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THIRD AMENDED AND
RESTATED CREDIT AGREEMENT
AMONG
OUTSOURCE INTERNATIONAL, INC.
THE BANKS
FROM TIME TO TIME PARTIES HERETO
AND
BANKBOSTON, N.A., SUCCESSOR BY MERGER
TO BANK OF BOSTON CONNECTICUT,
AS AGENT
REVOLVING CREDIT FACILITY
DATED AS OF JULY 27, 1998
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TABLE OF CONTENTS
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Page
SECTION 1. DEFINITIONS...........................................................................................1
1.1 Defined Terms...................................................................................1
1.2 Other Definitional Provisions..................................................................19
1.3 Change in Accounting Principles................................................................20
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS......................................................................20
2.1 Revolving Credit Commitments...................................................................20
2.1A. Swingline Loans................................................................................20
2.2 Designation of Interest Rates; Eurodollar Interest Periods.....................................23
2.3 Interest Rates and Payment Dates...............................................................23
2.4 Procedure for Borrowing........................................................................24
2.5 Conversion and Continuation Options............................................................25
2.6 Minimum Amounts and Maximum Number of Tranches.................................................25
2.7 Revolving Credit Notes.........................................................................26
2.8 Fees...........................................................................................26
2.9 Termination or Reduction of Revolving Credit Commitments.......................................26
2.10 Optional Prepayments...........................................................................27
2.11 Computation of Interest and Fees...............................................................27
2.12 Inability to Determine Interest Rate...........................................................27
2.13 Pro Rata Treatment and Payments................................................................28
2.14 Illegality.....................................................................................29
2.15 Requirements of Law............................................................................29
2.16 Taxes..........................................................................................30
2.17 Indemnity......................................................................................32
SECTION 3. LETTERS OF CREDIT....................................................................................32
3.1 L/C Commitment.................................................................................32
3.2 Procedure for Issuance of Letters of Credit....................................................33
3.3 Fees, Commissions and Other Charges............................................................34
3.4 Reimbursement Obligation of the Borrower.......................................................34
3.5 L/C Draws and Reimbursements...................................................................35
3.6 Obligations Absolute...........................................................................36
3.7 Letter of Credit Payments......................................................................36
3.8 Application....................................................................................36
SECTION 4. REPRESENTATIONS AND WARRANTIES.......................................................................36
4.1 Financial Condition............................................................................37
4.2 No Change......................................................................................38
4.3 Corporate Existence; Compliance with Law.......................................................38
4.4 Corporate Power, Authorization; Enforceable Obligations........................................38
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4.5 No Legal Bar...................................................................................39
4.6 No Material Litigation.........................................................................39
4.7 No Default.....................................................................................39
4.8 Ownership of Property; Liens...................................................................39
4.9 Intellectual Property..........................................................................39
4.10 No Burdensome Restrictions.....................................................................40
4.11 Taxes..........................................................................................40
4.12 Federal Regulations............................................................................40
4.13 ERISA..........................................................................................40
4.14 Investment Company Act; Other Regulations......................................................41
4.15 Subsidiaries...................................................................................41
4.16 Purpose of Loans...............................................................................41
4.17 Environmental Matters..........................................................................41
4.18 Security Documents.............................................................................42
4.19 [Intentionally Reserved].......................................................................43
4.20 Solvency.......................................................................................43
4.21 Certain Stockholders...........................................................................43
4.22 Year 2000 Compatability........................................................................43
SECTION 5. CONDITIONS PRECEDENT.................................................................................44
5.1 Amendment Effective Date.......................................................................44
5.2 Conditions to Each Extension of Credit.........................................................46
SECTION 6. AFFIRMATIVE COVENANTS................................................................................47
6.1 Financial Statements...........................................................................47
6.2 Certificates; Other Information................................................................48
6.3 Payment of Obligations.........................................................................49
6.4 Conduct of Business and Maintenance of Existence...............................................49
6.5 Maintenance of Property; Insurance.............................................................50
6.6 Inspection of Property; Books and Records; Discussions.........................................50
6.7 Notices........................................................................................50
6.8 Environmental Laws.............................................................................51
6.9 Use of Proceeds................................................................................52
6.10 Further Assurances.............................................................................52
[6.11 Interest Rate Protection.......................................................................52
6.12 Year 2000 Compatibility........................................................................52
SECTION 7. NEGATIVE COVENANTS...................................................................................52
7.1 Financial Condition Covenants..................................................................53
7.2 Limitation on Indebtedness.....................................................................53
