Exhibit 10.1
AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 6 dated as of May 10, 2002 to LOAN AND SECURITY AGREEMENT
dated as of December 14, 2000 among COMFORCE CORPORATION, COMFORCE OPERATING,
INC. (the "Holding Companies"), certain direct and indirect subsidiaries of the
Holding Companies and UNIFORCE SERVICES, INC. (the "Other Loan Parties"),
LabForce Services of America, Inc., a New York corporation, COMFORCE Coding
Services, Inc., a New York corporation, BXI Net, Inc., a California corporation
and COMFORCE P-T-P Services, Inc., a New York corporation (the "New Loan
Parties"), the Lenders whose signatures appear below, TRANSAMERICA BUSINESS
CAPITAL CORPORATION (as successor to TRANSAMERICA BUSINESS CREDIT CORPORATION),
as Co-Agent (the "Co-Agent"), THE CIT GROUP/BUSINESS CREDIT, INC., as Collateral
Agent (the "Collateral Agent") and IBJ WHITEHALL BUSINESS CREDIT CORPORATION, as
Administrative Agent for the benefit of itself and the Lenders (the
"Administrative Agent").
Preliminary Statement
(1) The Holding Companies, the Other Loan Parties, the Co-Agent, the Collateral
Agent, the Administrative Agent, and the Lenders (as defined therein) have
entered into a Loan and Security Agreement dated as of December 14, 2000,
as amended by Amendment No. 1 thereto dated as of January 5, 2001,
Amendment No. 2 thereto dated as of March 5, 2001, Amendment No. 3 thereto
dated as of September 21, 2001 and Amendments No. 4 and No. 5 thereto each
dated as of December 7, 2001 (the "Original Loan and Security Agreement";
terms defined in the Original Loan and Security Agreement and not otherwise
defined herein shall have the meanings assigned thereto in the Original
Loan and Security Agreement).
(2) The Loan Parties, and Lenders desire to amend the Original Loan and
Security Agreement as provided herein.
NOW, THEREFORE, in consideration of the premises set forth herein, the Loan
Parties and the Lenders hereby agree as follows:
1. Amendments. The Original Loan and Security Agreement is, subject to the
satisfaction of the conditions referred to below, amended as follows:
(a) paragraph (3) of the preamble to the Original Loan and Security
Agreement is amended by replacing "LABFORCE OF AMERICA, INC."
appearing therein with "COMFORCE TECHNICAL NW, INC. (as successor to
LABFORCE OF AMERICA, INC.)."
(b) the following parties are added as "Borrowers" to paragraph (3) of the
preamble to the Original Loan and Security Agreement: BXI Net, Inc., a
California corporation, COMFORCE Coding Services, Inc., a New York
corporation and LabForce Services of America, Inc., a New York
corporation.
(c) the following party is added as an "Inactive Subsidiary" to paragraph
(4) of the preamble to the Original Loan and Security Agreement:
COMFORCE P-T-P Services, Inc., a New York corporation.
(d) a new Schedule 2.8 is added immediately after Schedule 2.1(B) in the
list of Schedules to the Original Loan and Security Agreement and to
the Schedules attached to the Original Loan and Security Agreement,
such new schedule to be titled "Commercial Tort Claims".
(e) the following definitions are added to subsection 1.1 of the Original
Loan and Security Agreement in their respective proper alphabetical
places:
"'Amendment No. 6' shall mean Amendment No. 6, dated as of May 10,
2002, of this Agreement."
"'Amendment No. 6 Effective Date' shall mean the date on which the
amendments contemplated by Amendment No. 6 become effective."
"'Deposit Accounts' shall mean all 'deposit accounts,' as such term is
defined in the UCC, now or hereafter held in the name of any Loan
Party, wherever located."
"'Documents' shall mean all 'documents,' as such term is defined in
the UCC, now owned or hereafter acquired by any Loan Party, wherever
located."
"'General Intangibles' shall mean all 'general intangibles,' as such
term is defined in the UCC, now owned or hereafter acquired by any
Loan Party, wherever located."
"'Letter-of-Credit Rights' shall mean 'letter-of-credit rights,' as
such term is defined in the UCC, now owned or hereafter acquired by
any Loan Party, including rights to payment or performance under a
letter of credit, whether or not such Loan Party, as beneficiary, has
demanded or is entitled to demand payment or performance."
"'Software' shall mean all 'software,' as such term is defined in the
UCC, now owned or hereafter acquired by any Loan Party, other than
software embedded in any category of goods, including all computer
programs and all supporting information provided in connection with a
transaction related to any program."
"'Special Condition I Satisfaction Date' shall mean, the date, if any,
on which Administrative Agent is satisfied that the following
conditions have been satisfied in full on or prior to the date 90 days
after May 2, 2002:
(i) the Borrowers shall have delivered to the Lenders, Administrative
Agent and Collateral Agent a risk acceptance criteria
presentation, in form and substance reasonably satisfactory to
the Requisite Lenders and, in any event, noting specific credit
procedures that COI's credit committee will follow in the
analysis of prospective and/or existing Account Sellers to ensure
the preservation of the Borrowers' overall credit quality in
relation to Purchased Accounts and such presentation, credit
policy and procedures shall have been reviewed by a third party
consultant satisfactory to Administrative Agent, Collateral Agent
and COI shall have implemented any recommendations of such
consultant;
(ii) Administrative Agent, Collateral Agent and the Lenders shall have
received from the Borrowers a detailed report noting the amount
of chargebacks outstanding for each Account Debtor and Account
Seller and the amount of cash that has been applied to such
chargebacks, and such report shall be acceptable to the Requisite
Lenders as reviewed by the Lenders as part of the field
examination next occurring after the Amendment No. 6 Effective
Date and within 90 days following May 2, 2002; and
(iii)Administrative Agent and Collateral Agent shall be satisfied
that the Borrowers have installed a separate telephone line for
verification of amounts owing by the account debtors in respect
of Purchased Accounts."
