SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 2004
Commission file number 1-12215
Quest Diagnostics Incorporated
One Malcolm Avenue
Teterboro, NJ 07608
(201) 393-5000
Delaware
(State of Incorporation)
16-1387862
(I.R.S. Employer Identification Number)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [_]
As of April 23, 2004, there were outstanding 103,467,426 shares of the registrant's common stock, $.01 par value.
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements
Index to consolidated financial statements filed as part of this report:
Consolidated Statements of Operations for the
Three Months Ended March 31, 2004 and 2003 2
Consolidated Balance Sheets as of
March 31, 2004 and December 31, 2003 3
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2004 and 2003 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Management's Discussion and Analysis of Financial Condition
and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See Item 2. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" 22
Item 4. Controls and Procedures
Controls and Procedures 22
|
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
-----------------------
2004 2003
---------- ----------
Net revenues ........................................... $1,255,742 $1,092,797
---------- ----------
Operating costs and expenses:
Cost of services ....................................... 737,281 648,097
Selling, general and administrative .................... 307,545 279,199
Amortization of intangible assets ...................... 2,064 2,023
Other operating (income) expense, net .................. (27) 223
---------- ----------
Total operating costs and expenses .................. 1,046,863 929,542
---------- ----------
Operating income ....................................... 208,879 163,255
Other income (expense):
Interest expense, net .................................. (14,644) (13,909)
Minority share of income ............................... (4,454) (3,803)
Equity earnings in unconsolidated joint ventures ....... 4,557 4,056
Other income (expense), net ............................ 1,199 (805)
---------- ----------
Total non-operating expenses, net ................... (13,342) (14,461)
---------- ----------
Income before taxes .................................... 195,537 148,794
Income tax expense ..................................... 79,388 60,758
---------- ----------
Net income ............................................. $ 116,149 $ 88,036
========== ==========
Basic earnings per common share:
Net income ............................................. $ 1.13 $ 0.88
Weighted average common shares outstanding - basic ..... 103,142 100,037
Diluted earnings per common share:
Net income ............................................. $ 1.10 $ 0.86
Weighted average common shares outstanding - diluted ... 105,742 102,455
|
The accompanying notes are an integral part of these statements.
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2004 AND DECEMBER 31, 2003
(in thousands, except per share data)
(unaudited)
March 31, December 31,
2004 2003
---------- ------------
Assets
Current assets:
Cash and cash equivalents................................................ $ 190,075 $ 154,958
Accounts receivable, net of allowance of $207,210 and $211,739 at
March 31, 2004 and December 31, 2003, respectively.................... 650,511 609,187
Inventories.............................................................. 72,625 72,484
Deferred income taxes.................................................... 98,114 108,975
Prepaid expenses and other current assets................................ 62,296 50,182
---------- ----------
Total current assets.................................................. 1,073,621 995,786
Property, plant and equipment, net....................................... 609,765 607,305
Goodwill, net............................................................ 2,517,338 2,518,875
Intangible assets, net................................................... 15,013 16,978
Deferred income taxes.................................................... 50,829 49,635
Other assets............................................................. 113,491 112,839
---------- ----------
Total assets............................................................. $4,380,057 $4,301,418
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses.................................... $ 617,399 $ 649,850
Short-term borrowings and current portion of long-term debt.............. 44,597 73,950
---------- ----------
Total current liabilities............................................. 661,996 723,800
Long-term debt........................................................... 1,057,749 1,028,707
Other liabilities........................................................ 155,857 154,217
Commitments and contingencies
Common stockholders' equity:
Common stock, par value $0.01 per share; 300,000 shares authorized;
106,819 and 106,804 shares issued at March 31, 2004 and December
31, 2003, respectively................................................ 1,068 1,068
Additional paid-in capital............................................... 2,252,801 2,267,014
Retained earnings ...................................................... 481,151 380,559
Unearned compensation.................................................... (1,798) (2,346)
Accumulated other comprehensive income................................... 3,549 5,947
Treasury stock, at cost; 3,453 and 3,990 shares at March 31, 2004 and
December 31, 2003, respectively....................................... (232,316) (257,548)
---------- ----------
Total common stockholders' equity..................................... 2,504,455 2,394,694
---------- ----------
Total liabilities and stockholders' equity............................... $4,380,057 $4,301,418
========== ==========
|
The accompanying notes are an integral part of these statements.
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(in thousands)
(unaudited)
2004 2003
-------- ---------
Cash flows from operating activities:
Net income.............................................................. $116,149 $ 88,036
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization........................................... 41,070 36,701
Provision for doubtful accounts......................................... 56,626 54,629
Deferred income tax provision........................................... 11,419 10,046
Minority share of income................................................ 4,454 3,803
Stock compensation expense.............................................. 548 1,536
Tax benefits associated with stock-based compensation plans............. 24,447 5,637
Other, net.............................................................. (1,080) (1,027)
Changes in operating assets and liabilities:
Accounts receivable.................................................. (97,950) (84,316)
Accounts payable and accrued expenses................................ (63,895) (96,236)
Integration, settlement and other special charges.................... (13,975) (4,898)
Income taxes payable................................................. 41,544 40,038
Other assets and liabilities, net.................................... (8,666) 4,352
-------- ---------
Net cash provided by operating activities............................... 110,691 58,301
-------- ---------
Cash flows from investing activities:
Business acquisitions, net of cash acquired............................. -- (236,396)
Capital expenditures.................................................... (45,137) (37,481)
Increase in investments and other assets................................ (3,614) (2,628)
Proceeds from disposition of assets..................................... 3,293 9
-------- ---------
Net cash used in investing activities................................... (45,458) (276,496)
-------- ---------
Cash flows from financing activities:
Proceeds from borrowings................................................ 75,000 450,000
Repayments of debt...................................................... (75,359) (268,987)
Purchases of treasury stock............................................. (44,871) --
Exercise of stock options............................................... 34,483 2,799
Dividends paid.......................................................... (15,429) --
Distributions to minority partners...................................... (3,940) (3,002)
Financing costs paid.................................................... -- (4,224)
Other .................................................................. -- 429
-------- ---------
Net cash (used in) provided by financing activities..................... (30,116) 177,015
-------- ---------
Net change in cash and cash equivalents................................. 35,117 (41,180)
Cash and cash equivalents, beginning of period.......................... 154,958 96,777
-------- ---------
Cash and cash equivalents, end of period................................ $190,075 $ 55,597
======== =========
|
The accompanying notes are an integral part of these statements.
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, unless otherwise indicated)
(unaudited)
1. BASIS OF PRESENTATION
Background
Quest Diagnostics Incorporated and its subsidiaries ("Quest Diagnostics" or the "Company") is the largest clinical laboratory testing business in the United States. As the nation's leading provider of diagnostic testing and related services for the healthcare industry, Quest Diagnostics offers a broad range of clinical laboratory testing services to physicians, hospitals, managed care organizations, employers, governmental institutions and other commercial clinical laboratories. Quest Diagnostics is the leading provider of esoteric testing, including gene-based testing, and testing for drugs of abuse. The Company is also a leading provider of anatomic pathology services and testing to support clinical trials of new pharmaceuticals worldwide. Through the Company's national network of laboratories and patient service centers, and its esoteric testing laboratory and development facilities, Quest Diagnostics offers comprehensive and innovative diagnostic testing, information and related services used by physicians and other healthcare customers to diagnose, treat and monitor diseases and other medical conditions.
On an annualized basis, Quest Diagnostics processes over 130 million requisitions for testing through its extensive network of laboratories and patient service centers in virtually every major metropolitan area throughout the United States.
Basis of Presentation
The interim consolidated financial statements reflect all adjustments, which in the opinion of management are necessary for a fair statement of financial condition and results of operations for the periods presented. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. The interim consolidated financial statements have been compiled without audit. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's 2003 Annual Report on Form 10-K. Certain amounts reported in the Company's consolidated statements of operations for the three months ended March 31, 2003 have been reclassified to conform to the 2004 presentation, which reports operating income on the face of the consolidated statements of operations.
Earnings Per Share
Basic earnings per common share is calculated by dividing net income by the weighted average common shares outstanding. Diluted earnings per common share is calculated by dividing net income by the weighted average common shares outstanding after giving effect to all potentially dilutive common shares outstanding during the period. The if-converted method is used in determining the dilutive effect of the Company's 1 3/4% contingent convertible debentures in periods when the holders of such securities are permitted to exercise their conversion rights. Potentially dilutive common shares include outstanding stock options and restricted common shares granted under the Company's Employee Equity Participation Program. These dilutive securities increased the weighted average common shares outstanding by 2.6 million shares and 2.4 million shares for the three months ended March 31, 2004 and 2003, respectively.
Stock-Based Compensation
The Company has chosen to adopt the disclosure only provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), as amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123" ("SFAS 148"), and continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and related interpretations. Under this approach, the cost of restricted stock awards is expensed over their vesting period, while the imputed cost of stock option grants and discounts offered under the Company's Employee Stock Purchase Plan ("ESPP") is disclosed, based on the vesting provisions of the individual grants, but not charged to expense. Stock-based compensation expense recorded in accordance with APB 25, related to restricted stock awards, was $0.5 million and $1.5 million for the three months ended March 31, 2004 and 2003, respectively.
The following table presents net income and basic and diluted earnings per common share, had the Company elected to recognize compensation cost based on the fair value at the grant dates for stock option awards and discounts
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(in thousands, unless otherwise indicated)
(unaudited)
granted for stock purchases under the Company's ESPP, consistent with the method prescribed by SFAS 123, as amended by SFAS 148:
Three Months Ended
March 31,
-------------------
2004 2003
-------- --------
Net income:
Net income, as reported ..................... $116,149 $ 88,036
Add: Stock-based compensation under APB 25... 548 1,536
Deduct: Total stock-based compensation
expense determined under fair value
method for all awards, net of related tax
effects .................................. (10,962) (14,805)
-------- --------
Pro forma net income ........................ $105,735 $ 74,767
======== ========
Earnings per common share:
Basic - as reported ......................... $ 1.13 $ 0.88
-------- --------
Basic - pro forma ........................... $ 1.03 $ 0.75
-------- --------
Diluted - as reported ....................... $ 1.10 $ 0.86
-------- --------
Diluted - pro forma ......................... $ 1.01 $ 0.74
-------- --------
|
The fair value of each option grant was estimated on the date of grant currently calculated using the Black-Scholes option-pricing model with the following weighted average assumptions:
Three Months Ended
March 31,
------------------
2004 2003
-------- -------
Dividend yield.............................. 0.7% 0.0%
Risk-free interest rate..................... 3.0% 2.9%
Expected volatility......................... 47.3% 48.1%
Expected holding period, in years........... 5 5
|
New Accounting Standard
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities", as revised in December 2003 ("FIN 46"). FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. Historically, entities generally were not consolidated unless the entity was controlled through voting interests. FIN 46 also requires disclosures about variable interest entities that a company is not required to consolidate but in which it has a significant variable interest. The adoption of FIN 46 did not have an impact on the Company's consolidated financial statements.
2. BUSINESS ACQUISITION
On February 28, 2003, the Company completed the acquisition of Unilab Corporation ("Unilab"), the leading commercial clinical laboratory in California. In connection with the acquisition of Unilab, the Company entered into an agreement to sell to Laboratory Corporation of America Holdings, Inc., certain assets in northern California (the "Divestiture"). During the fourth quarter of 2003, the Company finalized its plan related to the integration of Unilab into the Company's laboratory network. As part of the plan, and following the Divestiture, the Company closed its previously owned clinical laboratory in the San Francisco Bay area and completed the integration of remaining customers in the northern California area to Unilab's laboratories in San Jose and Sacramento. The Company currently operates two laboratories in the Los Angeles metropolitan area. The Company plans to open a new regional laboratory in the Los Angeles metropolitan area
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(in thousands, unless otherwise indicated)
(unaudited)
and then integrate its business in the Los Angeles metropolitan area into the new facility. As of March 31, 2004 and December 31, 2003, accruals related to the Unilab integration plan totaled approximately $6 million and $7 million, respectively. While the majority of the accrued costs at March 31, 2004 are expected to be paid during the remainder of 2004, there are certain severance costs that have payment terms extending into 2005.
The following unaudited pro forma combined financial information for the three months ended March 31, 2003, assumes that the acquisition of Unilab and the related Divestiture were completed on January 1, 2003 (in thousands, except per share data):
Three Months Ended
March 31, 2003
------------------
Pro forma
------------------
Net revenues .............................................. $1,163,023
Net income ................................................ 96,715
Basic earnings per common share:
Net income ................................................ $ 0.92
Weighted average common shares outstanding - basic ........ 104,583
Diluted earnings per common share:
Net income ................................................ $ 0.90
Weighted average common shares outstanding - diluted ...... 107,036
|
The unaudited pro forma combined financial information presented above reflects certain reclassifications to the historical financial statements of Unilab to conform the acquired company's accounting policies and classification of certain costs and expenses to that of Quest Diagnostics. These adjustments had no impact on pro forma net income. Pro forma results for the three months ended March 31, 2003 exclude $14.5 million of direct transaction costs, which were incurred and expensed by Unilab immediately prior to the closing of the Unilab acquisition.
3. GOODWILL AND INTANGIBLE ASSETS
Goodwill at March 31, 2004 and December 31, 2003 consisted of the following:
March 31, December 31,
2004 2003
---------- ------------
Goodwill ........................................... $2,705,391 $2,706,928
Less: accumulated amortization ..................... (188,053) (188,053)
---------- ----------
Goodwill, net ...................................... $2,517,338 $2,518,875
========== ==========
|
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(in thousands, unless otherwise indicated)
(unaudited)
The changes in the gross carrying amount of goodwill for the period ended March 31, 2004 and for the year ended December 31, 2003 are as follows:
March 31, December 31,
2004 2003
---------- ------------
Balance at beginning of period...................... $2,706,928 $1,976,903
Goodwill acquired during the period................. -- 730,025
Other............................................... (1,537) --
---------- ----------
Balance at end of period............................ $2,705,391 $2,706,928
========== ==========
|
Intangible assets at March 31, 2004 and December 31, 2003 consisted of the following:
Weighted March 31, 2004 December 31, 2003
Average -------------------------------- --------------------------------
Amortization Accumulated Accumulated
Period Cost Amortization Net Cost Amortization Net
------------ ------- ------------ ------- ------- ------------ -------
Non-compete agreements.... 5 years $44,942 $(39,381) $ 5,561 $44,942 $(37,947) $ 6,995
Customer lists............ 15 years 42,225 (36,023) 6,202 42,225 (35,568) 6,657
Other..................... 10 years 5,895 (2,645) 3,250 5,895 (2,569) 3,326
------- -------- ------- ------ -------- -------
Total.................. 10 years $93,062 $(78,049) $15,013 $93,062 $(76,084) $16,978
======= ======== ======= ======= ======== =======
|
Amortization expense related to intangible assets was $2,064 and $2,023 for the three months ended March 31, 2004 and 2003, respectively.
The estimated amortization expense related to intangible assets for each of the five succeeding fiscal years and thereafter as of March 31, 2004 is as follows:
Fiscal Year Ending
December 31,
----------------------
Remainder of 2004......... $ 4,404
2005...................... 3,168
2006...................... 1,891
2007...................... 1,057
2008...................... 867
2009...................... 769
Thereafter................ 2,857
-------
Total.................. $15,013
=======
|
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(in thousands, unless otherwise indicated)
(unaudited)
4. DEBT
Term Loan due December 2008
On December 19, 2003, the Company entered into a new $75 million amortizing term loan facility (the "term loan due December 2008"), which was funded on January 12, 2004 and the proceeds of which were used to repay $75 million of outstanding principal under the Company's term loan due June 2007. Interest is based on LIBOR plus an applicable margin that can fluctuate over a range of up to 119 basis points, based on changes in the Company's public debt rating. As of March 31, 2004, the Company's borrowing rate for LIBOR-based loans was LIBOR plus 0.55%. The term loan due December 2008 requires principal repayments of the initial amount borrowed equal to 20% on each of the third and fourth anniversary dates of the funding and the remainder of the outstanding balance on December 31, 2008. The term loan due December 2008 is guaranteed by the Company's wholly owned subsidiaries that operate clinical laboratories in the United States (the "Subsidiary Guarantors").
2004 Debt Refinancings
On April 20, 2004, the Company entered into a new $500 million senior unsecured revolving credit facility to replace its existing $325 million unsecured revolving credit facility. Under the new $500 million senior unsecured revolving credit facility (the "Credit Facility"), which matures in April 2009, interest is based on certain published rates plus an applicable margin that will vary over an approximate range of 90 basis points based on changes in the Company's credit ratings. At the option of the Company, it may elect to enter into LIBOR-based interest rate contracts for periods up to 180 days. Interest on any outstanding amounts not covered under the LIBOR-based interest rate contracts is based on an alternate base rate, which is calculated by reference to the prime rate or federal funds rate. As of April 30, 2004, the Company's borrowing rate for LIBOR-based loans was LIBOR plus 0.625%. The Credit Facility is guaranteed by the Subsidiary Guarantors. The Credit Facility contains various covenants, including the maintenance of certain financial ratios, which could impact the Company's ability to, among other things, incur additional indebtedness.
In addition, on April 20, 2004, the Company entered into a new $300 million receivables securitization facility to replace its existing $250 million receivables securitization facility which matured in April 2004. The new $300 million receivables securitization facility (the "secured receivables credit facility") matures in April 2007. Interest on the $300 million secured receivables credit facility is based on rates that are intended to approximate commercial paper rates for highly rated issuers. The secured receivables credit facility is supported by one-year back-up facilities provided by two banks on a committed basis. Borrowings outstanding under the secured receivables credit facility, if any, are classified as a current liability on our consolidated balance sheet since the lenders fund the borrowings through the issuance of commercial paper which matures at various dates within one year from the date of issuance and the term of the one-year back-up facilities described above.
On April 30, 2004, the Company repaid the remaining $230 million of principal outstanding under its term loan due June 2007 with $100 million of borrowings under its new $500 million unsecured revolving credit facility and $130 million of borrowings under its new $300 million secured receivables credit facility.
In conjunction with the debt refinancings outlined above, the Company is expected to record a charge to earnings of approximately $3 million in the second quarter of 2004, representing the write-off of deferred financing costs associated with the Company's debt and credit facilities which were refinanced.
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(in thousands, unless otherwise indicated)
(unaudited)
5. COMMITMENTS AND CONTINGENCIES
The Company has standby letters of credit issued under its $68 million letter of credit lines to ensure its performance or payment to third parties, which amounted to $61 million at March 31, 2004. The letters of credit, which are renewed annually, primarily represent collateral for current and future automobile liability and workers' compensation loss payments.
The Company has entered into several settlement agreements with various government and private payers during recent years relating to industry-wide billing and marketing practices that had been substantially discontinued by the mid-1990s. The Company is aware of certain pending lawsuits filed under the qui tam provisions of the civil False Claims Act. Some of the proceedings against the Company involve claims that are substantial in amount.
Although management believes that established reserves for billing-related claims are sufficient, including qui tam cases of which management is aware, it is possible that additional information (such as the indication by the government of criminal activity, additional tests being questioned or other changes in the government's or private claimants' theories of wrongdoing) may become available which may cause the final resolution of these matters to exceed established reserves by an amount which could be material to the Company's results of operations and cash flows in the period in which such claims are settled. The Company does not believe that these issues will have a material adverse effect on its overall financial position. However, the Company understands that there may be pending qui tam claims brought by former employees or other "whistle blowers" as to which it has not been provided with a copy of the complaint and accordingly cannot determine the extent of any potential liability.
In addition to the billing-related settlement reserves discussed above, the Company is involved in various legal proceedings arising in the ordinary course of business. Some of the proceedings against the Company involve claims that are substantial in amount. Although management cannot predict the outcome of such proceedings or any claims made against the Company, management does not anticipate that the ultimate outcome of the various proceedings or claims will have a material adverse effect on the Company's financial position but may be material to the Company's results of operations and cash flows in the period in which such proceedings or claims are resolved.
As a general matter, providers of clinical laboratory testing services may be subject to lawsuits alleging negligence or other similar legal claims. These suits could involve claims for substantial damages. Any professional liability litigation could also have an adverse impact on the Company's client base and reputation. The Company maintains various liability insurance programs for claims that could result from providing or failing to provide clinical laboratory testing services, including inaccurate testing results and other exposures. The Company's insurance coverage limits its maximum exposure on individual claims; however, the Company is essentially self-insured for a significant portion of these claims. The basis for claims reserves incorporates actuarially determined losses based upon the Company's historical and projected loss experience. Management believes that present insurance coverage and reserves are sufficient to cover currently estimated exposures. Although management cannot predict the outcome of any claims made against the Company, management does not anticipate that the ultimate outcome of any such proceedings or claims will have a material adverse effect on the Company's financial position but may be material to the Company's results of operations and cash flows in the period in which such claims are resolved.
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(in thousands, unless otherwise indicated)
(unaudited)
6. STOCKHOLDERS' EQUITY
Changes in stockholders' equity for the three months ended March 31, 2004 were as follows:
Accumulated
Shares of Other
Common Additional Compre- Treasury Compre-
Stock Common Paid-In Retained Unearned hensive Stock, hensive
Outstanding Stock Capital Earnings Compensation Income at Cost Income
----------- ------ ---------- -------- ------------ ----------- --------- --------
Balance,
December 31, 2003.......... 102,814 $1,068 $2,267,014 $380,559 $(2,346) $ 5,947 $(257,548)
Net income.................... 116,149 $116,149
Other comprehensive
loss....................... (2,398) (2,398)
--------
Comprehensive income....... $113,751
========
Dividend declared ............ (15,557)
Issuance of common stock
under benefit plans........ 49 1 3,065
Exercise of stock options..... 1,124 (35,620) 70,103
Shares to cover employee
payroll tax withholdings
on stock issued under
benefit plans.............. (74) (1) (6,105)
Tax benefits associated
with stock-based
compensation plans ........ 24,447
Amortization of unearned
compensation............... 548
Purchases of treasury stock... (547) (44,871)
------- ------ ---------- -------- ------- ------ ---------
Balance,
March 31, 2004............. 103,366 $1,068 $2,252,801 $481,151 $(1,798) $3,549 $(232,316)
======= ====== ========== ======== ======= ====== =========
|
In 2003, the Company's Board of Directors authorized a share repurchase program, which permits the Company to purchase up to $600 million of its common stock. For the quarter ended March 31, 2004, the Company repurchased 0.5 million shares of its common stock at an average price of $81.97 per share for a total of $45 million. Since the inception of the share repurchase program, the Company has repurchased approximately 4.5 million shares of its common stock at an average price of $66.64 per share for a total of $303 million. For the quarter ended March 31, 2004, the Company reissued 1.0 million of these shares held in treasury in connection with employee benefit plans. At March 31, 2004, $297 million of the share repurchase authorization remains available.
During the first quarter of 2004, the Company's Board of Directors declared a quarterly cash dividend of $0.15 per common share payable on April 21, 2004 to shareholders of record on April 7, 2004.
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(in thousands, unless otherwise indicated)
(unaudited)
Changes in stockholders' equity for the three months ended March 31, 2003 were as follows:
Accumulated
Shares of Retained Other
Common Additional Earnings Compre- Compre-
Stock Common Paid-In (Accumulated Unearned hensive hensive
Outstanding Stock Capital Deficit) Compensation Income (Loss) Income
----------- ------ ---------- ------------ ------------ ------------- -------
Balance,
December 31, 2002.......... 97,963 $ 980 $1,817,511 $(40,772) $(3,332) $(5,524)
Net income.................... 88,036 $88,036
Other comprehensive income.... 744 744
-------
Comprehensive income....... $88,780
=======
Shares issued to acquire
Unilab..................... 7,055 71 372,393
Fair value of Unilab
converted options.......... 8,452
Issuance of common stock
under benefit plans........ 205 2 8,095 (5,041)
Exercise of stock options..... 197 2 2,797
Shares to cover employee
payroll tax withholdings
on stock issued under
benefit plans.............. (163) (2) (8,661)
Tax benefits associated with
stock-based compensation
plans...................... 5,637
Amortization of unearned
compensation............... 1,687
------- ------ ---------- -------- ------- -------
Balance,
March 31, 2003............. 105,257 $1,053 $2,206,224 $ 47,264 $(6,686) $(4,780)
======= ====== ========== ======== ======= =======
|
7. SUPPLEMENTAL CASH FLOW & OTHER DATA
Three Months Ended
March 31,
-------- --------
2004 2003
-------- --------
Depreciation expense........................................ $ 39,006 $ 34,678
Interest expense............................................ (15,050) (14,185)
Interest income............................................. 406 276
-------- --------
Interest expense, net....................................... (14,644) (13,909)
Interest paid............................................... 21,903 27,111
Income taxes paid........................................... 3,571 7,198
Businesses acquired:
Fair value of assets acquired............................... $ -- $972,764
Fair value of liabilities assumed........................... -- 275,349
Non-cash financing activities:
Fair value of common stock issued to acquire Unilab......... $ -- $372,464
Fair value of converted options issued in conjunction with
the Unilab acquisition................................... -- 8,452
|
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(in thousands, unless otherwise indicated)
(unaudited)
8. SUMMARIZED FINANCIAL INFORMATION
The Company's 6 3/4% senior notes due 2006, 7 1/2% senior notes due 2011 and 1 3/4% contingent convertible debentures due 2021 are guaranteed by the Subsidiary Guarantors. With the exception of Quest Diagnostics Receivables Incorporated (see paragraph below), the non-guarantor subsidiaries are primarily foreign and less than wholly owned subsidiaries.
In conjunction with the receivables securitization, the Company formed a new wholly owned non-guarantor subsidiary, Quest Diagnostics Receivables Incorporated ("QDRI"). Through March 31, 2004, the Company and the Subsidiary Guarantors, with the exception of American Medical Laboratories, Incorporated ("AML") and Unilab, transfer all private domestic receivables (principally excluding receivables due from Medicare, Medicaid and other federal programs, and receivables due from customers of its joint ventures) to QDRI. In conjunction with the Company's new $300 million secured receivables credit facility in April 2004, effective in the second quarter of 2004, the Company and the Subsidiary Guarantors, including AML and Unilab, will transfer all private domestic receivables to QDRI. QDRI utilizes the transferred receivables to collateralize the Company's secured receivables credit facility. The Company and the Subsidiary Guarantors provide collection services to QDRI. QDRI uses cash collections principally to purchase new receivables from the Company and the Subsidiary Guarantors.
The following condensed consolidating financial data illustrates the composition of the combined guarantors. Investments in subsidiaries are accounted for by the parent using the equity method for purposes of the supplemental consolidating presentation. Earnings (losses) of subsidiaries are therefore reflected in the parent's investment accounts and earnings. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. On February 28, 2003, Quest Diagnostics acquired Unilab, which has been included in the accompanying condensed consolidating financial data, subsequent to the closing of the acquisition, as a Subsidiary Guarantor.
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(in thousands, unless otherwise indicated)
(unaudited)
Condensed Consolidating Statement of Operations Three Months Ended March 31, 2004
Subsidiary Non-Guarantor
Parent Guarantors Subsidiaries Eliminations Consolidated
-------- ---------- ------------- ------------ ------------
Net revenues................................. $200,225 $992,321 $121,658 $(58,462) $1,255,742
Operating costs and expenses:
Cost of services ......................... 120,820 573,835 42,626 -- 737,281
Selling, general and administrative ...... 27,916 225,625 58,335 (4,331) 307,545
Amortization of intangible assets ........ 523 1,532 9 -- 2,064
Royalty (income) expense ................. (80,999) 80,999 -- -- --
Other operating (income) expense, net .... (736) 19 690 -- (27)
-------- -------- -------- -------- ----------
Total operating costs and expenses .... 67,524 882,010 101,660 (4,331) 1,046,863
-------- -------- -------- -------- ----------
Operating income ............................ 132,701 110,311 19,998 (54,131) 208,879
Non-operating expenses, net ................. (14,696) (51,719) (1,058) 54,131 (13,342)
-------- -------- -------- -------- ----------
Income before taxes ......................... 118,005 58,592 18,940 -- 195,537
Income tax expense .......................... 49,705 23,437 6,246 -- 79,388
-------- -------- -------- -------- ----------
Income before equity earnings ............... 68,300 35,155 12,694 -- 116,149
Equity earnings from subsidiaries ........... 47,849 -- -- (47,849) --
-------- -------- -------- -------- ----------
Net income .................................. $116,149 $ 35,155 $ 12,694 $(47,849) $ 116,149
======== ======== ======== ======== ==========
|
Condensed Consolidating Statement of Operations Three Months Ended March 31, 2003
Subsidiary Non-Guarantor
Parent Guarantors Subsidiaries Eliminations Consolidated
-------- ---------- ------------- ------------ ------------
Net revenues ................................ $191,631 $849,370 $112,980 $(61,184) $1,092,797
Operating costs and expenses:
Cost of services ......................... 115,506 495,786 36,805 -- 648,097
Selling, general and administrative ...... 19,227 207,039 56,757 (3,824) 279,199
Amortization of intangible assets ........ 289 1,734 -- -- 2,023
Royalty (income) expense ................. (69,304) 69,304 -- -- --
Other operating (income) expense, net .... -- (3) 226 -- 223
-------- -------- -------- -------- ----------
Total operating costs and expenses .... 65,718 773,860 93,788 (3,824) 929,542
-------- -------- -------- -------- ----------
Operating income ............................ 125,913 75,510 19,192 (57,360) 163,255
Non-operating expenses, net ................. (17,300) (53,104) (1,417) 57,360 (14,461)
-------- -------- -------- -------- ----------
Income before taxes ......................... 108,613 22,406 17,775 -- 148,794
Income tax expense .......................... 44,191 8,963 7,604 -- 60,758
-------- -------- -------- -------- ----------
Income before equity earnings ............... 64,422 13,443 10,171 -- 88,036
Equity earnings from subsidiaries ........... 23,614 -- -- (23,614) --
-------- -------- -------- -------- ----------
Net income .................................. $ 88,036 $ 13,443 $ 10,171 $(23,614) $ 88,036
======== ======== ======== ======== ==========
|
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(in thousands, unless otherwise indicated)
(unaudited)
Condensed Consolidating Balance Sheet
March 31, 2004
Subsidiary Non-Guarantor
Parent Guarantors Subsidiaries Eliminations Consolidated
---------- ---------- ------------- ------------ ------------
Assets
Current assets:
Cash and cash equivalents ................... $ 177,215 $ 1,195 $ 11,665 $ -- $ 190,075
Accounts receivable, net .................... 20,420 85,378 544,713 -- 650,511
Other current assets ........................ 39,058 101,404 92,573 -- 233,035
---------- ---------- --------- ----------- ----------
Total current assets ..................... 236,693 187,977 648,951 -- 1,073,621
Property, plant and equipment, net .......... 222,626 358,808 28,331 -- 609,765
Goodwill and intangible assets, net ......... 157,954 2,328,995 45,402 -- 2,532,351
Intercompany receivable (payable) ........... 602,976 (72,147) (530,829) -- --
Investment in subsidiaries .................. 1,970,807 -- -- (1,970,807) --
Other assets ................................ 51,770 71,425 41,125 -- 164,320
---------- ---------- --------- ----------- ----------
Total assets ............................. $3,242,826 $2,875,058 $ 232,980 $(1,970,807) $4,380,057
========== ========== ========= =========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses ....... $ 373,073 $ 214,820 $ 29,506 $ -- $ 617,399
Current portion of long-term debt ........... -- 44,597 -- -- 44,597
---------- ---------- --------- ----------- ----------
Total current liabilities ................ 373,073 259,417 29,506 -- 661,996
Long-term debt .............................. 315,916 739,877 1,956 -- 1,057,749
Other liabilities ........................... 49,382 83,687 22,788 -- 155,857
Common stockholders' equity ................. 2,504,455 1,792,077 178,730 (1,970,807) 2,504,455
---------- ---------- --------- ----------- ----------
Total liabilities and stockholders' equity $3,242,826 $2,875,058 $ 232,980 $(1,970,807) $4,380,057
========== ========== ========= =========== ==========
|
Condensed Consolidating Balance Sheet
December 31, 2003
Subsidiary Non-Guarantor
Parent Guarantors Subsidiaries Eliminations Consolidated
---------- ---------- ------------- ------------ ------------
Assets
Current assets:
Cash and cash equivalents ................... $ 141,588 $ 1,991 $ 11,379 $ -- $ 154,958
Accounts receivable, net .................... 17,919 164,247 427,021 -- 609,187
Other current assets ........................ 36,576 114,758 80,307 -- 231,641
---------- ---------- --------- ----------- ----------
Total current assets ..................... 196,083 280,996 518,707 -- 995,786
Property, plant and equipment, net .......... 228,109 350,196 29,000 -- 607,305
Goodwill and intangible assets, net ......... 158,295 2,332,147 45,411 -- 2,535,853
Intercompany receivable (payable) ........... 510,958 (106,078) (404,880) -- --
Investment in subsidiaries .................. 1,929,235 -- -- (1,929,235) --
Other assets ................................ 73,398 50,053 39,023 -- 162,474
---------- ---------- --------- ----------- ----------
Total assets ............................. $3,096,078 $2,907,314 $ 227,261 $(1,929,235) $4,301,418
========== ========== ========= =========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses ....... $ 337,635 $ 281,753 $ 30,462 $ -- $ 649,850
Current portion of long-term debt ........... -- 73,950 -- -- 73,950
---------- ---------- --------- ----------- ----------
Total current liabilities ................ 337,635 355,703 30,462 -- 723,800
Long-term debt .............................. 315,844 710,908 1,955 -- 1,028,707
Other liabilities ........................... 47,905 83,781 22,531 -- 154,217
Common stockholders' equity ................. 2,394,694 1,756,922 172,313 (1,929,235) 2,394,694
---------- ---------- --------- ----------- ----------
Total liabilities and stockholders' equity $3,096,078 $2,907,314 $ 227,261 $(1,929,235) $4,301,418
========== ========== ========= =========== ==========
|
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(in thousands, unless otherwise indicated)
(unaudited)
Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2004
Subsidiary Non-Guarantor
Parent Guarantors Subsidiaries Eliminations Consolidated
--------- ---------- ------------- ------------ ------------
Cash flows from operating activities:
Net income ............................................ $116,149 $ 35,155 $ 12,694 $(47,849) $ 116,149
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization ...................... 13,803 24,848 2,419 -- 41,070
Provision for doubtful accounts .................... 1,148 15,510 39,968 -- 56,626
Other, net ......................................... 9,342 (7,805) (9,598) 47,849 39,788
Changes in operating assets and liabilities ........ (68,855) 59,399 (133,486) -- (142,942)
-------- --------- --------- -------- ---------
Net cash provided by (used in) operating activities ... 71,587 127,107 (88,003) -- 110,691
Net cash used in investing activities ................. (10,169) (23,914) (1,983) (9,392) (45,458)
Net cash (used in) provided by financing activities ... (25,791) (103,989) 90,272 9,392 (30,116)
-------- --------- --------- -------- ---------
Net change in cash and cash equivalents ............... 35,627 (796) 286 -- 35,117
Cash and cash equivalents, beginning of period ........ 141,588 1,991 11,379 -- 154,958
-------- --------- --------- -------- ---------
Cash and cash equivalents, end of period .............. $177,215 $ 1,195 $ 11,665 $ -- $ 190,075
======== ========= ========= ======== =========
|
Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2003
Subsidiary Non-Guarantor
Parent Guarantors Subsidiaries Eliminations Consolidated
--------- ---------- ------------- ------------ ------------
Cash flows from operating activities:
Net income ............................................ $ 88,036 $ 13,443 $ 10,171 $ (23,614) $ 88,036
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization ...................... 13,417 21,306 1,978 -- 36,701
Provision for doubtful accounts .................... 1,757 11,184 41,688 -- 54,629
Other, net ......................................... (7,421) (5,913) 9,715 23,614 19,995
Changes in operating assets and liabilities ........ 7,536 (85,134) (63,462) -- (141,060)
--------- -------- -------- --------- ---------
Net cash provided by (used in) operating activities ... 103,325 (45,114) 90 -- 58,301
Net cash used in investing activities ................. (546,659) (20,633) (4,334) 295,130 (276,496)
Net cash provided by financing activities ............. 407,287 63,211 1,647 (295,130) 177,015
--------- -------- -------- --------- ---------
Net change in cash and cash equivalents ............... (36,047) (2,536) (2,597) -- (41,180)
Cash and cash equivalents, beginning of period ........ 79,015 7,377 10,385 -- 96,777
--------- -------- -------- --------- ---------
Cash and cash equivalents, end of period .............. $ 42,968 $ 4,841 $ 7,788 $ -- $ 55,597
========= ======== ======== ========= =========
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions and select accounting policies that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
While many operational aspects of our business are subject to complex federal, state and local regulations, the accounting for it is generally straightforward with net revenues primarily recognized upon completion of the testing process. Our revenues are primarily comprised of a high volume of relatively low dollar transactions, and about one-half of total operating costs and expenses consist of employee compensation and benefits. Due to the nature of our business, several of our accounting policies involve significant estimates and judgments. These accounting policies have been described in our 2003 Annual Report on Form 10-K.
Integration of Unilab Corporation
On February 28, 2003, we completed the acquisition of Unilab Corporation, or Unilab, the leading commercial clinical laboratory in California. In connection with the acquisition of Unilab, we entered into an agreement to sell to Laboratory Corporation of America Holdings, Inc., certain assets in northern California, or the Divestiture. During the fourth quarter of 2003, we finalized our plan related to the integration of Unilab into our laboratory network. As part of the plan, and following the Divestiture, we closed our previously owned clinical laboratory in the San Francisco Bay area and completed the integration of remaining customers in the northern California area to Unilab's laboratories in San Jose and Sacramento. We currently operate two laboratories in the Los Angeles metropolitan area. We plan to open a new regional laboratory in the Los Angeles metropolitan area and then integrate our business in the Los Angeles metropolitan area into the new facility.
As of March 31, 2004 and December 31, 2003, accruals related to the Unilab integration plan totaled approximately $6 million and $7 million, respectively. While the majority of the accrued costs at March 31, 2004 are expected to be paid during the remainder of 2004, there are certain severance costs that have payment terms extending into 2005.
Results of Operations
Three Months Ended March 31, 2004 Compared with Three Months Ended March 31, 2003
Net income for the three months ended March 31, 2004 increased to $116 million from $88 million for the prior year period. This increase in earnings was primarily attributable to revenue growth and improved efficiencies generated from our Six Sigma and standardization initiatives.
Net Revenues
Net revenues for the three months ended March 31, 2004 grew by 14.9% over the prior year level and include three months of results of Unilab, which was acquired on February 28, 2003, compared to one month of Unilab results in the prior year. Pro forma revenue growth, assuming that the Unilab acquisition and the related Divestiture had been completed on January 1, 2003, was 8.0% for the three months ended March 31, 2004.
For the three months ended March 31, 2004, clinical testing volume, measured by the number of requisitions, increased 11.1% compared to the prior year period. On a pro forma basis, assuming that the Unilab acquisition and the Divestiture had been completed on January 1, 2003, testing volume increased 2.9%. Approximately 2% of the improved volume is due to an extra day in the current quarter caused by Leap Year and less severe weather than the year before.
For the three months ended March 31, 2004, average revenue per requisition improved 3.1%, or 4.4% on a pro forma basis, assuming that the Unilab acquisition and the Divestiture had been completed on January 1, 2003. The improvement in average revenue per requisition was primarily attributable to a continuing shift in test mix to higher value testing, including gene-based and esoteric testing. The inclusion of Unilab's results subsequent to February 28, 2003 served to reduce average revenue per requisition, reflecting Unilab's lower revenue per requisition.
Drugs of abuse testing, which is among our lowest priced services and accounts for approximately 6% of our volume and 3% of our consolidated net revenues, showed modest growth during the quarter, the first reported growth in several years.
Our businesses, other than clinical laboratory testing, which represent approximately 4% of our consolidated net revenues, grew over 20% during the three months ended March 31, 2004 and contributed approximately one-half of a percent to reported revenue growth.
Operating Costs and Expenses
Total operating costs and expenses for the three months ended March 31, 2004 increased $117 million from the prior year period primarily due to increases in our clinical testing volume (largely as a result of the Unilab acquisition). The increased costs were primarily in the areas of employee compensation and benefits and testing supplies. While our cost structure has been favorably impacted by the improved efficiencies generated from our Six Sigma and standardization initiatives, we continue to make investments to enhance our infrastructure to pursue our overall business strategy.
Cost of services, which includes the costs of obtaining, transporting and testing specimens, was 58.7% of net revenues for the three months ended March 31, 2004, compared to 59.3% in the prior year period. This improvement was primarily the result of the increase in average revenue per requisition and efficiency gains resulting from our Six Sigma and standardization initiatives. This improvement was partially offset by initial installation costs of deploying our Internet-based orders and results systems in physicians' offices and our patient service centers. The increase in the number of orders and test results reported via our Internet-based systems is improving the initial collection of billing information which is reducing the cost of billing and bad debt expense, both of which are components of selling, general and administrative expenses. At March 31, 2004, approximately 30% of our orders and approximately 40% of our test results were being transmitted via the Internet. Additionally, we believe that the number of physicians who no longer draw blood in their office continues to increase, which is resulting in an increase in the number of blood draws in our patient service centers or by our phlebotomists placed in physicians' offices. This shift has increased our operating costs associated with our blood draws, but is reducing costs in accessioning and other parts of our operations due to improved billing information and a reduction in the number of inadequate patient samples obtained by our trained phlebotomists compared to samples collected by physician employed phlebotomists.
Selling, general and administrative expenses, which include the costs of the sales force, billing operations, bad debt expense and general management and administrative support, decreased during the three months ended March 31, 2004, as a percentage of net revenues, to 24.5% from 25.5% in the prior year period. This improvement was primarily due to efficiencies from our Six Sigma and standardization initiatives and the improvement in average revenue per requisition. During the first quarter of 2004, bad debt expense improved to 4.5% of net revenues, compared to 5.0% in the prior year period. The reduction in bad debt expense as a percentage of net revenues occurred despite the addition of Unilab, which has higher levels of bad debt than the rest of Quest Diagnostics. This improvement primarily relates to the collection of diagnosis, patient and insurance information necessary to more effectively bill for services performed. We believe that our Six Sigma and standardization initiatives and the increased use of electronic ordering by our customers will provide additional opportunities to further improve our overall collection experience and cost structure.
Operating Income
Operating income for the three months ended March 31, 2004 improved to $209 million, or 16.6% of net revenues, from $163 million, or 14.9% of net revenues, in the prior year period. The increase in operating income was driven by revenue growth and continuing efficiencies generated from our Six Sigma and standardization efforts, which have reduced both the cost of services and selling, general and administrative expenses as a percentage of net revenues.
Other Income (Expense)
Other income (expense), net represents miscellaneous income and expense items related to non-operating activities such as gains and losses associated with investments and other non-operating assets.
Impact of Contingent Convertible Debentures on Diluted Earnings per Common Share
The if-converted method is used in determining the dilutive effect of our 1 3/4% contingent convertible debentures due 2021 (the "Debentures") in periods when the holders of such securities are permitted to exercise their conversion rights. As of and for the three months ended March 31, 2004, the holders of the Debentures did not have the ability to exercise their conversion rights. Had the requirements to allow the holders to exercise their conversion rights been met and the Debentures remained outstanding for the entire period, diluted earnings per common share would have been reduced by approximately 2% during the three months ended March 31, 2004. See Note 11 to the Consolidated Financial Statements contained in our 2003 Annual Report on Form 10-K for a further discussion of the Debentures.
Quantitative and Qualitative Disclosures About Market Risk
We address our exposure to market risks, principally the market risk of changes in interest rates, through a controlled program of risk management that may include the use of derivative financial instruments. We do not hold or issue derivative financial instruments for trading purposes. We do not believe that our foreign exchange exposure is material to our financial position or results of operations. See Note 2 to the Consolidated Financial Statements contained in our 2003 Annual Report on Form 10-K for additional discussion of our financial instruments and hedging activities.
At both March 31, 2004 and December 31, 2003, the fair value of our debt was estimated at approximately $1.2 billion, using quoted market prices and yields for the same or similar types of borrowings, taking into account the underlying terms of the debt instruments. At March 31, 2004 and December 31, 2003, the estimated fair value exceeded the carrying value of the debt by approximately $100 million and $86 million, respectively. An assumed 10% increase in interest rates (representing approximately 50 basis points at both March 31, 2004 and December 31, 2003) would potentially reduce the estimated fair value of our debt by approximately $23 million and $17 million at March 31, 2004 and December 31, 2003, respectively.
The Debentures have a contingent interest component that will require us to pay contingent interest based on certain thresholds, as outlined in the indenture governing the Debentures. The contingent interest component, which is more fully described in Note 11 to the Consolidated Financial Statements contained in our 2003 Annual Report on Form 10-K, is considered to be a derivative instrument subject to Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended. As such, the derivative was recorded at its fair value in the consolidated balance sheet and was not material at March 31, 2004 and December 31, 2003.
Borrowings under our $325 million unsecured revolving credit facility, our term loan facilities and our $250 million secured receivables credit facility are subject to variable interest rates. Interest rates on our $325 million unsecured revolving credit facility and term loans are subject to a pricing schedule that can fluctuate based on changes in our credit rating. As such, our borrowing cost under these credit arrangements will be subject to both fluctuations in interest rates and changes in our credit rating. As of March 31, 2004, our borrowing rate for LIBOR-based loans was principally LIBOR plus 1.1875%. At March 31, 2004, there was $230 million outstanding under our term loan due June 2007, $75 million outstanding under our term loan due December 2008, and there were no borrowings outstanding under our $325 million unsecured revolving credit facility or our $250 million secured receivables credit facility. See Note 4 to the interim consolidated financial statements for details regarding the 2004 debt refinancings.
Based on our net exposure to interest rate changes, an assumed 10% change in interest rates on our variable rate indebtedness (representing approximately 11 basis points) would impact annual net interest expense by approximately $0.3 million, assuming no changes to the debt outstanding at March 31, 2004.
Liquidity and Capital Resources
Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2004 totaled $190 million, compared to $155 million at December 31, 2003. Cash flows from operating activities in 2004 provided cash of $111 million, which together with cash on-hand were used to fund investing and financing activities, which required cash of $45 million and $30 million, respectively. Cash and cash equivalents at March 31, 2003 totaled $56 million, compared to $97 million at December 31, 2002. Cash flows from operating activities in the first quarter of 2003 were $58 million, which along with cash flows from financing activities of $177 million and cash on-hand, were used to fund investing activities, which required cash of $276 million.
Cash Flows From Operating Activities
Net cash provided by operating activities for the three months ended March 31, 2004 was $111 million compared to $58 million in the prior year period. This increase was primarily due to improved operating performance and increased tax benefits associated with stock-based compensation plans, partially offset by an increase in accounts receivable associated with growth in net revenues. Days sales outstanding, a measure of billing and collection efficiency, improved to 45 days at March 31, 2004 from 48 days at December 31, 2003.
Cash Flows From Investing Activities
Net cash used in investing activities for the three months ended March 31, 2004 was $45 million, consisting primarily of capital expenditures of $45 million.
Net cash used in investing activities was $276 million for the first quarter of 2003, consisting primarily of acquisition and related transaction costs of $236 million to acquire the outstanding capital stock of Unilab, and capital expenditures of $37 million. The acquisition and related transaction costs included the cash portion of the Unilab purchase price of $297 million and approximately $11 million of transaction costs paid in the first quarter of 2003, partially offset by $72 million of cash acquired from Unilab.
Cash Flows From Financing Activities
Net cash used in financing activities in the three months ended March 31, 2004 was $30 million, consisting primarily of purchases of treasury stock totaling $45 million and a $15 million dividend payment, partially offset by $34 million received from the exercise of stock options. In addition, $75 million of borrowings under our term loan due December 2008 were used to repay $75 million under our term loan due June 2007. The $45 million in treasury stock purchases represents 547 thousand shares of our common stock repurchased at an average price of $81.97 per share.
Net cash provided by financing activities in 2003 was $177 million, consisting primarily of $450 million of borrowings under our term loan due June 2007, partially offset by debt repayments totaling $269 million. Borrowings under our term loan due June 2007 were used to finance the cash portion of the purchase price and related transaction costs associated with the acquisition of Unilab, and to repay $220 million of debt, representing substantially all of Unilab's then existing outstanding debt, and related accrued interest. Of the $220 million, $124 million represents payments related to our cash tender offer on March 7, 2003, for all of the outstanding $100.8 million principal amount of Unilab's 12 3/4% Senior Subordinated Notes due 2009 and $23 million of related tender premium and associated tender offer costs. The remaining debt repayments in the first quarter of 2003 consisted primarily of a $42 million repayment under our term loan due June 2007 and a $6 million capital lease repayment.
Dividend Policy
On October 21, 2003, our Board of Directors declared the payment of a quarterly cash dividend of $0.15 per common share. The quarterly dividend was paid on January 23, 2004 to shareholders of record on January 8, 2004 and totaled $15.4 million. During the first quarter of 2004, our Board of Directors declared a quarterly cash dividend of $0.15 per common share payable on April 21, 2004 to shareholders of record on April 7, 2004. The quarterly dividend was paid on April 21, 2004 and totaled approximately $15.5 million. We expect to fund future dividend payments with cash flows from operations, and do not expect the dividend to have a material impact on our ability to finance future growth.
Share Repurchase Plan
In 2003, our Board of Directors authorized a share repurchase program, which permits us to purchase up to $600 million of our common stock. During the three months ended March 31, 2004, we repurchased 547 thousand shares of our common stock at an average price of $81.97 per share for a total of $45 million. Since the inception of the share repurchase program, we have repurchased approximately 4.5 million shares of our common stock at an average price of $66.64 per share for a total of $303 million. During the first quarter of 2004, we reissued 1.0 million of these shares held in treasury in connection with employee benefit plans. At March 31, 2004, $297 million of the share repurchase authorization remains available. We expect to fund the share repurchase program with cash flows from operations and do not expect the share repurchase program to have a material impact on our ability to finance future growth.
Contractual Obligations and Commitments
A description of the terms of our indebtedness, related debt service requirements and our future payments under certain of our contractual obligations is contained in Note 11 to the Consolidated Financial Statements in our 2003 Annual Report on Form 10-K. A discussion of our debt refinancings in April 2004 is contained in Note 4 to the interim consolidated financial statements. A discussion and analysis regarding our minimum rental commitments under noncancelable operating leases and noncancelable commitments to purchase products or services at December 31, 2003 is contained in Note 15 to the Consolidated Financial Statements in our 2003 Annual Report on Form 10-K. See Note 5 to the interim consolidated financial statements for information regarding the status of our remaining contractual obligations and commitments.
Our credit agreements relating to our unsecured revolving credit facility and our term loan facilities contain various covenants and conditions, including the maintenance of certain financial ratios, that could impact our ability to, among other things, incur additional indebtedness, repurchase shares of our outstanding common stock, make additional investments and consummate acquisitions. We do not expect these covenants to adversely impact our ability to execute our growth strategy or conduct normal business operations.
Unconsolidated Joint Ventures
We have investments in unconsolidated joint ventures in Phoenix, Arizona; Indianapolis, Indiana; and Dayton, Ohio, which are accounted for under the equity method of accounting. We believe that our transactions with our joint ventures are conducted at arm's length, reflecting current market conditions and pricing. Total net revenues of our unconsolidated joint ventures, on a combined basis, are less than 6% of our consolidated net revenues. Total assets associated with our unconsolidated joint ventures are less than 3% of our consolidated total assets. We have no material unconditional obligations or guarantees to, or in support of, our unconsolidated joint ventures and their operations.
Requirements and Capital Resources
We estimate that we will invest approximately $180 million to $190 million during 2004 for capital expenditures to support and expand our existing operations, principally related to investments in information technology, equipment, and facility upgrades.
In April 2004, we entered into a new $500 million senior unsecured revolving credit facility to replace our existing $325 million unsecured revolving credit facility. In addition, we entered into a new $300 million secured receivables credit facility to replace our existing $250 million secured receivables credit facility, which matured in April 2004. On April 30, 2004, we repaid the remaining $230 million of principal outstanding under our term loan due June 2007 with $100 million of borrowings under our new $500 million senior unsecured revolving credit facility and $130 million of borrowings under our new $300 million secured receivables credit facility. The refinancings were done to take advantage of the improved lending environment and our improved credit profile. See Note 4 to the interim consolidated financial statements for further details regarding the refinancings. As of April 30, 2004, $400 million of our new $500 million senior unsecured revolving credit facility and $170 million of our new $300 million secured receivables credit facility remained available to us for future borrowing.
We believe that cash from operations and our borrowing capacity under our credit facilities will provide sufficient financial flexibility to meet seasonal working capital requirements and to fund capital expenditures, debt service requirements, cash dividends on common shares, share repurchases and additional growth opportunities for the foreseeable future. Our investment grade credit ratings have had a favorable impact on our cost of and access to capital, and we believe that our improved financial performance should provide us with access to additional financing, if necessary, to fund growth opportunities that cannot be funded from existing sources.
Impact of New Accounting Standard
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities", as revised in December 2003. The impact of this accounting standard is discussed in Note 1 to the interim consolidated financial statements.
Forward-Looking Statements
Some statements and disclosures in this document are forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as "may", "believe", "will", "expect", "project", "estimate", "anticipate", "plan" or "continue". These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could significantly cause our plans and expectations, including actual results, to differ materially from the forward-looking statements. The Private Securities Litigation Reform Act of 1995 (the "Litigation Reform Act") provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their companies without fear of litigation.
We would like to take advantage of the "safe harbor" provisions of the Litigation Reform Act in connection with the forward-looking statements included in this document. The risks and other factors that could cause our actual financial results to differ materially from those projected, forecasted or estimated by us in forward-looking statements may include, but are not limited to, unanticipated expenditures, changing relationships with customers, payers, suppliers and strategic partners, competitive environment, changes in government regulations, conditions of the economy and other factors described in our 2003 Annual Report on Form 10-K and subsequent filings.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Item 4. Controls and Procedures
(a) Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are adequate and effective.
(b) During the quarterly period covered by this report, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 5 to the interim consolidated financial statements for information regarding the status of government investigations and private claims.
Item 2. Changes in Securities and Use of Proceeds
ISSUER PURCHASES OF EQUITY SECURITIES
-----------------------------------------------------------------------------------------------------------------
(d) Approximate Dollar Value of
(a) Total (c) Total Number of Shares Shares that May Yet Be
Number of Purchased as Part of Purchased Under the Plans or
Shares (b) Average Price Publicly Announced Plans Programs
Period Purchased Paid per Share or Programs (in thousands)
-----------------------------------------------------------------------------------------------------------------
January 1, 2004 -
January 31, 2004 -- -- -- $342,452
-----------------------------------------------------------------------------------------------------------------
February 1, 2004 -
February 29, 2004 -- -- -- $342,452
-----------------------------------------------------------------------------------------------------------------
March 1, 2004 -
March 31, 2004 547,400 $81.97 547,400 $297,580
-----------------------------------------------------------------------------------------------------------------
Total 547,400 $81.97 547,400 $297,580
-----------------------------------------------------------------------------------------------------------------
|
In 2003, our Board of Directors authorized a share repurchase program, which permits us to purchase up to $600 million of our common stock.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 Fifth Supplemental Indenture dated as of April 16, 2004, among
Unilab Acquisition Corporation (d/b/a FNA Clinics of America),
Quest Diagnostics Incorporated, The Bank Of New York, and the
Subsidiary Guarantors
10.2 Third Amended and Restated Credit and Security Agreement dated
as of April 20, 2004 among Quest Diagnostics Receivables Inc.,
as Borrower, Quest Diagnostics Incorporated, as Servicer, each
of the lenders party thereto and Wachovia Bank, National
Association, as Administrative Agent
10.3 Second Amended and Restated Receivables Sale Agreement dated as
of April 20, 2004 among 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
10.4 Amended and Restated Credit Agreement dated as of April 20,
2004 among Quest Diagnostics Incorporated, the Subsidiary
Guarantors and the Banks
10.5 Form of Supplemental Deferred Compensation Plan
10.6 Letter Agreement dated April 21, 2004 between the Company and
Kenneth W. Freeman (filed as an Exhibit to the Company's
current report on Form 8-K (Date of Report: April 22, 2004) and
incorporated herein by reference)
31.1 Certification of Chief Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer Pursuant to 18
U.S.C. 'SS' 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer Pursuant to 18
U.S.C. 'SS' 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
(b) Report on Form 8-K filed during the first quarter of 2004:
On January 27, 2004, the Company furnished a current report on Form 8-K reporting its press release of January 27, 2004 announcing, among other things, its results for the quarter and year ended December 31, 2003.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
April 30, 2004
Quest Diagnostics Incorporated
By /s/ Kenneth W. Freeman
-----------------------------
Kenneth W. Freeman
Chairman of the Board and
Chief Executive Officer
By /s/ Robert A. Hagemann
-----------------------------
Robert A. Hagemann
Senior Vice President and
Chief Financial Officer
|
STATEMENT OF DIFFERENCES
The section symbol shall be expressed as............................'SS' The greater-than-or-equal-to sign shall be expressed as................. >=
Exhibit 10.1
FIFTH SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE dated as of April 16, 2004, (this "Fifth Supplemental Indenture"), among UNILAB ACQUISITION CORPORATION (d/b/a FNA Clinics of America), (the "Additional Subsidiary Guarantor"), QUEST DIAGNOSTICS INCORPORATED, a Delaware corporation (the "Company"), THE BANK OF NEW YORK, a New York banking corporation as Trustee (the "Trustee"), and the Subsidiary Guarantors (as defined in the Indenture referred to herein).
RECITALS OF THE COMPANY
WHEREAS, the Company, the Trustee and the Initial Subsidiary Guarantors executed and delivered an Indenture, dated as of June 27, 2001 (the "Base Indenture"), as supplemented by the first Supplemental Indenture as of June 27, 2001 (the "First Supplemental Indenture"), as further supplemented by the second Supplemental Indenture as of November 26, 2001 (the "Second Supplemental Indenture") as further supplemented by the third Supplemental Indenture as of April 4, 2002 (the "Third Supplemental Indenture"), as further supplemented by the fourth Supplemental Indenture as of March 19, 2003 (the "Fourth Supplemental Indenture") and as further supplemented by this Fifth Supplemental Indenture (collectively, the "Indenture"), to provide for the issuance by the Company from time to time of Securities to be issued in one or mores series as provided in the Indenture;
WHEREAS, Additional Subsidiary Guarantor intends to guarantee the Securities under the Indenture and the issuance of guarantees has been authorized by resolutions adopted by the Board of Directors of Additional Subsidiary Guarantor;
WHEREAS, Section 901(11) of the Indenture provides that without the consent of Holders of the Securities of any series issued under the Indenture, the Company, when authorized by a Board Resolution, and the Trustee may enter into one or more indentures supplemental to the Indenture to add a guarantor or guarantors for any series or all series of the Securities;
WHEREAS, pursuant to Sections 904, 1601, 1602 and 1604 of the Indenture, by delivery of a Supplemental Indenture to the Trustee in accordance with the terms of the Indenture, each Person that becomes a Subsidiary Guarantor after the date of the Base Indenture will be deemed to have executed and delivered the Subsidiary Guarantee for the benefit of the Holder of the Security upon which the Subsidiary Guarantee is endorsed, with the same effect as if such Subsidiary Guarantor had been named thereon and had executed and delivered the Subsidiary Guarantee;
WHEREAS, all things necessary to make this Fifth Supplemental Indenture a valid supplement to the Indenture according to its terms and the terms of the Indenture have been done.
NOW, THEREFORE, for and in consideration of the foregoing, the parties hereto hereby enter into this Fifth Supplemental Indenture, for the equal and proportionate benefit of all Holders of the Securities, as follows:
SECTION 1 Certain Terms Defined in the Indenture.
All capitalized terms used but not defined herein shall have the meanings assigned to them in the Indenture.
SECTION 2 Agreement to Guarantee.
Additional Subsidiary Guarantor, by its signature below, agrees to become an Additional Subsidiary Guarantor under the Indenture with the same force and effect as if originally named therein as a Subsidiary Guarantor. Additional Subsidiary Guarantor hereby agrees to all the terms and provisions of the Indenture applicable to it as Additional Subsidiary Guarantor thereunder and each reference to a "Subsidiary Guarantor" in the Indenture shall be deemed to include Additional Subsidiary Guarantor.
SECTION 3 Indenture remains in Full Force and Effect.
Except as expressly supplemented by this Fifth Supplemental Indenture, the Indenture shall remain in full force and effect in accordance with its terms.
SECTION 4 New York Law to Govern.
THIS FIFTH SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 5 Separability.
In case any one or more of the provisions contained in this Fifth Supplemental Indenture should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Indenture shall not in any way be affected or impaired. The parties hereto shall endeavor in good faith negotiations to replace any invalid, illegal or enforceable provisions herein with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 6 May be Executed in Counterparts.
This Fifth Supplemental Indenture may be executed in counterparts, each of which when taken together shall constitute one and the same instrument. This Fifth Supplemental Indenture shall become effective when the Trustee shall have received a counterpart thereof that bears the signature of the Additional Subsidiary Guarantor.
IN WITNESS WHEREOF, the Company, the Additional Subsidiary Guarantor, and the Trustee have duly executed this Fifth Supplemental Indenture as of the day and year first above written.
Attest: QUEST DIAGNOSTICS INCORPORATED,
a Delaware corporation, as Company
/s/ Leo C. Farrenkopf, Jr. By: /s/ Joseph P. Manory
-------------------------------------- ----------------------------------
Leo C. Farrenkopf, Jr. Name: Joseph P. Manory
Assistant Secretary Title: Vice President and Treasurer
Attest: UNILAB ACQUISITION CORPORATION,
as Additional Subsidiary Guarantor
/s/ Leo C. Farrenkopf, Jr.
--------------------------------------
Leo C. Farrenkopf, Jr. By: /s/ Joseph P. Manory
Assistant Secretary -----------------------------------
Name: Joseph P. Manory
Title: Vice President and Treasurer
Attest: THE BANK OF NEW YORK, as Trustee
/s/ Mary LaGumina By: /s/ Robert A. Massimillo
-------------------------------------- -----------------------------------
Vice President Title: Vice President
|
EXHIBIT 10.2
THIRD AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT is
entered into as of April 20, 2004, by and among:
(1) QUEST DIAGNOSTICS RECEIVABLES INC., a Delaware corporation (together with its successors and permitted assigns, the "Borrower"),
(2) QUEST DIAGNOSTICS INCORPORATED, a Delaware corporation (together with its successors, "Quest Diagnostics"), as initial servicer hereunder (in such capacity, together with any successor servicer or sub-servicer appointed pursuant to Section 8.1, the "Servicer"),
(3) BLUE RIDGE ASSET FUNDING CORPORATION, a Delaware corporation (together with its successors, "Blue Ridge"), and WACHOVIA BANK, NATIONAL ASSOCIATION, in its capacity as a Liquidity Bank to Blue Ridge (together with its successors, "Wachovia" and together with Blue Ridge, the "Blue Ridge Group"),
(4) ATLANTIC ASSET SECURITIZATION CORP., a Delaware corporation (together with its successors, "Atlantic" and together with Blue Ridge, the "Conduits"), and Credit Lyonnais New York Branch, in its capacity as a Liquidity Bank to Atlantic (together with its successors, "CLNY" and together with Atlantic, the "Atlantic Group"),
(5) WACHOVIA BANK, NATIONAL ASSOCIATION, in its capacity as agent for the Blue Ridge Group (together with its successors in such capacity, the "Blue Ridge Agent" or a "Co-Agent"), and Credit Lyonnais New York Branch, in its capacity as agent for the Atlantic Group (together with its successors in such capacity, the "Atlantic Agent" or a "Co-Agent"), and
(6) WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent for the Blue Ridge Group, the Atlantic Group and the Co-Agents (in such capacity, together with any successors thereto in such capacity, the "Administrative Agent" and together with each of the Co-Agents, the "Agents"),
with respect to that certain Second Amended and Restated Credit and Security Agreement dated as of September 30, 2003 originally by and among the Borrower, the Servicer, Blue Ridge, La Fayette Asset Securitization LLC ("La Fayette"), CLNY, individually and as a Co-Agent, Jupiter Securitization Corporation ("Jupiter"), Bank One, NA, individually and as a Co-Agent, and the Administrative Agent, as amended from time to time prior to the date hereof (the "Existing Agreement").
Unless otherwise indicated, capitalized terms used in this Agreement are defined in Annex A.
W I T N E S S E T H :
WHEREAS, the Borrower is a wholly-owned direct subsidiary of Quest Diagnostics;
WHEREAS, Quest Diagnostics and certain of its Subsidiaries as Originators and the Borrower have entered into the Sale Agreement pursuant to which each of the Originators has sold and/or contributed, and hereafter will sell to the Borrower, all of such Originator's right, title and interest in and to its Receivables and certain related rights;
WHEREAS, immediately prior to the effectiveness of this Agreement, (i) Bank One, NA and Jupiter assigned all of their rights and obligations under the Transaction Documents to La Fayette and Blue Ridge, on the one hand, and CLNY and Wachovia, on the other, and (ii) La Fayette assigned to Atlantic all of La Fayette's rights and obligations under the Transaction Documents, including those acquired from Jupiter under the foregoing clause (i);
WHEREAS, pursuant to the Existing Agreement, the Groups committed to make loans to the Borrower from time to time, secured by the Collateral, and Quest Diagnostics agreed to act as Servicer; and
WHEREAS, the Borrower, the Servicer, the Blue Ridge Group, the Atlantic Group and the Administrative Agent wish to amend and restate the Existing Agreement in its entirety, on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows:
ARTICLE I.
THE CREDIT
Section 1.1 The Facility. On the terms and subject to the conditions set forth in this Agreement, the Borrower (or the Servicer on the Borrower's behalf) may from time to time during the Revolving Period request Advances by delivering a Borrowing Request to the Co-Agents in accordance with Section 2.1. Upon receipt of a copy of each Borrowing Request from the Borrower or Servicer, each of the Co-Agents shall determine whether its Conduit will fund a Loan in an amount equal to the portion of the requested Advance specified in such Borrowing Request, and
(a) in the event that Blue Ridge elects not to make any such Loan to the Borrower, the Blue Ridge Agent shall promptly notify the Borrower and, unless the Borrower cancels its Borrowing Request, each of the Liquidity Banks of Blue Ridge severally agrees to make its Ratable Share of such Loan to the Borrower, on the terms and subject to the conditions hereof, provided that at no time may the aggregate principal amount of Blue Ridge's and its Liquidity Banks' Loans at any one time outstanding exceed the lesser of (i) the aggregate amount of the Blue Ridge Liquidity Banks' Commitments, and
(ii) the Blue Ridge Group's Percentage of the Borrowing Base (such lesser amount, the "Blue Ridge Allocation Limit");
(b) in the event that Atlantic elects not to make any such Loan to the Borrower, the Atlantic Agent shall promptly notify the Borrower and, unless the Borrower cancels its Borrowing Request, each of the Liquidity Banks of Atlantic severally agrees to make its Ratable Share of such Loan to the Borrower, on the terms and subject to the conditions hereof, provided that at no time may the aggregate principal amount of Atlantic's and its Liquidity Banks' Loans at any one time outstanding exceed the lesser of (i) the aggregate amount of the Atlantic Liquidity Banks' Commitments, and (ii) the Atlantic Group's Percentage of the Borrowing Base (such lesser amount, the "Atlantic Allocation Limit").
Each Loan shall be in the minimum amount of $1,000,000 or a larger integral multiple of $500,000. In no event may the aggregate principal amount of the Advances hereunder exceed the lesser of (x) the Aggregate Commitment, or (y) the Borrowing Base. Each Liquidity Bank's Commitment under this Agreement shall terminate on the earlier to occur of such Liquidity Bank's Scheduled Termination Date and the Termination Date. Each of the Loans, and all other Obligations of the Borrower, shall be secured by the Collateral as provided in Article IX.
Section 1.2 Funding Mechanics; Liquidity Fundings.
(a) Each Advance hereunder shall consist of Loans made by (i) Atlantic and/or its Liquidity Banks, and/or (ii) Blue Ridge and/or its Liquidity Banks, and which (except for any Advance which does not increase the aggregate principal amount of the Loans outstanding) shall be made in such proportions by each Group such that, after giving effect thereto, the aggregate outstanding principal balance of the Loans outstanding from each Group shall be in proportion to such Group's Commitment Percentage. Any Advance which does not increase the aggregate principal amount outstanding may be funded solely by one or more of the members of each Group.
(b) Each Lender funding any Loan (or portion thereof) shall wire transfer the principal amount thereof to its applicable Co-Agent in immediately available funds not later than 12:00 noon (New York City time) on the applicable Borrowing Date and, subject to its receipt of such Loan proceeds, such Co-Agent shall wire transfer such funds to the account specified by the Borrower in its Borrowing Request not later than 2:00 p.m. (New York City time) on such Borrowing Date.
(c) While it is the intent of each of the Conduits to fund its respective Loans through the issuance of Commercial Paper Notes, the parties acknowledge that if either of the Conduits is unable, or determines that it is undesirable, to issue Commercial Paper Notes to fund all or any portion of its Loans at a CP Rate, or is unable to repay such Commercial Paper Notes upon the maturity thereof, such Conduit may sell all or any portion of its Loans (or interests therein) to its Liquidity Banks at any time pursuant to its Liquidity Agreement to finance or refinance the necessary portion of its Loans through a Liquidity Funding to the extent available. The Liquidity Fundings may be Alternate Base Rate Loans or Eurodollar Loans, or a combination thereof, selected by the Borrower in accordance with Article II. In addition, the parties acknowledge that Commercial Paper Notes are issued at a discount and at varying
discount rates; accordingly, it may not be possible for all CP Rate Loans to be made in amounts precisely equal to the amounts specified in a Borrowing Request. Regardless of whether a Liquidity Funding constitutes an assignment of a Loan or the sale of one or more participations therein, each Liquidity Bank participating in a Liquidity Funding shall have the rights of a "Lender" hereunder with the same force and effect as if it had directly made a Loan to the Borrower in the amount of its Liquidity Funding.
(d) Nothing herein shall be deemed to commit any Lender to make CP Rate Loans.
Section 1.3 Interest Rates.
(a) Each CP Rate Loan shall bear interest on the outstanding principal amount thereof from and including the first day of the CP Tranche Period applicable thereto selected in accordance with Article II of this Agreement to (but not including) the last day of such CP Tranche Period at the applicable CP Rate. On the 5th Business Day immediately preceding each Settlement Date, Blue Ridge shall calculate the aggregate amount of CP Costs for the applicable Accrual Period and shall notify the Borrower of its aggregate amount of such CP Costs which shall be payable on such Settlement Date.
