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DEPOSITARY AGREEMENT
DEPOSITARY AGREEMENT (this "Agreement"), dated as of September 30,
1997, among PHYSICIANS CLINICAL LABORATORY, INC. (together with its successors
and assigns, the "Provider"), BIO-CYPHER FUNDING CORP., (together with its
successors and assigns, the "Borrower"), DAIWA HEALTHCO-2 LLC, (together with
its successors and assigns, the "Lender"), and UNION BANK OF CALIFORNIA, N.A.
(the "Lockbox Bank"). Except as otherwise defined herein, capitalized terms not
otherwise defined herein shall have the meanings set forth in the Loan Agreement
as hereinafter defined.
WHEREAS, pursuant to the Healthcare Receivables Purchase and Transfer
Agreement, dated as of September 30, 1997, between the Provider and the Borrower
(as it may be amended, restated, modified or supplemented from time to time in
accordance with its terms, the "Receivables Transfer Agreement"), the Provider
has agreed to sell or contribute all of the Provider's Receivables to the
Borrower.
WHEREAS, pursuant to a certain Loan and Security Agreement, dated as of
September 30, 1997, between the Borrower and the Lender (as it may be amended,
restated, modified or supplemented from time to time in accordance with its
terms, the "Loan Agreement"), the Borrower has agreed to assign the Borrower's
Receivables as collateral to the Lender and the Lender has agreed to make
Advances to the Borrower.
WHEREAS, in connection with the performance of obligations under the
Receivables Transfer Agreement and the Loan Agreement, the Provider and the
Borrower desire to establish with the Lockbox Bank (i) the Lender Lockbox and
the Provider Lockbox (each as defined below) (collectively, the "Lockboxes") and
(ii) the Lender Lockbox Account and the Provider Account (each as defined below)
(collectively, the "Lockbox Accounts").
WHEREAS, the Provider has delivered to all Governmental Entities that
are Obligors of its Receivables, a Notice to Governmental Entities instructing
that all checks and any attached EOB's from Governmental Entities on account of
the Provider's Receivables be sent to the Provider Lockbox and that all wire
transfers from Governmental Entities on account of the Provider's Receivables be
wired directly into the Provider Lockbox Account.
WHEREAS, the Provider has delivered a Notice to Insurers to all
Insurers that are Obligors of its Receivables instructing that all checks and
any attached EOB's from Insurers on account of the Provider's Receivables be
sent to the Lender Lockbox, and that all wire transfers from Insurers on account
of the Provider's Receivables be wired directly into the Lender Lockbox Account.
WHEREAS, the parties hereto wish to set forth the procedures
administering the Lockboxes and the Lockbox Accounts.
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NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the
foregoing recitals and the mutual covenants and promises set forth herein, the
parties hereto agree hereby as follows:
1. The Lender Lockbox and the Lender Lockbox Account. (a) The Lender,
the Borrower and the Provider hereby request the Lockbox Bank to open, and the
Lockbox Bank hereby agrees to open, the following post-office box to function as
the Lender Lockbox hereunder, under the Receivables Transfer Agreement, and
under the Loan Agreement:
Daiwa Healthco-2 LLC
X.X. Xxx 00000
Xxx Xxxxxxxxx, XX 00000-0000
(the "Lender Lockbox")
Each of the Provider, the Borrower and the Lender hereby agree, and the Lockbox
Bank acknowledges, that the Lender Lockbox is being established for the sole
purpose of receiving checks, other forms of Collections, and any attached EOB's
from Insurers on account of Receivables. The Lender Lockbox shall be
administered by the Lockbox Bank as agent for the sole benefit of the Lender.
The Provider hereby agrees and confirms that it has no right or ability to
direct the checks, documents, or other contents held in the Lender Lockbox or to
make a claim against the Lockbox Bank or the Lender in furtherance of such other
parties' rights hereunder.
(b) The Lender hereby requests the Lockbox Bank to open, and the
Lockbox Bank hereby agrees to open, account #0700489647 (as the "Lender Lockbox
Account") for the purpose of (i) depositing checks received from Insurers in the
Lender Lockbox, and (ii) receiving wire transfers from Insurers, each on account
of the Receivables of the Provider payable by Insurers. The Lender hereby
irrevocably and unconditionally instructs the Lockbox Bank on each Business Day,
to deposit on a daily basis (A) all checks received in the Lender Lockbox into
the Lender Lockbox Account, and (B) apply and credit to the Lender Lockbox
Account all transfers directed to such account. The Provider agrees and confirms
that it has no dominion or control whatsoever over funds held in the Lender
Lockbox Account and the Provider hereby disclaims any right of any nature
whatsoever to control or otherwise direct or make any claim against the funds
held in the Lender Lockbox Account from time to time.