"'Special Condition II Satisfaction Date' shall mean the date, if any,
on which Administrative Agent is satisfied that the following
conditions have been satisfied in full:
(i) the Special Condition I Satisfaction Date shall have occurred;
and
(ii) in connection with the two field examinations of the Borrowers
conducted by the Lenders next following the Amendment No. 6
Effective Date, the Requisite Lenders shall have confirmed the
continued adherence by the Borrowers to the implementation of the
credit policies and procedures referred to in the definition of
Special Condition I Satisfaction Date and the continued existence
and use of the telephone line referred to in the definition of
Special Condition I Satisfaction Date."
"'Supporting Obligations' shall mean all 'supporting obligations,' as
such term is defined in the UCC, now owned or hereafter acquired by
any Loan Party, wherever located."
"'Uniform Commercial Code Jurisdiction' shall mean any jurisdiction
that has adopted all or substantially all of Article 9 as contained in
the 2000 Official Text of the Uniform Commercial Code, as recommended
by the National Conference of Commissioners on Uniform State Laws and
the American Law Institute, together with any subsequent amendments or
modifications to the Official Text."
(f) the definition of "Applicable Base Rate Margin" appearing in
subsection 1.1 of the Original Loan and Security Agreement is amended
by changing the percentages appearing therein as follows: (i) .0% is
increased to .25%, (ii) .25% is increased to .50%, (iii) .50% is
increased to .75%, (iv) .75% is increased to 1.00% and (v) 1.00% is
increased to 1.25%.
(g) the definition of "Applicable LIBOR Margin" appearing in subsection
1.1 of the Original Loan and Security Agreement is amended by changing
the percentages appearing therein as follows: (i) 1.75% is increased
to 2.00%, (ii) 2.00% is increased to 2.25%, (iii) 2.25% is increased
to 2.50%, (iv) 2.50% is increased to 2.75% and (v) 2.75% is increased
to 3.00%.
(h) the following definitions appearing in subsection 1.1 of the Original
Loan and Security Agreement are amended and restated as follows:
"'Accounts' shall mean all 'accounts' (as defined in the UCC),
accounts receivable, contract rights and general intangibles relating
thereto, notes, drafts, health-care-insurance receivables and other
forms of obligations owed to or owned by any Borrower arising or
resulting from the sale of goods or the rendering of services and
including, in any event, all Purchased Accounts and Service Fee
Accounts."
"'Account Debtor' shall mean any Person who may become obligated to
any Loan Party under, with respect to, or on account of, an Account,
Chattel Paper or General Intangibles (including a payment
intangible)."
"'Asset Disposition' shall mean the disposition, whether by sale,
lease, license, transfer, loss, damage, destruction, condemnation or
otherwise, of any or all of the assets of any Loan Party."
"'Chattel Paper' shall mean any 'chattel paper,' as such term is
defined in the UCC, including electronic chattel paper, now owned or
hereafter acquired by any Loan Party, wherever located."
"'Contract' shall mean all contracts, undertakings, general
intangibles or agreements (other than rights evidenced by Chattel
Paper, Documents, Instruments or Accounts) in or under which any Loan
Party may now or hereafter have any right, title or interest."
(i) Clause (2) of subsection 2.1(A) of the Original Loan and Security
Agreement is amended and restated as follows:
"'Borrowing Base' means, as of any date of determination, an amount
equal to eighty-five per cent (85%) of Eligible Accounts other than
Eligible Accounts that are Purchased Accounts plus 80% of Eligible
Accounts that are Purchased Accounts less, until the Special Condition
I Satisfaction Date, a reserve equal to 2.5% of Eligible Accounts that
are Purchased Accounts, plus the lesser of eighty-five per cent (85%)
of (x) Unbilled Eligible Accounts and (y) an amount equal to 8% of the
sum of Unbilled Eligible Accounts plus Eligible Accounts; less
Landlord Waiver Reserves and less such other reserves as Collateral
Agent in its reasonable discretion may elect to establish from time to
time; provided, however, that so long as any Senior Notes or Senior
PIK Notes are outstanding, the Borrowing Base shall not exceed the
maximum principal amount of Indebtedness permitted to be incurred
under section 4.3(b)(i) of the Senior Notes Indenture or section
4.3(b)(i) of the Senior Debentures Indenture. With reasonable
promptness following delivery by the Borrower Representative of
financial statements in accordance with subsection 5.1(A) in respect
of the month ending May 31, 2002, assuming that at such time there
shall be continuing no Default or Event of Default, the Lenders in
good faith shall consider whether the advance rate against Eligible
Accounts that are Purchased Accounts be increased to 85%; provided,
however, that no such increase shall become effective without the
consent of all Lenders and no Lender shall have any obligation to
consent to such increase."