7.3 Limitation on Liens............................................................................54
7.4 Limitation on Guarantee Obligations............................................................55
7.5 Limitations on Fundamental Changes.............................................................55
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7.6 Limitation on Sale of Assets...................................................................56
7.7 Limitation on Restricted Payments..............................................................56
7.8 Limitation on Investments, Loans and Advances..................................................56
7.9 Limitation on Optional Payments and Modifications of Debt Instruments..........................58
7.10 Transactions with Affiliates...................................................................58
7.11 Sale and Leaseback.............................................................................58
7.12 Corporate Documents; Name/Location of Assets...................................................58
7.13 Fiscal Year....................................................................................59
7.14 Limitation on Negative Pledge Clauses..........................................................59
7.15 No Limit on Upstream Payments by Subsidiaries..................................................59
7.16 AASI and Voting Trust Agreement................................................................59
SECTION 8. EVENTS OF DEFAULT....................................................................................60
SECTION 9. THE AGENT............................................................................................63
9.1 Appointment....................................................................................63
9.2 Delegation of Duties...........................................................................64
9.3 Exculpatory Provisions.........................................................................64
9.4 Reliance by Agent..............................................................................64
9.5 Notice of Default..............................................................................64
9.6 Non-Reliance on Agent and Other Banks..........................................................65
9.7 Indemnification................................................................................65
9.8 Agent in Its Individual Capacity...............................................................66
9.9 Successor Agent................................................................................66
SECTION 10. MISCELLANEOUS.......................................................................................66
10.1 Amendments and Waivers.........................................................................66
10.2 Notices........................................................................................67
10.3 No Waiver; Cumulative Remedies.................................................................68
10.4 Survival of Representations and Warranties.....................................................68
10.5 Payment of Expenses and Taxes..................................................................68
10.6 Successors and Assigns; Participations; Purchasing Banks.......................................69
10.7 Adjustments; Set-off...........................................................................72
10.8 Counterparts...................................................................................73
10.9 Severability...................................................................................73
10.10 Integration....................................................................................73
10.11 Governing Law..................................................................................73
10.12 Submission To Jurisdiction; Waivers............................................................73
10.13 Acknowledgments................................................................................74
10.14 WAIVERS OF JURY TRIAL; COMMERCIAL TRANSACTIONS.................................................74
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SCHEDULES
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Schedule A Commitments; Addresses
Schedule 4.1(b) Long-Term Commitments
Schedule 4.1(c) Recent Dispositions
Schedule 4.2 Changes/Recent Distributions
Schedule 4.6 Litigation
Schedule 4.11 Tax Returns
Schedule 4.13 ERISA Matters
Schedule 4.15 Subsidiaries
Schedule 4.17 Environmental Matters
Schedule 4.18 UCC Filing Locations
Schedule 4.21 Relationships of Certain Stockholders to the Borrower
Schedule 7.2 Indebtedness Outstanding After the Execution Date
Schedule 7.3 Liens
Schedule 7.8 Management Loans and Advances
EXHIBITS
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EXHIBIT A-1 Form of Borrowing Notice EXHIBIT A-2 Form of Revolving Credit Note
EXHIBIT A-3 Form of Swingline Note EXHIBIT B Form of Subsidiary Guarantee
EXHIBIT C Form of OI Pledge Agreement EXHIBIT D Form of Assignment and
Acceptance
EXHIBIT E Form of Opinion of Counsel to the Borrower and its
Subsidiaries
EXHIBIT F Form of OI Security Agreement
EXHIBIT G Form of Subsidiary Security Agreement
EXHIBIT H Form of Trademark Security Agreement
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CREDIT AGREEMENT
THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 27, 1998,
by and among OUTSOURCE INTERNATIONAL, INC., a Florida corporation ("the
Borrower" or "OI"), the banks and other financial institutions listed on
SCHEDULE A to this Agreement (collectively, together with any banks or financial
institutions from time to time parties to this Agreement, the "Banks"), and
BANKBOSTON, N.A., a national banking association and successor by merger to BANK
OF BOSTON CONNECTICUT, as agent for the Banks hereunder (in such capacity, the
"Agent").
BankBoston, N.A., Comerica Bank and LaSalle National Bank, the Borrower
and the Agent entered into the Credit Agreement dated as of February 21, 1997,
which Agreement was (i) amended and restated as of Xxxxx 00, 0000, (xx) further
amended as of September 4, 1997, (iii) amended and restated as of November 26,
1997 to provide for, among other things, the addition of State Street Bank and
Trust Company, SunTrust Bank, South Florida, National Association, and The
Sumitomo Bank, Limited (together with BankBoston, N.A., Comerica Bank and
LaSalle National Bank, the "Existing Banks"), (iv) further amended as of
December 30, 1997, (v) further amended as of January 30, 1998, and (vi) further
amended as of March 18, 1998 (such Credit Agreement, as so amended and in effect
immediately prior to the Amendment Effective Date defined below, the "Existing
Credit Agreement").
The Borrower has requested that the Existing Banks and the Agent, and
the Banks parties hereto and the Agent are willing to, amend and restate the
Existing Credit Agreement to (i) take into account the Borrower's desire to
securitize certain of the accounts receivable of the Borrower and its
Subsidiaries, thereby reducing the need for the Revolving Credit Commitment
hereunder to a maximum of $34,000,000, and (ii) provide for the addition of
Fleet National Bank as a Bank to replace State Street Bank and Trust Company and
The Sumitomo Bank, Limited.
Accordingly, the parties hereto agree to amend and restate the Existing
Credit Agreement so that, as amended and restated, it provides in its entirety
as herein provided.
SECTION 1. DEFINITIONS
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1.1 Defined Terms: As used in this Agreement, the following terms shall
have the following meanings:
"AASI": the Agreement among Shareholders and Investors, dated as of
February 21, 1997, among the Borrower, certain shareholders of the Borrower,
Triumph/Bachow, the trustees of the Voting Trust Agreement (as defined herein)
and an escrow agent, as amended, supplemented or otherwise modified from time to
time with the prior written consent of the Banks.