The Lender hereby directs the Lockbox Bank to transfer from the Lender
Lockbox Account on each Business Day, all available funds held in the Lender
Lockbox Account to account #000-000-0000 of the Lender at The Chase Manhattan
Bank, ABA #000000000.
2. The Provider Lockbox and the Provider Lockbox Account. (a) The
Provider hereby requests the Lockbox Bank to open, and the Lockbox Bank hereby
agrees to open, the following post-office box to function as the Provider
Lockbox hereunder, under the Receivables Transfer Agreement, and under the Loan
Agreement:
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Physicians Clinical Laboratory, Inc:
X.X. Xxx 000000
Xxx Xxxxxxxxx, XX 00000-0000
(the "Provider Lockbox")
The Provider, the Borrower and the Lender hereby agree, and the Lockbox Bank
acknowledges; that the Provider Lockbox is being established for the sole
purpose of receiving checks, other forms of Collections and any attached EOB's
from Governmental Entities on account of Receivables. The Provider Lockbox shall
be administered by the Lockbox Bank as agent for the sole benefit of the
Provider.
(b) The Provider hereby requests that Lockbox Bank open, and the
Lockbox Bank hereby agrees to open with the Lockbox Bank account #2380012157 (as
the "Provider Lockbox Account") for the purpose of (i) depositing checks from
Governmental Entities received in the Provider Lockbox, and (ii) receiving wire
transfers from Governmental Entities, each on account of Receivables of the
Provider payable by Governmental Entities.
THE PARTIES HERETO HEREBY AGREE AND CONFIRM THAT THE PROVIDER HAS SOLE
DOMINION AND CONTROL OVER THE PROVIDER LOCKBOX, THE PROVIDER LOCKBOX ACCOUNT AND
ALL FUNDS HELD THEREIN AND EACH PARTY OTHER THAN THE PROVIDER HEREBY DISCLAIMS
ANY RIGHT OF ANY NATURE WHATSOEVER TO CONTROL OR OTHERWISE DIRECT OR MAKE ANY
CLAIM AGAINST THE FUNDS HELD IN THE PROVIDER ACCOUNT FROM TIME TO TIME, EXCEPT
AS PROVIDED IN SECTION 6 BELOW.
The Provider hereby provides the following standing revocable
instruction (the "Standing Revocable Instruction") to the Lockbox Bank:
On each Business Day, the Lockbox Bank shall (A) deposit all checks
received in the Provider Lockbox into the Provider Lockbox Account, (B)
apply and credit to the Provider Lockbox Account all transfers directed
to such account, and (C) transfer from the Provider Lockbox Account and
account #2180024185 all available funds held in account # 2380012157
and account #2180024185 to the Lender Lockbox Account;
provided, however, that such Standing Revocable Instruction is revocable by the
Provider at any time and for any reason by the Provider providing written
instruction (a "Revocation Order") to the Lockbox Bank, whereupon the within ten
Business Days the Lockbox Bank shall follow such Revocation Order and not the
Standing Revocable Instruction.
3. Access to the Lockboxes. (a) The Lender hereby irrevocably grants
the Lockbox Bank access to the Lender Lockbox and the right to withdraw any mail
delivered thereto and to open such mail. Any and all checks or other forms of
cash deposits withdrawn by the Lockbox
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Bank from the Lender Lockbox shall be deposited by the Lockbox Bank in the
Lender Lockbox Account. Unless otherwise directed by the Lender, all other items
withdrawn by the Lockbox Bank from the Lender Lockbox shall be returned to the
Provider with a copy to the Lender.
(b) Until such time as the Lockbox Bank has received a Revocation
Order, the Provider hereby grants the Lockbox Bank access to the Provider
Lockbox and the right to withdraw any mail delivered thereto and to open such
mail. Any and all checks or other forms of cash deposits withdrawn by the
Lockbox Bank from the Provider Lockbox shall be deposited by the Lockbox Bank in
the Provider Lockbox Account. All other items withdrawn by the Lockbox Bank from
the Provider Lockbox shall be returned to the Provider with a copy to the
Lender.