(b) Each Eurodollar Loan shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto selected in accordance with Article II of this Agreement to (but not including) the last day of such Interest Period at a rate per annum equal to the sum of (i) the applicable Eurodollar Rate (Reserve Adjusted) for such Interest Period plus (ii) the Applicable Percentage per annum.
(c) Each Alternate Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Loan is made to but excluding the date it is paid at a rate per annum equal to the Alternate Base Rate for such day. Changes in the rate of interest on Alternate Base Rate Loans will take effect simultaneously with each change in the Alternate Base Rate.
(d) Notwithstanding anything to the contrary contained in Sections 1.3(a), (b) or (c), upon the occurrence of an Event of Default, and during the continuance thereof, all Obligations shall bear interest, payable upon demand, at the Default Rate.
(e) Interest shall be payable for the day a Loan is made but not for
the day of any payment on the amount paid if payment is received prior to 1:00
p.m. (local time) at the place of payment. If any payment of principal of or
interest on a Loan shall become due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.
Section 1.4 Payment Dates; Absence of Notes to Evidence Loans.
(a) The Borrower promises to pay the principal of each CP Rate Loan on the last day of its CP Tranche Period.
(b) The Borrower promises to pay the principal of each Eurodollar Loan on the last day of its Interest Period.
(c) The Borrower promises to pay the principal of each Alternate Base Rate Loan on or before the earliest to occur of (i) the Termination Date, (ii) the applicable Liquidity Bank's Scheduled Termination Date, and (iii) the refinancing of such Loan with a CP Rate Loan or a Eurodollar Rate Loan.
(d) The Borrower promises to pay all accrued and unpaid interest on each Loan on its applicable Interest Payment Date.
(e) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. Upon request of the Borrower, such Lender's Co-Agent or the Administrative Agent, such Lender will confirm the outstanding principal balances of its Loans and the amount of any accrued and unpaid interest thereon. The entries maintained in the accounts maintained pursuant to this Section shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms.
Section 1.5 Prepayments. Subject, in the case of CP Rate Loans and Eurodollar Loans, to the funding indemnification provisions of Section 4.3:
(a) The Borrower may from time to time voluntarily prepay, without
penalty or premium, all outstanding Advances, or, in a minimum aggregate amount
of $2,000,000 (or a larger integral multiple of $1,000,000), any portion of the
outstanding Advances by written notice to the Co-Agents (each, a "Prepayment
Notice") given within the Required Notice Period; provided that each such
prepayment of principal is accompanied by a payment of all accrued and unpaid
interest on the amount prepaid, together with all amounts (if any) due under
Section 4.3, and except as provided in Sections 1.8(c) and Section 14.1(c) and
in the definitions of "Approved Amendment" and "Termination Date," is made
between the Groups in such proportions so that after giving effect thereto, the
aggregate outstanding principal balance of the Loans outstanding from each Group
shall be in proportion to the Groups' respective Commitment Percentages.
(b) If, on any Business Day, the aggregate outstanding principal amount of the Loans from the Blue Ridge Group exceeds the Blue Ridge Allocation Limit, or the aggregate principal amount of the Loans outstanding from Blue Ridge exceeds the Blue Ridge Liquidity Banks' Liquidity Commitments divided by 102%, the Borrower shall prepay such Loans by wire transfer to the Blue Ridge Agent received not later than 12:00 noon (New York City time) on the first Business Day thereafter of an amount sufficient to eliminate such excess, together with accrued and unpaid interest on the amount prepaid.
(c) If, on any Business Day, the aggregate outstanding principal amount of the Loans from the Atlantic Group exceeds the Atlantic Allocation Limit, or the aggregate principal amount of the Loans outstanding from Atlantic exceeds the Atlantic Liquidity Banks' aggregate Liquidity Commitments divided by 102%, the Borrower shall prepay such Loans by wire transfer to the Atlantic Agent received not later than 12:00 noon (New York City time) on the first Business Day thereafter of an amount sufficient to eliminate such excess, together with accrued and unpaid interest on the amount prepaid.
(d) Upon receipt of any wire transfer pursuant to Section 1.5(a), (b) or (c), the applicable Co-Agent shall wire transfer to each of its Constituent Lenders their respective shares thereof not later than 1:00 p.m. (New York City time) on the date when received. Any prepayment required pursuant to Section 1.5(b) or (c) shall be applied first, to the ratable reduction of the applicable Group's Alternate Base Rate Loans outstanding, second, to the ratable reduction of the applicable Group's Eurodollar Loans outstanding, and lastly, to the reduction of the applicable Group's CP Rate Loans selected by the Borrower (or the Servicer, on the Borrower's behalf).
(e) Unless each of the Co-Agents in its sole discretion shall otherwise agree, not more than three (3) Advances and/or prepayments pursuant to this Section 1.5 may occur, in the aggregate, in any calendar week.
Section 1.6 Reductions in Aggregate Commitment. The Borrower may permanently reduce the Aggregate Commitment in whole, or ratably between the Groups in part, in a minimum amount of $10,000,000 (or a larger integral multiple of $1,000,000), upon at least fifteen (15) Business Days' written notice to the Co-Agents (each, a "Commitment Reduction Notice"), which notice shall specify the aggregate amount of any such reduction and the Blue Ridge Liquidity Banks' and the Atlantic Liquidity Banks' respective Commitment Percentages thereof, provided, however, that (a) the amount of the Aggregate Commitment may not be reduced below the aggregate principal amount of the outstanding Advances, and (b) the amount of the Aggregate Commitment may not be reduced below $100,000,000 unless the Aggregate Commitment is terminated in full. All accrued and unpaid fees shall be payable on the effective date of any termination of the Aggregate Commitment. Each Commitment Reduction Notice shall be irrevocable once delivered to the Co-Agents.
Section 1.7 Requests for Increases in Aggregate Commitment. The Borrower may from time to time request increases in the Aggregate Commitment in a minimum amount of $10,000,000 (or a larger integral multiple of $1,000,000), upon at least 30 days' prior written notice to the Co-Agents, which notice shall specify the aggregate amount of and proposed effective date for any such requested increase as well as each Group's Commitment Percentage of the requested increase (each, a "Commitment Increase Request"). If each Co-Agent agrees to the requested increase by notifying the Borrower in writing of their concurrence, such increase shall be made to the Commitments of the Blue Ridge Liquidity Banks and the Atlantic Liquidity Banks, ratably in accordance with their respective Commitment Percentages and Ratable Shares as of the effective date specified in the Commitment Increase Request. If either Co-Agent declines such request, the other Co-Agents may elect to increase the Commitments of their Constituent Liquidity Banks by all or any portion of the entire amount requested, in which case the Commitment Percentages shall be adjusted to reflect such increase on the effective date
specified in the Commitment Increase Request. If no Co-Agent agrees to such increase, the amount of the Aggregate Commitment shall remain unchanged. The Atlantic Co-Agent shall notify each rating agency that is then rating Atlantic's Commercial Paper Notes of any increase in the Atlantic Liquidity Banks' Commitments.
Section 1.8 Extension of the Scheduled Termination Date.
(a) Provided that no Unmatured Default or Event of Default exists and is continuing, the Borrower may request one or more Liquidity Bank(s) to extend its Scheduled Termination Date by submitting a request for an extension (each, an "Extension Request") to the Co-Agents no more than 210 days prior to each such Liquidity Bank's respective Scheduled Termination Date then in effect (it being understood that no such request may be made with respect to CLNY's Scheduled Termination Date more than 90 days prior to such Liquidity Bank's existing Scheduled Termination Date). Each Extension Request must specify the new Scheduled Termination Date requested by the Borrower for such Liquidity Bank(s) and the date (which must be at least 30 days after the Extension Request is delivered to the Co-Agents and, in the case of CLNY, not more than 60 days prior to their respective existing Scheduled Termination Dates) as of which the applicable Liquidity Bank(s) must respond to the Extension Request (the "Response Date"). The new Scheduled Termination Date for each applicable Liquidity Bank shall be no more than 364 days after its existing Scheduled Termination Date, including such existing Scheduled Termination Date as one of the days in the calculation of the days elapsed, and the extension of the Scheduled Termination Date shall not become effective until the existing Scheduled Termination Date.
(b) Promptly upon receipt of an Extension Request, the Blue Ridge Agent shall notify the Blue Ridge Group of the contents thereof and shall request each applicable Blue Ridge Liquidity Bank to approve such Extension Request, and the Atlantic Agent shall notify the Atlantic Group of the contents thereof and shall request each applicable Atlantic Liquidity Bank to approve such Extension Request. Each applicable Liquidity Bank approving such Extension Request shall deliver its written approval to its Co-Agent no later than the Response Date, whereupon such Co-Agent shall notify the other Co-Agents and the Borrower within one Business Day thereafter as to which (if any) of such Co-Agent's applicable Constituent Liquidity Banks have approved such Extension Request subject to their receipt of their applicable Extension Fee.
(c) If any applicable Liquidity Bank does not approve the Extension Request, its Co-Agent shall promptly notify its Conduit, the other Co-Agents and the Borrower of such fact, and the Borrower shall have the right to (i) require such Non-Approving Lender to assign all, but not less than all, of its Commitment and outstanding Obligations by entering into written assignments with one or more Eligible Assignees not later than the 5th Business Day prior to the applicable Non-Approving Group's existing Scheduled Termination Date, (ii) require the applicable Non-Approving Group to assign all, but not less than all, of its respective Commitments (as applicable) and outstanding Obligations by entering into written assignments with one or more Eligible Assignees not later than the 5th Business Day prior to such Non-Approving Group's existing Scheduled Termination Date, or (iii) to pay in full of all Obligations (if any) owing to such Non-Approving Lender or such Non-Approving Group and terminate its Commitment(s) (as applicable) no later than such Non-Approving Group's existing Scheduled
Termination Date. Each assignment pursuant to clause (i) or (ii) above to an Eligible Assignee (which may include a Constituent of the other Co-Agent) shall become effective on the existing Scheduled Termination Date and, subject to receipt of payment in full on such existing Scheduled Termination Date for all Obligations, if any, owing to such Non-Approving Lender or its Group, as applicable, such Non-Approving Lender or its Group shall make the requested assignment; provided that any expenses or other amounts which would be owing to such Non-Approving Lender or its Group pursuant to any indemnification provision hereof shall be payable by the Borrower as if the Borrower had prepaid the Loans of the assigning Lenders rather than such assigning Lenders having assigned their respective interests hereunder. If no assignment of a Non-Approving Lender's Commitment and Obligations to an Eligible Assignee is executed by the 5th Business Day prior to its existing Scheduled Termination Date, the Scheduled Termination Date for all Lenders shall remain unchanged. If all applicable Liquidity Banks approve an Extension Request by the Response Date, the Scheduled Termination Date specified in such Extension Request shall become effective on such Response Date as to the approving Liquidity Banks provided they each receive payment of their respective Extension Fees, and each of the Co-Agents shall promptly notify the Borrower and the other Co-Agent of the applicable Liquidity Banks' new Scheduled Termination Date.
Section 1.9 Distribution of Certain Notices; Notification of Interest Rates. Promptly after receipt thereof, the Blue Ridge Agent will notify the Blue Ridge Group and the Atlantic Agent will notify the Atlantic Group, of the contents of each Monthly Report, Weekly Report, Borrowing Request, Extension Request, Commitment Reduction Notice, Prepayment Notice, Commitment Increase Request or notice of default received by it from the Borrower or the Servicer hereunder. In addition, each of the Co-Agents shall promptly notify its Constituent Lenders and the Borrower of each determination of and change in Interest Rates.
ARTICLE II.
BORROWING AND PAYMENT MECHANICS; CERTAIN COMPUTATIONS
Section 2.1 Method of Borrowing. The Borrower (or the Servicer, on the Borrower's behalf) shall give the Co-Agents irrevocable notice in the form of Exhibit 2.1 hereto (each, a "Borrowing Request") not later than 12:00 noon (New York City time) at least two (2) Business Days before the Borrowing Date of each Advance. On each Borrowing Date, each applicable Lender shall make available its Loan or Loans in immediately available funds to its Co-Agent by wire transfer of such amount received not later than 1:00 p.m. (New York City time). Subject to its receipt of such wire transfers, each Co-Agent will wire transfer the funds so received from its Constituent Lenders to the Borrower at the account specified in its Borrowing Request not later than 2:00 p.m. (New York City time) on the applicable Borrowing Date. Unless each of the Co-Agents in its sole discretion shall otherwise agree, not more than three (3) Advances and/or prepayments pursuant to Section 1.5 may occur, in the aggregate, in any calendar week.
Section 2.2 Selection of CP Tranche Periods and Interest Periods.
(a) Except upon the occurrence and during the continuance of an Event of Default, the Borrower (or the Servicer, on the Borrower's behalf) in its Borrowing Request may request CP Tranche Periods from time to time to apply to Atlantic's CP Rate Loans; provided,
however, that (i) at any time while Atlantic has CP Rate Loans outstanding, at
least one CP Tranche Period of Atlantic shall mature on each Settlement Date and
(ii) no CP Tranche Period of Atlantic may extend beyond the latest Scheduled
Termination Date of any Atlantic Liquidity Bank. In addition to the foregoing,
except upon the occurrence and during the continuance of an Event of Default,
the Borrower (or the Servicer, on the Borrower's behalf) in its Borrowing
Request may request Interest Periods from time to time to apply to the
Eurodollar Loans; provided, however, that (x) at any time while any Lender has
Eurodollar Loans outstanding, at least one Interest Period of such Lender shall
mature on each Settlement Date and (y) no Interest Period of any Lender which
began prior to its Scheduled Termination Date shall extend beyond such Scheduled
Termination Date.
(b) While the Atlantic Agent will use reasonable efforts to accommodate the Borrower's or the Servicer's requests for CP Tranche Periods except during the continuance of an Event of Default, the Atlantic Agent shall have the right to subdivide any requested CP Rate Loan into one or more CP Rate Loans of different CP Tranche Periods, or, if the requested period is not feasible, to suggest an alternative CP Tranche Period. While each of the Co-Agents will use reasonable efforts to accommodate the Borrower's or the Servicer's requests for Interest Periods for Eurodollar Loans except during the continuance of an Event of Default, each of the Co-Agents shall have the right to subdivide any requested Eurodollar Loan into one or more Eurodollar Loans with different Interest Periods, or, if the requested period is not feasible, to suggest an alternative Interest Period. Notwithstanding the foregoing, not less than $1,000,000 of principal may be allocated to any CP Tranche Period or Interest Period of any Lender, and no Alternate Base Rate Loan may have a principal amount of less than $1,000,000.
(c) The Borrower (or the Servicer, on the Borrower's behalf) may not request an Interest Period for a Eurodollar Loan unless it shall have given each of the applicable Co-Agent(s) written notice of its desire therefor not later than 12:00 noon (New York City time) at least three (3) Business Days prior to the first day of the desired Interest Period. Accordingly, all Liquidity Fundings shall initially be Alternate Base Rate Loans.
(d) Unless each Co-Agent shall have received written notice by 12:00 noon (New York City time) on the Required Day prior to the last day of a CP Tranche Period that the Borrower intends to reduce the aggregate principal amount of the CP Rate Loans outstanding, each of the Co-Agents and the Conduits shall be entitled to assume that the Borrower desires to refinance the principal and interest of each maturing CP Rate Loan on the last day of its CP Tranche Period with new CP Rate Loans having substantially similar CP Tranche Periods; provided, however, that the Borrower shall remain liable to pay in cash any portion of the principal or interest on the maturing CP Rate Loan when due to the extent that the applicable Conduit cannot issue Commercial Paper Notes or avail itself of a Liquidity Funding, in either case, in the precise amount necessary to refinance the maturing CP Rate Loan and the accrued and unpaid interest thereon.
(e) Unless the Co-Agents shall have received written notice by 12:00 noon (New York City time) on the third (3rd) Business Day prior to the last day of an Interest Period that the Borrower intends to reduce the aggregate principal amount of the Eurodollar Loans outstanding from the Liquidity Banks, each of the Liquidity Banks shall be entitled to assume that the
Borrower desires to refinance its maturing Eurodollar Loans on the last day of such Interest Period with Alternate Base Rate Loans.
Section 2.3 Computation of Concentration Limits and Unpaid Net Balance. The Obligor Concentration Limits and the aggregate Unpaid Net Balance of Receivables of each Obligor and its Affiliated Obligors (if any) shall be calculated as if each such Obligor and its Affiliated Obligors were one Obligor.
Section 2.4 Maximum Interest Rate. No provision of this Agreement shall require the payment or permit the collection of interest in excess of the maximum permitted by applicable law.
Section 2.5 Payments and Computations, Etc.
(a) Payments. All amounts to be paid or deposited by the Borrower or the Servicer (on the Borrower's behalf) to any of the Agents or Lenders (other than amounts payable under Section 4.2) shall be paid by wire or electronic transfer of immediately available funds received not later than 1:00 p.m. (New York City time) on the day when due in lawful money of the United States of America to the applicable Co-Agent at its address specified in Schedule 14.2, and, to the extent such payment is for the account of any Lender, the applicable Co-Agent shall promptly disburse such funds to the appropriate Lender(s) in its Group.
(b) Late Payments. To the extent permitted by law, upon demand, the Borrower or the Servicer (on the Borrower's behalf), as applicable, shall pay to the applicable Co-Agent for the account of each Person in its Group to whom payment of any Obligation is due, interest on all amounts not paid or deposited by 1:00 p.m. (New York City time) on the date when due (without taking into account any applicable grace period) at the Default Rate.
(c) Method of Computation. All computations of interest at the
Alternate Base Rate or the Default Rate shall be made on the basis of a year of
365 (or, when appropriate, 366) days for the actual number of days (including
the first day but excluding the last day) elapsed. All other computations of
interest, and all computations of Servicer's Fee, any per annum fees payable
under Section 4.1 and any other per annum fees payable by the Borrower to the
Lenders, the Servicer or any of the Agents under the Loan Documents shall be
made on the basis of a year of 360 days for the actual number of days (including
the first day but excluding the last day) elapsed.
(d) Avoidance or Rescission of Payments. To the maximum extent permitted by applicable law, no payment of any Obligation shall be considered to have been paid if at any time such payment is rescinded or must be returned for any reason.
Section 2.6 Non-Receipt of Funds by the Co Agents. Unless a Lender notifies its Co-Agent prior to the date and time on which it is scheduled to fund a Loan that it does not intend to fund, such Co-Agent may assume that such funding will be made and may, but shall not be obligated to, make the amount of such Loan available to the intended recipient in reliance upon such assumption. If such Lender has not in fact funded its Loan proceeds to the applicable Co-Agent, the recipient of such payment shall, on demand by such Co-Agent, repay to such Co-Agent the amount so made available together with interest thereon in respect of each day during
the period commencing on the date such amount was so made available by such Co-Agent until the date such Co-Agent recovers such amount at a rate per annum equal to the Federal Funds Rate for such day.
ARTICLE III.
SETTLEMENTS
Section 3.1 Reporting.
(a) Monthly Reports. Not later than the Monthly Reporting Date in each calendar month hereafter, the Servicer shall deliver to each of the Co-Agents, a Monthly Report accompanied by an electronic file in a form reasonably satisfactory to each of the Co-Agents; provided, however, that if an Unmatured Default or an Event of Default shall exist and be continuing, each of the Co-Agents may request that a computation of the Borrowing Base also be made on a date that is not a Monthly Reporting Date and, so long as such request is not made on or within 5 Business Days prior to the last day of any calendar month, the Servicer agrees to provide such computation within 3 Business Days after such request.
(b) Weekly Reports; Right to Request Cash Collateral Payment. Upon written request of the Administrative Agent, not later than each Weekly Reporting Date occurring at least 14 days after the Servicer's receipt of such request and continuing until the Administrative Agent gives written notice that it no longer desires Weekly Reports, the Servicer shall deliver to each of the Co-Agents, a Weekly Report of the dollar amount of cash collections and the number of requisitions, in each case, for the second preceding week (the "Report Week"). If the dollar amount of cash Collections or the number of requisitions for the Report Week is less than 50% of the arithmetic average of the corresponding figures for the four immediately preceding Report Weeks, upon request of either of the Co-Agents, the Servicer shall provide a written computation of the Cash Collateral Payment within 3 Business Days after such request.
(c) Interest; Other Amounts Due. At or before 12:00 noon (New York City time) on the Business Day before each Settlement Date, each of the Co-Agents shall notify the Borrower and the Servicer of (i) the aggregate principal balance of all Loans that are then outstanding from its Constituents, and (ii) the aggregate amount of all principal, interest and fees that will be due and payable by the Borrower to such Co-Agent for the account of such Co-Agent or its Constituents on such Settlement Date.
Section 3.2 Turnover of Collections. Without limiting any Agent's or Lender's recourse to the Borrower for payment of any and all Obligations:
(a) If any Monthly Report reveals that a mandatory prepayment is required under Section 1.5(b), (c) or (d), not later than the 1:00 p.m. (New York City time) on the next succeeding Settlement Date, the Servicer shall turn over to each applicable Co-Agent, for distribution to its Constituents, a portion of the Collections equal to the amount of such required mandatory prepayment;
(b) If, on any Settlement Date, any Loans are to be voluntarily prepaid in accordance with Section 1.5(a), or if the aggregate principal amount of the Advances
outstanding is to be reduced, the Servicer shall turn over to each of the Co-Agents, for distribution to its Constituents, a portion of the Collections equal to the Groups' respective Percentages of the aggregate amount of such voluntary prepayment or reduction; and
(c) In addition to, but without duplication of, the foregoing, on (i)
each Settlement Date and (ii) each other date on which any principal of or
interest on any of the Loans becomes due (whether by acceleration or
otherwise) and, in the case of principal, has not been reborrowed pursuant
to Section 1.1, the Servicer shall turn over to each of the Co-Agents, for
distribution to their respective Constituents, the Groups' respective
Percentages of a portion of the Collections equal to the aggregate amount
of all other Obligations that are due and owing on such date. If the
Collections and proceeds of new Loans are insufficient to make all payments
required under clauses (a), (b) and (c) and to pay the Servicer's Fees and,
if applicable, all expenses due and owing to any replacement Servicer under
Section 8.1(d) (all of the foregoing, collectively, the "Required Amounts")
and the Borrower has made any Demand Advances, the Borrower shall make
demand upon Quest Diagnostics for payment of the Demand Advances in an
amount equal to the lesser of the Required Amounts or the aggregate
outstanding principal balance of such Demand Advances (plus any accrued and
unpaid interest thereon) and, upon receipt of any such amounts, the
Borrower shall pay them to each of the Co-Agents, ratably in accordance
with their respective Groups' Percentages, for distribution in accordance
with this Section 3.2.
(d) If the aggregate amount of Collections and payments on Demand Advances received by the Co-Agents on any Settlement Date are insufficient to pay all Required Amounts, the aggregate amount received shall be applied to the items specified in the subclauses below, in the order of priority of such subclauses:
(i) to any accrued and unpaid interest on the Loans that is then due and owing, including any previously accrued interest which was not paid on its applicable due date;
(ii) if the Servicer is not the Borrower or an Affiliate thereof, to any accrued and unpaid Servicer's Fee that is then due and owing to such Servicer, together with any invoiced expenses of the Servicer due and owing pursuant to Section 8.1(d);
(iii) to the Unused Fee and the Usage Fee accrued during such Settlement Period, plus any previously accrued Unused Fee and Usage Fee not paid on a prior Settlement Date;
(iv) to the payment of the principal of any Loans that are then due and owing;
(v) to other Obligations that are then due and owing;
(vi) if the Servicer is the Borrower, Quest Diagnostics or one of their respective Affiliates, to the accrued and unpaid Servicer's Fee; and
(vii) the balance, if any, to the Borrower.
(e) If the Servicer is ever required to deliver a computation of the Cash Collateral Payment pursuant to Section 3.1(b), not later than one (1) Business Day after delivery of such computation, the Borrower shall pay to the applicable Co-Agent an amount equal to its Group's Percentage of the Cash Collateral Payment to be invested in Permitted Investments selected by such Co-Agent but held as Collateral for the Obligations until the next Settlement Date pending distribution in accordance with Section 3.2(d). If the Borrower lacks sufficient funds to make any such Cash Collateral Payment, in whole or in part, the Borrower shall make immediate demand upon Quest Diagnostics for payment of any Demand Advances that are then outstanding, and, upon receipt of any such shortfall amount, the Borrower shall pay each Group's Percentage of such shortfall amount to the applicable Co-Agent for deposit into a cash collateral account to be invested in Permitted Investments selected by the applicable Co-Agent but held as Collateral for the Obligations until the next Settlement Date pending distribution in accordance with Section 3.2(d).
(f) In addition to, but without duplication of, the foregoing, on (i) each Settlement Date and (ii) each other date on which any principal of or interest on any of the Loans becomes due (whether by acceleration pursuant to Section 10.2(a) or 10.2(b) or otherwise), the Servicer shall turn over to each of the Co-Agents, for distribution to the Lenders, a portion of the Collections equal to the aggregate amount of all Obligations that are due and owing on such date.
Section 3.3 Non-Distribution of Servicer's Fee. Each of the Agents and the other Secured Parties hereby consents to the retention by the Servicer of a portion of the Collections equal to the Servicer's Fee (and, if applicable, any invoiced expenses of such Servicer that are due and owing pursuant to Section 8.1(d)) so long as the Collections received by the Servicer are sufficient to pay all amounts pursuant to Section 3.2 of a higher priority as specified in such Section.
Section 3.4 Deemed Collections. If as of the last day of any Settlement Period:
(a) the outstanding aggregate balance of the Net Receivables as reflected in the preceding Monthly 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 Originator or any Affiliate thereof (regardless of whether the same is treated by such Originator 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 Originator or any Affiliate thereof to pay to the related Obligor any rebate or refund, or
(iv) the Unpaid Net Balance of any Receivable is less than the amount included in calculating the Net Pool Balance for purposes of any Monthly Report (for any reason other than such Receivable becoming a Defaulted Receivable), or
(b) any of the representations or warranties of the Borrower set forth in Section 6.1(j), (l) or (p) was not true when made with respect to any Receivable, or any of the representations or warranties of the Borrower set forth in Section 6.1(l) is no longer true with respect to any Receivable,
then, in such event, the Borrower shall be deemed to have received a Collection in an amount 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).
ARTICLE IV.
FEES AND YIELD PROTECTION
Section 4.1 Fees. Quest Diagnostics or the Borrower, as applicable, shall pay to each of the Agents and the Lenders certain fees from time to time in amounts and payable on such dates as are set forth in the Fee Letters.
Section 4.2 Yield Protection.
(a) If any Regulatory Change occurring after the date hereof:
(i) shall subject an Affected Party to any Tax, duty or other charge with respect to its Obligations or, as applicable, its Commitment or its Liquidity Commitment, or shall change the basis of taxation of payments to the Affected Party of any Obligations, owed to or funded in whole or in part by it or any other amounts due under this Agreement in respect of its Obligations or, as applicable, its Commitment or its Liquidity Commitment except for (A) Taxes based on, or measured by, net income or net profits, or changes in the rate of Tax on or determined by reference to the overall net income or net profits, of such Affected Party imposed by the United States of America, by the jurisdiction in which such Affected Party's principal executive office and/or its applicable lending office is located and, if such Affected Party's principal executive office or its applicable lending office is not in the United States of America, by the jurisdiction where such Affected Party's principal office or applicable lending office is located, (B) franchise Taxes, Taxes on, or in the nature of, doing business Taxes or capital Taxes, or (C) withholding Taxes required for payments made to any foreign entity (other than withholding Taxes imposed by the United States as a result of a change in law after the date hereof and before such foreign entity issues its Commitment or Liquidity Commitment or becomes an assignee of a Lender hereunder), unless such foreign entity fails to deliver to each of the Co-Agents and the Borrower an accurate IRS Form W-8BEN or W-8ECI (or the applicable successor form), as applicable; or
(ii) shall impose, modify or deem applicable any reserve that was not included in the computation of the applicable Interest Rate, or any special deposit or similar requirement against assets of any Affected Party, deposits or obligations with or for the account of any Affected Party or with or for the account of any affiliate (or entity deemed by the Federal
Reserve Board to be an affiliate) of any Affected Party, or credit extended by any Affected Party; or
(iii) shall affect the amount of capital required or expected to be maintained by any Affected Party; or
(iv) shall impose any other condition affecting any Obligation owned or funded in whole or in part by any Affected Party, or its rights or obligations, if any, to make Loans or Liquidity Fundings; or
(v) shall change the rate for, or the manner in which the Federal Deposit Insurance Corporation (or a successor thereto) assesses deposit insurance premiums or similar charges; or
(vi) shall require any Conduit to be consolidated for financial accounting purposes with any other Person;
and the result of any of the foregoing is or would be:
(x) to increase the cost to or to impose a cost on (I) an Affected Party funding or making or maintaining any Loan, any Liquidity Funding, or any commitment of such Affected Party with respect to any of the foregoing, or (II) any of the Agents for continuing its or the Borrower's relationship with any Affected Party, in each case, in an amount deemed to be material by such Affected Party,
(y) to reduce the amount of any sum received or receivable by an Affected Party under this Agreement or under the Liquidity Agreement, or
(z) to reduce the rate of return on such Affected Party's capital as a consequence of its Commitment, its Liquidity Commitment or the Loans made by it to a level below that which such Affected Party could have achieved but for the occurrence of such circumstances,
then, within thirty days after demand by such Affected Party (which demand shall be made not more than 90 days after the date on which the Affected Party becomes aware of such Regulatory Change and shall be accompanied by a certificate setting forth, in reasonable detail, the basis of such demand and the methodology for calculating, and the calculation of, the amounts claimed by the Affected Party), the Borrower shall pay directly to such Affected Party such additional amount or amounts as will compensate such Affected Party for such actual additional cost, actual increased cost or actual reduction.
(b) Each Affected Party will promptly notify the Borrower, the Administrative Agent and the applicable Co-Agent of any event of which it has knowledge (including any future event that, in the judgment of such Affected Party, is reasonably certain to occur) which will entitle such Affected Party to compensation pursuant to this Section 4.2; provided, however, no failure to give or delay in giving such notification shall adversely affect the rights of any Affected Party to such compensation unless such notification is given more than 90 days after the Affected Party becomes aware of such Regulatory Change.
(c) In determining any amount provided for or referred to in this
Section 4.2, an Affected Party may use any reasonable averaging and attribution
methods (consistent with its ordinary business practices) that it (in its
reasonable discretion) shall deem applicable. Any Affected Party when making a
claim under this Section 4.2 shall submit to the Borrower the above-referenced
certificate as to such actual increased cost or actual reduced return (including
calculation thereof in reasonable detail), which statement shall, in the absence
of demonstrable error, be conclusive and binding upon the Borrower.
(d) Each of the Lenders agrees, and to require each Affected Party to agree that, with reasonable promptness after an officer of such Lender or such Affected Party responsible for administering the Transaction Documents becomes aware that it has become an Affected Party under this Section 4.2, is entitled to receive payments under this Section 4.2, or is or has become subject to U.S. withholding Taxes payable by any Loan Party in respect of its investment hereunder, it will, to the extent not inconsistent with any internal policy of such Person or any applicable legal or regulatory restriction, (i) use all reasonable efforts to make, fund or maintain its commitment or investment hereunder through another branch or office of such Affected Party, or (ii) take such other reasonable measures, if, as a result thereof, the circumstances which would cause such Person to be an Affected Party under this Section 4.2 would cease to exist, or the additional amounts which would otherwise be required to be paid to such Person pursuant to this Section 4.2 would be reduced, or such withholding Taxes would be reduced, and if the making, funding or maintaining of such commitment or investment through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such commitment or investment or the interests of such Person; provided that such Person will not be obligated to utilize such other lending office pursuant to this Section 4.2 unless the Borrower agrees to pay all incremental expenses incurred by such Person as a result of utilizing such other office as described in clause (i) above.
(e) If any Lender makes a claim for compensation under this Section 4.2, the Borrower may propose an Eligible Assignee to the applicable Co-Agent who is willing to accept an assignment of such Lender's Commitment, Liquidity Commitment and outstanding Loans, as applicable, together with each of its other rights and obligations under the Transaction Documents; provided that any expenses or other amounts which would be owing to such Lender pursuant to any indemnification provision hereof (including, if applicable, Section 4.3) shall be payable by the Borrower as if the Borrower had prepaid the Loans of the assigning Lenders rather than such assigning Lenders having assigned their respective interests hereunder. If such proposed Eligible Assignee is acceptable to the applicable Co-Agent (who shall not unreasonably withhold or delay its approval), the claiming Lender will be obligated to assign all of its rights and obligations to such proposed Eligible Assignee within ten (10) Business Days after such Co-Agent gives its consent to such proposed Eligible Assignee. In addition, if one or more Affected Parties in one of the Groups (but not both of the Groups) requests compensation under Section 4.2(a), the Borrower shall have the right to (i) require all members of the Group to which such claiming part to assign all, but not less than all, of their Commitment(s) and outstanding Obligations, as applicable, by entering into written assignments with one or more Eligible Assignees identified by the Borrower, or (ii) to pay in full of all Obligations (if any) owing to such Group and terminate its Commitment(s) (as applicable). Each assignment pursuant to clause (i) above to an Eligible Assignee (which may include a Constituent of the other Co-Agent) shall become effective on the date specified therein subject to receipt of payment in full
on such date for all Obligations, if any, owing to the Group being replaced, and the Group being replaced shall make the requested assignments; provided that any expenses or other amounts which would be owing to such Group pursuant to any indemnification provision hereof shall be payable by the Borrower as if the Borrower had prepaid the Loans of the assigning Group rather than the members of such Group having assigned their respective interests hereunder
Section 4.3 Funding Losses. In the event that any Lender shall
actually incur any actual loss or expense (including any actual loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to make or maintain any Loan or Liquidity Funding) as a
result of (i) any payment of principal with respect to such Lender's Loan or
Liquidity Funding being made on any day other than the scheduled last day of an
applicable CP Tranche Period or Interest Period with respect thereto, including,
without limitation, because of a prepayment required by Section 1.5(b), (c) or
(d) (it being understood that the foregoing shall not apply to any Alternate
Base Rate Loans), or (ii) any Loan not being made in accordance with a request
therefor under Section 2.1, then, upon written notice from the applicable
Co-Agent to the Administrative Agent, the Borrower and the Servicer, the
Borrower shall pay to the Servicer, and the Servicer shall pay to the applicable
Co-Agent for the account of such Lender, the amount of such actual loss or
expense; provided, however, that in the case of Blue Ridge, nothing in this
Section 4.3 shall duplicate any amount paid to it as Broken Funding Costs. Such
written notice (which shall include the methodology for calculating, and the
calculation of, the amount of such actual loss or expense, in reasonable detail)
shall, in the absence of demonstrable error, be conclusive and binding upon the
Borrower and the Servicer.
ARTICLE V.
CONDITIONS OF ADVANCES
Section 5.1 Conditions Precedent to Restatement Effectiveness. Effectiveness of this Agreement shall be subject to the conditions precedent that on such date: (a) each of the statements contained in Sections 5.2(a), (b) and (c) shall be true, and (b) the Administrative Agent shall have received not less than two (2) originals (except in the case of item (xi) below) of each of the following documents dated the date hereof:
(i) This Agreement, duly executed by the parties hereto;
(ii) A certificate of the Secretary or Assistant Secretary of each Loan Party certifying (A) the names and true signatures of the officers authorized on its behalf to sign this Agreement and the other Transaction Documents to be delivered by it hereunder (on which certificate the Agents and the Lenders may conclusively rely until such time as the Administrative Agent shall receive from such Loan Party a revised certificate meeting the requirements of this subsection (ii)), (B) (x) an attached copy of the Organic Documents of such Loan Party, or (y) that there has been no change in the Organic Documents of such Loan Party since the date of the Existing Agreement, and (C) an attached copy of resolutions of such Loan Party's board of directors authorizing its execution and delivery of this Agreement;
(iii) Opinions dated the date hereof addressed to each of the Agents and the Lenders addressing (1) the existence of a "true sale" or "true contribution" of the Receivables
from each of the Originators to the Borrower under the Sale Agreement, and (2) the inapplicability of the doctrine of substantive consolidation to the Borrower with respect to each of the Originators in connection with any bankruptcy proceeding involving any of the Originators or the Borrower;
(iv) One or more favorable opinions of counsel or reliance letters to Loan Parties covering the matters set forth in of Exhibit 5.1(h);
(v) Copies in form suitable for filing of any and all financing statement amendments necessary to ensure that the Borrower continues to have a perfected ownership interest or perfected first priority security interest in the Receivables and Related Assets conveyed to it under the Sale Agreement and the Administrative Agent, for the benefit of the Secured Parties, continues to have a perfected first priority security interest in the Collateral hereunder;
(vi) A Monthly Report, prepared as of the Cut-Off Date of March 31, 2004;
(vii) An amendment to the Blue Ridge Liquidity Agreement, in form and substance satisfactory to the Blue Ridge Agent, duly executed by the parties thereto, increasing the Liquidity Commitments thereunder to $204,000,000, and the Atlantic Liquidity Agreement, in form and substance satisfactory to the Atlantic Agent, duly executed by the parties thereto;
(viii) The Atlantic Fee Letter and the Blue Ridge Fee Letter, together with payment of any and all fees due on or prior to the date hereof; and
(ix) A certificate of an Authorized Officer of each of the Loan Parties certifying that as of the date hereof, no Event of Default or Unmatured Event of Default exists and is continuing.
Section 5.2 Conditions Precedent to All Advances. Each Advance (including the initial Advance under this Agreement) shall be subject to the further conditions precedent that on the applicable Borrowing Date, each of the following statements shall be true (and the Borrower, by accepting the amount of such Advances or by receiving the proceeds of any Loan comprising such Advance, and each other Loan Party, upon such acceptance or receipt by the Borrower, shall be deemed to have certified that):
(a) the representations and warranties contained in Section 6.1 are correct in all respects on and as of the date of such Advance as though made on and as of such day and shall be deemed to have been made on such day (except for such representations which speak only as of an earlier date),
(b) no event has occurred and is continuing, or would result from such Advance, that constitutes an Event of Default or Unmatured Default,
(c) the Termination Date shall not have occurred,
(d) if such Advance is to be funded, in whole or in part, by either Conduit's Liquidity Banks, such Conduit shall have Liquidity Banks in its Group whose Scheduled
Termination Dates have not occurred with sufficient undrawn Commitments in an aggregate amount sufficient to fund the requisite portion of such Advance, and
(e) each of the Co-Agents shall have received (with such receipt to be determined in accordance with Section 14.2 of this Agreement) a timely Borrowing Request in accordance with Section 2.1;
provided, however, the absence of the occurrence and continuance of an Unmatured Default shall not be a condition precedent to any Advance which does not increase the aggregate principal amount of all Advances outstanding over the aggregate outstanding principal balance of the Advances as of the opening of business on such day.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties of Loan Parties. Each Loan Party, as to itself, represents and warrants to the Agents and the Lenders as follows:
(a) Ownership of the Borrower. Quest Diagnostics owns, directly or indirectly, all the issued and outstanding Equity Interests of the Borrower, and all of such Equity Interests are fully paid and non-assessable and are free and clear of any Liens.
(b) Existence; Due Qualification; Permits. Each of the Loan Parties:
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization; (ii) has all requisite
corporate power and authority 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 Material Adverse Effect. The Loan Parties hold all
governmental permits, licenses, authorizations, consents and approvals necessary
for the Loan Parties to own, lease, and operate their respective Properties and
to operate their respective businesses as now being conducted (collectively, the
"Permits"), except for Permits the failure to obtain which would not have a
Material Adverse Effect. None of the Permits has been modified in any way that
is reasonably likely to have a Material Adverse Effect. All Permits are in full
force and effect except where the failure of such to be in full force and effect
would not have a Material Adverse Effect.
(c) Action. Each Loan Party 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 each Loan Party 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 action on its part; and this Agreement has been duly and validly executed and delivered by each Loan Party and constitutes, and each of the other Transaction Documents to which it is a party when executed and delivered by such Loan Party will constitute, its legal, valid and binding obligation, enforceable against
each Loan Party 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) Absence of Default. No Unmatured Default or Event of Default has occurred and is continuing.
(e) Noncontravention.
(i) None of the execution, delivery and performance by a Loan Party 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, an Organic Document of such Loan Party or any
applicable Requirement of Law or any order, writ, injunction or decree of any
Governmental Authority binding on such Loan Party, or any term or provision of
any Contractual Obligation of such Loan Party 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 Loan
Party 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 Material Adverse Effect and which would not subject any Lender to any material
risk of damages or liability to third parties.
(ii) No Loan Party is in default under any material contract or agreement to which it is a party or by which it is bound, nor, to such Loan Party'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 Material Adverse Effect.
(f) No Proceedings. Except as described in Quest Diagnostics' Form 10-K for the fiscal year ended December 31, 2003 and all filings made with the SEC under the Exchange Act by any Loan Party subsequent thereto prior to the date of this Agreement (copies of which have been provided to each of the Co-Agents or made available on EDGAR):
(i) There is no Proceeding (other than any qui tam Proceeding, to which this Section is limited to the best of each Loan Party's knowledge) pending against, or, to the knowledge of either Loan Party, threatened in writing against or affecting, any Loan Party or any of its respective Properties before any Governmental Authority that, if determined or resolved adversely to such Loan Party, could reasonably be expected to have a Material Adverse Effect.
(ii) There is (A) no unfair labor practice complaint pending against any Loan Party or, to the best knowledge of each Loan Party, threatened against such Loan Party, 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 Loan Party or, to the best knowledge of such Loan Party after due inquiry, threatened against such Loan Party, (B) no strike, labor dispute, slowdown or stoppage pending
against such Loan Party or, to the best knowledge of Borrower, after due inquiry, threatened against such Loan Party and (C) to the best knowledge of Borrower after due inquiry, no union representation question existing with respect to the employees of such Loan Party and, to the best knowledge of such Loan Party, 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 Material Adverse Effect.
(g) Taxes.
(i) Except as would not have a 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, each Loan Party have been timely filed in accordance with all applicable laws; (B) each Loan Party 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 each Loan Party (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) each Loan Party has made adequate provision for all Taxes payable by such Loan Party for which no Tax Return has yet been filed.
(ii) Except as set forth in Quest Diagnostics' Annual Report on Form
10-K for the year ended December 31, 2003: (A) as of the date hereof no Loan
Party is 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 Borrower is required to
indemnify another party for a material amount of Taxes other than, in the case
of Quest Diagnostics, the tax indemnity contained in the Merger Agreement dated
as of August 16,1999, between Glaxo Smith Kline (formerly known as Smith Kline
Beecham) and Quest Diagnostics.
(h) 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 any Loan Party of the Transaction Documents to which it is a party or for the legality, validity or enforceability hereof or thereof or for the consummation of the transactions herein and therein contemplated, except for filings and recordings in respect of the Liens created pursuant to the Transaction Documents (all of which have been duly made or delivered to the Administrative Agent's counsel for filing or may be prepared by the Administrative Agent for filing in accordance with the terms of this Agreement) 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 Material Adverse Effect.
(i) Financial Statements and Absence of Certain Material Adverse Changes.
(i) The information, reports, financial statements, exhibits and schedules furnished in writing by either of the Loan Parties to each of the Co-Agents or Lenders in connection with the negotiation, preparation or delivery of the Transaction Documents, including Quest Diagnostics' Annual Report on Form 10-K for the year ended December 31, 2003, 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; it being understood that certain financial information so furnished, including without limitation information contained in the Weekly Reports and Monthly Reports, has not been prepared in accordance with GAAP and might vary materially from information prepared and presented in accordance with GAAP on the same subject matter. Each Loan Party understands that all such statements, representations and warranties shall be deemed to have been relied upon by the Lenders as a material inducement to make each extension of credit hereunder.
(ii) From December 31, 2003 through and including the date hereof, there has been no material adverse change in Quest Diagnostics' consolidated financial condition, business or operations. Since December 31, 2003, 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 an Originator or as Servicer, under the Transaction Documents when and as required, and no material adverse effect on the collectibility of any material portion of the Receivables.
(iii) Since the date hereof, no event has occurred which would have a Material Adverse Effect.
(j) Nature of Receivables. Each Receivable constitutes an Account or a Payment Intangible.
(k) Margin Regulations. The use of all funds obtained by such Loan Party under this Agreement or any other Transaction Document will not conflict with or contravene any of Regulation T, U or X.
(l) Title to Receivables and Quality of Title.
(i) Each Receivable has been acquired by the Borrower from an Originator in accordance with the terms of the Sale Agreement, and the Borrower has thereby irrevocably obtained good title to such Receivable and its Related Assets, free and clear of all Adverse Claims (except as created under the Transaction Documents), and the Borrower has the legal right to sell and encumber, such Receivable and the Related Assets. Without limiting the foregoing, there have been duly filed or delivered to the Administrative Agent's counsel in form suitable for filing, all financing statements and financing statements amendments or other similar instruments or documents necessary under the UCC of all appropriate jurisdictions to perfect the Borrower's ownership interest in such Receivable.
(ii) This Agreement creates a valid security interest in the Collateral in favor of the Administrative Agent, for the benefit of the Secured Parties, and, upon filing of the financing statements and amendments described in clause (i), together with UCC termination statements delivered under the Receivables Sale Agreement, such security interest will be a first priority perfected security interest.
(iii) No financing statement executed or otherwise authorized by any Originator or Loan Party 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 an Originator in accordance with the Contracts, (B) in favor of the Borrower and its assigns in connection with the Sale Agreement, (C) in favor of the Administrative Agent in accordance with this 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 have been terminated or amended pursuant to UCC financing statements delivered to or prepared by the Administrative Agent hereunder in form suitable for filing in all applicable jurisdictions.
(m) Accurate Reports. No Monthly Report, Weekly Report or computation of Cash Collateral Payment (in each case, if prepared by such Loan Party, or to the extent information therein was supplied by such Loan Party), no other information, exhibit, schedule or information concerning the Collateral furnished or to be furnished verbally or in writing before or after the date of this Agreement, by or on behalf of such Loan Party to each of the Co-Agents or Lenders pursuant to this Agreement was inaccurate in any material respect as of the date it was dated or (except as otherwise disclosed to each of the Co-Agents or the Lenders 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 (it being understood that the Monthly Reports and Weekly Reports are not prepared in accordance with GAAP and that reports prepared in accordance with GAAP on the same subject matter might vary materially; and certain reconciling information with respect to Receivables will be set forth in the Monthly Report).
(n) Jurisdiction of Organization; Offices. Each Loan Party's
jurisdiction of organization is correctly set forth after its name in the
preamble to this Agreement. The principal places of business and chief executive
office of the Borrower is located at the addresses set forth on Schedule 6.1(n),
and the offices where the Servicer and the Borrower keep all their Records and
material Contracts are located at the addresses specified in Schedule 6.1(n) (or
at such other locations, notified to each of the Co-Agents in accordance with
Section 7.1(f), in jurisdictions where all action required by Section 8.5 has
been taken and completed).
(o) Lockboxes and Collection Accounts.
(i) One of the Loan Parties or the applicable Originator has instructed all Obligors of all Receivables to pay all Collections thereon either (A) by mail addressed to a Lockbox or (B) by wire transfer or other electronic funds transfer directly to a Collection Account in the name of the applicable Originator, as sub-servicer, or in the name of the Borrower. Items received in the Lockboxes are deposited for collection each Business Day into a Collection Account in the name of the applicable Originator or the Borrower, and all collected and available funds from time to time in each Collection Account in the name of any Originator are swept each day to a Collection Account in the name of the Borrower. Each of the agreements establishing and governing the maintenance of the Lockboxes and Collections Accounts is in full force and effect, and each of the Lockboxes and Collections Accounts is subject to a Collection Account Agreement that is in full force and effect.
(ii) The Borrower has not granted any Person other than the Administrative Agent, dominion and control over any Collection Account or any Lockbox, or the right to take dominion and control of any of the foregoing at a future time or upon the occurrence of a future event.
(iii) Except as otherwise provided in Section 7.3(d), each Collection Account Agreement, and the name and address of each Collection Bank (together with the account numbers of all Collection Accounts maintained with it and the address of each Lockbox maintained with it) are set forth on Schedule 6.1(o).
(p) Eligible Receivables. Each Receivable included as an Eligible Receivable in the Net Pool Balance in connection with any computation or recomputation of the Borrowing Base is an Eligible Receivable on such date.
(q) ERISA. No ERISA Event has occurred or is reasonably expected to occur which could have a 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 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 Material Adverse Effect).
(r) Names. Since its incorporation, the Borrower has not used any legal names, trade names or assumed names other than (i) the name in which it has executed this Agreement, and (ii) any other name to which the Administrative Agent gives its prior written consent (which consent will not be unreasonably withheld or delayed).
(s) Credit and Collection Policy. With respect to the Receivables originated by each of the Originators, each of the applicable Originator, the Borrower and the Servicer has complied in all material respects with the 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 or decrease the credit quality of any newly created Receivables except for such changes as to which each of the Co-Agents has received the notice required under Section 7.2(h) and has given its prior written consent thereto (which consent shall not be unreasonably withheld or delayed).
(t) Payments to Applicable Originator. With respect to each Receivable sold or contributed to the Borrower by any Originator under the Sale Agreement, the Borrower has given reasonably equivalent value to such Originator 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. Sections 101 et seq.), as amended.
(u) Investment Company Act; Public Utility Holding Company Act; Other Restrictions. No Loan Party is 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. No Loan Party is 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. No Loan Party is 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) Borrowing Base; Solvency. The Borrowing Base is at all times at least equal to the aggregate outstanding principal balance of the Advances. As of each Borrowing Date, after giving effect to any Loans to be borrowed on such date, the Borrower is and will be Solvent.
ARTICLE VII.
GENERAL COVENANTS OF LOAN PARTIES
Section 7.1 Affirmative Covenants of Loan Parties. From the date hereof until the Final Payout Date, unless each of the Co-Agents shall otherwise consent in writing:
(a) Compliance With Laws, Etc. Each Loan Party 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 Material Adverse Effect.
(b) Preservation of Existence. Each Loan Party will preserve and maintain its existence, rights, franchises and privileges in the jurisdiction of its incorporation, 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 Material Adverse Effect.
(c) Audits. Each Loan Party 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 each of the
Agents or any of its 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 Loan Party, and (B) to visit the offices and
properties of such Loan Party for the purpose of examining such Records,
Contracts and Invoices and to discuss matters relating to Receivables or such
Loan Party's performance hereunder with any of the officers or employees of such
Loan Party having knowledge of such matters; and (ii) without limiting the
provisions of clause (i) above, from time to time, at the expense of such Loan
Party, permit certified public accountants or auditors acceptable to each of the
Co-Agents to conduct a review of such Loan Party's Contracts, Invoices and
Records (each, a "Review"); provided, however, that (x) so long as no
Event of Default has occurred and is continuing, the Loan Parties shall only be
responsible for the costs and expenses of two (2) such Reviews under this
Section or under Section 7.2(i) in 2004 and one (1) such Review in any calendar
year thereafter unless the first such Review in such subsequent calendar year
resulted in negative findings (in which case the Loan Parties shall be
responsible for the costs and expenses of two (2) such Reviews in such
subsequent calendar year). Notwithstanding the foregoing, if (x) any Loan Party
requests the approval of a new Eligible Originator who is a Material Proposed
Addition or (y) any Material Acquisition is consummated, the Loan Parties 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 either of the Co-Agents.
(d) Keeping of Records and Books of Account. The Servicer will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate essential Records evidencing the Receivables 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 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). Each of the Borrower and the Servicer shall post all Demand Advances to its respective books in accordance with GAAP on or before each Settlement Date.
(e) Performance and Compliance with Receivables, Invoices and Contracts. Each Loan Party 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 except for such failures to fully perform and comply as would not, individually or in the aggregate, have a Material Adverse Effect.
(f) Jurisdiction of Organization; Location of Records. Each Loan Party will keep its jurisdiction of organization, chief place of business and (at any time while the location of its chief executive office remains germane to perfection of any of the security interests or ownership interests purported to be conveyed pursuant to the Transaction Documents) its 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 address(es) of the Servicer and the Borrower referred to in Section 6.1(n) 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 shall have been taken and completed.
(g) Credit and Collection Policies. Each Loan Party will comply in all material respects with its Credit and Collection Policy in regard to the Receivables and the related Contracts and Invoices.
(h) Sale Agreement. The Borrower will perform and comply in all material respects with all of its covenants and agreements set forth in the Sale Agreement, and will enforce the performance by each Originator of its respective obligations thereunder.
(i) Collections.
(i) In accordance with Section 6.1(o)(i), each of the Loan Parties will instruct all Obligors to make all payments on Receivables directly to a Lockbox or Collection Account in the name of the applicable Originator (as sub-servicer for the Borrower and the Secured Parties), the Borrower or the Administrative Agent or its designee, which is subject to a Collection Account Agreement and, if such Collection Account is in the name of an Originator, it is swept on a daily basis into a Collection Account in the name of the Borrower (or the Administrative Agent or its designee) which is subject to a Collection Account Agreement. The Borrower will cause each of the Collection Accounts that is currently in the name of an Originator to be transferred to it and into its own name within a reasonable period of time after the initial Advance hereunder.
(ii) If, notwithstanding the foregoing clause (i) above, any
Collections are paid directly to any Loan Party, such Loan Party shall deposit
the same (with any necessary indorsements) to a Collection Account within one
(1) Business Day after receipt thereof.
(iii) Upon demand of any of the Agents at any time following the occurrence of any Unmatured Default or Event of Default, the Borrower or the Servicer shall establish a segregated account at Wachovia Bank, National Association which is subject to a perfected security interest in favor of the Administrative Agent, for the benefit of the Secured Parties (the "Collateral Account"), into which all deposits from time to time in the Collection Accounts, and all other Collections, are concentrated pending application in accordance with the terms of this Agreement to the Obligations.
(j) Further Assurances. Each of the Loan Parties shall take all necessary action to establish and maintain (i) in favor of the Borrower, a valid and perfected ownership interest in the Receivables and Related Assets, and (ii) in favor of the Administrative Agent for the benefit of the Secured Parties, a valid and perfected first priority security interest in the Collateral, including, without limitation, taking such action to perfect, protect or more fully evidence the security interests of the Administrative Agent as the Administrative Agent may reasonably request.
Section 7.2 Reporting Requirements of Loan Parties. From the date hereof until the Final Payout Date, unless each of the Co-Agents shall otherwise consent in writing:
(a) Quarterly Financial Statements. (i) Quest Diagnostics will furnish to each of the Co-Agents or make publicly available through EDGAR, as soon as available and in any event within 60 days after the end of each of the first three quarters of each of its fiscal years, copies of its report on SEC Form 10-Q as of the close of such fiscal quarter, and (ii) the Borrower will furnish to each of the Co-Agents as soon as available and in any event within 60 days after the end of each of the first three quarters of each of its fiscal years an unaudited balance sheet and income statement of the Borrower as of the close of such fiscal quarter, prepared in accordance with GAAP and certified in a manner reasonably acceptable to each of the Co-Agents by the Borrower's chief executive officer, chief financial officer or treasurer (or an officer acting in a similar capacity to any of the foregoing);
(b) Annual Financial Statements. Quest Diagnostics will furnish to each of the Co-Agents or make publicly available through EDGAR, as soon as available and in any event within 120 days after the end of each fiscal year of Quest Diagnostics, copies of its annual report on SEC Form 10-K for such year, and the Borrower will furnish to each of the Co-Agents as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, an unaudited balance sheet and income statement of the Borrower as of the close of such fiscal year, prepared in accordance with GAAP and certified in a manner reasonably acceptable to each of the Co-Agents by the Borrower's chief executive officer, chief financial officer or treasurer (or an officer acting in a similar capacity to any of the foregoing)
(c) Reports to SEC and Exchanges. In addition to the reports required by subsections (a) and (b) next above, promptly upon filing any report on SEC Form 8-K with the SEC, Quest Diagnostics shall deliver copies thereof to each of the Co-Agents or make them publicly available through EDGAR;
(d) ERISA. Promptly after the filing or receiving thereof, each Loan Party will furnish to each of the Co-Agents copies of all reports and notices with respect to any Reportable Event which any Loan Party files under ERISA with the Internal Revenue Service, the PBGC or the U.S. Department of Labor or which such Loan Party receives from the PBGC;
(e) Events of Default, etc. As soon as possible and in any event within five (5) Business Days after any Authorized Officer of either Loan Party obtains knowledge of the occurrence of any Event of Default or any Unmatured Default, each Loan Party will furnish to each of the Co-Agents a written statement of an Authorized Officer of such Loan Party setting forth details of such event and the action that such Loan Party will take with respect thereto;
(f) Litigation. As soon as possible and in any event within ten Business Days after any Authorized Officer of either Loan Party obtains knowledge thereof, such Loan Party will furnish to each of the Co-Agents notice of (i) any litigation, investigation or proceeding which may exist at any time which would reasonably be expected to have a Material Adverse Effect and (ii) any development in previously disclosed litigation which development would reasonably be expected to have a Material Adverse Effect;
(g) Reviews of Receivables. As soon as available and in any event within 30 days after each Review referenced in Section 7.1(c), the Borrower will deliver to each of the Co-Agents a written report on the results of such Review prepared by accountants or auditors selected as specified therein and reasonably acceptable to each of the Co-Agents, substantially in the form of the report delivered for the prior Review, and covering such other matters as any of the Agents may reasonably request in order to protect the interests of the Administrative Agent, for the benefit of the Secured Parties, under or as contemplated by this Agreement;
(h) Change in Business or Credit and Collection Policy. Each Loan Party will furnish to each of the Co-Agents prompt written notice of any material change in the character of such Loan Party's business prior to the occurrence of such change, and each Loan Party will provide each of the Co-Agents with not less than 15 Business Days' prior written notice of any material change in the Credit and Collection Policy (together with a copy of such proposed change); and
(i) Downgrade. Promptly after receipt of notice of any downgrade of any Indebtedness of Quest Diagnostics by Moody's or S&P, Quest Diagnostics shall furnish to each of the Co-Agents a notice of such downgrade setting forth the Indebtedness affected and the nature of such change in rating.
(j) Other. Promptly, from time to time, each Loan Party will furnish to each of the Agents such other information, documents, Records or reports respecting the Receivables or the condition or operations, financial or otherwise, of such Loan Party as any of the Agents may from time to time reasonably request in order to protect the interests of the Administrative Agent, for the benefit of the Secured Parties, under or as contemplated by this Agreement.
Section 7.3 Negative Covenants of Loan Parties. From the date hereof until the Final Payout Date, without the prior written consent of each of the Co-Agents:
(a) Sales, Liens, Etc. (i) The Borrower will not, 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 Collateral, 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 Account Agreements, set-off rights of any bank at which any such account is maintained), and (ii) the Servicer will not assert any interest in the Receivables, except as the Servicer.
(b) Extension or Amendment of Receivables. No Loan Party will, except as otherwise permitted in Section 8.2(c), extend, amend or otherwise modify the terms of any Receivable, 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 any Originator (taken as a whole), or any material part thereof, or the rights of the Borrower or the Administrative Agent (for the benefit of the Secured Parties) therein.
(c) Change in Business or Credit and Collection Policy. No Loan Party will make or permit to be made any change in the character of its business or Credit and Collection Policy, which change would, in either case, impair the collectibility of any significant portion of the Receivables or otherwise materially and adversely affect the interests or remedies of Lender under this Agreement or any other Transaction Document.
(d) Change in Payment Instructions to Obligors. No Loan Party will add or terminate any bank as a Collection Bank from those listed in Schedule 6.1(o) or, after the Collateral Account has been established pursuant to Section 7.1(i), make any change in its instructions to Obligors regarding payments to be made to any Collection Account or Lockbox (except for a change in instructions solely for the purpose of directing Obligors to make such payments to another existing Collection Account or Lockbox, as applicable, and where such change is immaterial and does not adversely affect the interests of the Administrative Agent, on behalf of the Secured Parties, in any respect), unless (i) the Co-Agents shall have received prior written notice of such addition, termination or change and (ii) the Administrative Agent shall have received duly executed copies of appropriate Collection Account Agreements, in a form reasonably acceptable to the Administrative Agent with each new Collection Bank.
(e) Deposits to Accounts. Each Loan Party will establish reasonable procedures designed to ensure that no Loan Party will 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. The Borrower will not enter into any amendment or modification of, or supplement to, the Borrower's Organic Documents without the prior written consent of the Administrative Agent. Neither the Borrower nor Quest Diagnostics will permit or enter into any amendment to or modification of, or supplement to, the Sale Agreement or the Subordinated Notes, except that they may enter into Joinder Agreements to add Eligible Originators as sellers thereunder.
(g) Restricted Payments by the Borrower. The Borrower will not:
(i) Purchase or redeem any shares of the capital stock of the Borrower, declare or pay any dividends thereon (other than stock dividends), make any distribution to stockholders or set aside any funds for any such purpose, unless, in each of the foregoing cases: (A) such purchase, redemption, payment or distribution is made on, or immediately following, a Settlement Date after payment of all Obligations due and owing on such Settlement Date, and (B) after giving effect to such purchase, redemption, payment or distribution, the Borrower's net worth (determined in accordance with GAAP) will at all times be at least 10% of the greater of the Aggregate Commitment or the aggregate outstanding principal amount of the Advances; or
(ii) Make any payment of principal or interest on the Subordinated Notes if any Event of Default exists or would result therefrom or if such payment would result in the Borrower's having insufficient cash on hand to pay all Obligations that will be due and owing on the next succeeding Settlement Date.
(h) Borrower Indebtedness. The Borrower will not incur or permit to exist any Indebtedness or liability on account of deposits except: (A) as provided in the Transaction Documents and (B) other current accounts payable arising in the ordinary course of business and not overdue in any material respect.
(i) Prohibition on Additional Negative Pledges. No Loan Party will enter into or assume any agreement (other than this Agreement and the other Transaction Documents) prohibiting the creation or assumption of any Lien upon the Receivables or Related Assets, whether now owned or hereafter acquired, except as contemplated by the Transaction Documents, or otherwise prohibiting or restricting any transaction contemplated hereby or by the other Transaction Documents, and no Loan Party will enter into or assume any agreement creating any Lien upon the Subordinated Notes.
(j) Name Change, Offices, Records and Books of Accounts. The Borrower will not change its name, identity or structure (within the meaning of Article 9 of any applicable enactment of the UCC) or relocate its chief executive office or any office where Records are kept unless it shall have: (i) given the Co-Agents 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.
(k) Mergers, Consolidations and Acquisitions. The Borrower will not merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or purchase, lease or otherwise acquire (in one transaction or a series of transactions) all or substantially all of the assets of any other Person (whether directly by purchase, lease or other acquisition of all or substantially all of the assets of such Person or indirectly by purchase or other acquisition of all or substantially all of the capital stock of such other Person) other than the acquisition of the Receivables and Related Assets pursuant to the Sale Agreement.
(l) Disposition of Receivables and Related Assets. Except pursuant to this Agreement, the Borrower will not sell, lease, transfer, assign, pledge or otherwise dispose of or encumber (in one transaction or in a series of transactions) any Receivables and Related Assets.
(m) Borrowing Base. The Borrower will not request any Advance if, after giving effect thereto, the aggregate outstanding principal balance of the Loans would exceed the Borrowing Base.
Section 7.4 Separate Existence of the Borrower. Each Loan Party hereby acknowledges that Lenders and the Agents are entering into the transactions contemplated hereby in reliance upon the Borrower's identity as a legal entity separate from the Servicer and its other Affiliates. Therefore, each Loan Party shall take all steps specifically required by this Agreement or reasonably required by any of the Agents to continue the Borrower's identity as a separate legal entity and to make it apparent to third Persons that the Borrower is an entity with assets and liabilities distinct from those of its Affiliates, and is not a division of Quest Diagnostics or any other Person. Without limiting the foregoing, each Loan Party will take such actions as shall be required in order that:
(a) The Borrower will be a limited purpose corporation whose primary activities are restricted in its Certificate of Incorporation to purchasing or otherwise acquiring from the Originators and owning, holding, granting security interests in the Collateral, entering into agreements for the financing and servicing of the Receivables, and conducting such other activities as it deems necessary or appropriate to carry out its primary activities;
(b) Not less than one member of the Borrower's Board of Directors (the "Independent Director") shall be an individual who is not, and never has been, a direct, indirect or beneficial stockholder, officer, director, employee, affiliate, associate, material supplier or material customer of Quest Diagnostics or any of its Affiliates (other than an Affiliate organized with a limited purpose charter for the purpose of acquiring receivables or other financial assets or intangible property). The certificate of incorporation of the Borrower shall provide that (i) at least one member of the Borrower's Board of Directors shall be an Independent Director, (ii) the Borrower's Board of Directors shall not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to the Borrower unless the Independent Director shall approve the taking of such action in writing prior to the taking of such action and (iii) the provisions requiring an independent director and the provision described in clauses (i) and (ii) of this
paragraph (b) cannot be amended without the prior written consent of the Independent Director;
(c) The Independent Director shall not at any time serve as a trustee in bankruptcy for the Borrower or any Affiliate thereof;
(d) Any director, employee, consultant or agent of the Borrower will be compensated from the Borrower's funds for services provided to the Borrower. The Borrower will not engage any agents (other than its attorneys, auditors and other professionals) and will not engage any Person other than the Servicer to deal with the Collateral as contemplated by the Transaction Documents;
(e) The Borrower will contract with the Servicer to perform for the Borrower all operations required on a daily basis to service the Collateral. The Borrower will pay the Servicer the Servicer's Fee pursuant hereto. The Borrower will not incur any material indirect or overhead expenses for items shared with Quest Diagnostics (or any other Affiliate thereof) which are not reflected in the Servicer's Fee. To the extent, if any, that the Borrower (or any other Affiliate thereof) shares items of expenses not reflected in the Servicer's Fee, for legal, auditing and other professional services and directors' fees, such expenses will be allocated to the extent practical on the basis of actual use or the value of services rendered, and otherwise on a basis reasonably related to the actual use or the value of services rendered, it being understood that Quest Diagnostics shall pay all expenses of the Borrower and, to the extent provided in this Agreement, the Agents relating to the preparation, negotiation, execution and delivery of the Transaction Documents, including, without limitation, legal, rating agency and other fees;
(f) The Borrower's operating expenses will not be paid by any other Loan Party or other Affiliate of the Borrower;
(g) The Borrower will have its own stationery;
(h) The books of account, financial reports and records of the Borrower will be maintained separately from those of Quest Diagnostics and each other Affiliate of the Borrower although they may appear in Quest Diagnostics' consolidated general ledger;
(i) Any financial statements of any Loan Party or Affiliate thereof which are consolidated to include the Borrower will contain detailed notes clearly stating that (A) all of the Borrower's assets are owned by the Borrower, and (B) the Borrower is a separate legal entity with its own separate creditors that will be entitled to be satisfied out of the Borrower's assets prior to any value in the Borrower becoming available to the Borrower's equity holders; and the accounting records and any published financial statements of each of the Originators will clearly show that, for accounting purposes, the Receivables and Related Assets have been sold by such Originator to the Borrower;
(j) The Borrower's assets will be maintained in a manner that facilitates their identification and segregation from those of the Servicer and the other Affiliates;
(k) Each Affiliate of the Borrower will strictly observe organizational formalities in its dealings with the Borrower, and, except as permitted pursuant to this Agreement with respect to Collections, funds or other assets of the Borrower will not be commingled with those of any of its Affiliates;
(l) No Affiliate of the Borrower will maintain joint bank accounts with the Borrower or other depository accounts with the Borrower to which any such Affiliate (other than in the Borrower's or such Affiliate's existing or future capacity as the Servicer hereunder or under the Sale Agreement) has independent access, provided that prior to demand by any of the Agents pursuant to Section 7.1(i) to establish a segregated Collateral Account, Collections may be deposited into general accounts of Quest Diagnostics, subject to the obligations of the Servicer hereunder;
(m) Each Affiliate of the Borrower will maintain arm's length relationships with the Borrower, and each Affiliate of the Borrower that renders or otherwise furnishes services or merchandise to the Borrower will be compensated by the Borrower at market rates for such services or merchandise;
(n) No Affiliate of the Borrower will be, nor will it hold itself out to be, responsible for the debts of the Borrower or the decisions or actions in respect of the daily business and affairs of the Borrower. Quest Diagnostics and the Borrower will immediately correct any known misrepresentation with respect to the foregoing and they will not operate or purport to operate as an integrated single economic unit with respect to each other or in their dealing with any other entity;
(o) The Borrower will keep correct and complete books and records of account and minutes of the meetings and other proceedings of its stockholder and board of directors, as applicable, and the resolutions, agreements and other instruments of the Borrower will be continuously maintained as official records by the Borrower; and
(p) The Borrower will conduct its business solely in its own legal name and in a manner separate from the Originators so as not to mislead others with whom they are dealing.
ARTICLE VIII.
ADMINISTRATION AND COLLECTION
Section 8.1 Designation of Servicer.
(a) Quest Diagnostics as Initial Servicer. The servicing,
administering and collection of the Receivables shall be conducted by the Person
designated as Servicer hereunder from time to time in accordance with this
Section 8.1. Until both of the Co-Agents give to Quest Diagnostics a Successor
Notice (as defined in Section 8.1(b)), Quest Diagnostics is hereby designated
as, and hereby agrees to perform the duties and obligations of, Servicer
pursuant to the terms hereof.
(b) Successor Notice; Servicer Transfer Events. Upon Quest Diagnostics' receipt of a notice from both of the Co-Agents following a Servicer Transfer Event of the designation of
a new Servicer (a "Successor Notice"), Quest Diagnostics agrees that it will terminate its activities as Servicer hereunder in a manner that will facilitate the transition of the performance of such activities to the new Servicer, and, after agreeing in writing to be bound by the terms of this Agreement (including, without limitation, the provisions of Section 14.14), the Co-Agents' designee shall assume each and all of Quest Diagnostics' obligations to service and administer such Receivables, on the terms and subject to the conditions herein set forth, and Quest Diagnostics shall use its reasonable best efforts to assist the Co-Agents' designee in assuming such obligations. Without limiting the foregoing, Quest Diagnostics agrees, at its expense, to take all actions necessary to provide the new Servicer with access to all computer software necessary to generate reports useful in collecting or billing Receivables, solely for use in collecting and billing Receivables. If Quest Diagnostics disputes the occurrence of a Servicer Transfer Event, Quest Diagnostics may take appropriate action to resolve such dispute; provided that Quest Diagnostics must terminate its activities hereunder as Servicer and allow the newly designated Servicer to perform such activities on the date specified by the Co-Agents as described above, notwithstanding the commencement or continuation of any proceeding to resolve the aforementioned dispute, if both of the Co-Agents reasonably determines, in good faith, that such termination is necessary or advisable to protect the Secured Parties' interests hereunder.
