Q3 2018 Form 10Q Combined Document




Exhibit 10.3
 





THIRD AMENDMENT TO THE 
RECEIVABLES FINANCING AGREEMENT


This THIRD AMENDMENT TO THE RECEIVABLES FINANCING AGREEMENT (this “Amendment”), dated as of October 25, 2018, is entered into by and among the following parties:
		
	(i)
	SYNEOS HEALTH RECEIVABLES LLC, as Borrower;


		
	(ii)
	INC RESEARCH, LLC, as initial Servicer; and


		
	(iii)
	PNC BANK, NATIONAL ASSOCIATION (“PNC”), as Administrative Agent and as Lender.


Capitalized terms used but not otherwise defined herein (including such terms used above) have the respective meanings assigned thereto in the Receivables Financing Agreement described below.
BACKGROUND
A.    The parties hereto have entered into a Receivables Financing Agreement, dated as of June 29, 2018 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Receivables Financing Agreement”).
B.    The parties hereto desire to amend the Receivables Financing Agreement as set forth herein.
NOW, THEREFORE, with the intention of being legally bound hereby, and in consideration of the mutual undertakings expressed herein, each party to this Amendment hereby agrees as follows:
SECTION 1.    Amendments to the Receivables Financing Agreement.  The Receivables Financing Agreement is hereby amended to incorporate the changes shown on the marked pages of the Receivables Financing Agreement attached hereto as Exhibit A.
SECTION 2.    Representations and Warranties of the Borrower and Servicer.  The Borrower and the Servicer hereby represent and warrant to each of the parties hereto as of the date hereof as follows:
(a)    Representations and Warranties.  The representations and warranties made by it in the Receivables Financing Agreement and each of the other Transaction Documents to which it is a party are true and correct as of the date hereof.
(b)    Enforceability.  The execution and delivery by it of this Amendment, and the performance of its obligations under this Amendment, the Receivables Financing Agreement (as amended hereby) and the other Transaction Documents to which it is a party are within its organizational powers and have been duly authorized by all necessary action on its part, and this Amendment, the Receivables Financing Agreement (as amended hereby) and the other Transaction Documents to which it is a party are (assuming due authorization and 


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execution by the other parties thereto) its valid and legally binding obligations, enforceable in accordance with their terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) as such enforceability may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.
(c)    No Event of Default.  No Event of Default or Unmatured Event of Default has occurred and is continuing, or would occur as a result of this Amendment or the transactions contemplated hereby.
SECTION 3.    Effect of Amendment; Ratification.  All provisions of the Receivables Financing Agreement and the other Transaction Documents, as expressly amended and modified by this Amendment, shall remain in full force and effect.  After this Amendment becomes effective, all references in the Receivables Financing Agreement (or in any other Transaction Document) to “this Receivables Financing Agreement”, “this Agreement”, “hereof”, “herein” or words of similar effect referring to the Receivables Financing Agreement shall be deemed to be references to the Receivables Financing Agreement as amended by this Amendment. This Amendment shall not be deemed, either expressly or impliedly, to waive, amend or supplement any provision of the Receivables Financing Agreement other than as set forth herein.  The Receivables Financing Agreement, as amended by this Amendment, is hereby ratified and confirmed in all respects.
SECTION 4.    Effectiveness.  This Amendment shall become effective as of the date hereof upon the Administrative Agent’s receipt of counterparts to this Amendment executed by each of the parties hereto.
SECTION 5.    Severability.  Any provisions of this Amendment which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 6.    Transaction Document.  This Amendment shall be a Transaction Document for purposes of the Receivables Financing Agreement.
SECTION 7.    Counterparts.  This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.  Delivery of an executed counterpart hereof by facsimile or other electronic means shall be equally effective as delivery of an originally executed counterpart.
SECTION 8.    GOVERNING LAW AND JURISDICTION. 
(a)    THIS AMENDMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 


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5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF).
(b)    EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO (I) WITH RESPECT TO THE BORROWER AND THE SERVICER, THE EXCLUSIVE JURISDICTION, AND (II) WITH RESPECT TO EACH OF THE OTHER PARTIES HERETO, THE NON-EXCLUSIVE JURISDICTION, IN EACH CASE, OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT, AND EACH PARTY HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING (I) IF BROUGHT BY THE BORROWER, THE SERVICER OR ANY AFFILIATE THEREOF, SHALL BE HEARD AND DETERMINED, AND (II) IF BROUGHT BY ANY OTHER PARTY TO THIS AMENDMENT, MAY BE HEARD AND DETERMINED, IN EACH CASE, IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.  NOTHING IN THIS SECTION 8 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY OTHER CREDIT PARTY TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR THE SERVICER OR ANY OF THEIR RESPECTIVE PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.  EACH OF THE BORROWER AND THE SERVICER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.  THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
SECTION 9.    Section Headings.  The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Receivables Financing Agreement or any provision hereof or thereof.
[SIGNATURE PAGES FOLLOW]




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IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their duly authorized officers as of the date first above written.