4. Other Duties of the Lockbox Bank; Conflicting Instructions. (a) The
Lockbox Bank shall notify the Lender within 48 hours (i) upon the receipt by the
Lockbox Bank of any Revocation Order, (ii) upon a request by the Provider to
withdraw any funds from the Provider Account, and (iii) upon the imposition or
attempted imposition of any Lien, security interest or other encumbrance on any
Lockbox or any Lockbox Account.
(b) In the event the Lockbox Bank receives conflicting requests or
instructions from the other parties hereto (except if the Lockbox Bank receives
a Revocation Order, which the Lockbox Bank shall follow regardless of
conflicting instructions, if any), the Lockbox Bank shall be entitled to
exercise its reasonable judgment in acting, suffering or omitting to act under
such circumstances, and the Lockbox Bank shall be entitled to refrain from
taking any action whatsoever. The Lockbox Bank may also consult with independent
legal counsel and the written opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by the Lockbox Bank hereunder in good faith and in reliance thereon.
(c) In the event that the Provider becomes subject to voluntary or
involuntary proceedings under the U.S. Bankruptcy Code, or if the Lockbox Bank
is served with legal process which the Lockbox Bank in good faith believes
affects the Collections and/or the Lockbox Accounts, the Lockbox Bank may place
a hold on any funds deposited thenceforth in the Lockbox Accounts until such
time as the Lockbox Bank receives an appropriate court order or other assurances
reasonably satisfactory to the Lockbox Bank that the funds may be disbursed
according to the terms of this Agreement. The Lockbox Bank shall immediately
provide notice to the Lender of any such hold placed by the Lockbox Bank.
5. Limitation of Duties; Limitation on Liability. The Lockbox Bank
undertakes to perform only such duties as are expressly set forth herein and as
set forth in the Lockbox Account Agreement between the Lockbox Bank and the
Provider. Notwithstanding any other provision of this Agreement, the parties
hereto agree that the Lockbox Bank shall not be liable for any action taken by
it or by any of its directors, officers, agents or employees in accordance with
this Agreement except for its or their own gross negligence or willful
misconduct. In no event shall the Lockbox Bank be liable for (i) losses or
delays resulting from force majeure, or other causes beyond the Lockbox Bank's
reasonable control; (ii) indirect, special or
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consequential damages; or, (iii) lost profits, or incidental or punitive
damages, regardless of the basis of the claim, whether in contract, tort, strict
liability or other legal or equitable theory and regardless of whether the
Lockbox Bank has been advised of the possibility of such damages.
6. Indemnity. The Provider agrees to pay, indemnify, and hold the
Lockbox Bank harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including, without limitation,
reasonable legal fees) with respect to the performance of this Agreement by the
Lockbox Bank or any of the Lockbox Bank's directors, officers, agents or
employees, unless arising from its or their own gross negligence or willful
misconduct. The indemnity provided in this paragraph shall extend to any items
deposited in the Lockbox Accounts which may be returned or otherwise not
collected, and all charges, commissions and fees related thereto (collectively,
the "Return Items"). The indemnity provided in this paragraph shall survive the
termination of this agreement pursuant to Section 13 below. The Lockbox Bank may
debit account #0700489922 of the Provider with the Lockbox Bank for any Returned
Items. To the extent there are insufficient funds in account #0700489922 to
cover such Returned Items, the Provider shall reimburse the Lockbox Bank for the
amount of any such Return Items within three Business Days of the Lockbox Bank's
demand for same. If the Provider has not reimbursed the Lockbox Bank for any
such Return Items within five Business Days after the Lockbox Bank's demand
therefor, the Lockbox Bank may then debit the Lockbox Accounts for the amount of
any such Return Items.
7. Fees. In compensation for the services rendered hereunder, the
Lockbox Bank shall be entitled to the fees described in the Lockbox Account
Agreement between the Lockbox Bank and the Provider. The Lockbox Bank's fees for
all the Lockboxes and the Lockbox Accounts shall be, at the Lockbox Bank's
option, debited account #0700489922 of the Provider with the Lockbox Bank or
billed directly to the Provider.
8. Lender Grant Coupled with Interest. The Lender hereby acknowledges
that the agreements made by it and the authorizations granted by it herein are
irrevocable and the authorizations granted and covenants made in Sections 1 and
3 are powers coupled with an interest.