"Affiliate": of a Person (the "Primary Person"), (a) any other Person
(other than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, the Primary Person or (b) any
Person who is a director or officer (i) of the Primary Person, (ii) of any
Subsidiary of the Primary Person or (iii) of any Person described in clause (a)
above. For purposes of this definition, control of a Person shall mean the
power, directly or indirectly, (a) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or (b) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"Aggregate Outstanding Extensions of Credit": as to any Bank at any
time and without duplication, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Credit Loans made by such Bank then
outstanding and (b) the product of such Bank's Commitment Percentage times the
undrawn and unexpired L/C Obligations then outstanding.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"All-Temps, Inc.": a corporation organized and existing under the laws
of the State of Illinois.
"Alternate Base Rate": the higher of (a) the rate of interest per annum
publicly announced from time to time by the Agent as its "base rate" in effect
at its principal office (the Alternate Base Rate not being intended to be the
best or lowest rate of interest charged by the Agent in connection with
extensions of credit to debtors) or (b) the Federal Funds Effective Rate plus
1/2 of 1% per annum (rounded upwards, if necessary, to the next 1/100 of 1%).
Any change in the Alternate Base Rate shall be effective as of the opening of
business on the effective day of such change in the Alternate Base Rate.
"Alternate Base Rate Loans": Loans for which the applicable rate of
interest is based upon the Alternate Base Rate.
"Amendment Effective Date": the date on which all of the conditions set
forth in Section 5.1 shall have been satisfied or waived by the Banks and the
Agent.
"Applicable Margin": at any time, for Alternate Base Rate Loans or
Eurodollar Loans, a rate per annum equal to the rate set forth opposite the
applicable Consolidated Indebtedness to Consolidated EBITDA Ratio in the Pricing
Grid.
"Application": an application in such form as the Issuing Bank may
specify from time to time, requesting the Issuing Bank to issue a Letter of
Credit.
"Arranger": BancBoston Securities, Inc., in its capacity as arranger
and syndication agent.
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"Assignment and Acceptance": an Assignment and Acceptance,
substantially in the form of Exhibit D.
"Available Revolving Credit Commitment": as to any Bank at any time, an
amount equal to the excess, if any, of (a) the amount of such Bank's Revolving
Credit Commitment over (b) such Bank's Aggregate Outstanding Extensions of
Credit.
"Borrowing Date": any Business Day specified in a notice pursuant to
subsections 2.1A(b) or 2.4 as a date on which the Borrower requests the Banks to
make Loans hereunder.
"Business Day": a day other than Saturday, Sunday or other day on which
commercial banks in Hartford, Connecticut are authorized or required by law to
close and, in the case of Eurodollar Loans, also a day on which commercial banks
are open for international business (including dealings in Dollar deposits) in
London or such other eurodollar interbank market as may be selected by the Agent
in its sole discretion acting in good faith.
"Capital Expenditures": any payment made directly or indirectly for the
purpose of acquiring, constructing or improving fixed assets, real property or
equipment which in accordance with GAAP would be added as a net debit (after
giving effect to any credits) to the fixed asset account of the Person making
such expenditure, including, without limitation, amounts paid or payable under
any conditional sale or other title retention agreement.
"Capital Lease": any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.
"Capital Stock": 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.
"Cash Equivalents": (a) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, (b) certificates of deposit and Eurodollar time
deposits with maturities of six (6) months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six (6) months and overnight
bank deposits, in each case, with any Bank or with any domestic commercial bank
having capital and surplus in excess of $100,000,000, (c) repurchase obligations
with a term of not more than seven (7) days for underlying securities of the
types described in clauses (a) and (b) entered into with any financial
institution meeting the qualifications specified in clause (b) above, and (d)
commercial paper issued by any Bank or the parent corporation of any Bank and
commercial paper of any other issuer rated at least A-1 or the equivalent
thereof by Standard & Poor's Corporation or at least P-1 or the equivalent
thereof by Xxxxx'x Investors Service, Inc. and in each case maturing within six
(6) months after the date of acquisition.
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"Cash Collateral Account": as defined in Section 8.
"Change of Control": except as contemplated by the AASI or the Voting
Trust Agreement, the occurrence of any of the following events: (a) any "person"
or "group" (as such terms are used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, and the rules promulgated thereunder) is or
becomes the beneficial owner, directly or indirectly, of more than 50% of the
total voting power of the Voting Stock of the Borrower; (b) during any period of
two (2) consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Borrower (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Borrower was approved by the directors then
still in office who either were directors at the beginning of such period or
whose election or nomination for director was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of the Borrower
then in office; (c) the direct or indirect, sale, lease, exchange or other
transfer of all or substantially all of the assets of the Borrower to any
"person" or "group" (as such terms are used in Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder); provided that the foregoing shall not include the granting of Liens
permitted by this Agreement; or (d) the Borrower consolidates with or merges
into another corporation or any Person consolidates with or merges into the
Borrower, in either event pursuant to a transaction in which either (i) the
outstanding Voting Stock of the Borrower is changed into or exchanged for cash,
securities or other property (other than any such transaction where the
outstanding Voting Stock of the Borrower is changed into or exchanged for Voting
Stock of the surviving corporation) or (ii) the holders of a majority of the
voting power of the Voting Stock of the Borrower immediately prior to such
transaction own, directly or indirectly, less than a majority of voting power of
the Voting Stock of the surviving corporation immediately after such
transaction.