	
		
	 
	SYNEOS HEALTH RECEIVABLES LLC 
 
By:/s/ Thomas E. Zajkowski    
Name: Thomas E. Zajkowski 
Title: President

	 
	 

	 
	 

	 
	




	 
	INC RESEARCH, LLC,
as the Servicer 
 
 
By:/s/ Jason Meggs    
Name: Jason Meggs 
Title: Chief Financial Officer

	 
	 

	 
	 

	 
	 

	 
	 






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	PNC BANK, NATIONAL ASSOCIATION, 
as Administrative Agent 
 
 
By:/s/ Christopher Blaney    
Name: Christopher Blaney 
Title:  Senior Vice President






	 

	 
	 
	 

	 
	PNC BANK, NATIONAL ASSOCIATION, 
as a Lender 
 
 
By: /s/ Christopher Blaney    
Name: Christopher Blaney 
Title: Senior Vice President


	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 








S-2








EXHIBIT A
(attached)





	






                   EXHIBIT A to THIRD AMENDMENT, dated as of October 25, 2018                                                CONFORMED COPY INCLUDES                                   FIRST AMENDMENT, dated as of August 1, 2018                                SECOND AMENDMENT, dated as of August 29, 2018                                                         EXECUTION VERSION                      RECEIVABLES FINANCING AGREEMENT                              Dated as of June 29, 2018                                   by and among                       SYNEOS HEALTH RECEIVABLES LLC,                                   as Borrower,                THE PERSONS FROM TIME TO TIME PARTY HERETO,                                   as Lenders,                       PNC BANK, NATIONAL ASSOCIATION,                              as Administrative Agent,                               INC RESEARCH, LLC,                                as initial Servicer,                                       and                           PNC CAPITAL MARKETS LLC,                               as Structuring Agent   730302054 18569090 





 






notes, note purchase, acceptance or credit facility, or other similar instruments or facilities, (iii) reimbursement  obligations  (contingent  or  otherwise)  under  any  letter  of  credit,  (iv)  any  other transaction  (including  production  payments  (excluding  royalties),  installment  purchase agreements,  forward  sale  or  purchase  agreements,  capitalized  leases  and  conditional  sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including accounts payable incurred in the ordinary course of such Person’s business payable on terms customary in the trade), (v) all net obligations of such Person in respect of interest rate or currency hedges or (vi) any Guaranty of any such Debt.        “Deemed Collections” has the meaning set forth in Section 4.01(d).        “Default  Ratio”  means  the  ratio  (expressed as  a percentage and rounded to  the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing:  (a) the aggregate Outstanding Balance of all Pool Receivables that became Defaulted  Receivables  during  such  Fiscal  Month,  by  (b)  the  aggregate  initial  Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during the month that is six (6) Fiscal Months (or if the Third Amendment Commencement Date, if any, has occurred, eight (8) Fiscal Months), before such Fiscal Month.        “Defaulted Receivable” means a Receivable, without duplication:              (a)   as to which any payment, or part thereof, remains unpaid for 151 days or       more (or if the Third Amendment Commencement Date, if any, has occurred, 211 days or       more) after the original due date for such Receivable;              (b)   as to which an Insolvency Proceeding shall have occurred with respect to       the Obligor thereof or any other Person obligated thereon or owning any Related Security       with respect thereto;              (c)   that  has  been  written  off  the  applicable  Originator’s  or  the  Borrower’s       books as uncollectible; or              (d)   that, consistent with the Credit and Collection Policy, should be written off       the applicable Originator’s or the Borrower’s books as uncollectible;        provided,  however,  that  in  each  case  above  such  amount  shall  be  calculated  without       giving  effect  to  any  netting  of  credits  that  have  not  been  matched  to  a  particular       Receivable for the purposes of aged trial balance reporting.        “Defaulting Lender” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans or (ii) pay over to any  Credit  Party  any  other  amount  required  to  be  paid  by  it  hereunder,  unless,  in  the  case  of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result  of  such  Lender’s  good  faith  determination  that  a  condition  precedent  to  funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that  it  does  not  intend  or  expect  to  comply  with  any  of  its  funding  obligations  under  this                                        9  730302054 18569090 





 