(c) Subcontracts. So long as Quest Diagnostics (or any of its existing or hereafter arising Affiliates approved by the Co-Agents at the request of Quest Diagnostics or the Borrower subject to satisfaction of the Rating Agency Condition) is acting as the Servicer, it may subcontract with any other Originator or other direct or indirect Subsidiary of Quest Diagnostics, for servicing, administering or collecting all or any portion of the Receivables, provided, however, that no such subcontract shall relieve Quest Diagnostics (or such approved affiliated substitute Servicer, if such approval is not conditioned upon Quest Diagnostics' issuance of a performance guaranty with respect to such affiliated substitute Servicer) of its primary liability for performance of its duties as Servicer pursuant to the terms hereof and any such sub-servicing arrangement may be terminated at the request of any of the Agents at any time after a Successor Notice has been given. In addition to the foregoing, with the prior written consent of the Co-Agents (which consent shall not be unreasonably withheld or delayed), any Servicer may subcontract with other Persons for servicing, administering or collecting all or any portion of the Receivables, provided, however, that no such subcontract shall relieve such Servicer of its primary liability for performance of its duties as Servicer pursuant to the terms hereof and any such sub-servicing arrangement may be terminated at the request of any of the Agents at any time that the Co-Agents reasonably determine that such sub-servicer is not performing adequately.
(d) Expense Indemnity after a Servicer Transfer Event. In addition to, and not in lieu of the Servicer's Fee, if Quest Diagnostics or one of its Affiliates is replaced as Servicer following a Servicer Transfer Event, the Borrower shall reimburse the Servicer within 10 Business Days after receipt of a written invoice, any and all reasonable costs and expenses of the Servicer incurred in connection with its servicing of the Receivables for the benefit of the Secured Parties.
Section 8.2 Duties of Servicer.
(a) Appointment; Duties in General. Each of the Borrower, the Lenders and the Agents hereby appoints as its agent, the Servicer, as from time to time designated pursuant to Section 8.1, to enforce its rights and interests in and under the Collateral. The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Receivable from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy.
(b) Segregation of Collections. The Servicer shall not be required (unless otherwise requested by any of the Agents) to segregate the funds constituting Collections prior to the remittance thereof in accordance with Article III. If instructed by any of the Agents, the Servicer shall segregate Collections and deposit them into the Collateral Account not later than the first Business Day following receipt by the Servicer of such Collections in immediately available funds.
(c) Modification of Receivables. Quest Diagnostics, while it is the Servicer, may, in accordance with the Credit and Collection Policy, so long as no Event of Default shall have occurred and be continuing, extend the maturity or adjust the Unpaid Net Balance of any Receivable as Quest Diagnostics may reasonably determine to be appropriate to maximize Collections of the Receivables taken as a whole in a manner consistent with the Credit and Collection Policy (although no such extension or adjustment shall alter the status of such Receivable as a Defaulted Receivable or a Delinquent Receivable or, in the case of an adjustment, limit the rights of the Agents or the Lenders under Section 3.4).
(d) Contracts and Records. Each Loan Party shall deliver to the Servicer, and the Servicer shall, or shall direct the Originators as sub-servicers to, hold in trust for the Borrower and the Secured Parties, all Contracts and Records.
(e) Certain Duties to the Borrower. The Servicer shall, as soon as
practicable following receipt, turn over to the Borrower (i) that portion of the
Collections which are not required to be turned over to each of the Co-Agents,
less the Servicer's Fee and all reasonable and appropriate out-of-pocket costs
and expenses of the Servicer of servicing, collecting and administering the
Receivables to the extent not covered by the Servicer's Fee received by it, and
(ii) the Collections of any receivable which is not a Receivable. The Servicer,
if other than Quest Diagnostics or any other Loan Party or Affiliate thereof,
shall, as soon as practicable upon demand, deliver to the Borrower all Contracts
and other Records in its possession that evidence or relate to receivables of
the Borrower other than Receivables, and copies of all Contracts and other
Records in its possession that evidence or relate to Receivables, Obligors or
Related Assets.
(f) Termination. The Servicer's authorization under this Agreement shall terminate upon the Final Payout Date.
(g) Power of Attorney. The Borrower hereby grants to the Servicer an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take in the name of the Borrower all steps which are necessary or advisable to endorse, negotiate or otherwise
realize on any writing or other right of any kind held or transmitted by the Borrower or transmitted or received by Lender in connection with any Receivable. This power of attorney shall automatically terminate as to any Servicer replaced in accordance with Section 8.1(b) and shall automatically transfer to its successor.
Section 8.3 Rights of the Agents.
(a) Notice to Obligors. At any time when an Event of Default has occurred and is continuing, any of the Agents may notify the Obligors of Receivables, or any of them, of the Borrower's ownership of the Receivables, and the Administrative Agent's security interest, for the benefit of the Secured Parties, in the Collateral.
(b) Notice to Collection Banks. At any time, the Administrative Agent is hereby authorized to give notice to the Collection Banks, as provided in the Collection Account Agreements, of the transfer to the Administrative Agent of dominion and control over the Lockboxes and the Collection Accounts, and the Administrative Agent hereby agrees to give such notice upon request of either of the Co-Agents. The Borrower and the Servicer hereby transfer to the Administrative Agent, effective when the Administrative Agent shall give notice to the Collection Banks as provided in the Collection Account Agreements, the exclusive dominion and control over the Lockboxes and the Collection Accounts, and shall take any further action that the Administrative Agent may reasonably request to effect such transfer.
(c) Rights on Servicer Transfer Event. At any time following the designation of a Servicer other than Quest Diagnostics (or one of its approved Affiliates) pursuant to Section 8.1:
(i) Any of the Agents may direct the Obligors of Receivables, or any of them, to pay all amounts payable under any Receivable directly to the Administrative Agent or its designee.
(ii) Any Loan Party shall, at any Agent's request and at such Loan Party's expense, give notice of the Administrative Agent's security interest in the Collateral to each Obligor of Receivables and direct that payments be made directly to the Administrative Agent or its designee.
(iii) Each Loan Party shall, at any Agent's request: (A) assemble and make available all of the Contracts and Records which are necessary or reasonably desirable to collect the Collateral, and make the same available to the successor Servicer at such place or places as the Administrative Agent may reasonably request, and (B) segregate all cash, checks and other instruments received by it from time to time constituting Collections in a manner acceptable to the Agents and promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the successor Servicer.
(iv) Each of the Loan Parties, the Co-Agents and the Lenders hereby authorizes the Administrative Agent and grants to the Administrative Agent an irrevocable power of attorney (which shall terminate on the Final Payout Date), to take any and all steps in such Person's name and on behalf of such Person which are necessary or desirable, in the determination of the Administrative Agent, to collect all amounts due under any and all Receivables, including, without limitation, endorsing any Loan Party's name on checks and other
instruments representing Collections and enforcing such Receivables and the related Contracts and Invoices.
Section 8.4 Responsibilities of Loan Parties. Anything herein to the contrary notwithstanding:
(a) Contracts. Each Originator shall remain responsible for performing all of its obligations (if any) under each Contract to the same extent as if no ownership interest or security interests had been conveyed under the Transactions Documents, and the exercise by the Administrative Agent or its designee of its rights and remedies hereunder shall not relieve such Originator from such obligations.
(b) Limitation of Liability. The Secured Parties shall not have any obligation or liability with respect to any Receivables, Invoices or Contracts, nor shall any of them be obligated to perform any of the obligations of any Loan Party or any Originator thereunder.
Section 8.5 Further Action Evidencing the Security Interest. Each
Loan Party agrees that from time to time, at its expense, it will promptly
execute (if legally required) and deliver all further instruments and documents,
and take all further action that the Administrative Agent or its designee may
reasonably request in order to perfect, protect or more fully evidence the
Administrative Agent's security interest, on behalf of the Secured Parties, in
the Collateral, or to enable the Administrative Agent or its designee to
exercise or enforce any of the Secured Parties' respective rights hereunder or
under any Transaction Document in respect thereof. In furtherance of the
foregoing, to the maximum extent permitted by applicable law, each Loan Party
(i) authorizes the Agent to execute any such agreements, instruments or other
documents in such Loan Party's name and to file such agreements, instruments or
other documents in any appropriate filing office, (ii) authorizes the
Administrative Agent to file any financing statement required hereunder or under
any other Loan Document, and any continuation statement or amendment with
respect thereto, in any appropriate filing office without the signature of such
Loan Party (including, without limitation, in the case of the Borrower, any such
financing statements that indicate the Collateral as "all assets" or words of
similar import), and (iii) ratifies the filing of any financing statement, and
any continuation statement or amendment with respect thereto, filed without the
signature of such Loan Party prior to the date hereof; provided that the
Administrative Agent shall provide prompt written notice to such Loan Party
after filing any such record without the signature of such Loan Party.
Section 8.6 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 an Originator or to the Borrower 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 IX.
SECURITY INTEREST
Section 9.1 Grant of Security Interest. To secure the due and punctual payment of the Obligations, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent, including, without limitation, all Indemnified Amounts, in each case pro rata according to the respective amounts thereof, the Borrower hereby pledges to the Administrative Agent, for the benefit of the Secured Parties, and hereby grants to the Administrative Agent, for the benefit of the Secured Parties, a security interest in, all of the Borrower's right, title and interest now or hereafter existing in, to and under (a) all the Receivables and Related Assets, (b) the Sale Agreement, (c) the rights to demand and receive payment of the Demand Advances, and (d) all proceeds of any of the foregoing (collectively, the "Collateral").
Section 9.2 Termination after Final Payout Date. Each of the Secured Parties hereby authorizes the Administrative Agent, and the Administrative Agent hereby agrees, promptly after the Final Payout Date to execute and deliver to the Borrower such UCC-3 termination statements as may be necessary to terminate the Administrative Agent's security interest in and Lien upon the Collateral, all at the Borrower's expense. Upon the Final Payout Date, all right, title and interest of the Administrative Agent and the other Secured Parties in and to the Collateral shall terminate.
Section 9.3 Limitation on Rights to Collateral Proceeds. Nothing in this Agreement shall entitle the Secured Parties to receive or retain proceeds of the Collateral in excess of the aggregate amount of the Obligations owing to such Secured Party (or to any Indemnified Party claiming through such Secured Party).
ARTICLE X.
EVENTS OF DEFAULT
Section 10.1 Events of Default. The occurrence of any of the following events shall constitute an "Event of Default" hereunder:
(a) The Servicer or the Borrower shall fail to make (i) when and as required to be made by it herein, any payment, prepayment or deposit of any amount of principal of any Loan, or (ii) within three (3) days after the same becomes due, any payment of any amount of interest, fees or other Obligations payable hereunder or under any other Transaction Document; provided that any interest, fees or other amounts which are not paid on the due date shall bear interest at the Default Rate after such due date.
(b) Any representation or warranty made or deemed to be made by any Loan Party (or any of its officers) under this Agreement or any other Transaction Document or in any Monthly Report, Weekly Report, computation of Cash Collateral Payment or other information or report delivered pursuant hereto shall prove to have been false or incorrect in any material adverse respect when made, provided that the materiality threshold in this subsection shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold.
(c) Any Loan Party fails to perform or observe any other term or covenant contained in this Agreement or any other Transaction Document, and such default shall continue unremedied for a period of 5 days (in the case of nonperformance or nonobservance by the Servicer) or 10 days (in the case of nonperformance or nonobservance by the Borrower) after the earlier to occur of (i) the date upon which written notice thereof is given to such Loan Party by the Administrative Agent and (ii) the date the applicable Loan Party becomes aware thereof.
(d) (i)The Borrower shall (A) fail to pay any principal or interest, regardless of amount, due in respect of any Indebtedness of which the aggregate unpaid principal amount is in excess of $11,600, when and as the same shall become due and payable (after expiration of any applicable grace period) or (B) fail to observe or perform any other term, covenant, condition or agreement (after expiration of any applicable grace period) contained in any agreement or instrument evidencing or governing any such Indebtedness if the effect of any failure referred to in this clause (B) is to cause, or permit the holder or holders of such Indebtedness or a trustee on its or their behalf (with or without the giving of notice, the lapse of time or both) to cause, such Indebtedness to become due prior to its stated maturity; or (ii) any of the Originators (A) shall fail to pay any principal or interest, regardless of amount, due in respect of any Indebtedness of which the aggregate unpaid principal amount is in excess of $100,000,000 (or such other amount as may be set forth in the comparable provision of the Credit Agreement), when and as the same shall become due and payable (after expiration of any applicable grace period) or (B) shall fail to observe or perform any other term, covenant, condition or agreement (after expiration of any applicable grace period) contained in any agreement or instrument evidencing or governing any Indebtedness in excess of $100,000,000 (or such other amount as may be set forth in the comparable provision of the Credit Agreement), in aggregate principal amount of the Originators if, as a result of such failure, the holder or holders of the Indebtedness outstanding thereunder (or an agent or a trustee on their behalf) cause the holder or holders of such Indebtedness or an agent or a trustee on its or their behalf to cause such Indebtedness to become due prior to its stated maturity.
(e) An Event of Bankruptcy shall have occurred and remain continuing with respect to the Borrower or the Servicer.
(f) The three-calendar month rolling average Dilution Ratio at any Cut-Off Date exceeds 6.00%.
(g) The three-calendar month rolling average Default Trigger Ratio at any Cut-Off Date exceeds 15.40%.
(h) The three-calendar month rolling average Delinquency Ratio at any Cut-Off Date exceeds 8.25%.
(i) The occurrence of any Missing Information Trigger Event.
(j) The three-calendar month rolling average Collections Ratio at any Cut-Off Date is less than 32.00%.
(k) On any Settlement Date, after giving effect to the payments made under Article II or Article III, the aggregate outstanding principal balances of the Advances exceed the Allocation Limit.
(l) A Change in Control shall occur.
(m) The Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the Internal Revenue Code with regard to any of the Receivables or Related Assets and such lien shall not have been released within seven (7) days, or the PBGC shall, or shall indicate its intention to, file notice of a lien pursuant to Section 4068 of ERISA with regard to any of the Receivables or Related Assets.
(n) The Administrative Agent, on behalf of the Secured Parties, for any reason, does not have a valid, perfected first priority security interest in the Receivables and the Related Assets.
(o) (i)A final judgment or judgments for the payment of money in excess of $11,600 in the aggregate (exclusive of judgment amounts to the extent covered by insurance or indemnity payments) shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction against the Borrower and the same shall not be discharged (or provision which results in a stay of execution shall not be made for such discharge), vacated or bonded pending appeal, or a stay of execution thereof shall not be procured, within 60 days from the date of entry thereof and the Borrower shall not, within said period of 60 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; or (ii) a final judgment or judgments for the payment of money in excess of $100,000,000 (or such other amount as may be set forth in the comparable provision of the Credit Agreement) in the aggregate (exclusive of judgment amounts to the extent covered by insurance or indemnity payments) shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction against any Originator and the same shall not be discharged (or provision which results in a stay of execution shall not be made for such discharge), vacated or bonded pending appeal, or a stay of execution thereof shall not be procured, within 60 days from the date of entry thereof and such Originator shall not, within said period of 60 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal.
(p) An ERISA Event or noncompliance with respect to Foreign Plans shall have occurred that when taken together with all other ERISA Events and noncompliance with respect to Foreign Plans that have occurred, is reasonably likely to result in liability of any Originator or Loan Party in an aggregate amount exceeding$100,000,000 (or such other amount as may be set forth in the comparable provision of the Credit Agreement).
(q) Quest Diagnostics shall fail to comply with any of the financial covenants set forth in Sections 7.2(a) and (b) (or analogous successor provisions) of the Credit Agreement.
(r) The occurrence of the Sale Termination Date under and as defined in the Sale Agreement.
(s) Any other event occurs that (i) could reasonably be expected to have a Material Adverse Effect of the type described in clause (d) of the definition thereof, or (ii) has had a Material Adverse Effect of the type described in any clause of the definition thereof.
Section 10.2 Remedies.
(a) Optional Acceleration. Upon the occurrence of an Event of Default (other than an Event of Default described in Section 10.1(e) with respect to the Borrower), the Administrative Agent may by notice to the Borrower, declare the Termination Date to have occurred and the Obligations to be immediately due and payable, whereupon the Aggregate Commitment shall terminate and all Obligations shall become immediately due and payable.
(b) Automatic Acceleration. Upon the occurrence of an Event of Default described in Section 10.1(e) with respect to the Borrower, the Termination Date shall automatically occur and the Obligations shall be immediately due and payable.
(c) Additional Remedies. Upon the Termination Date pursuant to this
Section 10.2, the Aggregate Commitment will terminate, no Loans or Advances
thereafter will be made, and the Administrative Agent, on behalf of the Secured
Parties, shall have, in addition to all other rights and remedies under this
Agreement or otherwise, all other rights and remedies provided to a secured
party upon default under the UCC of each applicable jurisdiction and other
applicable laws, which rights shall be cumulative.
ARTICLE XI.
THE AGENTS
Section 11.1 Appointment.
(a) Each member of the Blue Ridge Group hereby irrevocably designates and appoints Wachovia Bank, National Association as Blue Ridge Agent hereunder and under the other Transaction Documents to which the Blue Ridge Agent is a party, and authorizes the Blue Ridge Agent to take such action on its behalf under the provisions of the Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Blue Ridge Agent by the terms of the Transaction Documents, together with such other powers as are reasonably incidental thereto. Each member of the Atlantic Group hereby irrevocably designates and appoints CLNY as Atlantic Agent hereunder and under the other Transaction Documents to which the Atlantic Agent is a party, and authorizes the Atlantic Agent to take such action on its behalf under the provisions of the Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Atlantic Agent by the terms of the Transaction Documents, together with such other powers as are reasonably incidental thereto. Each of the Lenders and the Co-Agents hereby irrevocably designates and appoints Wachovia Bank, National Association as Administrative Agent hereunder and under the Transaction Documents to which the Administrative Agent is a party, and authorizes the Administrative Agent to take such action on its behalf under the provisions of the Transaction Documents and to
exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Transaction Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, none of the Agents shall have any duties or responsibilities, except those expressly set forth in the Transaction Documents to which it is a party, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of such Agent shall be read into any Transaction Document or otherwise exist against such Agent.
(b) The provisions of this Article XI are solely for the benefit of the Agents and the Lenders, and neither of the Loan Parties shall have any rights as a third-party beneficiary or otherwise under any of the provisions of this Article XI, except that this Article XI shall not affect any obligations which any of the Agents or Lenders may have to either of the Loan Parties under the other provisions of this Agreement.
(c) In performing its functions and duties hereunder, (i) the Blue Ridge Agent shall act solely as the agent of the members of the Blue Ridge Group and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for either of the Loan Parties or any of their respective successors and assigns, (ii) the Atlantic Agent shall act solely as the agent of the members of the Atlantic Group and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for either of the Loan Parties or any of their respective successors and assigns, and (iii) the Administrative Agent shall act solely as the agent of the Secured Parties and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for either of the Loan Parties or any of their respective successors and assigns.
Section 11.2 Delegation of Duties. Each Agent may execute any of its duties under the applicable Transaction Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care except for agents and attorneys-in fact to which any Agent delegates all or substantially all of its duties as an Agent which are not approved by S&P, Moody's and, so long as applicable, Fitch. No Agent shall be responsible for the negligence or misconduct of agents or attorneys-in-fact selected by it with reasonable care for due diligence and audit matters and attorneys selected with reasonable care for legal matters.
Section 11.3 Exculpatory Provisions. None of the Agents nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them or any Person described in
Section 11.2 under or in connection with this Agreement (except for its, their
or such Person's own bad faith, gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Lenders or other Agents for any
recitals, statements, representations or warranties made by the Borrower
contained in this Agreement or in any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other document furnished
in connection herewith, or for any failure of either of the Loan Parties to
perform its respective obligations hereunder, or for the satisfaction of any
condition specified in
Article V, except receipt of items required to be delivered to such Agent. None of the Agents shall be under any obligation to any other Agent or any Lender to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Loan Parties. This Section 11.3 is intended solely to govern the relationship between the Agents, on the one hand, and the Lenders and their respective Liquidity Banks, on the other.
Section 11.4 Reliance by Agents.
(a) Each of the Agents shall in all cases be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telecopy or telex message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Loan Parties), independent accountants and other experts selected by such Agent. Each of the Agents shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other document furnished in connection herewith unless it shall first receive such advice or concurrence of such of its Lenders and Liquidity Banks, as it shall determine to be appropriate under the relevant circumstances, or it shall first be indemnified to its satisfaction by its Constituent Liquidity Banks against any and all liability, cost and expense which may be incurred by it by reason of taking or continuing to take any such action.
(b) Any action taken by any of the Agents in accordance with Section 11.4(a) shall be binding upon all of the Agents and the Lenders.
Section 11.5 Notice of Events of Default. None of the Agents shall be deemed to have knowledge or notice of the occurrence of any Event of Default or Unmatured Default unless such Agent has received notice from another Agent, a Lender or a Loan Party referring to this Agreement, stating that an Event of Default or Unmatured Default has occurred hereunder and describing such Event of Default or Unmatured Default. In the event that any of the Agents receives such a notice, it shall promptly give notice thereof to the Lenders and the other Agents. The Administrative Agent shall take such action with respect to such Event of Default or Unmatured Default as shall be directed by either of the Co-Agents provided that the Administrative Agent is indemnified to its satisfaction by such Co-Agent and its Constituent Liquidity Banks against any and all liability, cost and expense which may be incurred by it by reason of taking any such action.
Section 11.6 Non-Reliance on Other Agents and Lenders. Each of the Lenders expressly acknowledges that none of the Agents, nor any of the Agents' respective officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by any of the Agents hereafter taken, including, without limitation, any review of the affairs of the Loan Parties, shall be deemed to constitute any representation or warranty by such Agent. Each of the Lenders also represents and warrants to the Agents and the other Lenders that it has, independently and without reliance upon any such Person (or any of their Affiliates) and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Loan Parties and made its
own decision to enter into this Agreement. Each of the Lenders also represents that it will, independently and without reliance upon the Agents or any other Liquidity Bank or Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, prospects, financial and other condition and creditworthiness of the Loan Parties. The Agents, the Lenders and their respective Affiliates, shall have no duty or responsibility to provide any party to this Agreement with any credit or other information concerning the business, operations, property, prospects, financial and other condition or creditworthiness of the Loan Parties which may come into the possession of such Person or any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates, except that each of the Agents shall promptly distribute to the other Agents and the Lenders, copies of financial and other information expressly provided to it by either of the Loan Parties pursuant to this Agreement.
Section 11.7 Indemnification of Agents. Each Liquidity Bank agrees to indemnify (a) its applicable Co-Agent, (b) the Administrative Agent, and (c) the officers, directors, employees, representatives and agents of each of the foregoing (to the extent not reimbursed by the Loan Parties and without limiting the obligation of the Loan Parties to do so), ratably in accordance with their respective Loans, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for such Co-Agent, the Administrative Agent or such Person in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not such Co-Agent or the Administrative Agent or such Person shall be designated a party thereto) that may at any time be imposed on, incurred by or asserted against such Co-Agent, the Administrative Agent or such Person as a result of, or arising out of, or in any way related to or by reason of, any of the transactions contemplated hereunder or the execution, delivery or performance of this Agreement or any other document furnished in connection herewith (but excluding any such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the bad faith, gross negligence or willful misconduct of such Co-Agent, the Administrative Agent or such Person as finally determined by a court of competent jurisdiction).
Section 11.8 Agents in their Individual Capacities. Each of the Agents in its individual capacity and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Loan Parties and their Affiliates as though such Agent were not an Agent hereunder. With respect to its Loans, if any, pursuant to this Agreement, each of the Agents shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include each of the Agents in their individual capacities.
Section 11.9 [Reserved].
Section 11.10 Conflict Waivers.
(a) Wachovia acts, or may in the future act: (i) as administrative agent for Blue Ridge, (ii) as issuing and paying agent for Blue Ridge's Commercial Paper Notes, (iii) to provide credit or liquidity enhancement for the timely payment for Blue Ridge's Commercial Paper Notes and (iv) to provide other services from time to time for Blue Ridge (collectively, the "Wachovia Roles"). Without limiting the generality of Sections 11.1 and 11.8, each of the Administrative Agent and the Lenders hereby acknowledges and consents to any and all Wachovia Roles and agrees that in connection with any Wachovia Role, Wachovia may take, or refrain from taking, any action which it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for Blue Ridge, the giving of notice to the Liquidity Banks of a mandatory purchase pursuant to the Blue Ridge Liquidity Agreement, and hereby acknowledges that neither Wachovia nor any of its Affiliates has any fiduciary duties hereunder to any Lender (other than Blue Ridge) arising out of any Wachovia Roles.
(b) CLNY acts, or may in the future act: (i) as administrator of Atlantic, (ii) as issuing and paying agent for Atlantic's Commercial Paper Notes, (iii) to provide credit or liquidity enhancement for the timely payment for Atlantic's Commercial Paper Notes and (iv) to provide other services from time to time for Atlantic (collectively, the "CLNY Roles"). Without limiting the generality of Sections 11.1 and 11.8, each of the Agents and the Lenders hereby acknowledges and consents to any and all CLNY Roles and agrees that in connection with any CLNY Role, CLNY may take, or refrain from taking, any action which it, in its discretion, deems appropriate, including, without limitation, in its role as administrator of Atlantic, the giving of notice to the Liquidity Banks of a mandatory purchase pursuant to the Atlantic Liquidity Agreement, and hereby acknowledges that neither CLNY nor any of its Affiliates has any fiduciary duties hereunder to any Lender (other than Atlantic) arising out of any CLNY Roles.
Section 11.11 UCC Filings. Each of the Secured Parties hereby expressly recognizes and agrees that the Administrative Agent may be listed as the assignee or secured party of record on the various UCC filings required to be made under the Transaction Documents in order to perfect their respective interests in the Collateral, that such listing shall be for administrative convenience only in creating a record or nominee holder to take certain actions hereunder on behalf of the Secured Parties and that such listing will not affect in any way the status of the Secured Parties as the true parties in interest with respect to the Collateral. In addition, such listing shall impose no duties on the Administrative Agent other than those expressly and specifically undertaken in accordance with this Article XI.
ARTICLE XII.
ASSIGNMENTS AND PARTICIPATIONS
Section 12.1 Restrictions on Assignments, etc.
(a) No Loan Party may assign its rights, or delegate its duties hereunder or any interest herein without the prior written consent of each of the Agents and satisfaction of the Rating Agency Condition; provided, however, that the foregoing shall not be deemed to restrict Quest Diagnostics' right, prior to delivery of a Successor Notice, to request the Agents' consent
to the appointment of an Affiliate as replacement Servicer (subject to satisfaction of the Rating Agency Condition) or to delegate all or any portion of its duties as Servicer to other Originators, as sub-servicers, so long as Quest Diagnostics remains primarily liable for the performance or non-performance of such duties.
(b) Each of the Conduits may, at any time, assign all or any portion of any of its Loans, or sell participations therein, to its Constituent Liquidity Banks (or to its Co-Agent for the ratable benefit of its Constituent Liquidity Banks).
(c) In addition to, and not in limitation of, assignments and participations described in Section 12.1(b):
(i) in the event that any of the Liquidity Banks becomes a Downgraded Liquidity Bank, such Downgraded Liquidity Bank shall give prompt written notice of its Downgrading Event to the applicable Co-Agent and the Borrower. Within 5 Business Days after the Borrower's receipt of such notice, the Borrower may propose an Eligible Assignee who is willing to accept an assignment of, and to assume, such Downgraded Liquidity Bank's rights and obligations under this Agreement and under the Liquidity Agreement to which it is a party. In the event that the Borrower fails to propose such an Eligible Assignee within such 5 Business Day period, or such Eligible Assignee does not execute and deliver assignment and assumption documents reasonably acceptable to such Downgraded Liquidity Bank and such Co-Agent, and pays the Downgraded Liquidity Bank's Obligations in full, in each case, not later than 5:00 p.m. (New York City time) on the 10th Business Day following the Borrower's receipt of notice of such Downgrading Event, such Co-Agent may identify an Eligible Assignee without the Borrower's consent, and the Downgraded Liquidity Bank shall promptly assign its rights and obligations to the Eligible Assignee designated by such Co-Agent against payment in full of its Obligations;
(ii) each of the Lenders may assign all or any portion of its Loans and, if applicable, its Commitment and Liquidity Commitment, to any Eligible Assignee with the prior written consent of (A) the Borrower and (B) such Lender's applicable Co-Agent, which consents shall not be unreasonably withheld or delayed.
(iii) each of the Lenders may, without the prior written consent of the Borrower or any of the Agents, sell participations in all or any portion of their respective rights and obligations in, to and under the Transaction Documents and the Obligations in accordance with Sections 12.2 and 14.7.
Section 12.2 Rights of Assignees and Participants.
(a) Upon the assignment by a Lender in accordance with Section 12.1(b) or (c), the Eligible Assignee(s) receiving such assignment shall have all of the rights and obligations of such Lender with respect to the Transaction Documents and the Obligations (or such portion thereof as has been assigned).
(b) In no event will the sale of any participation interest in any Lender's or any Eligible Assignee's rights under the Transaction Documents or in the Obligations relieve the
seller of such participation interest of its obligations, if any, hereunder or, if applicable, under the Liquidity Agreement to which it is a party.
Section 12.3 Terms and Evidence of Assignment. Any assignment to any Eligible Assignee(s) pursuant to Section 1.2(c), 12.1(b) or 12.1(c) shall be upon such terms and conditions as the assigning Lender and the applicable Co-Agent, on the one hand, and the Eligible Assignee, on the other, may mutually agree, and shall be evidenced by such instrument(s) or document(s) as may be satisfactory to such Lender, the applicable Co-Agent and the Eligible Assignee(s). Any assignment made in accordance with the terms of this Article XII shall relieve the assigning Lender of its obligations, if any, under this Agreement (and, if applicable, the Liquidity Agreement to which it is a party) to the extent assigned and no Lender may assign or otherwise transfer any of its rights and obligations hereunder except in accordance with the terms of this Article XII.
ARTICLE XIII.
INDEMNIFICATION
Section 13.1 Indemnities by the Borrower.
(a) General Indemnity. Without limiting any other rights which any such Person may have hereunder or under applicable law, the Borrower hereby agrees to indemnify each of the Affected Parties, each of their respective Affiliates, and all successors, transferees, participants and assigns and all officers, directors, shareholders, controlling persons, employees and agents of any of the foregoing (each, an "Indemnified Party"), forthwith on demand, from and against any and all damages, losses, claims, liabilities and reasonable related out-of-pocket costs and expenses, including reasonable attorneys' fees and disbursements (all of the foregoing being collectively referred to as "Indemnified Amounts") awarded against or incurred by any of them arising out of or relating to the Transaction Documents, the Obligations or the Collateral, excluding, however: (i) 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 Indemnified Party or (ii) recourse (except as otherwise specifically provided in this Agreement) for 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 or the related Obligor's refusal to pay; provided, however, that prior to the occurrence of an Event of Default, the Indemnified Parties shall only be entitled to seek indemnity for the reasonable fees and disbursements of a single law firm as special counsel to all such Indemnified Parties (and, if required, a single law firm as local counsel to all such Indemnified Parties in each relevant jurisdiction where the law firm acting as special counsel is not licensed to practice). Without limiting the foregoing, the Borrower shall indemnify each Indemnified Party for Indemnified Amounts arising out of or relating to:
(A) the creation of any Lien on, or transfer by any Loan Party of any interest in, the Collateral other than as provided in the Transaction Documents;
(B) any representation or warranty made by any Originator or Loan Party (or any of its officers) under or in connection with any Transaction Document, any Monthly Report, Weekly Report, computation of Cash Collateral Payment or any other
information or report delivered by or on behalf of any Originator or Loan Party pursuant thereto, 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 any Loan Party to comply with any applicable law, rule or regulation with respect to any Receivable or the related Contract and/or Invoice, 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 Receivable or the related Contract and/or Invoice with any such applicable law, rule or regulation;
(D) the failure to vest and maintain vested in the Borrower a perfected ownership interest in all Collateral; or the failure to vest and maintain vested in the Administrative Agent, for the benefit of the Secured Parties, a valid and perfected first priority security interest in the Collateral, free and clear of any other Lien, other than a Lien arising solely as a result of an act of one of the Secured Parties, now or at any time thereafter;
(E) unless the Borrower has actual knowledge that the Administrative Agent has prepared a financing statement, amendment or similar instrument or document under the UCC of any applicable jurisdiction or other applicable laws with respect to any Collateral, the failure to deliver to the Administrative Agent on a timely basis any such financing statement, amendment or similar instrument or document or to authorize its filing on a timely basis;
(F) any dispute, claim, offset or defense (other than discharge in bankruptcy) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivables or the related Contract and/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 3.4;
(H) any failure of any Loan Party, as the Borrower, the Servicer or otherwise, 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 of breach by any Loan Party of any related Contract and/or Invoice with respect to any Receivable;
(J) any Tax (but not including Taxes upon or measured by net income or net profits or franchise Taxes in lieu of net income or net profits Taxes), all interest and penalties thereon or with respect thereto, and all out-of-pocket costs and expenses, including the reasonable fees and expenses of counsel in defending against the same, which may arise by reason of the Administrative Agent's security interest in the Collateral;
(K) the commingling 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, the transactions
contemplated hereby or thereby, the use of the proceeds of any Loan, the
security interest in the Receivables and Related Assets or any other
investigation, litigation or proceeding relating to the Borrower or any of
the Originators in which any Indemnified Party becomes involved as a result
of any of the transactions contemplated hereby or thereby (other than an
investigation, litigation or proceeding (1) relating to a dispute solely
amongst the Lenders (or certain Lenders) and the Administrative Agent or
(2) excluded by Section 13.1(a));
(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, Invoice or any Receivable;
(N) any inability to litigate any claim against any Obligor in respect of any Receivable 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;
(O) the occurrence of any Event of Default of the type described in
Section 10.1(e);
(P) any loss incurred by any of the Secured Parties as a result of the inclusion in the Borrowing Base of Receivables owing from any single Obligor and its Affiliated Obligors which causes the aggregate Unpaid Net Balance of all such Receivables to exceed the applicable Obligor Concentration Limit; or
(Q) failure of any Specified Government Receivables to be recorded in the applicable Originator's or the Servicer's billing and accounting systems solely as a Client-Billed Receivable.
(b) Contest of Tax Claim; After-Tax Basis. If any Indemnified Party
shall have notice of any attempt to impose or collect any Tax or governmental
fee or charge for which indemnification will be sought from any Loan Party under
Section 13.1(a)(J), such Indemnified Party shall give prompt and timely notice
of such attempt to the Borrower and the Borrower shall have the right, at its
expense, to participate in any proceedings resisting or objecting to the
imposition or collection of any such Tax, governmental fee or charge.
Indemnification hereunder shall be in an amount necessary to make the
Indemnified Party whole after taking into account any tax consequences when
actually realized by the Indemnified Party of the payment of any of the
aforesaid taxes or payments of amounts indemnified against hereunder (including
any deduction) and the receipt of the indemnity payment provided hereunder or of
any refund of any such tax previously indemnified hereunder, including the
effect of such tax, amount indemnified against, deduction or refund on the
amount of tax measured by net income or profits which is or was payable by the
Indemnified Party. For purposes of this Agreement, an Indemnified Party shall be
deemed to have "actually realized" tax consequences to the extent that, and at
such time as, the amount of Taxes payable (including Taxes payable on an
estimated basis) by such
Indemnified Party is increased above or reduced below, as the case may be, the amount of Taxes that such Indemnified Party would be required to pay but for receipt or accrual of the indemnity payment or the incurrence or payment of such indemnified amount, as the case may be.
(c) Contribution. If for any reason the indemnification provided above in this Section 13.1 (and subject to the exceptions set forth therein) is unavailable to an Indemnified Party or is insufficient to hold an Indemnified Party harmless, then the Borrower shall contribute to the amount paid or payable by such 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 Indemnified Party on the one hand and the Borrower on the other hand but also the relative fault of such Indemnified Party as well as any other relevant equitable considerations.
Section 13.2 Indemnities by Servicer. Without limiting any other rights which any Indemnified Party may have hereunder or under applicable law, the Servicer hereby agrees to indemnify each of the Indemnified Parties forthwith on demand, from and against any and all Indemnified Amounts awarded against or incurred by any of them arising out of or relating to the Servicer's performance of, or failure to perform, any of its obligations under or in connection with any Transaction Document, or any representation or warranty made by the Servicer (or any of its officers) under or in connection with any Transaction Document, any Monthly Report, Weekly Report, computation of Cash Collateral Payment or any other information or report delivered by or on behalf of the Servicer, which shall have been false, incorrect or misleading in any material respect when made or deemed made or delivered, as the case may be, or the failure of the Servicer to comply with any applicable law, rule or regulation with respect to any Receivable or the related Contract and Invoice. Notwithstanding the foregoing, in no event shall any Indemnified Party be awarded any Indemnified Amounts (a) to the extent determined by a court of competent jurisdiction to have resulted from gross negligence or willful misconduct on the part of such Indemnified Party or (b) as recourse for 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.
If for any reason the indemnification provided above in this Section
13.2 (and subject to the exceptions set forth therein) is unavailable to an
Indemnified Party or is insufficient to hold an Indemnified Party harmless, then
the Servicer shall contribute to the amount paid or payable by such 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
Indemnified Party on the one hand and the Servicer on the other hand but also
the relative fault of such Indemnified Party as well as any other relevant
equitable considerations.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1 Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be in writing and signed by each of the Loan Parties and the Co-Agents, and any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that:
(a) before either of the Co-Agents enters into such an amendment or grants such a waiver or consent that is deemed to be material by S&P, Moody's or, at any time while it is rating either Conduit's Commercial Paper Notes, Fitch, the Rating Agency Condition must be satisfied with respect to each of the Conduits,
(b) without the prior written consent of all Liquidity Banks in a Co-Agent's Group, such Co-Agent will not amend, modify or waive any provision of this Agreement which would (i) reduce the amount of any principal or interest that is payable on account of its Conduit's Loans or delay any scheduled date for payment thereof; (ii) decrease the Required Reserve, decrease the spread included in any Interest Rate or change the Servicer's Fee; (iii) modify this Section 14.1; or (iv) modify any yield protection or indemnity provision which expressly inures to the benefit of assignees or participants of such Co-Agent's Conduit,
(c) if less than all of the Co-Agents decline to approve a requested amendment and within 90 days after the Borrower's request for approval of such amendment, and either (i) the Borrower prepays the Obligations of the dissenting Co-Agent's (or Co-Agents') Group in full or (ii) finds one or more Eligible Assignees to replace each such Co-Agent's Group, then the requested amendment shall become effective on the effective date of such prepayment or assignment as to the remaining Lenders (and, if applicable, as to any replacement Lenders), and
(d) if less than all of the Co-Agents decline to approve a requested waiver and (i) the Borrower either (A) identifies one or more Eligible Assignee(s) to accept immediate written assignments of such Co-Agent's Group's Commitment(s) and outstanding Obligations, or (B) immediately pays all Obligations owing to the members of such Co-Agent's (or Co-Agents') Group(s) in full, and (ii) the Administrative Agent has not already declared the Termination Date to have occurred, such waiver shall become effective as to the remaining Lenders on the effective date of such assignment or repayment.
Section 14.2 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 at the address or facsimile number of such party set forth on Schedule 14.2 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, (a) if personally delivered or sent by express mail or courier or if sent by certified mail, when received, and (b) if transmitted by facsimile, when sent, receipt confirmed by telephone or electronic means.
Section 14.3 No Waiver; Remedies. No failure on the part of the Administrative Agent or any of the other Secured Parties to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Without limiting the foregoing, each of the Administrative Agent and the Lenders is
hereby authorized by the Borrower at any time and from time to time, to the fullest extent permitted by law, to set off and apply to payment of any Obligations that are then due and owing any and all deposits (general or special, time or demand provisional or final) at any time held and other indebtedness at any time owing by such Person to or for the credit or the account of the Borrower.
Section 14.4 Binding Effect; Survival. This Agreement shall be binding upon and inure to the benefit of each the Loan Parties, the Administrative Agent, the Lenders and their respective successors and assigns, and the provisions of Section 4.2 and Article XIII shall inure to the benefit of the Affected Parties and the Indemnified Parties, respectively, and their respective successors and assigns; provided, however, nothing in the foregoing shall be deemed to authorize any assignment not permitted by Section 12.1. 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 until the Final Payout Date. The rights and remedies with respect to any breach of any representation and warranty made by the Borrower pursuant to Article VI and the indemnification and payment provisions of Article XIII and Sections 4.2, 14.5, 14.6, 14.7, 14.8, 14.14 and 14.16 shall be continuing and shall survive any termination of this Agreement.
Section 14.5 Costs, Expenses and Stamp Taxes. In addition to their obligations under the other provisions of this Agreement, the Loan Parties jointly and severally agree to pay:
(a) within 30 days after receipt of a written invoice therefor: all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent, in connection with (i) the negotiation, preparation, execution and delivery of this Agreement, the other Transaction Documents or the Liquidity Agreement (subject to the limitations set forth in the Fee Letters), or (ii) the administration of the Transaction Documents prior to an Event of Default including, without limitation, (A) the reasonable fees and expenses of a single law firm acting as counsel to the Administrative Agent and the Lenders incurred in connection with any of the foregoing, and (B) subject to the limitations set forth in the Fee Letters and in Section 7.1(c), the reasonable fees and expenses of independent accountants incurred in connection with any review of any Loan Party's books and records either prior to or after the execution and delivery hereof;
(b) within 30 days after receipt of a written invoice therefor: all reasonable out-of-pocket costs and expenses (including, without limitation, the reasonable fees and expenses of counsel and independent accountants) incurred by each of the Lenders, the Administrative Agent and the Liquidity Banks in connection with the negotiation, preparation, execution and delivery of any amendment or consent to, or waiver of, any provision of the Transaction Documents which is requested or proposed by any Loan Party (whether or not consummated), the administration of the Transaction Documents following an Event of Default (or following a waiver of or consent to any Event of Default), or the enforcement by any of the foregoing Persons of, or any actual or claimed breach of, this Agreement or any of the other Transaction Documents, including, without limitation, (i) the reasonable fees and expenses of counsel to any of such Persons incurred in connection with any of the foregoing or in advising such Persons as to their respective rights and remedies under any of the Transaction Documents in connection with any of
the foregoing, and (ii) the reasonable fees and expenses of independent accountants incurred in connection with any review of any Loan Party's books and records or valuation of the Receivables and Related Assets; and
(c) upon demand: all stamp and other similar 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 Loan Parties, jointly and severally agree to indemnify each Indemnified Party against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees).
Section 14.6 No Proceedings. Each of the parties hereto hereby agrees that it will not institute against the Borrower, Atlantic or Blue Ridge, or join any Person in instituting against the Borrower, Atlantic or Blue Ridge, any insolvency proceeding (namely, any proceeding of the type referred to in the definition of Event of Bankruptcy) so long as any Obligations (in the case of the Borrower) or any Commercial Paper Notes or other senior Indebtedness issued by Atlantic or Blue Ridge, as the case may be, shall be outstanding or there shall not have elapsed one year plus one day since the last day on which any such Obligations and Commercial Paper Notes or other senior Indebtedness shall have been outstanding. The parties' obligations under this Section 14.6 shall survive termination of this Agreement.
Section 14.7 Confidentiality of Borrower Information. Each of the
Agents and the Lenders agrees to keep information obtained by it pursuant to the
Transaction Documents confidential in accordance with such Agent's or Lender's
customary practices and in accordance with applicable law and agrees that it
will only use such information in connection with the transactions contemplated
hereby and not disclose any of such information other than (a) to such Agent's
or Lender's employees, representatives, directors, attorneys, auditors, agents,
professional advisors, trustees or affiliates who are advised of the
confidential nature thereof it solely for the purposes of evaluating,
administering and enforcing the transactions contemplated by the Transaction
Documents and making any necessary business judgments with respect thereto, or
to any direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty agrees to
be bound by the provision of this Section 14.7, such Agent or Lender being
liable for any breach of confidentiality by any Person described in this clause
(a) and with respect to disclosures to an Affiliate to the extent disclosed by
such Agent or Lender to such Affiliate), (b) to the extent such information
presently is or hereafter becomes available to such Agent or Lender on a
non-confidential basis from a Person not an Affiliate of such Agent or Lender
not known to such Lender to be violating a confidentiality obligation by such
disclosure, (c) to the extent disclosure is required by any Law, subpoena or
judicial order or process (provided that notice of such requirement or order
shall be promptly furnished to the applicable Loan Party unless such notice is
legally prohibited) or requested or required by bank, securities, insurance or
investment company regulations or auditors or any administrative body or
commission to whose jurisdiction such Agent or Lender may be subject, (d) to any
rating agency to the extent required in connection with any rating to be
assigned to such Lender, (e) to assignees or participants or prospective
assignees or participants who agree to be bound by the provisions of this
Section 14.7, (f) to the extent required in connection with any litigation
between any Loan Party and any Lender with respect
to the Loans or any Transaction Document, (g) to any dealer or placement agent
for such party's Commercial Paper Notes, who (i) in the good faith belief of
such party, has a need to know such confidential information, (ii) is informed
by such party of the confidential nature of such information and the terms of
this Section 14.7 and (iii) has agreed in writing to be bound by the provisions
of this Section 14.7, (h) to any Liquidity Bank (whether or not on the date of
disclosure, such Liquidity Bank continues to be an Eligible Assignee), or to any
other actual or potential permitted assignee or participant permitted under
Section 12.1 who has agreed to be bound by the provisions of this Section 14.7,
(i) to any rating agency that maintains a rating for such party's Commercial
Paper Notes or is considering the issuance of such a rating, for the purposes of
reviewing the credit of any Lender in connection with such rating, (j) to any
other party to this Agreement (and any independent attorneys and auditors of
such party), for the purposes contemplated hereby, (k) to any entity that
provides a surety bond or other credit enhancement to either Conduit solely for
the purpose of providing such surety bond or other credit enhancement and not
for any other purpose, (l) in connection with the enforcement of this Agreement
or any other Transaction Document to the extent required to exercise rights
against the Collateral, or (m) with the applicable Loan Party's prior written
consent. In addition, each of the Lenders and the Agents may disclose on a "no
name" basis to any actual or potential investor in Commercial Paper Notes
information regarding the nature of this Agreement, the basic terms hereof
(including without limitation the amount and nature of the Aggregate Commitment
and the Advances), the nature, amount and status of the Receivables, and the
current and/or historical ratios of losses to liquidations and/or outstandings
with respect to the Receivables. This Section 14.7 shall survive termination of
this Agreement.
Section 14.8 Confidentiality of Program Information.
(a) Confidential Information. Each party hereto acknowledges that the Conduits and the Agents regard the structure of the transactions contemplated by this Agreement to be proprietary, and each such party agrees that:
(i) it will not disclose without the prior consent of each Conduit or each Agent (other than to the directors, employees, auditors, counsel or affiliates (collectively, "representatives") of such party, each of whom shall be informed by such party of the confidential nature of the Program Information (as defined below) and of the terms of this Section 14.8): (A) any information regarding the pricing in, or copies of, the Liquidity Agreements or the Fee Letters, or (B) any information which is furnished by either Conduit or any Agent to such party and which is designated by such Conduit or such Agent to such party in writing or otherwise as confidential or not otherwise available to the general public (the information referred to in clauses (A) and (B) is collectively referred to as the "Program Information"); provided, however, that such party may disclose any such Program Information (1) as may be required by any municipal, state, federal or other regulatory body having or claiming to have jurisdiction over such party, including, without limitation, the SEC, (2) in order to comply with any law, order, regulation, regulatory request or ruling applicable to such party, (3) subject to subsection (c) below, in the event such party is legally compelled (by interrogatories, requests for information or copies, subpoena, civil investigative demand or similar process) to disclose any such Program Information, or (4) in financial statements as required by GAAP;
(ii) it will use the Program Information solely for the purposes of evaluating, administering and enforcing the transactions contemplated by the Transaction Documents and making any necessary business judgments with respect thereto; and
(iii) it will, upon demand, return (and cause each of its representatives to return) to the applicable Co-Agent, all documents or other written material received from either Conduit in connection with (a)(i)(B) above and all copies thereof made by such party which contain the Program Information.
(b) Availability of Confidential Information. This Section 14.8 shall be inoperative as to such portions of the Program Information which are or become generally available to the public or such party on a nonconfidential basis from a source other than the Administrative Agent or were known to such party on a nonconfidential basis prior to its disclosure by the Administrative Agent.
(c) Legal Compulsion to Disclose. In the event that any party or anyone to whom such party or its representatives transmits the Program Information is requested or becomes legally compelled (by interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any of the Program Information, such party will provide the Administrative Agent with prompt written notice so that the Administrative Agent may seek a protective order or other appropriate remedy and/or, if it so chooses, agree that such party may disclose such Program Information pursuant to such request or legal compulsion. In the event that such protective order or other remedy is not obtained, or the Administrative Agent agrees that such Program Information may be disclosed, such party will furnish only that portion of the Program Information which (in such party's good faith judgment) is legally required to be furnished and will exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Program Information.
(d) Survival. This Section 14.8 shall survive termination of this Agreement.
Section 14.9 Captions and Cross References. The various captions (including, without limitation, the table of contents) in this Agreement are provided solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement. Unless otherwise indicated, references in this Agreement to any Section, Annex, Schedule or Exhibit are to such Section of or Annex, Schedule or Exhibit to this Agreement, as the case may be, and references in any Section, subsection, or clause to any subsection, clause or subclause are to such subsection, clause or subclause of such Section, subsection or clause.
Section 14.10 Integration. This Agreement and the other Transaction Documents contain a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire understanding among the parties hereto with respect to the subject matter hereof, superseding all prior oral or written understandings.
Section 14.11 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 BORROWER OR THE ADMINISTRATIVE AGENT, ON BEHALF OF THE SECURED PARTIES, IN ANY OF THE COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 14.12 Waiver Of Jury Trial. EACH PARTY HERETO HEREBY 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 TRANSACTION DOCUMENT OR UNDER
ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL NOT BE TRIED BEFORE
A JURY.
Section 14.13 Consent To Jurisdiction; Waiver Of Immunities. EACH
PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT IRREVOCABLY (i) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION, FIRST, OF ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK COUNTY, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND (ii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF AN ACTION OR PROCEEDING IN SUCH COURTS.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.
Section 14.14 Business Associate Agreement; Health Care Data Privacy and Security Requirements.
(a) Definitions. "HIPAA" means the Health Insurance Portability and Accountability Act of 1996. The terms "EDI Rule," "Privacy Regulations" and "Security Regulations" refer to all of the rules and regulations in effect from time to time issued pursuant to HIPAA and applicable to (respectively) the electronic data interchange, privacy and security of Individually Identifiable Health Information (found at Title 45, Code of Federal Regulations (CFR) Parts 160, 162, and 164). "Business Associate" refers to each of the Agents, the Borrower and any successor Servicer to Quest Diagnostics appointed by the Agents pursuant to
this Agreement, severally and not jointly. All other terms used, but not otherwise defined in this Section, shall have the same meaning as those terms defined in the Title 45 of the Code of Federal Regulations applicable to HIPAA or any successor statute.
(b) Privacy. In accordance with the purposes of this Agreement, Quest Diagnostics will disclose to each Business Associate, and each Business Associate will use, disclose, and/or create Protected Health Information (hereinafter called "PHI") only on behalf of Quest Diagnostics for the specific purposes set forth in this Agreement. Each Business Associate agrees not to use or further disclose any PHI or Individually Identifiable Health Information received from Quest Diagnostics or created by any Business Associate other than as permitted by this Agreement or as required by applicable law or regulations, including the Privacy Regulations and the Security Regulations. Each Business Associate will only use or disclose the Minimum Necessary PHI to accomplish the intended purpose of its uses or disclosures. Each Business Associate will implement appropriate safeguards to prevent the use or disclosure of an Individual's PHI other than as provided for by this Agreement or in accordance with law and shall document its safeguards. Each Business Associate will provide access to an Individual's PHI upon the reasonable request of Quest Diagnostics, will make any amendments to an Individual's PHI as directed by Quest Diagnostics, and will maintain a record of disclosures of PHI as required for Quest Diagnostics to make an accounting to the Individual as required by the Privacy Regulations. Each Business Associate will promptly report to Quest Diagnostics any use or disclosure of an Individual's PHI not provided for by this Agreement or any security incident (as that term is defined in the Security Regulations) of which such Business Associate becomes aware. In the event any Business Associate contracts with any sub-contractors or agents and provides them with an Individual's PHI, such Business Associate shall include provisions in its agreements whereby the sub-contractor or agent agrees to the same privacy and security requirements and restrictions and conditions that apply to such Business Associate with respect to the Individual's PHI. Each Business Associate will, upon reasonable notice, make its internal practices, books, and records relating to the use and disclosure of an Individual's PHI available to the Secretary of Health and Human Services and to Quest Diagnostics to the extent required for determining compliance with this Section, the Privacy Regulations, and the Security Regulations. Notwithstanding the foregoing, no legal privilege shall be deemed waived by any Business Associate or Quest Diagnostics by virtue of this clause (b) of this Section. Quest Diagnostics may terminate this Agreement without penalty or recourse if it determines that any Business Associate has violated a material term of this Section or applicable law that is not cured within thirty (30) calendar days after delivery of the notice of violation to all of the Business Associates or, in lieu of termination, Quest Diagnostics, in its sole discretion, may report the breach to the Secretary. Upon termination of this Agreement for any reason, each Business Associate and its sub-contractors or agents agree to return or to destroy all PHI and retain no copies (and to certify to such actions) unless otherwise agreed by Quest Diagnostics or such return or disclosure is not reasonably feasible (in which case, at no additional cost to Quest Diagnostics, each Business Associate will extend the protections of this Section to the PHI that such Business Associate maintains and limit any further uses and disclosures of the PHI to the purposes that make the return or destruction of the PHI not feasible).
(c) Security. Each Business Associate shall adopt, implement and maintain throughout the term of this Agreement security policies, procedures, and practices,
administrative, physical and technical safeguards, and security mechanisms that reasonably and adequately protect the confidentiality, integrity, and availability of the PHI that it creates, receives, maintains, or transmits on behalf of Quest Diagnostics ("Business Associate Safeguards"), and each Business Associate shall require its sub-contractors or agents to adopt Business Associate Safeguards that are equally appropriate and adequate. Quest Diagnostics may terminate this Agreement at any time, without penalty, if it determines, in its sole discretion, that the Business Associate Safeguards are unsatisfactory.
(d) EDI. If Business Associate conducts all or any portion of its business or pays any claim in a transaction covered by the Electronic Data Interchange ("EDI") Rule on behalf of Quest Diagnostics, then Business Associate covenants and warrants that it shall and shall require its agents and/or subcontractors to comply with the requirements of the EDI Rule that are applicable to Quest Diagnostics.
(e) Benefit. This Section is not intended to create any right in or obligations to any Person that is not a party to this Agreement, including Individuals.
(f) Mitigation. In addition to any rights of indemnification contained in this Agreement, each Business Associate will take commercially reasonable steps to mitigate any harm caused by its breach of this Section and/or reimburse Quest Diagnostics for the cost of commercially reasonable mitigation based upon, arising out of or attributable to the acts or omissions of such Business Associate, its employees, officers, directors, agents, or sub-contractors for uses or disclosures in violation of this Section.
(g) Amendment. Each of the Business Associates and Quest Diagnostics agree to amend this Section in such manner as is reasonably necessary to comply with any amendment of (i) HIPAA or other applicable law, (ii) the Privacy Regulations, the Security Regulations, or other applicable regulations, or (iii) any applicable court decision or binding governmental policy. If the parties are unable to agree on an amendment within 30 days of notice from Quest Diagnostics to each Business Associate of the requirement to amend this Section, Quest Diagnostics may, at its option, terminate this Agreement upon written notice to the Business Associates.
(h) Survival. This Section and the confidentiality, privacy, security, and other requirements established herein shall survive termination of this Agreement.
(i) Interpretation. Any ambiguity in this Section shall be resolved in favor of a meaning that permits Quest Diagnostics to comply with the Privacy Regulations, the Security Regulations and the EDI Rule.
(j) Several Liability of Business Associates. No Business Associate shall have any liability to Quest Diagnostics or any third party of any kind or nature, whether such liability is asserted on the basis of contract, tort (including negligence or strict liability), or otherwise, arising from the failure of any other Business Associate to fulfill its obligations under this Section.
Section 14.15 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement.
Section 14.16 No Recourse Against Other Parties. The several obligations of the Lenders under this Agreement are solely the corporate obligations of such Lender. No recourse shall be had for the payment of any amount owing by such Lender under this Agreement or for the payment by such Lender of any fee in respect hereof or any other obligation or claim of or against such Lender arising out of or based upon this Agreement, against any employee, officer, director, incorporator or stockholder of such Lender. Each of the Borrower, the Servicer and the Administrative Agent agrees that each of the Conduits shall be liable for any claims that such party may have against such Conduit only to the extent that such Conduit has excess funds and to the extent such assets are insufficient to satisfy the obligations of such Conduit hereunder, such Conduit shall have no liability with respect to any amount of such obligations remaining unpaid and such unpaid amount shall not constitute a claim against such Conduit. Any and all claims against either of the Conduits or any of the Agents shall be subordinate to the claims against such Persons of the holders of such Conduit's Commercial Paper Notes and its Liquidity Banks.
Signature pages follow
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
BORROWER:
QUEST DIAGNOSTICS RECEIVABLES INC.
By: /s/ Joseph P. Manory
-----------------------------------
Name: Joseph P. Manory
Title: Vice President and Treasurer
|
SERVICER:
QUEST DIAGNOSTICS INCORPORATED
By: /s/ Joseph P. Manory
-----------------------------------
Name: Joseph P. Manory
Title: Vice President and Treasurer
|
ADMINISTRATIVE AGENT:
WACHOVIA BANK, NATIONAL ASSOCIATION, as
Administrative Agent and as Blue Ridge
Agent
By: /s/ Gary G. Fleming, Jr.
-----------------------------------
Name: Gary G. Fleming, Jr.
Title: Director
|
LENDERS:
BLUE RIDGE ASSET FUNDING CORPORATION
BY: WACHOVIA CAPITAL MARKETS, LLC, ITS
ATTORNEY-IN-FACT
By: /s/ Douglas R. Wilson, Sr.
-----------------------------------
Name: Douglas R. Wilson, Sr.
Title: Vice President
|
Initial Commitment: not applicable
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Gary G. Fleming, Jr.
-----------------------------------
Name: Gary G. Fleming, Jr.
Title: Director
|
Initial Commitment: $200,000,000
ATLANTIC ASSET SECURITIZATION CORP.
By: CREDIT LYONNAIS NEW YORK BRANCH AS
ATTORNEY-IN-FACT
By: /s/ Anthony Brown
-----------------------------------
Name: Anthony Brown
Title: Vice President
|
Initial Commitment: not applicable
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Anthony Brown
-----------------------------------
Name: Anthony Brown
Title: Vice President
|
Initial Commitment: $100,000,000
ANNEX A
DEFINITIONS
A. Certain Defined Terms. As used in this Agreement:
"Account" shall have the meaning specified in Article 9 of the UCC.
"Accrual Period" means each calendar month, provided that the initial Accrual Period hereunder means the period from (and including) the date of the initial Loan hereunder to (and including) the last day of the calendar month thereafter.
"Ad Hoc Reserve" means 0% or such higher percentage as the Servicer and the Agents may agree upon in writing from time to time.
"Administrative Agent" has the meaning provided in the preamble of this Agreement.
"Adjusted Dilution Ratio" means, at any time, the rolling average of the Dilution Ratio for the 12 months then most recently ended.
"Advance" means a borrowing hereunder consisting of the aggregate amount of the several Loans made on the same Borrowing Date.
"Affected Party" means each of the Conduits, the Liquidity Banks and the Agents.
"Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise.
"Affiliated Obligor" in relation to any Obligor means an Obligor that is an Affiliate of such Obligor.
"Agents" means the Administrative Agent and the Co-Agents.
"Aggregate Commitment" means the aggregate of the Commitments of the Liquidity Banks, as reduced or increased from time to time pursuant to the terms hereof.
"Agreement" means this Credit and Security Agreement, as it may be amended or modified and in effect from time to time.
"Allocation Limit" means the sum of the Blue Ridge Allocation Limit and the Atlantic Allocation Limit.
"Alternate Base Rate" means for any day, the rate per annum equal to the higher as of such day of (i) the Prime Rate, or (ii) one-half of one percent (0.50%) above the Federal Funds Rate. For purposes of determining the Alternate Base Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall be effective on the date of each such change.
"Alternate Base Rate Loan" means a Loan which bears interest at the Alternate Base Rate or the Default Rate.
"Applicable Percentage" means (a) if a Conduit puts a Loan to its Liquidity Banks solely due to a problem issuing Commercial Paper and not because of performance issues with the Collateral, credit issues with the Loan Parties or the existence of an Event of Default or Unmatured Default, the percentage representing the "margin" or "spread" for Eurodollar or LIBOR loans specified in the Credit Agreement minus 10 basis points, and (b) at all other times, the percentage representing the "margin" or "spread" for Eurodollar or LIBOR loans specified in the Credit Agreement.
"Approved Amendment" means any of the following amendments and waivers, to the Credit Agreement, howsoever evidenced:
(a) until such time (if any) that Quest Diagnostics' long-term senior unsecured debt rating from Moody's is raised above Ba1, and for so long as Quest Diagnostics' long-term senior unsecured debt ratings remain at BBB- or higher from S&P and at (but not below) Ba1 from Moody's, any amendment to or waiver of the Credit Agreement to which the requisite banks under the Credit Agreement consent,
(b) after the time (if any) that Quest Diagnostics' long-term senior unsecured debt rating from Moody's is raised to Baa3 or higher, and for so long as Quest Diagnostics' long-term senior unsecured debt ratings remain at BBB- or higher from S&P and at Baa3 or higher from Moody's, any amendment to or waiver of the Credit Agreement to which the requisite banks under the Credit Agreement consent, and
(c) at any time while Quest Diagnostics' long-term senior unsecured debt rating from either S&P or Moody's fails to meet the applicable minimum level set forth in (a) or (b) above or any such minimum rating is classified as being on "negative watch" or the equivalent, any amendment to or waiver of the Credit Agreement approved by the requisite banks under the Credit Agreement and to which either (x) each of the Co-Agents (acting in its capacity as such under this Agreement) gives its written consent on or within 30 days after receipt of a copy of the proposed amendment or waiver, or (y) one or two of the Co-Agents but not all of the Co-Agents gives its written consent on or within 30 days after receipt of a copy of the proposed amendment (but not waiver) and the Obligations owing each dissenting Co-Agent's Group are paid in full on or within 60 days after such 30th day.
"Article" means an article of this Agreement unless another document is specifically referenced.
"Atlantic" has the meaning provided in the preamble of this Agreement.
"Atlantic Agent" has the meaning provided in the preamble of this Agreement.
"Atlantic Allocation Limit" has the meaning set forth in Section 1.1(b).
"Atlantic Fee Letter" means that certain Atlantic Fee Letter dated as of April 20, 2004 by and among Quest Diagnostics, the Borrower, Atlantic and CLNY, as Atlantic Agent.
"Atlantic Group" has the meaning provided in the preamble of this Agreement.
"Atlantic Liquidity Agreement" means the Liquidity Asset Purchase Agreement dated as of April 20, 2004 among Atlantic, the Atlantic Agent, and the Liquidity Banks from time to time party thereto, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time.
"Atlantic Liquidity Bank" means any Liquidity Bank that now or hereafter enters into this Agreement and the Atlantic Liquidity Agreement.
"Authorized Officer" means with respect to either Loan Party, any of the following, acting singly: its chief executive officer, its president, its vice president-finance, its treasurer or its secretary.
"Blue Ridge" has the meaning provided in the preamble of this Agreement.
"Blue Ridge Agent" has the meaning provided in the preamble of this Agreement.
"Blue Ridge Allocation Limit" has the meaning set forth in Section 1.1(a).
"Blue Ridge Fee Letter" means that certain Blue Ridge Fee Letter dated as of April 20, 2004 by and among Quest Diagnostics, the Borrower, Blue Ridge and Wachovia, as Blue Ridge Agent and Administrative Agent.
"Blue Ridge Group" has the meaning provided in the preamble of this Agreement.
"Blue Ridge Liquidity Agreement" means the Fourth Amended and Restated Liquidity Asset Purchase Agreement dated as of April 20, 2004 among Blue Ridge, the Blue Ridge Agent, and the Liquidity Banks from time to time party thereto, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time.
"Blue Ridge Liquidity Bank" means any Liquidity Bank that enters into this Agreement and the Blue Ridge Liquidity Agreement.
"Borrower" has the meaning provided in the preamble of this Agreement.
"Borrowing Base" means, on any date of determination, the Net Pool Balance as of the last day of the period covered by the most recent Monthly Report, minus the Required Reserve as of the last day of the period covered by the most recent Monthly Report.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Request" is defined in Section 2.8.
"Broken Funding Costs" means, for any CP Rate Loan of Blue Ridge which: (i) has its principal reduced without compliance by the Borrower with the notice requirements hereunder or (ii) is not prepaid in the amount specified in a Prepayment Notice on the date specified therein or (iii) is assigned by Blue Ridge to its Liquidity Banks under its Liquidity Agreement or terminated prior to the date on which it was originally scheduled to end; an amount equal to the excess, if any, of (A) the CP Costs that would have accrued during the remainder of the applicable commercial paper tranche periods determined by the Blue Ridge Agent to relate to such Loan subsequent to the date of such reduction, assignment or termination (or in respect of clause (ii) above, the date such prepayment was designated to occur pursuant to the applicable Prepayment Notice) of the principal of such CP Rate Loan if such reduction, assignment or termination had not occurred or such Prepayment Notice had not been delivered, over (B) the sum of (x) to the extent all or a portion of such principal is allocated to another CP Rate Loan, the amount of CP Costs actually accrued during the remainder of such period on such principal for the new Loan, and (y) to the extent such principal is not allocated to another CP Rate Loan, the income, if any, actually received during the remainder of such period by the holder of such Loan from investing the portion of such principal not so allocated. All Broken Funding Costs shall be due and payable hereunder upon demand.
"Business Associate" has the meaning set forth in Section 14.14.
"Business Associate Safeguards" has the meaning set forth in Section 14.14.
"Business Day" means any day on which banks are not authorized or required to close in New York, New York, Atlanta, Georgia, Chicago, Illinois or Teterboro, New Jersey, and The Depository Trust Company of New York is open for business, and if the applicable Business Day relates to any computation or payment to be made with respect to the Eurodollar Rate (Reserve Adjusted), any day on which dealings in dollar deposits are carried on in the London interbank market.
"Cash Collateral Payment" means, on any date of determination, the dollar amount resulting from the product of (i) the arithmetic average of the dollar amount of cash collections from the 4 immediately preceding Report Weeks and (ii) the result of dividing (a) the then aggregate outstanding principal balance of the Advances by (b) the aggregate Unpaid Net Balance of all Receivables, as reflected on the most recent prior Monthly Report.
"Change in Control" means:
(a) the failure of Quest Diagnostics to own (directly or through one or more wholly-owned Subsidiaries of Quest Diagnostics) 100% of the issued and outstanding Equity Interests (including all Equity Rights) of the Borrower;
(b) the failure of Quest Diagnostics to own (directly or through one or more wholly-owned Subsidiaries of Quest Diagnostics) 100%, on a fully-diluted basis, of the issued and outstanding Equity Interests (including all Equity Rights) of each of the other
Originators; provided, however, that no Change in Control shall be deemed to have occurred under this clause (b) if, in any calendar year, Quest Diagnostics ceases to beneficially own (directly or through one or more wholly-owned Subsidiaries of Quest Diagnostics) 100%, on a fully diluted basis, of the issued and outstanding Equity Interests (including all Equity Rights) of any Originator or Originators whose Net Receivables as of the last day of the prior calendar year did not represent more than 10% of the Net Receivables of all Originators as of the last day of such prior calendar year; or
(c) (i) any Person or any group shall (A) beneficially own (directly or indirectly) in the aggregate Equity Interests of Quest Diagnostics having 35% or more of the aggregate voting power of all Equity Interests of Quest Diagnostics at the time outstanding or (B) have the right or power to appoint a majority of the board of directors of Quest Diagnostics; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of Quest Diagnostics (together with any new directors whose election by such board of directors or whose nomination for election by the shareholders of Quest Diagnostics was approved by a vote of a majority of the directors of Quest Diagnostics then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the board of directors of Quest Diagnostics then in office.
For purposes of this definition, the terms "beneficially own" and "group" shall have the respective meanings ascribed to them pursuant to Section 13(d) of the Exchange Act, except that a Person or group shall be deemed to "beneficially own" all securities that such Person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time.
"Client-Billed Receivable" means a Receivable booked in the
"client-billed receivables" category of accounts receivable in the billing and
accounting process of the applicable Originator owing from a physician, hospital
or other institutional Obligor (including a Governmental Authority or affiliated
Obligor) which is billed monthly in arrears for the services provided with
pricing typically based on a negotiated fee schedule. For the avoidance of
doubt, no Client-Billed Receivable would be (a) a "Government Receivable" of the
type described in clause (i), (ii) or (iii) of the definition of such term, or
(b) owing from another payor type such as an individual "self-pay" patient or an
insurance company or managed care plan.
"Client-Billed Receivables for the Reserve Computation" means, at any time, an amount determined by multiplying the Client-Billed Receivables Percentage by Net Receivables.
"Client-Billed Receivables Percentage" means, at any time, the percentage equal to (a) the Unpaid Net Balance of all Client-Billed Receivables, divided by (b) the reported Unpaid Net Balance of all Receivables, in each of the foregoing cases, determined as of the last day of the calendar month then most recently ended.
"Clinical Laboratory Services" means clinical laboratory, anatomic pathology or other diagnostics testing services (including, without limitation, routine and esoteric clinical laboratory services (including genetics testing), clinical laboratory services involved with clinical
trials, point-of-care testing, clinical laboratory services involving corporate healthcare and services involved with managing hospital laboratories) and information services involving the provision of data or information programs, services or products which substantially consists of laboratory or other medical data.
