======================================================
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of July 27, 1998
Among
OUTSOURCE INTERNATIONAL, INC.,
OUTSOURCE FRANCHISING, INC.,
CAPITAL STAFFING FUND, INC.,
SYNADYNE I, INC.,
SYNADYNE II, INC.,
SYNADYNE III, INC.,
SYNADYNE IV, INC.,
SYNADYNE V, INC.,
and
OUTSOURCE INTERNATIONAL
OF AMERICA, INC.,
each as an Originator,
------------------------
and
OUTSOURCE FUNDING CORPORATION,
as the Buyer,
-------------
and
OUTSOURCE INTERNATIONAL, INC.,
as the Servicer.
----------------
======================================================
TABLE OF CONTENTS
-----------------
ARTICLE I DEFINITIONS
-----------
SECTION 1.01. Certain Defined Terms........................................................................1
---------------------
SECTION 1.02. Accounting and Certain Other Terms..........................................................11
----------------------------------
SECTION 1.03. Other Terms.................................................................................11
-----------
SECTION 1.04. Computation of Time Periods.................................................................12
---------------------------
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES.
-----------------------------------
SECTION 2.01. Agreement to Purchase.......................................................................12
---------------------
SECTION 2.02. Payment for the Purchases...................................................................13
-------------------------
SECTION 2.03. Settlement Procedures.......................................................................14
----------------- ---
SECTION 2.04. Payments and Computations, Etc..............................................................15
------------------------------
SECTION 2.05. Transfer of Records to the Buyer............................................................15
--------------------------------
ARTICLE III CONDITIONS OF PURCHASES
-----------------------
SECTION 3.01. Conditions Precedent to Initial Purchase....................................................16
----------------------------------------
SECTION 3.02. Conditions Precedent to All Purchases and Remittances of Collections........................16
--------------------------------------------------------------------
SECTION 3.03. Effect of Payment of Purchase Price.........................................................16
-----------------------------------
ARTICLE IV REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION 4.01. Representations and Warranties of the Originators...........................................17
-------------------------------------------------
ARTICLE V GENERAL COVENANTS
-----------------
SECTION 5.01. General Covenants...........................................................................21
-----------------
ARTICLE VI ADMINISTRATION, COLLECTION AND MONITORING OF ASSETS
---------------------------------------------------
SECTION 6.01. Appointment and Designation of the Servicer.................................................26
-------------------------------------------
SECTION 6.02. Collection of Receivables by the Servicer; Extensions and Amendments of Receivables.........26
-----------------------------------------------------------------------------------
SECTION 6.03. Distribution and Application of Collections.................................................27
-------------------------------------------
SECTION 6.04. Other Rights of the Buyer...................................................................27
-------------------------
SECTION 6.05. Records; Audits.............................................................................27
---------------
SECTION 6.06. Receivable Reporting........................................................................28
--------------------
SECTION 6.07. Collections and Lock-Boxes..................................................................28
--------------------------
SECTION 6.08. UCC Matters; Protection and Perfection of Transferred Assets................................29
------------------------------------------------------------
SECTION 6.09. Obligations of the Originators With Respect to Receivables..................................30
----------------------------------------------------------
SECTION 6.10. Applications of Collections.................................................................30
---------------------------
SECTION 6.11. Annual Servicing Report of Independent Public Accountants...................................30
---------------------------------------------------------
ARTICLE VII EVENTS OF TERMINATION
---------------------
SECTION 7.01. Events of Termination.......................................................................31
---------------------
ARTICLE VIII INDEMNIFICATION
---------------
SECTION 8.01 Indemnities by the Originators..............................................................33
i
ARTICLE IX MISCELLANEOUS
--------------
SECTION 9.01. Amendments and Waivers......................................................................35
----------------------
SECTION 9.02. Notices, Etc................................................................................35
-------------
SECTION 9.03. Setoff and Counterclaim.....................................................................35
-----------------------
SECTION 9.04. No Waiver; Remedies.........................................................................35
-------------------
SECTION 9.05. Binding Effect; Assignability...............................................................36
-----------------------------
SECTION 9.06. Term of this Agreement......................................................................36
----------------------
SECTION 9.07. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO VENUE........................36
--------------------------------------------------------------------
SECTION 9.08. WAIVER OF JURY TRIAL........................................................................36
--------------------
SECTION 9.09. Costs, Expenses and Taxes...................................................................37
-------------------------
SECTION 9.10. Execution in Counterparts; Severability; Integration........................................37
----------------------------------------------------
SECTION 9.11. Confidentiality.............................................................................37
---------------
ii
SCHEDULES
---------
Schedule I -- Condition Precedent Documents
Schedule II -- Description of Credit and Collection Policy
Schedule III -- Lock-Box Banks and Lock-Box Accounts
Schedule IV -- Tradenames, Fictitious Names and "Doing Business As" Names
Schedule V -- List of Franchisees as of Closing Date
EXHIBITS
--------
Exhibit A -- Form of Contracts
Exhibit B -- Form of Lock-Box Agreements
Exhibit C -- Form of Asset Report
Exhibit D -- Form of Opinion of Counsel for the Originators
Exhibit E -- Form of Originator Note
Exhibit F -- Form of Franchise Agreement
THIS RECEIVABLES PURCHASE AND SALE AGREEMENT (the "Agreement")
is made as of July 27, 1998, by and among OUTSOURCE INTERNATIONAL, INC., a
Florida corporation ("OutSource International"), OUTSOURCE FRANCHISING, INC., a
Florida corporation ("OutSource Franchising"), CAPITAL STAFFING FUND, INC., a
Florida corporation ("CSF"), SYNADYNE I, INC., a Florida corporation, SYNADYNE
II, INC., a Florida corporation, SYNADYNE III, INC., a Florida corporation,
SYNADYNE IV, INC., a Florida corporation, SYNADYNE V, INC., a Florida
corporation, and OUTSOURCE INTERNATIONAL OF AMERICA, INC., a Florida
corporation, as the originators (each an "Originator" and, collectively, the
"Originators"), OUTSOURCE FUNDING CORPORATION, a Delaware corporation (the
"Buyer"), and OUTSOURCE INTERNATIONAL, INC., in its capacity as the initial
Servicer (as defined below).
WITNESSETH:
WHEREAS, the Originators desire to sell, and the Buyer desires
to purchase, all of the Originators' right, title and interest in the accounts
receivable originated by the Originators on the terms and conditions provided
herein;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I
---------
DEFINITIONS
------------
SECTION 1.01. Certain Defined Terms. (a) Certain
capitalized terms used throughout this Agreement are defined above or in this
Section 1.01.
(b) As used in this Agreement and its exhibits, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined).
"Actual Dilution" means, on any Business Day with respect to
any Receivable or Receivables, the actual reduction in the Outstanding Balance
of such Receivable or Receivables as a result of any of the Dilution Factors.
"Adverse Claim" means a lien, security interest, charge,
encumbrance or other right or claim of any Person having the practical effect of
a lien, security interest, charge or encumbrance.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract, or otherwise; and the terms "controlling" and "controlled" have the
meanings correlative to the foregoing.
"Asset Report" has the meaning set forth in the Receivables
Purchase Agreement.
"Asset Report Date" means, with respect to any Collection
Period, the tenth day of such Collection Period, or if such date is not a
Business Day, the next Business Day to occur thereafter.
"Average Maturity" has the meaning set forth in the
Receivables Purchase Agreement.
"Bankruptcy Code" means the United States Bankruptcy Reform
Act of 1978 (11 U.S.C. " 101 et seq.), as amended from time to time, or any
successor statute.
"Base Rate" means, on any day, a fluctuating rate of interest
per annum equal to the higher of (a) the per annum rate of interest announced
from time to time by BankBoston, N.A. at its head office in Boston,
Massachusetts as its "base rate", and (b) 2 of one percent per annum above the
Federal Funds Rate.
"Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA in respect of which any Originator or any ERISA Affiliate
of any Originator is, or at any time during the immediately preceding six years
was, an "employer" as defined in Section 3(5) of ERISA.
"Business Day" means a day of the year other than a Saturday
or a Sunday on which banks are required to be open in New York City and Boston,
Massachusetts.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Closing Date" means the date on which the Buyer makes the
Initial Purchase of Receivables under this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute.
"Collection Account" has the meaning set forth in the
Receivables Purchase Agreement.
"Collection Account Agreement" means that certain Collection
Account Agreement dated as of even date herewith among the Collection Account
Bank, the Servicer, the Buyer and the Deal Agent.
"Collection Account Bank" means the financial institution
maintaining the Collection Account, which initially shall be BankBoston, N.A.
2
"Collection Date" means the date following the Termination
Date on which the aggregate Outstanding Balance of all Receivables sold
hereunder has been reduced to zero (or such earlier date which is 365 days after
all outstanding Receivables sold hereunder have become written-off in accordance
with the Credit and Collection Policy), the Buyer has received all other amounts
due to it in connection with this Agreement or any other agreement executed
pursuant hereto or in connection herewith.
"Collection Period" means an accounting period of four or five
weeks as used by the Originators consistent with their present accounting
methods and as set forth in a written calendar to be provided to the Deal Agent
at closing for the remainder of 1998 and to be provided to the Deal Agent on or
prior to December 1st of each year for the immediately succeeding calendar year.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of the Related Security with respect thereto.
"Confidential Information" has the meaning assigned to such
term in Section 9.11.
"Contract" means an invoice issued by an Originator to a
Person, or an agreement between an Originator and a Person, in each case in
substantially the form of one of the forms set forth in Exhibit A pursuant to or
under which such Obligor shall be obligated to make one or more payments to an
Originator.
"Credit and Collection Policy" means those credit and
collection policies and practices relating to Contracts and Receivables
described in Schedule II.
"CSF Advance" means an advance of money by CSF to a
Franchisee.
"DCR" means Duff & Xxxxxx Credit Rating Co., and any successor
thereto.
"Deal Agent" means the "Deal Agent" under the Receivables
Purchase Agreement.
"Debt" of any Person means (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) obligations of such Person to pay the
deferred purchase price of property or services beyond ordinary course of
business payment terms for trade payables, (d) obligations of such Person as
lessee under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases, (e) obligations secured by an Adverse Claim upon
property or assets owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations and (f) without duplication
obligations of such Person under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e) above.
3
"Defaulted Receivable" means a Receivable (a) as to which any
payment, or part thereof, remains unpaid for more than 150 days from the
original invoice date for such payment, (b) as to which the Obligor thereof has
taken any action constituting an Insolvency Event or suffered any Insolvency
Event or (c) which, consistent with the Credit and Collection Policy, has been
or should be written off the applicable Originator's books as uncollectible.
"Delinquent Receivable" means a Receivable which is not a
Defaulted Receivable and (a) as to which any payment, or part thereof, remains
unpaid for more than 120 days from the original invoice date for such payment,
or (b) which, consistent with the Credit and Collection Policy, has been or
should be classified as delinquent by the applicable Originator.
"Dilution Factors" means, with respect to the Receivables, any
credits, rebates, freight charges, discounts, allowances, disputes, chargebacks,
returned or repossessed goods, inventory transfers, allowances for early
payments and other allowances or adjustments granted in accordance with the
Buyer's or the Originators' usual practices.
"Dilution Adjustment Credit" means, on any Business Day, the
Actual Dilution reported by the Servicer in the most recent applicable Weekly
Settlement Report.
"Discount Factor" means a percentage calculated to provide the
Buyer with a reasonable return on its investment in the Transferred Assets after
taking account of (i) the time value of money based upon the anticipated dates
of collection of the Transferred Assets, (ii) the risk of nonpayment by the
Obligors and (iii) the costs of servicing the Receivables to be performed by the
Originators. The initial Discount Factor shall be 3.0%. The Originators and the
Buyer may agree in writing from time to time to change the Discount Factor based
on changes in one or more of the items affecting the calculation thereof;
provided, however, that any change to the Discount Factor shall take effect as
of the commencement of a Collection Period, shall apply only prospectively and
shall not affect the Purchase Price payment in respect of Purchases which
occurred during any Collection Period ending prior to the Collection Period
during which the Originators and the Buyer agree to make such change.
"EagleFunding" means EagleFunding Capital Corporation, a
Delaware corporation.
"Eligible Receivable" means, at any time, a Receivable:
(a) the Obligor of which is a United States resident, is not
an Affiliate of the Buyer, the Servicer or any Originator, and is not a
government or a governmental subdivision or agency; provided, however,
that an otherwise "Eligible Receivable" owed by a Franchisee of any
Originator shall not be excluded under this clause (a) due to such
Franchisee being an Affiliate of such Originator;
4
(b) which is not a Defaulted Receivable or a Delinquent
Receivable or any other Receivable with respect to which a scheduled
payment or any part thereof remains unpaid for (x) more than 60 days
after the original invoice date therefor for any Receivable originated
by OutSource Franchising and (y) more than 90 days after the original
invoice date therefor for any other Receivable, and the Obligor of
which is not the Obligor of any Delinquent Receivables in the aggregate
amount of 20% or more of the aggregate Outstanding Balance of all
Receivables of such Obligor;
(c) which arises under a Contract (i) the performance of which
has been completed by the applicable Originator and by all other
parties other than the Obligor, (ii) that requires such Receivable to
be paid in full within (x) 60 days of the original invoice date
therefor for any Receivable originated by OutSource Franchising and (y)
90 days of the original invoice date therefor for any other Receivable
and (iii) that has been duly authorized and, together with such
Receivable, is in full force and effect and 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 dispute, offset, counterclaim or defense whatsoever;
(d) (i) which is an "account" (or, in the case of a CSF
Advance, is an "account" or a "general intangible") within the meaning
of Section 9-106 of the UCC of all applicable jurisdictions, (ii) as to
which all performance and other action required to be taken in
connection therewith by such Originator for the Obligor has been so
performed or taken, (iii) is denominated and payable only in United
States dollars in the United States, (iv) no portion of which is
payable on account of sales taxes, and (v) in which the applicable
Originator can grant a perfected security interest;
(e) which arises in the ordinary course of the Originators'
business in connection with providing services or the sale of goods
within the United States (or, in the case of a CSF Advance, arises from
the advance of money by CSF to a Franchisee);
(f) the assignment of which (including, without limitation,
the sale of an undivided percentage interest therein and the assignment
of any Related Security) does not contravene or conflict with any
applicable laws, rules or regulations or any contractual or other
restriction, limitation or encumbrance;
(g) which does not have an Adverse Claim filed against it
(other than pursuant to the Receivables Purchase Agreement) and is not
otherwise subject to an Adverse Claim and has not been compromised,
adjusted or modified (including by extension of time of payment or the
granting of any discounts, allowances or credits) except for discounts,
allowances or credits made in accordance with the Credit and Collection
Policy and in the ordinary course of the Originators' business;
(h) which, together with the 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 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;
5
(i) which (i) satisfies, and has been originated in accordance
with, all applicable requirements of the Credit and Collection Policy
and (ii) complies with such other criteria and requirements as the
Buyer may, in its reasonable credit judgment, from time to time specify
to the applicable Originator following 60 days' notice;
(j) as to which the Buyer has not notified the applicable
Originator and the Servicer that the Deal Agent (as Buyer's assignee)
has determined, in its reasonable business judgement, that the Obligor
of such Receivable is an unreasonable risk;
(k) the Obligor of which is not a Person to whom any of the
Originators or their Affiliates owe any accounts payable or other Debt
and is otherwise not a Person in respect of which the Originators
maintain any contra accounts on their books and records; provided,
however, that a Receivable which is subject only in part to any of the
foregoing shall constitute an Eligible Receivable to the extent such
Receivable is not subject to an accounts payable, other Debt or contra
account and otherwise satisfies the eligibility criteria set forth
herein;
(l) as to which the Buyer has not notified the applicable
Originator in writing that the Buyer or Deal Agent (as Buyer's
assignee) has determined, in its reasonable business judgment, that
such Receivable (or class of Receivables) is not acceptable for
purchase hereunder;
(m) with respect to which, (i) prior to the Purchase hereunder
by Buyer, the applicable Originator has a first priority ownership
interest therein, free and clear of any Adverse Claim except as
otherwise contemplated under the Intercreditor Agreement, and (ii) from
and after the Purchase hereunder, Buyer has a properly perfected first
priority ownership interest therein, free and clear of any Adverse
Claim; and
(n) which was not acquired by the applicable Originator
pursuant to a Permitted Acquisition and which does not arise in a line
of business acquired by such Originator as a result of a Permitted
Acquisition unless the Buyer and the Deal Agent shall, after conducting
such due diligence as they deem necessary, have determined (in their
sole discretion) that such Receivables are acceptable for Purchase
hereunder; provided, however, that Receivables which would otherwise be
eligible but for this clause (n) shall be eligible for Purchase
hereunder so long as the aggregate outstanding amount thereof at any
one time does not exceed 2% of the aggregate Outstanding Balance of all
Receivables at such time.