(j) clause (21) of subsection 2.1(B) of the Original Loan and Security
Agreement is amended and restated as follows:
"Purchased Accounts and Service Fee Accounts (other than arising from
Licensing Agreements) which exceed, in the aggregate, 50%, or from and
after the Special Condition II Satisfaction Date, 55%, of otherwise
Eligible Accounts;";
(k) subsection 2.8 of the Original Loan and Security Agreement is amended
and restated in its entirety as follows (it being understood that all
security interests granted under the Original Loan and Security
Agreement shall continue uninterrupted):
"2.8 Grant of Security Interest
To secure the payment and performance of the Obligations, including
all renewals, extensions, restructurings and refinancings of any or
all of the Obligations, each Loan Party hereby grants to
Administrative Agent, on behalf of Lenders and on behalf of the
Issuing Banks a continuing security interest, lien and mortgage in and
to all right, title and interest of such Loan Party in the following
property of such Loan Party (whether owned or consigned by or to, or
leased from or to such Loan Party), whether now owned or existing or
hereafter acquired or arising and regardless of where located (all
being collectively referred to as the 'Collateral'): (A) Accounts, and
all guaranties and security therefor, and all goods and rights
represented thereby or arising therefrom including the rights of
stoppage in transit, replevin and reclamation; (B) Inventory; (C)
General Intangibles (as defined in the UCC), including payment
intangibles, Software and the Account Agreements; (D) Documents (as
defined in the UCC) or other receipts covering, evidencing or
representing goods; (E) Instruments (as defined in the UCC); (F)
Chattel Paper (as defined in the UCC); (G) Equipment; (H) all
Letter-of-Credit Rights; (I) all Deposit Accounts of each Loan Party
maintained with any bank or financial institution; (J) all money, cash
or cash equivalents and property of such Borrower and such Holding
Party, any Lender or any participant; (K) all books, records, ledger
cards, files, correspondence, computer programs, tapes, disks and
related data processing software that at any time evidence or contain
information relating to any of the property described above or are
otherwise necessary or helpful in the collection thereof or
realization thereon; (L) all goods; (M) all Fixtures (as defined in
the UCC); (N) all Investment Property (as defined in the UCC) (other
than any covered by the Pledge Agreement); (O) all Supporting
Obligations; (P) any commercial tort claim listed and described in
Schedule 2.8; and (Q) proceeds of all or any of the property described
above, including, without limitation, the proceeds of any tort claims
or any insurance policies covering any of the above described property
and all accessions to, substitutions and replacements for and rents
and profits of, each of the foregoing."
(l) subsection 3.1(B) of the Original Loan and Security Agreement is
amended and restated in its entirety as follows:
"3.1(B) Security Interests
Administrative Agent and Lenders shall have received satisfactory
evidence that all security interests and liens granted to
Administrative Agent for the benefit of Lenders pursuant to this
Agreement or the other Loan Documents (including, without limitation,
a pledge of all present and future capital stock of all Subsidiaries
of CC) have been duly perfected and constitute first priority liens on
the Collateral, subject only to Permitted Encumbrances. Such first
priority liens shall be enforceable against any and all creditors of
and purchasers from any Loan Party (other than purchasers and lessees
of Inventory in the ordinary course of business and non-exclusive
licensees of General Intangibles in the ordinary course of business).
All filings, recordations and searches necessary or desirable in
connection with such liens and security interests shall have been duly
made and all filing and recording fees and taxes shall have been duly
paid."
(m) subsection 4.8 of the Original Loan and Security Agreement is amended
and restated in its entirety as follows:
"4.8 Locations; Organizational Identification Number; FEIN
Schedule 4.8 sets forth each Loan Party's name as it appears in
official filings in the state of its incorporation or other
organization, the type of entity of each Loan Party, the
organizational identification number issued by each Loan Party's state
of incorporation or organization or a statement that no such number
has been issued, the location of each Loan Party's principal place of
business, chief executive office, the location of each Loan Party's
books and records, the location of all other offices of such Loan
Party and all Collateral locations, and such locations are such Loan
Party's sole locations for its business and the Collateral. Each Loan
Party's federal employer identification number is also set forth on
Schedule 4.8. No Loan Party will change its jurisdiction of
organization except in connection with a merger permitted by
subsection 7.6."
(n) subsection 4.9 of the Original Loan and Security Agreement is amended
and restated in its entirety as follows:
"4.9 Title to Properties; Liens
Each Loan Party has the power to transfer and has good, sufficient and
legal title to, subject to Permitted Encumbrances, all its respective
material properties and assets. Except for Permitted Encumbrances, all
such properties and assets are free and clear of Liens. To the best
knowledge of any Loan Party after due inquiry, there are no actual,
threatened or alleged defaults with respect to any leases of real
property under which any Loan Party is lessee or lessor which could
reasonably be expected to have a Material Adverse Effect. Schedule 4.9
sets forth a description of each lease of real property to which a
Loan Party is a lessee and each parcel of real property owned in fee
by any Loan Party."
