SECOND MODIFICATION AGREEMENT
-----------------------------
DATE: February 19, 1997
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PARTIES: Borrower: Employee Solutions, Inc.,
------- an Arizona corporation
Borrower 0000 Xxxx Xxxxxxxxx Xxxx,
Xxxxxxx: Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000-0000
Bank: Bank One, Arizona, NA,
a national banking association
Bank X.X. Xxx 00
Address: Xxxxxxx, Xxxxxxx 00000
RECITALS:
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A. Bank has extended to Borrower credit ("Loan") in the current
principal amount of $45,000,000.00 pursuant to the Loan Agreement dated August
1, 1996 ("Credit Agreement"), and evidenced by the Secured Promissory Note dated
August 1, 1996 ("Note"). The unpaid principal of the Loan as of the date hereof
is $43,500,000. 00.
B. The Loan is secured by, among other things, the Security Agreement
dated August 1, 1996, as modified by the Letter Agreement dated August 22, 1996
("Security Agreement"), between the Obligor (as defined therein) and Bank (the
agreements, documents, and instruments securing the Loan and the Note are
referred to individually and collectively as the "Security Documents").
C. Bank and Borrower have executed and delivered previously the
following agreements ("Modifications") modifying the terms of the Loan, the
Note, the Credit Agreement, and/or the Security Documents: Letter Agreement
dated August 22, 1996, and Modification Agreement dated October 15, 1996. The
Note, the Credit Agreement, the Security Documents, any arbitration resolution,
any environmental certification and indemnity agreement, and all other
agreements, documents, and instruments evidencing, securing, or otherwise
relating to the Loan, as modified in the Modifications, are sometimes referred
to individually and collectively as the "Loan Documents".
D. Borrower has requested that Bank modify the Loan and the Loan
Documents as provided herein. Bank is willing to so modify the Loan and the Loan
Documents, subject to the terms and conditions herein.
AGREEMENT:
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For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower and Bank agree as follows:
1. ACCURACY OF RECITALS.
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Borrower acknowledges the accuracy of the Recitals.
2. MODIFICATION OF LOAN DOCUMENTS.
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2.1 The Loan Documents are modified as follows:
2.1.1 The Commitment Amount (as defined in the Credit
Agreement) is hereby increased from $45,000,000.00 to $60,000,000.00. All
references in the Loan Documents to the Commitment Amount are hereby modified to
refer to the increased Commitment Amount of $60,000,000.00. Notwithstanding the
preceding, with respect to the increased Commitment Amount of $15,000,000.00,
Bank and Borrower agree that until such time that Bank has obtained a
participant with respect to $10,000,000.00 of the increased Commitment Amount of
$15,000,000.00, Bank shall have no obligation to disburse any portion of such
$10,000,000.00 amount.
2.1.2 Commencing February 1, 1998, the Commitment Amount shall
be automatically reduced by $3,000,000.00, and thereafter shall automatically be
reduced by $3,000,000.00 every calendar quarter until the Scheduled Expiration
Date (as defined in the Credit Agreement).
2.1.3 As set forth in the Schedule of Terms in the Credit
Agreement, the Purpose of Advances is hereby modified to add letters of credit
thereto.
2.1.4 The following new entities are hereby added to the
Security Agreement as additional Obligors, and such entities hereby assign to
Bank, as security pledge to Bank, and grant to Bank, a security interest in the
Collateral (as defined therein) to secure the full and timely payment and
performance of the Obligations (as defined therein), all in accordance with the
terms and conditions of the Security Agreement:
Employee Solutions of Alabama, Inc., an Alabama corporation
GCK Entertainment Services I, Inc., a Delaware corporation
Talent, Entertainment and Media Services, Inc., a Delaware corporation
In addition, all such new Obligors shall execute perfection certificates and UCC
financing statements as Bank shall require.
