and as of the day of such purchase, with
the same effect as though made on and as of such day except to the extent it
relates to an earlier date.
ARTICLE IV
COVENANTS
Section 4.1. Affirmative Covenants. From each Seller's Applicable
Closing Date until the later of the Final Payout Date or the cessation of the
purchases of the Buyer hereunder, unless the Buyer and the Agents shall
otherwise consent in writing:
(a) Compliance With Laws, Etc. Such Seller will comply with all
applicable laws, rules, regulations and orders, including those with respect to
the Receivables and related Contracts and Invoices, except, in each of the
foregoing cases, where the failure to so comply would not individually or in the
aggregate have a Seller Material Adverse Effect.
(b) Preservation of Existence. Such Seller will preserve and maintain
its existence, rights, franchises and privileges in the jurisdiction of its
organization, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would have a Seller
Material Adverse Effect.
(c) Audits. Such Seller will, subject to compliance with applicable
law: (i) at any time and from time to time upon not less than ten (10) Business
Days' notice (unless an Unmatured Default or Event of Default has occurred and
is continuing, in which case, not more than one (1) Business Day's notice shall
be required) during regular business hours, permit the Buyer, the Agents or any
of their agents or representatives: (A) to examine and make copies of and
abstracts from all Records, Contracts and Invoices in the possession or under
the control of such Seller, and (B) to visit the offices and properties of such
Seller for the purpose of examining such Records, Contracts and Invoices and to
discuss matters relating to Receivables or such Seller's performance hereunder
with any of the officers or employees of such Seller having knowledge of such
matters; and (ii) without limiting the provisions of clause (i) above, from time
to time, at the expense of such Seller, permit certified public accountants or
auditors acceptable to the Agents to conduct a review of such Seller's
Contracts, Invoices and Records (each, a "Review"); provided, however, that, so
long as no Event of Default has occurred and is continuing, such Seller shall
only be responsible for the costs and expenses of one (1) such Review under this
Section in any one calendar year unless (1) the first such Review in such
calendar year resulted in negative findings (in which case such Seller shall be
responsible for the costs and expenses of two (2) such Reviews in such calendar
year), or (2) the Buyer delivers an Extension Request under the Credit and
Security Agreement and the applicable Response Date is more than 3 calendar
months after the first Review in such calendar year. Notwithstanding the
foregoing, if (1) such Seller requests the approval of a new Eligible Originator
who is a Material Proposed Addition or (2) any Material Acquisition is
consummated by such Seller, such Seller
14
shall be responsible for the costs and expenses of one additional Review per
proposed Material Proposed Addition or per Material Acquisition in the calendar
year in which such Material Proposed Addition is expected to occur or such
Material Acquisition is expected to be consummated if such additional Review is
requested by the Buyer or any of the Agents.
(d) Keeping of Records and Books of Account. Such Seller will maintain
and implement administrative and operating procedures (including, without
limitation, an ability to recreate essential Records evidencing the Receivables
originated by such Seller in the event of the destruction of the originals
thereof), and keep and maintain, all Contracts, Records and other information
necessary or reasonably advisable for the collection of all such Receivables
(including, without limitation, Records adequate to permit the identification as
of any Business Day when required of outstanding Unpaid Net Balances by Obligor
and related debit and credit details of the Receivables).
(e) Performance and Compliance with Receivables and Contracts. Such
Seller will, at its expense, timely and fully perform and comply with all
provisions, covenants and other promises, if any, required to be observed by it
under the Contracts and/or Invoices related to the Receivables originated by
such Seller and all agreements related to such Receivables except for such
failures to fully perform and comply as would not, individually or in the
aggregate, have a Seller Material Adverse Effect.
(f) Location of Records. Such Seller will keep its chief place of
business and chief executive office, and the offices where it keeps its Records
and material Contracts (and, to the extent that any of the foregoing constitute
instruments, chattel paper or negotiable documents, all originals thereof), at
the addresses referred to in Schedule 6.1(n) to the Credit and Security
Agreement or to its Joinder Agreement, if applicable, or, upon 15 days' prior
written notice to the Administrative Agent, at such other locations in
jurisdictions where all action required by Section 8.5 of the Credit and
Security Agreement shall have been taken and completed.
(g) Credit and Collection Policies. Such Seller will comply in all
material respects with its Credit and Collection Policy in regard to the
Receivables originated by it and the related Contracts and Invoices.