(o) the first sentence of subsection 5.6(a) of the Original Loan and
Security Agreement is amended and restated in its entirety as follows:
"As and when requested by Administrative Agent, Borrowers shall
establish lockboxes and blocked accounts (collectively, 'Blocked
Accounts') in Borrowers' names or, by separate agreement with
Administrative Agent, in Administrative Agent's name, with such banks
('Collecting Banks') as are acceptable to Administrative Agent
(subject to irrevocable instructions acceptable to Administrative
Agent as hereinafter set forth and contained in agreements in form and
substance acceptable to Administrative Agent among the applicable
Borrowers and Collecting Banks and Administrative Agent ('Blocked
Account Agreement')) to which all Account Debtors shall directly remit
all payments on Accounts and in which Borrowers will immediately
deposit all payments constituting proceeds of Collateral in the
identical form in which such payment was made, whether by cash or
check."
(p) subsection 5.6(b) of the Original Loan and Security Agreement is
amended and restated in its entirety as follows:
"Borrowers shall, in addition to the matters referred to in (a) above,
as and when requested by Administrative Agent, establish a cash
management arrangement pursuant to such instruments and documents and
with such bank or banks as shall be satisfactory to Administrative
Agent. The arrangements referred to in (a) above and the cash
management arrangement referred to in this clause (b) are herein
referred to collectively as the 'Cash Dominion Arrangement.'"
(q) subsection 5.12 of the Original Loan and Security Agreement is amended
and restated in its entirety as follows:
"5.12 Further Assurances
(a) Each Loan Party shall, from time to time, execute such
guaranties, financing or continuation statements (including
financing or continuation statements in those jurisdictions that
are not Uniform Commercial Code Jurisdictions), documents,
security agreements, reports and other documents or deliver to
Administrative Agent such instruments, certificates of title or
other documents as Administrative Agent at any time may
reasonably request to evidence, perfect or otherwise implement
the guaranties and security for repayment of the Obligations
provided for in the Loan Documents. Each Loan Party shall obtain
or use its best efforts to obtain waivers or subordinations of
Liens from landlords or mortgagees, and each Loan Party shall in
all instances obtain signed acknowledgements of Administrative
Agent's Liens from bailees having possession of any Loan Party's
goods that such bailees hold for the benefit of Administrative
Agent. Unless waived by Administrative Agent in writing (which
waiver may be revoked), each Borrower shall cause each Loan Party
to enter into control agreements, in form and substance
satisfactory to the Administrative Agent, to perfect the Lien of
Administrative Agent on Collateral consisting of Letter-of Credit
Rights, electronic chattel paper (as defined in the UCC),
uncertificated securities, securities accounts and commodity
accounts issued or held by a securities intermediary or
commodities intermediary, and other Collateral of a type as to
which perfection by control is advisable or required under the
UCC. With respect to Letter-of-Credit Rights, each Loan Party
that is or becomes the beneficiary of a letter of credit shall
promptly, and in any event within two (2) Business Days after
becoming a beneficiary, notify Administrative Agent thereof, and
enter into a tri-party agreement with Administrative Agent and
the issuer and/or confirmation bank with respect to
Letter-of-Credit Rights assigning such Letter-or-Credit Rights to
Administrative Agent and directing all payments thereunder to
Administrative Agent's Account, all in form and substance
reasonably satisfactory to Administrative Agent. Each Loan Party
shall obtain a Blocked Account Agreement or similar agreement
with each bank or financial institution holding a Deposit Account
for such Loan Party in accordance with subsection 5.6. Each Loan
Party shall also promptly, and in any event within two (2)
Business Days after the same is acquired by it, notify
Administrative Agent of any commercial tort claims (as defined in
the UCC) acquired by it and unless otherwise consented by
Administrative Agent, such Loan Party shall enter into a
supplement to this Agreement, granting to Administrative Agent a
Lien on such commercial tort claim.
(b) Upon creation or acquisition thereof, each Loan Party shall cause
any newly created or acquired Subsidiary of a Borrower or a Loan
Party promptly to become a Borrower and/or Corporate Guarantor
hereunder (as specified by Administrative Agent) and to grant to
Administrative Agent, on behalf of Lenders, perfected first
priority (subject only to Permitted Encumbrances) security
interests in all present and future real, personal and mixed
property of such Subsidiary, and shall cause all present and
future equity interests in such Subsidiary to be pledged to
Administrative Agent as security for the Obligations on a first
priority basis (subject only to Permitted Encumbrances) and, to
the extent requested by Administrative Agent, and at Borrowers'
sole cost and expense, shall deliver or cause to be delivered to
Administrative Agent such legal opinion, certificates, title
insurance, evidence of UCC and other searches, evidence of
perfection of security interests, environmental reports,
appraisals (including real estate appraisals contemplated by the
Financial Institutions Reform, Recovery and Enforcement Act of
1989, as amended, and the regulations promulgated thereunder),
landlord waivers, bailee letters and similar documents and
agreements, as Administrative Agent may have reasonably
requested. Nothing contained in this paragraph shall be deemed to
be a consent to the acquisition, establishment or creation of any
Subsidiary by any Loan Party.