"ERISA" means the U.S. Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
6
"ERISA Affiliate" means (a) any corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as the Originators; (b) a partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with the Originators or (c) a member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
the Originators, any corporation described in clause (a) above or any
partnership, trade or business described in clause (b) above.
"Event of Termination" has the meaning assigned to that term
in Section 7.01.
"Franchise Agreement" means a Franchise Agreement
substantially in the form of Exhibit F attached hereto.
"Franchisee" means those entities listed on Schedule V
attached hereto and any other entity which executes a Franchise Agreement with
OutSource International or an Affiliate of OutSource International.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, in each case consistently
applied.
AIndemnified Amounts" has the meaning assigned to that term in
Section 8.01.
AIndemnified Parties" has the meaning assigned to that term in
Section 8.01.
"Initial Purchase" means the initial Purchase made by the
Buyer hereunder.
"Insolvency Event" means, with respect to any Person, any of
the following events such Person shall make a general assignment for the benefit
of creditors; or any case or proceeding shall be instituted by or against such
Person seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
dissolution, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property.
"Intercreditor Agreement" means that certain Intercreditor
Agreement, dated as of July 27, 1998, among BankBoston, N.A. (in its capacity as
"Agent" under the Revolving Credit Agreement), the Originators, the Servicer,
the Buyer, EagleFunding and the Deal Agent, as the same be amended, restated,
supplemented or otherwise modified or replaced from time to time thereafter.
"Investment" means, with respect to any Person, any direct or
indirect loan, advance or investment by such Person in any other Person, whether
by means of share purchase, capital contribution, loan or otherwise, excluding
the acquisition of Receivables and other Transferred Assets (and interests
therein) pursuant to this Agreement and excluding commission, travel and similar
advances to officers, employees and directors made in the ordinary course of
business.
7
"Investment Company Act" means the Investment Company Act of
1940, as amended and any successor.
"Lock-Box" means a post office box to which Collections are
remitted for retrieval by a Lock-Box Bank and deposited by such Lock-Box Bank
into a Lock-Box Account.
"Lock-Box Account" means an account maintained for the purpose
of receiving Collections at a bank or other financial institution which has
executed a Lock-Box Agreement.
"Lock-Box Agreement" means an agreement, in substantially the
form of Exhibit B, among the applicable Originator, the Buyer, the Deal Agent
and a Lock-Box Bank.
"Lock-Box Bank" means any of the banks or other financial
institutions holding one or more Lock-Box Accounts.
"Material Adverse Effect@ means any act, omission, situation,
circumstance, event or undertaking which could, singly or in any combination
with one or more other acts, omissions, situations, circumstances, events or
undertakings, have, or are reasonably likely to have, a material adverse effect
upon (a) the business, assets, properties, liabilities, financial condition, or
results of operations of any Originator and its subsidiaries taken as a whole,
(b) the value of the whole or any material part of the Transferred Assets, the
interests therein transferred or purported to be transferred pursuant to the
terms hereof or the priority of such interests, (c) the respective ability of
the Originators or any of their subsidiaries to perform any obligations under
this Agreement or any other Originator Document to which it is a party, or (d)
the legality, validity, binding effect or enforceability of any Originator
Document or the ability of the Buyer or the Deal Agent to enforce any rights or
remedies under or in connection with any Originator Document.
"Moody's" means Xxxxx'x Investors Service, Inc., and any
successor thereto.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding five years contributed to by an Originator or
any ERISA Affiliate on behalf of its employees.
"Noncomplying Receivable" means any Receivable with respect to
which any Originator has received notice from the Buyer that such Receivable was
not an Eligible Receivable as of the date purchased hereunder or that such
Originator otherwise breached any representation, warranty or covenant made with
respect to such Receivable hereunder.
"Noncomplying Receivables Adjustment" means, with respect to
any Collection Period, an amount equal to (i) the aggregate Outstanding Balance
for all Receivables which the Buyer identified to the applicable Originator as
Noncomplying Receivables during such Collection Period minus (ii) all
Collections received during such Collection Period on account of Receivables
originated by such Originator with respect to which Noncomplying Receivables
Adjustments were previously paid.
8
"Obligor" means a Person obligated to make payments pursuant
to a Contract.
"Originator Documents" means this Agreement, the Lock-Box
Agreements, the Intercreditor Agreement, and all other certificates,
instruments, UCC financing statements, reports, notices, agreements and
documents executed or delivered under or in connection with this Agreement, in
each case as the same may be amended, supplemented or otherwise modified from
time to time in accordance with this Agreement.
"Originator Loan" has the meaning set forth in Section
2.02(b).
"Originator Note" has the meaning set forth in Section
2.02(c).
"Outstanding Balance" of any Receivable at any time means the
then outstanding principalbalance thereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Person succeeding to the functions thereof.
"Permitted Acquisition" has the meaning set forth in the
Revolving Credit Agreement (as such agreement is in effect on the date hereof
without giving effect to any amendments or modifications thereof).
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, limited liability company, government (or any agency
or political subdivision thereof) or other entity.
"Purchase" means a purchase of Transferred Assets by the Buyer
from the Originators pursuant to Section 2.01.
"Purchase Price" means, with respect to any Purchase on any
date, the aggregate price to be paid to the applicable Originator for such
Purchase in accordance with Section 2.02 for the Receivables, Related Security
and Collections being sold to the Buyer on such date, which price shall equal
the product of (x) the aggregate Outstanding Balance of such Receivables and (y)
one minus the Discount Factor then in effect.
"Receivable" means the indebtedness of any Obligor under a
Contract whether constituting an account, chattel paper, instrument, general
intangible or any other type of property, (a) which arises from a sale of
merchandise or the performance of services by an Originator or (b) which is a
CSF Advance. Each Receivable shall include the right to payment of any interest
or finance charges and other obligations of such Obligor with respect thereto.
9
"Receivables Purchase Agreement" means that certain
Receivables Purchase Agreement dated as of even date herewith by and among the
Buyer, as the seller thereunder, EagleFunding, as the purchaser, BancBoston
Securities Inc., as the "Deal Agent", and the Servicer, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Records" means all Contracts and other documents, books,
records and other information (including without limitation, computer programs,
tapes, disks, punch cards, data processing software and related property and
rights) maintained with respect to Receivables and the related Obligors which
the applicable Originator has itself generated or in which such Originator has
otherwise obtained an interest.
"Related Security" means with respect to any Receivable:
(a) all of the applicable Originator's interest in the
merchandise (including returned, repossessed or foreclosed
merchandise), if any, relating to the sale which gave rise to such
Receivable;
(b) all other Adverse Claims and property subject thereto from
time to time purporting to secure payment of such Receivable, whether
pursuant to the Contract related to such Receivable or otherwise;
(c) the assignment to the Buyer of all UCC financing
statements covering any collateral securing payment of such Receivable;
(d) all guarantees, indemnities, warranties, letters of
credit, insurance policies and proceeds and premium refunds thereof and
other agreements or arrangements of whatever character from time to
time supporting or securing payment of such Receivable whether pursuant
to the Contract related to such Receivable or otherwise;
(e) all Records; and
(f) all proceeds of the foregoing.
"Revolving Credit Agreement" means that certain Third Amended
and Restated Credit Agreement dated as of July 27, 1998 by and among OutSource
International, the banks and other financial institutions from time to time
parties thereto and BankBoston, N.A., as successor by merger to Bank of Boston
Connecticut, as agent for the banks thereunder, as the same may be amended,
restated, supplemented, replaced or otherwise modified from time to time, any
successor agreement, and any agreement pursuant to which the Debt issued under
any such "Revolving Credit Agreement" is refinanced.
"S&P" means Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc., and any successor thereto.
"Servicer" means at any time the Person then authorized
pursuant to Article VI to service, administer and collect Receivables.
10
"Servicer Fee" has the meaning set forth in the Receivables
Purchase Agreement.
"Servicer Termination Event" means the occurrence of any of
the following:
(a) any Event of Termination; or
(b) a material failure on the part of the Servicer to observe
or perform any of its duties or obligations as Servicer under this Agreement or
as "Servicer" under the Receivables Purchase Agreement and such failure shall
remain unremedied for two Business Days after written notice to the Servicer.
"Settlement Date" means, with respect to any Collection
Period, the fifteenth day of such Collection Period, or if such date is not a
Business Day, the next Business Day to occur thereafter.
"Termination Date" means the date on which the Originators'
obligation to sell and the Buyer's obligation to purchase Receivables hereunder
terminates, which date shall occur on the earliest of (i) the occurrence of the
"Termination Date" under the Receivables Purchase Agreement, (ii) the date on
which an Insolvency Event occurs with respect to OutSource International, any
Originator or the Buyer and (iii) upon the occurrence and during the continuance
of an Event of Termination, the date on which the Buyer declares its obligation
to purchase Receivables hereunder to be terminated.
"Transferred Assets" means, with respect to any Purchase or
Purchases, (a) the Receivables sold to the Buyer in connection with such
Purchase or Purchases, (b) all Related Security relating to such Receivables,
and (c) all Collections with respect to, and other proceeds of, such
Receivables.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
"United States" means the United States of America.
"Weekly Settlement Report" means the "Weekly Settlement
Report" prepared by the Servicer under the Receivables Purchase Agreement.
SECTION 1.02. Accounting and Certain Other Terms. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP, and all accounting determinations made and all financial
statements prepared hereunder shall be made and prepared in accordance with
GAAP. All undefined terms contained in this Agreement which are used in Article
9 of the UCC in the State of New York shall have the meanings provided for by
such Article 9.
11
SECTION 1.03. Other Terms. The words "herein," "hereof," and
"hereunder" and other words of similar import refer to this Agreement as a
whole, including the exhibits and schedules hereto, as the same may from time to
time be amended or supplemented and not to any particular section, subsection,
or clause contained in this Agreement, and all references to Sections, Exhibits
and Schedules shall mean, unless the context clearly indicates otherwise, the
Sections hereof and the Exhibits and Schedules attached hereto, the terms of
which Exhibits and Schedules are hereby incorporated into this Agreement.
Whenever appropriate, in the context, terms used herein in the singular also
include the plural, and vice versa.
SECTION 1.04. 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."
ARTICLE II
----------
AMOUNTS AND TERMS OF THE PURCHASES.
-----------------------------------
SECTION 2.01. Agreement to Purchase. (a) On the terms and
conditions hereinafter set forth, the Buyer agrees to make the Initial Purchase
hereunder on the Closing Date by purchasing from each Originator, and each
Originator agrees to sell to the Buyer, all Receivables of such Originator
existing as of the close of business on the Business Day immediately prior to
the Closing Date, together with all of the Related Security relating to such
Receivables, all Collections with respect to, and other proceeds of, such
Receivables. On each Business Day after the Initial Purchase until the
occurrence of the Termination Date, the Buyer agrees to purchase from each
Originator, and each Originator agrees to sell to the Buyer, all Receivables of
such Originator existing as of the close of business on the immediately
preceding Business Day which have not been previously purchased hereunder,
together with all of the Related Security relating to such Receivables and all
Collections with respect to and other proceeds of such Receivables. Prior to
making any Purchase hereunder, the Buyer may request of any Originator, and the
applicable Originator shall deliver, such approvals, opinions, information,
reports or documents as the Buyer may reasonably request.
(b) It is the intention of the parties hereto that each
Purchase of Receivables to be made hereunder shall constitute a "sale of
accounts," as such term is used in Article 9 of the UCC of the State of New
York, and not a loan secured by such accounts. Except for the Noncomplying
Receivables Adjustment made on each Asset Report Date and the Dilution
Adjustment Credit made on any Business Day, each sale of Receivables by any
Originator to the Buyer is made without recourse; provided, however, that (i)
the Originators shall be liable to the Buyer for all representations, warranties
and covenants made by the Originators pursuant to the terms of this Agreement,
and (ii) such sale does not constitute and is not intended to result in an
assumption by the Buyer or any assignee thereof of any obligation of the
Originators or any other person arising in connection with the Transferred
Assets, or any other obligations of the Originators. In view of the intention of
the parties hereto that the Purchases of Receivables to be made hereunder shall
constitute a sale of such Receivables rather than a loan secured by such
Receivables, each Originator agrees to clearly, expressly and accurately state
on its respective financial statements that the Receivables have been sold to
the Buyer.