(h) Separate Corporate Existence of the Buyer. Each Seller will take
such actions as shall be required in order to maintain the separate identity of
the Buyer separate and apart from such Seller and its other Affiliates,
including those actions set forth in Section 7.4 of the Credit and Security
Agreement.
(i) Collections. Such Seller will instruct all Obligors thereon to pay
all Collections either directly by mail addressed to a Lockbox listed on
Schedule 6.1(o) to the Credit and Security Agreement which is subject to a
Collection Account Agreement, or by wire transfer or other electronic funds
transfer directly to a Collection Account listed on Schedule 6.1(o) to the
Credit and Security Agreement which is subject to a Collection Account
Agreement. Such Seller will instruct each bank maintaining a Lockbox or
Collection Account in the name of any Seller to sweep all collected funds
received therein each Business Day to a Collection Account in the name of the
Buyer (or the Administrative Agent or its designee) which is subject to a
Collection Account Agreement. Such Seller will cooperate fully with the Buyer in
transferring each of the Collection Accounts to the Buyer and, to the extent
that such Collection Account is not already
15
in the Buyer's name, into the Buyer's name within a reasonable period of time
after the initial Advance under the Credit and Security Agreement.
(j) Further Assurances. Such Seller shall take all necessary action to
establish and maintain in favor of the Buyer, a valid and perfected ownership
interest in the Receivables and Related Assets.
Section 4.2. Reporting Requirements. From such Seller's Applicable
Closing Date until the later of the Final Payout Date or the cessation of the
purchases of the Buyer hereunder, such Seller will furnish to the Buyer and the
Administrative Agent:
(a) Proceedings. As soon as possible and in any event within ten
Business Days after any Authorized Officer of such Seller obtains knowledge
thereof, notice of (i) any litigation, investigation or proceeding which
may exist at any time which would reasonably be expected to have a Seller
Material Adverse Effect and (ii) any development in previously disclosed
litigation which development would reasonably be expected to have a Seller
Material Adverse Effect;
(b) Change in Business or Credit and Collection Policy. Prompt written
notice of any material change in the character of such Seller's business
prior to the occurrence of such change, and not less than 15 Business Days'
prior written notice of any material change in such Seller's Credit and
Collection Policy (together with a copy of such proposed change); and
(c) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables originated by such
Seller, the condition, operations, financial or otherwise, of such Seller
or such Seller's performance hereunder that the Buyer or any of the Agents
may from time to time reasonably request in order to protect the interests
of the Buyer and the Administrative Agent, on behalf of the Secured
Parties, under or as contemplated by the Transaction Documents.
Section 4.3. Negative Covenants. From such Seller's Applicable Closing
Date until the later of the Final Payout Date or the cessation of the purchases
of the Buyer hereunder, unless the Buyer and the Agents shall otherwise consent
in writing, such Seller shall not:
(a) Sales, Liens, Etc. (i) Except as otherwise provided herein and in
the other Transaction Documents, sell, assign (by operation of law or otherwise)
or otherwise dispose of, or create or suffer to exist any Lien upon or with
respect to, any Receivables originated by it, or any account to which any
Collections are sent, or any right to receive income or proceeds from or in
respect of any of the foregoing (except, prior to the execution of Collection
Agreements, set-off rights of any bank at which any such account is maintained),
or (ii) assert any interest in the Receivables, except as Servicer (or a
designated sub-servicer for the Servicer).
(b) Extension or Amendment of Receivables. Extend, amend or otherwise
modify the terms of any Receivable originated by it, or amend, modify or waive
any term or condition of any Contract or Invoice related thereto in any way that
adversely affects the collectibility of the
16
Receivables originated by such Originator, taken as a whole, or any material
part thereof, or the Buyer's rights therein.
(c) Change in Business or Credit and Collection Policy. Make or permit
to be made any change in the character of its business or in the Credit and
Collection Policy, which change would, in either case, impair the collectibility
of any significant portion of the Receivables originated by it or otherwise
materially and adversely affect the interests or remedies of the Buyer and its
assigns under this Agreement or any other Transaction Document.