"Closing Date": July 27, 1998.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": the collective reference to the Collateral, as such term
is defined in each of the OI Security Agreement, the OI Pledge Agreement, each
Subsidiary Security Agreement and the Trademark Security Agreement.
"Commitment Fee": as defined in Section 2.8(a).
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"Commitment Percentage": as to any Bank (a) at any time at which the
Revolving Credit Commitments remain outstanding, the percentage equivalent
(expressed as a decimal, rounded to the ninth decimal place) at such time of
such Bank's Revolving Credit Commitment divided by the aggregate combined
Revolving Credit Commitments of all Banks, and (b) after the termination of the
Revolving Credit Commitments, the percentage equivalent (expressed as a decimal,
rounded to the ninth decimal place) at such time of the principal amount of such
Bank's outstanding Loans divided by the aggregate principal amount of the
outstanding Loans of all the Banks.
"Commitment Period": the period from and including the date hereof to
but not including the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"Commitments": the collective reference to the Revolving Credit
Commitments and the L/C Commitments.
"Commonly Controlled Entity": an entity, whether incorporated or not,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414 of the Code.
"Consolidated Current Assets": the amount of the current assets of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP, provided, however, that irrespective of whether GAAP or any other
applicable accounting standard should require the consolidation of the current
assets of the Subsidiaries with those of the Borrower, the current assets of the
Subsidiaries shall be consolidated with those of the Borrower for purposes of
this definition, and provided further that, notwithstanding any applicable
accounting convention or compliance with GAAP, for purposes of this definition
the amount of current assets attributable to OutSource Funding Corporation will
in no event be less than the face amount of the Receivables (as such term is
defined in the Receivables Purchase and Sale Agreement) sold by the Originators
(as such term is defined in the Receivables Purchase and Sale Agreement) to
OutSource Funding Corporation pursuant to the Receivables Purchase and Sale
Agreement.
"Consolidated Current Liabilities": the amount of the current
liabilities of the Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; provided, however, there shall be excluded
therefrom the amount of any principal obligation due on Indebtedness of the
Borrower or its Subsidiaries after the Termination Date and provided further
that irrespective of whether GAAP or any other applicable accounting standard
should require the consolidation of the current liabilities of the Subsidiaries
with those of the Borrower, the current liabilities of the Subsidiaries shall be
consolidated with those of the Borrower for purposes of this definition.
"Consolidated EBITDA": for any period, Consolidated Net Income for such
period plus the aggregate amounts deducted in determining such Consolidated Net
Income in respect of (a) income taxes, (b) Consolidated Interest Expense (to the
extent deducted in determining Consolidated Net Income), (c) depreciation
expense and (d) the expense associated with amortization of intangible and other
assets.
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"Consolidated EBITDA to Consolidated Interest Expense Ratio": at the
end of any month, the ratio of (a) Consolidated EBITDA for the immediately
preceding twelve (12) months (ending on such date) to (b) Consolidated Interest
Expense for the immediately preceding twelve (12) months (ending on such date).
For purposes of (b) above, non-cash interest shall be excluded.
"Consolidated Indebtedness": at any particular date, with respect to
the Borrower and its Subsidiaries, all liabilities less trade accounts payable
and accrued liabilities ("Debt"), determined on a consolidated basis in
accordance with GAAP, provided, however, that irrespective of whether GAAP or
any other applicable accounting standard should require the consolidation of the
Debt of the Subsidiaries with that of the Borrower, the Debt of the Subsidiaries
shall be consolidated with that of the Borrower for purposes of this definition,
and provided further that for purposes of this definition the Debt reported for
OutSource Funding Corporation shall in no event be less than the sum of the
aggregate Face Amount (as such term is defined in the Liquidity Agreement) of
all outstanding EagleFunding CP Notes (as such term is defined in the Liquidity
Agreement) and the Liquidity Advance Balance (as such term is defined in the
Liquidity Agreement).
"Consolidated Indebtedness to Consolidated EBITDA Ratio": at the end of
any month, the ratio of (a) Consolidated Indebtedness on such date to (b)
Consolidated EBITDA for the immediately preceding twelve (12) months (ending on
such date). Note: For purposes of Section 7.1(a) only (i.e. not for pricing
under the Pricing Grid), the Borrower may add for such twelve (12) months (i)
Consolidated EBITDA of any entity acquired in a Permitted Acquisition or
identified in Note 1 to the Unaudited Pro Forma Consolidated Financial
Information contained in the Prospectus, plus any compensation paid by such
entity to any shareholder of such entity during such period to the extent such
shareholder is not continuing to receive compensation or consulting or similar
fees from the Borrower or any of its Subsidiaries subsequent to the acquisition
and (ii) any verifiable non-recurring expenses approved by the Required Banks.
"Consolidated Interest Expense": for any period, the interest expense
for the Borrower and its Subsidiaries, including the interest portion of rental
payments under Capital Leases plus all fees, expenses, and yields incurred under
the Receivable Securitization Transaction but excluding non-cash interest,
determined on a consolidated basis in accordance with GAAP, provided, however,
that irrespective of whether GAAP or any other applicable accounting standard
should require the consolidation of the interest expense of the Subsidiaries
with that of the Borrower, the interest expense of the Subsidiaries shall
nevertheless be consolidated with that of the Borrower for purposes of this
definition.