12
(c) The parties hereto acknowledge that on the Closing Date
OutSource International shall, and from time to time thereafter OutSource
International may (but without any obligation to do so), contribute to the
capital of Buyer such amounts as may be necessary or desirable for the operation
of Buyer's business and the payment of its obligations under this Agreement. In
connection with any such contribution, the parties hereto agree that OutSource
International may, in lieu of making a cash transfer, authorize Buyer to deduct
the amount of such contributions from the Purchase Price otherwise payable by
Buyer to OutSource International on the applicable date. All of the Receivables
so paid for through such deductions shall constitute Transferred Assets within
the meaning of this Agreement and shall be subject to all of the
representations, warranties and covenants hereunder to the same extent as if
Buyer had paid the Purchase Price for such Receivables with cash from its own
funds.
SECTION 2.02. Payment for the Purchases. (a) The Purchase
Price for each Purchase shall be payable in full in cash by the Buyer to the
applicable Originator or its designee on the date of such Purchase; except that
the Buyer may, with respect to any Purchase, offset against such Purchase Price,
(i) any positive Noncomplying Receivables Adjustments or other amounts shown on
an Asset Report as owing from such Originator to the Buyer and which remain
unpaid; (ii) any Dilution Adjustment Credits for Receivables sold by such
Originator reported on the most recent Weekly Settlement Report and any Dilution
Adjustment Credits for Receivables sold by such Originator and reported in any
previous Weekly Settlement Report which remain unpaid; and (iii) any other
amounts owed by such Originator to the Buyer hereunder and which remain unpaid.
(b) If, on any day, the amount of cash available to the Buyer
under the Receivables Purchase Agreement is less than the Purchase Price owing
for all Purchases of Receivables to be made on such day, then the Buyer may, by
written notice to the Originators, elect to pay such remaining part of the
Purchase Price by borrowing a subordinated revolving loan (each an "Originator
Loan") and each Originator shall have irrevocably agreed to advance, and shall
be deemed to have advanced, an Originator Loan in the amount so specified by the
Buyer; provided, however, that the Buyer may not make any such election and no
Originator shall have any obligation to extend any Originator Loans to the Buyer
if, as a result thereof, the aggregate unpaid principal amount of all of the
Originator Loans would exceed the sum of (i) the aggregate Outstanding Balance
of Eligible Receivables as of the opening of business on such date minus (ii)
the outstanding "Capital" under the Receivables Purchase Agreement minus (iii)
an amount equal to the product of (x) the amount described in clause (ii) above
times (y) 0.75 times (z) the "Loss Reserve Percentage" most recently calculated
under the Receivables Purchase Agreement.
13
(c) The Originator Loans advanced by each Originator shall be
evidenced by, and payable in accordance with the terms and provisions of, a
promissory note (the "Originator Note") payable to such Originator in the form
of Exhibit E attached hereto. On each Business Day, to the extent that the Buyer
receives either Collections or proceeds from any sales under the Receivables
Purchase Agreement which, in any case, it is not required to hold in trust for,
or remit to, the Servicer or the Deal Agent, then the Buyer shall remit such
funds to the Originators (net of any funds needed to pay existing expenses which
are then accrued and unpaid) in the following order of priority and application:
first to pay the Purchase Price owed on such date; second to pay any
Noncomplying Receivables Adjustment payments owed under Section 2.03; and third
to pay amounts owed under the Originator Notes.
(d) The Originator Loans shall, subject to the terms of the
Originator Note, be subordinated to the prior right and payment in full of all
recourse obligations of the Buyer under the Receivables Purchase Agreement. The
Buyer shall, to the extent reasonably practicable, use its best efforts (i) to
allocate the amount of Originator Loans made on any day first to OutSource
International and then ratably according to the respective Purchase Prices owed
to each other Originator for Receivables sold on such date and (ii) to allocate
payments of principal and interest on the Originator Notes ratably to each
Originator other than OutSource International according to the outstanding
principal amounts thereof and thereafter to OutSource International.
SECTION 2.03. Settlement Procedures. (a) Weekly. The Servicer
shall, as part of the Weekly Settlement Report delivered under the Receivables
Purchase Agreement, note the Dilution Adjustment Credit due to the Buyer from
any Originator. The Buyer shall, pursuant to Section 2.02, subtract such
Dilution Adjustment Credit from the Purchase Price which would otherwise be owed
to such Originator on such day and, if the amount of such credit exceeds the
amount of such Purchase Price, the unused amount of the Dilution Adjustment
Credit shall be applied as a prepayment of the then outstanding principal amount
of the Originator Note issued in favor of such Originator. Any remaining
unutilized amount of the Dilution Adjustment Credit shall be credited by the
Buyer against all future Purchases from such Originator; provided, however, that
if such credits are not fully utilized within five (5) Business Days, the
applicable Originator shall pay the remaining amount of such credit in cash on
the next succeeding Business Day.
14
(b) Monthly. On or prior to each Asset Report Date, the
Servicer shall prepare and deliver to the Buyer, as part of the Asset Report
delivered under the Receivables Purchase Agreement, a statement of the
Noncomplying Receivables Adjustment due to the Buyer from any Originator or from
the Buyer to any Originator, as the case may be. If the Noncomplying Receivables
Adjustment is a positive number, such number shall be shown on the Asset Report
as an amount due to the Buyer and the Buyer shall subtract such Noncomplying
Receivables Adjustment from the Purchase Price which would otherwise be owed to
the applicable Originator on such day and, if the amount of such adjustment
exceeds the amount of such Purchase Price, the unused positive amount of the
Noncomplying Receivables Adjustment shall be applied as a prepayment of the then
outstanding principal amount of the Originator Note held by such Originator. Any
remaining unutilized positive amount of the Noncomplying Receivables Adjustment
shall be credited by the Buyer against all future Purchases from the applicable
Originator; provided, however, that if such credits are not fully utilized
within five (5) Business Days, such Originator shall pay the remaining amount of
such adjustment in cash on the next succeeding Business Day. Alternatively, if
the Noncomplying Receivables Adjustment is a negative number, such number shall
be shown on the Asset Report as an amount due to such Originator, and the Buyer
shall pay to such Originator the amount, if any, shown on the Asset Report as
the net amount due from Buyer to such Originator. To the extent that such net
amount due remains unpaid as of the end of such Asset Report Date, the principal
amount of the Originator Note issued to such Originator shall be increased on
the applicable Asset Report Date by such remaining unpaid amount, subject,
however, to the limits on the amounts of the Originator Note permitted under
Section 2.02(b) above.
(c) Generally. Until the Originators or the Buyer shall notify
the Servicer of any exceptions to the calculations contained therein, the
calculations of the Dilution Adjustment Credit and Noncomplying Receivables
Adjustment in each Weekly Settlement Report and each Asset Report shall be
deemed to be correct as originally delivered. If any Originator or the Buyer
shall have notified the Servicer of any exceptions to such calculations, such
Originator and the Buyer shall promptly endeavor to resolve the matters set
forth in such notice. If no such resolution is agreed upon on or before the next
Asset Report Date, however, then the Asset Report originally delivered by the
Servicer shall, absent manifest error, continue to be presumed correct until a
resolution is reached to the contrary. Nothing contained in this Section 2.03(c)
shall be deemed to limit the rights of the Buyer under Section 8.01.
SECTION 2.04. Payments and Computations, Etc. All amounts to
be paid by any Originator or the Servicer to the Buyer hereunder shall be paid
in accordance with the terms hereof no later than 11:00 A.M. (Boston,
Massachusetts time) on the day when due in immediately available funds to such
account as the Buyer may from time to time specify in writing. Payments received
by the Buyer after such time shall be deemed to have been received on the next
Business Day. In the event that any payment becomes due on a day which is not a
Business Day, then such payment shall be made on the next succeeding Business
Day. Each of the Originators shall, and if any Originator is the Servicer, the
Servicer shall, to the extent permitted by law, pay to the Buyer, on demand,
interest on all amounts not paid when due hereunder (whether owing by any
Originator individually or as Servicer) at 2.0% per annum above the Base Rate,
payable on demand; provided, however, that such interest rate shall not at any
time exceed the maximum rate permitted by applicable law. All computations of
interest payable hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first but excluding the last day)
elapsed.
SECTION 2.05. Transfer of Records to the Buyer. (a) Each
Purchase of Receivables hereunder shall include the transfer to the Buyer of all
of the applicable Originator's right and title to and interest in the Records
relating to such Receivables and rights to the use of such Originator's computer
software to access and create the Records, and each Originator hereby agrees
that such transfer shall be effected automatically with each such Purchase,
without any action on the part of the parties hereto or any further
documentation.
(b) Each Originator shall take such action requested by the
Buyer, from time to time hereafter, that may be necessary or appropriate to
ensure that the Buyer and its assignees have (i) an enforceable ownership
interest in the Records relating to the Receivables purchased hereunder and (ii)
an enforceable right (whether by license or sublicense or otherwise) to use all
of the computer software used to account for the Receivables and/or to recreate
such Records.
15
ARTICLE III
-----------
CONDITIONS OF PURCHASES
-------------------------
SECTION 3.01. Conditions Precedent to Initial Purchase. The
Initial Purchase hereunder is subject to the conditions precedent that the Buyer
shall have received on or before the date of such purchase the items listed in
Schedule I, each (unless otherwise indicated) dated such date, in form and
substance satisfactory to the Buyer.
SECTION 3.02. Conditions Precedent to All Purchases and
Remittances of Collections. Each Purchase (including the Initial Purchase) from
the Originator by the Buyer shall be subject to the further conditions precedent
that (a) with respect to any such Purchase (other than the Initial Purchase), on
or prior to the date of such Purchase, the Servicer shall have delivered to the
Buyer, in each case in form and substance satisfactory to the Buyer, a completed
Asset Report dated as of the most recent Asset Report Date, and a completed
Weekly Settlement Report dated no more than seven Business Days prior to the
date of such Purchase, and in each case containing such additional information
as may be reasonably requested by the Buyer; (b) on the date of such Purchase,
the following statements shall be true:
(i) The representations and warranties contained in Section
4.01 are correct on and as of such day as though made on and as of such
date,
(ii) No event has occurred and is continuing, or would result
from such Purchase, which constitutes an Event of Termination, and
(iii) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or governmental
body, agency or instrumentality shall prohibit or enjoin, the making of
such Purchase by the Buyer in accordance with the provisions hereof and
c) the Buyer shall have received such other approvals, opinions or
documents as the Buyer may reasonably request.
SECTION 3.03. Effect of Payment of Purchase Price. Each
Originator, by accepting the proceeds of the Purchase Price for a Purchase,
shall be deemed to have certified to the Buyer the satisfaction of the
conditions precedent described in the immediately preceding Section 3.02. Upon
the payment of the Purchase Price for any Purchase, (whether in cash or by the
making of an Originator Loan pursuant to Section 2.02(b)), title to the
Transferred Assets included in such Purchase shall vest irrevocably in the
Buyer, whether or not the conditions precedent to such Purchase were in fact
satisfied; provided, however, that the Buyer shall not be deemed to have waived
thereby any claim for indemnification it may have under this Agreement for the
failure by any Originator in fact to have satisfied any such condition
precedent.
16
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES
----------------------------------
SECTION 4.01. Representations and Warranties of the
Originators. The Originators represent and warrant that as of the date hereof,
as of the date of the Initial Purchase and as of the date of each subsequent
Purchase:
(a) Each of the Originators is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to do business, and is in
good standing, in every jurisdiction in which the nature of its business
requires it to be so qualified and the failure to do so could reasonably be
expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the Originators
of this Agreement and all other Originator Documents to be entered into by them,
including the Originators' use of the proceeds of Purchases, are within each
Originator's corporate powers, have been duly authorized by all necessary
corporate action, do not contravene (i) each Originator's charter or by-laws,
(ii) any law, rule or regulation applicable to the Originators, (iii) any
contractual restriction binding on or affecting each Originator or its property
or (iv) any order, writ, judgment, award, injunction or decree binding on or
affecting each Originator or its property, and do not result in or require the
creation of any Adverse Claim upon or with respect to any of its properties
(other than in favor of the Buyer with respect to the Transferred Assets); and
no transaction contemplated hereby requires compliance with any bulk sales act
or similar law. This Agreement and each other Originator Document to be entered
into by the Originators have each been duly executed and delivered by the
Originators.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Originators of
this Agreement or any other Originator Document to be entered into by them,
except for the filing of the UCC financing statements referred to in Article
III, all of which financing statements have been duly filed and are in full
force and effect.
(d) This Agreement and each other Originator Document to be
entered into by the Originators constitute the legal, valid and binding
obligation of the Originators enforceable against each Originator in accordance
with their respective terms subject to bankruptcy and similar laws affecting
creditors generally and principles of equity.
17
(e) (i) OutSource International has furnished to the Buyer and
the Deal Agent (A) copies of the audited consolidated balance sheets of
OutSource International and its consolidated subsidiaries as at December 31,
1997, and the related audited consolidated statements of income, shareholders'
equity and cash flows for the fiscal year of OutSource International and its
consolidated subsidiaries then ended reported on by Deloitte & Touche, LLP,
which financial statements present fairly in all material respects in accordance
with GAAP the financial position of OutSource International and its consolidated
subsidiaries as at December 31, 1997, and the results of operations of OutSource
International and its consolidated subsidiaries for the fiscal year of OutSource
International then ended, and (B) copies of the unaudited consolidated balance
sheets of OutSource International and its consolidated subsidiaries as at March
31, 1998, and the related unaudited consolidated statements of income,
shareholders' equity and cash flows for the three-month period then ended, which
financial statements present fairly in all material respects in accordance with
GAAP the financial position of OutSource International and its consolidated
subsidiaries as at March 31, 1998, and the results of operations of OutSource
International and its consolidated subsidiaries for the three-month period then
ended; and (ii) since March 31, 1998, (A) no material adverse change has
occurred in the business, assets, liabilities, financial condition, or results
of operations or business prospects of OutSource International and its
subsidiaries taken as a whole, and (B) no event has occurred or failed to occur
which has had, or may have, singly or in the aggregate, a Material Adverse
Effect.
(f) There is no pending or threatened action or proceeding
affecting any Originator or any subsidiaries of any Originator before any court,
governmental agency or arbitrator that could reasonably be expected to have a
Material Adverse Effect. None of the Originators, or any subsidiary of any
Originator is in default with respect to any order of any court, arbitrator or
governmental body except for defaults with respect to orders of governmental
agencies which defaults are not material to the business or operations of the
Originators or any subsidiary of any of the Originators.