(d) Change in Payment Instructions to Obligors. Add or terminate any
bank as a Collection Bank from those listed in Schedule 6.1(o) to the Credit and
Security Agreement or, after the Collection Account has been established
pursuant to Section 7.1(i) of the Credit and Security Agreement, make any change
in its instructions to Obligors regarding payments to be made to the Buyer or
the Servicer or payments to be made to any Collection Bank (except for a change
in instructions solely for the purpose of directing Obligors to make such
payments to another existing Collection Bank and where such change is immaterial
and does not adversely affect the interests of the Administrative Agent, on
behalf of the Lenders, in any respect), unless (i) the Administrative Agent
shall have received prior written notice of such addition, termination or change
and (ii) the Administrative Agent shall have received duly executed copies of
Collection Agreements in a form reasonably acceptable to the Administrative
Agent with each new Collection Bank.
(e) Deposits to Collection Accounts. Deposit or authorize the deposit
to any Collection Account of any cash or cash proceeds other than Collections of
Receivables and of certain of the Excluded JV Receivables.
(f) Changes to Other Documents. Enter into any amendment or
modification of, or supplement to (i) such Seller's Organic Documents which
could reasonably be expected to be materially adverse to the Buyer, (ii) this
Agreement, or (iii) the Subordinated Notes.
(g) Change of Name, State of Organization, or Records Locations.
Change its name or state of organization or relocate any office where Records
are kept unless it shall have: (i) given the Administrative Agent at least 15
days' prior notice thereof and (ii) prior to effectiveness of such change,
delivered to the Administrative Agent all financing statements, instruments and
other documents requested by the Administrative Agent in connection with such
change or relocation.
(h) Mergers, Consolidations and Acquisitions. Liquidate or dissolve,
consolidate with, or merge into or with, any other Person, except for: (i)
mergers and consolidations of a Seller with one or more other Sellers (so long
as in any such transaction involving Quest Diagnostics, Quest Diagnostics is the
survivor), and (ii) other mergers or consolidations that do not constitute
Material Acquisitions, provided that, in each of the foregoing cases:
(A) the Administrative Agent and the Buyer receive prior written
notice of such consolidation or merger, and the successor or surviving
entity (if not a Seller) unconditionally assumes such Seller's (or
Sellers') respective obligations under the Transaction Documents to
which it is (or they are) a party immediately prior to giving effect
to such consolidation or merger,
17
(B) all UCC financing statements necessary to maintain the
validity and perfection of the Buyer's ownership interest in the
Receivables and Related Assets acquired or to be acquired from such
Seller or Sellers under this Agreement, and the Administrative Agent's
security interest therein on behalf of the Secured Parties, have been
duly filed in all necessary jurisdictions, and
(C) if the surviving entity in such transaction(s) is not an
existing Seller under this Agreement, all other documents required to
be delivered in connection with a Joinder Agreement hereunder have
been duly executed and delivered substantially contemporaneously with
such transaction(s).
(i) Disposition of Receivables and Related Assets. Except pursuant to
this Agreement, sell, lease, transfer, assign or otherwise dispose of (in one
transaction or in a series of transactions) any Receivables and Related Assets.
(j) Receivables Not to be Evidenced by Promissory Notes. Take any
action to cause or permit any Receivable generated by it to become evidenced by
any "instrument" (as defined in the applicable UCC), except in connection with
the collection of overdue Receivables, provided that the original of any such
instrument is delivered to the Buyer for immediate delivery to the
Administrative Agent, duly endorsed.
(k) Accounting for Purchases. Account for the transactions
contemplated hereby in any manner other than as a sale or contribution of
Receivables and the Related Assets by such Seller to the Buyer.
ARTICLE V
JOINDER OF ADDITIONAL SELLERS
Section 5.1. Addition of New Sellers. From time to time upon not less
than 60 days' prior written notice to the Buyer and the Administrative Agent (or
such shorter period of time as the Agents may agree upon), Quest Diagnostics may
propose that one or more of its existing or hereafter acquired wholly-owned
Subsidiaries become a Seller hereunder. No such addition shall become effective
(a) if such addition constitutes a Material Proposed Addition, without the
written consent of the Agents and, if applicable, each of the rating agencies
who is then rating Commercial Paper Notes of any Conduit but may become
effective prior to such 60th day if such written consent is given more promptly
and (b) unless all conditions precedent to such addition required by Section 5.2
below are satisfied prior to such date).