(c) Each Loan Party hereby irrevocably authorizes the Administrative
Agent to file financing statements (and to sign same where
required by applicable law) with respect to the Collateral
without the signature of such Loan Party that (a) indicate the
Collateral (i) as all assets of such Loan Party or words of
similar effect, regardless of whether any particular asset
comprised in the Collateral falls within the scope of Article 9
of the UCC, or (ii) as being of an equal or lesser scope or with
greater detail, and (b) contain any other information required by
part 5 of Article 9 of the UCC for the sufficiency or filing
office acceptance of any financing statement or amendment,
including (i) whether such Loan Party is an organization, the
type of organization and any organization identification number
issued to such Loan Party, and (ii) in the case of a financing
statement filed as a fixture filing or indicating Collateral as
as-extracted collateral or timber to be cut, a sufficient
description of real property to which the Collateral relates.
Each Loan Party agrees to furnish any such information to the
Administrative Agent promptly upon request. Each Loan Party also
ratifies its authorization for the Administrative Agent to have
filed any initial financing statements or amendments thereto if
filed prior to the date hereof."
(r) subsection 5.14 of the Original Loan and Security Agreement is amended
and restated in its entirety as follows:
"5.14 Instruments; Chattel Paper
Except to the extent Indebtedness evidenced thereby does not exceed
$50,000 outstanding at any time in the aggregate, Loan Parties will
deliver and pledge to Administrative Agent all notes, negotiable
Documents, certificated securities (other than any securities covered
by a Pledge Agreement), Chattel Paper, and instruments (as defined in
the UCC) duly endorsed and accompanied by duly executed instruments of
transfer or assignment (including stock powers, allonges or other
instruments of transfer executed in blank), all in form and substance
satisfactory to Administrative Agent. If the Loan Parties retain
possession of any Chattel Paper or Instruments with Administrative
Agent's consent, the Loan Parties will xxxx conspicuously all chattel
paper and instruments with a legend, in form and substance
satisfactory to Administrative Agent, indicating that such chattel
paper or instrument is subject to the security interest of
Administrative Agent, for the benefit of itself and Lenders. Borrowers
shall take all steps necessary to grant to Administrative Agent
control of all electronic chattel paper in accordance with any
provisions of the UCC regarding same which may come into effect and
all 'transferable records' as defined in each of the Uniform
Electronic Transactions Act and the Electronic Signatures in Global
and National Commerce Act."
Without limiting the generality of the foregoing, Loan Parties will
xxxx conspicuously all Account Agreements with the legend referred to
in the preceding paragraph."
(s) a new subsection 5.17 is added immediately after the end of subsection
5.16, such new subsection to be titled "Authorized Terminations" and
to read as follows:
"Upon payment and satisfaction in full in cash of all Obligations
hereunder and termination of the Commitments in accordance with
subsection 2.6, Administrative Agent shall deliver to the Loan Parties
for filing or authorize each Loan Party to prepare and file
termination statements, releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment
of the Obligations."
(t) subsection 6.2 of the Original Loan and Security Agreement is amended
and restated in its entirety as follows:
"6.2 Fixed Charge Coverage
The Loan Parties shall not suffer or permit Fixed Charge Coverage for
any period of four consecutive fiscal quarters ending on the last day
of (i) the fiscal quarter ending on March 31, 2002, to be less than
1.10:1.00, (ii) the fiscal quarter ending on June 30, 2002, to be less
than .75:1.00, (iii) the fiscal quarter ending on September 30, 2002,
to be less than .75:1.00 and (iv) any fiscal quarter ending after
September 30, 2002, to be less than 1.00:1.00."
(u) subsection 7.3(A) of the Original Loan and Security Agreement is
amended by adding the phrase ", lease, license" appearing therein
immediately after the phrase "Sell, assign" appearing therein.
(v) a new subsection 7.6(D) is added immediately after the end of
subsection 7.6(C), such new subsection to read as follows:
"Reincorporate or reorganize itself under the laws of any jurisdiction
other than the jurisdiction in which it is incorporated or organized
as of the date hereof or change its name."
(w) a new subsection 7.18 is added immediately after the end of subsection
7.17, such new subsection to be titled "Financing Statements;
Amendments; Termination Statements" and to read as follows:
"File any financing statement or amendment or termination statement
with respect to any financing statement without the prior written
consent of Administrative Agent, subject to each Loan Party's rights
under Section 9-509(d)(2) of the UCC."
(x) subsection 8.4(A) of the Original Loan and Security Agreement is
amended by (1) adding the phrase "lease, license, assign, give an
option or options to purchase or otherwise dispose of" appearing
therein immediately after the phrase "without notice except as
specified below, sell" appearing therein and (2) adding a new
paragraph at the end of such subsection to read as follows:
"To the extent that applicable law imposes duties on the Agent to
exercise remedies in a commercially reasonable manner, each Loan Party
acknowledges and agrees that it is not commercially unreasonable for
the Agent (i) to fail to incur expenses reasonably deemed significant
by the Agent to prepare the Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other
finished products for disposition, (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or,
if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be
collected or disposed of, (iii) to fail to exercise collection
remedies against Account Debtors or other Persons obligated on the
Collateral or to remove Liens on or any adverse claims against the
Collateral, (iv) to exercise collection remedies against Account
Debtors and other Persons obligated on the Collateral directly or
through the use of collection agencies and other collection
specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other Persons,
whether or not in the same business as the Loan Party, for expressions
of interest in acquiring all or any portion of such Collateral, (vii)
to hire one or more professional auctioneers to assist in the
disposition of Collateral, whether or not the Collateral is of a
specialized nature, (viii) to dispose of Collateral by utilizing
internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of
doing so, or that match buyers and sellers of assets, (ix) to dispose
of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure the Agent
against risks of loss, collection or disposition of Collateral or to
provide to the Agent a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate
by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in
the collection or disposition of any of the Collateral. Each Loan
Party acknowledges that the purpose of this paragraph under this
subsection 8.4(A) is to provide non-exhaustive indications of what
actions or omissions by the Agent would not be commercially
unreasonable in the Agent's exercise of remedies against the
Collateral and that other actions or omissions by the Agent shall not
be deemed commercially unreasonable solely on account of not being
indicated in this paragraph of this subsection 8.4(A). Without
limitation upon the foregoing, nothing contained in this paragraph
shall be construed to grant any rights to any Loan Party or to impose
any duties on any Agent that would not have been granted or imposed by
this Agreement or by applicable law in the absence of this paragraph."