(g) No proceeds of any Purchase will be used by the
Originators to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(h) Immediately prior to each Purchase hereunder, each
Receivable to be sold hereunder, together with the Contract related thereto and
the other Transferred Assets relating thereto, is owned by the applicable
Originator free and clear of any Adverse Claim except as provided herein or
permitted hereby, and the Buyer shall acquire all of such Originator's right,
title and interest in such Transferred Assets and a valid and perfected first
priority ownership interest in each such Receivable then existing or thereafter
arising and in the Related Security and Collections with respect thereto, free
and clear of any Adverse Claim except as created hereby or by the Buyer in the
Receivables Purchase Agreement or any related document. No effective financing
statement or other instrument similar in effect covering any Transferred Assets
shall at any time be on file in any recording office except such as may be filed
in favor of the Buyer relating to this Agreement or in favor of assignees of the
Buyer under the Receivables Purchase Agreement. The Purchases of the Transferred
Assets by the Buyer constitute true and valid sales and transfers for
consideration (and not merely a pledge of such Transferred Assets for security
purposes), enforceable against creditors of the Buyers and no Transferred Assets
shall constitute property of any Originator.
18
(i) No Asset Report or Weekly Settlement Report (if prepared
by OutSource International, an Originator or any Affiliate thereof, or to the
extent that information contained therein is supplied by OutSource
International, an Originator or any such Affiliates), information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished by OutSource International or an Originator to the Buyer in connection
with this Agreement is or will be inaccurate in any material respect as of the
date it is or shall be dated or (except as otherwise disclosed to the Buyer, as
the case may be, at such time) as of the date so furnished, and no such document
contains or will contain any material misstatement of fact or omits or shall
omit to state a material fact or any fact necessary to make the statements
contained therein not misleading.
(j) The principal place of business and chief executive office
of the Originators and the offices where the Originators keep all the Records
are located at the addresses of the Originators referred to in Section 9.02
hereof (or at such other locations as to which the notice and other requirements
specified in Section 6.08 shall have been satisfied).
(k) The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts at such Lock-Box
Banks and the names, addresses and account numbers of all accounts to which
Collections of the Receivables outstanding before the Initial Purchase hereunder
have been sent, are specified in Schedule III (which shall be deemed to be
amended in respect of terminating or adding any Lock-Box Account or Lock-Box
Bank upon satisfaction of the notice and other requirements specified in respect
thereof). The Originators have no other lock-box accounts or similar deposit
accounts for the collection of the Transferred Assets except for the Lock-Box
Accounts.
(l) Except as described in Schedule IV, none of the
Originators has any trade names, fictitious names, assumed names or "doing
business as" names or other names under which it has done (at any time during
the five year period preceding the date hereof) or is currently doing business.
(m) No event has occurred and is continuing, or would result
from any Purchase hereunder or from the application of the proceeds therefrom,
which constitutes an Event of Termination.
(n) The Purchase Price constitutes reasonably equivalent value
in consideration for the transfer to the Buyer of the Transferred Assets from
the Originators and no such transfer shall have been made for or on account of
an antecedent debt owed by any Originator to the Buyer and no such transfer is
or may be voidable under any Section of the Bankruptcy Code.
(o) Each Originator has received advice from its counsel which
is consistent with the conclusions set forth in the legal opinion(s) of Xxxxxx &
Xxxxx, counsel to the Originators relating to the issues of substantive
consolidation and true sale of the Receivables and the related property.
(p) Each Originator is solvent at the time of (and immediately
after) each transfer of Transferred Assets to the Buyer hereunder.
(q) Each Originator has accounted for and has otherwise
treated each Purchase of Transferred Assets hereunder in its books, records and
financial statements as a sale to the Buyer, in each case consistent with GAAP
and with the requirements set forth herein.
19
(r) OutSource International owns one hundred percent (100%) of
the outstanding capital stock of the Buyer and has not granted or issued any
options, warrants or other rights to acquire any such capital stock.
(s) None of the Originators has (i) guaranteed any obligation
of the Buyer, allowed any of its other Affiliates to guarantee any obligations
of the Buyer, and no Originator nor any of its other Affiliates has held itself
out as responsible for debts of the Buyer or actions with respect to the
business and affairs of the Buyer; or (ii) permitted the commingling or pooling
of its funds or other assets with those of the Buyer and has otherwise permitted
any other of its Affiliates to commingle or pool any of their funds or other
assets with those of the Buyer. Each of the Originators (i) has agreed with the
Buyer, and has caused each of its other Affiliates to the extent applicable to
agree with the Buyer, to allocate between themselves shared corporate operating
services and expenses which are not reflected in the Servicer Fee (including,
without limitation, the services of shared employees, consultants and agents and
reasonable legal and auditing expenses) on the basis of the reasonably projected
use or the projected value of services rendered, and otherwise on a basis
reasonably related to actual use or the value of services rendered, (ii) has not
named the Buyer, and has not allowed any other Affiliate to name the Buyer, as a
direct or contingent beneficiary or loss payee on any insurance policy covering
the property of the Originators, OutSource International or any other
Affiliates; and (iii) acknowledges that the Buyer, the "Deal Agent" and the
"Purchaser" under the Receivables Purchase Agreement are entering into the
transactions contemplated by the Receivables Purchase Agreement in reliance on
the Buyer's identity as a separate legal entity from the Originators, OutSource
International and any other Affiliates.
(t) None of the Originators is an "investment company" or a
company controlled by an "investment company" registered or required to be
registered under the Investment Company Act, or otherwise subject to any other
federal or state statute or regulation limiting its ability to incur
indebtedness.
(u) None of the Originators is engaged, principally or as one
of its important activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" any "margin stock" (as each of the quoted terms is
defined or used in Regulation G, T, U or X). No part of the proceeds of any
Transferred Asset has been used for so purchasing or carrying margin stock or
for any purpose which violates, or which would be inconsistent with, the
provisions of Regulation G, T, U or X.
(v) Each of the Originators and the Servicer has the right
(whether by license, sublicense or assignment) to use all of the computer
software used by the Servicer and/or the Originators to account for the
Transferred Assets to the extent necessary to administer the Transferred Assets,
and to assign (by way of sale) or sublicense such rights to use all of such
software to the Buyer.
(w) None of the Originators' inventory, the sale of which
would give rise to a Receivable, is subject to any Adverse Claim except as
contemplated under the Intercreditor Agreement.
20
(x) Each Originator has filed or caused to be filed all
Federal, state and local tax returns which are required to be filed by it, and
has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the applicable Originator has
set aside adequate reserves on its books in accordance with GAAP and which
proceedings have not given rise to any Adverse Claim.
(y) Each Receivable sold hereunder is, as of the date of sale,
unless otherwise identified to the Buyer and the Deal Agent on or prior to such
date, an Eligible Receivable.
(z) The copy of the Credit and Collection Policy attached
hereto as Schedule II is a true and complete copy thereof.
ARTICLE V
---------
GENERAL COVENANTS
---------------------
SECTION 5.01. General Covenants.
(a) Compliance with Laws; Preservation of Corporate Existence.
The Originators shall comply in all material respects with all applicable laws
(including, without limitation, ERISA and the Code), rules, regulations, orders
and Originator Documents and preserve and maintain their corporate existence,
rights, franchises, qualifications and privileges where the failure to comply
could reasonably be expected to have a Material Adverse Effect.
(b) Sales, Liens, Etc. Except as otherwise specifically
provided herein, no Originator shall (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to, any Transferred Asset, or upon or with respect to
any Lock-Box Account, the Collection Account or any other account to which any
Collections of any Receivable are sent, or assign any right to receive income in
respect thereof or (ii) create or suffer to exist any Adverse Claim upon or with
respect to any of the Originators' inventory, the sale of which would give rise
to a Receivable, except such Adverse Claims as are contemplated under the
Intercreditor Agreement.
(c) General Reporting Requirements. OutSource International
and each Originator will provide, or cause to be provided, to the Buyer the
following:
(i) as soon as available and in any event within 90 days after
the end of each fiscal year of OutSource International, consolidated
balance sheets of OutSource International and its consolidated
subsidiaries and the related statement of income, shareholders' equity
and cash flows for such year, each prepared in accordance with GAAP and
reported on by nationally recognized independent public accountants
acceptable to the Buyer;
21
(ii) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year
of OutSource International, consolidated balance sheets of OutSource
International and its consolidated subsidiaries and the related
statements of income, shareholders' equity and cash flows each for the
period commencing at the end of the previous fiscal year and ending
with the end of such quarter, prepared in accordance with GAAP and
certified by a senior financial officer of OutSource International;
(iii) promptly after the sending or filing thereof (as the
case may be), copies of (1) all reports which OutSource International
sends to any of its securityholders and (2) all reports and
registration statements which OutSource International files with the
Securities and Exchange Commission or any national securities exchange
other than registration statements relating to employee benefit plans
and to registrations of securities for selling securityholders and (3)
all reports, notices and/or certificates which OutSource International
delivers to any of its "Lenders" under the Revolving Credit Agreement;
(iv) promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which the applicable Originator or any ERISA
Affiliate files under ERISA with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation or the U.S. Department of Labor or
which the applicable Originator or any ERISA Affiliate receives from
such Corporation;
(v) as soon as possible and in any event within three days
after the occurrence of each Event of Termination or each event which,
with the giving of notice or lapse of time or both, would constitute an
Event of Termination, a statement of the chief financial officer or
chief accounting officer of the applicable Originator setting forth
details of such Event of Termination or event and the action which the
applicable Originator has taken and proposes to take with respect
thereto; and
(vi) promptly following the Buyer's request therefor, such
other information respecting the Receivables or the conditions or
operations, financial or otherwise, of the Originators, OutSource
International or any of their Affiliates as the Buyer may from time to
time reasonably request in order to protect the interests of the Buyer
in connection with this Agreement.
(d) Merger, Acquisition, Etc. No Originator shall enter into
any merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer, or otherwise dispose of, any of its property, business or
assets, or acquire the Capital Stock or assets constituting a business unit, or
enter into a new line of business or make any material change in its present
method of conducting business, except:
(1) dispositions of inventory in the ordinary course of
business;
(2) dispositions of unnecessary, obsolete or worn out
equipment;
22
(3) sales of Transferred Assets to the Buyer contemplated by
and in accordance with the terms of this Agreement;
(4) merger or consolidation of any Originator with or into
OutSource International (provided that OutSource International shall be
the continuing or surviving corporation) or with or into any one or
more of the other Originators;
(5) any sale, lease, transfer or other disposition of any
Originator of any or all of its assets (upon voluntary liquidation or
otherwise) to OutSource International or any other Originator; and
(6) any Permitted Acquisition; provided, however, that any
receivables acquired by an Originator from any Person shall not be sold
to the Buyer under Section 2.01 hereof except to the extent such
receivables are Eligible Receivables and the sale thereof would not
otherwise cause a breach of any provision of this Agreement.
(e) Accounting of Purchases. Each Originator will not prepare
any financial statements which shall account for the transactions contemplated
hereby in any manner other than as the sale of the Transferred Assets to the
Buyer or in any other respect account for or treat the transactions contemplated
hereby in any manner other than as a sale of the Transferred Assets by the
applicable Originator to the Buyer (it being understood, however, that such
sales may not be recognized for all accounting and tax purposes due to
principles of consolidated financial reporting and the filing of tax returns on
a consolidated basis).
(f) ERISA Matters. No Originator will (a) fail to comply in
all material respects with ERISA and the provisions of the Code applicable to
the Benefit Plans; (b) engage or permit any ERISA Affiliate to engage in any
prohibited transaction which would subject any Originator to a material tax or
penalty imposed on a prohibited transaction; (c) permit to exist any accumulated
funding deficiency, as defined in Section 302(a) of ERISA and Section 412(a) of
the Code, or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (d) incur any liability to the PBGC over and above the
premiums required by law; and (e) terminate any Benefit Plan in a manner which
could result in the imposition of a lien on the property of any Originator or
any such ERISA Affiliate.
23
(g) Maintenance of Separate Existence. Each Originator will
take all actions required on its part to help maintain the Buyer's status as a
separate legal entity, including, without limitation, (i) not misleading third
parties as to the Buyer's identity as an entity with assets and liabilities
distinct from those of the Originators and their Affiliates; (ii) not holding
itself out to be responsible for the debts or decisions or actions relating to
the business and affairs of the Buyer; (iii) using its best efforts not to
commingle its funds or other assets with those of the Buyer, and not to hold its
assets in any manner that would create an appearance that such assets belong to
the Buyer or that the Buyer's assets belong to it; (iv) taking such action as is
necessary on its part to ensure that the covenant made in Section 5.01(i) of the
Receivables Purchase Agreement is not breached; (v) taking such other actions as
are necessary on its part to ensure that the representations made in Section
4.01(s) hereunder and by the Buyer in Section 4.01(t) of the Receivables
Purchase Agreement are true and correct at all times; (vi) taking such actions
as are necessary on its part to ensure that the Buyer's corporate procedures
required by its certificate of incorporation and by-laws are duly and validly
taken; and (vii) taking such other actions on its part to ensure that the
factual assumptions set forth in, and forming the basis of the legal opinion(s)
of Xxxxxx & Xxxxx, counsel to the Originators, issued in connection with this
Agreement and relating to the issues of substantive consolidation and true sale
of the Receivables and the related property, are true and correct at all times.
Without limiting the foregoing, the Originators will cause any financial
statements consolidated with those of the Buyer to contain footnotes or other
disclosures which describe the Buyer's business and otherwise inform the
Originators' creditors that the Buyer is a separate corporate entity whose
creditors have a claim on its assets prior to those assets becoming available to
its equity holders and therefore to any creditors of the Originators or any of
their Affiliates.
(h) Supplemental Opinions. Each Originator will cause to be
delivered to the Buyer within 30 days following the Buyer's request therefor,
but in no event more frequently than once during each calendar year commencing
after the first anniversary date of the Initial Purchase, supplemental opinions
of outside counsel to the Originators in the form of Exhibit D or otherwise in
form and substance reasonably satisfactory to the Buyer, reaffirming the
opinions set forth in the opinion letters of Xxxxxx & Xxxxx delivered to the
Buyer in connection with the Initial Purchase hereunder pursuant to Section 3.01
or providing in reasonable detail the reasons why any such opinions cannot be
reaffirmed.
(i) Change in Corporate Name. No Originator will make any
change to its corporate name or use any trade names, fictitious names, assumed
names or conduct business under any names other than those described in Schedule
IV, unless at least 30 days prior to the effective date of any such name change
or use, the applicable Originator shall have delivered to the Buyer such
financing statements (Form UCC-1 and UCC-3) executed by such Originator which
the Buyer may request to reflect such name change or use, together with such
other documents and instruments that the Buyer may request in connection
therewith.