Section 5.2. Documentation. In the event that the Buyer and the Agents
consent to the addition of a New Seller, such New Seller shall execute a Joinder
Agreement and shall deliver each of the documents, certificates and opinions
required to be delivered under Section 3.1 prior to such New Seller's Closing
Date, together with such updated Schedules and Exhibits hereto as may be
necessary to ensure that after giving effect to the addition of such New Seller,
each of the representations and warranties of such New Seller under Article II
hereof will be true and correct, and the Buyer will deliver a Subordinated Note
to such New Seller.
18
ARTICLE VI
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES
Section 6.1. Rights of the Buyer. Each Seller hereby authorizes the
Buyer and the Servicer (if other than such Seller) or their respective designees
to take any and all steps in such Seller's name necessary or desirable, in their
respective determination, to collect all amounts due under any and all
Receivables, including, without limitation, endorsing such Seller's name on
checks and other instruments representing Collections and enforcing such
Receivables, the Invoices and the provisions of the related Contracts that
concern payment and/or enforcement of rights to payment.
Section 6.2. Responsibilities of the Sellers. Anything herein to the
contrary notwithstanding:
(a) Collection Procedures. Each Seller agrees to direct all Obligors
to make payments of such Seller's Receivables directly to a Collection
Account that is the subject of a Lock Box Agreement at a Collection Bank.
Each Seller further agrees to transfer any Collections (including any
security deposits applied to the Unpaid Net Balance of any Receivable) that
it receives on such Receivables directly to the Servicer (if other than
such Seller) within one (1) Business Day after receipt thereof, and agrees
that all such Collections shall be deemed to be received in trust for the
Buyer; provided that, to the extent permitted pursuant to Section 1.3, each
Seller may retain such Collections as a portion of the Purchase Price then
payable to it or apply such Collections to the reduction of the outstanding
balance of its Subordinated Note.
(b) Performance Under Contract. Each Seller shall remain responsible
for performing its obligations hereunder and under the Contracts applicable
to such Seller, and the exercise by the Buyer or its designee of its rights
hereunder shall not relieve any Seller from such obligations.
(c) Power of Attorney. Each Seller hereby grants to the Servicer (if
other than such Seller) an irrevocable power of attorney, with full power
of substitution, coupled with an interest, to take in the name of such
Seller all steps necessary or advisable to endorse, negotiate or otherwise
realize on any writing or other right of any kind held or transmitted by
such Seller or transmitted or received by the Buyer (whether or not from
such Seller) in connection with any Receivables generated by such Seller.
Section 6.3. Further Action Evidencing Purchases. Each Seller agrees
that from time to time, at its expense, it will promptly execute (if required)
and deliver all further instruments and documents, and take all further action
that the Buyer may reasonably request in order to perfect, protect or more fully
evidence the Buyer's ownership of the Receivables generated by such Seller (and
the Related Assets) purchased by the Buyer hereunder, or to enable the Buyer to
exercise or enforce any of its rights hereunder or under any other Transaction
Document. Without limiting the generality of the foregoing, upon the request of
the Buyer, each Seller will:
19
(a) file such financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as
may be necessary or appropriate; and
(b) mark the summary master control data processing records with the
legend set forth in Section 3.1(i).
Each Seller hereby authorizes the Buyer or its designee to file one or more
financing or continuation statements, and amendments thereto and assignment
thereof, relative to all or any of the Receivables (and the Related Assets) now
existing or hereafter sold by such Seller. If such Seller fails to perform any
of its agreements or obligations under this Agreement, the Buyer or its designee
may (but shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of the Buyer or its designee incurred
in connection therewith shall be payable by such Seller.
Section 6.4. Application of Collections. Except as otherwise specified
by such Obligor or required by the underlying Contract or law: any payment by an
Obligor in respect of any indebtedness owed by it to such Seller or to the Buyer
shall be applied first, as a Collection of any Receivable or Receivables then
outstanding of such Obligor in the order of the age of such Receivables,
starting with the oldest of such Receivables (unless another reasonable basis
for allocation of such payments to the Receivables of such Obligor exists), and
second, to any other indebtedness of such Obligor.