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"Consolidated Net Income": for any period, the net income (or loss) of
the Borrower and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded from the
calculation thereof (a) any non-operating gains or losses (including without
limitation, extraordinary or unusual gains or losses, gains or losses from
discontinuance of operations, gains or losses arising from the sale or
disposition by the Borrower or any Subsidiary of any asset, or the issuance of
any debt or equity securities, and other non-recurring gains or losses) and (b)
distributions and compensation not exceeding $1,000,000 in the aggregate paid by
the Borrower and its Subsidiaries to Xxxxx Xxxxxxxx, Xxxx Xxxxxxxx and Xxxxx
Xxxxxxx for the period from October 1, 1996 to February 21, 1997, and provided
further, that irrespective of whether GAAP or any other applicable accounting
standard should require the consolidation of the net income (or loss) of the
Subsidiaries with that of the Borrower, the net income (or loss) of the
Subsidiaries shall nevertheless be consolidated with that of the Borrower for
purposes of this definition.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CSF": Capital Staffing Fund, Inc., a Florida corporation.
"Current Ratio": at the end of any month, the ratio of Consolidated
Current Assets to Consolidated Current Liabilities.
"date hereof": July 27, 1998.
"Default": any of the events specified in Section 8, regardless of
whether any requirement for the giving of notice, the lapse of time, or both, or
any other conditions, has been satisfied.
"Default Rate": as defined in subsection 2.3(d).
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Environmental Laws": any and all Federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees or
requirements of any Governmental Authority regulating, relating to or imposing
liability or standards of conduct concerning environmental protection matters,
including without limitation, Hazardous Materials, as now or may at any time
hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
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"Eurodollar Base Rate": with respect to each day during each Eurodollar
Interest Period, the rate per annum equal to the rate at which the Agent is
offered Dollar deposits at or about 10:00 A.M., Eastern time, two (2) Business
Days prior to the beginning of such Eurodollar Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Eurodollar Interest Period for the number of
days comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Eurodollar Interest Period.
"Eurodollar Interest Period": any one (1), two (2), three (3) or six
(6) month period, subject to availability (which availability shall be
determined in good faith by the Agent), selected by the Borrower in respect to
any Eurodollar Loan pursuant to subsections 2.2, 2.4 or 2.5 of this Agreement.
"Eurodollar Loans": Loans for which the applicable rate of interest is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Eurodollar
Interest Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
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1.00 - Eurodollar Reserve Requirements
"Eurodollar Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding maintained by a member
bank of such System.
"Event of Default": any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Existing Banks": as defined in the recitals.
"Existing Credit Agreement": as defined in the recitals.
"Existing Loans": the loans outstanding under the Existing Credit
Agreement on the Amendment Effective Date.
"Federal Funds Effective Rate": at any time shall mean a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal Funds transactions with members of the Federal Reserve System arranged
by Federal Funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three (3) Federal Funds brokers of recognized
standing selected by the Agent.
8
"Field Examinations": as defined in subsection 6.6.
"FQED": the end date of any fiscal quarter in any fiscal year of the
Borrower.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing Person or (b) another Person (including,
without limitation, any bank under any letter of credit), to induce the creation
of which obligation the guaranteeing person has issued a reimbursement, counter
indemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether contingent or not, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (A) for the purchase
or payment of any such primary obligation or (B) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligations of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner of any
such primary obligation against loss in respect thereof; provided, however, that
the term "Guarantee Obligation" shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (x) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (y) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"Hazardous Materials": any hazardous materials, hazardous wastes,
hazardous constituents, hazardous or toxic substances, petroleum products
(including crude oil or any fraction thereof), defined or regulated as such in
or under any Environmental Law.
9
"Indebtedness": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under Capital Leases, (c) all
obligations of such person in respect of acceptances issued or created for the
account of such Person, (d) all liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (e) the face amount of any outstanding letters
of credit issued for the account of such Person, (f) obligations in respect of
interest rate hedge agreements entered into in the ordinary course of business,
and (g) all Guarantee Obligations of such Person in respect of obligations
referred to in clauses (a) through (f) above.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercreditor Agreement": the Intercreditor Agreement dated as of July
27, 1998 among the Agent, OutSource Funding Corporation, the Borrower, OutSource
Franchising, Inc., CSF, Synadyne I, Inc., Synadyne II, Inc., Synadyne III, Inc.,
Synadyne IV, Inc., Synadyne V, Inc., OutSource International of America, Inc.,
EagleFunding Capital Corporation and the Arranger, as the same may be amended,
supplemented, restated or otherwise modified and in effect from time to time.
"Interest Payment Date": (a) as to any Alternate Base Rate Loan, the
first day of each month to occur while such Loan is outstanding, (b) as to any
Eurodollar Loan having a Eurodollar Interest Period of one (1) month, the last
day of such Eurodollar Interest Period, (c) as to any Eurodollar Loan having a
Eurodollar Interest Period longer than one (1) month, the first day of each
month to occur during such Eurodollar Interest Period and the last day of such
Eurodollar Interest Period and (d) as to any Swingline Loan, the Swingline Loan
Maturity Date.