(j) Audits. At any time and from time to time upon prior
written notice from the Buyer during regular business hours and on an annual (or
more frequent) basis, if requested by the Buyer, the Originators will permit the
Buyer, or their agents or representatives, (i) to examine and make copies of and
abstracts from all Records, (ii) to visit the offices and properties of the
Originators for the purpose of examining such Records, and to discuss matters
relating to the Receivables or the Originators' performance hereunder with any
of the officers or employees of the Originators having knowledge of such matters
and (iii) to have access to its software for the purposes of examining such
Records. Each such audit shall be at the sole expense of the Originators.
24
(k) Keeping of Records and Books of Account. The Originators
will maintain (or cause to be maintained) and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing the Receivables in the event of the destruction of the
originals thereof) and keep and maintain, all documents, books, records and
other information which are reasonably necessary or advisable for the collection
of the Transferred Assets (including all Receivables and Collections included
therein). Such books and records shall be marked to indicate the sales of all
Receivables and Related Security hereunder and shall include, without
limitation, records adequate to permit the daily identification of each new
Receivable and all collections of and adjustments (including, without
limitation, adjustments on account of Dilution Factors) to each Receivable.
(l) Location of Records. Each Originator will keep its chief
place of business and chief executive office, and the offices where it keeps the
Records, at the addresses referred to in Section 9.02, or, in any such case,
upon 30 days' prior written notice to the Buyer, at such other locations within
the United States where all action required by Section 6.09 shall have been
taken and completed.
(m) Credit and Collection Policies. Each Originator will
comply in all material respects with the Credit and Collection Policy in regard
to each Receivable and the related Contract. The Originators shall not, without
the written consent of the Buyer and the Deal Agent (as Buyer's assignee), make
any change in the Credit and Collection Policy.
(n) Change in Payment Instructions to Obligors. The
Originators will not add or terminate any bank as a Lock-Box Bank from those
listed in Schedule III or make any change in its instructions to Obligors
regarding payments to be made to any Lock-Box Bank, unless the Buyer shall have
given its prior written consent to such addition, termination or change (which
consent shall not be unreasonably withheld) and the Buyer shall have received
(i) ten Business Days' prior notice of such addition, termination or change,
(ii) prior to the effective date of such addition, termination or change, (x)
executed copies of Lock-Box Agreements executed by each new Lock-Box Bank and
the applicable Originator and (y) copies of all agreements and documents signed
by either the applicable Originator or the respective Lock-Box Bank with respect
to any new Lock-Box Account, and (iii) the prior written consent of the Buyer to
such addition, termination or change (which consent shall not be unreasonably
withheld).
(o) Taxes. Each Originator will file or cause to be filed all
federal, state and local tax returns which are required to be filed by it. Each
Originator shall pay or cause to be paid all taxes shown to be due and payable
on such returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the applicable Originator
shall have set aside adequate reserves on its books in accordance with GAAP.
(p) Segregation of Collections. The Originators will to the
fullest extent practicable prevent the deposit into any of the Lock-Box Accounts
of any funds other than Collections and, to the extent that any such funds are
nevertheless deposited into any of such Lock-Box Accounts, such funds will be
relatively insignificant in amount and the applicable Originator will promptly
identify any such funds to the Servicer for segregation and remittance to the
owner thereof. To the extent that an Obligor has assigned other receivables as
payment for any Receivables and the Collections of such receivables exceeds the
balance of such Receivables, the applicable Originator will promptly identify
any such funds to the Servicer for segregation and remittance to the applicable
Obligor.
25
(q) Insolvency. So long as the Buyer is not "insolvent" within
the meaning of the Bankruptcy Code, OutSource International and the Originators
will not cause the Buyer to file a voluntary petition under the Bankruptcy Code
or any other bankruptcy or insolvency laws.
ARTICLE VI
----------
ADMINISTRATION, COLLECTION AND MONITORING OF ASSETS
-----------------------------------------------------
SECTION 6.01. Appointment and Designation of the Servicer. The
Originators and the Buyer hereby appoint the Person (the "Servicer") designated
by the Buyer from time to time pursuant to this Section 6.01, as the Buyer's
agent to service, administer and collect the Receivables and otherwise to
enforce its rights and interests in, to and under the Receivables, the Related
Security and the Contracts. The Servicer's authorization under this Agreement
shall terminate on the Collection Date. Until the Buyer gives notice to the
Originators of a designation of a new Servicer, OutSource International is
hereby designated as, and hereby agrees to perform the duties and obligations
of, the Servicer pursuant to the terms hereof. The Buyer may designate as
Servicer any Person to succeed OutSource International or any successor
Servicer, on the condition in each case that any such Person so designated shall
agree to perform the duties and obligations of the Servicer pursuant to the
terms hereof and of the Receivables Purchase Agreement. Each of the Originators
and the Servicer hereby grants to any successor Servicer an irrevocable power of
attorney to take any and all steps in such Originators' or the Servicer's name,
as applicable, and on behalf of the Buyer, as may be necessary or desirable, in
the determination of the successor Servicer, to collect all amounts due under
any and all Receivables, including, without limitation, endorsing the applicable
Originator's name on checks and other instruments representing Collections and
enforcing such Receivables and the related Contracts. The Servicer may, with the
prior consent of the Buyer, subcontract with any other Person for servicing,
administering or collecting the Receivables, provided that the Servicer shall
remain liable for the performance of the duties and obligations of the Servicer
pursuant to the terms hereof. Notwithstanding anything to the contrary contained
in this Agreement, the Servicer, if not OutSource International, an Originator
or an Affiliate thereof, shall have no obligation to collect, enforce or take
any other action described in this Article VI with respect to any Receivable
that is not a Transferred Asset other than to deliver to the Originators the
Collections and documents with respect to any such Receivable that is not a
Transferred Asset as described in Sections 6.03 and 6.06(b). The Servicer
hereunder acknowledges and agrees that the Servicer Fee paid under the
Receivables Purchase Agreement shall constitute the consideration for its
performance of services as Servicer hereunder.
26
SECTION 6.02. Collection of Receivables by the Servicer;
Extensions and Amendments of Receivables. 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; provided, however, that, (a) the Buyer shall have
the absolute and unlimited right to direct the Servicer (whether the Servicer is
OutSource International, an Originator or otherwise) to commence or settle any
legal action, to enforce collection of any Transferred Asset or to foreclose
upon or repossess any Related Security, and (b) the Servicer shall not make the
Buyer a party to any litigation without the express written consent of the
Buyer. If the Termination Date shall not have occurred, OutSource International,
while it is Servicer, may, in accordance with the Credit and Collection Policy,
(1) extend the maturity or adjust the Outstanding Balance of any Defaulted
Receivable as OutSource International may determine to be appropriate to
maximize Collections thereof and (2) adjust the Outstanding Balance of any
Receivable to reflect Actual Dilution and any reductions or cancellations as a
result of setoff in respect of any claim by the Obligor thereof, in accordance
with the requirements of the Credit and Collection Policy and provided that such
extension or adjustment shall not alter the status of such Receivable as a
Defaulted Receivable or limit the rights of the Buyer under this Agreement.
Except as otherwise permitted pursuant to the next preceding sentence, neither
the Servicer nor the Originators will extend, amend, cancel or otherwise modify
the terms of any Transferred Asset, or amend, modify, cancel or waive any term
or condition of any Contract related thereto without the prior written approval
of the Buyer.
SECTION 6.03. Distribution and Application of Collections. The
Servicer shall set aside and segregate funds to the extent required in the
Receivables Purchase Agreement and shall be required to segregate all
Collections on the Receivables from the other funds belonging to the Servicer.
The Servicer shall as soon as practicable following receipt turn over to the
applicable Originator the Collections of any Receivable which is not a
Transferred Asset less, in the event neither OutSource International, an
Originator nor an Affiliate thereof is the Servicer, all reasonable and
appropriate out-of-pocket costs and expenses of such Servicer of servicing,
collecting and administering the Receivables to the extent not covered by the
Servicer Fee received by it.
SECTION 6.04. Other Rights of the Buyer. At any time following
the occurrence of a Servicer Termination Event or the designation of a Servicer
other than OutSource International, an Originator or any Affiliate of either
thereof pursuant to Section 6.01:
(a) The Buyer may or, at the request of the Buyer, the
Originators shall (in either case, at the Originators' expense) direct the
Obligors of Receivables, or any of them, to pay all amounts payable under any
Receivable directly to the Buyer or its designee;
(b) The Buyer may, or at the request of the Buyer, the
Originators shall (in either case, at the Originators' expense) give each of the
Obligors notice of the Buyer's interests in the Transferred Assets; and
(c) The Originators shall, at the Buyer's request and at the
Originators' expense, (i) assemble all Records and make the same available to
the Buyer or its designee at a place selected by the Buyer or its designee, and
(ii) segregate all cash, checks and other instruments received by it from time
to time constituting Collections of Receivables in a manner acceptable to the
Buyer and, promptly following receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer, to the
Buyer or its designee.
27
SECTION 6.05. Records; Audits. (a) The Servicer will maintain
and implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing the Receivables in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each new Transferred
Asset and all Collections of and adjustments to each existing Transferred
Asset).
(b) The Servicer, whether or not OutSource International, an
Originator or an Affiliate thereof, shall hold all Records in trust for the
Buyer. Subject to the receipt of contrary instructions from the Buyer, each
Originator will deliver all Records to such Servicer; provided, however, that
the Servicer, if other than OutSource International or an Originator, shall as
soon as practicable upon demand deliver to the Originators all Records in its
possession relating to Receivables of the Originators other than Transferred
Assets, and copies of Records in its possession relating to Transferred Assets.
(c) The Servicer will, from time to time during regular
business hours as requested by the Buyer, permit the Buyer, or its agents or
representatives, (i) to examine and make copies of and abstracts from all
Records and (ii) to visit the offices and properties of the Servicer for the
purpose of examining such Records and to discuss matters relating to the
Receivables or the Servicer=s or the Originators' performance hereunder with any
of the officers or employees of the Servicer or the Originators having knowledge
of such matters.
SECTION 6.06. Receivable Reporting. (a) The Servicer, so long
as it is OutSource International, an Originator or an Affiliate thereof, and
otherwise the Originators, will deliver to the Buyer (i) prior to the Asset
Report Date occurring during each Collection Period hereafter, a report
identifying the Transferred Assets (and the aged balance thereof), by Obligor
and invoice number, as of the last day of the next preceding Collection Period,
(ii) as of the Termination Date, a report identifying the Transferred Assets
(and the aged balance thereof), by Obligor and invoice number, within five (5)
Business Days after the Termination Date, (iii) upon the Buyer's request, no
less frequently than once per week, a report identifying the Transferred Assets
by Obligor and invoice number as of the close of business on the preceding
Sunday and (iv) prior to the Asset Report Date occurring in each Collection
Period hereafter, a report identifying the outstanding accounts payable of each
of the Originators as of the last day of the next preceding Collection Period,
identified by the relevant account payee.
(b) On or prior to the Asset Report Date occurring in each
Collection Period, the Servicer shall prepare and forward to the Buyer, an Asset
Report relating to all Transferred Assets, as of the close of business of the
Servicer on the last day of the preceding Collection Period.
SECTION 6.07. Collections and Lock-Boxes. The Originators
and the Servicer will
28
(i) instruct all Obligors to cause all Collections to be
either (A) remitted to a Lock-Box and will cause each Lock-Box Bank to retrieve
such Collections promptly and deposit the same to the respective Lock-Box
Accounts or (B) deposited directly with the Lock-Box Bank, and
(ii) pursuant to the Receivables Purchase Agreement, instruct
all Lock-Box Banks to transfer such Collections in same day funds to a
Collection Account maintained with a Collection Account Bank. If the Originators
receive any Collections, the applicable Originator will remit such Collections
to the Collection Account within one Business Day following such Originator's
receipt thereof. The Originators will not add or terminate any bank as Lock-Box
Bank from those listed in Schedule III or make any change in their instructions
to Obligors regarding payments to be made to any Lock Box or any Lock-Box Bank,
unless the Buyer shall have received at least ten Business Days' prior written
notice of such addition, termination or change and all actions reasonably
requested by the Buyer to protect and perfect the interest of the Buyer in the
Collections of Transferred Assets have been taken and completed. The Originators
hereby transfer to the Buyer, effective upon the Initial Purchase, the exclusive
ownership and control of each of the Lock-Box Accounts, and each Lock-Box Bank
shall be instructed to remit any amounts deposited in its Lock-Box Accounts
solely according to the direction of the Buyer or its assigns. The Originators
hereby agree to take any further action necessary that the Buyer may reasonably
request to effect such transfer.
29
SECTION 6.08. UCC Matters; Protection and Perfection of
Transferred Assets. Each Originator will keep its principal place of business
and chief executive office, and the office where it keeps the Records, at the
address of such Originator referred to in Section 9.02 or, upon 30 days' prior
written notice to the Buyer, at such other locations within the United States
where all actions reasonably requested by the Buyer to protect and perfect the
interest of the Buyer in the Transferred Assets have been taken and completed.
Each Originator will not make any change to its corporate name or use any
tradenames, fictitious names, assumed names, "doing business as" names or other
names other than those described in Schedule IV, unless prior to the effective
date of any such name change or use, the applicable Originator delivers to the
Buyer such executed financing statements as the Buyer may request to reflect
such name change or use, together with such other documents and instruments as
the Buyer may request in connection therewith. Each Originator agrees that from
time to time, at its expense, it will promptly execute and deliver all further
instruments and documents, and take all further action that the Buyer may
reasonably request in order to perfect, protect or more fully evidence the
Transferred Assets acquired by the Buyer hereunder, or to enable the Buyer to
exercise or enforce any of its respective rights hereunder. Without limiting the
generality of the foregoing, the Originators will: (a) upon the request of the
Buyer, execute and file such financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may be
necessary or appropriate or as the Buyer may request, and (b) on or prior to the
date hereof, xxxx their master data processing records evidencing such
Transferred Assets and related Contracts with a legend, acceptable to the Buyer,
evidencing that the Buyer or its assigns have purchased all right and title
thereto. Each Originator hereby authorizes the Buyer to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Transferred Assets now existing or
hereafter arising without the signature of the applicable Originator where
permitted by law. A carbon, photographic or other reproduction of this Agreement
or any financing statement covering the Transferred Assets or any part thereof
shall be sufficient as a financing statement. The Originators shall, upon the
request of the Buyer at any time and at the Originators' expense, notify the
Obligors of Transferred Assets, or any of them, of the ownership of Transferred
Assets by the Buyer. If the Originators fail to perform any of their agreements
or obligations under this Section 6.08, the Buyer may (but shall not be required
to) itself perform, or cause performance of, such agreement or obligation, and
the expenses of the Buyer incurred in connection therewith shall be payable by
the Originators upon the Buyer's demand therefor. For purposes of enabling the
Buyer to exercise its rights described in the preceding sentence and elsewhere
in this Article VI, the Originators hereby authorize the Buyer to take any and
all steps in the Originators' names and on behalf of the Originators necessary
or desirable, in the determination of the Buyer, to collect all amounts due
under any and all Receivables, including, without limitation, endorsing the
Originators' names on checks and other instruments representing Collections and
enforcing such Receivables and the related Contracts.