"CLNY" has the meaning provided in the preamble of this Agreement.
"CLNY Roles" has the meaning set forth in Section 11.10(b).
"Co-Agents" has the meaning provided in the preamble of this Agreement.
"Code" means the Internal Revenue Code of 1986, as the same may be amended from time to time.
"Collateral" has the meaning set forth in Section 9.1.
"Collateral Account" has the meaning set forth in Section 7.1(i)(iv).
"Collection Account" means each concentration account, depositary account, lockbox account or similar account into which proceeds of Receivables are deposited.
"Collection Account Agreement" means an agreement in substantially the form of Exhibit A hereto by and among a Collection Bank at which a Lockbox or Collection Account is maintained, the applicable Originator (if such Lockbox or Collection Account is in the name of an Originator), the Borrower and the Administrative Agent.
"Collection Bank" means any of the banks holding one or more Collection Accounts or Lockboxes.
"Collections" means, (a) with respect to any Receivable, all funds which either (i) are received from or on behalf of the 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 Borrower, any Originator 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) are Deemed Collections, and (b) with respect to any Demand Advance, any payment of principal or interest in respect thereof and any Permitted Investments and the proceeds thereof made with any such payment.
"Collections Ratio" means Collections divided by the reported Unpaid Net Balance of all Receivables determined as of the last day of the calendar month then most recently ended.
"Commercial Paper Notes" means the commercial paper promissory notes, if any, issued by or on behalf of either of the Conduits to fund, in whole or in part, any of its CP Rate Loans.
"Commitment" means, for each Liquidity Bank, its obligation to make Loans not exceeding the amount set forth opposite its signature to the Agreement, as such amount may be modified from time to time pursuant to the terms hereof.
"Commitment Increase Request" has the meaning set forth in Section 1.7.
"Commitment Percentage" means, for each Group on any date of determination, the ratio which the sum the Commitments of the Liquidity Banks in such Group bears to the Aggregate Commitment.
"Commitment Reduction Notice" has the meaning set forth in Section 1.6.
"Conduits" has the meaning provided in the preamble of this Agreement.
"Constituent" means (a) as to the Atlantic Agent, any member of the Atlantic Group from time to time party hereto, and (b) as to the Blue Ridge Agent, any member of the Blue Ridge Group from time to time party hereto, and when used as an adjective, "Constituent" shall have a correlative meaning.
"Contract" means, with respect to any Receivable, any requisition, purchase order, agreement, contract or other writing with respect to the provision of services by an Originator to an Obligor other than (i) an Invoice, and (ii) any confidential patient information including, without limitation, test results.
"Contractual Disallowance" means an amount which represents the amount by which a Receivable is, consistent with usage and practices in the applicable Originator's industry, expected to be reduced prior to payment by the Obligor thereon.
"Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound.
"CP Costs" means, for each day for Blue Ridge, the sum of (i) discount
or interest accrued on such Conduit's Pooled Commercial Paper on such day, plus
(ii) any and all accrued commissions in respect of its placement agents and its
Commercial Paper dealers, and issuing and paying agent fees incurred, in respect
of such Conduit's Pooled Commercial Paper for such day, plus (iii) other costs
associated with funding small or odd-lot amounts with respect to all receivable
purchase or financing facilities which are funded by such Conduit's Pooled
Commercial Paper for such day, minus (iv) any accrual of income net of expenses
received by or on behalf of such Conduit on such day from investment of
collections received under all receivable purchase or financing facilities
funded substantially with such Conduit's Pooled Commercial Paper, minus (v) any
payment received on such day net of expenses in respect of such Conduit's Broken
Funding Costs related to the prepayment of any investment of Blue Ridge pursuant
to the terms of any receivable purchase or financing facilities funded
substantially with its Pooled Commercial Paper. In addition to the foregoing
costs, if the Borrower (or the Servicer, on the Borrower's behalf) shall request
any Advance during any period of time determined by the Blue Ridge Agent in its
sole discretion to result in incrementally higher CP
Costs applicable to Blue Ridge's Loan included in such Advance, the principal associated with any such Loan of Blue Ridge shall, during such period, be deemed to be funded by Blue Ridge in a special pool (which may include capital associated with other receivable purchase or financing facilities) for purposes of determining such additional CP Costs applicable only to such special pool and charged each day during such period against such principal.
"CP Rate" means:
(a) with respect to Blue Ridge for any CP Tranche Period, the per annum interest rate that, when applied to the outstanding principal balance of Blue Ridge's CP Rate Loans for the actual number of days elapsed in such CP Tranche Period, would result in an amount of accrued interest equivalent to Blue Ridge's CP Costs for such CP Tranche Period; and
(b) with respect to Atlantic for any CP Tranche Period, the per annum interest rate equivalent to the rate (or if more than one rate, the weighted average of the rates) at which Commercial Paper Notes of Atlantic having a term equal to such CP Tranche Period are sold plus (to the extent not already deducted from the Principal Amount of such Commercial Paper Notes) the amount of any placement agent or commercial paper dealer fees incurred in connection with such sale and other costs associated with funding small or odd-lot amounts.
"CP Rate Loan" means a Loan made by either of the Conduits which bears interest at a CP Rate.
"CP Tranche Period" means:
(a) with respect to Blue Ridge, an Accrual Period, and
(b) with respect to Atlantic, a period of 7 to 90 days commencing on a Business Day selected by the Borrower (or by the Servicer, on the Borrower's behalf) and agreed to by the Atlantic Agent pursuant to Section 2.2; provided, however, that if any such CP Tranche Period would end on a day which is not a Business Day, such CP Tranche Period shall end on the preceding Business Day.
"Credit Agreement" means that certain Amended and Restated Credit Agreement dated as of April 20, 2004 among Quest Diagnostics, as borrower, certain of its Subsidiaries, as guarantors, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent and issuing lender, as modified from time to time by one or more Approved Amendments.
"Credit and Collection Policy" means those credit and collection policies and practices of the Originators relating to Contracts and Receivables, copies or summaries of which are attached as Exhibit C to the Sale Agreement, as the same may be modified from time to time without violating Section 7.3(c) of this Agreement.
"Cut-Off Date" means the last day of each calendar month.
"Days Sales Outstanding" means, as of any day, an amount equal to the product of (x) 91, multiplied by (y) the amount obtained by dividing (i) the reported aggregate Unpaid Net Balance of Receivables as of the most recent Cut-Off Date, by (ii) the aggregate Net Revenues generated by the Originators during the three calendar months including and immediately preceding such Cut-Off Date.
"Deemed Collections" means Collections deemed received by the Borrower under Section 3.4.
"Default Rate" means a rate per annum equal to the sum of (i) the Alternate Base Rate plus (ii) 2.00%, changing when and as the Alternate Base Rate changes.
"Default Horizon Ratio" means, as of any Cut-Off Date, the ratio (expressed as a decimal) computed by dividing (i) the aggregate amount of Net Revenues generated by the Originators during the five months ending on such Cut-Off Date, by (ii) the Net Pool Balance as of such Cut-Off Date.
"Default Ratio" means, as of any Cut-Off Date, the ratio (expressed as a percentage) computed by dividing (i) the total amount of Receivables that became Defaulted Receivables (151-180 days past invoice) during the month that includes such Cut-Off Date, by (ii) the aggregate amount of Net Revenues generated by the Originators during the month occurring five months prior to the month ending on such Cut-Off Date.
"Default Trigger Ratio" means, as of any Cut-Off Date, the ratio (expressed as a percentage) computed by dividing (i)(a) the total amount of receivables 151-180 days past invoice, (b) as to which the obligor thereof has suffered an event of bankruptcy or (c) which, consistent with the Originators' billing systems' procedures, should be written off as uncollectible, by (ii)the aggregate amount of Net Revenues generated by the Originators during the month occurring five months prior to the month ending on such Cut-Off Date.
"Defaulted Receivable" means a Receivable: (i) as to which the obligor thereof has suffered an event of bankruptcy; (ii) which, consistent with the Originators' billing systems' procedures, should be written off as uncollectible; or (iii) as to which any payment, or part thereof, remains unpaid for 151 days or more from the original invoice date for such payment.
"Delinquency Ratio" means, at any time, a percentage equal to (i) Delinquent Receivables at such time divided by (ii) the reported aggregate Unpaid Net Balance of Receivables at such time.
"Delinquent Receivable" means a Receivable as to which any payment, or part thereof, remains unpaid for 121-150 days from the original invoice date for such payment.
"Demand Advance" means an advance made by the Borrower to Quest
Diagnostics on any day during the Revolving Period other than a Settlement Date
on which no Event of Default or Unmatured Default exists and is continuing,
which advance (a) is payable upon demand, (b) is not evidenced by an instrument,
chattel paper or a certificated security, (c) bears interest at a market rate
determined by the Borrower and the Servicer from time to time, (d) is not
subordinated to any other Indebtedness or obligation of Quest Diagnostics, and
(e) may not
be offset by Quest Diagnostics against amounts due and owing from the Borrower to Quest Diagnostics under its Subordinated Note.
"Dilution" means, total Net Revenues multiplied by the three month average calculated quarterly of (i)(a) for Originators on the QBS an amount equal to the dollar amount of adjustments measured by QBS adjustment codes 66, 70, 71, 72, 74, 75, 76, 83, 85 for client and patient receivables, plus (b) an amount equal to 0.30 times the dollar amount of adjustments measured by the QBS adjustment codes 66, 70, 71, 72, 74, 75, 76, 83, 85 for third party receivables, plus (c) 0.70 multiplied by the dollar amount of adjustments measured by QBS adjustment code 68 for client and patient receivables divided by (ii) the Net Revenues generated by Originators on QBS.
"Dilution Horizon Ratio" means, as of any Cut-Off Date, a ratio (expressed as a decimal), computed by dividing (i) the aggregate Net Revenues generated by the Originators during the one month ending on such Cut-Off Date, by (ii) the Net Pool Balance as of such Cut-Off Date.
"Dilution Ratio" means, as of any Cut-Off Date, a ratio (expressed as a percentage), computed by dividing (i) the total amount of decreases in outstanding principal balances due to Dilution during the month ending on such Cut-Off Date, by (ii) the aggregate Net Revenues generated by the Originators ending on such Cut-Off Date one month prior.
"Dilution Reserve" means, for any month, the product (expressed as a percentage) of: (a) the sum of (i) 1.5 times the Adjusted Dilution Ratio as of the immediately preceding Cut-Off Date, plus (ii) the Dilution Volatility Component as of the immediately preceding Cut-Off Date, times (b) the Dilution Horizon Ratio as of the immediately preceding Cut-Off Date.
"Dilution Volatility Component" means the product (expressed as a percentage) of (i) the difference between (a) the highest three (3)-month rolling average Dilution Ratio over the past 12 months and (b) the Adjusted Dilution Ratio, and (ii) a fraction, the numerator of which is equal to the amount calculated in (i)(a) of this definition and the denominator of which is equal to the amount calculated in (i)(b) of this definition.
"Disallowed Receivable" means a Receivable for which payment is not expected to be received by the applicable Originator.
"Dollars" means dollars in lawful money of the United States of America.
"Downgraded Liquidity Bank" means a Blue Ridge Liquidity Bank which becomes the subject of a Downgrading Event.
"Downgrading Event" with respect to any Person means the lowering of the rating with regard to the short-term securities of such Person to below (i) A-1 by S&P, (ii) P-1 by Moody's, or (if applicable) (iii) F1 by Fitch.
"Eligible Assignee" means (a) any "bankruptcy remote" special purpose entity which is administered by Wachovia or CLNY (or any Affiliate of Wachovia or CLNY) or any
Qualifying Liquidity Bank (or any Affiliate of a Qualifying Liquidity Bank) that is in the business of acquiring or financing receivables, securities and/or other financial assets and which issues commercial paper notes that are rated at least A-1 by S&P, P-1 by Moody's and, if applicable, F1 by Fitch, (b) any Qualifying Liquidity Bank, or (c) in the case of Blue Ridge, any Downgraded Liquidity Bank whose liquidity commitment has been fully drawn by the Blue Ridge Agent and funded into a collateral account.
"Eligible Originator" means any of (a) Quest Diagnostics, (b) 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 Diagnostic Clinical Laboratories Inc., a Delaware corporation, Quest Diagnostics LLC, an Illinois limited liability company, Unilab Corporation, a Delaware corporation, Quest Diagnostics Nichols Institute, Inc., a Virginia corporation formerly known as Medical Laboratories Corporation, Inc., Quest Diagnostics Incorporated, a Nevada corporation formerly known as APL Healthcare Group, Inc., and (c) each of the other direct or indirect, wholly-owned Subsidiaries of Quest Diagnostics who (with the consent of the Co-Agents if such Subsidiary constitutes a Material Proposed Addition) becomes a "seller" party to the Sale Agreement by executing a Joinder Agreement and complying with the conditions set forth in Article V of the Sale Agreement.
"Eligible Receivable" means, at any time:
(a) a Receivable which arises out of the provision or sale of Clinical Laboratory Services by an Eligible Originator in the ordinary course of its business that has been sold or contributed by such Originator to the Borrower pursuant to the Sale Agreement in a "true sale" or "true contribution" transaction;
(b) a Receivable as to which the perfection of the Administrative Agent's security interest, on behalf of the Secured Parties, is governed by the laws of a jurisdiction where the Uniform Commercial Code-Secured Transactions is in force, and which constitutes an "account" or a "payment intangible" (each as defined in the Uniform Commercial Code as in effect in any relevant jurisdiction);
(c) a Receivable the Obligor of which is resident of the United States or any of its possessions or territories, and is not an Affiliate of any Loan Party or Originator;
(d) a Receivable which is not a Disallowed Receivable at such time;
(e) the portion of a Receivable which is not an Ineligible Defaulted Receivable at such time;
(f) a Receivable with regard to which the representations and warranties of the Borrower in Sections 6.1(j), (l) and (p) are true and correct;
(g) a Receivable with regard to which the granting of a security interest therein does not contravene or conflict with any law;
(h) a Receivable which is denominated and payable only in Dollars in the United States;
(i) a Receivable which constitutes the legal, valid and binding obligation of the Obligor of such Receivable enforceable against such Obligor in accordance with its terms and is not subject to any actual or reasonably expected dispute, offset (except as provided below), counterclaim or defense whatsoever; provided, however, that if such dispute, offset, counterclaim or defense affects only a portion of the Unpaid Net Balance of such Receivable, then such Receivable may be deemed an Eligible Receivable to the extent of the portion of such Unpaid Net Balance which is not so affected;
(j) a Receivable which, together with any Contract related thereto, does not contravene in any material respect any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no party to the Contract related thereto is in violation of any such law, rule or regulation in any material respect if such violation would impair the collectibility of such Receivable;
(k) a Receivable which satisfies in all material respects all applicable requirements of the applicable Eligible Originator's Credit and Collection Policy;
(l) a Receivable which is due and payable within 60 days from the invoice date of such Receivable;
(m) [intentionally omitted];
(n) a Receivable the original term of which has not been extended (except as permitted in Section 8.2(c));
(o) a Receivable which has not been identified, either specifically or as a member of a class, in a notice by any of the Agents, in the exercise of its commercially reasonable credit judgment, as a Receivable that is not acceptable, including, without limitation, because such Receivables arises under an unreasonable Contract that is not acceptable to such Agent; and
(p) if the applicable Eligible Originator acquired such Receivable
through a Material Acquisition as to which the Administrative Agent is
permitted to and has, in fact, conducted, a Review in accordance with
Section 7.1(c), the Administrative Agent has notified the Borrower in
writing that (i) such Receivable is (and other similarly-acquired
Receivables are) acceptable to the Agents based on the satisfactory outcome
of such Review, and (ii) each Conduit's Rating Agency Condition has been
satisfied.
"Employee Benefit Plan" means an employee benefit plan (as defined in
Section 3(3) of ERISA) that is maintained or contributed to by any ERISA Entity
or with respect to which Quest Diagnostics or a Subsidiary could incur
liability.
"Equity Interests" means, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or non-voting), of capital of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership, whether outstanding on the date hereof or issued after the date of this Agreement.
"Equity Rights" means, with respect to any Person, any outstanding subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including any stockholders' or voting trust agreements) for the issuance, sale, registration or voting of, or outstanding securities convertible into, any additional shares of Equity Interests of any class, or partnership or other ownership interests of any type in, such Person.
"ERISA" means the United States Employee Retirement Income Security Act of 1974, as amended.
"ERISA Entity" means any member of an ERISA Group.
"ERISA Event" means (a) any Reportable Event with respect to a Pension
Plan; (b) the existence with respect to any Pension Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived, the failure to make by its due date a required
installment under Section 412(m) of the Code with respect to any Pension Plan or
the failure to make any required contribution to a Multiemployer Plan; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Pension Plan; (d) the incurrence by any ERISA Entity of any liability under
Title IV of ERISA with respect to the termination of any Pension Plan; (e) the
receipt by any ERISA Entity from the PBGC or a plan administrator of any notice
relating to an intention to terminate any Pension Plan or to appoint a trustee
to administer any Pension Plan, or the occurrence of any event or condition
which could constitute grounds under ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; (f) the incurrence by
any ERISA Entity of any liability with respect to the withdrawal or partial
withdrawal from any Pension Plan or Multiemployer Plan; (g) the receipt by an
ERISA Entity of any notice, or the receipt by any Multiemployer Plan from any
ERISA Entity of any notice, concerning the imposition of Withdrawal Liability or
a determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA; (h) the making of
any amendment to any Pension Plan which could result in the imposition of a lien
or the posting of a bond or other security; or (i) the occurrence of a nonexempt
prohibited transaction (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which could result in liability to any Loan Party.
"ERISA Group" means any Loan Party and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with such Loan Party, are treated as a single employer under Section 414 of the Code.
"Eurodollar Loan" means a Loan which bears interest at the applicable Eurodollar Rate.
"Eurodollar Rate" means, for any Interest Period, the rate per annum determined on the basis of the offered rate for deposits in Dollars of amounts equal or comparable to the principal amount of the related Liquidity Funding offered for a term comparable to such Interest Period, which rates appear on a Bloomberg L.P. terminal, displayed under the address "US0001M < Index > Q < Go >" effective as of 11:00 a.m., London time, two Business Days prior to the first day of such Interest Period, provided that if no such offered rates appear on such page, the Eurodollar Rate for such Interest Period will be the arithmetic average (rounded upwards, if necessary, to the next higher 1/100th of 1%) of rates quoted by not less than two major banks in New York City, selected by the Co-Agents, at approximately 10:00 a.m., New York City time, two Business Days prior to the first day of such Interest Period, for deposits in Dollars offered by leading European banks for a period comparable to such Interest Period in an amount comparable to the principal amount of such Liquidity Funding.
"Eurodollar Rate (Reserve Adjusted)" applicable to any Interest Period means a rate per annum equal to the quotient obtained (rounded upwards, if necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable Eurodollar Rate for such Interest Period by (ii) 1.00 minus the Eurodollar Reserve Percentage.
"Eurodollar Reserve Percentage" means, with respect to any Interest Period, the maximum reserve percentage, if any, applicable to a Liquidity Bank under Regulation D during such Interest Period (or if more than one percentage shall be applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be applicable) for determining such Liquidity Bank's reserve requirement (including any marginal, supplemental or emergency reserves) with respect to liabilities or assets having a term comparable to such Interest Period consisting or included in the computation of "Eurocurrency Liabilities" pursuant to Regulation D. Without limiting the effect of the foregoing, the Eurodollar Reserve Percentage shall reflect any other reserves required to be maintained by such Liquidity Bank by reason of any Regulatory Change against (a) any category of liabilities which includes deposits by reference to which the "London Interbank Offered Rate" or "LIBOR" is to be determined or (b) any category of extensions of credit or other assets which include LIBOR-based credits or assets.
"Event of Default" means an event described in Section 10.1.
"Event of Bankruptcy" shall be deemed to have occurred with respect to a Person if either:
(a) a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, and such
case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 60 consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for, such Person or for all or substantially all of its property, or shall make any general assignment for the benefit of creditors, or shall be adjudicated insolvent, or admit in writing its inability to, pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing.
"Excess Concentration Amount" means, as of any date, the sum of the amounts by which the aggregate Unpaid Net Balance of Receivables of each Obligor exceeds the Obligor Concentration Limit for such Obligor.
"Excess Rollforward Difference" means, at any time, an amount equal the Rollforward Difference greater than 3% of the reported aggregate Unpaid Net Balance of all Receivables.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"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.
"Exhibit" refers to an exhibit to this Agreement, unless another document is specifically referenced.
"Existing Agreement" has the meaning set forth in the preamble to this Agreement.
"Extension Fee" means such amount as the Agents and the Borrower may agree upon at the time of any Extension Request.
"Extension Request" has the meaning set forth in Section 1.8.
"Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on
the Business Day next succeeding such day, provided that (i) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if such rate is not so published for any day, the Federal Funds Rate for such day shall be the average rate charged to the applicable Co-Agent on such day on such transactions, as reasonably determined by such Co-Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve System, or any successor thereto or to the functions thereof.
"Fee Letters" means, collectively, the Atlantic Fee Letter and the Blue Ridge Fee Letter.
"Final Payout Date" means the date on or following the Termination Date on which the Obligations have been paid in full.
"Fitch" means Fitch, Inc.
"Foreign Plan" means any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to by, or entered into with, Quest Diagnostics or any of its Subsidiaries with respect to employees employed outside the United States.
"GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such accounting profession, which are applicable to the circumstances as of the date of determination.
"General Intangible" shall have the meaning specified in Article 9 of the UCC.
"Government Receivable" means:
(i) any Receivable with respect to which the United States (or an agency or intermediary thereof) is obligated to pay, pursuant to federal Medicare statutes and regulations, for services rendered to eligible beneficiaries thereunder,
(ii) any Receivable arising under any state's Medicaid statutes and regulations, for services rendered to eligible beneficiaries thereunder,
(iii) (A) any Receivable with respect to which the United States (or an agency or fiscal intermediary thereof) is obligated to pay, pursuant to federal statutes and regulations applicable to The Civilian Health and Medical Program of the Uniform Services, for services rendered to eligible beneficiaries thereunder and not in contravention of any statute or regulation applicable thereto and (B) any Receivable with respect to which the Obligor is any Person (other than a Governmental Authority) who enters into a contract with the United States for the provision of health care services rendered to eligible beneficiaries under The Civilian Health and Medical Program of the Uniform Services,
(iv) any Receivable with respect to which the United States (or an agency or fiscal intermediary thereof) is obligated to pay, pursuant to federal statutes and regulations applicable to The Civilian Health and Medical Program of Veterans Affairs, for services rendered to eligible beneficiaries thereunder and not in contravention of any statute or regulation applicable thereto,
(v) any other Receivable as to which the Obligor is a Governmental Authority,
(vi) any other Receivable as to which payment is required by law to be made directly to the provider of the services giving rise thereto or to an account under such provider's exclusive dominion and control, or
(vii) any other Receivable requiring compliance with the Federal Assignment of Claims Act or any similar state legislation.
"Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.
"Group" means the Blue Ridge Group or the Atlantic Group, as the case may be.
"Guarantee" of or by any Person means any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (c) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; provided however that the term Guarantee shall not include endorsements for collection or deposit, in either case, in the ordinary course of business.
"HIPAA" has the meaning set forth in Section 14.14.
"Indebtedness" of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have
been assumed, but limited, if such obligations are without recourse to such Person, to the lesser of the principal amount of such Indebtedness or the fair market value of such property, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations of such Person in respect of interest rate protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging arrangements (the amount of any such obligation to be the amount that would be payable upon the acceleration, termination or liquidation thereof) and (j) all obligations of such Person as an account party in respect of letters of credit and bankers' acceptances. The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner.
"Indemnified Amounts" has the meaning set forth in Section 13.1(a).
"Indemnified Party" has the meaning set forth in Section 13.1(a).
"Independent Director" has the meaning set forth in Section 7.4(b).
"Ineligible Defaulted Receivable" means, on any date of determination, the Outstanding Balance of a Defaulted Receivable multiplied by 1 minus the Recovery Rate.
"Interest Payment Date" means:
(a) with respect to any CP Rate Loan of Blue Ridge, each Settlement Date, and with respect to any CP Rate Loan of Atlantic, the last day of its CP Tranche Period, the date on which any such CP Rate Loan is prepaid, in whole or in part, and the Termination Date;
(b) with respect to any Eurodollar Loan, the last day of its Interest Period, the date on which any such Loan is prepaid, in whole or in part, and the Termination Date;
(c) with respect to any Alternate Base Rate Loan, each Settlement Date while such Loan remains outstanding, the date on which any such Loan is prepaid, in whole or in part, the date on which the applicable Liquidity Bank's Scheduled Termination Date occurs, and the Termination Date; and
(d) with respect to any Loan while the Default Rate is applicable thereto, upon demand or, in the absence of any such demand, each Settlement Date while such Loan remains outstanding, the date on which any such Loan is prepaid, in whole or in part, the Termination Date, and if the applicable Loan was funded by a Liquidity Bank, the date on which the applicable Liquidity Bank's Scheduled Termination Date occurs.
"Interest Period" means, with respect to a Eurodollar Loan, a period not to exceed three calendar months commencing on a Business Day selected by the Borrower (or the Servicer on the Borrower's behalf) pursuant to this Agreement and agreed to by the applicable Co-Agent. Such Interest Period shall end on the day which corresponds numerically to such date one, two, or three calendar months thereafter, provided, however, that (i) if there is no such numerically corresponding day in such next, second or third succeeding calendar month, such Interest Period shall end on the last Business Day of such next, second or third succeeding calendar month, and (ii) if an Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next succeeding Business Day unless said next succeeding Business Day falls in a new calendar month, then such Interest Period shall end on the immediately preceding Business Day.
"Interest Rate" means a Eurodollar Rate (Reserve Adjusted), a CP Rate, an Alternate Base Rate or the Default Rate.
"Invoice" means, with respect to any Receivable, any paper or electronic bill, statement or invoice for services rendered by an Originator to an Obligor.
"Joinder Agreement" has the meaning set forth in the Sale Agreement.
"Laws" means, collectively, all common law and all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents, including without limitation the interpretation thereof by any Governmental Authority charged with the enforcement thereof.
"Lenders" means, collectively, Blue Ridge, the Blue Ridge Liquidity Banks, Atlantic, the Atlantic Liquidity Banks, and their respective successors and permitted assigns.
"Lien" means any security interest, lien, encumbrance, pledge, assignment, title retention, similar claim, right or interest.
"Liquidity Agreements" means, collectively, the Atlantic Liquidity Agreement and the Blue Ridge Liquidity Agreement.
"Liquidity Bank" means (a) with respect to Blue Ridge, Wachovia or any Eligible Assignee of Wachovia's Commitment and Liquidity Commitment, and (b) with respect to Atlantic, CLNY or any Eligible Assignee of CLNY's Commitment and Liquidity Commitment, in each of the foregoing cases, to which the Borrower has consented if required under Section 12.1. A Liquidity Bank will become a "Lender" hereunder at such time as it makes any Liquidity Funding.
"Liquidity Commitment" means, with respect to each Liquidity Bank, its commitment to make Liquidity Fundings pursuant to the Liquidity Agreement to which it is a party.
"Liquidity Funding" means (a) a purchase made by any Liquidity Bank pursuant to its Liquidity Commitment of all or any portion of, or any undivided interest in, a Loan of its applicable Conduit, or (b) any Loan made by the applicable Liquidity Banks in lieu of a Conduit pursuant to Section 1.1.
"Loan" means any loan made by a Lender to the Borrower pursuant to this Agreement. Each Loan shall either be a CP Rate Loan, an Alternate Base Rate Loan or a Eurodollar Rate Loan, selected in accordance with the terms of this Agreement.
"Loan Parties" means, collectively, (i) the Borrower, and (ii) Quest Diagnostics so long as it is acting as the Servicer (or as a sub-servicer) hereunder.
"Lockbox" means any post office box maintained by an Originator on behalf of the Borrower to which payments on certain Receivables are mailed.
"Loss Reserve" means, for any month, the product (expressed as a percentage) of (i) 2.0, times (ii) the highest three-month rolling average Default Ratio during the 12 months ending on the immediately preceding Cut-Off Date, times (iii) the Default Horizon Ratio as of the immediately preceding Cut-Off Date, times (iv) one minus the Recovery Rate.
"Material Acquisition" means that any existing Originator acquires the Unpaid Net Balance of Receivables of one or more other Persons who are not existing Eligible Originators, whether by purchase, merger, consolidation or otherwise, if (i) the aggregate Unpaid Net Balance of receivables so acquired from any one such Person exceeds 10% of the Allocation Limit in effect on the date of acquisition, merger or consolidation, or (ii) the aggregate Unpaid Net Balance of receivables so acquired from all Persons in any calendar year exceeds (or from all such Persons in any calendar year) exceeds 10% of the weighted average Allocation Limit in effect during such calendar year.
"Material Adverse Effect" means an 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, financial condition or assets of
(i) the Originators 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) the
Servicer, or (iii) the Borrower, (b) a material adverse effect on the ability of
the Originators, the Servicer or the Borrower to perform when and as due any of
their material obligations under any Transaction Document to which they are
parties, (c) a material adverse effect on the legality, binding effect or
enforceability of any Transaction Document or any of the material rights and
remedies of any of the Agents or Lenders thereunder or the legality, priority,
or enforceability of the Lien on a material portion of the Collateral, or (d) a
material adverse effect upon the validity, enforceability or collectibility of a
material portion of the Receivables.
"Material Proposed Addition" means a Person whom any Loan Party proposes to add as a "seller" under the Sale Agreement if either (i) the aggregate Unpaid Net Balance of such Person's receivables (on the proposal date) exceeds 10% of the weighted average Allocation Limit in effect on the proposal date, or (ii) the Unpaid Net Balance of such Person's receivables (on such proposal date), when aggregated with the receivables of all other Persons added as "sellers" under the Sale Agreement in the same calendar year (measured on the respective dates such other Persons became "sellers" under the Sale Agreement) exceeds 10% of the weighted average Allocation Limit in effect during such calendar year.
"Missing Information Percentage" means the percentage equal to the ratio of (a) the total number of incomplete requisitions received in any month by the Originators, to (b) the total number of requisitions resulted in such month by the Originators. For this purpose, a requisition (whether in paper or electronic format) is incomplete if at the time that the test results of a specimen are reported, the Originator has not been provided sufficient information (whether from the requisition or otherwise) to bill the appropriate Person for the test or other service being
performed. As used herein, a "resulted" requisition is one which is processed and on which its results have been reported.
"Missing Information Trigger Event" means that the most recent three-calendar month rolling average Missing Information Percentage at any Cut-Off Date exceeds 7.00% (it being understood that if a private carrier or government action imposes any change expected to have an adverse impact on the information gathering process of the Originators, this percentage will not be utilized in the calculation of a Missing Information Trigger Event for the 3 Settlement Periods immediately following such change).
"Monthly Report" means a report in the form of Exhibit 3.1(a).
"Monthly Reporting Date" means the 20th day of each calendar month; provided, however, that if any such day is not a Business Day, then the Monthly Reporting Date shall occur on the next succeeding Business Day.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA (a) to which any ERISA Entity is then making or
accruing an obligation to make contributions, (b) to which any ERISA Entity has
within the preceding five plan years made contributions, including any Person
which ceased to be an ERISA Entity during such five year period, or (c) with
respect to which any Loan Party could incur liability.
"Net Pool Balance" means, at any time, an amount equal to (i) Net Receivables, minus (ii) Specified Government Ineligibles.
"Net Receivables" means, at any time, an amount equal to the reported aggregate Unpaid Net Balance of all Receivables at such time, minus (i) the aggregate Unpaid Net Balance of all Receivables that are not Eligible Receivables at such time, minus (ii) Receivables (other than those covered by any other clause of this definition) that are not yet Defaulted Receivables which are owing from any Top 10 Obligor as to which more than 50% of the aggregate Unpaid Net Balance of all Receivables owing from such Top 10 Obligor are Defaulted Receivables, minus (iii) the Excess Concentration Amount at such time, minus (iv) 2% of the aggregate Unpaid Net Balance of all Receivables owing from Obligors who are not Top 10 Obligors, minus (v) the Excess Rollforward Difference.
"Net Revenues" means, for any calendar month of determination, the gross amount of Receivables generated by the Originators from Clinical Laboratory Services during such calendar month less the associated Contractual Disallowances but before accruals for and write-offs of bad debts.
"Non-Approving Group" means any Group containing a Non-Approving Lender.
"Non-Approving Lender" means any Lender that does not approve (a) an Extension Request, (b) a requested waiver to this Agreement or the Credit Agreement, or (c) a requested amendment to this Agreement or the Credit Agreement.
"Obligations" means all unpaid principal of and accrued and unpaid interest on the Loans, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to the Lenders (or any Lender), any of the Agents or any Indemnified Party arising under the Transaction Documents.
"Obligor" means a Person obligated to make payments with respect to a Receivable, including any guarantor thereof.
"Obligor Concentration Limit" means, at any time, in relation to the aggregate Unpaid Net Balance of Receivables owed by any single Obligor and its Affiliated Obligors (if any), the applicable concentration limit shall (unless each Co-Agent from time to time upon the Borrower's request agrees to a higher percentage of Eligible Receivables for a particular Obligor and its Affiliates, which agreement may be conditioned upon an increase in the percentage set forth in clause (A)(i) of the definition of "Required Reserve" or upon satisfaction of the Rating Agency Condition) be determined as follows for Obligors who have short term unsecured debt ratings currently assigned to them by S&P and Moody's, the applicable concentration limit shall be determined according to the following table; provided, however, that if such Obligor has a split rating, the applicable rating will be the lower of the two:
-------------------------------------------------------------------------
Allowable % of Eligible
S&P Rating Moody's Rating Receivables
-------------------------------------------------------------------------
A-1+ P-1 10%
-------------------------------------------------------------------------
A-1 P-1 8%
-------------------------------------------------------------------------
A-2 P-2 6%
-------------------------------------------------------------------------
A-3 P-3 3%
-------------------------------------------------------------------------
Below A-3 or Not Rated Below P-3 or Not Rated 2%
-------------------------------------------------------------------------
|
and provided, further, that (a) unless and until any of the Agents gives the Borrower 5 Business Days' notice to the contrary, the Obligor Concentration Limit for United HealthGroup Incorporation and its Affiliated Obligors shall be 9% of Eligible Receivables and (b) if the change in a particular Obligor's Obligor Concentration Limit is accomplished by an increase in clause (A)(i) of the definition of Required Reserve, S&P, Moody's and, as long as it is rating Atlantic's Commercial Paper Notes, Fitch, will receive notice of the increase and the resulting increase in clause (A)(i) of the Required Reserve.
"Organic Document" means, relative to any Person, its certificate of incorporation, its by-laws, its partnership agreement, its memorandum and articles of association, its limited liability company agreement and/or operating agreement, share designations or similar organization documents and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized Equity Interests.
"Originator" means Quest Diagnostics or any its direct or indirect wholly-owned Subsidiaries who is or becomes a "seller" under the Sale Agreement.
"Payment Intangible" shall have the meaning specified in Article 9 of the UCC.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto.
"Pension Plan" means an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code or Section 302 of ERISA and is maintained or contributed to by any ERISA Entity or with respect to which any Loan Party could incur liability.
"Percentage" means, for each Group on any date of determination, the ratio which the sum the outstanding principal balance of such Group's Loans bears to the aggregate outstanding principal balance of all Advances.
"Permitted Investments" means, on any date, any one or more of the following types of investments provided that they mature on or prior to the next Settlement Date:
(a) marketable obligations of the United States of America, the full and timely payment of which are backed by the full faith and credit of the United States of America and which have a maturity of not more than 270 days from the date of acquisition;
(b) marketable obligations, the full and timely payment of which are directly and fully guaranteed by the full faith and credit of the United States of America and which have a maturity of not more than 270 days from the date of acquisition;
(c) bankers' acceptances and certificates of deposit and other interest-bearing obligations (in each case having a maturity of not more than 270 days from the date of acquisition) denominated in dollars and issued by any bank with capital, surplus and undivided profits aggregating at least $50,000,000, the short-term obligations of which are rated at least A-1 by S&P and P-1 by Moody's;
(d) repurchase obligations with a term of not more than ten days for underlying securities of the types described in clauses (a), (b) and (c) above entered into with any bank of the type described in clause (c) above;
(e) commercial paper rated at least A-1 by S&P and P-1 by Moody's; and,
(f) demand deposits, time deposits or certificates of deposit (having original maturities of no more than 365 days) of depository institutions or trust companies incorporated under the laws of the United States of America or any state thereof (or domestic branches of any foreign bank) and subject to supervision and examination by federal or state banking or depository institution authorities; provided, however, that at the time such investment, or the commitment to make such investment, is entered into, the short-term debt rating of such depository institution or trust company shall be at least A-1 by S&P and P-1 by Moody's.
"Person" means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof.
"PHI" has the meaning set forth in Section 14.14.
"Pooled Commercial Paper" means Commercial Paper Notes of Blue Ridge subject to any particular pooling arrangement by Blue Ridge but excluding Commercial Paper Notes issued by Blue Ridge for a tenor and in an amount specifically requested by any Person in connection with any agreement effected by such Conduit.
"Prepayment Notice" has the meaning set forth in Section 1.5(a).
"Proceedings" means, collectively, lawsuits, arbitrations, mediations and Congressional or regulatory hearings.
"Prime Rate" means the rate of interest per annum publicly announced from time to time by Wachovia as its "prime rate." (The "prime rate" is a rate set by Wachovia based upon various factors including Wachovia's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.) Any change in the prime rate announced by Wachovia shall take effect at the opening of business on the day specified in the public announcement of such change.
"Principal Amount" means the actual net cash proceeds received by a Conduit upon issuance by it of a Commercial Paper Note.
"Privacy Regulations" has the meaning set forth in Section 14.14.
"Program Information" has the meaning set forth in Section 14.8.
"Property" of a Person means any right, title or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including Equity Interests or other ownership interests of any Person.
"QBS" means the Quest Billing System.
"Qualifying Liquidity Bank" means a commercial bank having a combined
capital and surplus of at least $250,000,000 with a rating of its (or its parent
holding company's) short-term securities equal to or higher than (i) A-1 by S&P,
(ii) P-1 by Moody' and (if applicable) (iii) F1 by Fitch.
"Quest Diagnostics" has the meaning set forth in the preamble of this Agreement.
"Ratable Share" means with respect to any Liquidity Bank, the ratio which its Commitment bears to the Aggregate Commitment.
"Rating Agency Condition" means that each of the Conduits has received written notice from S&P, Moody's and, at any time while Fitch is rating such Conduit's Commercial Paper Notes, Fitch, that an amendment, a change or a waiver will not result in a withdrawal or downgrade of the then current ratings on such Conduit's Commercial Paper Notes.
"Receivable" means any Account or Payment Intangible arising from the sale of Clinical Laboratory Services by an Originator, including, without limitation, the right to payment of any interest or finance charges and other amounts with respect thereto, which is sold or contributed to the Borrower under the Sale Agreement; 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) evidencing, governing the payment terms or payment status
of, or identifying the Obligor on, any Receivable or Related Asset, other than
(i) any Contract related thereto, and (ii) any confidential patient information
including, without limitation, test results.
"Recovery Rate" means at any time 50%.
"Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation T, U or X" means Regulation T, U or X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit for the purpose of purchasing or carrying margin stocks.
"Regulatory Change" means any change after the date of this Agreement in United States (federal, state or municipal) or foreign laws, regulations (including Regulation D) or accounting principles or the adoption or making after such date of any interpretations, directives or requests applying to a class of banks (including the Liquidity Banks) of or under any United States (federal, state or municipal) or foreign laws, regulations (whether or not having the force of law) or accounting principles by any court, governmental or monetary authority, or accounting board or authority (whether or not part of government) charged with the establishment, interpretation or administration thereof. For the avoidance of doubt, any interpretation of Accounting Research Bulletin No. 51 by the Financial Accounting Standards Board shall constitute a Regulatory Change.
"Related Assets" means all of the Borrower's right, title and interest in and to the following: (a) the Related Security, (b) the Sale Agreement, (c) the Collateral Account (if any) and the balances and instruments from time to time therein, (d) the Lockboxes and Collection Accounts and all balances and instruments from time to time therein, (e) payments due in respect of the Demand Advances, and (f) all proceeds and insurance proceeds of any of the foregoing.
"Related Security" means, with respect to each Receivable, all right, title and interest in and to the following:
(a) (i) all Collections; (ii) all Records; (iii) all Collection Accounts and all cash, balances and instruments therein from time to time therein; (iv) the goods (including returned or repossessed goods), if any, the sale of which by a Seller gave rise to such Receivable; (v) all supporting obligations; and (vi) all liens and security interests, if any, securing payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise; and
(b) all proceeds and insurance proceeds of the foregoing.
"Reportable Event" means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC.
"Reporting Date" means a Weekly Reporting Date or a Monthly Reporting Date.
"Required Amounts" has the meaning set forth in Section 3.2.
"Required Day" means, with respect to any event, the Business Day preceding such event by the Required Notice Period.
"Required Notice Period" means the number of days required notice set forth below applicable to the aggregate principal reduction indicated below:
AGGREGATE REDUCTION REQUIRED NOTICE PERIOD
----------------------------------- ----------------------
< 25% of the Aggregate Commitment 2 Business Days
25%-50% of the Aggregate Commitment 5 Business Days
> 50% of Aggregate Commitment 10 Business Days
|
"Requirement of Law" means as to any Person, the Organic Documents of such Person, and any Law or determination of an arbitrator or any Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.
"Required Reserve" means, on any day during a month, an amount equal
to the product of (i) the greater of (a) the Required Reserve Factor Floor and
(b) the sum of the Loss Reserve, the Yield Reserve, the Dilution Reserve, the Ad
Hoc Reserve and the Servicing Reserve, times (ii) the Net Pool Balance as of the
Cut-Off Date immediately preceding such month.
"Required Reserve Factor Floor" means, for any month, the sum (expressed as a percentage) of (i) 11% plus (ii) the product of the Adjusted Dilution Ratio and the Dilution Horizon Ratio, in each case, as of the immediately preceding Cut-Off Date.
"Response Date" has the meaning set forth in Section 1.8.
"Review" has the meaning set forth in Section 7.1(c).
"Revolving Period" means, as to each Group, the period from and after the date of this Agreement to but excluding the earlier to occur of (a) the Termination Date, and (b) the last Scheduled Termination Date of any Liquidity Bank in such Group.
"Rollforward Difference" means, at any time, an amount equal to absolute value of the reported aggregate Unpaid Net Balance of all Receivables minus the calculated Unpaid Net Balance of all Receivables.
"S&P" means Standard and Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.
"Sale Agreement" means the Second Amended and Restated Receivables Sale Agreement dated as of April 20, 2004 between each of the Originators, as a seller and/or contributor, and the Borrower, as purchaser and contributee, as it may be amended, supplemented or otherwise modified in accordance with Section 7.3(f).
"Schedule" refers to a specific schedule to this Agreement, unless another document is specifically referenced.
"Scheduled Termination Date" means, as to each Liquidity Bank, the earlier to occur of April 20, 2007 and the date on which its Liquidity Commitment(s) terminate(s) in accordance with the Liquidity Agreement to which it is a party, in either of the foregoing cases, unless extended by agreement of such Liquidity Bank in accordance with Section 1.8.
"SEC" means the Securities and Exchange Commission.
"Section" means a numbered section of this Agreement, unless another document is specifically referenced.
"Secured Parties" means the Indemnified Parties.
"Security Regulations" has the meaning set forth in Section 14.14.
"Servicer" has the meaning set forth in the preamble of this Agreement.
"Servicer Transfer Event" means the occurrence of any Event of Default.
"Servicer's Fee" accrued for any day in a Settlement Period means:
(a) an amount equal to (x) 5.0% per annum (or, at any time while Quest Diagnostics is the Servicer, such lesser percentage as may be agreed between the
Borrower and the Servicer on an arms' length basis based on then prevailing market terms for similar services), times (y) the reported aggregate Unpaid Net Balance of the Receivables at the close of business on the first day of such Settlement Period, times (z) 1/360; or
(b) on and after the Servicer's reasonable request made at any time when Quest Diagnostics shall no longer be the Servicer, an alternative amount specified by the Servicer not exceeding (x) 110% of the Servicer's costs and expenses of performing its obligations under the Agreement during the Settlement Period when such day occurs, divided by (y) the number of days in such Settlement Period.
"Servicing Reserve" means the product of 3.0% and a fraction, the numerator of which is the highest Days Sales Outstanding calculated for each of the most recent 12 calendar months and the denominator of which is 360.
"Settlement Date" means (a) the second Business Day after each Monthly Reporting Date, (b) such other Business Days as the Co-Agents may specify by written notice to the Lenders, the Borrower and the Servicer, and (c) the Termination Date.
"Settlement Period" means each period from and including a Cut-Off Date to the earlier to occur of the next Cut-Off Date or the Final Payout Date.
"Solvent" and "Solvency" means, for any Person on a particular date, that on such date (a) the fair value of the Property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts and liabilities beyond such Person's ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person's Property would constitute an unreasonably small capital.
"Specified Government Ineligibles" means, on any date of determination, 15% times Client-Billed Receivables for the Reserve Computation as of the last day of the calendar month then most recently ended.
"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" has the meaning set forth in the Sale Agreement.
"Subordinated Note" has the meaning set forth in the Sale Agreement.
"Subsidiary" means, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person and/or one or more Subsidiaries of such Person.
"Successor Notice" has the meaning set forth in Section 8.1(b).
"Taxes" means any and all taxes, imposts, duties, charges, fees, levies or other similar charges or assessments, including income, gross receipts, excise, real or personal property, sales, withholding, social security, retirement, unemployment, occupation, use, service, license, net worth, payroll, franchise, and transfer and recording, imposed by the Internal Revenue Service or any taxing authority (whether domestic or foreign, including any federal, state, U.S. possession, county, local or foreign government or any subdivision or taxing agency thereof), whether computed on a separate, consolidated, unitary, combined or any other basis, including interest, fines, penalties or additions to tax attributable to or imposed on or with respect to any such taxes, charges, fees, levies or other assessments.
"Termination Date" means the earliest to occur of: (a) the last Scheduled Termination Date of any Liquidity Bank; (b) the date designated by the Borrower as the "Termination Date" on not less than fifteen (15) Business Days' notice to the Co-Agents, provided that on such date the Obligations have been paid in full; (c) the date specified in Section 10.2(a) or (b) (including, without limitation, any such specified date following either Co-Agent's failure to approve a requested waiver hereunder); (d) the 90th day after the Co-Agents receive a copy of any proposed amendment (but not waiver) to the Credit Agreement which does not become an Approved Amendment within 30 days after such date of receipt; and (e) the 90th day after any requested amendment to this Agreement (as opposed to a requested waiver hereunder) is not approved by each Co-Agent within 30 days after receipt of such request (unless such proposed amendment is approved by at least one Co-Agent and the Obligations owing the dissenting Co-Agent(s)'s Group(s) are paid in full on or within 60 days after such 30th day).
"Top 10 Obligor" means any of the following and its Affiliates considered as if it and its Affiliates were one and the same entity: (1) United Healthcare, (2) Aetna / US Healthcare / Prudential, (3) Cigna, (4) Independence Blue Cross / Amerihealth, (5) Private Health Care Systems (PHCS), (6) Beech Street, (7) Texas BCBS, (8) Anthem Health, (9) Empire BCBS, and (10) BCBS Mass.
"Transaction Documents" means this Agreement, the Collection Account Agreements, the Sale Agreement, the Fee Letters, the Subordinated Notes and the other documents to be executed and delivered in connection herewith or therewith.
"UCC" means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction or jurisdictions.
"Unmatured Default" means an event which but for the lapse of time or the giving of notice, or both, would constitute an Event of Default.
"Unpaid Net Balance" of any Receivable means at any time (i) the unpaid amount thereof, but excluding all late payment charges, delinquency charges and extension or collection fees, minus (ii) Contractual Disallowances.
"Unused Fee" has the meaning set forth in the Fee Letters.
"Usage Fee" has the meaning set forth in each of the Fee Letters.
"Wachovia" has the meaning set forth in the preamble of this Agreement.
"Wachovia Roles" has the meaning set forth in Section 11.10(a).
"Weekly Report" means a report in the form of Exhibit 3.1(b).
"Weekly Reporting Date" means Monday of any week in which Weekly Reports are required to be delivered hereunder; provided, however, that if any such Monday is not a Business Day, then the Weekly Reporting Date shall be the next succeeding Business Day.
"Yield Reserve" means, for any month, the product (expressed as a percentage) of (i) 1.5 times (ii) the Alternate Base Rate as of the immediately preceding Cut-Off Date times (iii) a fraction the numerator of which is the highest Days Sales Outstanding for the most recent 12 months and the denominator of which is 360.
The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.
B. 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.
C. 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".
Exhibit 10.3
SECOND AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
DATED AS OF APRIL 20, 2004
BETWEEN
QUEST DIAGNOSTICS INCORPORATED AND EACH OF ITS DIRECT OR INDIRECT
WHOLLY-OWNED SUBSIDIARIES WHO IS OR HEREAFTER BECOMES A SELLER HEREUNDER,
as the Sellers,
AND
QUEST DIAGNOSTICS RECEIVABLES INC.,
as the Buyer
TABLE OF CONTENTS
PAGE
----
ARTICLE I - CAPITALIZATION OF THE BUYER AND AMOUNTS AND TERMS OF THE PURCHASES.............5
SECTION 1.1. [INTENTIONALLY OMITTED]...................................................5
SECTION 1.2. PURCHASES OF RECEIVABLES..................................................5
SECTION 1.3. PAYMENT FOR THE PURCHASES.................................................2
SECTION 1.4. PURCHASE PRICE CREDIT ADJUSTMENTS.........................................4
SECTION 1.5. PAYMENTS AND COMPUTATIONS, ETC............................................5
SECTION 1.6. TRANSFER OF RECORDS.......................................................5
SECTION 1.7. CHARACTERIZATION; GRANTING CLAUSES........................................5
ARTICLE II - REPRESENTATIONS AND WARRANTIES................................................6
SECTION 2.1. REPRESENTATIONS OF THE SELLERS............................................6
(a) Ownership of such Seller.........................................................6
(b) Existence; Due Qualification; Permits............................................6
(c) Action...........................................................................6
(d) Title to Receivables; Valid Security Interest....................................7
(e) Absence of Change of Control.....................................................7
(f) Noncontravention.................................................................7
(g) No Proceedings...................................................................7
(h) Taxes............................................................................8
(i) Government Approvals.............................................................9
(j) Financial Statements and Absence of Certain Material Adverse Changes.............9
(k) Nature of Receivables...........................................................10
(l) Margin Regulations..............................................................10
(m) Quality of Title................................................................10
(n) Accurate Reports................................................................10
(o) Offices.........................................................................11
(p) Collection Accounts.............................................................11
(q) Eligible Receivables............................................................11
(r) Names...........................................................................11
(s) Credit and Collection Policy....................................................11
(t) Payments to Sellers.............................................................12
(u) Investment Company Act; Public Utility Holding Company Act; Other Restrictions..12
(v) Solvency........................................................................12
(w) ERISA...........................................................................12
(x) Bulk Sales Act..................................................................12
(y) Reliance on Separate Legal Identity.............................................12
ARTICLE III - CONDITIONS OF PURCHASES.....................................................12
SECTION 3.1. CONDITIONS PRECEDENT TO INITIAL PURCHASE.................................12
SECTION 3.2. CONDITIONS PRECEDENT TO ALL PURCHASES....................................13
SECTION 3.3. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES..........................14
ARTICLE IV - COVENANTS....................................................................14
SECTION 4.1. AFFIRMATIVE COVENANTS....................................................14
(a) Compliance With Laws, Etc.......................................................14
(b) Preservation of Existence.......................................................14
(c) Audits..........................................................................14
(d) Keeping of Records and Books of Account.........................................15
(e) Performance and Compliance with Receivables and Contracts.......................15
(f) Location of Records.............................................................15
(g) Credit and Collection Policies..................................................15
|
(h) Separate Corporate Existence of the Buyer.......................................15
(i) Collections.....................................................................15
(j) Further Assurances..............................................................16
SECTION 4.2. REPORTING REQUIREMENTS...................................................16
(a) Sales, Liens, Etc...............................................................16
(b) Extension or Amendment of Receivables...........................................16
(c) Change in Business or Credit and Collection Policy..............................17
(d) Change in Payment Instructions to Obligors......................................17
(e) Deposits to Collection Accounts and Collection Account..........................17
(f) Changes to Other Documents......................................................17
(g) Change of Name, State of Organization, or Records Locations.....................17
(h) Mergers, Consolidations and Acquisitions........................................17
(i) Disposition of Receivables and Related Assets...................................18
(j) Receivables Not to be Evidenced by Promissory Notes.............................18
(k) Accounting for Purchases........................................................18
ARTICLE V - JOINDER OF ADDITIONAL SELLERS.................................................18
SECTION 5.1. ADDITION OF NEW SELLERS..................................................18
SECTION 5.2. DOCUMENTATION............................................................18
ARTICLE VI - ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE RECEIVABLES..............19
SECTION 6.1. RIGHTS OF THE BUYER......................................................19
SECTION 6.2. RESPONSIBILITIES OF THE SELLERS..........................................19
(a) Collection Procedures...........................................................19
(b) Performance Under Contract......................................................19
(c) Power of Attorney...............................................................19
SECTION 6.3. FURTHER ACTION EVIDENCING PURCHASES......................................19
SECTION 6.4. APPLICATION OF COLLECTIONS...............................................20
ARTICLE VII - INDEMNIFICATION.............................................................20
SECTION 7.1. INDEMNITIES BY THE SELLERS...............................................20
SECTION 7.2. CONTRIBUTION.............................................................22
ARTICLE VIII - MISCELLANEOUS..............................................................23
SECTION 8.1. WAIVERS AND AMENDMENTS...................................................23
SECTION 8.2. NOTICES, ETC.............................................................23
SECTION 8.3. CUMULATIVE REMEDIES......................................................23
SECTION 8.4. BINDING EFFECT; ASSIGNABILITY............................................23
SECTION 8.5. GOVERNING LAW............................................................24
SECTION 8.6. COSTS, EXPENSES AND TAXES................................................24
SECTION 8.7. SUBMISSION TO JURISDICTION...............................................24
SECTION 8.8. WAIVER OF JURY TRIAL.....................................................24
SECTION 8.9. CAPTIONS AND CROSS REFERENCES; INCORPORATION BY REFERENCE................25
SECTION 8.10. EXECUTION IN COUNTERPARTS................................................25
SECTION 8.11. ACKNOWLEDGMENT AND AGREEMENT.............................................25
SECTION 8.12. NO PROCEEDINGS...........................................................25
ANNEX A - DEFINITIONS.....................................................................30
EXHIBIT A - FORM OF PURCHASE REPORT............................ERROR! BOOKMARK NOT DEFINED.
EXHIBIT B - FORM OF SUBORDINATED NOTE..........................ERROR! BOOKMARK NOT DEFINED.
EXHIBIT C - CREDIT AND COLLECTION POLICIES.....................ERROR! BOOKMARK NOT DEFINED.
EXHIBIT D - FORM OF JOINDER AGREEMENT..........................ERROR! BOOKMARK NOT DEFINED.
|
SCHEDULE 2.1(0) - SELLERS' FEDERAL TAXPAYER ID NUMBERS AND STATE ORGANIZATIONAL ID NUMBERS; PRINCIPAL LABORATORIES AND BILLING CENTERS, AND LOCATION(S) WHERE RECORDS ARE KEPT....................................ERROR! BOOKMARK NOT DEFINED.
SECOND AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
THIS SECOND AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT (as amended, supplemented, restated or otherwise modified from time to time, this "Agreement"), dated as of April 20, 2004 is entered into by and between:
(1) Quest Diagnostics Incorporated, a Delaware corporation ("Quest Diagnostics"), Quest Diagnostics Incorporated, a Michigan corporation, Quest Diagnostics Incorporated, a Maryland corporation, Quest Diagnostics Incorporated, a California corporation, Quest Diagnostics LLC, a Connecticut limited liability company, Quest Diagnostics LLC, a Massachusetts limited liability company, Quest Diagnostics of Pennsylvania Inc., a Delaware corporation, MetWest Inc., a Delaware corporation, Quest Diagnostics LLC, an Illinois limited liability company, Quest Diagnostics Clinical Laboratories, Inc., a Delaware corporation, Unilab Corporation, a Delaware corporation ("Unilab"), Quest Diagnostics Nichols Institute, Inc., a Virginia corporation formerly known as Medical Laboratories Corporation, Inc. ("Quest-Nichols"), Quest Diagnostics Incorporated, a Nevada corporation formerly known as APL Healthcare Group, Inc. ("Quest-Nevada"), and each of the other direct or indirect, wholly-owned subsidiaries of Quest Diagnostics who hereafter becomes a party hereto by executing a joinder agreement in the form of Exhibit D hereto (each, a "Joinder Agreement"), as sellers, and
(2) Quest Diagnostics Receivables Inc., a Delaware corporation, as purchaser (the "Buyer"),
and amends and restates in its entirety that certain Amended and Restated Receivables Sale Agreement dated as of September 30, 2003 by and among the parties hereto other than Unilab, Quest-Nichols and Quest-Nevada (the "Existing Agreement"). Unless otherwise indicated, capitalized terms used in this Agreement are defined in ANNEX A hereto or, if not defined therein, in that certain Third Amended and Restated Credit and Security Agreement dated as of April 20, 2004, by and among the Buyer, as borrower, Quest Diagnostics, as initial servicer, Blue Ridge Asset Funding Corporation, and Atlantic Asset Securitization Corp., Credit Lyonnais New York Branch, individually and as Atlantic Agent, and Wachovia Bank, National Association, individually, as Blue Ridge Agent and as Administrative Agent, as amended, supplemented, restated, joined or otherwise modified from time to time in accordance with the terms thereof (the "Credit and Security Agreement").
W I T N E S S E T H :
WHEREAS, Quest Diagnostics owns, directly or indirectly all of the issued and outstanding Equity Interests of each of the other Sellers;
WHEREAS, the Buyer is a limited purpose corporation, all of the issued and outstanding Equity Interests of which are owned by Quest Diagnostics;
WHEREAS, Quest Diagnostics contributed to the Buyer's capital all of its Receivables in existence as of the Initial Cut-Off Date, together with all Related Assets associated therewith;
WHEREAS, the Sellers desire to sell Receivables and Related Assets owned from time to time by the Sellers to the Buyer, and the Buyer is willing, on the terms and subject to the conditions set forth herein, to purchase Receivables and Related Assets from the Sellers;
WHEREAS, the Buyer has pledged the Receivables and Related Assets received from the Sellers hereunder to secure Obligations under the Credit and Security Agreement, including, without limitation, its obligations to repay Loans made thereunder; and
WHEREAS, at the request of the Buyer and its assigns, Quest Diagnostics has agreed to continue to act as Servicer for the Receivables, although Quest Diagnostics has informed the Buyer and its assigns that it may, subject to their approval and to satisfaction of the Rating Agency Condition, if required, transfer that function to an Affiliate;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
CAPITALIZATION OF THE BUYER AND AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. [Intentionally Omitted].
Section 1.2. Purchases of Receivables.
(a) Effective on the Applicable Closing Date for each Seller that has not already sold or contributed Receivables and Related Assets under the Existing Agreement, in consideration for the Purchase Price and upon the terms and subject to the conditions set forth herein, each such Seller does hereby sell, assign, transfer, set-over and otherwise convey to the Buyer, without recourse (except to the extent expressly provided herein), and the Buyer does hereby purchase from such Seller, all of such Seller's right, title and interest in and to such Seller's Initial Receivables and all Related Assets with respect thereto.
(b) Effective on each Business Day after each Seller's Applicable Closing Date and prior to the Sale Termination Date, in consideration for the Purchase Price and upon the terms and subject to the conditions set forth herein, such Seller does hereby sell, assign, transfer, set-over and otherwise convey to the Buyer, without recourse (except to the extent expressly provided herein), and the Buyer does hereby purchase from such Seller, all of such Seller's right, title and interest in and to such Seller's Additional Receivables and all Related Assets with respect thereto.
(a) (c) It is the intention of the parties hereto that each conveyance of Receivables made under this Agreement shall constitute an outright "sale of accounts" (as such terms are used in Article 9 of the UCC) or other absolute transfer, which is absolute and irrevocable and shall provide the Buyer with the full benefits of ownership of the Receivables and the associated Related Assets. Except for the Purchase Price Credits owed pursuant to Section 1.4, each conveyance of Receivables hereunder is made without recourse to the applicable Seller; provided, however, that (i) each Seller shall be liable to the Buyer for all representations, warranties, covenants and indemnities made by such Seller pursuant to the terms of the Transaction Documents to which such Seller is a party, and (ii) such conveyance does not constitute and is not intended to result in an assumption by the Buyer or any assignee thereof of any obligation of such Seller or any other Person arising in connection with the Receivables, the related Contracts and/or other Related Assets or any other obligations of such Seller. In view of the intention of the parties hereto that the conveyances of Receivables made hereunder shall constitute outright sales of such Receivables rather than loans secured thereby, each Seller agrees that it will, on or prior to its Applicable Closing Date, mark its master data processing records relating to its Receivables with the following legend (or the substantive equivalent thereof):
"THE RECEIVABLES DESCRIBED HEREIN, TOGETHER WITH CERTAIN RELATED
ASSETS, ARE THE PROPERTY OF QUEST DIAGNOSTICS RECEIVABLES INC."
Upon the request of the Buyer or the Administrative Agent, each Seller will file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of the Buyer's ownership interest in the Receivables and the Related Assets or as the Buyer or the Administrative Agent may reasonably request.
(d) Nothing herein shall be deemed to preclude Quest Diagnostics from contributing to the Buyer's capital, in lieu of selling, Receivables originated by Quest Diagnostics together with the Related Assets associated therewith, and any such contribution is made with the intention that each such contribution, if any, will be made with the same intentions as are set forth in Section 1.2(c) above. No Purchase Price shall be payable in respect of any contributed Receivable or its associated Related Assets.
Section 1.3. Payment for the Purchases.
(a) The Purchase Price for each purchase of Initial Receivables and Related Assets from any Seller (other than Quest Diagnostics) either has been paid pursuant to the Existing Agreement or shall be payable in full pursuant to this Agreement by the Buyer to such Seller on such Seller's Applicable Closing Date in one or both of the following manners:
(i) by delivery of immediately available funds, to the extent of the Buyer's Available Funds; and
(ii) solely to the extent such Available Funds are insufficient to pay the full amount of Purchase Price then due and owing, by delivery of a Subordinated Note made by the Buyer to the applicable Seller (and making a notation of a Subordinated Loan thereunder), so long as the aggregate principal amount of Subordinated Loans outstanding at any one time under such Subordinated Notes does not exceed the lesser of (A) the remaining unpaid portion of such Purchase Price, and (B) the maximum Subordinated Loan that could be borrowed without rendering the Buyer's net worth less than the amount required by Section 7.3(g) of the Credit and Security Agreement.
The Purchase Price for each purchase of Additional Receivables and Related Assets shall be due and owing in full by the Buyer to the applicable Seller on the date of such purchase (except that the Buyer may, with respect to any such purchase, offset against such Purchase Price any amounts owed by such Seller to the Buyer hereunder and which have become due but remain unpaid) and shall be paid to such Seller in the manner provided in the following paragraphs (b), (c) and (d).
(b) With respect to any purchase of Additional Receivables and Related Assets from any Seller, the Buyer shall pay the Purchase Price therefor on the next subsequent Settlement Date in accordance with Section 1.3(d) and in one or more of the following manners:
(i) by delivery of immediately available funds, to the extent of the Buyer's Available Funds; and
(ii) solely to the extent such Available Funds are insufficient to pay the full amount of Purchase Price then due and owing, by delivery of a Subordinated Note made by the Buyer to the applicable Seller (or by increasing the aggregate outstanding principal amount outstanding thereunder), so long as the aggregate principal amount of Subordinated Loans outstanding at any one time under such Subordinated Note does not exceed the lesser of (A) the remaining unpaid portion of such Purchase Price, and (B) the maximum Subordinated Loan that could be borrowed without rendering the Buyer's net worth less than the amount required by Section 7.3(g) of the Credit and Security Agreement.
Subject to the limitations set forth in Section 1.3(a)(ii) and Section 1.3(b)(ii), each of the Sellers irrevocably agrees to advance each Subordinated Loan requested by the Buyer on or prior to such Seller's Sale Termination Date. The Subordinated Loans owing to each Seller shall be evidenced by, and shall be payable in accordance with the terms and provisions, of its Subordinated Note and shall be payable solely from Available Funds. Each Seller is hereby authorized by the Buyer to endorse on the schedule attached to its Subordinated Note an appropriate notation evidencing the date and amount of each Subordinated Loan thereunder, as well as the date of each payment with respect thereto, provided that the failure to make such notation shall not affect any obligation of the Buyer thereunder.
(c) On each Monthly Reporting Date after its Applicable Closing Date, each Seller shall (or shall require the Servicer to) deliver to the Buyer and the Administrative Agent a report in substantially the form of Exhibit A hereto (each such report being herein called a
"Purchase Report") with respect to the Receivables sold by such Seller to the Buyer during the Settlement Period then most recently ended. Each such Purchase Report shall list the applicable Seller separately and shall specify, as applicable: (i) the Initial Receivables and/or Additional Receivables sold by such Seller during the Settlement Period then most recently ended, and (ii) the amount of the Receivables described in the foregoing clause (i) that were Eligible Receivables on the date they were acquired by the Buyer.
(d) Although the Purchase Price for each purchase of Additional Receivables and Related Assets shall be due and payable in full by the Buyer to the applicable Seller on the date of such purchase, settlement of the Purchase Price between the Buyer and such Seller shall be effected on Settlement Dates with respect to all purchases within the same Settlement Period and based on the information contained in the Purchase Report delivered for such Settlement Period pursuant to Section 1.3(c). Although cash settlements shall be effected on Settlement Dates, increases or decreases in the Subordinated Loans shall be deemed to have occurred and shall be effective as of the last Business Day of the Settlement Period to which such settlement relates.
Section 1.4. Purchase Price Credit Adjustments. If as of the last day of any Settlement Period:
(a) the outstanding aggregate balance of the Net Receivables originated by any Seller as reflected in the preceding Purchase Report (net of any positive adjustments) has been reduced for any of the following reasons:
(i) as a result of any rejected services, any cash discount or any other adjustment by the applicable Seller or any Affiliate thereof (regardless of whether the same is treated by such Seller or Affiliate as a write-off), or as a result of any surcharge or other governmental or regulatory action, or
(ii) as a result of any setoff or breach of the underlying agreement in respect of any claim by the Obligor thereof (whether such claim arises out of the same or a related or an unrelated transaction), or
(iii) on account of the obligation of the applicable Seller or any Affiliate thereof to pay to the related Obligor any rebate or refund, or
(iv) as a result of any Unpaid Net Balance of any Receivable on the date of its sale or contribution proving to have been less on such date than the amount reflected on the applicable Purchase Report, or
(b) any of the representations or warranties of the applicable Seller set forth in Section 2.1(d), (k) or (m) was not true when made with respect to any Receivable originated by it, or any of the representations or warranties of the applicable Seller set forth in Section 2.1(m) is no longer true with respect to any Receivable originated by it,
then, in such event, the Buyer shall be entitled to a credit (each, a "Purchase Price Credit") against the Purchase Price otherwise payable hereunder equal to (A) the amount of such reduction, cancellation or overstatement, in the case of the preceding clauses (a)(i), (a)(ii), (a)(iii) and (a)(iv), and (B) in the full amount of the Unpaid Net Balance of such Receivable in the case of the preceding clause (b). If such Purchase Price Credit exceeds the original Unpaid Net
Balance of the Receivables to be sold by the applicable Seller on the date of a purchase, then the applicable Seller shall pay the remaining amount of such Purchase Price Credit in cash not later than the next Settlement Date; provided that if such Seller's Sale Termination Date has not occurred, such Seller shall be allowed to deduct the remaining amount of such Purchase Price Credit from any Indebtedness owed to it under its Subordinated Note.
Section 1.5. Payments and Computations, Etc. All amounts to be paid or deposited by the Buyer hereunder shall be paid or deposited in accordance with the terms hereof on the day when due in immediately available funds to the account of the applicable Seller designated from time to time by such Seller or as otherwise directed by such Seller. In the event that any payment owed by any Person hereunder becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person fails to pay any amount hereunder when due, such Person agrees to pay, on demand, interest on the past due amount at the Default Rate until paid in full; provided, however, that such interest shall not at any time exceed the maximum rate permitted by applicable law. All computations of interest payable hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed.
Section 1.6. Transfer of Records.
(a) In connection with the purchases of Receivables hereunder, each Seller hereby sells, transfers, assigns and otherwise conveys to the Buyer all of such Seller's right and title to and interest in the Records relating to all Receivables sold hereunder, without the need for any further documentation in connection with any purchase. In connection with such transfer, each Seller hereby grants to each of the Buyer, the Administrative Agent and the Servicer an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all software used by such Seller to account for its Receivables, to the extent necessary to administer such Receivables following replacement of Quest Diagnostics (or any of its Affiliates) as the Servicer, whether such software is owned by such Seller or is owned by others and used by such Seller under license agreements with respect thereto, provided that should the consent of any licensor of such Seller to such grant of the license described herein be required, such Seller hereby agrees that upon the request of the Buyer, the Servicer or the Administrative Agent, such Seller will use its reasonable efforts to obtain the consent of such third-party licensor. The license granted hereby shall be irrevocable, and shall terminate on the date this Agreement terminates in accordance with its terms.
(b) Each Seller (i) shall take such action requested by the Buyer and/or the Administrative Agent, from time to time hereafter, that may be necessary or reasonably appropriate to ensure that the Buyer has an enforceable ownership interest in the Records relating to the Receivables purchased from such Seller hereunder, and (ii) shall use its reasonable efforts to ensure that the Buyer and the Servicer each has an enforceable right (whether by license or sublicense or otherwise) to use all of the computer software used to account for the Receivables and/or to recreate such Records.
Section 1.7. Characterization; Granting Clause.