"Issuing Bank": BankBoston, N.A., successor by merger to Bank of Boston
Connecticut, in its capacity as issuer of any Letter of Credit.
"Labor World": a trademark of OutSource Franchising, Inc. registered
with the United States Patent and Trademark Office and used by OutSource
Franchising, Inc. and its franchisees in marketing temporary industrial
personnel.
"L/C Commitment": the lesser of (a) $15,000,000, minus the sum of (i)
the aggregate then undrawn and unexpired amount of the then outstanding letters
of credit issued by The First National Bank of Boston or any affiliate for the
account of the Borrower or any Subsidiary and (ii) the aggregate amount of
unreimbursed drawings under such letters of credit and (b) the Revolving Credit
Commitment then in effect.
"L/C Fee": as defined in subsection 3.3(a).
10
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to subsection 3.5.
"L/C Participants": the collective reference to all the Banks other
than the Issuing Bank.
"Letter of Credit Rate": for each Letter of Credit, at any time, a rate
per annum equal to the rate set forth opposite the applicable ratio of
Consolidated Indebtedness to Consolidated EBITDA in the Pricing Grid.
"Letters of Credit": as defined in subsection 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, security
interest, deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any Capital Lease having substantially
the same economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).
"Liquidity Agreement": the Liquidity Agreement dated as of July 27,
1998 among EagleFunding Capital Corporation, as the borrower, the financial
institutions from time to time party thereto, as liquidity providers,
BankBoston, N.A., as the liquidity agent, and Bankers Trust Company, as
collateral agent, as the same may be amended, supplemented, restated or
otherwise modified and in effect from time to time.
"Loan": any loan made by any Bank pursuant to this Agreement.
"Loan Documents": this Agreement, the Notes, the Applications, the OI
Pledge Agreement, the OI Security Agreement, each Subsidiary Guarantee, each
Subsidiary Security Agreement, each Trademark Security Agreement and the
Subordination Agreements, together with any and all other instruments, documents
and agreements executed and delivered by the Borrower or the Subsidiaries from
time to time in connection with the indebtedness evidenced by this Agreement and
the Notes, as the same may hereafter be amended, supplemented, restated or
otherwise modified and in effect from time to time.
11
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the
Borrower or any Subsidiary to perform its obligations under the Loan Documents
to which it is a party or (c) the validity or enforceability of this Agreement,
the Notes or any of the other Loan Documents or the rights or remedies of the
Agent or the Banks hereunder or thereunder.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Notes": the collective reference to the Revolving Credit Notes and the
Swingline Note, and any promissory note delivered as a replacement, in
substitution or in exchange therefor, as each may be amended, supplemented,
restated or otherwise modified and in effect from time to time.
"Obligations": means all Indebtedness, obligations and liabilities of
the Borrower and its Subsidiaries, to the Agent and the Banks under this
Agreement, the Revolving Credit Notes, the Swingline Note or any other Loan
Document, as each of the foregoing may be amended, supplemented, restated or
otherwise modified and in effect from time to time (including amendments or
supplements increasing such Indebtedness, obligations and liabilities of the
Borrower and its Subsidiaries).
"Office Ours": a trademark of OutSource Franchising, Inc. registered
with the United States Patent and Trademark Office and used by OutSource
Franchising, Inc. and its franchisees in marketing temporary office and clerical
personnel.
"OI Pledge Agreement": the OI Pledge Agreement, substantially in the
form of Exhibit C, made by the Borrower in favor of the Agent for the benefit of
the Agent and the ratable benefit of the Banks, as the same may be amended,
supplemented, restated or otherwise modified and in effect from time to time.
"OI Security Agreement": the OI Security Agreement, substantially in
the form of Exhibit F, executed and delivered by the Borrower to the Agent for
the benefit of the Agent and the ratable benefit of the Banks, as the same may
be amended, supplemented, restated or otherwise modified and in effect from time
to time.
"Operating Cash Flow": for any period, an amount equal to (a)
Consolidated EBITDA for such period, minus (b) income taxes paid in cash by the
Borrower on a consolidated basis during such period, minus (c) all dividends,
distributions and other payments by the Borrower to its shareholders during such
period but (excluding the following payments in respect of Indebtedness to such
shareholders: (i) distribution of up to $9,200,000 in shareholder's equity
pursuant to notes issued at the time of the February 21, 1997 reorganization;
(ii) payment of up to $7,600,000 to shareholders for Subsidiaries' stock at the
time of the February 21, 1997 reorganization; (iii) payment of up to $1,000,000
to shareholders with respect to the acquisition of the All-Temps, Inc.
franchise, recorded as a 1996 shareholder distribution; and (iv) payment of up
to $1,000,000 to shareholders with respect to the acquisition of the WAD, Inc.
franchise), minus (d) Capital Expenditures paid out of cash flow during such
period.
12
"Operating Cash Flow Ratio": at the end of any month, the ratio of (a)
Operating Cash Flow for the immediately preceding twelve (12) months (ending on
such date) to (b) Total Debt Service for the immediately preceding twelve (12)
months (ending on such date).