SECTION 6.09. Obligations of the Originators With Respect to
Receivables. Each Originator will (a) at its expense, regardless of any exercise
by the Buyer of its rights hereunder, timely and fully perform and comply with
all material provisions, covenants and other promises required to be observed by
it under the Contracts related to the Transferred Assets to the same extent as
if Transferred Assets therein had not been sold hereunder and (b) pay when due
any taxes, including without limitation, sales and excise taxes, payable in
connection with the Transferred Assets. In no event shall the Buyer have any
obligation or liability with respect to any Transferred Assets or related
Contracts, nor shall it be obligated to perform any of the obligations of the
Originators or any of their Affiliates thereunder. The Originators will timely
and fully comply in all material respects with the Credit and Collection Policy
in regard to each Receivable and the related Contract. The Originators will not
make any change in the character of their businesses or in the Credit and
Collection Policy, which change would, in either case, impair the collectibility
of any Transferred Asset.
SECTION 6.10. Applications of Collections. Any payment by an
Obligor in respect of any indebtedness owed by it to any Originator shall,
except as otherwise specified by such Obligor or otherwise required by contract
or law and unless otherwise instructed by the Buyer, be applied as a Collection
of any Receivables constituting Transferred Assets of such Obligor, in the order
of the age of such Receivables, starting with the oldest such Receivable, to the
extent of any amounts then due and payable thereunder, before being applied to
any Receivable that is not a Transferred Asset or other indebtedness of such
Obligor.
30
SECTION 6.11. Annual Servicing Report of Independent Public
Accountants. On an annual basis on or before March 31 of each calendar year,
beginning with March 31, 1999, the Servicer shall cause nationally recognized
independent public accountants acceptable to the Buyer to furnish a report to
each of the Servicer and the Buyer substantially to the effect that (i) such
accountants have examined certain documents and records relating to the
servicing of Receivables under this Agreement, compared the information
contained in the Weekly Settlement Reports and Asset Reports delivered by or on
behalf of the Originators under this Agreement during the annual period covered
by such report (or such shorter initial period, as the case may be) with such
documents and records and that, on the basis of such examination, and subject to
such reasonable limitations and qualifications as may be set forth in such
report, such accountants are of the opinion that the servicing has been
conducted substantially in compliance with the terms and conditions as set forth
in Article VI of this Agreement, except for such exceptions as they believe to
be immaterial and such other exceptions as shall be set forth in such statement
and (ii) such accountants have compared the mathematical calculations of each
amount set forth in the Weekly Settlement Reports and Asset Reports delivered
pursuant to this Agreement during the period covered by such report with the
Servicer=s computer reports which were the source of such amounts and that on
the basis of such comparison, such accountants are of the opinion that such
amounts are in agreement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such statement.
ARTICLE VII
-----------
EVENTS OF TERMINATION
-----------------------
SECTION 7.01. Events of Termination. If any of the following
events ("Events of Termination")shall occur:
(a) (i) The Servicer (if OutSource International, an
Originator or any Affiliate thereof) shall fail to perform or observe any term,
covenant or agreement hereunder (other than as referred to in clause (ii) of
this Section 7.01(a)) and such failure shall remain unremedied for two Business
Days after written notice to the Servicer or (ii) either the Servicer (if
OutSource International, an Originator or any Affiliate thereof) or any
Originator shall fail to make any payment or deposit to be made by it hereunder
when due; or
(b) (i) Any representation or warranty made or deemed to be
made by OutSource International or any Originator (or any of their officers or
agents) under or in connection with this Agreement or any Asset Report or other
information or report delivered pursuant hereto shall prove to have been false
or incorrect in any material respect when made or (ii) any representation or
warranty made or deemed to be made by the Servicer (or any of its officers or
agents) under or in connection with the Receivables Purchase Agreement or this
Agreement (as the case may be) shall prove to have been false or incorrect in
any material respect when made; or
(c) Any Originator (individually or in its capacity as
Servicer) shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement on its part to be performed or observed and any such
failure shall remain unremedied for two Business Days after written notice
thereof shall have been given by the Buyer to the Originators; or
31
(d)(i) Any Originator shall fail to pay any principal of or
premium or interest on any Debt, if the aggregate principal amount of such Debt
is $500,000 or more, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or (ii) any other default or
any event which, with the passage of time or the giving of notice, or both,
would constitute a default under any agreement or instrument relating to any
such Debt, shall occur and shall continue after the applicable grace period, if
any, specified in such agreement or instrument; provided, however, that, if such
default arises solely under the Revolving Credit Agreement and the lenders
thereunder have waived or rescinded such event, such event shall not constitute
an "Event of Termination" hereunder; or (iii) any Debt of any Originator, or of
any of their Affiliates, if, in the case of any Originator the aggregate
principal amount of such Debt is $500,000 or more, shall be declared to be due
and payable or required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof; or
(e) Either (i) any Purchase shall for any reason, except to
the extent permitted by the terms hereof, cease to create a valid and perfected
ownership interest in each Transferred Asset with respect thereto free and clear
of an Adverse Claim or (ii) this Agreement shall for any reason cease to
evidence the transfer to the Buyer of legal and equitable title to, and
ownership of, the Transferred Assets; or
(f)(i) Any Originator or any of their respective Affiliates
shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against any Originator seeking to adjudicate it a bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against (but not by) any Originator or
any such Affiliate, either such proceeding shall have remained undismissed or
unstayed for a period of 60 days or any order for relief of the sort described
above shall have been entered; or (ii) any Originator shall take any corporate
action to authorize any of the actions set forth in clause (i) above in this
Section 7.01(f); or
(g) There shall have occurred and be continuing an "Event of
Termination" under the Receivables Purchase Agreement; or
(h) A Servicer Termination Event shall have occurred and be
continuing; or
(i) Any Originator or the Servicer shall fail to perform or
observe any material term, covenant or agreement contained in the Credit and
Collection Policy and such failure shall remain unremedied for two Business Days
after written notice to Servicer and Seller; or
(j) The IRS or the PBGC shall have filed notice of one or more
Adverse Claims against any Originator or any of their ERISA Affiliates under
ERISA or the Code, unless such Adverse Claim does not purport to cover the
Receivables, and such notice shall have remained in effect for more than thirty
(30) Business Days unless, prior to the expiration of such period, such Adverse
Claims shall have been adequately bonded by such Originator or any of their
ERISA Affiliates (as the case may be) in a transaction with respect to which the
Buyer has given its prior written approval; or
32
(k) The Buyer shall have become subject to registration as an
"investment company" within the meaning of the Investment Company Act; or
(l) The Revolving Credit Agreement shall cease to be in full
force and effect;
then, and in any such event, the Buyer may, by notice to the Originators declare
the Termination Date to have occurred, except that, in the case of any event
described in Section 7.01(f) above, the Termination Date shall be deemed to have
occurred automatically upon the occurrence of such event. Upon any such
declaration or automatic occurrence, the Buyer shall have, in addition to all
other rights and remedies under this Agreement or otherwise, all other rights
and remedies provided under the UCC of the applicable jurisdiction and other
applicable laws, which rights shall be cumulative.
ARTICLE VIII
------------
INDEMNIFICATION
-----------------
SECTION 8.01. Indemnities by the Originators. Without limiting
any other rights which the Buyer may have hereunder or under applicable law,
each of the Originators, on a joint and several basis, hereby agrees to
indemnify the Buyer and its assigns, and each of their respective directors,
officers, employees, agents and attorneys (all of the foregoing being
collectively referred to as "Indemnified Parties") from and against any and all
damages, losses, claims, liabilities and related 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 resulting from:
(i) the sale of any Receivable under this Agreement which is
not at the date of Purchase an Eligible Receivable;
(ii) reliance on any representation or warranty made or deemed
made by any Originator, the Servicer (if OutSource International, an Originator
or one of its Affiliates) or any of their respective officers under or in
connection with this Agreement, which shall have been false or incorrect in any
material respect when made or deemed made or delivered;
(iii) the failure by any Originator or the Servicer (if
OutSource International, an Originator or one of its Affiliates) to comply with
any term, provision or covenant contained in this Agreement or the Receivables
Purchase Agreement or any of the other Originator Documents, or with any
applicable law, rule or regulation with respect to any Receivable, the related
Contract or the Related Security, or the nonconformity of any Receivable, the
related Contract or the Related Security with any such applicable law, rule or
regulation;
33
(iv) (A) the failure to vest and maintain vested in the Buyer
or to transfer to the Buyer, legal and equitable title to and ownership of, the
Receivables and the other Transferred Assets which are, or are purported to be,
sold by the Originators hereunder; or (B) the failure to grant to the Buyer a
valid and perfected ownership interest under Article 9 of the UCC in and to the
Receivables which are, or are purported to be, Transferred Assets, together with
all Collections and Related Security; in each case free and clear of any Adverse
Claim whether existing at the time of the Purchase of any such Receivable or at
any time thereafter (other than Adverse Claims created in favor of the Buyer
hereunder or by the Buyer under the Receivables Purchase Agreement);
(v) the failure by any Originator to make any payment required
on its part to be made hereunder;
(vi) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any Receivables
and other Transferred Assets which are, or are purported to be, sold by the
Originators hereunder, whether at the time of any Purchase or at any subsequent
time;
(vii) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable which is, or is purported to be sold by an Originator hereunder
(including, without limitation, a defense based on such Receivable or the
related Contract 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 merchandise or services related to such
Receivable or the furnishing or failure to furnish such merchandise or services;
(viii) any failure of any Originator or the Servicer (if
OutSource International, an Originator or one of its Affiliates) to perform its
duties or obligations in accordance with the provisions of this Agreement or any
failure by any Originator or any Affiliate thereof to perform its respective
duties under the Contracts;
(ix) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of whatever
sort arising out of or in connection with goods and/or merchandise which are the
subject of any Receivable or Contract;
(x) the failure to pay when due any taxes, including without
limitation, sales, excise or personal property taxes payable in connection with
the Transferred Assets;
(xi) the commingling of Collections of Transferred Assets at
any time with other funds;
(xii) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of Purchases or the ownership by the Buyer
of Transferred Assets except any such investigation, litigation or proceeding
arising from the gross negligence or willful misconduct of the Buyer;
(xiii) any attempt by any Person to void or otherwise avoid
any transfer of a Transferred Asset from the Originators to the Buyer under any
statutory provision or common law or equitable action, including, without
limitation, any provision of the Bankruptcy Code; or
34
(xiv) the failure of any Originator or any of their respective
agents or representatives (including, without limitation, agents,
representatives and employees of the Originators acting pursuant to authority
granted under Section 6.01) to remit to the Servicer, Collections of Transferred
Assets remitted to such Originator or any such agent or representative.
Any amounts subject to the indemnification provisions of this
Section 8.01 shall be paid by the applicable Originator to the Buyer within five
(5) Business Days following the Buyer's written demand therefor. Notwithstanding
any other provision of this Agreement to the contrary, the Originators shall not
indemnify the Indemnified Parties for or with respect to any Indemnified Amounts
that would constitute recourse for uncollectible Transferred Assets due to
credit reasons.
ARTICLE IX
----------
MISCELLANEOUS
---------------
SECTION 9.01. Amendments and Waivers. No amendment to or
modification of any provision of this Agreement shall be effective without the
written agreement of the parties hereto and, to the extent then required in the
Receivables Purchase Agreement, the written consent of the Deal Agent. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including telex communication and communication by facsimile copy)
and mailed, telexed, transmitted or delivered, as to each party hereto, at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto. All such notices and communications shall be effective, upon
receipt, or in the case of (a) notice by mail, five days after being deposited
in the United States mails, first class postage prepaid, (b) notice by telex,
when telexed against receipt of answerback, or (c) notice by facsimile copy,
when verbal communication of receipt is obtained, except that notices and
communications pursuant to Article II shall not be effective until received.
SECTION 9.03. Setoff and Counterclaim. All payments to be made
by the Originators or the Servicer under this Agreement shall be made free and
clear of any counterclaim, set-off, deduction or other defense, which the
Originators or the Servicer may have against the Buyer, or against each other.
SECTION 9.04. No Waiver; Remedies. No failure on the part of
the Buyer 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.
35
SECTION 9.05. Binding Effect; Assignability. (a) This
Agreement shall be binding upon and inure to the benefit of the Originators, the
Buyer and their respective successors and permitted assigns. None of the
Originators may assign its rights and obligations or any interest herein without
the prior written consent of the Buyer. The Buyer may, subject to any
restrictions in the Receivables Purchase Agreement, assign at any time all of
its rights and obligations hereunder and interests herein without the consent of
the Originators. Without limiting the foregoing, the Originators acknowledge the
assignment of Buyer's rights and interests hereunder pursuant to the Receivables
Purchase Agreement and agrees that, subject to the terms set forth in the
Receivables Purchase Agreement, any such assignee of the Buyer (and any further
assignee of such assignee) shall have the right, as the assignee of the Buyer
(or the assignee of such assignee), to enforce the Buyer's rights and remedies
under this Agreement directly against such party (including, without limitation,
the right (i) to appoint a successor Servicer and (ii) to give or withhold any
and all consents, requests, notices, directions, approvals, demands, extensions
or waivers under or with respect to this Agreement or the obligations in respect
of any Originator hereunder to the same extent as the Buyer may do), but without
any obligation on the part of any such assignee to perform any of the
obligations of the Buyer hereunder. Each of the Originators also agrees that it
shall send to the Deal Agent a copy of all notices required or desired to be
given by the Originators to the Buyer hereunder.
SECTION 9.06. Term of this Agreement. This Agreement,
including, without limitation, the Originators' obligations to observe its
covenants set forth in Articles V and VI, and the Servicer's obligation to
observe its covenants set forth in Article VI, shall remain in full force and
effect until the Collection Date; provided, however, that the rights and
remedies with respect to any breach of any representation and warranty made or
deemed made by OutSource International or the Originators pursuant to Articles
III and IV, and the indemnification and payment provisions of Article VIII shall
be continuing and shall survive any termination of this Agreement.