9. Waiver of Right of Set-Off. The Lockbox Bank hereby waives, with
respect to all of its existing and future claims against the Borrower, the
Provider, the Lender or any Affiliate of any of them, except as provided in
Section 6 above, all existing and future rights of set-off and banker's Liens
against the Lender Lockbox, the Provider Lockbox, the Lender Lockbox Account or
the Provider Account and all items (and proceeds thereof) that come into its
possession in connection with the Lender Lockbox, the Provider Lockbox, the
Lender Lockbox Account or the Provider Account.
10. No Lien. The Lockbox Bank hereby represents, warrants and covenants
that as of the date of delivery of this Agreement, it has not received any
notice of any claim, Lien,
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security interest or other encumbrance relating to the Lender Lockbox Account or
the Provider Account.
11. Further Assurances. Each of the parties hereto agree to execute
such further documents, including, without limitation, forms relating to opening
the Lockboxes and the Lockbox Accounts at the Lockbox Bank, as may be necessary,
in the reasonable judgment of the Lockbox Bank, to further effectuate the
purposes of this Agreement.
12. Miscellaneous. This Agreement is binding upon the parties hereto
and their respective successors and assigns and shall inure to their benefit.
Neither this Agreement nor any provision hereof may be changed, amended,
modified or waived orally, but only by an instrument in writing signed by each
of the parties hereto. Subject to the Loan Agreement, this Agreement and the
Lender's rights and obligations herein shall be assignable by the Lender and its
successors and assigns. The Provider and the Borrower hereby acknowledge that
the Lender is granting its lenders a security interest in this Agreement and all
of the Lender's rights, title and interests hereunder. Any provision of this
Agreement which may prove unenforceable under any law or regulation shall not
affect the validity of any other provision hereof. This Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of New
York. This Agreement may be executed in any number of counterparts which
together shall constitute one and the same instrument.
13. Termination. Upon thirty days' advance written notice to the other
parties hereto, this Agreement may be terminated by (i) the Borrower; (ii) the
Provider only with the consent of the Lender (which consent shall not be
unreasonably withheld); (iii) the Lender; or (iv) the Lockbox Bank. In the event
of termination by the Lockbox Bank, the Provider hereby covenants that, within
such thirty day notice period, it will (x) enter into a substantially similar
depositary account agreement with a successor Lockbox Bank reasonably acceptable
to the Lender, and (y) deliver to all Obligors under the Loan Agreement a Notice
(as defined in the Receivables Transfer Agreement) with respect to such
successor Lockbox Bank.
14. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and be mailed, transmitted by facsimile, or delivered,
as to each party hereto (with a copy of each such notice and other communication
to the Lender), at its address set forth below or at such other address as shall
be designated by such party in a written notice to the parties hereto. Such
notice shall be delivered to:
if to the Lockbox Bank, to:
if by overnight courier: if by mail:
Union Bank of California, N.A. Union Bank of California, N.A.
Att: Commercial Customer Service Att: Commercial Customer Service -
0000 Xxxxxx Xxxxxx Xxxxxxxxx Xxxxxxx
Xxxxxxxx Xxxx, XX 00000 X.X. Xxx 0000
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0
Xxx Xxxxxxx, XX 00000-0000
Attention: Corporate Markets
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
if to the Lender, to:
Daiwa Healthco-2 LLC
c/o Lord Securities Corporation
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Daiwa Securities America Inc.
Financial Square, 00 Xxx Xxxx
Xxx Xxxx, XX 00000-0000
Attention: Chief Operating Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and with a copy to:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
if to the Provider, to:
Physicians Clinical Laboratory, Inc.
0000 X Xxxxxx, Xxxxx 000X
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
with a copy by facsimile to:
J. Xxxxxx Xxxxxxxxxx
Facsimile No.: (000) 000-0000
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if to the Borrower, to:
Bio-Cypher Funding Corp.
0000 X Xxxxxx, Xxxxx 000X
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
with a copy by facsimile to:
J. Xxxxxx Xxxxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
00 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Facsimile No.: (000) 000-0000
All such notices and communications shall be effective (a) in the case of notice
by mail, on the earlier of the date of receipt or five Business Days after being
deposited in the mails, first-class postage prepaid, and (b) in the case of
notice by facsimile transmission, when sent, in each case respectively addressed
as aforesaid.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
UNION BANK OF CALIFORNIA, N.A.
By: _____________________________
Name:
Title:
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DAIWA HEALTHCO-2 LLC
By: _____________________________
Name:
Title:
PHYSICIANS CLINICAL LABORATORY, INC.
By: _____________________________
Name:
Title:
BIO-CYPHER FUNDING CORP.
By: _____________________________
Name:
Title:
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