ARTICLE VII
INDEMNIFICATION
Section 7.1. Indemnities by the Sellers. Without limiting any other
rights which any such Person may have hereunder or under applicable law, each of
the Sellers hereby agrees to indemnify the Buyer, its assigns, and each of their
respective Affiliates, and all successors, transferees, participants and assigns
and all officers, directors, shareholders, controlling persons, employees and
agents (each, a "Seller Indemnified Party"), forthwith on demand, from and
against any and all damages, losses, claims, liabilities and related costs and
expenses, including attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Seller Indemnified Amounts") awarded against
or incurred by any of them arising out of or relating to this Agreement, any of
the other Transaction Documents to which such Seller is a party, and/or the
Receivables and Related Assets, excluding, however, (i) Seller Indemnified
Amounts to the extent determined by a court of competent jurisdiction to have
resulted from bad faith, gross negligence or willful misconduct on the part of
such Seller Indemnified Party, (ii) taxes imposed by the jurisdiction in which
such Seller Indemnified Party's principal executive office is located, on or
measured by the overall net income of such Seller Indemnified Party; and (iii)
recourse (except as otherwise specifically provided in this Agreement) for
Seller Indemnified Amounts to the extent the same includes losses in respect of
Receivables which are uncollectible on account of the insolvency, bankruptcy or
lack of creditworthiness of the related Obligor. Without limiting the foregoing,
each of the Sellers shall indemnify each Seller Indemnified Party for Seller
Indemnified Amounts arising out of or relating to:
20
(A) the creation of any Lien on, or transfer by such Seller of any
interest in, its Receivables and Related Assets other than (1) the sales
and contributions of Receivables and Related Assets pursuant hereto, and
(2) the Lien granted by the Buyer pursuant to the Credit and Security
Agreement;
(B) any representation or warranty made by such Seller (or any of its
officers) under or in connection with any Transaction Document or any
Purchase Report delivered by such Seller pursuant hereto, which shall have
been false, incorrect or misleading in any respect when made or deemed made
or delivered, as the case may be;
(C) the failure by such Seller to comply with any applicable law, rule
or regulation with respect to any of its Receivables or the related
Contracts or Invoices, including, without limitation, any state or local
assignment of claims act or similar legislation prohibiting or imposing
notice and acknowledgement requirements or other limitations or conditions
on the assignment of a Specified Government Receivable, or the
nonconformity of any of such Seller's Receivables or the related Contracts
or Invoices with any such applicable law, rule or regulation;
(D) the failure to vest and maintain vested in the Buyer, a valid and
perfected ownership interest in the Receivables and Related Assets sold or
contributed by such Seller hereunder, free and clear of any other Lien,
other than a Lien arising solely as a result of the Buyer, now or at any
time thereafter;
(E) the failure to file, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Receivables or
Related Assets originated by such Seller and sold or contributed by such
Seller hereunder;
(F) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of the Obligor to the payment of any Receivable originated by
such Seller (including, without limitation, a defense based on such
Receivable or the related Contract or Invoice not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the services
related to such Receivable or the furnishing or failure to furnish such
services;
(G) any matter described in Section 1.4;
(H) any failure of such Seller to perform its duties or obligations in
accordance with the provisions of this Agreement or the other Transaction
Documents to which it is a party;
(I) any claim relating to a breach by such Seller of any related
Contract or Invoice with respect to any Receivable;
21
(J) any sales or use tax payable in connection with the transactions
giving rise to any Receivable originated by such Seller, and any
documentary stamp taxes or recording taxes associated with the perfection
of the Buyer's ownership in the Receivables and Related Assets;
(K) the commingling by such Seller of Collections of Receivables at
any time with other funds;
(L) any investigation, litigation or proceeding related to or arising
from this Agreement or any other Transaction Document to which such Seller
is a party, the transactions contemplated hereby or thereby, the use of the
proceeds of any sale, the Buyer's ownership interest in the Receivables and
Related Assets originated by such Seller or any other investigation,
litigation or proceeding relating to such Seller or the Receivables and
Related Assets originated by it in which any Seller Indemnified Party
becomes involved as a result of any of the transactions contemplated hereby
or thereby;
(M) any products or professional liability, personal injury or damage
suit, or other similar claim arising out of or in connection with
merchandise, insurance or services that are the subject of any Contract or
Invoice or any Receivable originated by such Seller;
(N) any inability to litigate any claim against any Obligor in respect
of any Receivable originated by such Seller as a result of such Obligor
being immune from civil and commercial law and suit on the grounds of
sovereignty or otherwise from any legal action, suit or proceeding; or
(O) the occurrence of any Event of Bankruptcy with respect to such
Seller; or
(P) failure of any Specified Government Receivables to be recorded in
the applicable Seller's billing and accounting systems solely as a
Client-Billed Receivable.