SECTION 9.07. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF OBJECTION TO VENUE. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE BUYER, THE ORIGINATORS,
AND THE SERVICER EACH HEREBY AGREES TO THE JURISDICTION OF ANY FEDERAL COURT
LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY WAIVES
ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.
36
SECTION 9.08. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE BUYER, THE ORIGINATORS AND THE SERVICER EACH WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF
THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
SECTION 9.09. Costs, Expenses and Taxes. In addition to the
rights of indemnification granted to the Buyer and the Indemnified Parties under
Article VIII hereof, the Originators agree to pay on demand, on a joint and
several basis, all costs and expenses of the Buyer and its assignee incurred in
connection with the preparation, execution, delivery, administration (including
periodic auditing), amendment or modification of, or any waiver or consent
issued in connection with, this Agreement and the other documents to be
delivered hereunder or in connection herewith, including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Buyer and its
assignee with respect thereto, and with respect to advising the Buyer and its
assignee as to its respective rights and remedies under this Agreement and the
other documents to be delivered hereunder or in connection herewith, and all
costs and expenses, if any (including reasonable counsel fees and expenses),
incurred by the Buyer and its assignee in connection with the enforcement of
this Agreement and the other documents to be delivered hereunder or in
connection herewith.
SECTION 9.10. Execution in Counterparts; Severability;
Integration. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
37
SECTION 9.11. Confidentiality. Except to the extent otherwise
required by applicable laws, rules or regulation, unless the provider thereof
shall otherwise consent in writing, each Originator agrees that it shall (i)
maintain the confidentiality of information obtained as a result of being a
party hereto, to any related documents or to any of the transactions
contemplated hereby or thereby (including, without limitation, the contents of
any summary of indicative terms and conditions with respect to such
transactions, and the provisions of this Agreement and any of the other
Originator Documents) ("Confidential Information") and (ii) not disclose,
deliver or otherwise make available to any third party any part of any such
Confidential Information; provided, however, that the Originators may disclose
any Confidential Information (w) to its legal counsel, auditors and accountants,
(x) as may be required or requested by any governmental authority, regulatory
body or rating agency, (y) subject to a written confidentiality agreement having
terms substantially similar to this Section 9.11, to any financial institution
or other party that extends or is considering the extension of material debt or
equity financing to the applicable Originator or (z) as may be required or
appropriate in response to a court order or in connection with any litigation;
provided further, however, that the Originators shall have no obligation of
confidentiality whatsoever in respect of any information which may be generally
available to the public or becomes available to the public through no fault of
the Buyer.
38
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE ORIGINATORS: OUTSOURCE INTERNATIONAL, INC.
By:/s/ Xxxxx X. Xxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
OUTSOURCE FRANCHISING, INC.
By: /s/ Xxxxx X. Xxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
CAPITAL STAFFING FUND, INC.
By: /s/ Xxxxx X. Xxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
SYNADYNE I, INC.
By:/s/ Xxxxx X. Xxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
SYNADYNE II, INC.
By:/s/ Xxxxx X. Xxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
SYNADYNE III, INC.
By:/s/ Xxxxx X. Xxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
SYNADYNE IV, INC.
By: /s/ Xxxxx X. Xxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
SYNADYNE V, INC.
By: /s/ Xxxxx X. Xxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
OUTSOURCE INTERNATIONAL
OF AMERICA, INC.
By: /s/ Xxxxx X. Xxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Signature Page to the Receivables
Purchase and Sale Agreement
THE BUYER: OUTSOURCE FUNDING CORPORATION
By: /s/ Xxxxxx X. Xxxxx
_________________________________
Name: Xxxxxx X. Xxxxx
Title: Vice President
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0X
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
THE SERVICER: OUTSOURSE INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Signature Page to the Receivables
Purchase and Sale Agreement
SCHEDULE I
CONDITION PRECEDENT DOCUMENTS
As required by Section 3.01 of the Agreement, each of the
following items must be delivered to the Buyer prior to the Closing Date:
(a) a copy of this Agreement duly executed by each of the
Originators, the Servicer and the Buyer;
(b) a certificate of the Secretary or Assistant Secretary of
each Originator dated the date of this Agreement, certifying (i) the names and
true signatures of the incumbent officers of each of the Originators authorized
to sign this Agreement and the other Originator Documents to be delivered by it
hereunder, (ii) that the copy of the certificate of incorporation of each of the
Originators attached thereto is a complete and correct copy and that such
certificate of incorporation has not been amended, modified or supplemented and
is in full force and effect, (iii) that the copy of the by-laws of each of the
Originators attached thereto is a complete and correct copy and that such
by-laws have not been amended, modified or supplemented and are in full force
and effect, and (iv) the resolutions of each Originator's board of directors
approving and authorizing the execution, delivery and performance by each of the
Originators of this Agreement and the other Originator Documents to which it is
a party;
(c) Good standing certificates for each Originator issued by
the Secretaries of State of their respective jurisdiction of incorporation;
(d) Acknowledgment copies of proper financing statements (the
"Facility Financing Statements"), dated a date reasonably near to the Closing
Date, describing the Receivables and Related Security and naming each Originator
as seller of Receivables and Related Security, the Buyer as purchaser, or other,
similar instruments or documents, as may be necessary or, in the opinion of the
Buyer, desirable under the UCC of all appropriate jurisdictions or any
comparable law to perfect the Buyer=s interests in all Receivables and Related
Security and other Transferred Assets;
(e) Acknowledgment copies of proper financing statements, if
any, necessary to release all security interests and other rights of any Person
in the Receivables and Related Security previously granted by any Originator;
(f) Certified copies of requests for information or copies (or
a similar search report certified by a party acceptable to the Buyer), dated a
date reasonably near to the Closing Date, listing all effective financing
statements (including the Facility Financing Statements) which name any
Originator and/or OutSource International (under their present names and any
previous names) as debtor and which are filed in the jurisdictions in which the
Facility Financing Statements were filed, together with copies of such financing
statements (none of which, other than the Facility Financing Statements, shall
cover any Receivables or Contracts except to the extent permitted under the
Intercreditor Agreement);
(g) Executed copies of Lock-Box Agreements with each of the
Lock-Box Banks and an executed copy of the Collection Account Agreement with the
Collection Account Bank;
(h) An opinion of Xxxxxx & Xxxxx, counsel to the Originators
relating to the issues of substantive consolidation and true sale of the
Receivables and the related property, in form and substance satisfactory to the
Buyer;
(i) An opinion of Xxxxxx & Xxxxx, counsel to the Originators,
issued in connection with this Agreement and relating to corporate issues,
perfection and priority of security interests, in substantially the form of
Exhibit D, and as to such other matters as the Buyer may reasonably request;
(j) Original copies of the Receivables Purchase Agreement and
all documents described in Section 3.01 of the Receivables Purchase Agreement
and not otherwise described above;
(k) A fully and correctly completed Asset Report, as of the
last day of the most recently concluded Collection Period and a fully and
correctly completed Weekly Settlement Report as of the most recent Business Day;
and
(l) The Intercreditor Agreement executed by all parties
thereto.
SCHEDULE II
DESCRIPTION OF CREDIT AND COLLECTION POLICY
Attached.
---------
SCHEDULE III
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
Lock-Box Bank:
--------------
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Title of Account Account No. Lock-box No.
---------------- ---------- ------------
OutSource International, Inc. 5800103110 [__________]
Capital Staffing Fund, Inc. 5800103128 [__________]
SCHEDULE IV
TRADENAMES, FICTITIOUS NAMES AND "DOING BUSINESS AS" NAMES
OutSource International, Inc.:
------------------------------
None
OutSource Franchising, Inc.:
----------------------------
None
Capital Staffing Fund, Inc.:
----------------------------
None
Synadyne I, Inc.:
-----------------
Synadyne
Synadyne II, Inc.:
------------------
Synadyne
Synadyne III, Inc.:
-------------------
Labor World
Payroll Partners
Synadyne
Synadyne IV, Inc.:
------------------
Synadyne
Synadyne V, Inc.:
-----------------
Synadyne
OutSource International of America, Inc.:
-----------------------------------------
Labor Quick
Labor World
Office Network
Office Ours
Senior Achievement
Tandem
SCHEDULE V
LIST OF FRANCHISEES AS OF CLOSING DATE
[List of Franchisees]
EXHIBIT A
FORM OF CONTRACTS
Attached.
---------
EXHIBIT B
FORM OF LOCK-BOX AGREEMENT
____________, 19__
[Name and Address of
Lock-Box Bank]
Re: OutSource International, Inc.
Lock-Box Account No. [___________]
(the "Lock-Box Account")
Ladies and Gentlemen:
The undersigned, OutSource International, Inc. ("OutSource
International") hereby notifies you that we have transferred exclusive ownership
and control of the above-referenced Lock-Box Account to OutSource Funding
Corporation, a Delaware corporation, and that OutSource Funding Corporation (the
"Seller"), in connection with certain purchase and financing arrangements
between the Seller and EagleFunding Capital Corporation (the "Purchaser"),
hereby transfers exclusive ownership and control of the above-referenced
Lock-Box Account to BancBoston Securities Inc., acting in its capacity as deal
agent (the "Deal Agent") for itself and for the Purchaser under that certain
Receivables Purchase Agreement dated as of July 27, 1998 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Receivables Purchase Agreement") by and among the Seller, the Purchaser, the
Deal Agent and OutSource International, as Servicer thereunder (in such
capacity, the "Servicer").
In connection with the foregoing, OutSource International, the
Seller and the Deal Agent each hereby instructs you, beginning on the date
hereof and in accordance with your existing procedures for management of the
Lock-Box Account, (i) to change the name of the Lock-Box Account to BancBoston
Securities Inc., as Deal Agent for OutSource Funding Securitization, (ii) to
collect and deposit into the Lock-Box Account all monies, checks, instruments
and other items of payment received in the related lock-box (the "Lock-Box") and
(iii) to transfer to the Deal Agent an amount equal to all monies, checks,
instruments and other items of payment deposited in the Lock-Box Account on a
daily basis. All such transfers shall be made on a daily basis by depository
transfer check (DTC), automated clearing house (ACH) transfer, or wire or
otherwise, as the Deal Agent may direct you in its sole discretion, to the
following account (the "Collection Account"):
BankBoston, N.A.
Account No: 00000000
Reference: BancBoston Securities Inc.
Collection Account, as Deal Agent for
OutSource Funding Securitization
or to such other account as the Deal Agent may instruct from time to time.
You are hereby further instructed, unless and until the Deal
Agent notifies you of the occurrence of a "Servicer Termination Event" under and
as defined in the Receivables Purchase Agreement, (i) to make transfers to the
Collection Account at such times and in such manner as OutSource International,
Inc., in its capacity as servicer (the "Servicer") for the Seller, shall from
time to time instruct; provided, however, that in no case shall OutSource
International, the Servicer or the Seller be allowed to withdraw funds from the
Lock-Box Account or have access to the Lock-Box, and (ii) to permit the Servicer
to obtain upon request any information relating to the Lock-Box Account or
Lock-Box, including, without limitation, any information regarding the balance
or activity of the Lock-Box Account or Lock-Box.
The Seller and OutSource International also each hereby
notifies you that the Deal Agent shall be irrevocably entitled to exercise any
and all rights (if any) of OutSource International and the Seller in respect of
or in connection with the Lock-Box Account, including, without limitation, the
right to specify when payments are to be made out of or in connection with the
Lock-Box Account. All monies in the Lock-Box Account will be held for and in
trust for the Deal Agent upon deposit therein and neither OutSource
International nor the Seller will have any control over the Lock-Box Account or
the funds on deposit therein. Without limiting the generality of the foregoing,
neither OutSource International nor the Seller shall have any right to draw
against the Lock-Box Account, direct the transfer of funds therein or otherwise
assign, pledge or have access to the Lock-Box Account or the funds on deposit
therein.
You will have no duty to inquire into the source or use of any
monies, checks, drafts, instruments or other items or amounts deposited into the
Lock-Box Account. The Seller and OutSource International each hereby agrees that
any deposits of monies, checks, drafts, instruments or other items into or
withdrawals from the Lock-Box Account now or hereafter directed by the Deal
Agent or the Servicer on behalf of the Deal Agent are authorized by the Seller
and OutSource International, and each of OutSource International and the Seller
acknowledges that it has no right to direct such transfers at any time. You
shall be fully protected in acting on any instruction of the Deal Agent with
respect to the Lock-Box Account without making any inquiry as to the Deal
Agent's authority to give such instruction.
B-2
Notwithstanding anything herein or elsewhere to the contrary,
you hereby waive any and all rights to bankers liens and rights to deduct from
or set-off against amounts in the Lock-Box Account, except that: (i) in the
event that any checks deposited in the Lock-Box Account are returned unpaid to
you, the amount thereof shall be charged to the Lock-Box Account, and (ii) any
monthly maintenance fees in connection with the Lock-Box Account may also be
charged to the Lock-Box Account. The Seller hereby agrees that if there are
insufficient funds in the Lock-Box Account to cover any such charges to the
Lock-Box Account, then it will pay to you the amount of such deficiency on
demand. In the event the Seller fails to reimburse you as set forth above, you
may so notify the Deal Agent, and the Deal Agent may, but shall have no
obligation to, pay the same.
The use of any such checks or electronic or other means of
funds transfer, together with the resolutions authorizing the same, are intended
to affirm the rights and the interests of the Deal Agent in the Lock-Box Account
and all funds deposited therein and not to derogate therefrom.
The taxpayer identification number associated with the
Lock-Box Account shall be that of the Seller and the Seller will report for
federal, state and local income tax purposes the income, if any, earned on funds
in the Lock-Box Account.
This letter agreement may not be terminated at any time by
OutSource International or the Seller, but may be terminated by either you or
the Deal Agent upon 30 days' prior written notice to the other and to the
undersigned.
You will not assign or transfer your rights or obligations
hereunder (other than to the Deal Agent) without the prior written consent of
the other parties hereto. Subject to the preceding sentence, this letter
agreement shall inure to the benefit of and be binding upon all parties hereto
and their respective successors and assigns.
Any change, amendment, modification or waiver of this letter
agreement or any provision hereof will not be effective unless such change,
amendment, modification or waiver is in writing and signed by all parties
hereto.