"OSIA Pledge Agreement": the OSIA Pledge Agreement dated as of March
18, 1998 by OutSource International of America, Inc. in favor of the Agent for
the benefit of the Agent and the ratable benefit of the Banks, as the same may
be amended, supplemented, restated or otherwise modified and in effect from time
to time.
"OutSource Franchising, Inc.": a Florida corporation and a wholly-owned
Subsidiary of the Borrower.
"OutSource Funding Corporation": a Delaware corporation and a
wholly-owned Subsidiary of the Borrower.
"Participants": as defined in subsection 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
13
"Permitted Acquisition": (a) the acquisition by the Borrower or any
Subsidiary of the Capital Stock or assets of any Person provided that (i) such
Person conducts the same general type of business as currently conducted by the
Borrower and its Subsidiaries, (ii) such Person conducts all of its business in
the United States of America, (iii) none of the shareholders of the Borrower or
its Affiliates have or will have any direct or indirect beneficial ownership of
any stock or other interest in the acquired company, (iv) the net income of such
Person (excluding any non-operating gains or losses and adjusted for the factors
identified in the second sentence of the definition of Consolidated Indebtedness
to Consolidated EBITDA Ratio) is positive for the twelve (12) month period
ending as of the end of the month immediately preceding such acquisition, (v)
the total aggregate consideration in any single transaction or series of related
transactions, including any transactions with Affiliates of such Person, does
not exceed $750,000, (vi) the Borrower is in compliance with all provisions of
this Agreement both immediately before and after (pro-forma) giving effect to
the acquisition, (vii) there will be, in the Agent's sole discretion, adequate
Available Revolving Credit Commitments (in no event less than $7,500,000) to
fund the working capital requirements of the Borrower and its Subsidiaries,
including the acquired Person, for at least nine (9) months following the
acquisition, (viii) any Indebtedness incurred in connection with an acquisition
and owed to third parties must be (A) incurred payable to the seller in such
acquisition and must be Subordinated Indebtedness or (B) Indebtedness otherwise
permitted under Section 7.2 hereof, or (b) any other acquisition or series of
related acquisitions, including any transactions with Affiliates of such Person,
which the Agent and the Required Banks may approve in their sole discretion. If
the total aggregate consideration for a single transaction or a series of
related transactions exceeds $750,000, the prior written consent of the Agent
and the Required Banks shall be required, which consent may be given or withheld
in their sole discretion.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement-Deposit Account": the Pledge and Security
Agreement-Deposit Account, dated as of March 18, 1997, made by the Borrower in
favor of the Agent for the benefit of the Agent and the ratable benefit of the
Banks, as the same may be amended, restated, supplemented or otherwise modified
from time to time.
"Pricing Grid": the Applicable Margin, the Commitment Fee and the
Letter of Credit Rate will be determined quarterly for the period of four (4)
consecutive fiscal quarters ending on each FQED and will be as set forth in the
following Pricing Grid:
-----------------------------------------------------------------------------------------------------------------
Consolidated Applicable Applicable
Indebtedness to Margin for Margin for Commitment Fee Letter of Credit
Consolidated Alternate Base Eurodollar Loans Rate
EBITDA Ratio Rate Loans
-----------------------------------------------------------------------------------------------------------------
Level 1 greater than 3.00 to 1 0.25% 2.250% 0.375% 1.500%
-------
-----------------------------------------------------------------------------------------------------------------
Xxxxx 0 2.25-3.00 to 1 0.00% 1.875% 0.375% 1.125%
-------
-----------------------------------------------------------------------------------------------------------------
Xxxxx 0 1.50-2.24 to 1 0.00% 1.500% 0.250% 1.000%
-------
-----------------------------------------------------------------------------------------------------------------
Level 4 less than 1.50 to 1 0.00% 1.250% 0.250% 0.750%
-------
-----------------------------------------------------------------------------------------------------------------
The pricing at the Closing Date shall be at Level 2. Pricing will be adjusted
thereafter based on the Borrower's performance relative to the above grid,
effective on the first day of the immediately following fiscal quarter. The
Borrower's Consolidated Indebtedness to Consolidated EBITDA Ratio must have
changed from a given Level for at least two (2) consecutive quarters before
pricing will be adjusted up or down (other than an adjustment arising from the
issuance by the Borrower of publicly traded common stock). In the event that the
Borrower's Consolidated Indebtedness to Consolidated EBITDA Ratio changes Levels
twice in two consecutive quarters (e.g., from Level 2 to Level 3 in one quarter,
and from Level 3 to Level 4 in the next quarter), pricing shall adjust to the
less beneficial (from the Borrower's point of view) of the two Levels attained
during such two consecutive quarters.
14
"Properties": as defined in subsection 4.17.
"Prospectus": the Prospectus of the Borrower dated October 24, 1997
relating to the offering of 3,700,00 shares of common stock of the Borrower.
"Purchasing Banks": as defined in subsection 10.6(c).
"Receivables": means and includes accounts receivable and notes,
drafts, acceptances, and other instruments representing or evidencing a right to
payment for goods sold or leased or for services rendered, whether or not earned
by performance, of the Borrower and its Subsidiaries, whether secured or
unsecured, whether now existing or hereafter created or arising, and including
all of the receivables resulting from funding advances to franchisees of
OutSource Franchising, Inc..
