Exhibit 10.2
--------------------------------------------------------------------------------
AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
DATED AS OF SEPTEMBER 30, 2003
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
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
----
ARTICLE I - CAPITALIZATION OF THE BUYER AND AMOUNTS AND TERMS OF THE PURCHASES....................................2
SECTION 1.1. [INTENTIONALLY OMITTED]......................................................................2
SECTION 1.2. PURCHASES OF RECEIVABLES.....................................................................2
SECTION 1.3. PAYMENT FOR THE PURCHASES....................................................................3
SECTION 1.4. PURCHASE PRICE CREDIT ADJUSTMENTS............................................................5
SECTION 1.5. PAYMENTS AND COMPUTATIONS, ETC...............................................................5
SECTION 1.6. TRANSFER OF RECORDS..........................................................................6
SECTION 1.7. CHARACTERIZATION; GRANTING CLAUSES...........................................................6
ARTICLE II - REPRESENTATIONS AND WARRANTIES.......................................................................7
SECTION 2.1. REPRESENTATIONS OF THE SELLERS...............................................................7
(a) Ownership of such Seller................................................................................7
(b) Existence; Due Qualification; Permits...................................................................7
(c) Action..................................................................................................7
(d) Title to Receivables; Valid Security Interest...........................................................8
(e) Absence of Change of Control............................................................................8
(f) Noncontravention........................................................................................8
(g) No Proceedings..........................................................................................8
(h) Taxes...................................................................................................9
(i) Government Approvals....................................................................................9
(j) Financial Statements and Absence of Certain Material Adverse Changes...................................10
(k) Nature of Receivables..................................................................................11
(l) Margin Regulations.....................................................................................11
(m) Quality of Title.......................................................................................11
(n) Accurate Reports.......................................................................................11
(o) Offices................................................................................................12
(p) Collection Accounts....................................................................................12
(q) Eligible Receivables...................................................................................12
(r) Names..................................................................................................12
(s) Credit and Collection Policy...........................................................................12
(t) Payments to Sellers....................................................................................12
(u) Investment Company Act; Public Utility Holding Company Act; Other Restrictions.........................13
(v) Solvency...............................................................................................13
(w) ERISA..................................................................................................13
(x) Bulk Sales Act.........................................................................................13
(y) Reliance on Separate Legal Identity....................................................................13
(z) Specified Government Receivables.......................................................................13
ARTICLE III - CONDITIONS OF PURCHASES............................................................................13
SECTION 3.1. CONDITIONS PRECEDENT TO INITIAL PURCHASE....................................................13
SECTION 3.2. CONDITIONS PRECEDENT TO ALL PURCHASES.......................................................14
SECTION 3.3. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES.............................................15
ARTICLE IV - COVENANTS...........................................................................................15
SECTION 4.1. AFFIRMATIVE COVENANTS.......................................................................15
(a) Compliance With Laws, Etc..............................................................................15
(b) Preservation of Existence..............................................................................15
(c) Audits.................................................................................................15
(d) Keeping of Records and Books of Account................................................................16
(e) Performance and Compliance with Receivables and Contracts..............................................16
(f) Location of Records....................................................................................16
i
(g) Credit and Collection Policies.........................................................................16
(h) Separate Corporate Existence of the Buyer..............................................................16
(i) Collections............................................................................................16
(j) Further Assurances.....................................................................................17
SECTION 4.2. REPORTING REQUIREMENTS......................................................................17
(a) Sales, Liens, Etc......................................................................................17
(b) Extension or Amendment of Receivables..................................................................17
(c) Change in Business or Credit and Collection Policy.....................................................18
(d) Change in Payment Instructions to Obligors.............................................................18
(e) Deposits to Collection Accounts and Collection Account.................................................18
(f) Changes to Other Documents.............................................................................18
(g) Change of Name, State of Organization, or Records Locations............................................18
(h) Mergers, Consolidations and Acquisitions...............................................................18
(i) Disposition of Receivables and Related Assets..........................................................19
(j) Receivables Not to be Evidenced by Promissory Notes....................................................19
(k) Accounting for Purchases...............................................................................19
ARTICLE V - JOINDER OF ADDITIONAL SELLERS........................................................................19
SECTION 5.1. ADDITION OF NEW SELLERS.....................................................................19
SECTION 5.2. DOCUMENTATION...............................................................................19
ARTICLE VI - ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE RECEIVABLES.....................................20