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2.1.5 The following new entities are hereby added as
Guarantors for the Loan, and Borrower shall cause such entities to execute
Bank's form of Continuing Guaranty of Payment:
Employee Solutions of Alabama, Inc., an Alabama corporation
GCK Entertainment Services I, Inc., a Delaware corporation
Talent, Entertainment and Media Services, Inc., a Delaware corporation
2.1.6 Bank hereby consents to the guarantee to be provided by
Borrower for Employee Solutions of Texas, Inc. in order to satisfy the audit
requirements of the State of Texas, all as outlined in the January 29, 1997
letter from Xxxxxx X. Xxxxx to the Bank.
2.2 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Borrower shall fail to comply
with any of the covenants of Borrower herein or if any representation or
warranty by Borrower herein or by any guarantor in any related Consent and
Agreement of Guarantor(s) is materially incomplete, incorrect, or misleading as
of the date hereof.
2.3 Each reference in the Loan Documents to any of the Loan Documents
shall be a reference to such document as modified herein,
3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.
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The Loan Documents are ratified and affirmed by Borrower and shall remain in
full force and effect as modified herein. Any property or rights to or interests
in property granted as security in the Loan Documents shall remain as security
for the Loan and the obligations of Borrower in the Loan Documents.
4. BORROWER REPRESENTATIONS AND WARRANTIES.
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Borrower represents and warrants to Bank:
4.1 No default or event of default under any of the Loan Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to Bank in connection with the Loan from the most recent financial
statement received by Bank.
4.3 Each and all representations and warranties of Borrower in the Loan
Documents are accurate on the date hereof.
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4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loan or the Loan Documents as modified herein.
4.5 The Loan Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Loan Documents as modified herein.
The execution and delivery of this Agreement and the performance of the Loan
Documents as modified herein have been duly authorized by all requisite action
by or on behalf of Borrower. This Agreement has been duly executed and delivered
on behalf of Borrower.
5. BORROWER COVENANTS.
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Borrower covenants with Bank:
5.1 Borrower shall execute, deliver, and provide to Bank such
additional agreements, documents, and instruments as reasonably required by Bank
to effectuate the intent of this Agreement.
5.2 Borrower fully, finally, and forever releases and discharges Bank
and its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, causes of action, claims, debts,
demands, liabilities, obligations, and suits, of whatever kind or nature, in law
or equity, that Borrower has or in the future may have, whether known or
unknown, arising from events occurring prior to the date of this Agreement and
in respect of the Loan, the Loan Documents, or the actions or omissions of Bank
in respect of the Loan or the Loan Documents.
5.3 Contemporaneously with the execution and delivery of this
Agreement, Borrower has paid to Bank:
5.3.1 All accrued and unpaid interest under the Note and all
amounts, other than interest and principal, due and payable by Borrower under
the Loan Documents as of the date hereof.
5.3.2 All of the internal and external costs and expenses
incurred by Bank in connection with this Agreement (including, without
limitation, inside and outside attorneys, processing, filing, and all other
costs, expenses, and fees).
5.3.3 The increased commitment fee on the portion of the Loan
that is fully committed, which may be advanced from the Loan.
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5.4 Contemporaneously with the execution and delivery of this
Agreement, Borrower shall provide to Bank:
5.4.1 Corporate resolutions and/or secretary certificates for
Borrower and each guarantor authorizing the increased Commitment Amount and the
other matters set forth in this Agreement.
5.4.2 Such additional Loan Documents as may be required by the
terms of this Second Modification Agreement as provided in Section 2 above. If
necessary, Borrower agrees to cooperate with Bank in completing and delivering
all such documentation after the closing of this Second Modification Agreement.
6. EXECUTION AND DELIVERY OF AGREEMENT BY BANK.
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Bank shall not be bound by this Agreement until each of the following shall have
occurred: (i) Bank has executed and delivered this Agreement, (ii) Borrower has
performed all of the obligations of Borrower under this Agreement to be
performed contemporaneously with the execution and delivery of this Agreement,
(iii) each guarantor(s) of the Loan, if any, has executed and delivered to Bank
a Consent and Agreement of Guarantor(s), and (iv) if required by Bank, Borrower
and any guarantor(s) have executed and delivered to Bank an arbitration
resolution, an environmental questionnaire, and an environmental certification
and indemnity agreement.
7. ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.
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The Loan Documents as modified herein contain the entire understanding and
agreement of Borrower and Bank in respect of the Loan and supersede all prior
representations, warranties, agreements, arrangements, and understandings. No
provision of the Loan Documents as modified herein may be changed, discharged,
supplemented, terminated, or waived except in a writing signed by Bank and
Borrower.
8. BINDING EFFECT.
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The Loan Documents as modified herein shall be binding upon, and inure to the
benefit of, Borrower and Bank and their respective successors and assigns.
9. CHOICE OF LAW.
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This Agreement shall be governed by and construed in accordance with the laws of
the State of Arizona, without giving effect to conflicts of law principles.
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10. COUNTERPART EXECUTION.
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This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
11. ARBITRATION.
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11.1 Binding Arbitration. Bank, Borrower and each guarantor executing a
Consent and Agreement of Guarantor(s) with respect to this Agreement hereby
agree that all controversies and claims arising directly or indirectly out of
this Agreement and the Loan Documents, shall at the written request of any party
be arbitrated pursuant to the applicable rules of the American Arbitration
Association. The arbitration shall occur in the State of Arizona. Judgment upon
any award rendered by the arbitrator(s) may be entered in any court having
jurisdiction. The Federal Arbitration Act shall apply to the construction and
interpretation of this arbitration agreement.
11.2 Arbitration Panel. A single arbitrator shall have the power to
render a maximum award of one hundred thousand dollars. When any party files a
claim in excess of this amount, the arbitration decision shall be made by the
majority vote of three arbitrators. No arbitrator shall have the power to
restrain any act of any party.
11.3 Provisional Remedies, Self Help and Foreclosure. No provision of
Section 11.1 shall limit the right of any party to exercise self help remedies,
to foreclose against any real or personal property collateral, or to obtain any
provisional or ancillary remedies (including but not limited to injunctive
relief or the appointment of a receiver) from a court of competent jurisdiction.
At Bank's option, it may enforce its right under a mortgage by judicial
foreclosure, and under a deed of trust either by exercise of power of sale or by
judicial foreclosure. The institution and maintenance of any remedy permitted
above shall not constitute a waiver of the rights to submit any controversy or
claim to arbitration. The statute of limitations, estoppel, waiver, laches, and
similar doctrines which would otherwise be applicable in an action brought by a
party shall be applicable in any arbitration proceeding.
DATED as of the date first above stated.
EMPLOYEE SOLUTIONS, INC., an Arizona
corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
6
BANK ONE, ARIZONA, NA, a national banking
association
By: _____________________________________
Name: ___________________________________
Title: __________________________________
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CONSENT AND AGREEMENT OF GUARANTOR(S) AND
MODIFICATION OF GUARANTY
With respect to the Second Modification Agreement dated February 19,
1997 ("Agreement"), between Employee Solutions, Inc., an Arizona corporation
("Borrower") and Bank One, Arizona, NA, a national banking association ("Bank"),
the undersigned (individually and, if more than one, collectively "Guarantor")
agrees for the benefit of Bank as follows:
1. Guarantor acknowledges (i) receiving a copy of and reading the
Agreement, (ii) the accuracy of the Recitals in the Agreement, and (iii) the
effectiveness of (A) the Continuing Guaranty of Payment dated August 1, 1996
("Guaranty"), by the undersigned for the benefit of Bank, as modified herein,
and (B) any other agreements, documents, or instruments securing or otherwise
relating to the Guaranty, (including, without limitation, any arbitration
resolution and any environmental certification and indemnity agreement
previously executed and delivered by the undersigned), as modified herein. The
Guaranty and such other agreements, documents, and instruments, as modified
herein, are referred to individually and collectively as the "Guarantor
Documents". All capitalized terms used herein and not otherwise defined shall
have the meaning given to such terms in the Agreement.
2. Guarantor consents to the modification of the Loan Documents and all
other matters in the Agreement. Guarantor agrees to the arbitration provisions
set forth in Section 11.1 of the Agreement.