(y) subsection 8.4(B) of the Original Loan and Security Agreement is
amended and restated in its entirety as follows:
"At any time after an Event of Default shall have occurred and be
continuing (or if any rights of set-off (other than set-off against an
Account arising under the contract giving rise to the same Account) or
contra accounts may be asserted with respect to the following), (i)
Collateral Agent may, without prior notice to each Loan Party, notify
Account Debtors and other Persons obligated on the Collateral that
Administrative Agent has a security interest therein, and that
payments shall be made directly to Administrative Agent, for itself
and the benefit of Lenders, and (ii) each Loan Party shall, if so
requested by Collateral Agent, so notify Account Debtors and other
Persons obligated on the Collateral."
(z) the first sentence of subsection 8.4(C) of the Original Loan and
Security Agreement is amended and restated in its entirety as follows:
"Collateral Agent may, if an Event of Default shall have occurred and
be continuing, in Collateral Agent's own name or in the name of a Loan
Party, communicate with Account Debtors, parties to Contracts,
obligors in respect of Instruments and obligors in respect of Chattel
Paper and/or payment intangibles to verify with such Persons, to
Collateral Agent's satisfaction, the existence, amount and terms of
any such Accounts, Contracts, Instruments or Chattel Paper and/or
payment intangibles."
(aa) subsection 8.5 of the Original Loan and Security Agreement is amended
and restated in its entirety as follows:
"8.5 Appointment of Attorney-in-Fact
Each Loan Party hereby constitutes and appoints each Agent as such
Loan Party's attorney-in-fact with full authority in the place and
stead of such Loan Party and in the name of such Loan Party, any Agent
or otherwise, from time to time in such Agent's discretion while an
Event of Default is continuing to take any action and to execute any
instrument that such Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including: (a) to ask,
demand, collect, xxx for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral; (b) to adjust, settle or compromise
the amount or payment of any Account, or release wholly or partly any
customer or obligor thereunder or allow any credit or discount
thereon; (c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(a) above; (d) to file any claims or take any action or institute any
proceedings that such Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of such Agent and Lenders with respect to any of the Collateral; and
(e) to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, assignments, verifications
and notices in connection with Accounts and other documents relating
to the Collateral. Regardless of whether an Event of Default has
occurred or is continuing, each Loan Party that is a party hereto
authorizes Administrative Agent to file financing statements
describing Collateral of such Loan Party with or without the signature
of the Loan Party, or to file a photocopy of this Agreement in
substitution for a financing statement, as Administrative Agent may
deem appropriate and to execute in such Loan Party's name such
financing statements and amendments thereto and continuation
statements which may require the Loan Party's signature. The
appointment of Agents as each Loan Party's attorney and Agents' rights
and powers are coupled with an interest and are irrevocable until
payment in full and complete performance of all of the Obligations."
(bb) subsection 8.6(B) of the Original Loan and Security Agreement is
amended and restated in its entirety as follows:
"It is expressly agreed by each Loan Party that, anything herein to
the contrary notwithstanding, each Loan Party shall remain liable in
respect of the Collateral and all other agreements to which it is a
party or by which it is bound relating to the Collateral to observe
and perform all the conditions and obligations to be observed and
performed by it thereunder. Neither any Agent nor any Lender shall
have any obligation or liability under any Contract by reason of or
arising out of this Agreement or the granting herein of a Lien thereon
or the receipt by any Agent or any Lender of any payment relating to
any Contract pursuant hereto. Neither any Agent nor any Lender shall
be required or obligated in any manner to perform or fulfill any of
the obligations of each Loan Party in respect of the Collateral, or to
make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any
performance by any party in respect of the Collateral, or to present
or file any claims, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned
to it or to which it may be entitled at any time or times."
2. Waivers.
(a) Effective on the Effective Date, as hereinafter defined, the Requisite
Lenders waive any Default or Event of Default arising by virtue of any
failure by the Loan Parties to comply with the covenant set forth in
subsection 6.2 for the period of four consecutive fiscal quarters
ending on the last day of the fiscal quarter ending on March 31, 2002.
Such waiver shall pertain only to such covenant for such fiscal
quarter and shall not entitle any Loan Party to any other waiver.