SECTION 6.1. RIGHTS OF THE BUYER.........................................................................20
SECTION 6.2. RESPONSIBILITIES OF THE SELLERS.............................................................20
(a) Collection Procedures..................................................................................20
(b) Performance Under Contract.............................................................................20
(c) Power of Attorney......................................................................................20
SECTION 6.3. FURTHER ACTION EVIDENCING PURCHASES.........................................................20
SECTION 6.4. APPLICATION OF COLLECTIONS..................................................................21
ARtICLE VII - INDEMNIFICATION....................................................................................21
SECTION 7.1. INDEMNITIES BY THE SELLERS..................................................................21
SECTION 7.2. CONTRIBUTION................................................................................23
ARTICLE VIII - MISCELLANEOUS.....................................................................................24
SECTION 8.1. WAIVERS AND AMENDMENTS......................................................................24
SECTION 8.2. NOTICES, ETC................................................................................24
SECTION 8.3. CUMULATIVE REMEDIES.........................................................................24
SECTION 8.4. BINDING EFFECT; ASSIGNABILITY...............................................................24
SECTION 8.5. GOVERNING LAW...............................................................................25
SECTION 8.6. COSTS, EXPENSES AND TAXES...................................................................25
SECTION 8.7. SUBMISSION TO JURISDICTION..................................................................25
SECTION 8.8. WAIVER OF JURY TRIAL........................................................................25
SECTION 8.9. CAPTIONS AND CROSS REFERENCES; INCORPORATION BY REFERENCE...................................26
SECTION 8.10. EXECUTION IN COUNTERPARTS...................................................................26
SECTION 8.11. ACKNOWLEDGMENT AND AGREEMENT................................................................26
SECTION 8.12. NO PROCEEDINGS..............................................................................26
ANNEX A - DEFINITIONS............................................................................................30
EXHIBIT A - FORM OF PURCHASE REPORT..............................................................................37
EXHIBIT B - FORM OF SUBORDINATED NOTE............................................................................39
EXHIBIT C - CREDIT AND COLLECTION POLICIES.......................................................................45
EXHIBIT D - FORM OF JOINDER AGREEMENT............................................................................64
ii
SCHEDULE 2.1(0) - SELLERS' FEDERAL TAXPAYER ID NUMBERS; CHIEF EXECUTIVE OFFICE
ADDRESSES; PRINCIPAL LABORATORIES AND BILLING CENTERS, AND LOCATION(S) WHERE
RECORDS ARE KEPT.................................................................................................67
iii
AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
THIS AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT (as amended,
supplemented, restated or otherwise modified from time to time, this
"Agreement"), dated as of September 30, 2003 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, 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 Receivables Sale Agreement
dated as of July 21, 2000 by and among the parties (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 Second Amended and
Restated Credit and Security Agreement dated as of September 30, 2003, by and
among the Buyer, as borrower, Quest Diagnostics, as initial servicer, Blue Ridge
Asset Funding Corporation, La Fayette Asset Securitization LLC, Jupiter
Securitization Corporation, Credit Lyonnais New York Branch, individually and as
La Fayette Agent, Bank One, NA, individually and as Jupiter 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;
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
1
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
(other than Quest Diagnostics), 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.
(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
2
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, xxxx its master data processing records relating to its
Receivables with the legend required by Section 3.1(i) of the Existing
Agreement. 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)
shall be payable in full by the Buyer to such Seller on such Seller's Applicable
Closing Date, and shall be paid to such Seller 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
(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.
3
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 "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
4
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
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
5
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 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.
6
(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, and to secure its
obligations under this Section 1.7(b), each of the Sellers hereby grants to the
Buyer (and to the Administrative Agent, as the Buyer's assignee), a security
interest in such Seller's right, title and interest in and to, but not such
Seller's obligations under, each of such Seller's now existing and hereafter
arising Contracts associated with any Receivable sold or contributed by such
Seller hereunder at any time and in all proceeds of the foregoing (provided,
however, that to the extent that any Contract includes a prohibition on
assignment, such security interest shall be limited to a security interest in
the applicable Seller's right to receives payment thereunder to the extent
contemplated by Section 9-406 of the UCC of the applicable jurisdiction).
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
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
7
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, 2002 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:
(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
8
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, 2002 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.
(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
9
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) 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,
2002 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, 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, 2002 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 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.
10
(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."
(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 legal
and equitable 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 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.
11
(o) Offices. The principal places of laboratories and chief
executive offices 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
(except for the Collection Account at China Trust Bank) 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), since
January 1, 1997, 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).
(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.
12
(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. 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.