Agreement (unless such writing or public statement indicates that such position is based on such Lender’s  good  faith  determination  that  a  condition  precedent  (specifically  identified  and including  the  particular  default,  if  any)  to  funding  a  Loan  under  this  Agreement  cannot  be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by a Credit Party, acting in good faith, to provide a certification  in  writing  from  an  authorized  officer  of  such  Lender  that  it  will  comply  with  its obligations (and is financially able to meet such obligations) to fund prospective Loans under this Agreement,  provided  that  such  Lender  shall  cease  to  be  a  Defaulting  Lender  pursuant  to  this clause  (c)  upon  such  Credit  Party’s  receipt  of  such  certification  in  form  and  substance satisfactory to it and the Administrative Agent, or (d) has become the subject of an Insolvency Proceeding.        “Delinquency  Ratio”  means  the  ratio  (expressed  as  a  percentage  and  rounded  to  the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing:  (a) the aggregate Outstanding Balance of all Pool Receivables that were Delinquent Receivables on such day, by (b) the aggregate Outstanding Balance of all Pool Receivables on such day.        “Delinquent Receivable” means a Receivable as to which any payment, or part thereof, remains  unpaid  for  91  days  or  more  from  the  original  due  date  for  such  payment;  provided, however, that such amount shall be calculated without giving effect to any netting of credits that have not been matched to a particular Receivable for the purposes of aged trial balance reporting.        “Dilution  Horizon  Ratio”  means,  for  any  Fiscal  Month,  the  ratio  (expressed  as  a percentage  and  rounded  to  the  nearest  1/100th  of  1%,  with  5/1000th  of  1%  rounded  upward) computed  as  of  the  last  day  of  such  Fiscal  Month  by  dividing:   (a)  the  aggregate  initial Outstanding Balance of all Pool Receivables (other than Unbilled Receivables) generated by the Originators during such Fiscal Month, by (b) the sum of (x) the Net Receivables Pool Balance as of the last day of such Fiscal Month plus (y) the aggregate Outstanding Balance as of the last day of  such  Fiscal  Month  of  all  Receivables  and  portions  of  Receivables  that  do  not  constitute Eligible Receivables on such date solely due to the failure to satisfy clause (r) and/or clause (w) of  the  definition  of “Eligible  Receivable”.   Within  thirty  (30)  days  of  the  completion  and  the receipt  by  the  Administrative  Agent  of  the  results  of  any  annual  audit  or  field  exam  of  the Receivables and the servicing and origination practices of the Servicer and the Originators, the numerator of the Dilution Horizon Ratio may be adjusted, after consultation with the Borrower, by the Administrative Agent upon not less than five (5) Business Days notice to the Borrower to reflect  such  number  of  Fiscal  Months  as  the  Administrative  Agent  reasonably  believes  best reflects  the  business  practices  of  the  Servicer  and  the  Originators  and  the  actual  amount  of dilution  and  Deemed  Collections  that  occur  with  respect  to  Pool  Receivables  based  on  the weighted average dilution lag calculation completed as part of such audit or field exam.        “Dilution Ratio” means, for any Fiscal Month, the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward), computed as of the last  day  of  each  Fiscal  Month  by  dividing:  (i)  the  aggregate  amount  of  Deemed  Collections during such Fiscal Month (other than any Deemed Collections with respect to any Receivables that were both (x) generated by an Originator during such Fiscal Month and (y) written off the applicable Originator’s or the Borrower’s books as uncollectible during such Fiscal Month), by                                      10  730302054 18569090 





 