(a) If, notwithstanding the intention of the parties expressed in
Section 1.2(c), any sale by any of the Sellers to the Buyer of Receivables
hereunder shall be characterized as a secured loan and not a sale, then this
Agreement shall be deemed to constitute a security
agreement under the UCC and other applicable law. For this purpose and without being in derogation of the parties' intention that each sale of Receivables hereunder shall constitute a true sale thereof, each of the Sellers hereby grants to the Buyer a duly perfected security interest in all of such Seller's right, title and interest in, to and under all of such Seller's Receivables now existing and hereafter arising, and in all Related Assets with respect thereto, which security interest shall be prior to all other Liens thereto. After the occurrence of a Seller's Sale Termination Event, the Buyer and its assigns shall have as against the applicable Seller, in addition to the rights and remedies which they may have under this Agreement, all other rights and remedies provided to a secured creditor after default under the UCC and other applicable law, which rights and remedies shall be cumulative.
(b) Each Seller hereby covenants and agrees to do all things necessary under each of its Contracts to facilitate collection of the Receivables arising thereunder by the Buyer and its assigns.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations of the Sellers. In order to induce the Buyer to enter into this Agreement and to make purchases and accept the contributions hereunder, each Seller hereby makes the following representations and warranties, as to itself, as of the date of each sale or contribution by it hereunder:
(a) Ownership of such Seller. Quest Diagnostics owns, directly or indirectly, all the issued and outstanding Equity Interests of each of the other Sellers, and all of such Equity Interests are fully paid and non-assessable.
(b) Existence; Due Qualification; Permits. Such Seller: (i) is a
corporation or limited liability company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization; (ii) has
all requisite corporate or other power and authority, and has all governmental
licenses, authorizations, consents and approvals necessary to own its Property
and carry on its business as now being conducted; (iii) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary; and (iv) is in
compliance with all Requirements of Law, except, in the case of clauses (i),
(ii), (iii) and (iv) where the failure thereof individually or in the aggregate
could not reasonably be expected to have a Seller Material Adverse Effect. Such
Seller holds all governmental permits, licenses, authorizations, consents and
approvals necessary for such Seller to own, lease, and operate its Properties
and to operate its businesses as now being conducted (collectively, the
"Permits"), except for Permits the failure of which to obtain would not have a
Seller Material Adverse Effect. None of the Permits has been modified in any way
that is reasonably likely to have a Seller Material Adverse Effect. All Permits
are in full force and effect except where the failure to be in full force and
effect would not have a Seller Material Adverse Effect.
(c) Action. Such Seller has all necessary corporate or other entity power, authority and legal right to execute, deliver and perform its obligations under each Transaction Document to which it is a party and to consummate the transactions herein and therein contemplated; the execution, delivery and performance by such Seller of each Transaction Document to which it is a party and the consummation of the transactions herein and therein
contemplated have been duly authorized by all necessary corporate or other entity action on its part; and this Agreement has been duly and validly executed and delivered by such Seller and constitutes, and each of the other Transaction Documents to which it is a party when executed and delivered by such Seller will constitute, its legal, valid and binding obligation, enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws of general applicability from time to time in effect affecting the enforcement of creditors' rights and remedies and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(d) Title to Receivables; Valid Security Interest. Each such Receivable originated by such Seller has been transferred to the Buyer free and clear of any Lien except as created hereby or by the other Transaction Documents. Without limiting the foregoing, such Seller has delivered to the Administrative Agent (as the Buyer's assignee) in form suitable for filing all financing statements or other similar instruments or documents necessary under the UCC of all appropriate jurisdictions to perfect the Buyer's ownership interest in such Receivable and the Administrative Agent's collateral assignment thereof. This Agreement creates a valid security interest in each such Receivable and its Related Assets in favor of the Buyer, and, upon filing of the financing statements described in the preceding sentence, together with UCC termination statements delivered hereunder, such security interest will be a first priority perfected security interest.
(e) Absence of Change of Control. No Change of Control has occurred.
(f) Noncontravention.
(i) None of the execution, delivery and performance by such Seller of any Transaction Document to which it is a party nor the consummation of the transactions herein and therein contemplated will (A) conflict with or result in a breach of, or require any consent (which has not been obtained and is in full force and effect) under, any Organic Document of such Seller or any applicable Requirement of Law or any order, writ, injunction or decree of any Governmental Authority binding on such Seller, or any term or provision of any Contractual Obligation of such Seller or (B) constitute (with due notice or lapse of time or both) a default under any such Contractual Obligation, or (C) result in the creation or imposition of any Lien (except for the Liens created pursuant to the Transaction Documents) upon any Property of such Seller pursuant to the terms of any such Contractual Obligation, except with respect to each of the foregoing which could not reasonably be expected to have a Seller Material Adverse Effect and which would not subject the Buyer or its assigns to any material risk of damages or liability to third parties.
(ii) Such Seller is not in default under any material contract or agreement to which it is a party or by which it is bound, nor, to such Seller's knowledge, does any condition exist that, with notice or lapse of time or both, would constitute such default, excluding in any case such defaults that are not reasonably likely to have a Seller Material Adverse Effect.
(g) No Proceedings. Except as described in Quest Diagnostics' Form 10-K for the fiscal year ended December 31, 2003 and all filings made with the SEC under the Exchange Act by such Seller prior to the date of this Agreement, copies of which have been provided to the Buyer and the Administrative Agent or made available on EDGAR:
(i) There is no Proceeding (other than any qui tam Proceeding, to which this Section is limited to the best of such Seller's knowledge) pending against, or, to the knowledge of such Seller, threatened in writing against or affecting, such Seller or any of its Properties before any Governmental Authority that, if determined or resolved adversely to such Seller, could reasonably be expected to have a Seller Material Adverse Effect.
(ii) There is (A) no unfair labor practice complaint pending against any Seller or, to the best knowledge of such Seller, threatened against such Seller, before the National Labor Relations Board or any other Governmental Authority, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against such Seller or, to the best knowledge of such Seller after due inquiry, threatened against such Seller, (B) no strike, labor dispute, slowdown or stoppage pending against such Seller or, to the best knowledge of such Seller, after due inquiry, threatened against such Seller and (C) to the best knowledge of such Seller after due inquiry, no union representation question existing with respect to the employees of such Seller and, to the best knowledge of such Seller, no union organizing activities are taking place, except such as would not, with respect to any matter specified in clause (A), (B) or (C) above, individually or in the aggregate, have a Seller Material Adverse Effect.
(h) Taxes.
(i) Except as would not have a Seller Material Adverse Effect: (A) all tax returns, statements, reports and forms (including estimated Tax or information returns) (collectively, the "Tax Returns") required to be filed with any taxing authority by, or with respect to, such Seller have been timely filed in accordance with all applicable laws; (B) such Seller has timely paid or made adequate provision for payment of all Taxes shown as due and payable on Tax Returns that have been so filed, and, as of the time of filing, each Tax Return was accurate and complete and correctly reflected the facts regarding income, business, assets, operations, activities and the status of such Seller (other than Taxes which are being contested in good faith and for which adequate reserves are reflected on the financial statements delivered hereunder); and (C) such Seller has made adequate provision for all Taxes payable by such Seller for which no Tax Return has yet been filed.
(ii) Except as described in Quest Diagnostics' Form 10-K for the fiscal year ended December 31, 2003 and all filings made with the SEC under the Exchange Act by such Seller prior to the date of this Agreement, copies of which have been provided to the Buyer and the Administrative Agent: (A) as of the date hereof such Seller is not a member of an affiliated group of corporations within the meaning of Section 1504 of the Code other than an affiliated group of corporations of which Quest Diagnostics is the common parent; and (B) there are no material tax sharing or tax indemnification agreements under which such Seller is required to indemnify another party for a material amount of Taxes other than, in the case of Quest Diagnostics, the tax indemnity contained in the Merger
Agreement dated as of August 16, 1999, between Glaxo Smith Kline (formerly known as Smith Kline Beecham) and Quest Diagnostics.
(i) Government Approvals. No authorizations, approvals or consents of, and no filings or registrations with, any Governmental Authority or any securities exchange are necessary for the execution, delivery or performance by such Seller of the Transaction Documents to which it is a party or for the legality, validity or enforceability hereof or thereof or for the consummation of the transactions herein and therein contemplated, except for filings and recordings in respect of the Liens created pursuant to the Transaction Documents (all of which have been duly made or delivered to the Administrative Agent for filing or may be prepared for filing by the Buyer or the Administrative Agent in accordance with the terms of the Transaction Documents) and except for consents, authorizations and filings that have been obtained or made and are in full force and effect or the failure of which to obtain would not have a Seller Material Adverse Effect.
(j) Financial Statements and Absence of Certain Material Adverse Changes.
(i) The information, reports, financial statements, exhibits and schedules furnished in writing by such Seller to the Administrative Agent or any of the Lenders in connection with the negotiation, preparation or delivery of the Transaction Documents, including Quest Diagnostics' Annual Report on Form 10-K for the year ended December 31, 2003 and all filings made with the SEC under the Exchange Act by such Seller prior to the date of this Agreement, copies of which have been provided to the Buyer and the Administrative Agent or made available on EDGAR, but in each case excluding all projections, whether prior to or after the date of this Agreement, when taken as a whole, do not, as of the date such information was furnished, contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements herein or therein, in light of the circumstances under which they were made, not materially misleading. The projections and pro forma financial information furnished at any time by such Seller to the Buyer, the Administrative Agent or any Lender pursuant to the Transaction Documents have been prepared in good faith based on assumptions believed by such Seller and/or Quest Diagnostics to be reasonable at the time made, it being recognized that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount and no Seller, however, makes any representation as to the ability of any Seller to achieve the results set forth in any such projections. Each Seller understands that all such statements, representations and warranties shall be deemed to have been relied upon by the Buyer as a material inducement to entering into this Agreement and making any Purchase hereunder and by the Agents and the Lenders as a material inducement to make each extension of credit under the Credit and Security Agreement.
(ii) From December 31, 2003 through and including the date of this Agreement, there has been no material adverse change in Quest Diagnostics' consolidated financial condition, business or operations. Since the date of this
Agreement, there has been no material adverse change in Quest Diagnostics' consolidated financial condition, business or operations that has had, or would reasonably be expected to have, a material adverse effect upon its ability to perform its obligations, as a Seller or, if applicable, as Servicer, under the Transaction Documents when and as required, or a material adverse effect on the collectibility of any material portion of the Receivables.
(iii) Since such Seller's Applicable Closing Date, no event has occurred which would have a Seller Material Adverse Effect.
(k) Nature of Receivables. Each Receivable constitutes an "Account" or a "Payment Intangible."
(l) Margin Regulations. The use of all funds obtained by such Seller under this Agreement or any other Transaction Document to which it is a party will not conflict with or contravene any of Regulation T, U or X.
(m) Title to Receivables and Quality of Title.
(i) Upon issuance of its shares of capital stock to Quest Diagnostics (in the case of contributed Initial Receivables and any Receivables that Quest Diagnostics, in its sole discretion, may elect to contribute thereafter) and payment of the applicable Purchase Price for each purchased Receivable in one or both of the manners permitted by this Agreement, the Buyer will have irrevocably obtained all good title to such Receivable and its Related Assets (other than any Related Asset constituting a Contract that contains a prohibition on assignment, in which case the Buyer has obtained a valid and perfected first priority perfected security interest in the applicable Seller's right to receive payments thereunder to the extent contemplated by Section 9-406 of the UCC of the applicable jurisdiction), and the Buyer has the legal right to sell and encumber, each such Receivable and its Related Assets. Without limiting the foregoing, there have been duly filed all financing statements or other similar instruments or documents necessary under the UCC of all appropriate jurisdictions to perfect the Buyer's ownership interest in such Receivable.
(ii) No financing statement or other instrument similar in effect covering any portion of the Collateral is on file in any recording office except such as may be filed (A) in favor of a Seller in accordance with the Contracts, (B) in favor of the Buyer and its assigns in connection with this Agreement, (C) in favor of the Administrative Agent in accordance with the Credit and Security Agreement, (D) in connection with any Lien arising solely as the result of any action taken by the Administrative Agent or one of the Secured Parties, or (E) which shall be terminated or amended pursuant to the UCC termination statements or amendments delivered hereunder.
(n) Accurate Reports. No Purchase Report prepared by such Seller, or to the extent information therein was supplied by such Seller, no other information, exhibit, schedule or information concerning the Receivables originated by such Seller furnished or to be furnished
verbally or in writing before or after the date of this Agreement, by or on
behalf of such Seller to the Buyer or any of its assigns pursuant to this
Agreement was or will be inaccurate in any material respect as of the date it
was or will be dated or (except as otherwise disclosed to the Buyer and the
Administrative Agent at such time) as of the date so furnished, or contained or
(in the case of information or other materials to be furnished in the future)
will contain any material misstatement of fact or omitted or (in the case of
information or other materials to be furnished in the future) will omit to state
a material fact or any fact necessary to make the statements contained therein
not materially misleading in light of the circumstances made or presented.
(o) Offices. The principal laboratories and billing centers of such Seller are located at the respective addresses set forth on Schedule 2.1(o) hereto or its Joinder Agreement, as applicable, and the offices where such Seller keep all books, records and documents evidencing the Receivables originated by it (other than books, records and documents that are stored off-site with respect to Receivables which are no longer outstanding or which have been written-off), the related material Contracts and all purchase orders and other agreements related to such Receivables are located at the addresses specified in Schedule 2.1(o) hereto or its Joinder Agreement (or at such other locations, notified to the Buyer in accordance with Section 4.3(g), in jurisdictions where all action required by Section 4.3(g) has been taken and completed).
(p) Collection Accounts. Such Seller has instructed all Obligors thereon to pay all Collections either directly by mail addressed to a Lockbox listed on Schedule 6.1(o) to the Credit and Security Agreement which is subject to a Collection Account Agreement, or by wire transfer or other electronic funds transfer directly to a Collection Account listed on Schedule 6.1(o) to the Credit and Security Agreement which is subject to a Collection Account Agreement. Such Seller has instructed each bank maintaining a Lockbox or Collection Account to sweep all collected funds received therein each Business Day to a Collection Account in the name of the Buyer which is subject to a Collection Account Agreement. The Buyer will cause each of the Collection Accounts that is currently in the name of a Seller to be transferred to it and into its own name within a reasonable period of time after the initial Advance under the Credit and Security Agreement, and each Seller agrees to cooperate fully with the Buyer in effecting such transfers.
(q) Eligible Receivables. Each Receivable originated by such Seller that is included as an Eligible Receivable on any Purchase Report was an Eligible Receivable on the date on which it was sold or contributed to the Buyer pursuant hereto.
(r) Names. Except as set forth on Schedule 2.1(o), in the five years preceding such Seller's Applicable Closing Date, such Seller has not used any legal names, trade names or assumed names other than the name in which it has executed this Agreement.
(s) Credit and Collection Policy. With respect to the Receivables originated by such Seller, such Seller has complied in all material respects with its applicable Credit and Collection Policy, and no change has been made to such Credit and Collection Policy since the date of this Agreement which would be reasonably likely to materially and adversely affect the collectibility of the Receivables originated by such Seller or decrease the credit quality of any newly created Receivables originated by such Seller except for such changes as to which the Administrative Agent has received the notice required under Section 7.2(h) of the Credit and Security Agreement and has given its prior written consent thereto (which consent shall not be unreasonably withheld or delayed).
(t) Payments to Sellers. With respect to each Receivable sold or contributed to the Buyer by such Seller under this Agreement, the Buyer has given reasonably equivalent value to such Seller in consideration for such Receivable and the Related Assets with respect thereto and no such transfer is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. 'SS''SS' 101 et seq.), as amended.
(u) Investment Company Act; Public Utility Holding Company Act; Other Restrictions. Such Seller is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the United States Investment Company Act of 1940, as amended. Seller is not a "holding company", or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company", within the meaning of the United States Public Utility Holding Company Act of 1935, as amended. Such Seller is not subject to regulation under any law or regulation which limits its ability to incur Indebtedness, other than Regulation X of the Board of Governors of the Federal Reserve System.
(v) Solvency. As of the date of each sale or contribution by such Seller hereunder, after giving effect thereto, such Seller is and will be Solvent.
(w) ERISA. No ERISA Event has occurred or is reasonably expected to occur which could have a Seller Material Adverse Effect. The present value of all accumulated benefit obligations of all underfunded Pension Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $20.0 million the fair market value of the assets of all such underfunded Pension Plans of the Sellers. Each ERISA Entity is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Employee Benefit Plan. Using actuarial assumptions and computation methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of any of each ERISA Entity to all Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan, would not result in a Seller Material Adverse Effect. All Foreign Plans are in substantial compliance with all Requirements of Law (other than to the extent such failure to comply would not reasonably be expected to have a Seller Material Adverse Effect).
(x) Bulk Sales Act. No transaction contemplated hereby requires compliance with any bulk sales act or similar law.
(y) Reliance on Separate Legal Identity. Such Seller is aware that the Lenders, the Liquidity Banks and the Agents are entering into the Transaction Documents in reliance upon the Buyer's identity as a legal entity separate from such Seller and any of its other Affiliates.
ARTICLE III
CONDITIONS OF PURCHASES
Section 3.1. Conditions Precedent to the Initial Purchase under this Agreement. The initial purchase from each Seller on or after April 20, 2004 is subject to the conditions precedent that (1) the Buyer shall have executed and delivered a Subordinated Note in favor of each such Seller, and (2) the Buyer shall have received, on or before each Seller's Applicable Closing Date, the following, each (unless otherwise indicated) dated such Seller's Applicable
Closing Date, and each in form, substance and date reasonably satisfactory to the Buyer and the Administrative Agent:
(a) A copy of the resolutions of such Seller's board of directors, board of managers, general partners or analogous Persons of such Seller approving the Transaction Documents to be delivered by it and the transactions contemplated hereby and thereby, certified by a Responsible Officer of such Seller;
(b) A good standing certificate for such Seller issued as of a recent date by the Secretary of State of the state of its formation;
(c) A certificate of a Responsible Officer of such Seller certifying the names and true signatures of the officers, partners, managers or members authorized on such Seller's behalf to sign the Transaction Documents to be delivered by it, on which certificate the Buyer and the Servicer (if the Servicer is not such Seller) may conclusively rely until such time as the Buyer and the Servicer shall receive from such Seller a revised certificate meeting the requirements of this subsection (c);
(d) Recently certified copies of such Seller's Organic Document or a certificate of a Responsible Officer that there have been no changes therein since the date of the Existing Agreement;
(e) Copies of the proper financing statements (Form UCC-1 or UCC-3) necessary to continue the perfection of the Liens under the Existing Agreement and give effect to the amendments embodied in this Agreement;
(f) Evidence (i) of the execution and delivery by each of the parties thereto of each of the other Transaction Documents to be executed and delivered in connection herewith and (ii) that each of the conditions precedent to the execution, delivery and effectiveness of such other Transaction Documents has been satisfied to the Buyer's satisfaction; and
(g) One or more opinions of such Seller's counsel in form and substance reasonably satisfactory to the Agents covering the matters referenced in Exhibit 5.1(h) to the Credit and Security Agreement, the treatment of the transactions evidenced hereby as true sales and certain related bankruptcy matters.
Section 3.2. Conditions Precedent to All Purchases. Each purchase shall be subject to the further conditions precedent that:
(a) Such Seller's Sale Termination Date shall not have occurred;
(b) The Buyer (or its assigns) shall have received such other approvals, opinions or documents as it may reasonably request; and
(c) On the date of such purchase, each of the representations and warranties of such Seller set forth in Article II hereof are true and correct on and
as of the date of such purchase (and after giving effect thereto) as though made on and as of such date except to the extent it relates to an earlier date.
Section 3.3. Reaffirmation of Representations and Warranties. Each Seller, by accepting the Purchase Price related to each purchase of such Seller's Receivables and Related Assets, shall be deemed to have certified that the representations and warranties of such Seller contained in Article II are true and correct as to such Seller on and as of the day of such purchase, with the same effect as though made on and as of such day except to the extent it relates to an earlier date.
ARTICLE IV
COVENANTS
Section 4.1. Affirmative Covenants. From each Seller's Applicable Closing Date until the later of the Final Payout Date or the cessation of the purchases of the Buyer hereunder, unless the Buyer and the Agents shall otherwise consent in writing:
(a) Compliance With Laws, Etc. Such Seller will comply with all applicable laws, rules, regulations and orders, including those with respect to the Receivables and related Contracts and Invoices, except, in each of the foregoing cases, where the failure to so comply would not individually or in the aggregate have a Seller Material Adverse Effect.
(b) Preservation of Existence. Such Seller will preserve and maintain its existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualification would have a Seller Material Adverse Effect.
(c) Audits. Such Seller will, subject to compliance with applicable
law: (i) at any time and from time to time upon not less than ten (10) Business
Days' notice (unless an Unmatured Default or Event of Default has occurred and
is continuing, in which case, not more than one (1) Business Day's notice shall
be required) during regular business hours, permit the Buyer, the Agents or any
of their agents or representatives: (A) to examine and make copies of and
abstracts from all Records, Contracts and Invoices in the possession or under
the control of such Seller, and (B) to visit the offices and properties of such
Seller for the purpose of examining such Records, Contracts and Invoices and to
discuss matters relating to Receivables or such Seller's performance hereunder
with any of the officers or employees of such Seller having knowledge of such
matters; and (ii) without limiting the provisions of clause (i) above, from time
to time, at the expense of such Seller, permit certified public accountants or
auditors acceptable to the Agents to conduct a review of such Seller's
Contracts, Invoices and Records (each, a "Review"); provided, however, that, so
long as no Event of Default has occurred and is continuing, such Seller shall
only be responsible for the costs and expenses of one (1) such Review under this
Section in any one calendar year unless (1) the first such Review in such
calendar year resulted in negative findings (in which case such Seller shall be
responsible for the costs and expenses of two (2) such Reviews in such calendar
year), or (2) the Buyer delivers an Extension Request under the Credit and
Security Agreement and the applicable Response Date is more than 3 calendar
months after the first Review in such calendar year. Notwithstanding the
foregoing, if (1) such Seller requests the approval of a new Eligible Originator
who is a Material Proposed Addition or (2) any Material Acquisition is
consummated by such Seller, such Seller
shall be responsible for the costs and expenses of one additional Review per proposed Material Proposed Addition or per Material Acquisition in the calendar year in which such Material Proposed Addition is expected to occur or such Material Acquisition is expected to be consummated if such additional Review is requested by the Buyer or any of the Agents.
(d) Keeping of Records and Books of Account. Such Seller will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate essential Records evidencing the Receivables originated by such Seller in the event of the destruction of the originals thereof), and keep and maintain, all Contracts, Records and other information necessary or reasonably advisable for the collection of all such Receivables (including, without limitation, Records adequate to permit the identification as of any Business Day when required of outstanding Unpaid Net Balances by Obligor and related debit and credit details of the Receivables).
(e) Performance and Compliance with Receivables and Contracts. Such Seller will, at its expense, timely and fully perform and comply with all provisions, covenants and other promises, if any, required to be observed by it under the Contracts and/or Invoices related to the Receivables originated by such Seller and all agreements related to such Receivables except for such failures to fully perform and comply as would not, individually or in the aggregate, have a Seller Material Adverse Effect.
(f) Location of Records. Such Seller will keep its chief place of business and chief executive office, and the offices where it keeps its Records and material Contracts (and, to the extent that any of the foregoing constitute instruments, chattel paper or negotiable documents, all originals thereof), at the addresses referred to in Schedule 6.1(n) to the Credit and Security Agreement or to its Joinder Agreement, if applicable, or, upon 15 days' prior written notice to the Administrative Agent, at such other locations in jurisdictions where all action required by Section 8.5 of the Credit and Security Agreement shall have been taken and completed.
(g) Credit and Collection Policies. Such Seller will comply in all material respects with its Credit and Collection Policy in regard to the Receivables originated by it and the related Contracts and Invoices.
(h) Separate Corporate Existence of the Buyer. Each Seller will take such actions as shall be required in order to maintain the separate identity of the Buyer separate and apart from such Seller and its other Affiliates, including those actions set forth in Section 7.4 of the Credit and Security Agreement.
(i) Collections. Such Seller will instruct all Obligors thereon to pay all Collections either directly by mail addressed to a Lockbox listed on Schedule 6.1(o) to the Credit and Security Agreement which is subject to a Collection Account Agreement, or by wire transfer or other electronic funds transfer directly to a Collection Account listed on Schedule 6.1(o) to the Credit and Security Agreement which is subject to a Collection Account Agreement. Such Seller will instruct each bank maintaining a Lockbox or Collection Account in the name of any Seller to sweep all collected funds received therein each Business Day to a Collection Account in the name of the Buyer (or the Administrative Agent or its designee) which is subject to a Collection Account Agreement. Such Seller will cooperate fully with the Buyer in transferring each of the Collection Accounts to the Buyer and, to the extent that such Collection Account is not already
in the Buyer's name, into the Buyer's name within a reasonable period of time after the initial Advance under the Credit and Security Agreement.
(j) Further Assurances. Such Seller shall take all necessary action to establish and maintain in favor of the Buyer, a valid and perfected ownership interest in the Receivables and Related Assets.
Section 4.2. Reporting Requirements. From such Seller's Applicable Closing Date until the later of the Final Payout Date or the cessation of the purchases of the Buyer hereunder, such Seller will furnish to the Buyer and the Administrative Agent:
(a) Proceedings. As soon as possible and in any event within ten Business Days after any Authorized Officer of such Seller obtains knowledge thereof, notice of (i) any litigation, investigation or proceeding which may exist at any time which would reasonably be expected to have a Seller Material Adverse Effect and (ii) any development in previously disclosed litigation which development would reasonably be expected to have a Seller Material Adverse Effect;
(b) Change in Business or Credit and Collection Policy. Prompt written notice of any material change in the character of such Seller's business prior to the occurrence of such change, and not less than 15 Business Days' prior written notice of any material change in such Seller's Credit and Collection Policy (together with a copy of such proposed change); and
(c) Other. Promptly, from time to time, such other information, documents, records or reports respecting the Receivables originated by such Seller, the condition, operations, financial or otherwise, of such Seller or such Seller's performance hereunder that the Buyer or any of the Agents may from time to time reasonably request in order to protect the interests of the Buyer and the Administrative Agent, on behalf of the Secured Parties, under or as contemplated by the Transaction Documents.
Section 4.3. Negative Covenants. From such Seller's Applicable Closing Date until the later of the Final Payout Date or the cessation of the purchases of the Buyer hereunder, unless the Buyer and the Agents shall otherwise consent in writing, such Seller shall not:
(a) Sales, Liens, Etc. (i) Except as otherwise provided herein and in the other Transaction Documents, sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien upon or with respect to, any Receivables originated by it, or any account to which any Collections are sent, or any right to receive income or proceeds from or in respect of any of the foregoing (except, prior to the execution of Collection Agreements, set-off rights of any bank at which any such account is maintained), or (ii) assert any interest in the Receivables, except as Servicer (or a designated sub-servicer for the Servicer).
(b) Extension or Amendment of Receivables. Extend, amend or otherwise modify the terms of any Receivable originated by it, or amend, modify or waive any term or condition of any Contract or Invoice related thereto in any way that adversely affects the collectibility of the
Receivables originated by such Originator, taken as a whole, or any material part thereof, or the Buyer's rights therein.
(c) Change in Business or Credit and Collection Policy. Make or permit to be made any change in the character of its business or in the Credit and Collection Policy, which change would, in either case, impair the collectibility of any significant portion of the Receivables originated by it or otherwise materially and adversely affect the interests or remedies of the Buyer and its assigns under this Agreement or any other Transaction Document.
(d) Change in Payment Instructions to Obligors. Add or terminate any bank as a Collection Bank from those listed in Schedule 6.1(o) to the Credit and Security Agreement or, after the Collection Account has been established pursuant to Section 7.1(i) of the Credit and Security Agreement, make any change in its instructions to Obligors regarding payments to be made to the Buyer or the Servicer or payments to be made to any Collection Bank (except for a change in instructions solely for the purpose of directing Obligors to make such payments to another existing Collection Bank and where such change is immaterial and does not adversely affect the interests of the Administrative Agent, on behalf of the Lenders, in any respect), unless (i) the Administrative Agent shall have received prior written notice of such addition, termination or change and (ii) the Administrative Agent shall have received duly executed copies of Collection Agreements in a form reasonably acceptable to the Administrative Agent with each new Collection Bank.
(e) Deposits to Collection Accounts. Deposit or authorize the deposit to any Collection Account of any cash or cash proceeds other than Collections of Receivables and of certain of the Excluded JV Receivables.
(f) Changes to Other Documents. Enter into any amendment or modification of, or supplement to (i) such Seller's Organic Documents which could reasonably be expected to be materially adverse to the Buyer, (ii) this Agreement, or (iii) the Subordinated Notes.
(g) Change of Name, State of Organization, or Records Locations. Change its name or state of organization or relocate any office where Records are kept unless it shall have: (i) given the Administrative Agent at least 15 days' prior notice thereof and (ii) prior to effectiveness of such change, delivered to the Administrative Agent all financing statements, instruments and other documents requested by the Administrative Agent in connection with such change or relocation.
(h) Mergers, Consolidations and Acquisitions. Liquidate or dissolve, consolidate with, or merge into or with, any other Person, except for: (i) mergers and consolidations of a Seller with one or more other Sellers (so long as in any such transaction involving Quest Diagnostics, Quest Diagnostics is the survivor), and (ii) other mergers or consolidations that do not constitute Material Acquisitions, provided that, in each of the foregoing cases:
(A) the Administrative Agent and the Buyer receive prior written notice of such consolidation or merger, and the successor or surviving entity (if not a Seller) unconditionally assumes such Seller's (or Sellers') respective obligations under the Transaction Documents to which it is (or they are) a party immediately prior to giving effect to such consolidation or merger,
(B) all UCC financing statements necessary to maintain the validity and perfection of the Buyer's ownership interest in the Receivables and Related Assets acquired or to be acquired from such Seller or Sellers under this Agreement, and the Administrative Agent's security interest therein on behalf of the Secured Parties, have been duly filed in all necessary jurisdictions, and
(C) if the surviving entity in such transaction(s) is not an existing Seller under this Agreement, all other documents required to be delivered in connection with a Joinder Agreement hereunder have been duly executed and delivered substantially contemporaneously with such transaction(s).
(i) Disposition of Receivables and Related Assets. Except pursuant to this Agreement, sell, lease, transfer, assign or otherwise dispose of (in one transaction or in a series of transactions) any Receivables and Related Assets.
(j) Receivables Not to be Evidenced by Promissory Notes. Take any action to cause or permit any Receivable generated by it to become evidenced by any "instrument" (as defined in the applicable UCC), except in connection with the collection of overdue Receivables, provided that the original of any such instrument is delivered to the Buyer for immediate delivery to the Administrative Agent, duly endorsed.
(k) Accounting for Purchases. Account for the transactions contemplated hereby in any manner other than as a sale or contribution of Receivables and the Related Assets by such Seller to the Buyer.
ARTICLE V
JOINDER OF ADDITIONAL SELLERS
Section 5.1. Addition of New Sellers. From time to time upon not less
than 60 days' prior written notice to the Buyer and the Administrative Agent (or
such shorter period of time as the Agents may agree upon), Quest Diagnostics may
propose that one or more of its existing or hereafter acquired wholly-owned
Subsidiaries become a Seller hereunder. No such addition shall become effective
(a) if such addition constitutes a Material Proposed Addition, without the
written consent of the Agents and, if applicable, each of the rating agencies
who is then rating Commercial Paper Notes of any Conduit but may become
effective prior to such 60th day if such written consent is given more promptly
and (b) unless all conditions precedent to such addition required by Section 5.2
below are satisfied prior to such date).
Section 5.2. Documentation. In the event that the Buyer and the Agents consent to the addition of a New Seller, such New Seller shall execute a Joinder Agreement and shall deliver each of the documents, certificates and opinions required to be delivered under Section 3.1 prior to such New Seller's Closing Date, together with such updated Schedules and Exhibits hereto as may be necessary to ensure that after giving effect to the addition of such New Seller, each of the representations and warranties of such New Seller under Article II hereof will be true and correct, and the Buyer will deliver a Subordinated Note to such New Seller.
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:
(a) file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate; and
(b) mark the summary master control data processing records with the legend set forth in Section 3.1(i).
Each Seller hereby authorizes the Buyer or its designee to file one or more financing or continuation statements, and amendments thereto and assignment thereof, relative to all or any of the Receivables (and the Related Assets) now existing or hereafter sold by such Seller. If such Seller fails to perform any of its agreements or obligations under this Agreement, the Buyer or its designee may (but shall not be required to) itself perform, or cause performance of, such agreement or obligation, and the expenses of the Buyer or its designee incurred in connection therewith shall be payable by such Seller.
Section 6.4. Application of Collections. Except as otherwise specified by such Obligor or required by the underlying Contract or law: any payment by an Obligor in respect of any indebtedness owed by it to such Seller or to the Buyer shall be applied first, as a Collection of any Receivable or Receivables then outstanding of such Obligor in the order of the age of such Receivables, starting with the oldest of such Receivables (unless another reasonable basis for allocation of such payments to the Receivables of such Obligor exists), and second, to any other indebtedness of such Obligor.
ARTICLE VII
INDEMNIFICATION
Section 7.1. Indemnities by the Sellers. Without limiting any other rights which any such Person may have hereunder or under applicable law, each of the Sellers hereby agrees to indemnify the Buyer, its assigns, and each of their respective Affiliates, and all successors, transferees, participants and assigns and all officers, directors, shareholders, controlling persons, employees and agents (each, a "Seller Indemnified Party"), forthwith on demand, from and against any and all damages, losses, claims, liabilities and related costs and expenses, including attorneys' fees and disbursements (all of the foregoing being collectively referred to as "Seller Indemnified Amounts") awarded against or incurred by any of them arising out of or relating to this Agreement, any of the other Transaction Documents to which such Seller is a party, and/or the Receivables and Related Assets, excluding, however, (i) Seller Indemnified Amounts to the extent determined by a court of competent jurisdiction to have resulted from bad faith, gross negligence or willful misconduct on the part of such Seller Indemnified Party, (ii) taxes imposed by the jurisdiction in which such Seller Indemnified Party's principal executive office is located, on or measured by the overall net income of such Seller Indemnified Party; and (iii) recourse (except as otherwise specifically provided in this Agreement) for Seller Indemnified Amounts to the extent the same includes losses in respect of Receivables which are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor. Without limiting the foregoing, each of the Sellers shall indemnify each Seller Indemnified Party for Seller Indemnified Amounts arising out of or relating to:
(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;
(J) any sales or use tax payable in connection with the transactions giving rise to any Receivable originated by such Seller, and any documentary stamp taxes or recording taxes associated with the perfection of the Buyer's ownership in the Receivables and Related Assets;
(K) the commingling by such Seller of Collections of Receivables at any time with other funds;
(L) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document to which such Seller is a party, the transactions contemplated hereby or thereby, the use of the proceeds of any sale, the Buyer's ownership interest in the Receivables and Related Assets originated by such Seller or any other investigation, litigation or proceeding relating to such Seller or the Receivables and Related Assets originated by it in which any Seller Indemnified Party becomes involved as a result of any of the transactions contemplated hereby or thereby;
(M) any products or professional liability, personal injury or damage suit, or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or Invoice or any Receivable originated by such Seller;
(N) any inability to litigate any claim against any Obligor in respect of any Receivable originated by such Seller as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding; or
(O) the occurrence of any Event of Bankruptcy with respect to such Seller; or
(P) failure of any Specified Government Receivables to be recorded in the applicable Seller's billing and accounting systems solely as a Client-Billed Receivable.
In addition to Quest Diagnostics' obligations under the foregoing indemnity with respect to itself as a Seller and the Receivables originated by it, Quest Diagnostics hereby agrees to be jointly and severally liable with each other Seller for such other Seller's indemnity obligations set forth above.
Section 7.2. Contribution. If for any reason the indemnification provided above in Section 7.1 (and subject to the exceptions set forth therein) is unavailable to a Seller Indemnified Party or is insufficient to hold a Seller Indemnified Party harmless, then the applicable Seller(s) shall contribute to the amount paid or payable by such Seller Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such Seller Indemnified Party on the one hand and the applicable Seller(s) on the other hand but also the relative fault of such Seller Indemnified Party as well as any other relevant equitable considerations.
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.
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
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
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date first above written.
QUEST DIAGNOSTICS INCORPORATED, A DELAWARE
CORPORATION
By: /s/ Joseph P. Manory
--------------------------------------
Name: Joseph P. Manory
Title: Vice President and Treasurer
|
QUEST DIAGNOSTICS INCORPORATED, A MICHIGAN
CORPORATION
QUEST DIAGNOSTICS INCORPORATED, A MARYLAND
CORPORATION
QUEST DIAGNOSTICS INCORPORATED, A
CALIFORNIA CORPORATION
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
QUEST DIAGNOSTICS CLINICAL LABORATORIES,
INC., A DELAWARE CORPORATION
UNILAB CORPORATION, A DELAWARE
CORPORATION,
QUEST DIAGNOSTICS NICHOLS INSTITUTE, INC.,
A VIRGINIA CORPORATION
QUEST DIAGNOSTICS INCORPORATED, A NEVADA
CORPORATION
QUEST DIAGNOSTICS RECEIVABLES INC.
By: /s/ Joseph P. Manory
--------------------------------------
Name: Joseph P. Manory
Title: Vice President and Treasurer
|
ANNEX A
DEFINITIONS
A. Incorporation of Credit and Security Agreement Definitions. Unless otherwise defined herein, terms that are capitalized and used throughout this Agreement are used as defined in the Credit and Security Agreement (hereinafter defined).
B. Certain Defined Terms. The following terms have the respective meanings indicated hereinbelow:
"Additional Receivables" means, with respect to any Seller, all Receivables of such Seller arising after the close of such Seller's business on the Initial Cut-Off Date (in the case of each of the Original Sellers) or the applicable New Seller Cut-Off Date (in the case of any New Seller) through and including such Seller's Sale Termination Date.
"Applicable Closing Date" means (i) with respect to each of the Original Sellers, the Initial Closing Date or, as applicable, the date specified in its applicable Joinder Agreement, and (ii) with respect to each New Seller, its New Seller Closing Date. The Applicable Closing Date for each of Unilab, Quest-Nichols and Quest-Nevada shall be April 20, 2004.
"Applicable Cut-Off Date" means (i) with respect to each Original Seller, the Initial Cut-Off Date, (ii) with respect to each New Seller, its New Seller Cut-Off Date, and (iii) with respect to all Sellers, each Cut-Off Date after the applicable date in the preceding clause (i) or clause (ii).
"Available Funds" means, on any date of determination, monies then held by or on behalf of the Buyer after deduction of (a) all Obligations, if any, that are due and owing under the Credit and Security Agreement, (b) all Servicer's Fees that are then due and owing, and (c) in the Buyer's discretion, the accrued and unpaid portion of all current expenses of the Buyer (whether or not then due and owing).
"Buyer" has the meaning set forth in the preamble.
"Collections" means, with respect to any Receivable, (i) all funds which are received from or on behalf of any related Obligor in payment of any amounts owed (including, without limitation, purchase prices, finance charges, interest and all other charges) in respect of such Receivable, or applied to such amounts owed by such Obligor (including, without limitation, payments that the Buyer, the applicable Seller or the Servicer receives from third party payors and applies in the ordinary course of its business to amounts owed in respect of such Receivable and net proceeds of sale or other disposition of repossessed goods or other collateral or property of the Obligor or any other party directly or indirectly liable for payment of such Receivable and available to be applied thereon), or (ii) all Purchase Price Credits.
"Contract" means, with respect to any Receivable, any requisition,
purchase order, agreement, contract or other writing with respect to the
provision of services by a Seller to an Obligor other than (i) an Invoice and
(ii) any confidential patient information including, without limitation, test
results.
"Credit and Security Agreement" has the meaning set forth in the preamble.
"Discount Factor" means a percentage calculated to provide the Buyer with a reasonable return on its investment in the Receivables acquired from each Seller after taking
account of (i) the time value of money based upon the anticipated dates of collection of the Receivables and the cost to the Buyer of financing its investment in such Receivables during such period and (ii) the risk of nonpayment by the Obligors. Each Seller and the Buyer may agree from time to time to change the Discount Factor applicable to purchases from such Seller based on changes in one or more of the items affecting the calculation thereof, provided that any change to the Discount Factor shall take effect as of the commencement of a Calculation Period, shall apply only prospectively and shall not affect the Purchase Price payment in respect of Purchases which occurred during any Calculation Period ending prior to the Calculation Period during which such Seller and the Buyer agree to make such change.
"Excluded JV Receivable" means any account receivable (and proceeds thereof) that Quest Diagnostics of Pennsylvania Inc. ("Quest Pennsylvania") bills in its own name and collects through its own accounts arising from services for which revenues belong to Quest Diagnostics Venture LLC under that certain Sharing and General Allocation Agreement dated as of November 1, 1998 by and among Quest Diagnostics Venture LLC, a Pennsylvania limited liability company, Quest Pennsylvania and UPMC Health System Diversified Services, Inc., as amended or modified from time to time.
"Existing Agreement" has the meaning set forth in the preamble.
"Initial Closing Date" means July 21, 2000.
"Initial Cut-Off Date" means the Cut-Off Date immediately preceding the Initial Closing Date.
"Initial Receivables" means, with respect to any Seller, all Receivables of such Seller that existed and was owing to such Seller as of the close of such Seller's business on the Initial Cut-Off Date (in the case of each of the Original Sellers) or the applicable New Seller Cut-Off Date (in the case of any New Seller).
"Invoice" means, with respect to any Receivable, any paper or electronic bill, statement or invoice for services rendered by a Seller to an Obligor.
"Joinder Agreement" has the meaning set forth in the preamble.
"New Seller" means any direct or indirect wholly-owned Subsidiary of Quest Diagnostics that hereafter becomes a Seller under this Agreement by executing a Joinder Agreement and complying with the provisions of Article V hereof.
"New Seller Closing Date" means, as to any New Seller, the Business Day on which each of the conditions set forth in Article V has been satisfied.
"New Seller Cut-Off Date" means, with respect to each New Seller, Cut-Off Date immediately preceding its New Seller Closing Date.
"Original Sellers" means Quest Diagnostics Incorporated, a Delaware corporation; Quest Diagnostics Incorporated, a Michigan corporation; Quest Diagnostics Incorporated, a Maryland corporation; Quest Diagnostics Incorporated, a California corporation; Quest Diagnostics LLC, a Connecticut limited liability company; Quest Diagnostics LLC, a Massachusetts limited liability company; Quest Diagnostics of Pennsylvania Inc., a Delaware corporation; Quest Diagnostics LLC, an Illinois limited liability company; MetWest Inc., a
Delaware corporation; and Quest Diagnostics Clinical Laboratories, Inc., a Delaware corporation.
"Purchase Price" means, with respect to any purchase of Receivables
and their Related Assets from a Seller on any date, the aggregate price to be
paid therefor by the Buyer to the applicable Seller in accordance with Section
1.3 of this Agreement on such date, which price shall equal (i) the product of
(x) the Unpaid Net Balance of such Receivables as of the Applicable Cut-Off
Date, multiplied by (y) one minus the Discount Factor then in effect, minus (ii)
any Purchase Price Credits to be credited against the Purchase Price otherwise
payable in accordance with Section 1.4 of the Agreement.
"Purchase Price Credit" shall have the meaning provided in Section 1.4 hereof.
"Purchase Report" shall have the meaning provided in Section 1.3(c) hereof.
"Receivable" means any Account or Payment Intangible arising from the
sale of Clinical Laboratory Services by a Seller, including, without limitation,
the right to payment of any interest or finance charges and other amounts with
respect thereto; provided, however, that the term "Receivable" shall not include
(a) any Excluded JV Receivable, or (b) any Government Receivable except a
Specified Government Receivable. Rights to payment arising from any one
transaction, including, without limitation, rights to payment represented by an
individual invoice, shall constitute a Receivable separate from a Receivable
consisting of the rights to payment arising from any other transaction.
"Records" means, collectively, all Invoices and all other documents, books, records and other information (including, without limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to any Receivable, Related Asset and/or Obligor other than (i) any Contract related thereto, and (ii) any confidential patient information including, without limitation, test results.
"Related Assets" means, with respect to each Receivable, all right, title and interest in and to the following:
(a) (i) all Collections; (ii) all Records; (iii) all Collection Accounts and all cash, balances and instruments therein from time to time therein; (iv) the goods (including returned or repossessed goods), if any, the sale of which by a Seller gave rise to such Receivable; (v) all supporting obligations; and (vi) all liens and security interests, if any, securing payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise; and
(b) all proceeds and insurance proceeds of the foregoing.
"Responsible Officer" means, with respect to each Seller, any of its chief executive officer, president, vice president-finance, treasurer or secretary, acting singly.
"Sale Termination Date" means, as to any Seller, the earliest to occur of the following:
(i) the date designated by such Seller to the Buyer upon not less than 15 Business Days' prior written notice,
(ii) the date on which an Event of Bankruptcy occurs with respect to such Seller;
(iii) the date on which such Seller is unable to satisfy the applicable conditions precedent to each purchase set forth in Article III hereof;
(iv) the date on which a Change in Control occurs with respect to Quest Diagnostics, the Buyer or such Seller; and
(v) the occurrence of the Termination Date under clause (a) or (b) of the definition of such term in the Credit and Security Agreement.
"Seller" means an Original Seller or a New Seller.
"Seller Indemnified Amounts" shall have the meaning provided in
Section 7.1(a) hereof.
"Seller Indemnified Party" shall have the meaning provided in Section 7.1(a) hereof.
"Seller Material Adverse Effect" means, with respect to any Seller, the occurrence of any of the following events, circumstances, occurrences, or conditions:
(i) any event, circumstance, occurrence or condition which has caused as of any date of determination any of (a) a material adverse effect, or any condition or event that has resulted in a material adverse effect, on the business, operations, consolidated financial condition or assets of the Sellers, taken as a whole (after taking into account indemnification obligations by third parties that are Solvent to the extent that such third party has not disputed (after notice of claim in accordance with the applicable agreement therefor) liability to make such indemnification payment),
(ii) any event, circumstance, occurrence or condition which has caused as of any date of determination a material adverse effect on the ability of such Seller to perform its obligations under this Agreement or any other Transaction Document to which such Seller is a party;
(iii) any event, circumstance, occurrence or condition which has caused as of any date of determination a material adverse effect on the validity or enforceability of this Agreement or any other Transaction Document to which such Seller is a party, or the validity, enforceability or collectibility of a material portion of the Receivables sold by such Seller to the Buyer; or
(iv) any event, circumstance, occurrence or condition which has caused as of any date of determination a material adverse effect on the validity, perfection, priority or enforceability of the Buyer's title to the Receivables and Related Assets acquired by the Buyer from such Seller.
"Specified Government Receivable" means a Government Receivable as to which the Obligor is a state or local Governmental Authority (other than a Receivable arising under any state's Medicaid statutes and regulations, for services rendered to eligible beneficiaries thereunder).
"Subordinated Loan" means a subordinated revolving loan from a Seller to the Buyer which is evidenced by a Subordinated Note.
"Subordinated Note" means a subordinated promissory note substantially in the form of Exhibit B hereto issued by the Buyer to a Seller, as it may be amended, supplemented, endorsed or otherwise modified from time to time in substitution therefor or renewal thereof in accordance with the Transaction Documents.
The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.
C. Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.
D. Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding".
Exhibit 10.4
AMENDED AND RESTATED CREDIT AGREEMENT
among
QUEST DIAGNOSTICS INCORPORATED
as Borrower,
AND
CERTAIN SUBSIDIARIES OF THE BORROWER
as Guarantors,
AND
THE LENDERS IDENTIFIED HEREIN,
AND
BANK OF AMERICA, N.A.,
as Administrative Agent
AND
WACHOVIA BANK, NATIONAL ASSOCIATION
as Syndication Agent
AND
BANK ONE, NA,
PNC BANK, NATIONAL ASSOCIATION
AND
KEYBANK NATIONAL ASSOCIATION
As Co-Documentation Agents
DATED AS OF APRIL 20, 2004
BANC OF AMERICA SECURITIES LLC
and
WACHOVIA CAPITAL MARKETS, LLC
as Co-Book Managers and Co-Lead Arrangers
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS...................................1 1.1 Definitions........................................................1 1.2 Other Interpretive Provisions.....................................24 1.3 Accounting Terms/Calculation of Financial Covenants...............25 1.4 Time..............................................................25 1.5 Rounding..........................................................25 1.6 References to Agreements and Laws.................................26 1.7 Letter of Credit Amounts..........................................26 SECTION 2 CREDIT FACILITIES.................................................26 2.1 Revolving Loans...................................................26 2.2 Letter of Credit Subfacility......................................28 2.3 Swing Line Loans Subfacility......................................34 2.4 Competitive Bid Loans Subfacility.................................35 2.5 Continuations and Conversions.....................................38 2.6 Minimum Amounts...................................................38 SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT......39 3.1 Interest..........................................................39 3.2 Place and Manner of Payments......................................39 3.3 Prepayments.......................................................40 3.4 Fees..............................................................41 3.5 Payment in full at Maturity.......................................42 3.6 Computations of Interest and Fees.................................42 3.7 Pro Rata Treatment................................................43 3.8 Sharing of Payments...............................................44 3.9 Capital Adequacy/Regulation D.....................................45 3.10 Inability To Determine Interest Rate..............................45 3.11 Illegality........................................................45 3.12 Requirements of Law...............................................46 3.13 Taxes.............................................................46 3.14 Compensation......................................................50 3.15 Determination and Survival of Provisions..........................50 3.16 Notification by Lenders...........................................50 3.17 Mitigation; Mandatory Assignment..................................51 SECTION 4 GUARANTY..........................................................51 4.1 Guaranty of Payment...............................................51 4.2 Obligations Unconditional.........................................52 4.3 Modifications.....................................................52 4.4 Waiver of Rights..................................................53 4.5 Reinstatement.....................................................53 4.6 Remedies..........................................................53 4.7 Limitation of Guaranty............................................54 4.8 Rights of Contribution............................................54 4.9 Release of Guarantors.............................................54 |
SECTION 5 CONDITIONS PRECEDENT..............................................54 5.1 Closing Conditions................................................54 5.2 Conditions to All Extensions of Credit............................56 SECTION 6 REPRESENTATIONS AND WARRANTIES....................................57 6.1 Organization and Good Standing....................................57 6.2 Due Authorization.................................................57 6.3 Enforceable Obligations...........................................57 6.4 No Conflicts......................................................58 6.5 Consents..........................................................58 6.6 Financial Condition...............................................58 6.7 No Material Change................................................59 6.8 Disclosure........................................................59 6.9 No Default........................................................59 6.10 Litigation........................................................59 6.11 Taxes.............................................................59 6.12 Compliance with Law...............................................59 6.13 Licensing and Accreditation.......................................60 6.14 Title to Properties, Liens........................................60 6.15 Insurance.........................................................61 6.16 Use of Proceeds...................................................61 6.17 Government Regulation.............................................61 6.18 ERISA.............................................................61 6.19 Environmental Matters.............................................62 6.20 Intellectual Property.............................................64 6.21 Subsidiaries......................................................64 6.22 Solvency..........................................................64 SECTION 7 AFFIRMATIVE COVENANTS.............................................64 7.1 Information Covenants.............................................64 7.2 Financial Covenants...............................................68 7.3 Preservation of Existence and Franchises..........................68 7.4 Books and Records.................................................69 7.5 Compliance with Law...............................................69 7.6 Payment of Taxes and Other Indebtedness...........................69 7.7 Insurance.........................................................70 7.8 Maintenance of Property...........................................70 7.9 Performance of Obligations........................................70 7.10 Use of Proceeds...................................................70 7.11 Audits/Inspections................................................70 7.12 Additional Credit Parties.........................................71 7.13 Compliance Program................................................71 7.14 Existing Term Credit Agreement....................................72 SECTION 8 NEGATIVE COVENANTS................................................72 8.1 Indebtedness......................................................72 8.2 Liens.............................................................73 8.3 Nature of Business................................................73 8.4 Consolidation and Merger..........................................73 |
8.5 Sale or Lease of Assets...........................................74 8.6 Investments.......................................................74 8.7 Transactions with Affiliates......................................74 8.8 Fiscal Year; Accounting; Organizational Documents.................75 8.9 Stock Repurchases.................................................75 8.10 Sale/Leasebacks...................................................75 SECTION 9 EVENTS OF DEFAULT.................................................76 9.1 Events of Default.................................................76 9.2 Acceleration; Remedies............................................78 9.3 Allocation of Payments After Event of Default.....................79 SECTION 10 AGENCY PROVISIONS.................................................80 10.1 Appointment.......................................................80 10.2 Delegation of Duties..............................................81 10.3 Exculpatory Provisions............................................81 10.4 Reliance on Communications........................................82 10.5 Notice of Default.................................................83 10.6 Non-Reliance on Administrative Agent and Other Lenders............83 10.7 Indemnification...................................................83 10.8 Administrative Agent in Its Individual Capacity...................84 10.9 Successor Agent...................................................84 10.10. Agent May File Proofs of Claim....................................85 SECTION 11 MISCELLANEOUS.....................................................86 11.1 Notices, Etc......................................................86 11.2 Right of Set-Off..................................................87 11.3 Benefit of Agreement..............................................88 11.4 No Waiver; Remedies Cumulative....................................91 11.5 Payment of Expenses; Indemnification..............................91 11.6 Amendments, Waivers and Consents..................................93 11.7 Counterparts......................................................94 11.8 Headings..........................................................94 11.9 Defaulting Lender.................................................94 11.10 Survival of Indemnification.......................................94 11.11 Governing Law; Venue; Jurisdiction................................94 11.12 Waiver of Jury Trial; Waiver of Consequential Damages.............95 11.13 Severability......................................................95 11.14 Further Assurances................................................95 11.15 Confidentiality...................................................95 11.16 Entirety..........................................................96 11.17 Binding Effect; Continuing Agreement..............................96 11.18. USA Patriot Act Notice............................................97 |
SCHEDULES
Schedule 1.1(a) Commitment Percentages/Lending Offices Schedule 2.2(c) Existing Letters of Credit Schedule 6.7 Material Changes Schedule 6.10 Litigation Schedule 6.21 Subsidiaries Schedule 8.1 Indebtedness Schedule 8.2 Liens Schedule 8.6 Investments Schedule 8.7 Affiliate Transactions Schedule 11.1 Notices EXHIBITS Exhibit 2.1(b) Form of Notice of Borrowing Exhibit 2.1(e) Form of Revolving Note Exhibit 2.3(b) Form of Swing Line Loan Request Exhibit 2.3(d) Form of Swing Line Note Exhibit 2.4(b) Form of Competitive Bid Request Exhibit 2.4(g) Form of Competitive Bid Loan Note Exhibit 2.5 Form of Notice of Continuation/Conversion Exhibit 7.1(c) Form of Officer's Certificate Exhibit 7.12 Form of Joinder Agreement Exhibit 11.3(b) Form of Assignment and Assumption |
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Credit Agreement"), is entered into as of April 20, 2004 among QUEST DIAGNOSTICS INCORPORATED, a Delaware corporation (the "Borrower"), certain of the Subsidiaries of the Borrower (individually a "Guarantor" and collectively the "Guarantors"), the Lenders (as defined herein), and BANK OF AMERICA, N.A., as Administrative Agent for the Lenders and as Issuing Lender.
RECITALS
WHEREAS, the Borrower, the Guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent and issuing lender entered into that certain Credit Agreement dated as of June 27, 2001 (as previously amended or modified, the "Existing Revolving Credit Agreement";
WHEREAS, the Borrower has requested that the parties thereto amend and restate the terms of the Existing Revolving Credit Agreement;
WHEREAS, certain existing lenders will no longer be a party to the amended and restated credit facility and certain new lenders will become a party to the amended and restated credit facility; and
WHEREAS, the parties hereto have agreed to amend and restate the terms of the Existing Revolving Credit Agreement as set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions.
As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires. Defined terms herein shall include in the singular number the plural and in the plural the singular:
"Acquisition" means the acquisition by any Person of (a) more than 50% of the Capital Stock of another Person, (b) all or substantially all of the assets of another Person or (c) all or substantially all of a line of business of another Person, in each case whether or not involving a merger or consolidation with such other Person.
"Additional Credit Party" means each Person that becomes a Guarantor after the Closing Date, as provided in Section 7.12 or otherwise.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the Applicable Percentage.
"Administrative Agent" means Bank of America, N.A. (or any successor
thereto) or any successor administrative agent appointed pursuant to
Section 10.9.
"Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling (including but not limited to all directors and officers of such Person), controlled by or under direct or indirect common control with such Person. A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the power (a) to vote 10% or more of the securities having ordinary voting power for the election of directors of such corporation or (b) to direct or cause direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise.
"Agency Services Address" means Bank of America, N.A., NC1-001-15-04, 101 North Tryon Street, Charlotte, North Carolina 28255, Attn: Agency Services, Attn: Credit Services, or such other address as may be identified by written notice from the Administrative Agent to the Borrower.
"Agent-Related Person" means the Administrative Agent (including any successor administrative agent), together with its Affiliates (including, in the case of Bank of America in its capacity as the Administrative Agent, BAS), and their respective officers, directors, employees, agents, counsel and attorneys-in-fact.
"Agents" means Bank of America N.A., in its capacity as Administrative Agent, Wachovia Bank, National Association in its capacity as Syndication Agent, Bank One, NA in its capacity as Co-Documentation Agent, PNC Bank, National Association in its capacity as Co-Documentation Agent, and KeyBank National Association in its capacity as Co-Documentation Agent.
"Applicable Percentage" means the appropriate applicable percentages corresponding to the Debt Rating of the Borrower in effect from time to time as described below:
==========================================================================================================================
Applicable
Applicable Applicable Percentage for
Percentage for Percentage for Commercial Applicable
Pricing Revolving Loans that Standby Letter of Letter of Percentage for
Level Debt Rating are Eurodollar Loans Credit Fees Credit Fees Facility Fee
---------------------------------------------------------------------------------------------------------------------------
I >=A- from S&P/ .275% .275% .1325% .100%
>=A3 from Moody's
--------------------------------------------------------------------------------------------------------------------------
II >=BBB+ but < A-from S&P/ .375% .375% .1875% .125%
>=Baa1 but < A3 from Moody's
--------------------------------------------------------------------------------------------------------------------------
III >=BBB but < BBB+ from S&P/ .475% .475% .2375% .150%
>=Baa2 but < Baa1 from Moody's
--------------------------------------------------------------------------------------------------------------------------
IV >=BBB- but < BBB from S&P/ .575% .575% .2875% .175%
>=Baa3 but < Baa2 from Moody's
--------------------------------------------------------------------------------------------------------------------------
V >=BB+ but < BBB- from S&P/ 1.00% 1.00% .5000% .250%
>=Ba1 but < Baa3 from Moody's
--------------------------------------------------------------------------------------------------------------------------
VI < BB+ or unrated by S&P/ 1.20% 1.20% .6000% .300%
< Ba1 or unrated by Moody's
==========================================================================================================================
|
The Applicable Percentage for Eurodollar Loans, the Letter of Credit Fees and the Facility Fees shall, in each case, be determined and adjusted on the date (each a "Calculation Date") one Business Day after the date on which the Borrower's Debt Rating is upgraded or downgraded in a manner which requires a change in the then applicable Pricing Level set forth above. If at any time there is a split in the Borrower's Debt Ratings between S&P and Moody's, the Applicable Percentages shall be determined by the higher of the two Debt Ratings (i.e. the lower pricing); provided that if the two Debt Ratings are more than one level apart, the Applicable Percentage shall be based on the Debt Rating which is one level higher than the lower rating. Each Applicable Percentage shall be effective from one Calculation Date until the next Calculation Date. Any adjustment in the Applicable Percentage shall be applicable to all existing Eurodollar Loans and Letters of Credit as well as any new Eurodollar Loans made or Letters of Credit issued.
"Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
"Assignment and Assumption" means an Assignment and Assumption substantially in the form of Exhibit 11.3(b).
"Attorney Costs" means all reasonable fees and disbursements of any law firm or other external counsel and the reasonable allocated cost of internal legal services and all disbursements of internal counsel.
"Attributable Debt" means, with respect to a Sale and Leaseback Transaction, an amount equal to the lesser of: (a) the fair market value of the Principal Property (as determined in good faith by the Borrower's board of directors); and (b) the present value of the total net amount of rent payments to be made under the lease during its remaining
term, discounted at the rate of interest set forth or implicit in the terms of the lease, compounded semi-annually.
"Authorized Officer" means any of the chief executive officer, president, chief financial officer, corporate controller, treasurer or assistant treasurer of the Borrower.
"Bank of America" means Bank of America, N.A. or any successor thereto.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.
"BAS" means Banc of America Securities LLC.
"Base Rate" means, for any day, the rate per annum equal to the greater of (a) the Federal Funds Rate in effect on such day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable after due inquiry to ascertain the Federal Funds Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms hereof, the Base Rate shall be determined without regard to clause (a) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective at the opening of business on the day specified in the public announcement of such change.
"Base Rate Loan" means any Revolving Loan bearing interest at a rate determined by reference to the Base Rate.
"Borrower" means Quest Diagnostics Incorporated, a Delaware corporation, together with any successors and permitted assigns.
"Business Day" means any day other than a Saturday, a Sunday, a legal holiday or a day on which banking institutions are authorized or required by law or other governmental action to close in New York, New York or Charlotte, North Carolina; provided that in the case of Eurodollar Loans, such day is also a day on which dealings between banks are carried on in U.S. dollar deposits in the London interbank market.
"Calculation Date" has the meaning set forth in the definition of Applicable Percentage.
"CAP" means the College of American Pathologists.
"Capital Expenditures" means all expenditures of the Borrower and its Subsidiaries on a consolidated basis which, in accordance with GAAP, would be classified as capital expenditures, including, without limitation, Capital Leases which would be so classified in accordance with GAAP.
"Capital Lease" means, as applied to any Person, any lease of any Property (whether real, personal or mixed) by that Person as lessee which, in accordance with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP.
"Capital Stock" means (a) in the case of a corporation, all classes of capital stock of such corporation, (b) in the case of a partnership, partnership interests (whether general or limited), (c) in the case of a limited liability company, membership interests and (d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than eighteen months
from the date of acquisition, (b) Dollar denominated time and demand
deposits, certificates of deposit and banker's acceptances of (i) any
Lender, (ii) any domestic commercial bank having capital and surplus in
excess of $500,000,000 or (iii) any bank whose short-term commercial paper
rating from S&P is at least A-1 or the equivalent thereof or from Moody's
is at least P-1 or the equivalent thereof (any such bank being an "Approved
Bank"), in each case with maturities of not more than 270 days from the
date of acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within six months of
the date of acquisition, (d) repurchase agreements with a bank or trust
company (including any of the Lenders) or recognized securities dealer
having capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which the
Borrower shall have a perfected first priority security interest (subject
to no other Liens) and having, on the date of purchase thereof, a fair
market value of at least 100% of the amount of the repurchase obligations,
(e) Investments in tax-exempt municipal bonds rated A (or the equivalent
thereof) or better by S&P or MIG2 (or the equivalent thereof) or better by
Moody's, (f) auction rate securities rated AA or better by S&P or Moody's,
in either case with a reset of no longer than 90 days and (g) Investments,
classified in accordance with GAAP as current assets, in money market
investment programs registered under the Investment Company Act of 1940, as
amended, which are administered by reputable financial institutions having
capital of at least $500,000,000 and the portfolios of which are limited to
Investments of the character described in the foregoing subdivisions (a)
through (f).
"Cash Interest Expenses" means all Interest Expense actually paid in cash by the Borrower and its Subsidiaries.
"CHAMPUS" means the United States Department of Defense Civilian Health and Medical Program of the United States or any successor thereto including, without limitation, TRICARE.
"Change of Control" means either of the following events:
(a) any "person" or "group" (within the meaning of Section 13(d) or 14(d) of the Exchange Act) has become, directly or indirectly, the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), by way of merger, consolidation or otherwise of 35% or more of the Voting Stock of the Borrower on a fully-diluted basis, after giving effect to the conversion and exercise of all outstanding warrants, options and other securities of the Borrower convertible into or exercisable for Voting Stock of the Borrower (whether or not such securities are then currently convertible or exercisable); or
(b) during any period of twelve calendar months, individuals who at the beginning of such period constituted the board of directors of the Borrower together with any new members of such board of directors whose elections by such board or board of directors or whose nomination for election by the stockholders of the Borrower was approved by a vote of a majority of the members of such board of directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved cease for any reason to constitute a majority of the directors of the Borrower then in office.
"CLIA" means the Clinical Laboratory Improvement Act as set forth at 42 U.S.C. 263a and the regulations promulgated thereunder, as amended.
"Closing Date" means the date hereof.
"CMS" means the Centers for Medicare and Medicaid Services of HHS, any successor thereof and any predecessor thereof, including HCFA.
"Code" means the Internal Revenue Code of 1986 and the rules and regulations promulgated thereunder, as amended, modified, succeeded or replaced from time to time.
"Commitments" means (a) the commitment of each Lender with respect to the Revolving Committed Amount, (b) the commitment of the Issuing Lender with respect to the LOC Commitment and (c) the commitment of the Swing Line Lender with respect to the Swing Line Committed Amount.
"Competitive Bid" means an offer by a Lender to make a Competitive Bid Loan pursuant to the terms of Section 2.4.
"Competitive Bid Loan" means a loan made by a Lender in its discretion pursuant to the provisions of Section 2.4.
"Competitive Bid Loan Notes" means the promissory notes of the Borrower in favor of each Lender evidencing the Competitive Bid Loans provided pursuant to
Section 2.4, individually or collectively, as appropriate, as such promissory notes may be amended, modified, supplemented or replaced from time to time and as evidenced in the form of Exhibit 2.4(g).
"Competitive Bid Fee" means $1,000 for each Competitive Bid Request.
"Competitive Bid Rate" means, as to any Competitive Bid made by a Lender in accordance with the provisions of Section 2.4, the rate of interest offered by the Lender making the Competitive Bid.
"Competitive Bid Request" means a request by the Borrower for Competitive Bids in the form of Exhibit 2.4(b).
"Credit Documents" means this Credit Agreement, the Notes, any Joinder Agreement, the LOC Documents, any Notice of Borrowing, any Competitive Bid Request and any Swing Line Loan Request.
"Credit Exposure" has the meaning set forth in the definition of Required Lenders in this Section 1.1.
"Credit Parties" means the Borrower and the Guarantors and "Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication, all of the obligations of the Credit Parties to the Lenders (including the Issuing Lender and the Swing Line Lender) and the Administrative Agent, whenever arising, under this Credit Agreement, the Notes, or any of the other Credit Documents.
"Debt Rating" means the long-term senior unsecured, non-credit enhanced debt rating of the Borrower from S&P and Moody's.
"Default" means any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, (a) has failed to make a Loan or purchase a Participation Interest required pursuant to the terms of this Credit Agreement (but only for so long as such Loan is not made or such Participation Interest is not purchased), (b) has failed to pay to the Administrative Agent or any Lender an amount owed by such Lender pursuant to the terms of this Credit Agreement (but only for so long as such amount has not been repaid) or (c) has been deemed insolvent or has become subject to a bankruptcy or insolvency proceeding or to a receiver, trustee or similar official.
"Dividends" means any payment of dividends or any other distribution upon any shares of any class of Capital Stock of the Borrower.
"Dollars" and "$" means dollars in lawful currency of the United States of America.
"Domestic Subsidiary" means each direct and indirect Subsidiary of the Borrower that is domiciled or organized under the laws of any State of the United States or the District of Columbia.
"EBITDA" means, for any period, with respect to the Borrower and its Subsidiaries on a consolidated basis, (a) Net Income for such period (excluding the effect of any extraordinary or other non-recurring gains and losses (including any gain or loss from the sale of Property)) plus (b) an amount which, in the determination of Net Income for such period, has been deducted for (i) Interest Expense for such period, (ii) total Federal, state, foreign or other income or franchise taxes for such period, (iii) all depreciation and amortization for such period, (iv) other items of expense during such period that do not involve a cash payment at any time (other than the provision for bad debt in connection with uncollectible accounts receivable), (v) cash charges during such period for which the Borrower and its Subsidiaries are reimbursed by a third party during such period and (vi) special or restructuring items during any such period included in Net Income that do not involve a cash payment during such period (collectively, "Non-Cash Items") minus (c) any actual cash payments during the applicable period related to Non-Cash Items expensed or reserved under clauses (v) and (vi) above plus (d) Tender Costs during such period.
"Effective Date" means the date on which the conditions set forth in
Section 5.1 shall have been fulfilled (or waived in the sole discretion of
the Lenders) and on which the initial Loans shall have been made and/or the
initial Letters of Credit shall have been issued.
"Eligible Assets" means any assets or any business (or any substantial part thereof) used or useful in the same or a similar line of business as the Borrower and its Subsidiaries are engaged on the Closing Date or other healthcare-related businesses or businesses reasonably related thereto.
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender;
(c) an Approved Fund and (d) any other Person approved by the
Administrative Agent, the Issuing Lender and the Borrower (such approval
not to be unreasonably withheld or delayed); provided that (i) the
Borrower's consent is not required during the existence and continuation of
a Default or an Event of Default, (ii) approval by the Borrower shall be
deemed given if no objection is received by the assigning Lender and the
Administrative Agent from the Borrower within five Business Days after
notice of such proposed assignment has been delivered to the Borrower;
(iii) neither the Borrower nor an Affiliate of the Borrower shall qualify
as an Eligible Assignee; and (iv) no competitor of the Borrower shall
qualify as an Eligible Assignee.
"Environmental Laws" means any current or future legally enforceable requirement of any Governmental Authority pertaining to (a) the protection of the indoor or outdoor environment, (b) the conservation, management, or use of natural resources and wildlife, (c) the protection or use of surface water and groundwater or (d) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, release,
threatened release, abatement, removal, remediation or handling of, or exposure to, any hazardous or toxic substance or material or (e) pollution (including any release to land surface water and groundwater) and includes, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 USC 6901 et seq., Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous Materials Transportation Act, 49 USC App. 1801 et seq., Occupational Safety and Health Act of 1970, as amended, 29 USC 651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et seq., any analogous implementing or successor law, and any amendment, rule, regulation, order, or directive issued thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto, as interpreted by the rules and regulations thereunder, all as the same may be in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections.
"ERISA Affiliate" means an entity, whether or not incorporated, which is treated as a single employer with the Borrower or any Subsidiary of the Borrower under Sections 414(b) or (c) of the Code and solely for purposes of Section 412 of the Code under Section 414(m) of the Code.