In addition to Quest Diagnostics' obligations under the foregoing indemnity with
respect to itself as a Seller and the Receivables originated by it, Quest
Diagnostics hereby agrees to be jointly and severally liable with each other
Seller for such other Seller's indemnity obligations set forth above.
Section 7.2. Contribution. If for any reason the indemnification
provided above in Section 7.1 (and subject to the exceptions set forth therein)
is unavailable to a Seller Indemnified Party or is insufficient to hold a Seller
Indemnified Party harmless, then the applicable Seller(s) shall contribute to
the amount paid or payable by such Seller Indemnified Party as a result of such
loss, claim, damage or liability in such proportion as is appropriate to reflect
not only the relative benefits received by such Seller Indemnified Party on the
one hand and the applicable Seller(s) on the other hand but also the relative
fault of such Seller Indemnified Party as well as any other relevant equitable
considerations.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1. Waivers and Amendments. The provisions of this Agreement
may from time to time be amended, restated, otherwise modified or waived, if
such amendment, modification or waiver is in writing and consented to by each
Seller, the Buyer, the Agents and the Servicer (if the Servicer is not a
Seller); provided, however, that material amendments, modifications and waivers
may require the prior written consent of the rating agencies who are then rating
the Commercial Paper Notes of any Conduit. No failure or delay on the part of
the Buyer, the Servicer, any Seller or any third party beneficiary in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on the Buyer, the Servicer or any Seller in any case shall entitle
it to any notice or demand in similar or other circumstances. No waiver or
approval by the Buyer or the Servicer under this Agreement shall, except as may
otherwise be stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval under this Agreement shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
Section 8.2. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
express mail or courier or by certified mail, postage-prepaid, or by facsimile,
to the intended party in care of Quest Diagnostics at the address or facsimile
number of Quest Diagnostics set forth on Schedule 14.2 of the Credit and
Security Agreement or, in the case of a New Seller, below its signature on its
Joinder Agreement, or at such other address or facsimile number as shall be
designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be effective, (i) if personally delivered
or sent by express mail or courier or if sent by certified mail, when received,
and (ii) if transmitted by facsimile, when sent, receipt confirmed by telephone
or electronic means.
Section 8.3. Cumulative Remedies. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 8.4. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the Buyer, each Seller and its
respective successors and permitted assigns. Except as permitted in Section
4.3(h), no Seller may assign its rights hereunder or any interest herein without
the prior written consent of the Buyer and the Agents; subject to Section 8.11,
the Buyer may not assign its rights hereunder or any interest herein without the
prior written consent of each of the Sellers and the Agents. This Agreement
shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect as to each
Seller until the date after such Seller's Sale Termination Date on which such
Seller has received payment in full for all Receivables and Related Assets
conveyed by it to the Buyer hereunder and shall have paid and performed all of
its obligations hereunder in full. The rights and remedies with respect to any
breach of any representation and warranty made by any Seller pursuant to Article
II and the indemnification and payment provisions of Article VII and Section 8.6
shall be continuing and shall survive any termination of this Agreement.
23
Section 8.5. Governing Law. EACH TRANSACTION DOCUMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF OTHER THAN SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW (EXCEPT IN THE CASE OF THE OTHER
TRANSACTION DOCUMENTS, TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND
EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE OWNERSHIP INTERESTS OR SECURITY
INTERESTS OF THE BUYER OR THE ADMINISTRATIVE AGENT, ON BEHALF OF THE SECURED
PARTIES, IN ANY COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF NEW YORK.