      “Lock-Box” means each locked postal box with respect to which a Collection Account Bank  has  executed  an  Account  Control  Agreement  pursuant  to  which  it  has  been  granted exclusive access for the purpose of retrieving and processing payments made on the Receivables and  which  is  listed  on  Schedule  II  (as  such  schedule  may  be  modified  from  time  to  time  in connection with the addition or removal of any Lock-Box in accordance with the terms hereof).        “Loss  Horizon  Ratio”  means  the  ratio  (expressed  as  a  percentage  and  rounded  to  the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing:              (a)   the  sum  of  (x)  the  aggregate  initial  Outstanding  Balance  of  all  Pool       Receivables (other than Unbilled Receivables) generated by the Originators during the six       (6) most recent Fiscal Months plus (y) 65% of the aggregate initial Outstanding Balance       of all  Pool Receivables  (other than  Unbilled  Receivables) generated by  the Originators       during the eighth most recent Fiscal Month; by              (b)   the sum of (x) the Net Receivables Pool Balance as of such date plus (y)       the  aggregate  Outstanding  Balance as  of  such  date  of  all  Receivables  and  portions  of       Receivables  that  do  not  constitute  Eligible  Receivables  on  such  date  solely  due  to  the       failure to satisfy clause (r) and/or clause (w) of the definition of “Eligible Receivable”.        “Loss Reserve Percentage” means, at any time of determination, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of (a) the Stress Factor, multiplied by (b) the highest average of the Default Ratios for any three (3) consecutive Fiscal Months during the twelve (12) most recent Fiscal Months, multiplied by (c) the Loss Horizon Ratio.        “Management  Investors”  means  the  officers,  directors,  managers,  employees  and members of management of Parent, any Parent Company and/or any subsidiary of Parent.        “Majority  Lenders”  means  Lenders  representing  more  than  50%  of  the  aggregate Commitments  of  all  Lenders  (or,  if  the  Commitments  have  been  terminated,  Lenders representing more than 50% of the aggregate outstanding Capital held by all the Lenders).        “Material  Adverse  Effect”  means  relative  to  any  Person  (provided  that  if  no  particular Person is specified, “Material Adverse Effect” shall be deemed to be relative to the Performance Guarantor,  the  Servicer  and  the  Originators,  in  the  aggregate)  with  respect  to  any  event  or circumstance, a material adverse effect on any of the following:              (a)   the assets, operations, business or financial condition of such Person or, if       no  Person  is  specified, of  the Servicer,  the  Performance  Guarantor and the Originators       taken as a whole;              (b)   the ability of such Person, or if no Person is specified, of the Servicer, the       Performance  Guarantor  and  any  Originators,  taken  as  a  whole,  to  perform  its  or  their       obligations  under  this  Agreement  or any other Transaction  Document  to  which  it  is  or       they are a party;                                       22  730302054 18569090 





 






      “Subsidiary”  means,  as  to  any  Person,  a  corporation,  partnership,  limited  liability company or other entity of which shares of stock of each class or other interests having ordinary voting  power  (other  than  stock  or  other  interests  having  such  power  only  by  reason  of  the happening of a contingency) to elect a majority of the Board of Directors or other managers of such entity are at the time owned, or management of which is otherwise controlled:  (a) by such Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and one or more Subsidiaries of such Person.        “Syneos Party” means the Borrower, the Servicer, the Performance Guarantor and each Originator.        “Taxes”  means  any  and  all  present  or  future  taxes,  levies,  imposts,  duties,  deductions, charges,  withholdings  (including  backup  withholding),  assessments,  fees  or  other  charges imposed  by  any  Governmental  Authority  and  all  interest,  penalties,  additions  to  tax  and  any similar liabilities with respect thereto.        “Termination Date” means the earliest to occur of (a) the Scheduled Termination Date, (b)  the  date  on  which  the  “Termination  Date”  is  declared  or  deemed  to  have  occurred  under Section 10.01, (c) the occurrence of a Purchase and Sale Termination Event under the Purchase and Sale Agreement, (d) the date selected by the Borrower on which all Commitments have been reduced to zero pursuant to Section 2.02(e) or (e) the date (if any) on which the Borrower, the Servicer  or  any  Originator  delivers  to  the  Administrative  Agent  a  written  notice  that  the Borrower is unable to pay the “Purchase Price” (as defined in the Purchase and Sale Agreement) for Receivables and Related Rights pursuant to Section 3.2 of the Purchase and Sale Agreement.        “Third Amendment Closing Date” means October 25, 2018.        “Third Amendment Commencement Date” means the date elected by the Borrower as the “Third Amendment Commencement Date” in a written notice provided by the Borrower (or the Servicer on its behalf) to the Administrative Agent; provided, that such date may not occur more than 180  days  following  the  Third  Amendment  Closing Date  and  any  election  following such date shall be null and void; provided, further, that neither the Borrower nor the Servicer on its behalf shall provide any notice of the election of the “Third Amendment Commencement Date” until  such  time  as  the  Borrower  (or  the  Servicer  on  its  behalf)  has  provided  such  historical Receivables performance data as may be reasonably requested by the Administrative Agent on or prior to the Third Amendment Closing Date.        “THL” means Thomas H. Lee Partners, L.P. and its Affiliates.        “Threshold Amount” means $150,000,000.        “Total Reserves” means, at any time of determination, an amount equal to the product of (i)  the  sum  of:   (a)  the  Yield  Reserve  Percentage,  plus  (b)  the  greater  of  (I)  the  sum  of  the Concentration Reserve Percentage, plus the Minimum Dilution Reserve Percentage and (II) the sum  of  the  Loss  Reserve  Percentage,  plus  the  Dilution  Reserve  Percentage,  times  (ii)  the  Net Receivables Pool Balance at such time.                                       30  730302054 18569090