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
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(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
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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.
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(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.
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(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
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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
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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,
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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
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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
10
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
11
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.
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(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
13
(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
14
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.
15
(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
16
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
17
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
18
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
19
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 ▇▇▇▇▇):
(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
20
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 ▇▇▇▇▇ ▇▇▇▇▇ (formerly known as ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇) 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
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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.
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(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.
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(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
24
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
25
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.
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(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 ▇▇▇▇▇, 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);
27
(b) Annual Financial Statements. Quest Diagnostics will furnish to
each of the Co-Agents or make publicly available through ▇▇▇▇▇, 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 ▇▇▇▇▇;
(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
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(i) Downgrade. Promptly after receipt of notice of any downgrade of
any Indebtedness of Quest Diagnostics by ▇▇▇▇▇'▇ 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.
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(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,
30
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
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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;
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(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
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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.
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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
35
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
36
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.
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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.
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(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%.
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(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.
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(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
41
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, ▇▇▇▇▇'▇ 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
42
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
43
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].
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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
45
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
46
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
47
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;
48
(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
49
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:
50
(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,
▇▇▇▇▇'▇ 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
51
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
52
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
53
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;
54
(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
55
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
56
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,
57
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
58
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
59
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BORROWER:
QUEST DIAGNOSTICS RECEIVABLES INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
SERVICER:
QUEST DIAGNOSTICS INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
60
ADMINISTRATIVE AGENT:
WACHOVIA BANK, NATIONAL ASSOCIATION, as
Administrative Agent and as Blue Ridge
Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Director
LENDERS:
BLUE RIDGE ASSET FUNDING CORPORATION
BY: WACHOVIA CAPITAL MARKETS, LLC, ITS
ATTORNEY-IN-FACT
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
Initial Commitment: not applicable
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Director
Initial Commitment: $200,000,000
61
ATLANTIC ASSET SECURITIZATION CORP.
By: CREDIT LYONNAIS NEW YORK BRANCH AS
ATTORNEY-IN-FACT
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Initial Commitment: not applicable
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Initial Commitment: $100,000,000
62
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.
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"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 ▇▇▇▇▇'▇ 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 ▇▇▇▇▇'▇ 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.
64
"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.
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"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
66
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
67
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.
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"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
69
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.
70
"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
71
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
72
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 ▇▇▇▇▇▇▇ 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;
73
(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.
74
"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.
75
"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
76
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
77
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,
78
(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
79
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
80
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 ▇▇▇▇, 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.
81
"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 ▇▇▇▇ the appropriate
Person for the test or other service being
82
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 ▇▇▇▇▇'▇ 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.
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"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 ▇▇▇▇▇'▇ 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.
84
"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.
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"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 ▇▇▇▇▇' 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.
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"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.
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"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.
88
"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
▇▇▇▇▇▇-▇▇▇▇ 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
89
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
90
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.
91
"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".
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