(b) Effective on the Effective Date, as hereinafter defined, the Requisite
Lenders waive any Default or Event of Default arising by virtue of
failure by the Loan Parties to comply with the covenant set forth in
subsection 7.12 only to the extent that non-compliance arises from the
creation of the New Loan Parties; provided, however, that the waiver
contained in this paragraph (b) shall cease and be of no further force
or effect from and after the date 45 days following the Effective
Date, as hereinafter defined, unless on or prior to such date the Loan
Parties shall have complied with the requirements of paragraph (c) of
this Section 2. Each New Loan Party hereby (i) agrees that it is a
Corporate Guarantor, a Loan Party and, except in the case of COMFORCE
P-T-P Services, Inc., a Borrower, in each case, under the terms of the
Original Loan and Security Agreement as amended by Amendment No. 6
(and as it may hereafter be amended), (ii) acknowledges that it is
unconditionally and jointly and severally obligated for all
Obligations of the Loan Parties heretofore incurred under the Original
Loan and Security Agreement or that may hereafter be incurred under
the Original Loan and Security Agreement as amended by this Amendment
No. 6 and as it may subsequently be amended as a Corporate Guarantor
and, except in the case of COMFORCE P-T-P Services, Inc., as a
Borrower, (iii) makes, as to itself and as of the date hereof, all
representations and warranties of a Loan Party contained in the
Original Loan and Security Agreement and (iv) agrees to cause each of
the covenants contained in paragraph (c) of this Section 2 to be
performed on or before the date 45 days following the Effective Date,
as hereinafter defined. The waiver contained in this paragraph (b)
shall apply only to the failure to comply with subsection 7.12 with
respect to the creation of the New Loan Parties and shall not entitle
any Loan Party to any other waiver.
(c) In connection with such waiver, on or before the date 45 days
following the Effective Date, as hereinafter defined, the Loan Parties
shall (A) deliver to the Administrative Agent for each New Loan Party,
(i) incumbency certificates, certified as of a recent date by such
party's corporate secretary or an assistant secretary, (ii)
resolutions of the Board of Directors authorizing and approving the
execution, delivery and performance of this Amendment No. 6
consummation of the transactions contemplated hereby, certified as of
a recent date by such party's corporate secretary or assistant
secretary as being in full force and effect without modification or
amendment, (iii) certified copies of the certificate or articles of
incorporation together with good standing certificates from the state
of its incorporation and (iv) a copy of the bylaws certified as of a
recent date by its corporate secretary or assistant secretary as being
in full force and effect without modification or amendment, in the
case of each of clauses (i) and (ii), in form and substance
satisfactory to the Administrative Agent, (B) deliver a legal opinion
from independent counsel to the New Loan Parties in form and substance
satisfactory to the Administrative Agent as to such matters in
connection with the execution, delivery performance by the New Loan
Parties of this Amendment No. 6 and the pledge of stock referred to
below as the Administrative Agent may reasonably request and (C)
pledge to the Administrative Agent pursuant to the Pledge Agreement
all issued and outstanding capital stock of the New Loan Parties and
all other equity interests, if any, therein, deliver to the
Administrative Agent all certificates evidencing such capital stock
and other equity interests endorsed in blank or accompanied by stock
powers signed, undated and left blank as to the transferee and caused
the Pledge Agreement to be amended (in form and substance satisfactory
to the Administrative Agent) to accommodate such pledge.
3. Representations and Warranties. Each Loan Party and New Loan Party
represents and warrants (which representations and warranties shall survive
the execution and delivery hereof) to the Lenders that:
(a) no consent of any other person, including, without limitation,
shareholders or creditors of any Loan Party or New Loan Party is
required to authorize, or is otherwise required in connection with the
execution, delivery and performance of this Amendment No. 6.
(b) this Amendment No. 6 has been duly executed and delivered by a duly
authorized officer of each Loan Party and New Loan Party, and
constitutes the legal, valid and binding obligations of such Loan
Party or New Loan Party, enforceable against such party in accordance
with its terms, except as enforcement thereof may be subject to the
effect of any applicable (i) bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).
(c) the execution, delivery and performance of this Amendment No. 6 will
not violate any law, statute or regulation applicable to any Loan
Party or New Loan Party, or any order or decree of any court or
governmental instrumentality applicable to such company, or conflict
with, or result in the breach of, or constitute a default under any
contractual obligation of such company, including the Loan Documents.
4. Effectiveness. The foregoing amendments contained in this Amendment No. 6
to the Original Loan and Security Agreement shall become effective upon the
satisfaction in full of the following conditions on a date (the "Effective
Date") on or before May 10, 2002:
(a) this Amendment No. 6 shall have been executed and delivered by each
Loan Party, New Loan Party and the Requisite Lenders;
(b) as of the Effective Date, there shall be continuing no Default or
Event of Default, other than (i) the failure of the Loan Parties to
comply with the covenant set forth in subsection 6.2 of the Original
Loan and Security Agreement for the period of four consecutive fiscal
quarters ending on the last day of the fiscal quarter ending on March
31, 2002 and (ii) the failure of the Loan Parties to comply with the
covenant set forth in subsection 7.12 of the Original Loan and
Security Agreement with respect to the creation of the New Loan
Parties;
(c) the representations made by the Loan Parties and New Loan Parties
herein and in the Loan Documents shall be true in all respects as of
the Effective Date (except as to any representation or warranty
limited to a specific earlier date);
(d) the Administrative Agent shall have received from CC, COI and USI a
fee of $50,000 for the pro rata account of the Lenders; and
(e) the Administrative Agent shall have received a legal opinion, dated
the Effective Date and addressed to the Administrative Agent, the
Collateral Agent and the Lenders, from independent counsel to the Loan
Parties and the New Loan Parties, as to the Original Loan and Security
Agreement, as amended by Amendment No. 6 and the other Loan Documents,
in form and substance satisfactory to the Administrative Agent.