3. Guarantor fully, finally, and forever releases and discharges Bank
and its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, causes of action, claims, debts,
demands, liabilities, obligations, and suits of whatever kind or nature, in law
or equity, that Guarantor has or in the future may have, whether known or
unknown, arising from events occurring prior to the date hereof and in respect
of the Loan, the Loan Documents, the Guarantor Documents, or the actions or
omissions of Bank in respect of the Loan, the Loan Documents, or the Guarantor
Documents.
4. Guarantor agrees that all references, if any, to the Note, the
Credit Agreement, the Deed of Trust, the Security Documents, and the Loan
Documents in the Guarantor Documents shall be deemed to refer to such
agreements, documents, and instruments as modified by the Agreement.
5. Guarantor reaffirms the Guarantor Documents and agrees that the
Guarantor Documents continue in full force and effect and remain unchanged,
except as specifically modified by this Consent and Agreement of Guarantor(s).
Any property or rights to or interests in property granted as security in the
Guarantor Documents shall remain as security for the Guaranty and the
obligations of Guarantor in the Guaranty.
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6. Guarantor represents and warrants that the Loan Documents, as
modified by the Agreement, and the Guarantor Documents, as modified by this
Consent and Agreement of Guarantor(s), are the legal, valid, and binding
obligations of Borrower and the undersigned, respectively, enforceable in
accordance with their terms against Borrower and the undersigned, respectively.
7. Guarantor represents and warrants that Guarantor has no claims,
counterclaims, defenses, or off sets with respect to the enforcement against
Guarantor of the Guarantor Documents.
8. Guarantor represents and warrants that there has been no material
adverse change in the financial condition of any Guarantor from the most recent
financial statement received by Bank.
9. Guarantor agrees that this Consent and Agreement of Guarantor(s) may
be executed in one or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same document.
Signature and acknowledgment pages may be detached from the counterparts and
attached to a single copy of this Consent and Agreement of Guarantor(s) to
physically form one document.
10. The Guaranty is hereby modified to increase the principal amount of
indebtedness of Borrower to Bank from $45,000,000.00 to $60,000,000.00, as all
set forth in the Agreement.
DATED as of the date of the Agreement.
LOGISTICS PERSONNEL CORP., a Nevada
corporation
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
EMPLOYEE SOLUTIONS OF TEXAS, INC.,
a Texas corporation
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
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EMPLOYEE SOLUTIONS-EAST, INC., a Georgia
corporation
By _______________________________________
Name: ____________________________________
Title: ___________________________________
EMPLOYEE SOLUTIONS-MIDWEST, INC., a
Michigan corporation
By _______________________________________
Name: ____________________________________
Title: ___________________________________
ESI AMERICA, INC., a Michigan corporation
By _______________________________________
Name: ____________________________________
Title: ___________________________________
ESI-MIDWEST, INC., a Nevada corporation
By _______________________________________
Name: ____________________________________
Title: ___________________________________
EMPLOYEE SOLUTIONS OF CALIFORNIA, INC., a
Nevada corporation
By _______________________________________
Name: ____________________________________
Title: ___________________________________
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EMPLOYEE SOLUTIONS - OHIO, INC., an
Indiana corporation, formerly known
as POKAGON OFFICE SERVICES, INC.
By _______________________________________
Name: ____________________________________
Title: ___________________________________
ESI RISK MANAGEMENT AGENCY, INC., an
Arizona corporation
By _______________________________________
Name: ____________________________________
Title: ___________________________________
EMPLOYEE SOLUTIONS OF ALABAMA, INC., an
Alabama corporation
By _______________________________________
Name: ____________________________________
Title: ___________________________________
GCK ENTERTAINMENT SERVICES I, INC., a
Delaware corporation
By _______________________________________
Name: ____________________________________
Title: ___________________________________
TALENT, ENTERTAINMENT AND MEDIA SERVICES,
INC., a Delaware corporation
By _______________________________________
Name: ____________________________________
Title: ___________________________________
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