All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto shall be
effective if communicated in writing and personally delivered or sent by
registered, certified, express or regular mail, postage prepaid, return receipt
requested, or by telex, telecopy (receipt promptly confirmed by telephone) or
prepaid telegram (with messenger delivery specified in the case of a telegram)
or by telephone (promptly confirmed in writing) and shall be deemed to be given
for purposes of this letter agreement on the day that such communication is
delivered to the intended recipient thereof in accordance with the provisions of
this paragraph. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this paragraph, notices, demands,
instructions and other communications shall be given to or made upon the
respective parties hereto at their respective addresses (or to their respective
telex, telecopy or telephone numbers) indicated below, or at such other address
as any party hereto may notify to the other parties in accordance with the
provisions of this paragraph.
All bank statements on the Lock-Box Account should be sent to the
Seller at:
OutSource Funding Corporation
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0X
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxx
B-3
With a copy to the Deal Agent at:
BancBoston Securities Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxx
Each of OutSource International and the Seller consents and
agrees to the foregoing, authorizes you to enter into this letter agreement, and
agrees to indemnify and hold you harmless from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses and liabilities of every nature and character arising out of your
compliance with the terms of this letter agreement, except such as result from
your gross negligence or willful misconduct, and in no event shall you be liable
for any consequential, indirect or special damages and except that losses for
uncollected checks shall be the responsibility of the Seller to the extent not
set-off against other funds in the Lock-Box Account.
You and each of the parties hereto (other than the Seller)
hereby agree (which agreement shall, pursuant to the terms of this letter
agreement, be binding upon its successors and assigns) that you and each of the
parties hereto shall not institute against, or join any other Person in
instituting against the Seller any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, for one year and a day after the payment in
full of all of the indebtedness of the Seller and the termination of any of the
commitments under each of the "Facility Documents", as such term is defined
under the Receivables Purchase Agreement. The provisions of this paragraph shall
survive the termination of this letter agreement.
This letter agreement shall be governed by and construed in
accordance with the internal laws of The Commonwealth of Massachusetts and
applicable federal law.
This letter agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original and all of
which when taken together shall constitute one and the same instrument.
This letter agreement constitutes the entire agreement between
the parties hereto relating to the Lock-Box Account and the other matters herein
described and supersedes any and all prior agreements relating to such matters.
[Remainder of Page Intentionally Left Blank]
B-4
Please agree to the terms of, and acknowledge receipt of, this
notice by signing in the space provided below.
Very truly yours,
OUTSOURCE INTERNATIONAL, INC.
By:________________________________
Name:
Title:
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
OUTSOURCE FUNDING CORPORATION
By:________________________________
Name:
Title:
0000 X. Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
BANCBOSTON SECURITIES INC.,
as Deal Agent
By:________________________________
Name:
Title:
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
B-5
Accepted this __th day
of ___________, 19__
[NAME OF BANK]
By:________________________________
Name:
Title:
[Address]
Attn: [______________]
Telephone: [(___) ________]
Telecopy: [(___) ________]
B-6
EXHIBIT C
FORM OF ASSET REPORT
Attached.
---------
EXHIBIT D
FORM OF OPINION OF COUNSEL FOR THE ORIGINATORS
Attached.
---------
EXHIBIT E
FORM OF ORIGINATOR NOTE
Attached.
---------
EXHIBIT E
FORM OF
OUTSOURCE FUNDING CORPORATION
NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE
[Date]
THIS NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE AND ANY
INTEREST REPRESENTED HEREBY SHALL NOT BE TRANSFERRED,
ASSIGNED, EXCHANGED, CONVEYED, PLEDGED, HYPOTHECATED, OR
OTHERWISE THE SUBJECT OF A GRANT OF A SECURITY INTEREST,
ABSENT THE PRIOR WRITTEN CONSENT OF THE HOLDER AND THE DEAL
AGENT, AND ANY ATTEMPT TO TRANSFER, ASSIGN, CONVEY, PLEDGE,
HYPOTHECATE OR GRANT A SECURITY INTEREST IN THIS NOTE OR ANY
INTEREST REPRESENTED HEREBY, EXCEPT WITH THE PRIOR WRITTEN
CONSENT OF THE HOLDER AND THE AGENT, SHALL BE VOID AND OF NO
EFFECT.
OUTSOURCE FUNDING CORPORATION (the "Issuer"), for value
received, hereby promises to pay to [INSERT APPLICABLE ORIGINATOR] (the
"Holder"), or its permitted assigns, at its address for payments set forth in
the Originator Sale Agreement hereinafter referred to, an amount equal to the
aggregate principal amount of the Originator Loans, as calculated under the
Originator Sale Agreement from time to time (which amount shall be equal to the
Purchase Price of the Purchase made on or about July 27, 1998 minus the amount
of cash paid to the Holder on the date of such Purchase pursuant to Section
2.02(a) of the Originator Sale Agreement minus the amount of the Purchase Price
of the Purchase paid by way of a capital contribution under Section 2.01(c) of
the Originator Sale Agreement, upon the date occurring one year and one day
after the occurrence of the Collection Date (the "Final Payment Date"), unless
earlier prepaid pursuant to the provisions for repayment referred to herein, to
the extent permitted under the terms of the Originator Sale Agreement, and to
pay interest (computed on the basis of a 360-day year and the actual number of
days in each calendar year) on the unpaid principal sum, at a variable interest
rate per annum equal to the Base Rate, from the date such principal sum is
advanced, such interest being payable on (a) August 15, 1998, and on each
Settlement Date thereafter and (b) on the earlier of (1) the date of prepayment
and (2) the Final Payment Date, until the principal hereof is paid in full. The
Holder shall enter on the grid attached hereto, as Attachment A, information
reflecting the date and the amount of any payments made hereon.
Payments of the principal of and interest on this
Non-negotiable Subordinated Promissory Note (the "Note") will be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts by check
E-1
mailed to, or wire transfer in federal funds to the account of, the Holder as
directed by the Holder. If any payment on this Note shall remain unpaid on the
due date thereof, the same shall thereafter be payable with interest thereon (to
the extent permitted by law) at a variable rate equal to 2% per annum above the
Base Rate, from such due date to the date of payment thereof.
This Note is issued under the Receivables Purchase and Sale
Agreement dated as of July 27, 1998, among OutSource International, Inc.
("OutSource International"), Capital Staffing Fund, Inc., OutSource Franchising,
Inc., Synadyne I, Inc., Synadyne II, Inc., Synadyne III, Inc., Synadyne IV,
Inc., Synadyne V, Inc., and OutSource International of America, Inc., as the
originators, OutSource International, as the "Servicer" thereunder, and the
Issuer (as amended, restated, supplemented or otherwise modified from time to
time, the "Originator Sale Agreement"), and is an "Originator Note" described
in, and is subject to the terms and conditions set forth in, the Originator Sale
Agreement. This Note represents all or a portion of the Purchase Price for
Receivables purchased by the Issuer from the Holder pursuant to the terms of the
Originator Sale Agreement. Each capitalized term utilized herein which is
defined in the Originator Sale Agreement shall have the meaning ascribed to such
term in the Originator Sale Agreement.
This Note is subject to prepayment in full or in part at the
option of the Issuer at any time upon three Business Days' prior notice to the
Holder, without a premium, subject in all events to the terms of the Originator
Sale Agreement.
This Note is subordinate and junior in right and time of
payment to all obligations and required payments or deposits of the Issuer in
favor of EagleFunding Capital Corporation ("EagleFunding") and/or BancBoston
Securities Inc. (as the "Deal Agent" for and on behalf of EagleFunding and its
assignees) (collectively, together with their respective successors and
assignees, the "Senior Claimants"), howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter, or due or
to become due on or before the Final Payment Date (collectively, the "Senior
Issuer Claims"), pursuant to the following subordination provisions (the
"Subordination Provisions"):
E-2
(A) The Holder agrees upon any distribution of all or
any of the assets of the Issuer to creditors of the Issuer upon the dissolution,
winding up, total or partial liquidation, arrangement, reorganization,
adjustment protection, relief, or composition of the Issuer or its debts, any
payment or distribution of any kind in respect of this Note (including, without
limitation, cash, property, securities and any payment or distribution which may
be payable or deliverable by reason of the payment of any other Debt of the
Issuer being subordinated to the payment of this Note) that otherwise would be
payable or deliverable upon or with respect to this Note, directly or
indirectly, by set-off or in any other manner, including, without limitation,
from or by way of liquidation of the Transferred Assets, shall be paid or
delivered directly to the Deal Agent for application (in the case of cash) to,
or as Related Security or Collections on, the Transferred Assets, for the
payment or prepayment in full of all amounts payable under the Senior Issuer
Claims, until all of the Senior Issuer Claims shall have been indefeasibly paid
in full in cash. BancBoston Securities Inc. as the Deal Agent, is irrevocably
authorized and empowered (in its own name or in the name of the Holder or
otherwise), but shall have no obligation, to demand, xxx for, collect and
receive every payment or distribution referred to in the preceding sentence and
give acquittance therefor and to file claims and proofs of claim and take such
other action (including, without limitation, voting this Note and enforcing any
security interest or other lien securing payment of this Note) as the Deal Agent
may request to (i) collect this Note for the account of itself and the other
Senior Claimants and to file appropriate claims or proofs of claim in respect of
this Note, (ii) execute and deliver to the Deal Agent such powers of attorney,
assignments or other instruments as the Deal Agent may request in order to
enable the Deal Agent to enforce any and all claims with respect to, and any
security interest and other liens securing payment of, this Note, and (iii)
collect and receive any and all payments or distribution which may be payable or
deliverable upon or with respect to this Note.
(B) All payments or distributions upon or with respect to this
Note that are received by the Holder contrary to the provisions of this Note,
any of the Originator Sale Agreement, the Receivables Purchase Agreement, the
Intercreditor Agreement or the Lock-Box Agreement, or any of the other
documents, agreements and instruments entered into in connection therewith and
the transactions contemplated thereby (collectively, the "Facility Documents")
shall be received in trust for the benefit of the Senior Claimants, shall be
segregated from other funds and property held by the Holder and shall be
forthwith paid over to the Deal Agent in the same form as so received (with any
necessary endorsement) to be applied (in the case of cash) to, or held as
Related Security or Collections (in the case of non-cash property) for the
payment or prepayment in full of the Senior Issuer Claims until the Senior
Issuer Claims shall have been indefeasibly paid in full in cash. The Holder
agrees that no payment or distribution to any of the Senior Claimants pursuant
to the provisions of this Note shall entitle the Holder to exercise any rights
of subrogation in respect thereof against the Issuer until the Senior Issuer
Claims shall have been indefeasibly paid in full and in cash. The Holder and the
Issuer hereby waive promptness, diligence, notice of acceptance and any other
notice with respect to any of the Senior Issuer Claims and any requirement that
the Deal Agent or any other Person protect, secure, perfect or insure any
security interest or lien on any property subject thereto or exhaust any right
or take any action against the Issuer or any other Person or any assets or
property.
(C) The Holder agrees and confirms that none of the Senior
Claimants (including, without limitation, the Deal Agent) shall have any duty
whatsoever to the Holder as holder of this Note and that none of the Senior
Claimants shall be liable to the Holder for any action taken or omitted, to the
extent authorized under the terms of any Facility Document, with respect to this
Note.
(D) Prior to the indefeasible payment in full and in cash of
all of the Senior Issuer Claims, the Holder will not seek to collect, ask,
demand, xxx for or take or receive from the Issuer in cash or other property, by
set-off or in any other manner, any amounts owing under this Note in any manner,
or exercise or enforce any of its rights under this Note.
(E) The Holder and the Issuer agree that at no time
hereafter will any part of the
indebtedness represented by this Note be represented by any negotiable
instruments or other writings except this Note.
E-3
(F) The Holder and the Issuer waive notice of and consent to
the creation of additional Senior Issuer Claims from time to time pursuant to
the other Facility Documents, and any other obligation, any extensions granted
by any of the Senior Claimants with respect thereto, the taking or releasing of
collateral or any obligors or guarantors for the payment thereof, and the
releasing of the Holder or any other subordinating creditors. No failure or
delay by any of the Senior Claimants to exercise any right granted herein, or in
any other agreement or bylaw shall constitute a waiver of such right or of any
other right.
(G) The Holder and the Issuer agree to execute and deliver to
any of the Senior Claimants, such additional documents, and to take such further
actions as any of such Senior Claimants may hereafter reasonably require to
evidence the subordination of this Note.
(H) The terms of this Note and the subordination
effected hereby and the rights of the
Senior Claimants, and the obligations of the Holder and the Issuer arising
hereunder and under the Originator Sale Agreement, shall not be affected,
modified or impaired in any manner or to any extent by (i) any amendment or
modification of or supplement to any provision of any Facility Document, or any
instrument or document executed or delivered pursuant thereto or in connection
with the transactions contemplated thereby; (ii) the validity or enforceability
of any of such documents; (iii) any exercise or non-exercise of any right, power
or remedy under or in respect of any of the Issuer or the Senior Issuer Claims
or any agreements, instruments or documents related thereto or arising at law or
equity; or (iv) any waiver, consent release, indulgence, extension, renewal,
modification, delay or other action, inaction, or omission in respect of the
Issuer, the Senior Issuer Claims or any of the instruments, documents or
agreements related thereto.
(I) All payments of principal, interest and all other amounts
payable in respect of the Senior Issuer Claims must be paid before any portion
of the principal amount of this Note may be paid or prepaid. All payments of
principal, interest and all other amounts then due and payable in respect of the
Senior Issuer Claims must be paid before any portion of the accrued interest on
this Note may be paid on any day. All scheduled payments of principal and
interest then due on this Note shall be payable only to the extent that the
Issuer has available funds to make such payments, and is permitted to make such
payments under the Facility Documents (including, without limitation, the
Originator Sale Agreement).
The Holder, and any assignee of the Holder, by accepting this
Note, hereby agrees to the Subordination Provisions. Neither this Note nor any
right of the Holder to receive any payment thereunder, shall be assigned,
transferred, exchanged, pledged, hypothecated, participated or otherwise
conveyed; provided, however, that the Holder may pledge or otherwise transfer
this Note with the prior written consent of the Issuer and the Deal Agent;
provided, further, that any assignee of this Note shall be bound by all of the
terms applicable to this Note set forth in the Facility Documents.
The Holder of this Note and any of its assignees, by its
acceptance hereof, hereby covenants and agrees that it will not at any time
institute against the Issuer, or join any other Person in instituting against
the Issuer, any proceedings of the type referred to in clause (i) of Section
7.01(f) of the Originator Sale Agreement, or take any corporate action in
furtherance of any such action.
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
E-4
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed manually by its undersigned officer duly authorized thereunto.
Dated: [Date]
OUTSOURCE FUNDING CORPORATION
By: _________________________
Name:
Title:
E-5
EXHIBIT F
FORM OF FRANCHISE AGREEMENT
Attached.
---------