(z) Specified Government Receivables. All Specified Government
Receivables are recorded in the Originators' billing and accounting systems
solely as Client-Billed Receivables.
ARTICLE III
CONDITIONS OF PURCHASES
Section 3.1. Conditions Precedent to the Effectiveness of this
Agreement. The effectiveness of this Agreement is subject to the conditions
precedent that (1) the Buyer shall have executed and delivered an amended and
restated Subordinated Note in favor of such Seller, and (2) the Buyer shall have
received, on or before such Seller's Applicable Closing Date, the following,
each (unless otherwise indicated) dated such Seller's Applicable Closing Date,
and each in form, substance and date reasonably satisfactory to the Buyer and
the Administrative Agent:
13
(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;
(g) An opinion and/or reliance letter of such Seller's counsel
covering the matters referenced in Exhibit 5.1(h) to the Credit and
Security Agreement, and
(h) A letter from Shearman & Sterling LLP confirming that none
of the amendments embodied herein would alter the conclusions reached
in their bankruptcy opinions delivered in connection with the Existing
Agreement.
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 as of the date of such purchase (and after giving
effect thereto) as though made on and as of such date.
14
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.
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 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.
15
(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 (except for
the Collection Account at China Trust Bank) 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 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.
16
(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 Receivables originated by
such Originator, taken as a whole, or any material part thereof, or the Buyer's
rights therein.
17
(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,
(B) all UCC financing statements necessary to
maintain the validity and perfection of the Buyer's ownership
interest in the
18
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.
19
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:
20
(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) xxxx 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:
21
(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;
22
(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.
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.
23
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.
24
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
25
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]
26
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:
--------------------------------------
Name:
Title:
QUEST DIAGNOSTICS INCORPORATED, A MICHIGAN
CORPORATION
By:
---------------------------------------
Name:
Title:
QUEST DIAGNOSTICS INCORPORATED, A MARYLAND
CORPORATION
By:
-----------------------------------------
Name:
Title:
QUEST DIAGNOSTICS INCORPORATED, A CALIFORNIA
CORPORATION
By:
------------------------------------------
Name:
Title:
27
QUEST DIAGNOSTICS LLC, A CONNECTICUT LIMITED
LIABILITY COMPANY
By:
-----------------------------------------
Name:
Title:
QUEST DIAGNOSTICS LLC, A MASSACHUSETTS
LIMITED LIABILITY COMPANY
By:
-----------------------------------------
Name:
Title:
QUEST DIAGNOSTICS OF PENNSYLVANIA
INCORPORATED, A DELAWARE CORPORATION
By:
-----------------------------------------
Name:
Title:
QUEST DIAGNOSTICS LLC, AN ILLINOIS LIMITED
LIABILITY COMPANY
By:
-----------------------------------------
Name:
Title:
28
METWEST INC., A DELAWARE CORPORATION
By:
--------------------------------------
Name:
Title:
QUEST DIAGNOSTICS CLINICAL LABORATORIES,
INC., A DELAWARE CORPORATION
By:
--------------------------------------
Name:
Title:
QUEST DIAGNOSTICS RECEIVABLES INC.
By:
---------------------------------------
Name:
Title:
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, and (ii) with respect to each New
Seller, its New Seller Closing Date.
"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 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
30
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 the date on which the initial Advance is
made under the Credit and Security Agreement.
"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 xxxx, 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 Delaware corporation; and Quest Diagnostics Clinical
Laboratories, Inc., a Delaware corporation.
31
"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 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, collectively, all of the following with respect
to each Receivable:
(a) a security interest in favor of the Buyer and its assigns in all
Contracts (provided, however, that to the extent that any Contract includes a
prohibition on assignment, such security interest shall be limited to a security
interest in the applicable Seller's right to receives payment thereunder to the
extent contemplated by Section 9-406 of the UCC of the applicable jurisdiction);
(b) an ownership interest in all right, title and interest in and to
the following: (i) all Collections; (ii) all Records; (iii) all Collection
Accounts and all cash, balances and instruments therein from time to time
therein; (iv) all right, title and interest in and to (A) the goods (including
returned or repossessed goods), if any, the sale of which by a Seller gave rise
to such Receivable and all insurance contracts with respect thereto, (B) all
security deposits and other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise, (C)
all UCC financing statements covering any collateral securing payment of such
Receivable, and (D) all guarantees and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise; and
(c) all proceeds and insurance proceeds of the foregoing.
32
"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,
(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
33
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.
"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 an amended and restated subordinated
promissory note 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".
34