"ERISA Event" means (a) with respect to any Single Employer or
Multiple Employer Plan, the occurrence of a Reportable Event or the
substantial cessation of operations (within the meaning of Section 4062(e)
of ERISA); (b) the withdrawal of the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan
year in which it was a substantial employer (as such term is defined in
Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer
Plan; (c) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA; (d)
the institution of proceedings to terminate or the actual termination of
any Plan by the PBGC under Section 4042 of ERISA; (e) any event or
condition which might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any
Plan; (f) the complete or partial withdrawal of the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate from a Multiemployer Plan
or notification that a Multiemployer Plan is in reorganization; (g) the
conditions for imposition of a lien under Section 302(f) of ERISA exist
with respect to any Plan; or (h) the adoption of an amendment to any Plan
requiring the provision of security to such Plan pursuant to Section 307 of
ERISA.
"Eurodollar Loan" means a Loan bearing interest based at a rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar Loan comprising part of the same borrowing (including conversions, extensions and renewals), a per annum interest rate equal to the London Interbank Offered Rate.
"Eurodollar Reserve Percentage" means, with respect to each Lender, the percentage (expressed as a decimal) applicable to such Lender which is in effect from time to time under Regulation D as the reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to its Eurocurrency liabilities, as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Loans is determined). Eurodollar Loans made by a Lender shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements, if applicable, without benefits of credits for proration, exceptions or offsets that may be available from time to time to such Lender.
"Event of Default" means any of the events or circumstances specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as amended, modified, succeeded or replaced from time to time.
"Existing Letters of Credit" means the letters of credit described on Schedule 2.2(c).
"Existing Revolving Credit Agreement" has the meaning set forth in the Recitals.
"Existing Term Credit Agreement" means that certain Term Loan Credit Agreement, dated as of June 21, 2002, among the Borrower, the Guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent and issuing lender.
"Extension of Credit" means, as to any Lender, the making of a Loan by such Lender (or a participation therein by a Lender) or the issuance of, or participation in, a Letter of Credit by such Lender.
"Facility Fees" means the fees payable to the Lenders pursuant to
Section 3.4(a).
"Federal Funds Rate" means for any day the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (b) if no such rate is so published on such next preceding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Administrative Agent on such day on such transactions as determined by the Administrative Agent.
"Fee Letters" means (a) that certain letter agreement dated as of April 2, 2004 among the Borrower, BAS, and Bank of America and (b) that certain letter agreement, dated as of April 2, 2004, among the Borrower, Wachovia Capital Markets, LLC and Wachovia Bank, National Association.
"Foreign Subsidiary" means any Subsidiary of the Borrower that is not a Domestic Subsidiary.
"Fund" means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.
"Funded Debt" means, without duplication, the sum of (a) all Indebtedness of the Borrower and its Subsidiaries for borrowed money, (b) all purchase money Indebtedness of the Borrower and its Subsidiaries, (c) the principal portion of all obligations of the Borrower and its Subsidiaries under Capital Leases, (d) all drawn but unreimbursed amounts under all letters of credit (other than letters of credit supporting trade payables in the ordinary course of business) issued for the account of the Borrower or any of its Subsidiaries, (e) all Funded Debt of another Person secured by a Lien on any Property of the Borrower and its Subsidiaries whether or not such Funded Debt has been assumed by a Borrower or any of its Subsidiaries, (f) all Funded Debt of any partnership or unincorporated joint venture to the extent the Borrower or one of its Subsidiaries is legally obligated with respect thereto and (g) the amount of principal attributable under any outstanding Synthetic Lease. It is understood and agreed that Indebtedness incurred pursuant to Hedging Agreements is not Funded Debt.
"GAAP" means generally accepted accounting principles in the United States applied on a consistent basis and subject to Section 1.3.
"Governmental Authority" means any Federal, state, local, provincial or foreign court or governmental agency, authority, instrumentality or regulatory body.
"Guarantor" means each of the Material Domestic Subsidiaries of the Borrower, any other Subsidiary of the Borrower that guaranties any Pari Passu Debt and each Additional Credit Party, together with their successors and assigns.
"Guaranty" means the guaranty of the Credit Party Obligations provided by the Guarantors pursuant to Section 4.
"Guaranty Obligations" means, with respect to any Person, without duplication, any obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing any Indebtedness of any other Person in any manner, whether direct or indirect, and including without limitation any obligation,
whether or not contingent, (a) to purchase any such Indebtedness or other obligation or any Property constituting security therefor, (b) to advance or provide funds or other support for the payment or purchase of such Indebtedness or obligation or to maintain working capital, solvency or other balance sheet condition of such other Person (including, without limitation, maintenance agreements, comfort letters, take or pay arrangements, put agreements or similar agreements or arrangements) for the benefit of the holder of Indebtedness of such other Person, (c) to lease or purchase Property, securities or services primarily for the purpose of assuring the owner of such Indebtedness or (d) to otherwise assure or hold harmless the owner of such Indebtedness or obligation against loss in respect thereof. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made.
"Hazardous Materials" means any substance, material or waste defined in or regulated under any Environmental Laws.
"HCFA" means the United States Health Care Financing Administration and any successor thereto, including CMS.
"Hedging Agreements" means, collectively, interest rate protection agreements, foreign currency exchange agreements, commodity purchase or option agreements or other interest or exchange rate or commodity price hedging agreements, in each case, entered into or purchased by a Credit Party.
"HHS" means the United States Department of Health and Human Services and any successor thereof.
"HIPAA" means the Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191, Aug. 21, 1996, 110 Stat. 1936.
"Indebtedness" of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (c) all obligations of such Person under conditional sale or other title retention agreements relating to Property purchased by such Person to the extent of the value of such Property (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (d) all obligations, other than intercompany items, of such Person issued or assumed as the deferred purchase price of property or services purchased by such Person which would appear as liabilities on a balance sheet of such Person, (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (f) all Guaranty Obligations of such Person, (g) the principal portion of all obligations of such Person under (i) Capital Leases and (ii) any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product of such Person where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease in accordance with GAAP, (h) all obligations of such Person to repurchase any securities which repurchase obligation is related to the issuance thereof, including, without limitation, obligations commonly known as residual equity appreciation potential shares, (i) all net obligations of such Person in respect of Hedging Agreements, (j) the maximum amount of all performance and standby letters of credit issued or bankers' acceptances facilities created for the account of such Person and, without duplication, all drafts drawn thereunder (to the extent unreimbursed), and (k) the aggregate amount of uncollected accounts receivable of such Person subject at such time to a sale of receivables (or similar transaction) regardless of whether such transaction is effected without recourse to such Person or in a manner that would not be reflected on the balance sheet of such Person in accordance with GAAP. The Indebtedness of any Person shall include the Indebtedness of any partnership or unincorporated joint venture in which such Person is legally obligated.
"Indemnified Liabilities" has the meaning set forth in Section 11.5.
"Intellectual Property" has the meaning set forth in Section 6.20.
"Interest Coverage Ratio" means, as of the last day of each fiscal quarter, the ratio of (a) EBITDA for the twelve month period ending on such date to (b) Cash Interest Expense for the twelve month period ending on such date.
"Interest Expense" means, for any period, with respect to the Borrower and its Subsidiaries on a consolidated basis, all interest expense, including, without duplication, the interest component under Capital Leases, as determined in accordance with GAAP.
"Interest Payment Date" means (a) as to Base Rate Loans and Swing Line Loans, the last day of each calendar quarter and the Maturity Date, (b) as to Eurodollar Loans, the last day of each applicable Interest Period and the Maturity Date and in addition, where the applicable Interest Period for a Eurodollar Loan is greater than three months, then also the date three months from the beginning of the Interest Period and each three months thereafter and (c) as to Competitive Bid Loans, on the last day of the Interest Period for each Competitive Bid Loan and on the Maturity Date. If an Interest Payment Date falls on a date which is not a Business Day, such Interest Payment Date shall be deemed to be the next succeeding Business Day, except that in the case of Eurodollar Loans where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day.
"Interest Period" means (a) as to Eurodollar Loans, a period of one, two, three or six months' duration, as the Borrower may elect, commencing, in each case, on the date of the borrowing (including continuations and conversions thereof) and (b) as to Competitive Bid Loans, a period beginning on the date the Competitive Bid Loan is made and ending on the date specified in the respective Competitive Bid whereby the offer to make the Competitive Loan was extended, which shall not be less than 14 days nor more than 180 days duration; provided, however, (i) if any Interest Period would end on a day which is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day (except that where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day), (ii) no Interest Period shall extend beyond the Maturity Date and (iii) where an Interest Period begins on a day for which there is no numerically corresponding day in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last Business Day of such calendar month.
"Investment" in any Person means (a) the acquisition (whether for cash, property, services, assumption of Indebtedness, securities or otherwise) of assets, shares of Capital Stock, bonds, notes, debentures, partnership, joint ventures or other ownership interests or other securities of such other Person or (b) any deposit with, or advance, loan or other extension of credit to, such Person (other than deposits or advances made in connection with the purchase of equipment or other assets or services in the ordinary course of business) or (c) any other capital contribution to or investment in such Person, including, without limitation, any Guaranty Obligation (including any support for a letter of credit issued on behalf of such Person) incurred for the benefit of such Person.
"Issuing Lender" means Bank of America.
"Issuing Lender Fees" has the meaning set forth in Section 3.4(b)(ii).
"Joinder Agreement" means a Joinder Agreement substantially in the form of Exhibit 7.12.
"Lender" means any of the Persons identified as a "Lender" on the signature pages hereto, and any Eligible Assignee which may become a Lender by way of assignment in accordance with the terms hereof, together with their successors and permitted assigns.
"Lending Office" means, as to any Lender, the office or offices of such Lender described as such on Schedule 1.1(a), or such other office or offices as a Lender may from time notify to the Borrower and the Administrative Agent.
"Letter of Credit" means any letter of credit issued for the account of the Borrower by the Issuing Lender pursuant to Section 2.2, as such letter of credit may be amended, modified, extended, renewed or replaced.
"Letter of Credit Fees" has the meaning set forth in Section 3.4(b)(i).
"Leverage Ratio" means, as of the last day of each fiscal quarter, the ratio of (a) Funded Debt on such date to (b) EBITDA for the twelve month period ending on such date.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of any kind, including, without limitation, any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof (other than operating leases).
"Loan" or "Loans" means the Revolving Loans, the Competitive Bid Loans and the Swing Line Loans (or any portion thereof), individually or collectively, as appropriate.
"Loan Participant" has the meaning set forth in Section 11.3(d).
"LOC Commitment" means the commitment of the Issuing Lender to issue Letters of Credit for the account of the Borrower in an aggregate face amount outstanding (together with the amounts of any unreimbursed drawings thereon) at any time of up to the LOC Committed Amount.
"LOC Committed Amount" means ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000).
"LOC Documents" means, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk or (b) any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (a) the maximum
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance with
all requirements for drawings referred to in such Letters of Credit plus
(b) the aggregate amount of all drawings under Letters of Credit honored by
the Issuing Lender but not theretofore reimbursed.
"London Interbank Offered Rate" means for any Interest Period with respect to any Eurodollar Loan: (a) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period, or (b) if the rate referenced in the preceding clause (a) does not appear on such page or service or such page or service shall cease to be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period, or (c) if the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum determined by the Administrative Agent as the rate of interest at which deposits in Dollars for delivery on the first day of such Interest Period in
same day funds in the approximate amount of the Eurodollar Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America's London Branch to major banks in the London interbank Eurodollar market at their request at approximately 4:00 p.m. (London time) two Business Days prior to the first day of such Interest Period.
"Mandatory Borrowing" has the meaning set forth in Section 2.2(e).
"Material Adverse Effect" means a material adverse effect on (a) the business, operations or financial condition of the Borrower and its Subsidiaries taken as a whole, (b) the ability of a Credit Party to perform its obligations under this Credit Agreement or any of the other Credit Documents, or (c) the validity or enforceability of this Credit Agreement, any of the other Credit Documents, or the rights and remedies of the Lenders hereunder or thereunder taken as a whole.
"Material Domestic Subsidiary" means any wholly-owned Domestic Subsidiary of the Borrower that, directly or indirectly, (a) owns assets in excess of $20,000,000 or (b) has annual revenues, as of the most recently ended fiscal year of the Borrower, in excess of two percent (2%) of the total revenues of the Borrower and its Subsidiaries on a consolidated basis; provided that Quest Receivables shall not be deemed to be a Material Domestic Subsidiary.
"Maturity Date" means April 20, 2009.
"Medicaid" shall mean that entitlement program under Title XIX of the Social Security Act that provides federal grants to states for medical assistance based on specific eligibility criteria.
"Medicaid Provider Agreement" means an agreement entered into between a state agency or other such entity administering the Medicaid program and a health care provider or supplier under which the health care provider or supplier agrees to provide services for Medicaid patients in accordance with the terms of the agreement and Medicaid Regulations.
"Medicaid Regulations" means, collectively, (a) all federal statutes
(whether set forth in Title XIX of the Social Security Act or elsewhere)
affecting Medicaid and any statutes succeeding thereto; (b) all applicable
provisions of all federal rules, regulations, manuals and orders and
administrative, reimbursement and other guidelines having the force of law
of all Governmental Authorities promulgated pursuant to or in connection
with the statutes described in clause (a) above; (c) all state statutes and
plans for medical assistance enacted in connection with the statutes and
provisions described in clauses (a) and (b) above; and (d) all applicable
provisions of all rules, regulations, manuals and orders and
administrative, reimbursement and other guidelines having the force of law
of all Governmental Authorities promulgated pursuant to or in connection
with the statutes described in clause (c) above and all state
administrative, reimbursement and other guidelines of all Governmental
Authorities having the force of law promulgated pursuant
to or in connection with the statutes described in clause (b) above, in each case as may be amended, supplemented or otherwise modified from time to time.
"Medical Reimbursement Programs" shall mean the Medicare, Medicaid, CHAMPUS and TRICARE programs and any other healthcare program operated by or financed in whole or in part by any foreign, domestic, federal, state or local government and any other non-government funded third party payor programs.
"Medicare Provider Agreement" means an agreement entered into between CMS or other such entity administering the Medicare program on behalf of CMS, and a health care provider or supplier under which the health care provider or supplier agrees to provide services for Medicare patients in accordance with the terms of the agreement and Medicare Regulations.
"Medicare" shall mean that government-sponsored entitlement program under Title XVIII of the Social Security Act that provides for a health insurance system for eligible elderly and disabled individuals.
"Medicare Regulations" shall mean, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting the health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act and any statutes
succeeding thereto; together with all applicable provisions of all rules,
regulations, manuals and orders and administrative, reimbursement and other
guidelines having the force of law of all Governmental Authorities
(including, without limitation, the HHS, CMS, the OIG, or any person
succeeding to the functions of any of the foregoing) promulgated pursuant
to or in connection with any of the foregoing having the force of law, as
each may be amended, supplemented or otherwise modified from time to time.
"Moody's" means Moody's Investors Service, Inc., or any successor or assignee of the business of such company in the business of rating securities.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan covered by Title IV of ERISA (other than a Multiemployer Plan) in which the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate and at least one employer other than the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate are contributing sponsors.
"Net Income" means, for any period, the net income after taxes for such period of the Borrower and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP.
"Non-Cash Items" has the meaning set forth in the definition of EBITDA in Section 1.1.
"Non-Material Domestic Subsidiary" means any wholly-owned Domestic Subsidiary that is not a Guarantor other than Quest Receivables.
"Note" or "Notes" means the Revolving Notes, the Competitive Bid Loan Notes and the Swing Line Loan Note, individually or collectively, as appropriate.
"Notice of Borrowing" means a request by the Borrower for a Loan, in the form of Exhibit 2.1(b).
"Notice of Continuation/Conversion" means a request by the Borrower to continue an existing Eurodollar Loan to a new Interest Period or to convert a Eurodollar Loan to a Base Rate Loan or a Base Rate Loan to a Eurodollar Loan, in the form of Exhibit 2.5.
"OIG" means the Office of Inspector General of HHS and any successor thereof.
"Pari Passu Debt" means all unsecured indebtedness of the Borrower.
"Participants" means Lenders with a Revolving Loan Commitment Percentage greater than zero.
"Participation Interest" means the Extension of Credit by a Lender by
way of a purchase of a participation in (a) Letters of Credit or LOC
Obligations as provided in Section 2.2, (b) Swing Line Loans as provided in
Section 2.3 or (c) any Loans as provided in Section 3.8.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA and any successor thereto.
"Permitted Acquisition" means an Acquisition by the Borrower or any of its Subsidiaries; provided that (a) substantially all of the Property acquired (or the Property of the Person acquired) in such Acquisition constitutes Eligible Assets (or goodwill associated therewith), (b) in the case of an Acquisition of the Capital Stock of another Person, the board of directors (or other comparable governing body) of such other Person or its parent shall have duly approved such Acquisition, (c) on the date of such Acquisition no Event of Default exists, (d) after giving effect to such Acquisition, no Default or Event of Default shall exist, (e) if such Acquisition involves the formation of a new Subsidiary of the Borrower, such Subsidiary complies with Section 7.12 and (f) such Acquisition is undertaken in accordance with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees and awards to which any party to such Acquisition may be subject.
"Permitted Investments" means Investments which constitute the following: (a) cash or Cash Equivalents, (b) trade accounts receivable created, acquired or made in the ordinary course of business, (c) inventory, raw materials, general intangibles and other current assets acquired in the ordinary course of business, (d) Investments by the Borrower or one of its
Subsidiaries in each other, (e) Permitted Acquisitions, (f) advances to management personnel and employees in the ordinary course of business, (g) Investments existing as of the Closing Date; provided that any such Investment in excess of $2,000,000 is set forth on Schedule 8.6, (h) Investments consisting of non-cash consideration received in the form of securities, notes or similar obligations in connection with any conveyance, sale, lease, assignment, transfer or other disposition of any Property by the Borrower or one of its Subsidiaries to any Person, and which are permitted hereunder, and (i) any other Investment as long as (i) on the date of such Investment, no Event of Default exists and (ii) after giving effect to such Investment no Default or Event of Default shall exist.
"Permitted Liens" means (a) Liens securing Credit Party Obligations,
if any, (b) Liens for taxes not yet due or Liens for taxes being contested
in good faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to foreclosure,
sale, collection, levy or loss on account thereof), (c) Liens in respect of
Property imposed by law arising in the ordinary course of business such as
materialmen's, mechanics', warehousemen's, carrier's, landlords' and other
nonconsensual statutory Liens which are not yet due and payable or which
are being contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have been established
(and as to which the Property subject to any such Lien is not yet subject
to foreclosure, sale or loss on account thereof), (d) Liens (other than
Liens imposed under ERISA) consisting of pledges or deposits made in the
ordinary course of business to secure payment of worker's compensation
insurance, unemployment insurance, pensions or social security programs,
(e) Liens arising from good faith deposits in connection with or to secure
performance of tenders, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (other than obligations in respect of the
payment of borrowed money), (f) Liens arising from good faith deposits in
connection with or to secure performance of statutory obligations and
surety and appeal bonds, (g) easements, rights-of-way, restrictions
(including zoning restrictions), matters of plat, minor defects or
irregularities in title and other similar charges or encumbrances not, in
any material respect, impairing the use of the encumbered Property for its
intended purposes, (h) judgment Liens that would not constitute an Event of
Default, (i) Liens in connection with Indebtedness permitted by Sections
8.1(d), (j) Liens arising by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar rights as
to deposit accounts or other funds maintained with a creditor depository
institution, (k) Liens existing on the date hereof and identified on
Schedule 8.2, (l) Liens upon Property acquired (or the Property of a
Subsidiary that is acquired) after the Effective Date by the Borrower or
its Subsidiaries, which Liens either (i) existed on such Property before
the time of such acquisition and was not created in anticipation thereof or
(ii) were created solely for the purpose of securing Indebtedness
representing, or incurred to finance or refinance, the cost of such
Property or improvements thereon; provided, however; that (A) no such Lien
shall extend to or cover any Property of any Credit Party other than the
Property so acquired and improvements thereon and proceeds thereof, (B) the
principal amount of Indebtedness secured by any such Lien shall at no time
exceed 100% of the fair market value of such Property at the time it was
acquired or constructed and (C) the Indebtedness secured by any such Lien
is permitted
hereunder; provided that (x) no such Lien shall extend to any Property other than the Property subject thereto on the closing date of such acquisition and (y) the principal amount of the Indebtedness secured by such Liens shall not be increased, (m) Liens in connection with Permitted Receivables Financing, (n) Liens with respect to lease filings for notice purposes only, (o) Liens on purchase money Indebtedness incurred by the Borrower in an amount not to exceed, in the aggregate, $100,000,000 less Indebtedness incurred by Subsidiaries of the Borrower pursuant to Section 8.1(d), (p) Liens on Property of non-wholly owned Subsidiaries of the Borrowers incurred to finance working capital and (q) renewals and extensions of the foregoing so long as such Lien (i) does not cover any additional Property, (ii) does not secure additional Indebtedness and (iii) is not otherwise prohibited by this Credit Agreement.
"Permitted Receivables Financing" means any transaction entered into pursuant to documentation reasonably acceptable to the Administrative Agent in which (a) one or more Credit Parties sells, conveys or otherwise transfers to Quest Receivables and (b) Quest Receivables sells, conveys or otherwise transfers to any other Person or grants a security interest to any Person in, any Receivables (whether now existing or hereafter acquired) of a Credit Party, and any assets related thereto including all collateral securing such Receivables, all contracts and all Guaranty Obligations or other obligations in respect of such Receivables, all proceeds of such Receivables and all other assets that are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving Receivables.
"Person" means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise (whether or not incorporated), or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of ERISA) which is covered by ERISA and with respect to which the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" within the meaning of Section 3(5) of ERISA.
"Prime Rate" means the per annum rate of interest established from time to time by the Administrative Agent at its principal office in Charlotte, North Carolina (or such other principal office of the Administrative Agent as communicated in writing to the Borrower and the Lenders) as its Prime Rate. Any change in the interest rate resulting from a change in the Prime Rate shall become effective as of 12:01 a.m. of the Business Day on which each change in the Prime Rate is announced by the Administrative Agent. The Prime Rate is a reference rate used by the Administrative Agent in determining interest rates on some loans which may be priced at, above or below such announced rate and is not intended to be the lowest rate of interest charged on any extension of credit to any debtor.
"Principal Property" means any real property and any related buildings, fixtures or other improvements located in the United States owned by the Borrower or its Subsidiaries (a) on or in which one of its 30 largest domestic clinical laboratories conducts operations, as
determined by net revenues for the four most recent fiscal quarters for which financial statements have been filed with the Securities and Exchange Commission, or (b) the net book value of which at the time of the determination exceeds 1% of Total Assets.
"Property" means any right, title or interest in or to any property or asset of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Quest Receivables" means Quest Diagnostics Receivables Incorporated, a Delaware corporation, a wholly-owned, bankruptcy-remote, special purpose Subsidiary of the Borrower.
"Real Properties" has the meaning given thereto in Section 6.19.
"Receivable" means the indebtedness and payment obligations of any Person to any Credit Party or acquired by any Credit Party (including obligations constituting an account or general intangible or evidenced by a note, instrument, contract, security agreement, chattel paper or other evidence of indebtedness or security) arising from a sale of merchandise or the provision of services in the ordinary course of business by such Credit Party or the Person from which such indebtedness and payment obligation were acquired by any Credit Party, including (a) any right to payment for goods sold or for services rendered and (b) the right to payment of any interest, sales taxes, finance charges, returned check or late charges and other obligations of such Person with respect thereto.
"Regulation A, D, T, U or X" means Regulation A, D, T, U or X, respectively, of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
"Required Lenders" means Lenders whose aggregate Credit Exposure (as
hereinafter defined) constitutes more than 50% of the Credit Exposure of
all Lenders at such time; provided, however, that if any Lender shall be a
Defaulting Lender at such time then there shall be excluded from the
determination of Required Lenders the aggregate principal amount of Credit
Exposure of such Lender at such time. For purposes hereof, the term "Credit
Exposure" as applied to each Lender shall mean (a) at any time prior to the
termination of the Commitments, the sum of the Revolving Loan Commitment
Percentage of such Lender multiplied by the Revolving Committed Amount and
(b) at any time after the termination of the Commitments, the sum of (i)
the principal balance of the outstanding Loans of such Lender plus (ii)
such Lender's Participation Interests in the face amount of the outstanding
Letters of Credit and outstanding Swing Line Loans.
"Requirement of Law" means, as to any Person, the articles or certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or to which any of its material Property is subject.
"Reportable Event" means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the notice requirement has been waived by regulation or by the PBGC.
"Revolving Committed Amount" means FIVE HUNDRED MILLION DOLLARS ($500,000,000) or such lesser amount to which the Revolving Committed Amount may be reduced pursuant to Section 2.1(d).
"Revolving Loan Commitment Percentage" means, for each Lender, the percentage identified as its Revolving Loan Commitment Percentage on Schedule 1.1(a), as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 11.3.
"Revolving Loans" means the Revolving Loans made to the Borrower pursuant to Section 2.1.
"Revolving Notes" means the promissory notes of the Borrower in favor
of each of the Lenders evidencing the Revolving Loans provided pursuant to
Section 2.1, individually or collectively, as appropriate, as such
promissory notes may be amended, modified, supplemented, extended, renewed
or replaced from time to time and as evidenced in the form of Exhibit
2.1(e).
"Sale and Leaseback Transaction" means any arrangement with any Person providing for the leasing by the Borrower or one of its Subsidiaries of any Principal Property that has been or is to be sold or transferred by the Borrower or any Guarantor to such Person, as the case may be.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. or any successor or assignee of the business of such division in the business of rating securities.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as amended, modified, succeeded or replaced from time to time.
"Single Employer Plan" means any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
"Social Security Act" means the Social Security Act as set forth in Title 42 of the United States Code, as amended, and any successor statute thereto, as interpreted by the rules and regulations issued thereunder, in each case as in effect from time to time. References to sections of the Social Security Act shall be construed also to refer to any successor sections.
"Solvent" means, with respect to any Person as of a particular date, that on such date (a) such Person is able to pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (b) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature in their ordinary course, (c) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person's assets would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged or is to engage, (d) the fair value of the assets of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person and (e) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability reduced by the amount of any contribution or indemnity that can reasonably be expected to be received.
"Stock Repurchase" has the meaning set forth in Section 8.9.
"Strategic Investment Portfolio" means all Investments in Persons in which the Borrower and its Subsidiaries own less than 50% of the Voting Stock of such Person.
"Subsidiary" means, as to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time, any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries, and (b) any partnership, association, joint venture or other entity in which such person directly or indirectly through Subsidiaries has more than a 50% equity interest at any time.
"Swing Line Committed Amount" means FIFTY MILLION DOLLARS ($50,000,000).
"Swing Line Lender" means Bank of America.
"Swing Line Loans" means the loans made by the Swing Line Lender pursuant to Section 2.3.
"Swing Line Loan Note" means the promissory note of the Borrower in favor of the Swing Line Lender evidencing the Swing Line Loans provided pursuant to Section 2.3, as such promissory note may be amended, modified, supplemented, extended, renewed or replaced from time to time in and as evidenced by the form of Exhibit 2.3(d).
"Swing Line Loan Request" means a request by the Borrower for a Swing Line Loan in substantially the form of Exhibit 2.3(b).
"Synthetic Lease" means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease in accordance with GAAP.
"Tender Costs" means the costs incurred by the Borrower in connection with any tender for outstanding indebtedness of the Borrower, and the termination of the interest rate swap contracts related thereto in an aggregate amount not to exceed $35,000,000 during the term of this Credit Agreement.
"Total Assets" means all items that in accordance with GAAP would be classified as assets of the Borrower and its Subsidiaries on a consolidated basis.
"TRICARE" means the United States Department of Defense health care program for service families including, but not limited to, TRICARE Prime, TRICARE Extra and TRICARE Standard, and any successor to or predecessor thereof (including, without limitation, CHAMPUS).
"Voting Stock" means all classes of the Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors (or similar governing authority).
1.2 Other Interpretive Provisions.
With reference to this Credit Agreement and each other Credit Document, unless otherwise specified herein or in such other Credit Document:
(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b) (i) The words "herein", "hereto", "hereof" and "hereunder" and words of similar import when used in any Credit Document shall refer to such Credit Document as a whole and not to any particular provisions thereof.
(ii) Article, Section, Exhibit and Schedule references are to the Credit Document in which such reference appears.
(iii) The term "including" is by way of example and not limitation.
(iv) the term "documents" includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.
(c) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding"; and the word "through" means "to and including".
(d) Section headings herein and in the other Credit Documents are included for convenience of reference only and shall not affect the interpretation of this Credit Agreement or any other Credit Document.
1.3 Accounting Terms/Calculation of Financial Covenants.
(a) Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall be prepared, in accordance with GAAP applied on a consistent basis. All calculations made for the purposes of determining compliance with this Credit Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP applied on a basis consistent with the most recent annual or quarterly financial statements delivered pursuant to Section 7.1 (or, prior to the delivery of the first financial statements pursuant to Section 7.1, consistent with the financial statements delivered to the Lenders prior to the Closing Date); provided, however, if (a) the Borrower shall object to determining such compliance on such basis at the time of delivery of such financial statements due to any change in GAAP or the rules promulgated with respect thereto or (b) the Administrative Agent or the Required Lenders shall so object in writing within 30 days after delivery of such financial statements, then such calculations shall be made on a basis consistent with GAAP as in effect as of the date of the most recent financial statements delivered by the Borrower to the Lenders to which no such objection shall have been made.
(b) Notwithstanding anything herein to the contrary, for the purposes of calculating the financial covenants set forth in Section 7.2, (i) income statement items (positive or negative) attributable to any Person or Property acquired in a Permitted Acquisition and Indebtedness incurred in connection with such Permitted Acquisition shall, without duplication, be treated as if such Person or Property was acquired or such Indebtedness incurred as of the first day of the twelve month period ending as of the most recently completely fiscal quarter of the Borrower and (ii) income statement items (positive or negative) attributable to Property disposed of in any asset sale permitted by Section 8.5(g) and Indebtedness retired in connection with such sale shall, without duplication, be treated as if such sale occurred as of the first day of the twelve month period ending as of the most recently completed fiscal quarter of the Borrower.
1.4 Time.
All references to time herein shall be references to Eastern Standard Time or Eastern Daylight time, as the case may be, unless specified otherwise.
1.5 Rounding.
Any financial ratios required to be maintained by the Borrower pursuant to this Credit Agreement shall be calculated by dividing the appropriate component by the other component,
carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
1.6 References to Agreements and Laws.
Unless otherwise expressly provided herein, (a) references to organization documents, agreements (including the Credit Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Credit Document and (b) references to any law shall include all statutory and regulatory provisions (having the force of law) consolidating, amending, replacing, supplementing or interpreting such law.
1.7 Letter of Credit Amounts.
Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to mean the maximum face amount of such Letter of Credit after giving effect to all increases thereof contemplated by such Letter of Credit or the LOC Documents related thereto, whether or not such maximum face amount is in effect at such time.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Loan Commitment. Subject to the terms and conditions set forth herein, including but not limited to Section 5.2, each Lender severally agrees to make revolving loans (each a "Revolving Loan" and collectively the "Revolving Loans") to the Borrower, in Dollars, in an amount equal to its Revolving Loan Commitment Percentage, if any, of such Revolving Loan, at any time and from time to time, during the period from and including the Effective Date to but not including the Maturity Date (or such earlier date if the Commitments have been terminated as provided herein); provided, however, that the sum of the aggregate amount of Revolving Loans outstanding plus the aggregate amount of LOC Obligations outstanding plus the aggregate amount of Competitive Bid Loans outstanding plus the aggregate amount of Swing Line Loans outstanding shall not exceed the Revolving Committed Amount. Subject to the terms of this Credit Agreement, the Borrower may borrow, repay and reborrow Revolving Loans.
(b) Method of Borrowing for Revolving Loans. By no later than 11:00
a.m. (i) on the date of the requested borrowing of Revolving Loans that
will be Base Rate Loans or (ii) three Business Days prior to the date of
the requested borrowing of Revolving Loans that will be Eurodollar Loans,
the Borrower shall provide telephonic notice to the Administrative Agent,
followed promptly by a written Notice of Borrowing in the form of
Exhibit 2.1(b) (which may be submitted by telecopy), each of such telephonic notice and such written Notice of Borrowing setting forth (A) the amount requested, (B) whether such Revolving Loans shall accrue interest at the Base Rate or the Adjusted Eurodollar Rate, (C) with respect to Revolving Loans that will be Eurodollar Loans, the Interest Period applicable thereto and (D) certification that the Borrower has complied in all respects with Section 5.2.
(c) Funding of Loans. Upon receipt of a Notice of Borrowing, the
Administrative Agent shall promptly inform the Lenders as to the terms
thereof. Each Lender shall make its Revolving Loan Commitment Percentage of
the requested Revolving Loans available to the Administrative Agent by 1:00
p.m. on the date specified in the Notice of Borrowing by deposit, in
Dollars, of immediately available funds at the Agency Services Address. The
amount of the requested Revolving Loans will then be made available to the
Borrower by the Administrative Agent as directed by the Borrower, to the
extent the amount of such Revolving Loans are made available to the
Administrative Agent.
No Lender shall be responsible for the failure or delay by any other Lender in its obligation to make Revolving Loans hereunder; provided, however, that the failure of any Lender to fulfill its obligations hereunder shall not relieve any other Lender of its obligations hereunder. Unless the Administrative Agent shall have been notified by any Lender prior to the date of any such Revolving Loan that such Lender does not intend to make available to the Administrative Agent its portion of the Revolving Loans to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on the date of such Revolving Loans, and the Administrative Agent in reliance upon such assumption, may (in its sole discretion but without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent, the Administrative Agent shall be able to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount upon the Administrative Agent's demand therefor, the Administrative Agent will promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent at a per annum rate equal to (i) from the Borrower at the applicable rate for such Revolving Loan pursuant to the Notice of Borrowing or (ii) from such Lender, at a rate per annum equal to, during the period to but excluding the date two Business Days after demand therefor, the Federal Funds Rate, and, thereafter, the Base Rate plus two percent (2%) per annum.
(d) Reductions of Revolving Committed Amount. Upon at least three Business Days' prior written notice, the Borrower shall have the right to permanently reduce, without premium or penalty, all or part of the aggregate unused amount of the Revolving Committed Amount at any time or from time to time; provided that (i) each partial reduction shall be in an aggregate amount at least equal to $10,000,000 and in integral multiples of $1,000,000
above such amount and (ii) no reduction shall be made which would reduce the Revolving Committed Amount to an amount less than the aggregate amount of outstanding Revolving Loans plus the aggregate amount of outstanding LOC Obligations plus the aggregate amount of outstanding Competitive Bid Loans plus the aggregate amount of outstanding Swing Line Loans. Any reduction in (or termination of) the Revolving Committed Amount pursuant to this Section 2.1(d) shall be permanent and may not be reinstated. The Administrative Agent shall immediately notify the Lenders of any reduction in the Revolving Committed Amount pursuant to this Section 2.1(d).
(e) Revolving Loan Notes. The Revolving Loans made by each Lender shall be evidenced by a duly executed promissory note of the Borrower to each Lender that requests a Revolving Loan Note in substantially the form of Exhibit 2.1(e).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which the Issuing
Lender may reasonably require (so long as such terms and conditions do not
impose any financial obligation on or require any Lien (not otherwise
contemplated by this Credit Agreement) to be given by any Credit Party or
conflict with any obligation of, or detract from any action which may be
taken by, the Borrower or its Subsidiaries under this Credit Agreement),
the Issuing Lender agrees, in reliance upon the agreements of the other
Lenders set forth in this Section 2.2, from time to time upon request, in
its reasonable discretion, to issue (from the Effective Date to thirty days
prior to the Maturity Date and in a form reasonably acceptable to the
Issuing Lender), in Dollars, and the Participants shall participate in,
Letters of Credit for the account of the Borrower; provided, however, that
(i) the aggregate amount of LOC Obligations shall not at any time exceed
the LOC Committed Amount, (ii) the aggregate amount of commercial Letters
of Credit shall not at any time exceed $40,000,000, (iii) the sum of the
aggregate amount of outstanding LOC Obligations plus the aggregate amount
of outstanding Revolving Loans plus the aggregate amount of outstanding
Competitive Bid Loans plus the aggregate amount of outstanding Swing Line
Loans shall not exceed the Revolving Committed Amount and (iv) if any
Participant shall be a Defaulting Lender at the time of issuance of any
Letter of Credit, the amount of such Letter of Credit shall be reduced by
the amount of such Participant's Participation Interest in such Letter of
Credit, unless otherwise agreed by the Issuing Lender in its sole
discretion. The Issuing Lender may require the issuance and expiry date of
each Letter of Credit to be a Business Day. Each Letter of Credit shall be
either (A) a standby letter of credit issued to support the obligations
(including pension or insurance obligations), contingent or otherwise, of
the Borrower or any of its Subsidiaries, or (B) a commercial letter of
credit in respect of the purchase of goods or services by the Borrower or
any of its Subsidiaries in the ordinary course of business; provided that
any "time" commercial Letter of Credit shall not have a tenor exceeding 180
days. Except as otherwise expressly agreed upon by all the Participants, no
Letter of Credit shall have an original expiry date more than one year from
the date of issuance nor, as extended or otherwise, shall have an expiry
date beyond the Maturity Date. Each Letter of Credit shall comply with the
related LOC Documents. The Borrower shall promptly examine a copy of each
Letter of Credit and each amendment thereto that is
delivered to it and, in the event of any claim of noncompliance with the Borrower's instructions or other irregularity, the Borrower will immediately notify the Issuing Lender.
(b) Notice and Reports. The request for the issuance of a Letter of Credit shall be submitted to the Issuing Lender at least three Business Days prior to the requested date of issuance. The Issuing Lender will, at least quarterly and more frequently upon request, provide to the Administrative Agent for dissemination to the Lenders a report specifying the Letters of Credit which are then issued and outstanding. The Issuing Lender will further provide to the Administrative Agent, promptly upon request, copies of the Letters of Credit and the other LOC Documents.
(c) Participations.
(i) On the Effective Date, each Participant shall automatically acquire a participation in the liability of the Issuing Lender under each Existing Letter of Credit in an amount equal to its Revolving Loan Commitment Percentage of such Existing Letters of Credit.
(ii) Each Participant, upon issuance of a Letter of Credit, shall be deemed to have purchased without recourse a risk participation from the Issuing Lender in such Letter of Credit and each LOC Document related thereto and the rights and obligations arising thereunder and any collateral relating thereto, in each case in an amount equal to its Revolving Loan Commitment Percentage of the obligations under such Letter of Credit, and shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the Issuing Lender therefor and discharge when due, its Revolving Loan Commitment Percentage of the obligations arising under such Letter of Credit. Without limiting the scope and nature of each Participant's participation in any Letter of Credit, to the extent that the Issuing Lender has not been reimbursed as required hereunder or under any such Letter of Credit or pursuant to a Mandatory Borrowing under Section 2.2(e)(i), each such Participant shall fund its Participation Interest in such unreimbursed drawing in accordance with the terms of Section 2.2(e)(ii). Any such reimbursement shall not relieve or otherwise impair the obligation of the Borrower or any other Credit Party to reimburse the Issuing Lender under any Letter of Credit, together with interest as hereinafter provided.
(d) Reimbursement by Borrower. In the event of any drawing under any Letter of Credit, the Issuing Lender will promptly notify the Borrower. Unless the Borrower shall notify the Issuing Lender of its intent to otherwise reimburse the Issuing Lender and shall reimburse the Issuing Lender in same day funds within one hour of receipt of notice of such drawing from the Issuing Lender, the Borrower shall be deemed to have requested a Revolving Loan at the Base Rate in the amount of the drawing, the proceeds of which will be used to satisfy the reimbursement obligations. The Borrower's reimbursement obligations hereunder shall be absolute and unconditional under all circumstances irrespective of (but without waiver of) (i) any rights of set-off, counterclaim or defense to payment the applicable account party or the Borrower may claim or have against the Issuing
Lender, the Administrative Agent, the Lenders, the beneficiary of the
Letter of Credit drawn upon or any other Person, including without
limitation, any defense based on any failure of the applicable account
party, the Borrower or any other Credit Party to receive consideration or
(ii) the legality, validity, regularity or unenforceability of the Letter
of Credit, this Credit Agreement or any other Credit Document.
(e) Reimbursement by Lenders.
(i) Reimbursement with Revolving Loans. On any day on which the Borrower shall have requested, or been deemed to have requested, a Revolving Loan borrowing to reimburse a drawing under a Letter of Credit (as set forth in clause (d) above), the Administrative Agent shall give notice to the Lenders that a Revolving Loan has been requested or deemed requested in connection with a drawing under a Letter of Credit, in which case a Revolving Loan borrowing comprised solely of Base Rate Loans (each such borrowing, a "Mandatory Borrowing") shall be made from all Lenders (without giving effect to any termination of the Commitments pursuant to Section 9.2) pro rata based on each Lender's respective Revolving Loan Commitment Percentage and the proceeds thereof shall be paid directly to the Issuing Lender for application to the respective LOC Obligations. Each applicable Lender hereby irrevocably agrees to make such Revolving Loans upon any such request or deemed request on account of each such Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and in accordance with the terms of Section 2.2(e)(iii) notwithstanding (A) the amount of Mandatory Borrowing may not comply with the minimum amount for borrowings of Revolving Loans otherwise required hereunder, (B) whether any conditions specified in Section 5.2 are then satisfied, (C) whether a Default or Event of Default then exists, (D) failure of any such request or deemed request for Revolving Loans to be made by the time otherwise required hereunder, (E) the date of such Mandatory Borrowing, (F) any reduction in the Revolving Committed Amount or any termination of the Commitments, or (G) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Issuing Lender, the Borrower or any other Person for any reason whatsoever.
(ii) Reimbursement Through Funding of Participation Interests. In the event that any Mandatory Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code with respect to the Borrower or any other Credit Party), the Issuing Lender will promptly notify the Participants of the amount of any unreimbursed drawing (as of the date the Mandatory Borrowing would otherwise have occurred, but adjusted for any payments received from the Borrower on or after such date and prior to the funding of the Participation Interests therein) and each Participant shall fund its Participation Interest in such unreimbursed drawing by paying to the Issuing Lender, in Dollars and in immediately available funds, the amount of such Participant's Revolving Loan Commitment Percentage of such unreimbursed drawing. Each Participant's obligation to make such payment to the Issuing Lender, and the right of the Issuing
Lender to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and without regard to (A) the termination of this Credit Agreement or the Commitments hereunder, (B) the existence of a Default or Event of Default, (C) the acceleration of the obligations hereunder and (D) any set-off, counterclaim, recoupment, defense or other right which such Participant may have against the Issuing Lender, the Borrower or any other Person for any reason whatsoever. Simultaneously with the making of each such payment by a Participant to the Issuing Lender, such Participant shall, automatically and without any further action on the part of the Issuing Lender or such Participant, acquire a participation in an amount equal to such payment (excluding the portion of such payment constituting interest owing to the Issuing Lender) in the related unreimbursed drawing portion of the LOC Obligation and in the interest thereon and in the related LOC Documents, and shall have a claim against the Borrower and the other Credit Parties with respect thereto.
(iii) Funding of Mandatory Borrowing or Participation Interest.
Each applicable Lender (including the Lender acting as Issuing Lender)
and each Participant shall upon any notice pursuant to Section
2.2(e)(i) or Section 2.2(e)(ii), respectively, make its Revolving Loan
Commitment Percentage of the unreimbursed drawing available to the
Administrative Agent, for the benefit of the Issuing Lender, by 1:00
p.m. on the day of the notice if notice is given on or before 11:00
a.m. or by 1:00 p.m. the next Business Day if notice is given after
11:00 a.m., in Dollars, of immediately available funds at the Agency
Services Address. The Administrative Agent shall remit the funds so
received to the Issuing Lender.
(iv) Failure to Fund. In the event any Lender or any Participant
shall fail to fund its portion of a Mandatory Borrowing or its
Participation Interest, respectively, on the date required pursuant to
Section 2.2(e)(iii), the amount of such Lender's unfunded portion of
the Mandatory Borrowing or such Participant's unfunded Participation
Interest shall bear interest payable to the Issuing Lender upon
demand, at a rate per annum equal to, during the period to but
excluding the date two Business Days after demand therefor, the
Federal Funds Rate, and, thereafter, the Base Rate plus two percent
(2%) per annum.
(f) Modification and Extension. The issuance of any supplement, modification, amendment, renewal, or extensions to any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new Letter of Credit hereunder.
(g) Applicability of ISP98 and UCP. Unless otherwise expressly agreed
by the Issuing Lender and the Borrower when a Letter of Credit is issued
(including any such agreement applicable to an Existing Letter of Credit),
(i) the rules of the "International Standby Practices 1998" published by
the Institute of International Banking Law & Practice (or such later
version thereof as may be in effect at the time of issuance) shall apply to
each standby Letter of Credit, and (ii) the rules of the Uniform Customs
and Practice for Documentary Credits, as most recently published by the
International Chamber of Commerce at the time of issuance shall apply to each commercial Letter of Credit.
(h) Responsibility of Issuing Lender.
(i) It is expressly understood and agreed as between the Lenders
that the obligations of the Issuing Lender hereunder to the
Participants are only those expressly set forth in this Credit
Agreement and that the Issuing Lender shall be entitled to assume that
the conditions precedent set forth in Section 5.2 have been satisfied
unless it shall have acquired actual knowledge that any such condition
precedent has not been satisfied; provided, however, that nothing set
forth in this Section 2.2 shall be deemed to prejudice the right of
any Participant to recover from the Issuing Lender any amounts made
available by such Participant to the Issuing Lender pursuant to this
Section 2.2 in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit
constituted gross negligence or willful misconduct on the part of the
Issuing Lender.
(ii) The Issuing Lender shall be under no obligation to issue any
Letter of Credit if (a) any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to
enjoin or restrain the Issuing Lender from issuing such Letter of
Credit, (b) any Requirement of Law applicable to the Issuing Lender or
any request or directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over the Issuing Lender
shall prohibit, or request that the Issuing Lender refrain from, the
issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon the Issuing Lender with respect to
such Letter of Credit any restriction, reserve or capital requirement
(for which the Issuing Lender is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon the Issuing
Lender any unreimbursed loss, cost or expense which was not applicable
on the Closing Date and which the Issuing Lender in good faith deems
material to it, or (c) the issuance of such Letter of Credit would
violate one or more policies of the Issuing Lender.
(i) Conflict with LOC Documents. In the event of any conflict between this Credit Agreement and any LOC Document, this Credit Agreement shall govern.
(j) Indemnification of Issuing Lender.
(i) In addition to its other obligations under this Credit Agreement, the Borrower hereby agrees to protect, indemnify, pay and save the Issuing Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including Attorney Costs) that the Issuing Lender may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit or (B) the failure of the Issuing Lender to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority (all such acts or omissions, herein called "Government Acts").
(ii) As between the Borrower and the Issuing Lender, the Borrower shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. The Issuing Lender shall not be responsible for (except in the case of (A), (B) and (C) below if the Issuing Lender has actual knowledge to the contrary): (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) failure of the beneficiary of a Letter of Credit to comply fully with conditions required in order to draw upon a Letter of Credit; (D) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or of the proceeds thereof; and (F) any consequences arising from causes beyond the control of the Issuing Lender, including, without limitation, any Government Acts. None of the above shall affect, impair, or prevent the vesting of the Issuing Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the Issuing Lender, under or in connection with any Letter of Credit or the related certificates, if taken or omitted in good faith, shall not put the Issuing Lender under any resulting liability to the Borrower or any other Credit Party. It is the intention of the parties that this Credit Agreement shall be construed and applied to protect and indemnify the Issuing Lender against any and all risks involved in the issuance of the Letters of Credit, all of which risks are hereby assumed by the Borrower, including, without limitation, any and all risks of the acts or omissions, whether rightful or wrongful, of any present or future Government Acts. The Issuing Lender shall not, in any way, be liable for any failure by the Issuing Lender or anyone else to pay any drawing under any Letter of Credit as a result of any Government Acts or any other cause beyond the control of the Issuing Lender.
(iv) Nothing in this subsection (j) is intended to limit the
reimbursement obligation of the Borrower contained in this Section
2.2. The obligations of the Borrower under this subsection (j) shall
survive the termination of this Credit Agreement. No act or omission
of any current or prior beneficiary of a Letter of Credit shall in any
way affect or impair the rights of the Issuing Lender to enforce any
right, power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in this subsection (j), the Borrower shall have no obligation to indemnify the Issuing Lender in respect of any liability incurred by the Issuing Lender arising out of the
gross negligence or willful misconduct of the Issuing Lender, as determined by a court of competent jurisdiction.
(k) Designation of other Persons as Account Parties. Notwithstanding anything to the contrary set forth in this Credit Agreement, including without limitation Section 2.2(a) hereof, a Letter of Credit issued hereunder may contain a statement to the effect that such Letter of Credit is issued for the account of a Subsidiary of the Borrower; provided that notwithstanding such statement, the Borrower shall be the actual account party for all purposes of this Credit Agreement for such Letter of Credit and such statement shall not affect the Borrower's reimbursement obligations hereunder with respect to such Letter of Credit.
(l) Payments Set Aside. If any payment received by the Issuing Lender
(or by the Administrative Agent for the account of the Issuing Lender)
pursuant to Section 2.2(d) or (e) is subsequently invalidated, declared to
be fraudulent or preferential, set aside or required (including pursuant to
any settlement entered into by the Issuing Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under the Bankruptcy Code or any other Requirement of Law or
otherwise, each Participant shall fund its Participation Interest in such
payment by paying to the Issuing Lender its Revolving Loan Commitment
Percentage of such payment on demand of the Administrative Agent, plus
interest thereon from the date of such demand to the date such
Participation Interest is funded by such Lender, at a rate per annum equal
to the Federal Funds Rate from time to time in effect.
2.3 Swing Line Loans Subfacility.
(a) Swing Line Loans. The Swing Line Lender hereby agrees, on the terms and subject to the conditions set forth herein and in the other Credit Documents, to make loans (each a "Swing Line Loan" and collectively, the "Swing Line Loans") to the Borrower, in Dollars, at any time and from time to time, during the period from and including the Effective Date to but not including the Maturity Date (or such earlier date if the Commitments have been terminated as provided herein); provided that (i) the aggregate principal amount of the Swing Line Loans outstanding at any one time shall not exceed the Swing Line Committed Amount and (ii) the aggregate amount of outstanding Swing Line Loans plus the aggregate amount of outstanding Revolving Loans plus the aggregate amount of outstanding LOC Obligations plus the aggregate amount of outstanding Competitive Bid Loans shall not exceed the Revolving Committed Amount. Subject to the terms of this Credit Agreement, the Borrower may borrow, repay and reborrow Swing Line Loans.
(b) Method of Borrowing and Funding Swing Line Loans. By no later than 1:00 p.m. on the date of the requested borrowing of Swing Line Loans, the Borrower shall provide telephone notice to the Swing Line Lender, followed promptly by a written Swing Line Loan Request in the form of Exhibit 2.3(b) (which may be submitted by telecopy) setting forth (i) the amount of the requested Swing Line Loan and (ii) the date of the requested Swing Line Loan and complying in all respects with Section 5.2. The Swing Line
Lender shall initiate the transfer of funds representing the Swing Line Loan advance to the Borrower by 3:00 p.m. on the Business Day of the requested borrowing.
(c) Repayment and Participations of Swing Line Loans. The Borrower
agrees to repay all Swing Line Loans immediately upon the existence of a
Default or Event of Default or otherwise within three Business Days of
demand therefor by the Swing Line Lender. Each repayment of a Swing Line
Loan may be accomplished by requesting Revolving Loans which request is not
subject to the conditions set forth in Section 5.2. In the event that the
Borrower shall fail to timely repay any Swing Line Loan, and in any event
upon (i) a request by the Swing Line Lender, (ii) the occurrence of an
Event of Default described in Section 9.1(f) or (iii) the acceleration of
any Loan or termination of any Commitment pursuant to Section 9.2, each
other Participant shall irrevocably and unconditionally purchase from the
Swing Line Lender, without recourse or warranty, an undivided interest and
participation in such Swing Line Loan in an amount equal to such other
Lender's Revolving Loan Commitment Percentage thereof, by directly
purchasing a participation in such Swing Line Loan in such amount
(regardless of whether the conditions precedent thereto set forth in
Section 5.2 are then satisfied, whether or not the Borrower has submitted a
Notice of Borrowing and whether or not the Commitments are then in effect,
any Event of Default exists or all the Loans have been accelerated) and
paying the proceeds thereof to the Swing Line Lender at the Agency Services
Address, or at such other address as the Swing Line Lender may designate,
in Dollars and in immediately available funds. If such amount is not in
fact made available to the Swing Line Lender by any Participant, the Swing
Line Lender shall be entitled to recover such amount on demand from such
Participant, together with accrued interest thereon for each day from the
date of demand thereof, at a rate equal to, if paid within two Business
Days of such date, the Federal Funds Rate, and thereafter at a rate equal
to the Base Rate plus two percent (2%) per annum. If such Participant does
not pay such amount forthwith upon the Swing Line Lender's demand therefor,
and until such time as such Participant makes the required payment, the
Swing Line Lender shall be deemed to continue to have outstanding Swing
Line Loans in the amount of such unpaid participation obligation for all
purposes of the Credit Documents other than those provisions requiring the
other Participants to purchase a participation therein. Further, such
Participant shall be deemed to have assigned any and all payments made of
principal and interest on its Loans, and any other amounts due to it
hereunder to the Swing Line Lender to fund Swing Line Loans in the amount
of the participation in Swing Line Loans that such Participant failed to
purchase pursuant to this Section 2.3(c) until such amount has been
purchased (as a result of such assignment or otherwise).
(d) Swing Line Loan Note. The Swing Line Loans made by the Swing Line Lender shall, if requested by the Swing Line Lender, be evidenced by a duly executed promissory note of the Borrower to the Swing Line Lender in substantially the form of Exhibit 2.3(d).
2.4 Competitive Bid Loans Subfacility.
(a) Competitive Bid Loans. Subject to the terms and conditions set forth herein, the Borrower may, from time to time, during the period from the Closing Date to
the Maturity Date, request, in Dollars, and each Lender may, in its sole discretion, agree to make loans to the Borrower in accordance with the terms of this Section 2.4 (each a "Competitive Bid Loan" and collectively the "Competitive Bid Loans"); provided, however, that (i) the sum of the aggregate amount of outstanding Revolving Loans plus the aggregate amount of outstanding Competitive Bid Loans plus the aggregate amount of outstanding Swing Line Loans plus the aggregate amount of outstanding LOC Obligations shall not exceed the Revolving Loan Commitment, (ii) the aggregate amount of Competitive Bid Loans outstanding at any one time cannot exceed $300,000,000 and (iii) if a Lender does make a Competitive Bid Loan it shall not reduce such Lender's obligation to make its pro rata share of any Revolving Loan.
(b) Competitive Bid Requests. The Borrower may solicit Competitive Bids by delivery of a Competitive Bid Request to the Administrative Agent by 11:00 a.m. on a Business Day not less than one nor more than five Business Days prior to the date of the requested Competitive Bid Loan. A Competitive Bid Request must be substantially in the form of Exhibit 2.4(b) and shall specify (i) the date of the requested Competitive Bid Loan (which shall be a Business Day), (ii) the amount of the requested Competitive Bid Loan and (iii) the applicable Interest Period or Interest Periods requested and be accompanied by the Competitive Bid Fee. The Administrative Agent shall notify the Lenders of its receipt of a Competitive Bid Request and the contents thereof and invite the Lenders to submit Competitive Bids in response thereto. The Borrower may not request a Competitive Bid for more than four different Interest Periods per Competitive Bid Request and Competitive Bid Requests may be made no more frequently than six times every calendar month.
(c) Competitive Bid Procedure. Each Lender may, in its sole discretion, make one or more Competitive Bids to the Borrower in response to a Competitive Bid Request. Each Competitive Bid must be received by the Administrative Agent not later than 11:00 a.m. on the proposed date of the requested Competitive Bid Loan; provided, however, that should the Administrative Agent, in its capacity as a Lender, desire to submit a Competitive Bid it shall notify the Borrower of its Competitive Bid and the terms thereof not later than 15 minutes prior to the time the other Lenders are required to submit their Competitive Bid. A Lender may offer to make all or part of the requested Competitive Bid Loan and may submit multiple Competitive Bids in response to a Competitive Bid Request. Any Competitive Bid must specify (i) the particular Competitive Bid Request as to which the Competitive Bid is submitted, (ii) the minimum (which shall be not less than $10,000,000 and integral multiples of $1,000,000 in excess thereof) and maximum principal amounts of the requested Competitive Bid Loan or Loans as to which the Lender is willing to make and (iii) the applicable interest rate or rates and Interest Period or Interest Periods therefor. A Competitive Bid submitted by a Lender in accordance with the provisions hereof shall be irrevocable. The Administrative Agent shall promptly notify the Borrower of all Competitive Bids made and the terms thereof. The Administrative Agent shall send a copy of each of the Competitive Bids to the Borrower and each of the Lenders for its records as soon as practicable.
(d) Acceptance of Competitive Bids. The Borrower may, in its sole discretion, subject only to the provisions of this subsection (d), accept or refuse any Competitive Bid offered to it. To accept a Competitive Bid, the Borrower shall give oral notification of its acceptance of any or all such Competitive Bids (which shall be promptly confirmed in writing) to the Administrative Agent by 12:00 noon on the proposed date of the Competitive Bid Loan; provided, however, (i) the failure by the Borrower to give timely notice of its acceptance of a Competitive Bid shall be deemed to be a refusal thereof, (ii) to the extent Competitive Bids are for comparable Interest Periods, the Borrower may accept Competitive Bids only in ascending order of rates, (iii) the aggregate amount of Competitive Bids accepted by the Borrower shall not exceed the principal amount specified in the Competitive Bid Request, (iv) if the Borrower shall accept a bid or bids made at a particular Competitive Bid Rate, but the amount of such bid or bids shall cause the total amount of bids to be accepted by the Borrower to be in excess of the amount specified in the Competitive Bid Request, then the Borrower shall accept a portion of such bid or bids in an amount equal to the amount specified in the Competitive Bid Request less the amount of all other Competitive Bids accepted with respect to such Competitive Bid Request, which acceptance in the case of multiple bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such bid at such Competitive Bid Rate and (v) no bid shall be accepted for a Competitive Bid Loan unless such Competitive Bid Loan is in a minimum principal amount of $10,000,000 and integral multiples of $1,000,000 in excess thereof, except that where a portion of a Competitive Bid is accepted in accordance with the provisions of clause (iv) of subsection (d) hereof, then in a minimum principal amount of $500,000 and integral multiples of $100,000 (but not in any event less than the minimum amount specified in the Competitive Bid), and in calculating the pro rata allocation of acceptances of portions of multiple bids at a particular Competitive Bid Rate pursuant to clause (iv) of subsection (d) hereof, the amounts shall be rounded to integral multiples of $100,000 in a manner which shall be in the discretion of the Borrower. A notice of acceptance of a Competitive Bid given by the Borrower in accordance with the provisions hereof shall be irrevocable. The Administrative Agent shall, not later than 1:00 p.m. on the proposed date of such Competitive Bid Loan, notify each bidding Lender whether or not its Competitive Bid has been accepted (and if so, in what amount and at what Competitive Bid Rate), and each successful bidder will thereupon become bound, subject to the other applicable conditions hereof, to make the Competitive Bid Loan in respect of which its bid has been accepted.
(e) Funding of Competitive Bid Loans. Each Lender which is to make a Competitive Bid Loan shall make its Competitive Bid Loan available to the Administrative Agent by 2:00 p.m. on the date specified in the Competitive Bid Request by deposit of immediately available funds at the Agency Services Address or at such other address as the Administrative Agent may designate in writing. The Administrative Agent will, upon receipt, make the proceeds of such Competitive Bid Loans available to the Borrower.
(f) Maturity of Competitive Bid Loans. Each Competitive Bid Loan shall mature and be due and payable in full on the last day of the Interest Period applicable
thereto. Unless the Borrower shall give notice to the Administrative Agent otherwise (or repays such Competitive Bid Loan), or a Default or Event of Default exists and is continuing, the Borrower shall be deemed to have requested Revolving Loans from all of the Lenders (in the amount of the maturing Competitive Bid Loan and accruing interest at the Base Rate), the proceeds of which will be used to repay such Competitive Bid Loan.
(g) Competitive Bid Loan Notes. The Competitive Bid Loans made by each Lender shall be evidenced by a duly executed promissory note of the Borrower to each Lender that requests a Competitive Bid Loan Note in substantially the form of Exhibit 2.4(g).
2.5 Continuations and Conversions.
Subject to the terms below, the Borrower shall have the option, on any
Business Day, to continue existing Eurodollar Loans for a subsequent Interest
Period, to convert Base Rate Loans into Eurodollar Loans or to convert
Eurodollar Loans into Base Rate Loans. By no later than 11:00 a.m. (a) on the
date of the requested conversion of a Eurodollar Loan to a Base Rate Loan or (b)
three Business Days prior to the date of the requested continuation of a
Eurodollar Loan or conversion of a Base Rate Loan to a Eurodollar Loan, the
Borrower shall provide telephonic notice to the Administrative Agent, followed
promptly by a written Notice of Continuation/Conversion, in the form of Exhibit
2.5 setting forth (i) whether the Borrower wishes to continue or convert such
Loans and (ii) if the request is to continue a Eurodollar Loan or convert a Base
Rate Loan to a Eurodollar Loan, the Interest Period applicable thereto.
Notwithstanding anything herein to the contrary, (A) except as provided in
Section 3.11, Eurodollar Loans may only be continued or converted into Base Rate
Loans on the last day of the Interest Period applicable thereto, (B) Eurodollar
Loans may not be continued nor may Base Rate Loans be converted into Eurodollar
Loans during the existence and continuation of a Default or an Event of Default,
(C) any request to continue a Eurodollar Loan that fails to comply with the
terms hereof or any failure to request a continuation of a Eurodollar Loan at
the end of an Interest Period shall constitute a conversion to a Base Rate Loan
on the last day of the applicable Interest Period and (D) any failure to state
the Interest Period with respect to the continuation of a Eurodollar Loan or the
conversion of a Base Rate Loan to a Eurodollar Loan shall constitute a request
for a one month Interest Period. It is understood and agreed that Competitive
Bid Loans and Swing Line Loans may not be continued or converted.
2.6 Minimum Amounts.
Each request for a borrowing, conversion or continuation shall be subject to the requirements that (a) each Eurodollar Loan and each Competitive Bid Loan shall be in a minimum amount of $10,000,000 and in integral multiples of $1,000,000 in excess thereof, (b) each Base Rate Loan shall be in a minimum amount of the lesser of $5,000,000 (and in integral multiples of $1,000,000 in excess thereof) or the remaining amount available under the Revolving Committed Amount, (c) each Swing Line Loan shall be in a minimum amount of the lesser of $1,000,000 (and in integral multiples of $100,000 in excess thereof) or the remaining amount available under the Swing Line Committed Amount and (d) no more than ten Eurodollar Loans shall be outstanding hereunder at any one time. For the purposes of this Section 2.6, all Eurodollar Loans with the same
Interest Periods that begin and end on the same date shall be considered as one Eurodollar Loan, but Eurodollar Loans with different Interest Periods, even if they begin on the same date, shall be considered as separate Eurodollar Loans.
SECTION 3
GENERAL PROVISIONS APPLICABLE
TO LOANS AND LETTERS OF CREDIT
3.1 Interest.
(a) Interest Rate. Subject to Section 3.1(b), (i) all Base Rate Loans shall accrue interest at the Base Rate, (ii) all Eurodollar Loans shall accrue interest at the Adjusted Eurodollar Rate, (iii) all Swing Line Loans shall accrue interest at the Base Rate and (iv) all Competitive Bid Loans shall accrue interest at the applicable Competitive Bid Rate with respect to each Competitive Bid Loan.
(b) Default Rate of Interest. Upon the occurrence, and during the continuation, of an Event of Default pursuant to Section 9.1(a), the principal of and, to the extent permitted by law, interest on the Loans and any other amounts owing hereunder or under the other Credit Documents (including without limitation fees and expenses) shall bear interest, payable on demand, at a per annum rate equal to 2% plus the rate which would otherwise be applicable (or if no rate is applicable, then the Base Rate plus two percent (2%) per annum).
(c) Interest Payments. Interest on Loans shall be due and payable in arrears on each Interest Payment Date.
3.2 Place and Manner of Payments.
All payments of principal, interest, fees, expenses and other amounts to be made by a Credit Party under this Credit Agreement shall be made unconditionally and without any setoff, deduction, counterclaim, defense, recoupment or withholding of any kind and received not later than 2:00 p.m. on the date when due, in Dollars and in immediately available funds, by the Administrative Agent at the Agency Services Address. Payments received after such time shall be deemed to have been received on the next Business Day. The Borrower shall, at the time it makes any payment under this Credit Agreement, specify to the Administrative Agent the Loans, Letters of Credit, fees or other amounts payable by the Borrower hereunder to which such payment is to be applied (and in the event that it fails to specify, or if such application would be inconsistent with the terms hereof, the Administrative Agent shall, subject to Section 3.7, distribute such payment to the Lenders in such manner as the Administrative Agent may reasonably deem appropriate). The Administrative Agent will distribute such payments to the Lenders on the same Business Day if any such payment is received at or before 2:00 p.m.; otherwise the Administrative Agent will distribute such payment to the Lenders on the next succeeding Business Day. Whenever any payment hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day (subject to accrual of interest and fees for the period of such
extension), except that, in the case of Eurodollar Loans (or interest payable with respect thereto), if the extension would cause the payment to be made in the next following calendar month, then such payment shall instead be made on the next preceding Business Day.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right to prepay Loans in whole or in part from time to time without premium or penalty; provided, however, that (i) Eurodollar Loans may only be prepaid on three Business Days' prior written notice to the Administrative Agent, (ii) each such partial prepayment of Eurodollar Loans or Base Rate Loans shall be in the minimum principal amount of $5,000,000 and integral multiples of $1,000,000, (iii) each such partial prepayment of Swing Line Loans shall be in the minimum principal amount of $1,000,000 and integral multiples of $100,000 and (iv) Competitive Bid Loans may not be prepaid unless a breakage fee equal to the amount of damages suffered by the Lender (other than loss of anticipated profits) whose Competitive Bid Loan is prepaid is paid to such Lender (as determined by such Lender in its reasonable discretion). Amounts prepaid pursuant to this Section 3.3(a) shall be applied as the Borrower may elect; however, if the Borrower fails to specify, such prepayment will be applied in the manner set forth in Section 3.3(c) below.
(b) Mandatory Prepayments. If at any time (i) the sum of the aggregate
amount of outstanding Revolving Loans plus the aggregate amount of
outstanding LOC Obligations plus the aggregate amount of outstanding
Competitive Bid Loans plus the aggregate amount of outstanding Swing Line
Loans exceeds the Revolving Committed Amount, (ii) the aggregate amount of
outstanding Swing Line Loans exceeds the Swing Line Committed Amount, (iii)
the aggregate amount of outstanding LOC Obligations exceeds the LOC
Committed Amount, (iv) the aggregate amount of outstanding commercial
Letters of Credit exceeds $40,000,000 or (v) the amount of outstanding
Competitive Bid Loans exceeds $300,000,000, the Borrower shall immediately
make a principal payment to the Administrative Agent (or with respect to
LOC Obligations an amount to be held as cash collateral) in a manner and in
an amount necessary to be in compliance with Sections 2.1, 2.2, 2.3 and
2.4, as applicable and as directed by the Administrative Agent (any such
prepayment with respect to clause (i) above to be applied as set forth in
Section 3.3(c) below).
(c) Application of Prepayments. All amounts paid pursuant to Sections
3.3(a) and 3.3(b)(i), if the Borrower has not otherwise elected an
application of such amounts, shall be applied first to Swing Line Loans,
second to Revolving Loans (first to Base Rate Loans and then to Eurodollar
Loans in direct order of Interest Period Maturities), third, pro rata, to
Competitive Bid Loans and fourth to a cash collateral account in respect of
LOC Obligations. All prepayments under this Section 3.3 shall be subject to
Section 3.14.
3.4 Fees.
(a) Facility Fees. In consideration of the Revolving Committed Amount being made available by the Lenders hereunder, the Borrower agrees to pay to the Administrative Agent, for the pro rata benefit of each Lender (based on such Lender's Revolving Loan Commitment Percentage of the Revolving Committed Amount), a per annum fee equal to the Applicable Percentage for Facility Fees (the "Facility Fees"). The Facility Fees shall commence to accrue on the Effective Date and shall be due and payable in arrears on the last day of each fiscal quarter (beginning with the fiscal quarter ending June 30, 2004) of the Borrower (as well as on the Maturity Date and on any date that the Revolving Committed Amount is reduced) for the immediately preceding fiscal quarter, or portion thereof, (or with respect to the fiscal quarter ending June 30, 2004, for the period from the Closing Date to June 30, 2004).
(b) Letter of Credit Fees.
(i) Letter of Credit Fees. In consideration of the issuance of Letters of Credit hereunder, the Borrower agrees to pay to the Issuing Lender, for the pro rata benefit of each Lender (based on each Lender's Commitment Percentage), a per annum fee (the "Letter of Credit Fees") (i) for each commercial Letter of Credit equal to the Applicable Percentage for Commercial Letter of Credit Fees on the average daily maximum amount available to be drawn under each such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit) from the date of issuance to the date of expiration and (ii) for each standby Letter of Credit equal to the Applicable Percentage for Standby Letter of Credit Fees on the average daily maximum amount available to be drawn under each such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit) from the date of issuance to the date of expiration. The Letter of Credit Fees will be payable in arrears on the last day of each fiscal quarter (beginning with the fiscal quarter ending June 30, 2004) of the Borrower (as well as on the Maturity Date) for the immediately preceding fiscal quarter, or portion thereof, (or with respect to the fiscal quarter ending June 30, 2004, for the period from the Closing Date to June 30, 2004).