5. Special Condition I Non-Satisfaction Fee. If Borrowers fail to satisfy in
full the conditions specified in the definition of "Special Condition I
Satisfaction Date" on or prior to the date 90 days after May 2, 2002, CC,
COI and USI shall pay, as compensation to the Lenders for their increased
risk, to the Administrative Agent for the pro rata account of the Lenders a
fee in the amount of $25,000.
6. New or Replaced Schedules. Schedule 2.8 referred to in Section 1(d) of this
Amendment No. 6 shall be added to the Original Loan and Security Agreement
and is attached hereto as Exhibit A. Schedule 4.8 of the Original Loan and
Security Agreement shall be replaced with a new Schedule 4.8 referred to in
Section 1(m) of this Amendment No. 6 and is attached hereto as Exhibit B.
7. Governing Law. This Amendment No. 6 to the Original Loan and Security
Agreement is being delivered in the State of New York and shall be governed
by and construed in accordance with the laws of the State of New York.
8. Counterparts. This Amendment No. 6 to the Original Loan and Security
Agreement is being executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original,
but all of which counterparts together shall constitute but one and the
same instrument.
9. Consent. By signing below, each Loan Party and New Loan Party consents to
the execution and delivery of this Amendment No. 6 by each other Loan Party
and each other New Loan Party and agrees that the obligations of such Loan
Party or such New Loan Party under the Loan Documents continue in full
force and effect.
10. Miscellaneous. All references in the Loan Documents to the "Loan and
Security Agreement" and in the Original Loan and Security Agreement to
"this Agreement," "hereof," "herein" or the like shall mean and refer to
the Original Loan and Security Agreement and this Amendment No. 6 (as well
as by all subsequent amendments, restatements, modifications and
supplements thereto).
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the Loan Parties, the New Loan Parties, the Lenders,
the Co-Agent, the Collateral Agent and the Administrative Agent have caused this
Amendment No. 6 to the Original Loan and Security Agreement to be executed as of
the day and year first written above.
Holding Parties: COMFORCE CORPORATION
COMFORCE OPERATING, INC.
Borrowers: BRENTWOOD OF CANADA, INC.
BRENTWOOD SERVICE GROUP, INC.
CAMELOT COMMUNICATIONS GROUP, INC.
CAMELOT CONTROL GROUP, INC.
CLINICAL LABFORCE OF AMERICA, INC.
COMFORCE INFORMATION TECHNOLOGIES, INC.
COMFORCE TECHNICAL ADMINISTRATIVE SERVICES, INC.
COMFORCE TECHNICAL NW, INC. (as successor to LABFORCE
OF AMERICA, INC.)
COMFORCE TECHNICAL SERVICES, INC.
COMFORCE TELECOM, INC.
XXXXX X., INC.
PRO SERVICES, INC.
PRO UNLIMITED, INC.
PRO UNLIMITED SERVICES, INC.
SUMTEC CORPORATION
TEMPORARY HELP INDUSTRY SERVICING COMPANY, INC.
THISCO OF CANADA, INC.
UNIFORCE PAYROLLING SERVICES, INC.
UNIFORCE PAYROLLING TRI-STATE INC.
UNIFORCE SERVICES, INC.
UNIFORCE STAFFING SERVICES, INC.
Inactive Subsidiaries: COMFORCE ACQUISITION 1 CORP.
New Loan Parties: BXI NET, INC.
COMFORCE CODING SERVICES, INC.
COMFORCE P-T-P SERVICES, INC.
LABFORCE SERVICES OF AMERICA, INC.
[Signatures Continued on Following Page]
[Signature page 1 of 2 to Amendment No. 6]
For each of the foregoing corporations:
By: _____________________________________
Name:
Title:
IBJ WHITEHALL BUSINESS CREDIT
CORPORATION, as Administrative Agent and Lender
By: _____________________________________
Name:
Title:
Revolving Loan Commitment:
$17,272,727.00
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Collateral Agent and Lender
By: _____________________________________
Name:
Title:
Revolving Loan Commitment:
$17,272,727.00
TRANSAMERICA BUSINESS CAPITAL
CORPORATION (as successor to Transamerica
Business Credit Corporation), as Co-Agent and
Lender
By: _____________________________________
Name:
Title:
Revolving Loan Commitment:
$17,272,727.00
[Signatures Continued on Following Page]
[Signature page 2 of 2 to Amendment No. 6]
FLEET CAPITAL CORPORATION, as Lender
By: _____________________________________
Name:
Title:
Revolving Loan Commitment:
$12,954,546.00
JPMORGAN CHASE BANK (formerly known as
The Chase Manhattan Bank), as Lender
By: _____________________________________
Name:
Title:
Revolving Loan Commitment:
$12,954,546.00
LASALLE BUSINESS CREDIT, INC., as Lender
By: _____________________________________
Name:
Title:
Revolving Loan Commitment:
$10,795,454.00
GUARANTY BUSINESS CREDIT
CORPORATION, as Lender
By: _____________________________________
Name:
Title:
Revolving Loan Commitment:
$6,477,273.00