Section 8.6. Costs, Expenses and Taxes. In addition to the obligations
of each Seller under Article VII, each of the Sellers agrees to pay on demand:
(a) all reasonable costs and expenses, including attorneys' fees, in
connection with the enforcement against such Seller of this Agreement and
the other Transaction Documents executed by such Seller; and
(b) all stamp duties and other similar filing or recording taxes and
fees payable or determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement or the other Transaction
Documents, and agrees to indemnify each Seller Indemnified Party against
any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
Section 8.7. Submission to Jurisdiction. EACH PARTY HERETO HEREBY
IRREVOCABLY (a) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE
OR UNITED STATES FEDERAL COURT SITTING IN THE STATE OF NEW YORK, OVER ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT; (b) AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH STATE OR UNITED STATES FEDERAL COURT; (c) WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; (d) CONSENTS
TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES OF SUCH PROCESS TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN
SECTION 8.2; AND (e) TO THE EXTENT ALLOWED BY LAW, AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. NOTHING IN THIS SECTION 8.7 SHALL AFFECT BUYER'S RIGHT TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY SELLER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
Section 8.8. Waiver of Jury Trial. EACH PARTY HERETO EXPRESSLY WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER
24
TRANSACTION DOCUMENT, OR UNDER ANY AMENDMENT, INSTRUMENT, JOINDER AGREEMENT OR
DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED BY IT OR ON ITS
BEHALF IN CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
Section 8.9. Captions and Cross References; Incorporation by
Reference. The various captions (including, without limitation, the table of
contents) in this Agreement are included for convenience only and shall not
affect the meaning or interpretation of any provision of this Agreement.
References in this Agreement to any underscored Section or Exhibit are to such
Section or Exhibit of this Agreement, as the case may be. The Exhibits hereto
are hereby incorporated by reference into and made a part of this Agreement.
Section 8.10. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
Section 8.11. Acknowledgment and Agreement. By execution below, each
Seller expressly acknowledges and agrees that all of the Buyer's rights, title,
and interests in, to, and under this Agreement shall be pledged and/or
collaterally assigned by the Buyer to the Administrative Agent for the benefit
of the Secured Parties pursuant to the Credit and Security Agreement (and the
Lenders may further assign such rights in accordance with the Credit and
Security Agreement), and each Seller consents to such assignment. Each of the
parties hereto acknowledges and agrees that the Agents and the Lenders are third
party beneficiaries of the rights of the Buyer arising hereunder and under the
other Transaction Documents to which any Seller is a party.
Section 8.12. No Proceedings. Each Seller agrees that it shall not
institute against the Buyer or any Conduit, or join any other Person in
instituting against the Buyer or any Conduit, any insolvency proceeding (namely,
any proceeding of the type referred to in the definition of Event of Bankruptcy)
as long as there shall not have elapsed one year plus one day after the Final
Payout Date. The foregoing shall not limit any Seller's right to file any claim
in or otherwise take any action with respect to any insolvency proceeding that
was instituted by any Person other than a Seller.
signature pages follow
25
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
QUEST DIAGNOSTICS INCORPORATED, A DELAWARE
CORPORATION
By: /s/ Joseph P. Manory
--------------------------------------
Name: Joseph P. Manory
Title: Vice President and Treasurer
QUEST DIAGNOSTICS INCORPORATED, A MICHIGAN
CORPORATION
QUEST DIAGNOSTICS INCORPORATED, A MARYLAND
CORPORATION
QUEST DIAGNOSTICS INCORPORATED, A
CALIFORNIA CORPORATION
26
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
27
METWEST INC., A DELAWARE CORPORATION
QUEST DIAGNOSTICS CLINICAL LABORATORIES,
INC., A DELAWARE CORPORATION
UNILAB CORPORATION, A DELAWARE
CORPORATION,
QUEST DIAGNOSTICS NICHOLS INSTITUTE, INC.,
A VIRGINIA CORPORATION
QUEST DIAGNOSTICS INCORPORATED, A NEVADA
CORPORATION
28
QUEST DIAGNOSTICS RECEIVABLES INC.
By: /s/ Joseph P. Manory
--------------------------------------
Name: Joseph P. Manory
Title: Vice President and Treasurer
29
ANNEX A
DEFINITIONS
A. Incorporation of Credit and Security Agreement Definitions. Unless
otherwise defined herein, terms that are capitalized and used throughout this
Agreement are used as defined in the Credit and Security Agreement (hereinafter
defined).
B. Certain Defined Terms. The following terms have the respective
meanings indicated hereinbelow:
"Additional Receivables" means, with respect to any Seller, all
Receivables of such Seller arising after the close of such Seller's business on
the Initial Cut-Off Date (in the case of each of the Original Sellers) or the
applicable New Seller Cut-Off Date (in the case of any New Seller) through and
including such Seller's Sale Termination Date.
"Applicable Closing Date" means (i) with respect to each of the
Original Sellers, the Initial Closing Date or, as applicable, the date specified
in its applicable Joinder Agreement, and (ii) with respect to each New Seller,
its New Seller Closing Date. The Applicable Closing Date for each of Unilab,
Quest-Nichols and Quest-Nevada shall be April 20, 2004.