(ii) Issuing Lender Fees. In addition to the Letter of Credit Fees payable pursuant to subsection (i) above, the Borrower shall pay to the Issuing Lender for its own account, without sharing by the other Lenders, (A) the customary, incidental and/or out of pocket charges from time to time to the Issuing Lender for its services in connection with the issuance, amendment, payment, transfer, administration, cancellation and conversion of, and drawings under, Letters of Credit and (B) (1) with respect to each commercial Letter of Credit, a one time commercial letter of credit fronting fee based on the Issuing Lender's commercial letter of credit fee schedule then in effect, payable on demand by the Issuing Lender upon the issuance of any commercial Letter of Credit and (2) with respect to each standby Letter of Credit, a standby letter of credit fronting fee of .125% per annum of the face amount of each Letter of Credit payable quarterly on the last day of each fiscal quarter of the
Borrower (beginning with the fiscal quarter ending June 30, 2004) and on the Maturity Date (collectively, the "Issuing Lender Fees").
(c) Administrative Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, an annual fee as agreed to between the Borrower and the Administrative Agent.
3.5 Payment in full at Maturity.
On the Maturity Date, the entire outstanding principal balance of all Loans and all LOC Obligations, together with accrued but unpaid interest and all other sums owing with respect thereto, shall be due and payable in full, unless accelerated sooner pursuant to Section 9.
3.6 Computations of Interest and Fees.
(a) Except for Base Rate Loans and Swing Line Loans that are based upon the Prime Rate, in which case interest shall be computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, all computations of interest and fees hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days. Interest shall accrue from and include the date of borrowing (or continuation or conversion) but exclude the date of payment.
(b) It is the intent of the Lenders and the Credit Parties to conform to and contract in strict compliance with applicable usury law from time to time in effect. All agreements between the Lenders and the Credit Parties are hereby limited by the provisions of this paragraph which shall override and control all such agreements, whether now existing or hereafter arising and whether written or oral. In no way, nor in any event or contingency (including but not limited to prepayment or acceleration of the maturity of any obligation), shall the interest taken, reserved, contracted for, charged, or received under this Credit Agreement, under the Notes or otherwise, exceed the maximum nonusurious amount permissible under applicable law. If, from any possible construction of any of the Credit Documents or any other document, interest would otherwise be payable in excess of the maximum nonusurious amount, any such construction shall be subject to the provisions of this paragraph and such documents shall be automatically reduced to the maximum nonusurious amount permitted under applicable law, without the necessity of execution of any amendment or new document. If any Lender shall ever receive anything of value which is characterized as interest on the Loans under applicable law and which would, apart from this provision, be in excess of the maximum nonusurious amount, an amount equal to the amount which would have been excessive interest shall, without penalty, be applied to the reduction of the principal amount owing on the Loans and not to the payment of interest, or refunded to the Borrower or the other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal amount of the Loans. The right to demand payment of the Loans or any other Indebtedness evidenced by any of the Credit Documents does not include the right to accelerate the payment of any interest which has not otherwise accrued on the date of such demand, and the Lenders do not intend to charge or receive any unearned interest in the event of such demand. All interest paid or agreed to
be paid to the Lenders with respect to the Loans shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term (including any renewal or extension) of the Loans so that the amount of interest on account of such Indebtedness does not exceed the maximum nonusurious amount permitted by applicable law.
3.7 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Revolving Loans. Each Revolving Loan borrowing (including, without limitation, each Mandatory Borrowing), each payment or prepayment of principal of any Revolving Loan, each payment of fees (other than the Issuing Lender Fees retained by the Issuing Lender for its own account and the Administrative Fees retained by the Administrative Agent for its own account), each reduction of the Revolving Committed Amount, and each conversion or continuation of any Revolving Loan, shall (except as otherwise provided in Section 3.11) be allocated pro rata among the relevant Lenders in accordance with the respective Revolving Loan Commitment Percentages of such Lenders, as applicable, (or, if the Commitments of such Lenders have expired or been terminated, in accordance with the respective principal amounts of the outstanding Revolving Loans and Participation Interests of such Lenders); provided that, if any Lender shall have failed to pay its applicable pro rata share of any Revolving Loan, then any amount to which such Lender would otherwise be entitled pursuant to this subsection (a) shall instead be payable to the Administrative Agent until the share of such Loan not funded by such Lender has been repaid; provided further, that in the event any amount paid to any Lender pursuant to this subsection (a) is rescinded or must otherwise be returned by the Administrative Agent, each Lender shall, upon the request of the Administrative Agent, repay to the Administrative Agent the amount so paid to such Lender, with interest for the period commencing on the date such payment is returned by the Administrative Agent until the date the Administrative Agent receives such repayment at a rate per annum equal to, during the period to but excluding the date two Business Days after such request, the Federal Funds Rate, and thereafter, the Base Rate plus two percent (2%) per annum; and
(b) Letters of Credit. Each payment of unreimbursed drawings in respect of LOC Obligations shall be allocated to each Participant pro rata in accordance with its Revolving Loan Commitment Percentage; provided that, if any Participant shall have failed to pay its applicable pro rata share of any drawing under any Letter of Credit, then any amount to which such Participant would otherwise be entitled pursuant to this subsection (b) shall instead be payable to the Issuing Lender until the share of such unreimbursed drawing not funded by such Lender has been repaid; provided further, that in the event any amount paid to any Participant pursuant to this subsection (b) is rescinded or must otherwise be returned by the Issuing Lender, each Participant shall, upon the request of the Issuing Lender, repay to the Administrative Agent for the account of the Issuing Lender the amount so paid to such Participant, with interest for the period commencing on the date such payment is returned by the Issuing Lender until the date the Issuing Lender receives such repayment at a rate per annum equal to, during the period to but excluding the date two
Business Days after such request, the Federal Funds Rate, and thereafter, the Base Rate plus two percent (2%) per annum.
(c) Swing Line Loans. The Swing Line Lender shall receive, for its own account, all payments or prepayments of principal and interest with respect to the Swing Line Loans; provided, however, upon the funding of the Participants' participation interests with respect to a Swing Line Loan pursuant to Section 2.3(c), such Participants shall be entitled to receive their pro rata share of any payment or prepayment of principal and interest with respect to such Swing Line Loan.
3.8 Sharing of Payments.
The Lenders agree among themselves that, except to the extent otherwise provided herein, in the event that any Lender shall obtain payment in respect of any Loan, unreimbursed drawing with respect to any LOC Obligations or any other obligation owing to such Lender under this Credit Agreement through the exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, in excess of its pro rata share of such payment as provided for in this Credit Agreement, such Lender shall promptly pay in cash or purchase from the other Lenders a participation in such Loans, LOC Obligations, and other obligations in such amounts, and make such other adjustments from time to time, as shall be equitable to the end that all Lenders share such payment in accordance with their respective ratable shares as provided for in this Credit Agreement. The Lenders further agree among themselves that if payment to a Lender obtained by such Lender through the exercise of a right of setoff, banker's lien, counterclaim or other event as aforesaid shall be rescinded or must otherwise be restored, each Lender which shall have shared the benefit of such payment shall, by payment in cash or a repurchase of a participation theretofore sold, return its share of that benefit (together with its share of any accrued interest payable with respect thereto) to each Lender whose payment shall have been rescinded or otherwise restored. The Borrower agrees that any Lender so purchasing such a participation may, to the fullest extent permitted by law, exercise all rights of payment, including setoff, banker's lien or counterclaim, with respect to such participation as fully as if such Lender were a holder of such Loan, LOC Obligation or other obligation in the amount of such participation. Except as otherwise expressly provided in this Credit Agreement, if any Lender or the Administrative Agent shall fail to remit to any other Lender an amount payable by such Lender or the Administrative Agent to such other Lender pursuant to this Credit Agreement on the date when such amount is due, such payments shall be made together with interest thereon for each date from the date such amount is due until the date such amount is paid to the Administrative Agent or such other Lender at a rate per annum equal to the Federal Funds Rate. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section 3.8 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders under this Section 3.8 to share in the benefits of any recovery on such secured claim.
3.9 Capital Adequacy/Regulation D.
(a) If, after the date thereof, any Lender determines that the introduction after the Closing Date of any law, rule or regulation or other Requirement of Law regarding capital adequacy or any change therein or in the interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has or would have the effect of reducing the rate of return on the capital or assets of such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender's desired return on capital), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction.
(b) The Borrower shall pay to each Lender, as long as such Lender shall be required under regulations of the Board of Governors of the Federal Reserve System of the United States of America to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as "Eurocurrency liabilities"), additional interest on the unpaid principal amount of each Eurodollar Loan equal to (i) (A) the applicable Eurodollar Rate divided by (B) one minus the Eurodollar Reserve Percentage minus (ii) the applicable Eurodollar Rate. Such additional interest shall be due and payable on each date on which interest is payable on such Loan; provided the Borrower shall have received at least five days' prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice five days prior to the relevant Interest Payment Date, such additional interest shall be due and payable five days from the receipt by the Borrower of such notice.
3.10 Inability To Determine Interest Rate.
If the Administrative Agent determines (which determination shall be conclusive and binding upon the Borrower) in connection with any request for a Eurodollar Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the applicable offshore Dollar market for the applicable amount and Interest Period of such Eurodollar Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Rate for such Eurodollar Loan, or (c) the Eurodollar Rate for such Eurodollar Loan does not adequately and fairly reflect the cost to the Lenders of funding such Eurodollar Loan, the Administrative Agent will promptly notify the Borrower and all the Lenders. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Loans shall be suspended until the Administrative Agent revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending Notice of Borrowing or Notice of Continuation/Conversion with respect to Eurodollar Loans or, failing that, will be deemed to have converted such request into a request for a borrowing of or conversion into a Base Rate Loan in the amount specified therein.
3.11 Illegality.
If any Lender determines that any Requirement of Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending
Office to make, maintain or fund Eurodollar Loans, or materially restricts the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the applicable offshore Dollar market, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Loans or to convert Base Rate Loans to Eurodollar Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period thereof, if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans. Upon any such prepayment or conversion, the Borrower shall also pay interest on the amount so prepaid or converted, together with any amounts due with respect thereto pursuant to Section 3.14. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.
3.12 Requirements of Law.
If any Lender determines that as a result of the introduction of or any change in, or in the interpretation of, any Requirement of Law, or such Lender's compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section 3.13 shall govern) and (ii) reserve requirements utilized in the determination of the Eurodollar Rate), then from time to time, within 10 days of demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction in yield.
3.13 Taxes.
(a) Any and all payments by a Credit Party to or for the account of the Administrative Agent or any Lender under any Credit Document shall be made free and clear of and without deduction for any and all present or future income, stamp or other taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, but excluding, in the case of the Administrative Agent and each Lender, any branch profit taxes or taxes imposed on or measured by its net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which the Administrative Agent or such Lender, as the case may be, is organized or maintains its Lending Office (all such non-excluded present or future income, stamp or other taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as "Taxes"). If a Credit Party shall be required
by any Requirement of Law to deduct any Taxes from or in respect of any sum payable under any Credit Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.13(a)), the Administrative Agent or such Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Credit Party shall make such deductions, (iii) such Credit Party shall pay the full amount deducted to the relevant taxation authority or other Governmental Authority in accordance with applicable Requirements of Law, and (iv) within 30 days after the date of such payment, such Credit Party shall furnish to the Administrative Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof, to the extent such receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Administrative Agent.
(b) In addition, each Credit Party agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Credit Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Credit Document (hereinafter referred to as "Other Taxes").
(c) If a Credit Party shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Credit Document to the Administrative Agent or any Lender, such Credit Party shall also pay to the Administrative Agent (for the account of such Lender) or to such Lender, at the time interest is paid, such additional amount that such Lender reasonably specifies by written notice to such Credit Party as necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) such Lender would have received if such Taxes or Other Taxes had not been imposed; provided that if such Lender fails to provide such notice to such Credit Party before the date which is five days prior to the date such interest is paid, such Credit Party shall pay at the time such interest is paid such amount as such Credit Party reasonably estimates will preserve such Lender's after-tax yield (after factoring in only such Taxes or Other Taxes) and pay the balance within five days after receiving such notice.
(d) Each Credit Party agrees to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 3.13(d)) paid by the Administrative Agent and such Lender, and (ii) any liability (including penalties, interest and reasonable expenses) arising therefrom or with respect thereto.
(e) In the case of any payment hereunder or under any other Credit Document by or on behalf of a Credit Party through an account or branch outside the United States, or on behalf of a Credit Party by a payor that is not a United States person, if such Credit Party determines that no taxes are payable in respect thereof, such Credit Party shall furnish, or shall cause such payor to furnish, to the Administrative Agent, an opinion of
counsel reasonably acceptable to the Administrative Agent stating that such payment is exempt from Taxes. For purposes of this subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Code.
(f) Each Lender that is a foreign corporation, foreign partnership or
foreign trust within the meaning of the Code shall deliver to the
Administrative Agent, prior to receipt of any payment subject to
withholding under the Code, two duly signed completed copies of either IRS
Form W-8BEN or any successor thereto (relating to such Lender and entitling
it to an exemption from, or reduction of, withholding tax on all payments
to be made to such Lender by the Credit Parties pursuant to this Credit
Agreement) or IRS Form W-8ECI or any successor thereto (relating to all
payments to be made to such Lender by a Credit Party pursuant to this
Credit Agreement), as appropriate, or such other evidence satisfactory to
the Borrower and the Administrative Agent that such Lender is entitled to
an exemption from, or reduction of, United States withholding tax. Upon the
request of the Administrative Agent or the Borrower, each Lender that is a
"United States person" within the meaning of Section 7701(a)(30) of the
Code shall deliver to the Administrative Agent two duly signed completed
copies of IRS Form W-9 or any successor thereto or such other evidence
satisfactory to the Borrower and the Administrative Agent that such Lender
is entitled to an exemption from, or reduction of, United States
withholding tax. Thereafter and from time to time, each such Lender shall
(i) promptly submit to the Administrative Agent such additional duly
completed and signed copies of one of such forms (or such successor forms
as shall be adopted from time to time by the relevant United States taxing
authorities), as appropriate, as may reasonably be requested by the
Borrower or the Administrative Agent and then be available under then
current United States laws and regulations to avoid, or such evidence as is
satisfactory to the Borrower and the Administrative Agent of any available
exemption from or reduction of, United States withholding taxes in respect
of all payments to be made to such Lender by the Borrower pursuant to this
Credit Agreement, (ii) promptly notify the Administrative Agent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction (or it is determined the earlier claimed exemption
was incorrectly claimed for any reason), and (iii) take such steps as shall
not be materially disadvantageous to it, in the reasonable judgment of such
Lender, and as may be reasonably necessary (including the re-designation of
its Lending Office) to avoid any Requirement of Law that the Credit Parties
make any deduction or withholding for taxes from amounts payable to such
Lender. If the forms or other evidence provided by such Lender at the time
such Lender first becomes a party to this Credit Agreement indicate a
United States interest withholding tax rate in excess of zero, withholding
tax at such rate shall be considered excluded from Taxes for purpose of any
indemnity or gross up unless and until such Lender provides the appropriate
forms certifying that a lesser rate applies, whereupon withholding tax at
such lesser rate only shall be considered excluded from Taxes for periods
governed by such forms; provided, however, that, if at the date of any
assignment pursuant to which a Lender becomes a party to this Credit
Agreement, the Lender assignor was entitled to payments under subsection
(a) of this Section 3.13 in respect of United States withholding tax with
respect to interest paid at such date, then, to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future or other amounts
otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender assignee on such date. If such Lender fails to deliver the above forms or other evidence, then the Borrower or the Administrative Agent may withhold from any interest payment to such Lender an amount equal to the applicable withholding tax imposed by the Code, without reduction. If any Governmental Authority asserts that the Borrower or the Administrative Agent did not properly withhold any tax or other amount from payments made in respect of such Lender, such Lender shall indemnify the Borrower or the Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Borrower or the Administrative Agent under this Section 3.13(f), and costs and expenses (including Attorney Costs) of the Borrower or the Administrative Agent. For any period with respect to which a Lender has failed to provide the Administrative Agent with the above forms or other evidence (other than if such failure is due to a change in the applicable law, or in the interpretation or application thereof, occurring after the date on which such form or other evidence originally was required to be provided or if such form or other evidence otherwise is not required), such Lender shall not be entitled to indemnification under subsection (d) of this Section 3.13 nor shall the Credit Party be required to deduct or withhold under subsections (a) or (c) of this Section 3.13 with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender become subject to Taxes because of its failure to deliver such form or other evidence required hereunder, the Borrower shall take such steps as such Lender shall reasonably request to assist such Lender in recovering such Taxes. (v) The obligation of the Lenders under this Section 3.13(f) shall survive the payment of all Obligations and the resignation or replacement of the Administrative Agent.
(g) In the event that an additional payment is made under Section 3.13(a) or (c) for the account of any Lender and such Lender, in its reasonable judgment, determines that it has finally and irrevocably received or been granted a credit against or release or remission for, or repayment of, any tax paid or payable by it in respect of or calculated with reference to the deduction or withholding giving rise to such payment, such Lender shall, to the extent that it determines that it can do so without prejudice to the retention of the amount of such credit, relief, remission or repayment, pay to the Borrower such amount as such Lender shall, in its reasonable judgment, have determined to be attributable to such deduction or withholding and which will leave such Lender (after such payment) in no worse position than it would have been in if the Borrower had not been required to make such deduction or withholding. Nothing herein contained shall interfere with the right of a Lender to arrange its tax affairs in whatever manner it thinks fit nor oblige any Lender to claim any tax credit or to disclose any information relating to its tax affairs or any computations in respect thereof or require any Lender to do anything that would prejudice its ability to benefit from any other credits, reliefs, remissions or repayments to which it may be entitled.
3.14 Compensation.
Upon the written demand of any Lender, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Eurodollar Loan on a day other than the last day of the Interest Period for such Eurodollar Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or
(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Eurodollar Loan) to prepay, borrow, continue or convert any Eurodollar Loan on the date or in the amount previously requested by the Borrower; or
(c) any repayment of a Competitive Bid Loan on a date which is not the last day of the Interest Period applicable thereto or any failure by the Borrower to borrow a Competitive Bid Loan on the date in the amount previously agreed to by the Borrower.
The amount each such Lender shall be compensated pursuant to this Section 3.14 shall include, without limitation, (i) any loss incurred by such Lender in connection with the re-employment of funds prepaid, repaid, not borrowed or paid, as the case may be and (ii) any reasonable out-of-pocket expenses (including Attorney Costs) incurred and reasonably attributable thereto.
For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.14, each Lender may deem that it funded each Eurodollar Loan made by it at the Eurodollar Rate for such Eurodollar Loan by a matching deposit or other borrowing in the applicable offshore Dollar interbank market for a comparable amount and for a comparable period, whether or not such Eurodollar Loan was in fact so funded.
3.15 Determination and Survival of Provisions.
All determinations by the Administrative Agent or a Lender of amounts owing under Sections 3.9 through 3.14, inclusive, shall, absent manifest error, be conclusive and binding on the parties hereto. In determining such amount, the Administrative Agent or such Lender may use any reasonable averaging and attribution methods. Section 3.9 through 3.14, inclusive, shall survive the termination of this Credit Agreement and the payment of all Credit Party Obligations.
3.16 Notification by Lenders.
Subject to Section 3.13(c), each Lender shall notify the Borrower (and any applicable Credit Party) of any event that will entitle such Lender to compensation under Section 3.9, 3.12, 3.13 or 3.14 as promptly as practicable, but in any event within 90 days after such Lender obtains actual knowledge thereof; provided, however, that if any Lender fails to give such notice within 90 days after it obtains actual knowledge of such an event, such Lender shall, with respect to compensation payable pursuant to Section 3.9, 3.12, 3.13 or 3.14 in respect of any costs resulting from such event, only be entitled to payment under Section 3.9, 3.12, 3.13 or 3.14 for costs
incurred from and after the date 90 days prior to the date that such Lender gives such notice. If requested by the Borrower, each Lender will furnish to Borrower within ten Business Days of the time the Lender requests compensation under Section 3.9, 3.12, 3.13 or 3.14, a certificate setting forth the basis, amount and reasonable detail of computation of each request by such Lender for compensation under Section 3.9, 3.12, 3.13 or 3.14, which certificate shall, except for demonstrable error, be final, conclusive and binding for all purposes.
3.17 Mitigation; Mandatory Assignment.
Each Lender shall use reasonable efforts to avoid or mitigate any increased cost or suspension of the availability of an interest rate under Sections 3.9 through 3.14 above to the greatest extent practicable (including transferring the Loans to another Lending Office or Affiliate of a Lender) unless, in the reasonable opinion of such Lender, such efforts would be likely to have an adverse effect upon it. In the event a Lender makes a request to the Borrower for additional payments in accordance with Section 3.9, 3.11, 3.12, 3.13 or 3.14, then, provided that no Default or Event of Default has occurred and is continuing at such time, the Borrower may, at its own expense (such expense to include, without limitation, any transfer fee payable to the Administrative Agent under Section 11.3(b)) and in its sole discretion, require such Lender to transfer and assign in whole (but not in part), without recourse (in accordance with and subject to the terms and conditions of Section 11.3(b)), all of its interests, rights and obligations under this Credit Agreement to an Eligible Assignee which shall assume such assigned obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (a) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority and (b) the Borrower or such assignee shall have paid to the assigning Lender in immediately available funds the principal of and interest accrued to the date of such payment on the portion of the Loans hereunder held by such assigning Lender and all other amounts owed to such assigning Lender hereunder, including amounts owed pursuant to Sections 3.9 through 3.14 hereof.
SECTION 4
GUARANTY
4.1 Guaranty of Payment.
Subject to Section 4.7 below, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Lender and the Administrative Agent the prompt payment of the Credit Party Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) and the timely performance of all other obligations under the Credit Documents. This Guaranty is a guaranty of payment and not of collection and is a continuing guaranty and shall apply to all Credit Party Obligations whenever arising.
4.2 Obligations Unconditional.
The obligations of the Guarantors hereunder are absolute and unconditional,
irrespective of the value, genuineness, validity, regularity or enforceability
of any of the Credit Documents, or any other agreement or instrument referred to
therein, to the fullest extent permitted by applicable law, irrespective of any
other circumstance whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor. Each Guarantor agrees
that this Guaranty may be enforced by the Lenders without the necessity at any
time of resorting to or exhausting any other security or collateral and without
the necessity at any time of having recourse to the Notes or any other of the
Credit Documents or any collateral, if any, hereafter securing the Credit Party
Obligations or otherwise and each Guarantor hereby waives the right to require
the Lenders to proceed against the Borrower or any other Person (including a
co-guarantor) or to require the Lenders to pursue any other remedy or enforce
any other right. Each Guarantor further agrees that it shall have no right of
subrogation, indemnity, reimbursement or contribution against the Borrower or
any other Guarantor of the Credit Party Obligations for amounts paid under this
Guaranty until such time as the Lenders have been paid in full, all Commitments
under the Credit Agreement have been terminated. Each Guarantor further agrees
that nothing contained herein shall prevent the Lenders from suing on the Notes
or any of the other Credit Documents or foreclosing its security interest in or
Lien on any collateral, if any, securing the Credit Party Obligations or from
exercising any other rights available to it under this Credit Agreement, the
Notes, any other of the Credit Documents, or any other instrument of security,
if any, and the exercise of any of the aforesaid rights and the completion of
any foreclosure proceedings shall not constitute a discharge of any of any
Guarantor's obligations hereunder; it being the purpose and intent of each
Guarantor that its obligations hereunder shall be absolute, independent and
unconditional under any and all circumstances. Neither any Guarantor's
obligations under this Guaranty nor any remedy for the enforcement thereof shall
be impaired, modified, changed or released in any manner whatsoever by an
impairment, modification, change, release or limitation of the liability of the
Borrower or by reason of the bankruptcy or insolvency of the Borrower. Each
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Credit Party Obligations and notice of or proof of
reliance of by the Administrative Agent or any Lender upon this Guaranty or
acceptance of this Guaranty. The Credit Party Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guaranty. All
dealings between the Borrower and any of the Guarantors, on the one hand, and
the Administrative Agent and the Lenders, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Guaranty. The Guarantors further agree to all rights of set-off as set forth in
Section 11.2.
4.3 Modifications.
Each Guarantor agrees that (a) all or any part of the collateral, if any, now or hereafter held for the Credit Party Obligations, if any, may be exchanged, compromised or surrendered from time to time; (b) the Lenders shall not have any obligation to protect, perfect, secure or insure any such security interests, liens or encumbrances now or hereafter held, if any, for the Credit Party Obligations or the properties subject thereto; (c) the time or place of payment of the Credit Party Obligations may be changed or extended, in whole or in part, to a time certain or otherwise, and may be renewed or accelerated, in whole or in part; (d) the Borrower and any other party liable for
payment under the Credit Documents may be granted indulgences generally; (e) any of the provisions of the Notes or any of the other Credit Documents may be modified, amended or waived; (f) any party (including any co-guarantor) liable for the payment thereof may be granted indulgences or be released; and (g) any deposit balance for the credit of the Borrower or any other party liable for the payment of the Credit Party Obligations or liable upon any security therefor may be released, in whole or in part, at, before or after the stated, extended or accelerated maturity of the Credit Party Obligations, all without notice to or further assent by such Guarantor, which shall remain bound thereon, notwithstanding any such exchange, compromise, surrender, extension, renewal, acceleration, modification, indulgence or release.
4.4 Waiver of Rights.
Each Guarantor expressly waives to the fullest extent permitted by applicable law: (a) notice of acceptance of this Guaranty by the Lenders and of all extensions of credit to the Borrower by the Lenders; (b) presentment and demand for payment or performance of any of the Credit Party Obligations; (c) protest and notice of dishonor or of default (except as specifically required in the Credit Agreement) with respect to the Credit Party Obligations or with respect to any security therefor; (d) notice of the Lenders obtaining, amending, substituting for, releasing, waiving or modifying any security interest, lien or encumbrance, if any, hereafter securing the Credit Party Obligations, or the Lenders' subordinating, compromising, discharging or releasing such security interests, liens or encumbrances, if any; and (e) all other notices to which such Guarantor might otherwise be entitled.
4.5 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Credit Party Obligations is rescinded or must be otherwise restored by any holder of any of the Credit Party Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify the Administrative Agent and each Lender on demand for all reasonable costs and expenses (including, without limitation, reasonable Attorney Costs) incurred by the Administrative Agent or such Lender in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.
4.6 Remedies.
The Guarantors agree that, as between the Guarantors, on the one hand, and
the Administrative Agent and the Lenders, on the other hand, the Credit Party
Obligations may be declared to be forthwith due and payable as provided in
Section 9 (and shall be deemed to have become automatically due and payable in
the circumstances provided in Section 9) notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing such Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or such Credit Party
Obligations being deemed to have
become automatically due and payable), such Credit Party Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Guarantors.
4.7 Limitation of Guaranty.
Notwithstanding any provision to the contrary contained herein or in any of the other Credit Documents, to the extent the obligations of any Guarantor shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of such Guarantor hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state or otherwise and including, without limitation, the Bankruptcy Code).
4.8 Rights of Contribution.
The Credit Parties agree among themselves that, in connection with payments made hereunder, each Credit Party shall have contribution rights against the other Credit Parties as permitted under applicable law. Such contribution rights shall be subordinate and subject in right of payment to the obligations of the Credit Parties under the Credit Documents and no Credit Party shall exercise such rights of contribution until all Credit Party Obligations have been paid in full and the Commitments terminated.
4.9 Release of Guarantors.
Subject to Section 7.12(b), if any of the Guarantors shall cease to be a
Material Domestic Subsidiary of the Borrower for any reason subject to and in
accordance with the terms of the Credit Agreement, then such Guarantor shall,
automatically and without any further action on the part of any party to any
Credit Document, and upon notice to the Administrative Agent, be fully released
and discharged from all its liabilities and obligations under or in respect of
the Credit Documents to which such Guarantor is a party (other than liabilities
and obligations resulting from a demand on such Guarantor's Guaranty pursuant to
Section 9.2) and, promptly upon the request of the Borrower and at the expense
of the Borrower, the Administrative Agent shall execute such documents and take
such other action as is reasonably requested by the Borrower to evidence the
release and discharge of such Guarantor from all such liabilities and
obligations and shall, if applicable, certify to the Borrower that such
Guarantor has no liabilities or obligations resulting from a demand on such
Guarantor's Guaranty pursuant to Section 9.2.
SECTION 5
CONDITIONS PRECEDENT
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit Agreement and make the initial Extension of Credit is subject to satisfaction (or waiver) of the following conditions:
(a) Executed Credit Documents. Receipt by the Administrative Agent of duly executed copies of: (i) this Credit Agreement; (ii) the Notes requested by Lenders (or the Swing Line Lender) prior to the Closing Date; and (iii) all other Credit Documents, each in form and substance reasonably acceptable to the Lenders in their sole discretion.
(b) Authority Documents. Receipt by the Administrative Agent of the following with respect to each Credit Party:
(i) Organizational Documents. Copies of the articles or certificates of incorporation or other organizational documents of each Credit Party certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its formation and certified by a secretary or assistant secretary of such Credit Party to be true and correct as of the Closing Date.
(ii) Bylaws. A copy of the bylaws or other governing documents of each Credit Party certified by a secretary or assistant secretary of such Credit Party to be true and correct as of the Closing Date.
(iii) Resolutions. Copies of resolutions of the Board of Directors or other governing body of each Credit Party approving and adopting the Credit Documents to which it is a party, the transactions contemplated therein and authorizing execution and delivery thereof, certified by a secretary or assistant secretary of such Credit Party to be true and correct and in full force and effect as of the Closing Date.
(iv) Good Standing. Copies of certificates of good standing, existence or its equivalent with respect to each Credit Party certified as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its formation.
(v) Incumbency. An incumbency certificate of each Credit Party certified by a secretary or assistant secretary of such Credit Party to be true and correct as of the Closing Date.
(c) Opinions of Counsel. Receipt by the Administrative Agent of opinions reasonably satisfactory to the Administrative Agent, addressed to the Administrative Agent on behalf of the Lenders and dated as of the Closing Date.
(d) Consents. Receipt by the Administrative Agent of evidence that all necessary governmental, shareholder and third party consents and approvals, if any, have been received and no condition or Requirement of Law exists which would reasonably be likely to restrain, prevent or impose any material adverse conditions on the transactions contemplated hereby.
(e) Officer's Certificates. The Administrative Agent shall have received a certificate or certificates executed by an Authorized Officer of the Borrower as of the Closing Date stating that (i) the financial statements and information delivered to the
Administrative Agent on or before the Closing Date were prepared in good faith and that such financial statements were prepared in accordance with GAAP and (ii) immediately after giving effect to this Credit Agreement, the other Credit Documents and all the transactions contemplated herein or therein to occur on such date, (A) each Credit Party is Solvent and the Borrower and its Subsidiaries taken as a whole are Solvent, (B) no Default or Event of Default exists, (C) all representations and warranties contained herein and in the other Credit Documents are true and correct in all material respects, and (D) the Credit Parties are in compliance with each of the financial covenants set forth in Section 7.2.
(f) Existing Revolving Credit Agreement. Receipt by the Administrative Agent of evidence satisfactory to it that all of the Indebtedness of the Credit Parties under the Existing Revolving Credit Agreement has been paid in full (or will be paid in full with the proceeds of the initial Loans made herein) and all documents executed or delivered in connection therewith have been terminated.
(g) Fees and Expenses. Payment by the Credit Parties of all fees (and all expenses for which invoices have been presented at least three Business Days prior to the Closing Date) owed by them as of the Closing Date to the Agents and the Lenders, including, without limitation, as set forth in the Fee Letters.
(h) Other. Receipt by the Lenders of such other documents, instruments, agreements or information as reasonably and timely requested by any Lender.
5.2 Conditions to All Extensions of Credit.
In addition to the conditions precedent stated elsewhere herein, the Lenders shall not be obligated to make Loans nor shall the Issuing Lender be required to issue or extend a Letter of Credit unless:
(a) Notice. The Borrower shall have delivered (i) in the case of any new Revolving Loan, to the Administrative Agent, an appropriate Notice of Borrowing, duly executed and completed, by the time specified in Section 2.1, (ii) in the case of any Letter of Credit, to the Issuing Lender, an appropriate request for issuance of a Letter of Credit in accordance with the provisions of Section 2.2, (iii) in the case of any Swing Line Loan, to the Swing Line Lender, a Swing Line Loan Request, duly executed and completed, by the time specified in Section 2.3, and (iv) in the case of any Competitive Bid Loan, to the Administrative Agent, an appropriate Competitive Bid Request, duly executed and completed, by the time specified in Section 2.4.
(b) Representations and Warranties. The representations and warranties made by the Credit Parties in any Credit Document are true and correct in all material respects at and as if made as of such date except to the extent they expressly and exclusively relate to an earlier date.
(c) No Default. No Default or Event of Default shall exist and be continuing either prior to or after giving effect to such Extension of Credit.
(d) Availability. Immediately after giving effect to the making of a Loan (and the application of the proceeds thereof) or to the issuance of a Letter of Credit, as the case may be, (i) the sum of the outstanding Revolving Loans plus outstanding LOC Obligations plus outstanding Swing Line Loans plus outstanding Competitive Bid Loans shall not exceed the Revolving Committed Amount, (ii) the sum of outstanding LOC Obligations shall not exceed the LOC Committed Amount, (iii) the sum of outstanding commercial Letters of Credit shall not exceed $40,000,000, (iv) the sum of outstanding Swing Line Loans shall not exceed the Swing Line Committed Amount and (v) the sum of outstanding Competitive Bid Loans shall not exceed $300,000,000.
The delivery of each Notice of Borrowing, each request for a Letter of Credit, each Swing Line Loan Request and each Competitive Bid Loan Request shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in subsections (b), (c), and (d) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Administrative Agent and each Lender that:
6.1 Organization and Good Standing.
Each Credit Party (a) is either a partnership, a corporation or a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) is duly qualified and in good standing as a foreign organization and authorized to do business in every other jurisdiction where its ownership or operation of property or the conduct of its business would require it to be qualified, in good standing and authorized, unless the failure to be so qualified, in good standing or authorized would not have or would not reasonably be expected to have a Material Adverse Effect and (c) has the power and authority to own and operate its properties and to carry on its business as now conducted and as currently proposed to be conducted.
6.2 Due Authorization.
Each Credit Party (a) has the power and authority to execute, deliver and perform this Credit Agreement and the other Credit Documents to which it is a party and to incur the obligations herein and therein provided for and (b) has duly taken all necessary action to authorize, and is duly authorized, to execute, deliver and perform this Credit Agreement and the other Credit Documents to which it is a party.
6.3 Enforceable Obligations.
Each Credit Party has duly executed this Credit Agreement and each other Credit Document to which such Credit Party is a party and this Credit Agreement and such other Credit Documents
constitute legal, valid and binding obligations of such Credit Party enforceable against such Credit Party in accordance with their respective terms, except as may be limited by bankruptcy or insolvency laws or similar laws affecting creditors' rights generally or by general equitable principles.
6.4 No Conflicts.
Neither the execution and delivery of the Credit Documents to which it is a party, nor the consummation of the transactions contemplated herein and therein, nor the performance of or compliance with the terms and provisions hereof and thereof by a Credit Party will (a) violate, contravene or conflict with any provision of such Credit Party's organizational documents, (b) violate, contravene or conflict with any Requirement of Law (including, without limitation, Regulations T, U or X), order, writ, judgment, injunction, decree, license or permit applicable to such Credit Party which violation would have or would reasonably be expected to have a Material Adverse Effect, (c) violate, contravene or conflict with contractual provisions of, or cause an event of default under, any indenture, loan agreement, mortgage, deed of trust, contract or other agreement or instrument to which such Credit Party is a party or by which it or its properties may be bound which violation would have or would reasonably be expected to have a Material Adverse Effect, or (d) result in or require the creation of any Lien upon or with respect to the properties of such Credit Party.
6.5 Consents.
Except for consents, approvals and authorizations which have been obtained or the absence of which would not have or would not reasonably be expected to have a Material Adverse Effect, no consent, approval, authorization or order of, or filing, registration or qualification with, any Governmental Authority, equity owner or third party in respect of any Credit Party is required in connection with the execution, delivery or performance of this Credit Agreement or any of the other Credit Documents, or the consummation of any transaction contemplated herein or therein by such Credit Party.
6.6 Financial Condition.
The financial statements delivered to the Administrative Agent and the Lenders pursuant to Sections 7.1(a) and (b): (a) have been prepared in accordance with GAAP and (b) present fairly the consolidated financial condition, results of operations and cash flows of the Borrower and its Subsidiaries as of such date and for such periods. Since December 31, 2003, there has been no sale, transfer or other disposition by the Borrower or any of its Subsidiaries of any material part of the business or property of the Borrower and its Subsidiaries, taken as a whole, or purchase or other acquisition by any such Person of any business or property (including any Capital Stock of any other Person) material in relation to the consolidated financial condition of the Borrower and its Subsidiaries, taken as a whole, in each case, which, is not (i) reflected in the most recent financial statements delivered to the Lenders prior to the Closing Date or pursuant to Section 7.1 or in the notes thereto or (ii) otherwise permitted by the terms of this Credit Agreement and communicated to the Administrative Agent and the Lenders.
6.7 No Material Change.
Except as disclosed on Schedule 6.7, since December 31, 2003, there has been no development or event relating to or affecting the Borrower or any of its Subsidiaries which has had or would reasonably be expected to have a Material Adverse Effect.
6.8 Disclosure.
Neither this Credit Agreement, nor any other Credit Document, nor any financial statements delivered to the Administrative Agent or the Lenders nor any other document, certificate or statement furnished to the Administrative Agent or the Lenders by or on behalf of any Credit Party in connection with the transactions contemplated hereby, taken as a whole, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein or herein not misleading.
6.9 No Default.
No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Credit Agreement and the other Credit Documents.
6.10 Litigation.
Except as set forth in Schedule 6.10, no litigation, investigation, claim, criminal prosecution, civil investigative demand, imposition of criminal or civil fines and penalties, or any other proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against the Borrower or any of its Subsidiaries or against any of its or their respective Properties (a) with respect to the Credit Documents or any Loan or any of the transactions contemplated hereby or (b) which would reasonably be expected to have a Material Adverse Effect.
6.11 Taxes.
The Borrower and each of its Subsidiaries has filed, or caused to be filed, all material tax returns (federal, state, local and foreign) required to be filed and has paid (a) all amounts of taxes shown thereon to be due (including interest and penalties) and (b) all other material taxes, fees, assessments and other governmental charges (including mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing by it, except for such taxes (i) which are not yet delinquent or (ii) that are being contested in good faith and by proper proceedings, and against which adequate reserves are being maintained in accordance with GAAP.
6.12 Compliance with Law.
Except to the extent the same would not have or would not reasonably be expected to have a Material Adverse Effect:
(a) The Borrower and each of its Subsidiaries is in compliance with all Requirements of Law (including, without limitation, Environmental Laws, ERISA, HIPAA, Medicaid Regulations and Medicare Regulations) and all material orders, writs, injunctions and decrees applicable to it, or to its Properties.
(b) (i) Neither the Borrower nor any of its Subsidiaries nor any individual employed by the Borrower or any of its Subsidiaries has been, or may reasonably be expected to be, excluded or suspended from participation in any Medical Reimbursement Program for their corporate or individual actions or failures to act; and (ii) there is no member of management continuing to be employed by the Borrower or any of its Subsidiaries who has been, or may reasonably be expected to have, individual criminal culpability for healthcare matters under investigation by any Governmental Authority unless such member of management has been, within a reasonable period of time after discovery of such actual or potential culpability, either suspended or removed from positions of responsibility related to those activities under challenge by the Governmental Authority.
(c) Current billing policies, arrangements, protocols and instructions comply with all material requirements of Medical Reimbursement Programs and are administered by properly trained personnel.
(d) Current medical director compensation arrangements and other arrangements with referring physicians comply with state and federal self-referral and anti-kickback laws, including without limitation 42 U.S.C. Section 1320a-7b(b)(1) - (b)(2) and 42 U.S.C. Section 1395nn.
6.13 Licensing and Accreditation.
Except to the extent the same would not have or would not be reasonably expected to have a Material Adverse Effect, each of the Credit Parties has, to the extent applicable: (a) obtained and maintains in good standing all required licenses, permits, authorization and approvals of each Governmental Authority necessary to the conduct of its business; (b) to the extent prudent and customary in the industry in which it is engaged, obtained and maintains accreditation from all generally recognized accrediting agencies (including, but not limited to, CAP); (c) obtained and maintains CLIA certification; (d) entered into and maintains in good standing its Medicare Provider Agreements and its Medicaid Provider Agreements; and (e) ensured that all such required licenses, certifications and accreditations are in full force and effect on the date hereof and have not been revoked or suspended or otherwise limited.
6.14 Title to Properties, Liens.
The Borrower and each of its Subsidiaries, is the owner of, and has good title to, or has a valid license or lease to use, all of its material Properties. All Liens on the Properties of the Borrower and its Subsidiaries are Permitted Liens.
6.15 Insurance.
The properties of the Borrower and each of its Subsidiaries are insured with financially sound and reputable insurance companies that are not Affiliates of the Borrower (except to the extent that self-insurance is maintained in reasonable amounts), in such amounts, with such deductibles and covering such risks, as is reasonable and prudent.
6.16 Use of Proceeds.
The proceeds of the Loans will be used solely for the purposes specified in
Section 7.10. No proceeds of the Loans will be used for the Acquisition of
another Person unless such Acquisition is a Permitted Acquisition.
6.17 Government Regulation.
(a) "Margin stock" within the meaning of Regulation U does not constitute more than 25% of the value of the consolidated assets of the Borrower and its Subsidiaries. None of the transactions contemplated by the Credit Documents (including, without limitation, the direct or indirect use of the proceeds of the Loans) will violate or result in a violation of (i) the Securities Act, (ii) the Exchange Act or (iii) Regulations T, U or X.
(b) Neither the Borrower nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act or the Investment Company Act of 1940, each as amended.
6.18 ERISA.
Except as would not result in or would not reasonably be expected to result in a Material Adverse Effect:
(a) (i) No ERISA Event has occurred, and, to the best knowledge of the
Borrower, each of its Subsidiaries and each ERISA Affiliate, no event or
condition has occurred or exists as a result of which any ERISA Event could
reasonably be expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, has occurred with
respect to any Plan and no application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code has been
made with respect to any Plan; (iii) each Plan has been maintained,
operated, and funded in compliance with its own terms and in material
compliance with the provisions of ERISA, the Code, and any other applicable
federal or state laws; (iv) each Plan that is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter
from the IRS or an application for such a letter is currently being
processed by the IRS with respect thereto and, to the best knowledge of the
Borrower, each of its Subsidiaries and each ERISA Affiliate, nothing has
occurred which would prevent, or cause the loss of, such qualification; and
no Lien in favor or the PBGC or a Plan has arisen or is reasonably likely to arise on account of any Plan.
(b) Neither the Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate has incurred, or, to the best of each such party's knowledge, is reasonably expected to incur, any liability under Title IV of ERISA with respect to any Single Employer Plan, or any withdrawal liability under ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate has received any notification that any Multiemployer Plan is in reorganization (within the meaning of Section 4241 of ERISA), is insolvent (within the meaning of Section 4245 of ERISA), or has been terminated (within the meaning of Title IV of ERISA), and no Multiemployer Plan is, to the best of each such Person's knowledge, reasonably expected to be in reorganization, insolvent, or terminated. Neither the Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.
(c) No prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has occurred with respect to a Plan which has subjected or may subject the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any agreement or other instrument pursuant to which the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate has agreed or is required to indemnify any person against any such liability. There are no pending or, to the best knowledge of the Borrower, each of its Subsidiaries and each ERISA Affiliate, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect.
(d) Each Plan that is a welfare plan (as defined in Section 3(1) of ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code apply has been administered in compliance in all material respects with such sections.
6.19 Environmental Matters.
(a) Except as would not result in or would not reasonably be expected to result in a Material Adverse Effect:
(i) Each of the real properties owned, leased or operated by the Borrower or any of its Subsidiaries (the "Real Properties") and all operations at the Real Properties are in compliance with all applicable Environmental Laws, and there is no violation of any Environmental Law with respect to the Real Properties or the businesses operated by the Borrower or any of its Subsidiaries (the "Businesses"), and there are no conditions relating to the Businesses or Real Properties that would reasonably be expected to give rise to liability under any applicable Environmental Laws.
(ii) No Credit Party has received any written notice of, or inquiry from any Governmental Authority regarding, any violation, alleged violation, non-compliance, liability or potential liability regarding Hazardous Materials or compliance with Environmental Laws with regard to any of the Real Properties or the Businesses, nor, to the knowledge of the Borrower or any of its Subsidiaries, is any such notice being threatened.
(iii) Hazardous Materials have not been transported or disposed of from the Real Properties, or generated, treated, stored or disposed of at, on or under any of the Real Properties or any other location, in each case by, or on behalf or with the permission of, the Borrower or any of its Subsidiaries in a manner that would give rise to liability under any applicable Environmental Laws.
(iv) No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower or any of its Subsidiaries, threatened, under any Environmental Law to which the Borrower or any of its Subsidiaries is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Borrower or any of its Subsidiaries, the Real Properties or the Businesses.
(v) There has been no release (including, without limitation, disposal) or threat of release of Hazardous Materials at or from the Real Properties, or arising from or related to the operations of the Borrower or any of its Subsidiaries in connection with the Real Properties or otherwise in connection with the Businesses where such release constituted a violation of, or would give rise to liability under, any applicable Environmental Laws.
(vi) None of the Real Properties contains, or has previously contained, any Hazardous Materials at, on or under the Real Properties in amounts or concentrations that, if released, constitute or constituted a violation of, or could give rise to liability under, Environmental Laws.
(vii) Neither the Borrower, nor any of its Subsidiaries, has assumed any liability of any Person (other than among themselves) under any Environmental Law.
(b) The Credit Parties have adopted procedures that are designed to
(i) ensure that each Credit Party, any of its operations and each of the
Real Properties complies with applicable Environmental Laws and (ii)
minimize any liabilities or potential liabilities that each Credit Party,
any of its operations and each of the Real Properties may have under
applicable Environmental Laws.
6.20 Intellectual Property.
The Borrower and each of its Subsidiaries owns, or has the legal right to use, all material patents, trademarks, tradenames, copyrights, technology, know-how and processes (the "Intellectual Property") necessary for each of them to conduct its business as currently conducted other than as would not have or would not be reasonably expected to have a Material Adverse Effect. No claim has been asserted and is pending by any Person challenging or questioning the use of any Intellectual Property owned by the Borrower or any of its Subsidiaries or that the Borrower or any of its Subsidiaries has a right to use or the validity or effectiveness of any such Intellectual Property, nor does the Borrower or any of its Subsidiaries have knowledge of any such claim, and, to the knowledge of the Borrower and its Subsidiaries, the use of any Intellectual Property by the Borrower and its Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that in the aggregate, would not have or would not reasonably be expected to have a Material Adverse Effect.
6.21 Subsidiaries.
As of the Closing Date, set forth on Schedule 6.21 is a complete and accurate list of all Subsidiaries of the Borrower and which of such Subsidiaries are Material Domestic Subsidiaries.
6.22 Solvency.
Each Credit Party is and, after consummation of the transactions contemplated by this Credit Agreement, will be Solvent.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit Agreement is in effect and until the Loans and LOC Obligations, together with interest and fees and other obligations then due and payable hereunder, have been paid in full and the Commitments and Letters of Credit hereunder shall have terminated:
7.1 Information Covenants.
The Credit Parties will furnish, or cause to be furnished, to the Administrative Agent and each of the Lenders an electronic (if readily available) and a hard copy of:
(a) Annual Financial Statements. As soon as available, and in any event within the earlier of (i) 95 days after the close of each fiscal year of the Borrower or (ii) ten Business Days after the date the Borrower files its Form 10-K with the Securities and Exchange Commission, a consolidated balance sheet and income statement of the Borrower and its Subsidiaries, as of the end of such fiscal year, together with related consolidated statements of operations, cash flows and changes in stockholders' equity for such fiscal
year, setting forth in comparative form consolidated figures for the preceding fiscal year, all such consolidated financial information described above to be audited by independent certified public accountants of recognized national standing and whose opinion shall be to the effect that such financial statements fairly present in all material respects the consolidated financial position, results of operations and cash flows of the Borrower and its Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP and shall not be limited as to the scope of the audit or qualified in any manner.
(b) Quarterly Financial Statements. As soon as available, and in any
event within the earlier of (i) 50 days after the close of each of the
first three fiscal quarters of the Borrower or (ii) ten Business Days after
the date the Borrower files its Form 10-Q with the Securities and Exchange
Commission, a consolidated balance sheet and income statement of the
Borrower and its Subsidiaries, as of the end of such fiscal quarter,
together with related consolidated statements of operations, cash flows and
changes in stockholders' equity for such fiscal quarter setting forth in
each case in comparative form the corresponding consolidated statements of
operations and cash flows for the corresponding period of the preceding
fiscal year, and accompanied by a certificate of an Authorized Officer of
the Borrower to the effect that such quarterly financial statements fairly
present in all material respects the consolidated financial condition of
the Borrower and its Subsidiaries and in accordance with GAAP, subject to
changes resulting from audit and normal year-end audit adjustments.
Notwithstanding the above, it is understood and agreed that delivery of the
Borrower's applicable Form 10-Q shall satisfy the requirements of this
Section 7.1(b).
(c) Officer's Certificate. At the time of delivery of the financial statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate of an Authorized Officer of the Borrower substantially in the form of Exhibit 7.1(c), (i) demonstrating compliance with the financial covenants contained in Section 7.2 and the covenant requirements in Section 7.12(b) by calculation thereof as of the end of each such fiscal period, (ii) demonstrating compliance with any other terms of this Credit Agreement as reasonably requested by the Administrative Agent, (iii) stating that no Default or Event of Default exists, or if any Default or Event of Default does exist, specifying the nature and extent thereof and what action the Borrower proposes to take with respect thereto and (iv) updating Schedule 6.21 as of the end of such fiscal period.
(d) Reports. Promptly upon transmission or receipt thereof, copies of all financial statements, proxy statements, notices and reports as the Borrower or any of its Subsidiaries shall send to shareholders of the Borrower generally and, upon request of the Administrative Agent, copies of any filings and registrations with, and reports to or from, any Governmental Authority which has regulatory authority with respect to the Borrower and its Subsidiaries.
(e) Notices. Upon a Credit Party obtaining knowledge thereof, the Borrower will give written notice to the Administrative Agent promptly (and in any event within five Business Days) of (i) the occurrence of an event or condition consisting of a Default or Event of Default, specifying the nature and existence thereof and what action the Borrower proposes to take with respect thereto, (ii) the occurrence of any of the following with respect
to the Borrower or any of its Subsidiaries (A) the pendency or commencement of any litigation, arbitration or governmental proceeding against the Borrower or any of its Subsidiaries which (x) would have or would reasonably be expected to have a Material Adverse Effect, or (y) would result in a significant liability to the Credit Parties or (B) material non-compliance with, or the institution of any proceedings against the Borrower or any of its Subsidiaries with respect to, or the receipt of written notice by such Person of potential liability or responsibility for violation, or alleged violation of, any Requirement of Law (including, without limitation, Environmental Laws) the violation of which would have or would reasonably be expected to have a Material Adverse Effect (iii) any change to the Debt Rating of the Borrower, and (iv) any investigation or proceeding against the Borrower or any of its Subsidiaries to suspend, revoke or terminate, any Medicaid Provider Agreement, Medicare Provider Agreement, or exclusion from any Medical Reimbursement Program, which is reasonably expected to have a Material Adverse Effect; and (v) any breach by the Borrower or any of its Subsidiaries or any predecessor of the Borrower or any of its Subsidiaries of the Corporate Integrity Agreement entered into with the OIG if such breach causes the OIG to take any adverse action as a result of such breach.
(f) ERISA. Upon the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate obtaining knowledge thereof, such Person shall give written
notice to the Administrative Agent and each of the Lenders promptly (and in
any event within two Business Days) of the occurrence of any of the
following events which has had or would be reasonably expected to have a
Material Adverse Effect: (i) any Reportable Event, that constitutes an
ERISA Event; (ii) with respect to any Multiemployer Plan, the receipt of
notice as prescribed in ERISA or otherwise of any withdrawal liability
assessed against the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate, or of a determination that any Multiemployer Plan is in
reorganization or insolvent (both within the meaning of Title IV of ERISA);
(iii) the failure to make full payment on or before the due date (including
extensions) thereof of all amounts which the Borrower, any Subsidiary of
the Borrower or any ERISA Affiliate is required to contribute to each Plan
pursuant to its terms and as required to meet the minimum funding standard
set forth in ERISA and the Code with respect thereto; or (iv) any change in
the funding status of any Plan that could have a Material Adverse Effect;
in each case together with a description of any such event or condition or
a copy of any such notice and a statement by an Authorized Officer of the
Borrower briefly setting forth the details regarding such event, condition,
or notice, and the action, if any, which has been or is being taken or is
proposed to be taken by such Person with respect thereto. Promptly upon
request, the Credit Parties shall furnish the Administrative Agent and the
Lenders with such additional information concerning any Plan as may be
reasonably requested, including, but not limited to, copies of each annual
report/return (Form 5500 series), as well as all schedules and attachments
thereto required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA and the Code, respectively, for
each "plan year" (within the meaning of Section 3(39) of ERISA).
(g) Environmental.
(i) Subsequent to a written notice from any Governmental Authority that would reasonably be expected to result in a Material Adverse Effect, or during the existence of an Event of Default, and upon the written request of Administrative Agent, the Credit Parties will furnish or cause to be furnished to the Administrative Agent, at the Credit Parties' expense, a report of an environmental assessment of reasonable scope, form and depth, including, where appropriate, invasive soil or groundwater sampling, by a consultant reasonably acceptable to the Administrative Agent addressing the subject of such notice or, if during the existence of an Event of Default, regarding any release or threat of release of Hazardous Materials on any Property owned, leased or operated by a Credit Party and the compliance by the Credit Parties with Environmental Laws. If the Credit Parties fail to deliver such an environmental report within seventy-five (75) days after receipt of such written request, then the Administrative Agent may arrange for same, and the Credit Parties hereby grant to the Administrative Agent and its representatives access to the Real Properties and a license of a scope reasonably necessary to undertake such an assessment (including, where appropriate, invasive soil or groundwater sampling). The reasonable cost of any assessment arranged for by the Administrative Agent pursuant to this provision will be payable by the Credit Parties on demand.
(ii) Each Credit Party will conduct and complete, or cause to be conducted and completed, all investigations, studies, sampling, and testing and all remedial, removal, and other actions necessary to address all Hazardous Materials on, from, or affecting any Real Properties to the extent necessary to be in compliance with all Environmental Laws and all other applicable federal, state, and local laws, regulations, rules and policies and with the orders and directives of all Governmental Authorities exercising jurisdiction over such Real Properties to the extent any failure would have or would reasonably be expected to have a Material Adverse Effect.
(h) Other Information. With reasonable promptness upon any such request, such other information regarding the business, properties or financial condition of the Borrower and its Subsidiaries as the Administrative Agent may reasonably request.
(i) Public/Private Information. The Borrower hereby acknowledges that
(i) the Administrative Agent will make available to the Lenders materials
and/or information provided by or on behalf of the Borrower hereunder
(collectively, "Borrower Materials") by posting the Borrower Materials on
IntraLinks or another similar electronic system (the "Platform") and (ii)
certain of the Lenders may be "public-side" Lenders (i.e., Lenders that do
not wish to receive material non-public information with respect to the
Borrower or its securities) (each, a "Public Lender"). The Borrower hereby
agrees that (A) all Borrower Materials that are to be made available to the
Public Lenders shall be clearly and conspicuously marked "PUBLIC" which, at
a minimum, shall mean that the word "PUBLIC" shall appear prominently on
the first page thereof; (B) by marking Borrower Materials "PUBLIC", the
Borrower shall be deemed to have authorized the Administrative
Agent and the Lenders to treat such Borrower Materials as either publicly available information or not material information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes of United States federal and state securities laws; (C) all Borrower Materials marked "PUBLIC" are permitted to be made available through a portion of the Platform designated as "Public"; and (D) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked "PUBLIC" as being suitable only for posting on a portion of the Platform not marked "Public".
(j) Electronic Delivery. Documents required to be delivered pursuant to Section 7.1(a) or (b) (to the extent any such documents are included in materials otherwise filed with the Securities and Exchange Commission) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower's website on the Internet at the website address listed on Schedule 11.1 or (ii) on which such documents are posted on the Borrower's behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (A) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (B) the Borrower shall notify (which may be facsimile or electronic mail) the Administrative Agent and each Lender of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the compliance certificates required by Section 7.1(c) to the Administrative Agent. Except for such compliance certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
7.2 Financial Covenants.
(a) Leverage Ratio. The Leverage Ratio, as of the last day of each fiscal quarter of the Borrower, shall be less than or equal to 3.25 to 1.0.
(b) Interest Coverage Ratio. The Interest Coverage Ratio, as of the last day of each fiscal quarter of the Borrower, shall be greater than or equal to 3.5 to 1.0.
7.3 Preservation of Existence and Franchises.
The Borrower will, and will cause its Subsidiaries to, do all things necessary to preserve and keep in full force and effect its existence, rights, franchises, Intellectual Property and authority except as permitted by Section 8.4; provided that neither the Borrower nor any of its Subsidiaries shall be required to preserve any rights, franchises, Intellectual Property or authority if the Borrower
or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of its business and if the loss thereof would not have or would not reasonably be expected to have a Material Adverse Effect.
7.4 Books and Records.
The Borrower will, and will cause its Subsidiaries to, keep complete and accurate books and records of its transactions in order to produce its financial statements in accordance with GAAP (including the establishment and maintenance of appropriate reserves).
7.5 Compliance with Law.
Except to the extent the failure to do so would not have or would not
reasonably be expected to have a Material Adverse Effect, the Borrower will, and
will cause each of its Subsidiaries to, (a) comply with all Requirements of Law,
and all applicable restrictions imposed by all Governmental Authorities,
applicable to it and its Property (including, without limitation, Environmental
Laws and ERISA), (b) conform with and duly observe in all material respects all
laws, rules and regulations and all other valid requirements of any regulatory
authority with respect to the conduct of its business, including without
limitation, HIPAA, Medicare Regulations, Medicaid Regulations, and all laws,
rules and regulations of Governmental Authorities, pertaining to the business of
the Credit Parties; (c) obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and herein
contemplated, including without limitation professional licenses, CLIA
certifications, Medicare Provider Agreements and Medicaid Provider Agreements;
(d) ensure that (i) billing policies, arrangements, protocols and instructions
will comply with reimbursement requirements under Medicare, Medicaid and other
Medical Reimbursement Programs and will be administered by properly trained
personnel; (ii) medical director compensation arrangements and other
arrangements with referring physicians will comply with applicable state and
federal self-referral and anti-kickback laws, including without limitation 42
U.S.C. Section 1320a-7b(b)(1) - (b)(2) 42 U.S.C. and 42 U.S.C. Section 1395nn;
and (iii) no event or related events occur that results in the exclusion of the
Borrower or any of its Subsidiaries from participation in any Medical
Reimbursement Program and (e) make commercially reasonable efforts to implement
policies that are consistent with HIPAA on or before the date that any Credit
Party is required to comply therewith.
7.6 Payment of Taxes and Other Indebtedness.
The Borrower will, and will cause its Subsidiaries to, pay, settle or discharge (a) all material taxes, assessments and governmental charges or levies imposed upon it, or upon its income or profits, or upon any of its properties, before they shall become delinquent, (b) all material lawful claims (including claims for labor, materials and supplies) which, if unpaid, might give rise to a Lien upon any of its properties, and (c) all of its other material Indebtedness as it shall become due (to the extent such repayment is not otherwise prohibited by this Credit Agreement); provided, however, that a Credit Party shall not be required to pay any such tax, assessment, charge, levy, claim or Indebtedness which is being contested in good faith by appropriate proceedings and as to which adequate reserves therefor have been established in accordance with GAAP, unless the
failure to make any such payment (i) would give rise to an immediate right to foreclose or collect on a Lien securing such amounts or (ii) would have or would reasonably be expected to have a Material Adverse Effect.
7.7 Insurance.
The Borrower will, and will cause each of its Subsidiaries to, at all times maintain in full force and effect insurance (including worker's compensation, liability, casualty and business interruption insurance) with reputable national companies that are not Affiliates of the Borrower (except to the extent that self-insurance is maintained in reasonable amounts), in such amounts, covering such risks and liabilities as is reasonable and prudent.
7.8 Maintenance of Property.
The Borrower will, and will cause its Subsidiaries to, maintain and preserve its properties and equipment in good repair, working order and condition, normal wear and tear excepted, and will make, or cause to be made, in such properties and equipment from time to time all repairs, renewals, replacements, extensions, additions, betterments and improvements thereto as may be needed or proper, in each case to the extent and in the manner customary for companies in similar businesses.
7.9 Performance of Obligations.
Except to the extent the failure to do so would not have or would not reasonably be expected to have a Material Adverse Effect, the Borrower will, and will cause its Subsidiaries to, perform all of its obligations under the terms of all contracts, agreements or other agreements not evidencing Indebtedness to which it is a party or by which it or its Properties may be bound.
7.10 Use of Proceeds.
The Borrower will use the proceeds of the Loans solely (a) to repay Indebtedness outstanding under the Existing Revolving Credit Agreement and any other Indebtedness of the Borrower and its Subsidiaries, (b) to provide working capital for the Borrower and its Subsidiaries and (c) for general corporate purposes of the Borrower and its Subsidiaries. The Borrower will use the Letters of Credit solely for the purposes set forth in Section 2.2(a).
7.11 Audits/Inspections.
Upon reasonable notice and during normal business hours, but not more than once per calendar year, the Borrower will, and will cause each of its Subsidiaries to, permit representatives appointed by the Administrative Agent or any Lender, including, without limitation, independent accountants, agents, attorneys and appraisers to visit and inspect the Borrower's or any Subsidiary's Property, including its books and records, its accounts receivable and inventory, its facilities and its other business assets, and to make photocopies or photographs thereof and to write down and record any information such representative obtains and shall permit the Administrative Agent, any Lender or its representatives to investigate and verify the accuracy of information provided to the Administrative Agent or the Lenders and to discuss all such matters with the officers, employees
and representatives of the Borrower and/or its Subsidiaries; provided, however, during the existence of a Default or Event of Default, the Administrative Agent and the Lenders may request as many inspections as reasonable under the circumstances. Any expenses incurred in connection with this Section 7.11 shall be for the account of the Lenders unless an Event of Default exists in which case such expenses shall be for the account of the Borrower. Any representatives appointed by the Administrative Agent shall sign a confidentiality agreement reasonably acceptable to the Borrower prior to any visit, investigation, inspection or verification permitted by this Section 7.11.
7.12 Additional Credit Parties.
(a) At the time any Person becomes a Material Domestic Subsidiary or at the time any Subsidiary of the Borrower guaranties any Pari Passu Debt (if it is not already a Guarantor), the Borrower shall so notify the Administrative Agent and promptly thereafter (but in any event within 30 days) shall cause such Person to (i) execute a Joinder Agreement in substantially the same form as Exhibit 7.12, and (ii) deliver such other documentation as the Administrative Agent may reasonably request in connection with the foregoing, including, without limitation, certified resolutions and other organizational and authorizing documents of such Person and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to above), all in form, content and scope reasonably satisfactory to the Administrative Agent.
(b) If at any time Non-Material Domestic Subsidiaries own assets in an aggregate amount greater than five percent (5%) of Total Assets or produce revenues in an aggregate amount greater than five percent (5%) of the total revenues of the Borrower and its Subsidiaries on a consolidated basis, the Borrower will designate one or more Non-Material Domestic Subsidiaries to become a Guarantor (and such Non-Material Domestic Subsidiary shall become a Guarantor in accordance with clause (a) above) so that after giving effect to such designation and action, Non-Material Domestic Subsidiaries own assets in the aggregate of equal to or less than five percent (5%) of Total Assets and produce revenues in an aggregate amount equal to or less than five percent (5%) of the total revenues of the Borrower and its Subsidiaries on a consolidated basis.
7.13 Compliance Program.
The Borrower will, and will cause each of its Domestic Subsidiaries that operates a clinical laboratory to, maintain, and be operated in accordance with, a compliance program which is reasonably designed to provide effective internal controls that promote adherence to applicable federal and state law and the program requirements of federal and state health plans, and which includes the implementation of internal audits and monitoring on a regular basis to monitor compliance with the requirements of the compliance program and applicable law, regulations and company policies.
7.14 Existing Term Credit Agreement.
The Borrower will repay in full all outstanding obligations under the Existing Term Credit Agreement on the earlier of (a) the last day of the applicable Eurodollar interest periods in effect as of the Closing Date and (b) May 15, 2004.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit Agreement is in effect and until the Loans and LOC Obligations, together with interest, fees and other obligations then due and payable hereunder, have been paid in full and the Commitments and Letters of Credit hereunder shall have terminated:
8.1 Indebtedness.
The Borrower will not permit any of its Subsidiaries to, contract, create, incur, assume or permit to exist any Indebtedness, other than:
(a) Guaranty Obligations arising under this Credit Agreement and the other Credit Documents;
(b) Indebtedness in respect of current accounts payable and accrued expenses incurred in the ordinary course of business;
(c) Indebtedness owing by a Subsidiary of the Borrower to the Borrower or another Subsidiary of the Borrower;
(d) purchase money Indebtedness (including Capital Leases) to finance
the purchase of fixed assets (including equipment); provided that (i) the
total of all such Indebtedness shall not exceed an aggregate principal
amount of $100,000,000 (less any purchase money Indebtedness incurred by
the Borrower) at any one time outstanding; (ii) such Indebtedness when
incurred shall not exceed the purchase price of the asset(s) financed; and
(iii) no such Indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the time of such
refinancing;
(e) Indebtedness arising from Permitted Receivables Financings in an amount not to exceed $600,000,000, in the aggregate (less any Indebtedness incurred by the Borrower arising from Permitted Receivables Financings), at any one time outstanding;
(f) Indebtedness evidenced by Hedging Agreements entered into in the ordinary course of business and not for speculative purposes;
(g) Any guaranty of Indebtedness of the Borrower;
(h) Indebtedness incurred after the Effective Date in connection with the acquisition of a Person or Property as long as such Indebtedness existed prior to such acquisition and was not created in anticipation thereof;
(i) Indebtedness existing on the Closing Date as set forth on Schedule 8.1; and
(j) other unsecured Indebtedness in an amount not to exceed $200,000,000, in the aggregate, at any one time outstanding.
8.2 Liens.
The Borrower will not, nor will it permit its Subsidiaries to, contract, create, incur, assume or permit to exist any Lien with respect to any of its Property of any kind (whether real or personal, tangible or intangible), whether now owned or after acquired, other than Permitted Liens.
8.3 Nature of Business.
The Borrower will not, nor will it permit its Subsidiaries to, alter the character of its business from that conducted as of the Effective Date or engage in any substantial manner in any business other than (a) the business conducted by the Borrower and its Subsidiaries as of the Effective Date and (b) other healthcare-related businesses and businesses reasonably related thereto.
8.4 Consolidation and Merger.
The Borrower will not, nor will it permit any Subsidiary to, enter into any transaction of merger or consolidation or liquidate, wind up or dissolve itself, or suffer any such liquidation, wind-up or dissolution; provided that (subject to Sections 7.12 and 7.13) (a) a Subsidiary of the Borrower may merge into the Borrower or another Subsidiary of the Borrower, (b) a Subsidiary of the Borrower may merge or consolidate with another Person in a transaction otherwise permitted by Section 8.5 or (c) the Borrower or a Subsidiary of the Borrower may merge or consolidate with or into another Person if the following conditions are satisfied:
(i) if such transaction involves total consideration (cash and non-cash) in excess of $750,000,000, the Administrative Agent is given prior written notice of such action;
(ii) if the merger or consolidation involves a Credit Party, the surviving entity of such merger or consolidation shall either (A) be such Credit Party or (B) be a Subsidiary of the Borrower and expressly assume in writing all of the obligations of such Credit Party under the Credit Documents; provided that if the transaction is between the Borrower and another Person, the Borrower must be the surviving entity;
(iii) the Credit Parties execute and deliver such documents, instruments and certificates as the Administrative Agent may reasonably request; and
(iv) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing.
8.5 Sale or Lease of Assets.
The Borrower will not, nor will it permit its Subsidiaries to, convey,
sell, lease, transfer or otherwise voluntarily dispose of, in one transaction or
a series of transactions, all or any part of its business or assets whether now
owned or hereafter acquired, including, without limitation, inventory,
receivables, equipment, real property interests (whether owned or leasehold) and
securities, other than a sale, lease, transfer or other disposal of (a) subject
to Sections 7.12 and 7.13, assets from the Borrower or one of its Subsidiaries
to each other; (b) inventory and supplies in the ordinary course of business;
(c) obsolete, surplus, slow-moving, idle or worn-out assets no longer used or
useful in the business of such Credit Party or the trade-in of equipment for
equipment in better condition or of better quality; (d) assets which constitute
a Permitted Investment in the ordinary course of business; (e) Receivables
pursuant to a Permitted Receivables Financing; (f) Investments in the Strategic
Investments Portfolio and (g) assets of the Borrower and its Subsidiaries, in
addition to those permitted above in this Section 8.5; provided that in the case
of this clause (g) (i) no Event of Default exists prior to such transfer, (ii)
no Default or Event of Default exists after giving effect to such transfer and
(iii) after giving effect to such transfer, the aggregate amount of all such
transfers, calculated on a net book value basis, does not exceed ten percent
(10%) of Total Assets, as determined on the last day of the most recently ended
fiscal quarter of the Borrower for which an officer's certificate has been
delivered pursuant to Section 7.1(c).
8.6 Investments.
The Borrower will not, nor will it permit its Subsidiaries to, make or permit to exist any Investments except for Permitted Investments.