"Applicable Cut-Off Date" means (i) with respect to each Original
Seller, the Initial Cut-Off Date, (ii) with respect to each New Seller, its New
Seller Cut-Off Date, and (iii) with respect to all Sellers, each Cut-Off Date
after the applicable date in the preceding clause (i) or clause (ii).
"Available Funds" means, on any date of determination, monies then
held by or on behalf of the Buyer after deduction of (a) all Obligations, if
any, that are due and owing under the Credit and Security Agreement, (b) all
Servicer's Fees that are then due and owing, and (c) in the Buyer's discretion,
the accrued and unpaid portion of all current expenses of the Buyer (whether or
not then due and owing).
"Buyer" has the meaning set forth in the preamble.
"Collections" means, with respect to any Receivable, (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 Receivable, 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 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 Receivable and available
to be applied thereon), or (ii) all Purchase Price Credits.
"Contract" means, with respect to any Receivable, any requisition,
purchase order, agreement, contract or other writing with respect to the
provision of services by a Seller to an Obligor other than (i) an Invoice and
(ii) any confidential patient information including, without limitation, test
results.
"Credit and Security Agreement" has the meaning set forth in the
preamble.
"Discount Factor" means a percentage calculated to provide the Buyer
with a reasonable return on its investment in the Receivables acquired from each
Seller after taking
30
account of (i) the time value of money based upon the anticipated dates of
collection of the Receivables and the cost to the Buyer of financing its
investment in such Receivables during such period and (ii) the risk of
nonpayment by the Obligors. Each Seller and the Buyer may agree from time to
time to change the Discount Factor applicable to purchases from such Seller
based on changes in one or more of the items affecting the calculation thereof,
provided that any change to the Discount Factor shall take effect as of the
commencement of a Calculation Period, shall apply only prospectively and shall
not affect the Purchase Price payment in respect of Purchases which occurred
during any Calculation Period ending prior to the Calculation Period during
which such Seller and the Buyer agree to make such change.
"Excluded JV Receivable" means any account receivable (and proceeds
thereof) that Quest Diagnostics of Pennsylvania Inc. ("Quest Pennsylvania")
bills in its own name and collects through its own accounts arising from
services for which revenues belong to Quest Diagnostics Venture LLC under that
certain Sharing and General Allocation Agreement dated as of November 1, 1998 by
and among Quest Diagnostics Venture LLC, a Pennsylvania limited liability
company, Quest Pennsylvania and UPMC Health System Diversified Services, Inc.,
as amended or modified from time to time.
"Existing Agreement" has the meaning set forth in the preamble.
"Initial Closing Date" means July 21, 2000.
"Initial Cut-Off Date" means the Cut-Off Date immediately preceding
the Initial Closing Date.
"Initial Receivables" means, with respect to any Seller, all
Receivables of such Seller that existed and was owing to such Seller as of the
close of such Seller's business on the Initial Cut-Off Date (in the case of each
of the Original 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 Sellers" means Quest Diagnostics Incorporated, a Delaware
corporation; Quest Diagnostics Incorporated, a Michigan corporation; Quest
Diagnostics Incorporated, a Maryland corporation; 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
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Delaware corporation; and Quest Diagnostics Clinical Laboratories, Inc., a
Delaware corporation.
"Purchase Price" means, with respect to any purchase of Receivables
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 with Section
1.3 of this Agreement on such date, which price shall equal (i) the product of
(x) the Unpaid Net Balance of such Receivables 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 with Section 1.4 of the Agreement.
"Purchase Price Credit" shall have the meaning provided in Section 1.4
hereof.
"Purchase Report" shall have the meaning provided in Section 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
(a) any 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, 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
(b) all proceeds and insurance proceeds of the foregoing.
"Responsible Officer" means, with respect to each Seller, any of its
chief executive officer, president, vice president-finance, 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,
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(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 in
Section 7.1(a) hereof.
"Seller Indemnified Party" shall have the meaning provided in Section
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),
(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
Receivables and Related Assets acquired by the Buyer from such Seller.
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"Specified Government Receivable" means a Government Receivable as to
which the Obligor is a state or local Governmental Authority (other than a
Receivable arising under any state's Medicaid statutes and regulations, for
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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