8.7 Transactions with Affiliates.
The Borrower will not, nor will it permit its Subsidiaries to, enter into
any transaction or series of transactions, whether or not in the ordinary course
of business, with any officer, director, shareholder, Subsidiary or Affiliate
other than on terms and conditions substantially as favorable as would be
obtainable in a comparable arm's-length transaction with a Person other than an
officer, director, shareholder, Subsidiary or Affiliate, except that,
notwithstanding the foregoing, each of the following shall be permitted: (a)
transactions between or among the Credit Parties; (b) transactions between or
among the Borrower and its wholly owned Subsidiaries as long as such transaction
is not disadvantageous to the Lenders in any material respect; (c) transactions
between or among the Borrower or one or more of its wholly owned Subsidiaries
(on the one hand) and one of the non-wholly owned Subsidiaries of the Borrower
(on the other hand) as long as none of the equity of such non-wholly owned
Subsidiary is owned or controlled by an officer or director of any Credit Party;
(d) advances to employees permitted by clause (f) of the definition of Permitted
Investments; (e) Dividends; (f) fees, compensation and other benefits paid to,
and customary indemnity and reimbursement provided on behalf of, officers,
directors and employees of any Credit Party in the ordinary course of business;
(g) any employment agreements entered into by
the Borrower or any of its Subsidiaries in the ordinary course of business; (h) any Permitted Receivables Financing; and (i) transactions and agreements in existence on the Closing Date and listed on Schedule 8.7 and, in each case, any amendment thereto, that is not disadvantageous to the Lenders in any material respect.
8.8 Fiscal Year; Accounting; Organizational Documents.
The Borrower will not, nor will it permit its Subsidiaries to, unless such
action (i) would not affect the calculation of the financial covenants in
Section 7.2 and (ii) would not or would not reasonably be likely to affect the
rights of the Lenders under the Credit Documents: (a) change its fiscal year
other than changing the fiscal year of a Subsidiary of the Borrower to a
calendar year end, (b) change its accounting procedures, except as a result of
changes in GAAP and in accordance with Section 1.3 or (c) change its
organizational or governing documents.
8.9 Stock Repurchases.
The Borrower will not, nor will it permit its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire or retire or make any provisions for redemption, acquisition or retirement of any shares of the Capital Stock of the Borrower of any class or any warrants or options to purchase any such shares (collectively, a "Stock Repurchase"); provided that the Borrower or its Subsidiaries may consummate Stock Repurchases as long as on the date of such Stock Repurchase and after giving effect to such Stock Repurchase no Default or Event of Default exists and is continuing.
8.10 Sale/Leasebacks.
(a) Except as set forth in clause (b) below, the Borrower will not, and will not permit any Subsidiary to, enter into any Sale and Leaseback Transaction with respect to any Principal Property unless:
(i) the Sale and Leaseback Transaction is solely with the Borrower or a Guarantor; or
(ii) the lease is for a period not in excess of five years, including renewal rights; or
(iii) prior to or within 270 days after the completion of the sale of such Principal Property in connection with the Sale and Leaseback Transaction, the Borrower or its Subsidiary applies the net cash proceeds of the sale of such Principal Property to: (A) the prepayment of the Revolving Loans (with a corresponding permanent reduction in the Revolving Committed Amount) or the prepayment of debt ranking equally with the Loans; or (B) the acquisition of different property, facilities or equipment or the expansion of the Borrower and its Subsidiaries' existing business, including the acquisition of other businesses.
(b) In addition to the Sale and Leaseback Transactions permitted by clause (a) above, the Borrower or any of its Subsidiaries may enter into any Sale and Leaseback Transactions if all Attributable Debt (measured, in each case, at the time such Sale and Leaseback Transaction is entered into by the Borrower or its Subsidiary) in respect of such Sale and Leaseback Transactions (not including any Sale and Leaseback Transactions permitted under clause (a) above), in the aggregate, does not exceed 5% of Total Assets.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence, and during the continuation, of any of the following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall default in the payment (i) when due of any principal of any of the Loans or any reimbursement obligation arising from drawings under Letters of Credit or (ii) within three Business Days of when due of any interest on the Loans or any fees or other amounts owing hereunder, under any of the other Credit Documents or in connection herewith.
(b) Representations. Any representation, warranty or statement made or deemed to be made by any Credit Party herein, in any of the other Credit Documents, or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove untrue in any material respect on the date as of which it was made or deemed to have been made.
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or observance of any term, covenant or agreement contained in Sections 7.2, 7.3, 7.10, 7.12, or 7.14 or Section 8 inclusive;
(ii) default in the due performance or observance by it of any
term, covenant or agreement contained in Section 7.1 (excepting
Section 7.1(e) for which the unremedied period shall only be five
Business Days) and 7.11 and such default shall continue unremedied for
a period of ten Business Days; or
(iii) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in subsections (a), (b) or (c)(i) or (ii) of this Section 9.1) contained in this Credit Agreement and such default shall continue unremedied for a period of at least 30 days after the earlier of an Authorized Officer of the Borrower becoming aware of such default or notice thereof given by the Administrative Agent.
(d) Other Credit Documents. (i) Any Credit Party shall default in the due performance or observance of any term, covenant or agreement in any of the other Credit Documents and such default shall continue unremedied for a period of at least 30 days after the earlier of an Authorized Officer of the Borrower becoming aware of such default or notice thereof given by the Administrative Agent, (ii) any Credit Document shall fail to be in full force and effect or any Credit Party shall so assert or (iii) any Credit Document shall fail to give the Administrative Agent and/or the Lenders the rights, powers and privileges purported to be created by such Credit Document.
(e) Guaranties. The guaranty given by the Credit Parties hereunder or by any Additional Credit Party or material provision thereof shall cease to be in full force and effect, or any Guarantor or any Person acting by or on behalf of such Guarantor shall deny or disaffirm such Guarantor's obligations under such guaranty or such Guarantor shall default in the due payment or performance of such guaranty.
(f) Bankruptcy, etc. The occurrence of any of the following with respect to a Credit Party (i) a court or governmental agency having jurisdiction in the premises shall enter a decree or order for relief in respect of a Credit Party in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator, administrator or similar official of a Credit Party or for any substantial part of its Property or ordering the winding up or liquidation of, or an administrator in respect of, its affairs; or (ii) an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect is commenced against a Credit Party and such petition remains unstayed and in effect for a period of 60 consecutive days; or (iii) a Credit Party shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator, administrator or similar official of such Person or any substantial part of its Property or make any general assignment for the benefit of creditors; or (iv) a Credit Party shall fail generally, or shall admit in writing its inability, to pay its debts as they become due or any action shall be taken by such Person in furtherance of any of the aforesaid purposes.
(g) Defaults under Other Indebtedness. With respect to any Indebtedness in excess of $100,000,000 (other than Indebtedness outstanding under this Credit Agreement) of the Borrower or any of its Subsidiaries (A) such Person shall (x) default in any payment (beyond the applicable grace period with respect thereto, if any) with respect to any such Indebtedness, or (y) default (after giving effect to any applicable grace period) in the observance or performance relating to such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event or condition shall occur or condition exist, the effect of which default or other event or condition is to cause, or permit, the holder or holders of such Indebtedness (or trustee or agent on behalf of such holders, if any) to require (determined without regard to whether any notice or lapse of time is required) any such Indebtedness to become due prior to its stated maturity; or (B) any
such Indebtedness shall be declared due and payable, or required to be prepaid other than by a regularly scheduled required prepayment prior to the stated maturity thereof; or (C) any such Indebtedness shall mature and remain unpaid.
(h) Judgments. One or more judgments, orders, or decrees shall be entered against any one or more of the Borrower and its Subsidiaries involving a liability of $100,000,000 or more, in the aggregate, (to the extent not paid, covered by insurance provided by a carrier who has acknowledged coverage or covered by an indemnification from Corning Incorporated or SmithKline Beecham PLC) and such judgments, orders or decrees (i) are the subject of any enforcement proceeding commenced by any creditor or (ii) shall continue unsatisfied, undischarged and unstayed for a period ending on the first to occur of (A) the last day on which such judgment, order or decree becomes final and unappealable or (B) 60 days.
(i) ERISA. The occurrence of any of the following events or conditions
which individually or in the aggregate has had or would reasonably be
expected to have a Material Adverse Effect: (i) any "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section
412 of the Code, whether or not waived, shall exist with respect to any
Plan, other than a Multiemployer Plan, or any Lien shall arise on the
assets of the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate in favor of the PBGC or a Plan, other than a Multiemployer Plan;
(ii) an ERISA Event shall occur with respect to a Single Employer Plan,
which is reasonably likely to result in the termination of such Plan for
purposes of Title IV of ERISA; (iii) an ERISA Event shall occur with
respect to a Multiemployer Plan or Multiple Employer Plan, which is
reasonably likely to result in (A) the termination of such plan for
purposes of Title IV of ERISA, or (B) the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate incurring any liability in connection with
a withdrawal from, reorganization of (within the meaning of Section 4241 of
ERISA), or insolvency (within the meaning of Section 4245 of ERISA) of such
plan; (iv) any prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility
shall occur which may subject the Borrower, any Subsidiary of the Borrower
or any ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
502(l) of ERISA or Section 4975 of the Code, or under any agreement or
other instrument pursuant to which the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate has agreed or is required to indemnify any
Person against any such liability; or (v) the Borrower, any Subsidiary of
the Borrower or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of $100,000,000.
(j) Ownership. There shall occur a Change of Control.
9.2 Acceleration; Remedies.
Upon the occurrence and during the continuation of an Event of Default, the Administrative Agent may or shall, upon the request and direction of the Required Lenders, take the following
actions without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Credit Parties, except as otherwise specifically provided for herein:
(a) Termination of Commitments. Declare the Commitments terminated whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid principal of and any accrued interest in respect of all Loans, any reimbursement obligations arising from drawings under Letters of Credit and any and all other Indebtedness or obligations of any and every kind owing by a Credit Party to any of the Lenders under the Credit Documents to be due whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Credit Parties.
(c) Cash Collateral. Direct the Borrower to pay (and the Borrower agrees that upon receipt of such notice, or upon the occurrence of an Event of Default under Section 9.1(f), it will immediately pay) to the Administrative Agent additional cash, to be held by the Administrative Agent, for the benefit of the Lenders, in a cash collateral account as additional security for the LOC Obligations in respect of subsequent drawings under all then outstanding Letters of Credit in an amount equal to the maximum aggregate amount which may be drawn under all Letters of Credits then outstanding.
(d) Enforcement of Rights. To the extent permitted by law, enforce any and all rights and interests created and existing under the Credit Documents, including, without limitation, all rights and remedies against a Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section 9.1(f) shall occur, then the Commitments shall automatically terminate and all Loans, all reimbursement obligations under Letters of Credit, all accrued interest in respect thereof, all accrued and unpaid fees and other indebtedness or obligations owing to the Lenders hereunder shall immediately become due and payable without the giving of any notice or other action by the Administrative Agent or the Lenders, which notice or other action is expressly waived by the Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily with the Administrative Agent, each Lender has, to the extent permitted by law, a separate right of payment and shall be considered a separate "creditor" holding a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code or any other insolvency statute.
9.3 Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit Agreement, after the
exercise of any remedies by the Administrative Agent or the Lenders pursuant to
Section 9.2 (or after any Event of Default that causes the Commitments to
terminate and/or all of the Credit Party Obligations to be due hereunder), all
amounts collected or received by the Administrative Agent or any Lender on
account of amounts outstanding under any of the Credit Documents shall be paid
over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation reasonable Attorney Costs) of the Administrative Agent or any of the Lenders in connection with enforcing the rights of the Lenders under the Credit Documents, pro rata as set forth below;
SECOND, to payment of any fees owed to the Administrative Agent, the Issuing Lender, the Swing Line Lender or any Lender, pro rata as set forth below;
THIRD, to the payment of all accrued interest payable to the Lenders hereunder, pro rata as set forth below;
FOURTH, to the payment of the outstanding principal amount of the Loans and unreimbursed drawings under Letters of Credit, and to the payment or cash collateralization of the outstanding LOC Obligations, pro rata as set forth below;
FIFTH, to all other obligations which shall have become due and payable under the Credit Documents and not repaid pursuant to clauses "FIRST" through "FOURTH" above; and
SIXTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (b) each of the Lenders shall receive an amount equal to its pro rata share (based on the proportion that the then outstanding Loans, and LOC Obligations held by such Lender bears to the aggregate then outstanding Loans and LOC Obligations of amounts available to be applied; and (c) to the extent that any amounts available for distribution pursuant to clause "FOURTH" above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by the Administrative Agent in a cash collateral account and applied (i) first, to reimburse the Issuing Lender from time to time for any drawings under such Letters of Credit and (ii) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses "FOURTH" and "FIFTH" above in the manner provided in this Section 9.3.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
(a) Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Credit Agreement and each other Credit Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Credit Agreement or any
other Credit Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Credit Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary or trustee relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Credit Agreement or any other Credit Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" herein and in the other Credit Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.
(b) The Issuing Lender shall act on behalf of the Lenders with respect
to any Letters of Credit issued by it and the documents associated
therewith until such time (and except for so long) as the Administrative
Agent may agree at the request of the Required Lenders to act for the
Issuing Lender with respect thereto; provided, however, that the Issuing
Lender shall have all of the benefits and immunities (i) provided to the
Administrative Agent in this Section 10 with respect to any acts taken by
or omissions of the Issuing Lender in connection with Letters of Credit
issued by it or proposed to be issued by it and the application and
agreements for letters of credit pertaining to the Letters of Credit as
fully as if the term "Administrative Agent" as used in this Section 10
included the Issuing Lender with respect to such acts or omissions, and
(ii) as additionally provided herein with respect to the Issuing Lender.
(c) Each of (i) Wachovia Bank, National Association in its capacity as Syndication Agent and (ii) Bank One, NA, PNC Bank, National Association and KeyBank National Association in their capacities as Co-Documentation Agents shall have no duties or obligations whatsoever under this Credit Agreement or the other Credit Documents.
10.2 Delegation of Duties.
The Administrative Agent may execute any of its duties under this Credit Agreement or any other Credit Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care.
10.3 Exculpatory Provisions.
No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Credit Agreement or any other Credit Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein), or (b) be responsible in any manner to
any Lender or participant for any recital, statement, representation or warranty made by any Credit Party or any officer thereof, contained herein or in any other Credit Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Credit Agreement or any other Credit Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Credit Agreement or any other Credit Document, or for any failure of any Credit Party or any other party to any Credit Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Credit Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party or any Affiliate thereof.
10.4 Reliance on Communications.
(a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to any Credit
Party), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat each
Lender as the owner of its interests hereunder for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have
been delivered to the Administrative Agent in accordance with Section
11.3(b). The Administrative Agent shall be fully justified in failing or
refusing to take any action under any Credit Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Credit Agreement or any
other Credit Document in accordance with a request or consent of the
Required Lenders or all the Lenders, if required hereunder, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and participants, and their respective
successors and assigns. Where this Credit Agreement expressly permits or
prohibits an action unless the Required Lenders otherwise determine, the
Administrative Agent shall, and in all other instances, the Administrative
Agent may, but shall not be required to, initiate any solicitation for the
consent or a vote of the Lenders.
(b) For purposes of determining compliance with the conditions specified in Section 5.1, each Lender that has signed this Credit Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender.
10.5 Notice of Default.
The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrower referring to this Credit Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default." The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to such Default or Event of Default as may be reasonably directed by the Required Lenders in accordance with Section 9.2; provided, however, that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Lenders.
10.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by the Administrative Agent hereinafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Credit Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon any Agent-Related Person or any other Lender and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, Property, financial and other condition and creditworthiness of the Credit Parties and their respective Affiliates, and all applicable bank or other regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Credit Agreement and to extend credit to the Borrower hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Credit Agreement and the other Credit Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, Property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, Property, financial and other condition or creditworthiness of any of the Credit Parties or any of their respective Affiliates which may come into the possession of any Agent-Related Person.
10.7 Indemnification.
Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on
behalf of any Credit Party and without limiting the obligation of any Credit
Party to do so), pro rata, and hold harmless each Agent-Related Person from and
against any and all Indemnified Liabilities incurred by it; provided, however,
that no Lender shall be liable for the payment to any Agent-Related Person of
any portion of such Indemnified Liabilities resulting from such Agent-Related
Person's gross negligence or willful misconduct; it being understood that no
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section 10.7. Without limitation of the foregoing, each Lender shall reimburse
the Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Administrative
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Credit Agreement, any other Credit Document, or any
document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Credit Parties. The undertaking in this Section 10.7 shall survive termination
of the Commitments, the payment of all Obligations hereunder and the resignation
or replacement of the Administrative Agent.
10.8 Administrative Agent in Its Individual Capacity.
Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Credit Parties and their respective Affiliates as though Bank of America were not the Administrative Agent or the Issuing Lender hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding any Credit Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Credit Party or such Affiliate) and that the Administrative Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Credit Agreement as any other Lender and may exercise such rights and powers as though it were not the Administrative Agent or the Issuing Lender, and the terms "Lender" and "Lenders" include Bank of America in its individual capacity.
10.9 Successor Agent.
The Administrative Agent may resign as Administrative Agent upon 30 days' notice to the Lenders. If the Administrative Agent resigns under this Credit Agreement, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders which successor administrative agent (such appointment, absent the existence of an Event of Default, to be subject to the consent of the Borrower, which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, such successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent" shall mean such successor administrative agent and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Section 10 and Sections 11.5 and 11.10 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Credit Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.
10.10. Agent May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Borrower or any of its Subsidiaries, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Credit Party Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its Administrative Agents and counsel, and any other amounts due the Administrative Agent under the Credit Documents.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Credit Party Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
SECTION 11
MISCELLANEOUS
11.1 Notices, Etc.
(a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed certified or registered mail, faxed or delivered to the applicable address, facsimile number or (subject to subsection (c) below) electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i) if to a Credit Party or the Administrative Agent to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 11.1 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and
(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its administrative questionnaire provided by the Administrative Agent or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to such Credit Party and the Administrative Agent.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).
(b) Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Section 2 if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Section 2 by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.
(c) Effectiveness of Facsimile Documents and Signatures. Credit Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable law, have the same force and effect as manually-signed originals and shall be binding on the Borrower, the Administrative Agent and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.
(d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic notices) purportedly given by or on behalf of a Credit Party even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Credit Parties shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of a Credit Party. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.
11.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default and the commencement of remedies described in Section 9.2, each Lender is authorized at any time and from time to time, without presentment, demand, protest or other notice of any kind (all of which rights being hereby expressly waived), to set-off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Lender (including, without limitation, branches, agencies or Affiliates of such Lender wherever located) to or for the credit or the account of any Credit Party against obligations and liabilities of such Credit Party to the Lenders hereunder, under the Notes, the other Credit Documents or otherwise, irrespective of whether the Administrative Agent or the Lenders shall have made any demand hereunder and although such obligations, liabilities or claims, or any of them, may be contingent or unmatured, and any such set-off shall be deemed to have been made immediately upon the occurrence of an Event of Default even though such charge is made or entered on the books of such Lender subsequent thereto. The Credit Parties hereby agree that any Person purchasing a participation in the Loans and Commitments hereunder pursuant to Sections 11.3(e) or 3.8 may exercise all rights of set-off with respect to its participation interest as fully as if such Person were a Lender hereunder.
11.3 Benefit of Agreement.
(a) Generally. The provisions of this Credit Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender and
no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the
provisions of subsection (b) of this Section, (ii) by way of participation
in accordance with the provisions of subsection (d) of this Section, or
(iii) by way of pledge or assignment of a security interest subject to the
restrictions of subsection (f) of this Section (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing
in this Credit Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent
provided in subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Indemnitees) any legal or equitable right, remedy
or claim under or by reason of this Credit Agreement.
(b) Assignments. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Credit Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Revolving Committed Amount (which for this purpose includes Loans outstanding thereunder) subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Credit Agreement with respect to the Loans or the Commitment assigned; (iii) any assignment of a Commitment must be approved by the Administrative Agent unless the Person that is the proposed assignee is itself a Lender or an Affiliate of a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500. Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Credit Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Credit Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Credit Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Credit Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.9, 3.13, 3.14 and 11.5 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Borrower (at its expense) shall execute and deliver applicable Note(s) to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Credit Agreement that does not comply with this subsection shall be treated for purposes of this Credit Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Credit Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, at any reasonable time and from time to time upon reasonable prior notice. In addition, at any time that a request for a consent for a material or other substantive change to the Credit Documents is pending, any Lender wishing to consult with other Lenders in connection therewith may request and receive from the Administrative Agent a copy of the Register.
(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower's Affiliates or Subsidiaries or any competitor of the Borrower or any affiliate of a competitor of the Borrower) (each, a "Loan Participant") in all or a portion of such Lender's rights and/or obligations under this Credit Agreement (including all or a portion of its Commitment and/or the Loans; provided that (i) such Lender's obligations under this Credit Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Credit Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Credit Agreement and to approve any amendment, modification or waiver of any provision of this Credit Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Loan Participant, agree to any amendment, waiver or other modification that would change the amount, interest rate or maturity of the Loans or any other matter that requires unanimous consent of all of the Lenders. Subject to subsection (e) of this Section, the Borrower agrees that each Loan Participant shall be entitled to the benefits of Sections 3.9, 3.13 and 3.14 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to subsection (b) of this Section. To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 11.2 as
though it were a Lender, provided such Participant agrees to be subject to
Section 3.8 as though it were a Lender.
(e) Participant's Rights. A Loan Participant shall not be entitled to receive any greater payment under Section 3.9 or 3.14 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Loan Participant that would be a foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.13 unless the Borrower is notified of the participation sold to such Loan Participant and such Loan Participant agrees, for the benefit of the Borrower, to comply with Section 3.13 as though it were a Lender.
(f) Unrestricted Assignments. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Credit Agreement (including under its Note(s), if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(g) Special Purpose Entities. Notwithstanding anything to the contrary
contained herein, so long as any action in accordance with this Section
11.3(g) does not cause increased costs or expenses for the Borrower, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC") the option to fund all or any part of any Loan that such
Granting Lender would otherwise be obligated to fund pursuant to this
Credit Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to fund any Loan, (ii) if an SPC elects not to
exercise such option or otherwise fails to fund all or any part of such
Loan, the Granting Lender shall be obligated to fund such Loan pursuant to
the terms hereof, (iii) no SPC shall have any voting rights pursuant to
Section 11.6 and (iv) with respect to notices, payments and other matters
hereunder, the Borrower, the Administrative Agent and the Lenders shall not
be obligated to deal with an SPC, but may limit their communications and
other dealings relevant to such SPC to the applicable Granting Lender. The
funding of a Loan by an SPC hereunder shall utilize the Commitment of the
Granting Lender to the same extent that, and as if, such Loan were funded
by such Granting Lender. Each party hereto hereby agrees that no SPC shall
be liable for any indemnity or payment under this Credit Agreement for
which a Lender would otherwise be liable for so long as, and to the extent,
the Granting Lender provides such indemnity or makes such payment.
Notwithstanding anything to the contrary contained in this Credit
Agreement, any SPC may disclose any non-public information relating to its
funding of Loans to any rating agency, commercial paper dealer or provider
of any surety or guarantee to such SPC so long as such disclosure is
clearly designated as being made on a confidential basis. This Section
11.3(g) may not be amended without the prior written consent of each
Granting Lender, all or any part of whose Loan is being funded by an SPC at
the time of such amendment.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Administrative Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower or any Credit Party and the Administrative Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies which the Administrative Agent or any Lender would otherwise have. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent or the Lenders to any other or further action in any circumstances without notice or demand.
11.5 Payment of Expenses; Indemnification.
(a) The Borrower shall pay on demand:
(i) any and all attorneys' fees and disbursements and out-of-pocket costs and expenses incurred by the Administrative Agent in connection with the development, drafting, negotiation and administration of the Credit Documents, any amendments thereto and the syndication and closing of the transactions contemplated thereby; and
(ii) all costs and expenses (including fees and disbursements of in-house and other attorneys, appraisers and consultants) incurred by the Agents or the Lenders in any workout, restructuring or similar arrangements or, after an Event of Default, in connection with the protection, preservation, exercise or enforcement of any of the terms of the Credit Documents or in connection with any foreclosure, collection or bankruptcy proceedings.
The foregoing costs and expenses shall include all out-of-pocket expenses
incurred by the Administrative Agent and the cost of independent public
accountants and other outside experts retained by the Administrative Agent or
any Lender. If requested by the Borrower, the Administrative Agent or a Lender,
as applicable, will furnish to the Borrower, within ten Business Days of such
request, a certificate setting forth the basis in reasonable detail with respect
to any amounts requested under this Section 11.5(a). All amounts due under this
Section 11.5(a) shall be payable within twenty Business Days after demand
therefor. The agreements in this Section shall survive the termination of the
Commitments and repayment of all Credit Party Obligations.
(b) Indemnification.
(i) Whether or not the transactions contemplated hereby are consummated, the Borrower shall indemnify and hold harmless each
Agent-Related Person, each Lender and their respective Affiliates,
directors, officers, employees, counsel, agents and attorneys-in-fact
(collectively the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, claims, demands,
actions, judgments, suits, costs, expenses and disbursements
(including attorney costs) of any kind or nature whatsoever which may
at any time be imposed on, incurred by or asserted against any such
Indemnitee in any way relating to or arising out of or in connection
with (A) the execution, delivery, enforcement, performance or
administration of any Credit Document or any other agreement, letter
or instrument delivered in connection with the transactions
contemplated thereby or the consummation of the transactions
contemplated thereby, (B) any Commitment or Loan or the use or
proposed use of the proceeds therefrom, (C) any actual or alleged
presence or release of hazardous materials on or from any property
currently or formerly owned or operated by the Borrower or any of its
Subsidiaries or any environmental liability related in any way to the
Borrower or any of its Subsidiaries or (D) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory
(including any investigation of, preparation for, or defense of any
pending or threatened claim, investigation, litigation or proceeding)
and regardless of whether any Indemnitee is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided that
such indemnity shall not, as to any Indemnitee, be available to the
extent that such liabilities, obligations, losses, damages, penalties,
claims, demands, actions, judgments, suits, costs, expenses or
disbursements are determined by a final judgment of a court of
competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee. No Indemnitee shall be liable
for any damages arising from the use by others of any information or
other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Credit
Agreement, nor shall any Indemnitee have any liability for any
indirect or consequential damages relating to this Credit Agreement or
any other Credit Document or arising out of its activities in
connection herewith or therewith (whether before or after the Closing
Date). All amounts due under this Section 11.5(b) shall be payable
within ten Business Days after demand therefor. The agreements in this
Section shall survive the resignation of the Administrative Agent, the
replacement of any Lender, the termination of the Commitments and the
repayment, satisfaction or discharge of all the Credit Party
Obligations.
(ii) To the extent that the undertaking to indemnify and hold harmless set forth in Section 11.5(b)(i) may be unenforceable as violative of any applicable law or public policy, the Borrower shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated unless such amendment, change, waiver, discharge or termination is in writing and signed by the Required Lenders and the then Credit Parties; provided that no such amendment, change, waiver, discharge or termination shall without the consent of each Lender affected thereby:
(a) extend the Maturity Date or extend or postpone the time for any payment or prepayment of principal;
(b) reduce the rate or extend the time of payment of interest (other than as a result of waiving the applicability of any post-default increase in interest rates) thereon or fees hereunder;
(c) reduce or waive the principal amount of any Loan;
(d) increase or extend the Commitment of a Lender (it being understood and agreed that a waiver of any Default or Event of Default or a waiver of any mandatory reduction in the Commitments shall not constitute a change in the terms of any Commitment of any Lender);
(e) release the Borrower from its obligations or consent to the assignment or transfer by the Borrower of any of its rights and obligations under (or in respect of) the Credit Documents or release all or substantially all of the Guarantors from their respective obligations under the Credit Documents;
(f) amend, modify or waive any provision of this Section 11.6 or
Section 3.4(a), 3.4(b)(i), 3.7, 3.8, 9.1(a), 11.2, 11.3 or 11.5; or
(g) reduce any percentage specified in, or otherwise modify, the definition of Required Lenders.
Notwithstanding the above, (i) no provisions of Section 10 may be amended or
modified without the consent of the Administrative Agent, (ii) no provisions of
Section 2.2 may be amended or modified without the consent of the Issuing Lender
and (iii) no provisions of Section 2.3 may be amended or modified without the
consent of the Swing Line Lender.
Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (x) each Lender is entitled to vote as such Lender sees fit on any reorganization plan that affects the Loans or the Letters of Credit, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent provisions set forth herein and (y) the Required Lenders may consent to allow a Credit Party to use cash collateral in the context of a bankruptcy or insolvency proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.
11.8 Headings.
The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Credit Agreement.
11.9 Defaulting Lender.
Each Lender understands and agrees that if such Lender is a Defaulting Lender then notwithstanding the provisions of Section 11.6 it shall not be entitled to vote on any matter requiring the consent of the Required Lenders or to object to any matter requiring the consent of all the Lenders; provided, however, that all other benefits and obligations under the Credit Documents shall apply to such Defaulting Lender.
11.10 Survival of Indemnification.
All indemnities set forth herein shall survive the execution and delivery of this Credit Agreement, the making of the Loans, the issuance of the Letters of Credit and the repayment of the Loans, LOC Obligations and other obligations and the termination of the Commitments hereunder.
11.11 Governing Law; Venue; Jurisdiction.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to this Credit Agreement or any other Credit Document may be brought in the courts of the State of New York or of the United States sitting in New York City, and, by execution and delivery of this Credit Agreement, each Credit Party hereby irrevocably accepts for itself and in respect of its Property, generally and unconditionally, the jurisdiction of such courts. Each Credit Party irrevocably consents to the service of process in any action or proceeding with respect to this Credit Agreement or any other Credit Document by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at the address for notices pursuant to Section 11.1, such service to become effective 10 days after such mailing. Nothing herein shall affect the right of a Lender to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against a Credit Party in any other jurisdiction. Each Credit Party agrees that a final judgment in any 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; provided that nothing in this Section 11.11(a) is intended to impair a Credit Party's right under applicable law to appeal or seek a stay of any judgment.
(b) Each Credit Party hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Credit Agreement or any other Credit Document in the courts referred to in subsection (a) hereof and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.
11.12 Waiver of Jury Trial; Waiver of Consequential Damages.
EACH OF THE PARTIES TO THIS CREDIT AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. Each Credit Party agrees not to assert any claim against the Administrative Agent, the Issuing Lenders, any Lender, any of their Affiliates, or any of their respective directors, officers, employees, attorneys or agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to any of the transactions contemplated herein.
11.13 Severability.
If any provision of any of the Credit Documents is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions.
11.14 Further Assurances.
The Credit Parties agree, upon the request of the Administrative Agent, to promptly take such actions, as reasonably requested, as is necessary to carry out the intent of this Credit Agreement and the other Credit Documents.
11.15 Confidentiality.
Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Affiliates' respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it; (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Credit Agreement; (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Credit Agreement or the enforcement of rights hereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any Eligible Assignee of or Loan Participant in, or any prospective Eligible Assignee of or Loan Participant in, any of
its rights or obligations under this Credit Agreement or (ii) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty's or prospective counterparty's professional advisor) to any credit derivative transaction relating to obligations of the Credit Parties; (g) with the consent of the Borrower; (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower; or (i) to the National Association of Insurance Commissioners or any other similar organization. In addition, the Administrative Agent and the Lenders may disclose the existence of this Credit Agreement and information about this Credit Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Administrative Agent and the Lenders in connection with the administration and management of this Credit Agreement, the other Credit Documents and the Commitments. For the purposes of this Section, "Information" means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary; provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified in writing at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
In addition, the Administrative Agent may disclose to any agency or organization that assigns standard identification numbers to loan facilities such basic information describing the facilities provided hereunder as is necessary to assign unique identifiers (and, if requested, supply a copy of this Credit Agreement), it being understood that the Person to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to make available to the public only such Information as such person normally makes available in the course of its business of assigning identification numbers.
11.16 Entirety.
This Credit Agreement together with the other Credit Documents and the Fee Letter represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the Credit Documents or the transactions contemplated herein and therein.
11.17 Binding Effect; Continuing Agreement.
(a) This Credit Agreement shall become effective at such time when all of the conditions set forth in Section 5.1 have been satisfied or waived by the Lenders and it shall have been executed by the Borrower, the Guarantors and the Administrative Agent, and the Administrative Agent shall have received copies hereof (telefaxed or otherwise) which, when taken together, bear the signatures of each Lender, and thereafter this Credit Agreement shall be binding upon and inure to the benefit of the Borrower, the
Guarantors, the Administrative Agent and each Lender and their respective successors and assigns.
(b) This Credit Agreement shall be a continuing agreement and shall remain in full force and effect until all Loans, LOC Obligations, interest, fees and other Credit Party Obligations have been paid in full and all Commitments and Letters of Credit have been terminated. Upon termination, the Credit Parties shall have no further obligations (other than the indemnification provisions that survive) under the Credit Documents; provided that should any payment, in whole or in part, of the Credit Party Obligations be rescinded or otherwise required to be restored or returned by the Administrative Agent or any Lender, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, then the Credit Documents shall automatically be reinstated and all amounts required to be restored or returned and all costs and expenses incurred by the Administrative Agent or any Lender in connection therewith shall be deemed included as part of the Credit Party Obligations.
11.18. USA Patriot Act Notice.
Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Each of the parties hereto has caused a counterpart of this Amended and Restated Credit Agreement to be duly executed and delivered as of the date first above written.
BORROWER:
QUEST DIAGNOSTICS INCORPORATED,
a Delaware corporation
By: /s/ Joseph P. Manory
------------------------------------------
Name: Joseph P. Manory
----------------------------------------
Title: Vice President and Treasurer
---------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
GUARANTORS:
QUEST DIAGNOSTICS HOLDINGS
INCORPORATED
a Delaware corporation
QUEST DIAGNOSTICS CLINICAL
LABORATORIES, INC.,
a Delaware corporation
APL PROPERTIES LIMITED LIABILITY
COMPANY,
a Nevada limited liability company
QUEST DIAGNOSTICS INCORPORATED,
a California corporation
QUEST DIAGNOSTICS INCORPORATED,
a Maryland corporation
QUEST DIAGNOSTICS INCORPORATED,
a Nevada corporation
QUEST DIAGNOSTICS LLC,
an Illinois limited liability company
QUEST DIAGNOSTICS INCORPORATED,
a Michigan corporation
QUEST DIAGNOSTICS NICHOLS INSTITUTE, INC.
a Virginia corporation
QUEST DIAGNOSTICS OF PENNSYLVANIA, INC.,
a Delaware corporation
METWEST INC.,
a Delaware corporation
NICHOLS INSTITUTE DIAGNOSTICS,
a California corporation
DPD HOLDINGS, INC.,
a Delaware corporation
DIAGNOSTICS REFERENCE SERVICES INC.,
a Maryland corporation
QUEST DIAGNOSTICS LLC,
a Connecticut limited liability company
QUEST DIAGNOSTICS LLC,
a Massachusetts limited liability company
UNILAB CORPORATION,
a Delaware corporation
UNILAB ACQUISITION CORPORATION,
a Delaware corporation
AMERICAN MEDICAL LABORATORIES, INCORPORATED,
a Delaware corporation
AML INC,
a Delaware corporation
By: /s/ Joseph P. Manory
------------------------------------------
Name: Joseph P. Manory
Vice President and Treasurer
of each of the above Guarantors
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
PATHOLOGY BUILDING PARTNERSHIP,
a Maryland general partnership
By: Quest Diagnostics Incorporated, a Maryland
corporation, its general partner
By: /s/ Joseph P. Manory ------------------------------------ Name: Joseph P. Manory Title: Vice President and Treasurer |
By: Diagnostic Reference Services Inc., a Maryland corporation, its general partner
By: /s/ Joseph P. Manory ------------------------------------ Name: Joseph P. Manory Title: Vice President and Treasurer |
QUEST DIAGNOSTICS INVESTMENTS INCORPORATED,
a Delaware corporation
By: /s/ Robert S. Galen
-------------------------------------------
Name: Robert S. Galen
-----------------------------------------
Title: Vice President
----------------------------------------
|
QUEST DIAGNOSTICS FINANCE INCORPORATED,
a Delaware corporation
By: /s/ Robert S. Galen
-------------------------------------------
Name: Robert S. Galen
-----------------------------------------
Title: Vice President
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
LENDERS:
BANK OF AMERICA, N.A.,
individually in its capacity as a Lender and
in its capacity as Administrative Agent and
Issuing Lender
By: /s/ Philip S. Durand
-------------------------------------------
Name: Philip S. Durand
-----------------------------------------
Title: Managing Director
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
BANK ONE, NA,
as a Lender
By: /s/ Michael R. Zaksheske
-------------------------------------------
Name: Michael R. Zaksheske
-----------------------------------------
Title: Director
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
NATIONAL CITY BANK,
as a Lender
By: /s/ Heather M. McIntyre
-------------------------------------------
Name: Heather M. McIntyre
-----------------------------------------
Title: Assistant Vice President
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
KEYBANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ J.T. Taylor
-------------------------------------------
Name: J.T. Taylor
-----------------------------------------
Title: Vice President and Senior Portfolio
Manager
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
SUNTRUST BANK,
as a Lender
By: /s/ Mark D. Mattson
-------------------------------------------
Name: Mark D. Mattson
-----------------------------------------
Title: Managing Director
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
MERRILL LYNCH BANK USA,
as a Lender
By: /s/ Louis Alder
-------------------------------------------
Name: Louis Alder
-----------------------------------------
Title: Director
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
SUMITOMO MITSUI BANKING CORP., NEW YORK
as a Lender
By: /s/ Robert H. Riley III
-------------------------------------------
Name: Robert H. Riley III
-----------------------------------------
Title: Senior Vice President
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
THE BANK OF NEW YORK,
as a Lender
By: /s/ Thomas J. McCormack
-------------------------------------------
Name: Thomas J. McCormack
-----------------------------------------
Title: Vice President
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
FIFTH THIRD BANK,
as a Lender
By: /s/ Christine L. Wagner
-------------------------------------------
Name: Christine L. Wagner
-----------------------------------------
Title: Vice President
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
CREDIT LYONNAIS NEW YORK BRANCH,
as a Lender
By: /s/ Charles Heidsieck
-------------------------------------------
Name: Charles Heidsieck
-----------------------------------------
Title: Senior Vice President
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Jeanette A. Griffin
-------------------------------------------
Name: Jeanette A. Griffin
-----------------------------------------
Title: Director
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
MANUFACTURERS AND TRADERS TRUST COMPANY,
as a Lender
By: /s/ W. Blake Hampson
-------------------------------------------
Name: W. Blake Hampson
-----------------------------------------
Title: Vice President
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Roy H. Roberts
-------------------------------------------
Name: Roy H. Roberts
-----------------------------------------
Title: Vice President
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
MORGAN STANLEY BANK,
as a Lender
By: /s/ Daniel Twenge
-------------------------------------------
Name: Daniel Twenge
-----------------------------------------
Title: Vice President
----------------------------------------
|
Signature Page to Amended and Restated Credit Agreement Quest Diagnostics Incorporated
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Michael Richards
-------------------------------------------
Name: Michael Richards
-----------------------------------------
Title: Vice President
----------------------------------------
|
Exhibit 10.5
QUEST DIAGNOSTICS
SUPPLEMENTAL DEFERRED COMPENSATION PLAN
(Effective January 1, 1999, Amended and Restated Effective January 1, 2004)
PREAMBLE
Effective as of January 1, 1999, Quest Diagnostics adopted this Quest Diagnostics Supplemental Deferred Compensation Plan for the benefit of certain of its Employees. Quest Diagnostics hereby amends and restates this Plan in its entirety, effective as of the Restatement Effective Date, to reflect amendments adopted and to implement certain other changes. The provisions of this restated Plan shall govern the rights of Employees who have Accounts under the Plan that have not been paid in full prior to the Restatement Effective Date. The purpose of the Plan is to provide supplemental retirement income and to permit eligible Employees the option to defer receipt of Compensation, pursuant to the terms of the Plan. The Plan is intended to be an unfunded deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees under sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS...........................................................................1 1.1 Definitions.................................................................................1 ARTICLE 2. PARTICIPATION.........................................................................4 2.1 Commencement of Participation...............................................................4 2.2 Resumption of Participation Following Reemployment..........................................4 2.3 Change in Employment Status.................................................................4 ARTICLE 3. CONTRIBUTIONS.........................................................................5 3.1 Deferral Contributions......................................................................5 3.2 Participating Employer Contributions........................................................6 3.3 Transfer of Funds...........................................................................6 ARTICLE 4. PARTICIPANTS' ACCOUNTS................................................................7 4.1 Individual Accounts.........................................................................7 4.2 Accounting for Payments.....................................................................7 ARTICLE 5. INVESTMENT OF CONTRIBUTIONS...........................................................8 5.1 Manner of Investment........................................................................8 5.2 Investment Decisions........................................................................8 ARTICLE 6. RIGHT TO BENEFITS.....................................................................9 6.1 Termination of Employment...................................................................9 6.2 Death.......................................................................................9 6.3 Payment on a Designated Future Date.........................................................9 6.4 Payment Due to an Unforeseen Emergency......................................................9 6.5 Adjustment for Investment Experience........................................................9 6.6 Forfeiture of Unvested Amounts.............................................................10 ARTICLE 7. PAYMENT OF BENEFITS..................................................................11 7.1 Payment of Benefits to Participants and Beneficiaries......................................11 7.2 Determination of Method of Payment.........................................................11 7.3 Right of Offset............................................................................11 7.4 Payment in the Event of Taxation...........................................................11 ARTICLE 8. AMENDMENT AND TERMINATION............................................................12 8.1 Amendment by Quest Diagnostics.............................................................12 8.2 Retroactive Amendments.....................................................................12 8.3 Plan Termination...........................................................................12 |
8.4 Payment upon Termination of the Plan.......................................................12
ARTICLE 9. THE TRUST............................................................................13
9.1 Establishment of Trust.....................................................................13
ARTICLE 10. MISCELLANEOUS........................................................................14
10.1 Limitation of Rights.......................................................................14
10.2 Spendthrift Provision......................................................................14
10.3 Facility of Payment........................................................................14
10.4. Discharge of Obligations...................................................................14
10.5 Furnishing Information.....................................................................15
10.6 Information between the Administrator and Trustee..........................................15
10.7 Notices....................................................................................15
10.8 Writings and Electronic Communications. All elections, notices and other communication
with respect to the Plan, including signatures relating to such documentation, may be
executed and stored on paper, electronically or in another medium.......................15
10.9 Governing Law..............................................................................15
10.10 Construction...............................................................................15
ARTICLE 11. PLAN ADMINISTRATION..................................................................16
11.1 Powers and Responsibilities of the Administrator...........................................16
11.2 Claims and Review Procedures...............................................................16
11.3 Plan's Administrative Costs................................................................17
|
Article 1. Definitions.
1.1 Definitions. Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise. Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:
(a) "Account" means an account established on the books of a Participant's Employer for the purpose of recording Deferral Contributions and Employer Contributions credited on behalf of a Participant in respect of compensation for services to such Employer and any notional income, expenses, gains or losses related thereto. For each Participant who was a participant in the MetPath Inc. Deferred Compensation Plan, a MetPath Plan Subaccount was established as part of the Participant's Account.
(b) "Administrator" means the Quest Diagnostics Benefits Administration Committee or its delegee, which has been designated by Quest Diagnostics to be responsible for the administration of the Plan.
(c) "Beneficiary" means the person or persons entitled under Section 6.2 to receive benefits under the Plan upon the death of a Participant.
(d) "Bonus" means the cash bonus that is payable each March (if not deferred pursuant to Section 3.1) under the Senior Management Incentive Plan or the Quest Diagnostics Incorporated Management Incentive Plan.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to time.
(f) "Compensation" shall have the meaning ascribed to the term "Deferral Compensation" by the Profit Sharing Plan; provided that any exclusion attributable to (i) deferred compensation deferred pursuant to this Plan or (ii) limits imposed by Code Section 401(a)(17) shall not apply.
(g) "Deferral Contributions" means those amounts credited to a Participant's Account pursuant to Section 3.1.
(h) "Effective Date" means January 1, 1999.
(i) "Eligible Employee" means an Employee of an Employer who is determined by the Administrator to be among a select group of management or highly compensated Employees and who is designated by the Administrator as an Eligible Employee for purposes of the Plan.
(j) "Employee" means any employee of an Employer.
(k) "Employer" means Quest Diagnostics and any successors and assigns unless otherwise provided herein, and shall include any Related Employer or other affiliated employer adopting this Plan.
(l) "Employer Contributions" means amounts credited to a Participant's Account pursuant to Section 3.2.
(m) "Employer Stock" means any class of common stock of Quest Diagnostics or the preferred stock of Quest Diagnostics that is convertible into common stock.
(n) "ERISA" means the Employee Retirement Income Security Act of 1974, as from time to time amended.
(o) "MetPath Plan Subaccount" means the subaccount established and maintained by the Administrator pursuant to Section 4.1 on behalf of each Participant who was a participant in the MetPath Inc. Deferred Compensation Plan.
(p) "Participant" means any Eligible Employee who has filed in accordance with Article 2 an election to defer Compensation pursuant to Section 3.1.
(q) "Plan" means this Quest Diagnostics Supplemental Deferred Compensation Plan as in effect from time to time.
(r) "Plan Year" means the calendar year.
(s) "Profit Sharing Plan" means the Profit Sharing Plan of Quest Diagnostics Incorporated, as amended from time to time.
(t) "Quest Diagnostics" means Quest Diagnostics Incorporated.
(u) "Related Employer" means any employer other than Quest Diagnostics, if Quest
Diagnostics and such other employer are members of a controlled group of
corporations (as defined in Section 414(b) of the Code) or an affiliated service
group (as defined in Code Section 414(m)), or are trades or businesses (whether
or not incorporated) which are under common control (as defined in Section
414(c)), or such other employer is required to be aggregated with Quest
Diagnostics pursuant to regulations issued under Code Section 414(o).
(v) "Restatement Effective Date" means January 1, 2004.
(w) "Section 16 Executive" means an Eligible Employee who is designated as such by the Administrator.
(x) "Section 401(a)(17) Limit" means the maximum amount of annual compensation
that can be taken into account by the Profit Sharing Plan pursuant to Code
Section 401(a)(17).
(y) "Senior Executive" means an Eligible Employee who is designated as such by the Administrator.
(z) "Senior Management Incentive Plan" means the Quest Diagnostics Incorporated Senior Management Incentive Plan, as in effect from time to time.
(aa) "SMIP Bonus Subaccount" means the portion of a Participant's Account established and maintained by the Administrator on behalf of each Participant who elects to defer a portion of his Bonus payable under the Senior Management Incentive Plan and any other plan intended to pay performance-based compensation within the meaning of Code Section 162(m)(4)(c).
(bb) "Supplemental Contribution" means an additional discretionary Employer Contribution credited to a Participant's Account pursuant to Section 3.2.
(cc) "Trust" means the trust fund established pursuant to the terms of the Plan.
(dd) "Trust Agreement" means the agreement by and among the Trustee and each Employer establishing the Trust.
(ee) "Trustee" means the corporation or individuals named in the agreement establishing the Trust and such successor and/or additional trustees as may be named in accordance with the Trust Agreement.
(ff) "Valuation Date" means the last day of the Plan Year and such other date(s) as designated by the Administrator.
Article 2. Participation.
2.1 Commencement of Participation. Each Eligible Employee who, as of the Restatement Effective Date, has filed an election to defer Compensation in accordance with Section 3.1 or has an Account is a Participant in this Plan. Each other Eligible Employee shall become a Participant in this Plan after he has timely filed an election to defer Compensation pursuant to Section 3.1 or has a Supplemental Contribution credited to his Account. An election to defer Compensation will be timely if it is filed in accordance with procedures established by the Administrator which shall require elections to be filed no later than January 1 of the Plan Year to which the deferral election applies or, if an individual is designated by the Administrator as an Eligible Employee during the Plan Year, within 30 days following the date of such designation.
2.2 Resumption of Participation Following Reemployment. If a Participant ceases to be an Employee and thereafter returns to the employ of an Employer, he may again become a Participant following his reemployment, provided he is an Eligible Employee and has timely filed an election to defer Compensation pursuant to Section 3.1.
2.3 Change in Employment Status. If any Participant continues in the employ of an Employer but ceases to be an Eligible Employee, he shall continue to be a Participant until the entire amount of the value of his Account is paid; provided, however, he shall not be entitled to make Deferral Contributions or receive an allocation of Employer Contributions or Supplemental Contributions during the period that he is not an Eligible Employee.
Article 3. Contributions.
3.1 Deferral Contributions.
(a) Participant deferral elections. Each Participant who is not a Senior Executive may elect to defer up to fifty (50) percent (in whole percentages) of his future Compensation in excess of the Section 401(a)(17) Limit.
(b) Senior Executive deferral elections. Each Participant who is a Senior
Executive may elect to defer (1) up to fifty (50) percent (in whole percentages)
of his future Compensation (excluding any Bonus deferred pursuant to Section
3.1(b)(2)) in excess of the Section 401(a)(17) Limit; and (2) up to ninety-five
(95) percent (in whole percentages) of his future Compensation which constitutes
Bonus.
(c) Effectiveness of deferral election. A deferral election shall become effective on the first day of the Plan Year (or for an individual who is designated as an Eligible Employee during the Plan Year and timely files a deferral election, the first day of the first payroll period that follows receipt by the Administrator of such election). The election will be effective to defer Compensation relating to all services performed in the Plan Year subsequent to the time such election becomes effective. Any subsequent election will be effective as of the first day of the following Plan Year and will apply only to Compensation payable with respect to services rendered after such date. Amounts credited to a Participant's Account prior to the effective date of any subsequent election will not be affected by such subsequent election.
(d) Commencement of deferrals. (i) Deferrals made pursuant to Section 3.1(a) and
3.1(b)(1). If a Participant's Compensation for a Plan Year exceeds the Section
401(a)(17) Limit on account of payment of Compensation (excluding any Bonus),
then deferrals pursuant to his election under Section 3.1(a) or 3.1(b)(1) shall
commence as of the payroll period coincident with or next following the payroll
period in which the Participant's Compensation exceeds the Section 401(a)(17)
Limit (but deferrals shall be made only on Compensation in excess of the Section
401(a)(17) Limit). If a Participant's Compensation for a Plan Year exceeds the
Section 401(a)(17) Limit on account of payment of Bonus, then deferrals pursuant
to his election shall commence as of the payroll period in which the
Participant's Compensation exceeds the Section 401(a)(17) Limit (but deferrals
shall be made only on Compensation in excess of the Section 401(a)(17) Limit).
(ii) Deferrals made pursuant to Section 3.1(b)(2). Deferrals of Bonus pursuant
to Section 3.1(b)(2) shall be made in the payroll period in which the Bonus
would otherwise be paid.
(e) Election irrevocable except as required pursuant to Profit Sharing Plan. An Employer shall credit to the Account maintained on behalf of a Participant the amount of Compensation deferred pursuant to such Participant's election. Under no circumstances may an election to defer Compensation be adopted or effective retroactively. A Participant may not revoke or change an election to defer Compensation for a Plan Year during that year; provided, however, that a Participant who has made a hardship withdrawal under the Profit Sharing Plan may not defer Compensation under this Plan for a period of six months from the date of the withdrawal, unless otherwise determined by the Administrator.
(f) SMIP Bonus Subaccount. A Participant's Employer shall credit to the
Participant's SMIP Bonus Subaccount an amount corresponding to the amount of
Bonus payable under the Senior Management Incentive Plan deferred pursuant to
Section 3.1(b)(2).
(g) Vested Right. Subject to the claims of the Employer's creditors in the event of the Employer's insolvency, a Participant shall have a nonforfeitable right to the value of Deferral Contributions credited to his Account.
3.2 Participating Employer Contributions.
(a) Employer Contributions. (i) Matching Contribution. An Employer shall credit an Employer Contribution to the Account maintained on behalf of each Participant who had Deferral Contributions credited to his Account for a payroll period. Notwithstanding the preceding sentence, no Employer Contribution shall be credited to the Account of a Participant who is also a participant in the Quest Diagnostics Transferee Pension Plan for former Corning Incorporated employees. The amount of the Employer Contribution to be credited on behalf of a Participant shall be equal to the applicable percentage specified from time to time in Section 3.2 of the Profit Sharing Plan of the Deferral Contributions made on behalf of the Participant with respect to such payroll period. (ii) Vested Right. Subject to the claims of the Employer's creditors in the event of the Employer's insolvency, a Participant shall have a nonforfeitable right to the value of Employer Contributions credited to his Account.
(b) Supplemental Contributions. In addition, a Participant's Employer may, from time to time in its sole discretion, credit a Supplemental Contribution to a Participant's Account in an amount determined by such Employer in its sole discretion and without regard to any Deferral Contribution elected by such Participant. Unless otherwise specified by the Employer at the time the Supplemental Contribution is made, a Participant shall have a nonforfeitable right to the value of such Supplemental Contribution credited to his Account, subject to the claims of such Employer's creditors in the event of such Employer's insolvency.
3.3 Transfer of Funds. Each Employer will, as soon as administratively practicable after each payroll period, make a transfer of assets to the Trustee. The Employers shall provide the Trustee with information on the amount credited to each Participant's Account.
Article 4. Participants' Accounts.
4.1 Individual Accounts. The Administrator will establish and maintain an Account for each Participant which will reflect Deferral Contributions, Employer Contributions and Supplemental Contributions credited to the Account and any notional earnings, expenses, gains and losses credited thereto, attributable to the investments in which the Participant's Account is treated as invested. For each Participant who was a participant in the MetPath Inc. Deferred Compensation Plan, the Administrator will establish and maintain, as part of such Participant's Account, a subaccount (the "MetPath Plan Subaccount") to reflect his participation in the MetPath Inc. Deferred Compensation Plan. The MetPath Plan Subaccount had an opening balance equal to the balance of the Participant's account under the MetPath Inc. Deferred Compensation Plan on the date the Participant's balance under the MetPath Inc. Deferred Compensation Plan was transferred to this Plan (with interest credited, pursuant to the terms of the MetPath Inc. Deferred Compensation Plan, from December 31, 1998 to the transfer date). The Administrator will establish and maintain such other accounts and records as it decides in its discretion to be reasonably required or appropriate in order to discharge its duties under the Plan. Participants will be furnished statements of their Account value at least once each Plan Year.
4.2 Accounting for Payments. A payment to the Participant or to the Participant's Beneficiary(ies) shall be charged to the Participant's Account as of the date of such payment.
Article 5. Investment of Contributions.
5.1 Manner of Investment. All amounts credited to the Accounts of Participants shall be treated as though invested and reinvested only in eligible investments selected by the Administrator.
5.2 Investment Decisions. Investments in which the Accounts of Participants shall be treated as invested and reinvested shall be directed by the Employer, each Participant, or both, as specified pursuant to procedures established by the Administrator from time to time. No portion of the Employer Contributions credited to a Participant's Account on or after January 1, 2003 or Deferral Contributions credited to a Participant's Account on or after April 1, 2004 may be treated as though invested in Employer Stock, but the portion of the Employer Contributions credited to a Participant's Account before January 1, 2003 that was treated as though invested in Employer Stock shall continue, on and after January 1, 2003, to be treated as though invested in Employer Stock.
Notwithstanding the preceding provisions of this Section 5.2, in no event may a
Section 16 Executive direct that Deferral Contributions made by him on or after
January 1, 2000 be treated as though invested in Employer Stock.
Article 6. Right to Benefits.
6.1 Termination of Employment. If a Participant terminates his employment for any reason, the value of the Participant's Account will be paid in accordance with Article 7.
6.2 Death. If a Participant dies before payment of the value of his Account has commenced, or before such payment has been completed, his designated Beneficiary or Beneficiaries will be entitled to receive the remaining balance of his Account. Payment to the Beneficiary or Beneficiaries will be made in accordance with Article 7.
A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation of Beneficiary or Beneficiaries by giving notice to the Administrator on a form designated by the Administrator. With respect to any Beneficiary designations filed with the Administrator, after December 31, 2003, a Participant's spouse must consent to his designation of a Beneficiary other than his spouse. If more than one person is designated as the Beneficiary, their respective interests shall be indicated on the designation form. A copy of the death notice or other sufficient documentation must be filed with and approved by the Administrator. If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the value of the Participant's Account, such amount will be paid to his surviving spouse or, if none, to his estate (such spouse or estate shall be deemed to be the Beneficiary for purposes of the Plan). If a Beneficiary dies after payment to such Beneficiary has commenced, but before the full value of the Participant's Account has been paid, and, in the opinion of the Administrator, no person has been designated to receive such remaining balance, then such balance shall be paid to the deceased Beneficiary's estate.
6.3 Payment on a Designated Future Date. Concurrently with a Participant's election to defer Compensation pursuant to Section 3.1 for any Plan Year (or the making of a Supplemental Contribution by an Employer), the Administrator may permit a Participant to designate a specific date on which a specified amount of the value of his Account attributable to such election (or a Supplemental Contribution that is nonforfeitable) shall be paid in accordance with Article 7; provided that in the event of such Participant's earlier termination of employment or death, his Account shall be paid in accordance with Section 6.1 or 6.2, as the case may be. Unless otherwise permitted under procedures specified by the Administrator, such election shall be irrevocable.
6.4 Payment Due to an Unforeseen Emergency. A Participant shall not be permitted to withdraw any portion of the value of his Account prior to termination of employment or any date specified pursuant to Section 6.3 (whichever occurs first), except a Participant may apply to the Administrator, in accordance with procedures specified by the Administrator, to withdraw some or all of the value of his Account if such withdrawal is required on account of a financial hardship resulting from an unforeseen emergency. The Administrator shall establish criteria to determine what constitutes financial hardship. Withdrawals made on account of financial hardship shall be made in a lump sum payment in accordance with Article 7.
6.5 Adjustment for Investment Experience. If the total value of a Participant's Account is not paid in a single sum after the Participant terminates employment, the amount remaining in the Account after the first payment will continue to be treated as invested in an interest-bearing
money market account and will be subject to adjustment until paid to reflect the income, gains and losses on such deemed investment.
6.6 Forfeiture of Unvested Amounts. Any portion of the value of a Participant's Account attributable to a Supplemental Contribution that is not fully vested at the time he terminates employment shall be forfeited.
Article 7. Payment of Benefits.
7.1 Payment of Benefits to Participants and Beneficiaries. (a) Payments under the Plan to a Participant or to the Beneficiary of the Participant shall be made in a lump sum in cash or, if permitted by the Administrator and specified in the Participant's election to defer Compensation, under a systematic withdrawal plan (installment(s)) not exceeding 5 years, upon termination of employment or death. Notwithstanding the preceding sentence, amounts attributable to that portion of the Employer Contribution credited to a Participant's Account treated as though invested in Employer Stock pursuant to Section 5.2 shall be paid in Employer Stock following termination of employment, and any amounts attributable to Deferral Contributions credited to a Participant's Account treated as though invested in Employer Stock shall be paid in cash or Employer Stock, as elected by the Participant. Payments under the Plan shall be made first from the value of the Participant's SMIP Bonus Subaccount and then from the remaining value of the Participant's Account.
(b) Payments under a systematic withdrawal plan must be made in substantially equal annual installments, in cash, over a period certain which does not exceed 5 years.
7.2 Determination of Method of Payment. The Participant will determine the method of payment of benefits to himself and the method of payment to his Beneficiary. Unless such determination was made at least one (1) year prior to the date on which a payment is to be made pursuant to Section 6.1, 6.2 or 6.3, the Participant's prior determination shall govern such payment. If the Participant does not determine the method of payment to him or his Beneficiary within the time frame set forth in the preceding sentence, the method shall be a lump sum.
7.3 Right of Offset. The value of a Participant's Account to be paid under the Plan may be reduced in accordance with procedures established by the Administrator by any amount the Participant owes his Employer at the time payment is made.
7.4 Payment in the Event of Taxation. If, for any reason, all or any portion of the value of a Participant's Account under this Plan becomes taxable to the Participant prior to receipt, a Participant may petition the Administrator for a payment of that portion of the value of his Account that has become taxable. Upon the grant of such a petition, a payment shall immediately be made to a Participant in an amount equal to the taxable portion of the value of his Account (which amount shall not exceed the remaining balance of a Participant's Account). If the petition is granted, the tax liability payment shall be made as soon as practicable after the Participant's petition is granted.
Article 8. Amendment and Termination.
8.1 Amendment by Quest Diagnostics. Quest Diagnostics reserves the authority to amend the Plan at any time, provided, however, that no amendment may reduce the value of any Participant's Account determined as though the Participant terminated his employment as of the date of such amendment. The Compensation Committee of the Quest Diagnostics Board of Directors of or other individual specified in the resolution of such Committee shall act on behalf of Quest Diagnostics for purposes of this Section.
8.2 Retroactive Amendments. An amendment made by Quest Diagnostics in accordance with Section 8.1 may be made effective on a date prior to the first day of the Plan Year in which it is adopted. Any retroactive amendment by the Employer shall be subject to the provisions of Section 8.1.
8.3 Plan Termination. Neither Quest Diagnostics nor any other Employer has any obligation or liability whatsoever to maintain the Plan for any length of time and may discontinue deferrals under the Plan or terminate the Plan at any time without any liability hereunder for any such discontinuance or termination.
8.4 Payment upon Termination of the Plan. Upon termination of the Plan, no further Deferral Contributions or Employer Contributions shall be made under the Plan, but Accounts of Participants maintained under the Plan at the time of termination shall continue to be governed by the terms of the Plan until paid out in accordance with the terms of the Plan. In its discretion, and notwithstanding any prior election made by the Participant, Quest Diagnostics may, upon Plan termination or at any time thereafter, cause each Participant to be paid in a single lump sum the value of the Participant's Account in full satisfaction of all obligations to the Participant under the Plan.
Article 9. The Trust
9.1 Establishment of Trust. Quest Diagnostics has established the Trust between each Employer and the Trustee, in accordance with the terms and conditions as set forth in a separate agreement, under which assets are held, administered and managed, subject to the claims of an Employer's creditors in the event of such Employer's insolvency, until paid to Participants and their Beneficiaries as specified in the Plan. The Trust is intended to be treated as a grantor trust under the Code, and the establishment of the Trust is not intended to cause Participants to realize current income on amounts contributed thereto or earnings on the Trust's assets.
Article 10. Miscellaneous.
10.1 Limitation of Rights. None of the establishment of the Plan or the Trust, or any amendment thereof, or the creation of any fund or Account, or the payment of any benefits, will be construed as giving to any Participant or other person any legal or equitable right against an Employer, the Administrator or the Trustee, except as provided herein, and in no event will the terms of employment or service of any Participant be modified or in any way affected hereby.
10.2 Spendthrift Provision. A Participant's or Beneficiary's right to payment under the Plan is not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, judgment, seizure, alimony or separate maintenance owed by Participant or his Beneficiary or garnishment by creditors of the Participant or his Beneficiary, either voluntarily, involuntarily by operation of law or as a result of property settlement, and any attempt to cause such right to payment to be so subjected will not be recognized, except to such extent as shall be required by law.
10.3 Facility of Payment. In the event the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may make such payments to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient. The receipt by such person or institution of any such payments therefore, and any such payment to the extent thereof, shall discharge the liability of the Employers and the Trust for the payment of benefits hereunder to such recipient.
10.4. Discharge of Obligations. Payment of the value of an Account under the Plan to a person believed in good faith by the Administrator to be a valid Beneficiary shall fully and completely discharge the Employers from all further obligations under this Plan with respect to the Participant. Neither the Administrator nor Quest Diagnostics shall be obliged to search for any Participant or Beneficiary beyond the sending of a registered letter to the Participant's or Beneficiary's last known address. If the Administrator notifies any Participant or Beneficiary that he is entitled to an amount under the Plan and the Participant or Beneficiary fails to claim such amount or make his location known to the Administrator within one year thereafter, then, except as otherwise required by law, if the location of one or more of the next of kin of the Participant is known to the Administrator, the Administrator may direct payment of such amount to any one or more or all of such next of kin, and in such proportions as the Administrator determines. If the location of none of the foregoing persons can be determined, the Administrator shall have the right to direct that the amount payable shall be deemed to be forfeited and retained by the Employers, except that the dollar amount of the forfeiture, unadjusted for deemed earnings, gains or losses in the interim, may be paid in full satisfaction of the Employers' obligations under this Plan in the sole discretion of the Administrator if a claim for payment subsequently is made by the Participant or the Beneficiary to whom it was payable. If any benefit payable to a Participant or Beneficiary who has not been located is subject to escheat pursuant to applicable state law, neither the Administrator nor Quest Diagnostics shall be liable to any person for any payment made in accordance with such law.
10.5 Furnishing Information. A Participant or his Beneficiary will cooperate with the Administrator by furnishing any and all information requested by the Administrator and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of amounts hereunder.
10.6 Information between the Administrator and Trustee. The Administrator agrees to furnish the Trustee, and the Trustee agrees to furnish the Administrator, with such information relating to the Plan and Trust as may be required by the other in order to carry out their respective duties hereunder, including without limitation information required under the Code or ERISA and any regulations issued or forms adopted thereunder.
10.7 Notices. Any notice or other communication in connection with this Plan shall be deemed delivered in writing if addressed as provided below and if either actually delivered at said address or, in the case of a letter, three business days shall have elapsed after the same shall have been deposited in the United States mails, first-class postage prepaid and registered or certified:
(a) If it is sent to Quest Diagnostics, an Employer or the Administrator, it will be at the address specified by Quest Diagnostics, such Employer or the Administrator, as the case may be.
(b) If it is sent to the Trustee, it will be sent to the address set forth in the Trust Agreement; or, in each case at such other address as the addressee shall have specified by written notice delivered in accordance with the foregoing to the addressee's then effective notice address.
10.8 Writings and Electronic Communications. All elections, notices and other communication with respect to the Plan, including signatures relating to such documentation, may be executed and stored on paper, electronically or in another medium. Any documentation executed or stored electronically shall comply with the Electronic Signatures Act.
10.9 Governing Law. The Plan will be construed, administered and enforced according to ERISA, and to the extent not preempted thereby, the laws of the State of New Jersey.
10.10 Construction. In the event that it is determined that a Participant or group of Participants does not qualify as a select group of management or highly compensated employees as determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Administrator shall have the right, in its sole discretion, to (i) terminate any election to defer Compensation made by each such Participant pursuant to Section 3.1 for the remainder of the Plan Year in which the Participant's status changes, (ii) prevent the Participant from making future elections to defer Compensation and/or (iii) immediately pay the value of the Participant's Account and terminate the Participant's participation in the Plan. In any event, following such determination the Plan shall constitute two plans, one covering such non-qualifying Participants and one covering the remaining Participants up to the maximum number of participants permissible for an unfunded deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees under such sections of ERISA.
Article 11. Plan Administration.
11.1 Powers and Responsibilities of the Administrator. The Administrator has the full power and the full responsibility to administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA. The Administrator's powers and responsibilities include, but are not limited to, the following:
(a) To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;
(b) To interpret the Plan, its interpretation thereof in good faith to be final, conclusive and binding on all persons claiming payment under the Plan;
(c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;
(d) To administer the claims and review procedures specified in Section 11.3;
(e) To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan;
(f) To determine the person or persons to whom such benefits will be paid;
(g) To authorize the payment of benefits;
(h) To comply with applicable requirements of Part 1 of Subtitle B of Title I of ERISA; and
(i) To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan.
11.2 Claims and Review Procedures.
(a) Claims Procedure. If any person believes he is being denied any rights or benefits under the Plan, such person may file a claim in writing with the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) information as to the steps to be taken if the person wishes to submit a request for review. Such notification will be given within 90 days after the claim is received by the Administrator (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90-day period). If such notification is not given within such period, the claim will be considered denied as of the last day of such period and such person may request a review of his claim.
(b) Review Procedure. Within 60 days after the date on which a person receives written notice of a denied claim (or, if applicable, within 60 days after the date on which such denial is
considered to have occurred), such person (or his duly authorized representative) may (i) file a written request with the Administrator for a review of his denied claim and of pertinent documents and (ii) submit issues and comments to the Administrator. The Administrator will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The decision on review will be made within 60 days after the request for review is received by the Administrator (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Administrator to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period). If the decision on review is not made within such period, the claim will be considered denied.
(c) LIMITATIONS ON ACTIONS. NO ACTION (WHETHER AT LAW, IN EQUITY OR OTHERWISE) SHALL BE BROUGHT BY OR ON BEHALF OF ANY PARTICIPANT OR BENEFICIARY FOR OR WITH RESPECT TO PAYMENT DUE UNDER THIS PLAN UNLESS THE PERSON BRINGING SUCH ACTION HAS TIMELY EXHAUSTED THE PLAN'S CLAIM REVIEW PROCEDURE. ANY ACTION (WHETHER AT LAW, IN EQUITY OR OTHERWISE) MUST BE COMMENCED WITHIN ONE YEAR. THIS ONE-YEAR PERIOD SHALL BE COMPUTED FROM THE EARLIER OF (I) THE DATE A FINAL DETERMINATION DENYING SUCH BENEFIT, IN WHOLE OR IN PART, IS ISSUED UNDER THE PLAN'S CLAIM REVIEW PROCEDURE AND (II) THE DATE SUCH INDIVIDUAL'S CAUSE OF ACTION FIRST ACCRUED (AS DETERMINED UNDER THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO PRINCIPLES OF CHOICE OF LAWS).
11.3 Plan's Administrative Costs.
The Employers shall pay all reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Administrator and the Trustee in administering the Plan and Trust.
IN WITNESS WHEREOF, Quest Diagnostics by its duly authorized officer(s), has caused this Plan to be amended and restated as of January 1, 2004.
QUEST DIAGNOSTICS INCORPORATED
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kenneth W. Freeman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Quest Diagnostics Incorporated;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
April 30, 2004
By /s/ Kenneth W. Freeman
----------------------------------
Kenneth W. Freeman
Chairman of the Board and
Chief Executive Officer
|
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert A. Hagemann, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Quest Diagnostics Incorporated;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
April 30, 2004
By /s/ Robert A. Hagemann
----------------------------------
Robert A. Hagemann
Senior Vice President and
Chief Financial Officer
|
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. 'SS' 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. 'SS' 1350, the undersigned certifies that, to the best of my knowledge, the Quarterly Report on Form 10-Q for the period ended March 31, 2004 of Quest Diagnostics Incorporated, as being filed with the Securities and Exchange Commission concurrently herewith, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 'SS' 78m or 78o(d)) and that the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Quest Diagnostics Incorporated.
Dated: April 30, 2004 /s/ Kenneth W. Freeman
----------------------------------------
Kenneth W. Freeman
Chairman of the Board and
Chief Executive Officer
|
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 'SS' 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. 'SS' 1350, the undersigned certifies that, to the best of my knowledge, the Quarterly Report on Form 10-Q for the period ended March 31, 2004 of Quest Diagnostics Incorporated, as being filed with the Securities and Exchange Commission concurrently herewith, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 'SS' 78m or 78o(d)) and that the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Quest Diagnostics Incorporated.
Dated: April 30, 2004 /s/ Robert A. Hagemann
----------------------------------------
Robert A. Hagemann
Senior Vice President and
Chief Financial Officer
|