"Receivables Purchase Agreement": the Receivables Purchase Agreement
dated as of July 27, 1998 among OutSource Funding Corporation, as the seller,
EagleFunding Capital Corporation, as the purchaser, the Arranger, as the deal
agent, and the Borrower, as the servicer, as the same may be amended,
supplemented, restated or otherwise modified and in effect from time to time.
"Receivables Purchase and Sale Agreement": the Receivables Purchase and
Sale Agreement dated as of July 27, 1998 among the Borrower, OutSource
Franchising, Inc., CSF, 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 the Borrower, as the servicer, as the same may be amended, supplemented,
restated or otherwise modified and in effect from time to time.
"Receivables Securitization Transaction": the securitization
transaction contemplated by the Receivables Purchase Agreement, the Receivables
Purchase and Sale Agreement, the Liquidity Agreement, the Securitization
Security Agreement and the Intercreditor Agreement.
"Register": as defined in subsection 10.6(d).
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System.
"Reimbursement Obligation": the obligation of the Borrower to reimburse
the Issuing Bank pursuant to subsection 3.4 for amounts drawn under Letters of
Credit.
"Reimbursing Bank": as defined in subsection 2.13(a).
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
15
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived in accordance with subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. '2615.
"Required Banks": at any time, Banks having Commitment Percentages
representing at least 66 2/3% of the aggregate Revolving Credit Commitments, or
if the Revolving Credit Commitments are terminated, Banks representing at least
66 2/3% of the aggregate principal amount of all Loans outstanding (taking into
account each Bank's participation in any Swingline Loans and L/C Obligations).
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organization or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": the chief executive officer or the president or
other executive officer of the Borrower or, with respect to financing matters,
the chief financial officer or other executive officer of the Borrower.
"Restricted Payment": as defined in subsection 7.7.
"Revolving Credit Commitment": as to any Bank, the obligation of such
Bank to make Revolving Credit Loans to the Borrower hereunder in an aggregate
principal amount at any one time outstanding not to exceed the amount set forth
opposite such Bank's name on SCHEDULE A under the caption, "Commitment Amount".
"Revolving Credit Loans": any loans, advances or other disbursements by
Agent, or any or all of the Banks to or for the account of the Borrower under
the Revolving Credit Commitments (including without limitation, amounts paid in
respect of any draft under any Letter of Credit) or in respect of any amounts
due and not paid by the Borrower in accordance with subsection 10.5.
"Revolving Credit Note": as defined in subsection 2.7.
"Sale/Leaseback Transaction": as defined in subsection 7.11.
"Securities Purchase Agreement": the Securities Purchase Agreement
dated as of February 21, 1997 between the Borrower and Triumph/Bachow, pursuant
to which the Borrower issued its Senior Subordinated Notes -- as such Securities
Purchase Agreement may, with the prior written consent of the Agent and the
Banks, be amended, supplemented or otherwise modified from time to time.
16
"Securitization Security Agreement": the Security Agreement dated as of
July 27, 1998 between EagleFunding Capital Corporation, as the borrower, and
Bankers Trust Company, as the collateral agent, as the same may be amended,
supplemented, restated or otherwise modified and in effect from time to time.
"Security Documents": the OI Security Agreement, OI Pledge Agreement,
each Subsidiary Security Agreement, the Trademark Security Agreement, the Pledge
Agreement-Deposit Account and the OSIA Pledge Agreement.
"Senior Subordinated Notes": the $25,000,000 Senior Subordinated Notes
due February 20, 2002 issued pursuant to the Securities Purchase Agreement.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (A) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (B)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Subordinated Indebtedness": means Indebtedness of the Borrower or its
Subsidiaries identified as subordinated on Schedule 7.2 and other unsecured
Indebtedness which contains in the instrument evidencing such Indebtedness or in
the agreement under which it is issued (which agreement shall be binding on all
holders of such Indebtedness) subordination provisions acceptable to the Agent
and the Required Banks in their sole discretion, which unsecured Indebtedness
must be approved in writing by the Agent and the Required Banks prior to
incurring such Indebtedness.
17
"Subordination Agreements": the subordination agreements and notes
executed and delivered to the Borrower or any Subsidiary prior to or on the
Closing Date by the holders of the Subordinated Indebtedness identified on
Schedule 7.2.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership, limited liability company or other entity are at the
time owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantee": a Guarantee, substantially in the form of
Exhibit B, made by each Subsidiary (except for OutSource Funding Corporation) in
favor of the Agent for the benefit of the Agent and the ratable benefit of the
Banks, as the same may be amended, supplemented, restated or otherwise modified
and in effect from time to time.
"Subsidiary Security Agreement": a Subsidiary Security Agreement,
substantially in the form of Exhibit G, executed and delivered by each
Subsidiary (except for OutSource Funding Corporation) to the Agent for the
benefit of the Agent and the ratable benefit of the Banks, as the same may be
amended, supplemented, restated or otherwise modified and in effect from time to
time.
"Successor Agent": any Bank or any bank, depository or financial
institution, trust company, bank and trust company having capital and surplus in
excess of $100,000,000 and acceptable to the remaining Bank or Banks and to the
Borrower, the Borrower's consent not to be unreasonably withheld or delayed.
"Swingline Bank": BankBoston, N.A., successor by merger to Bank of
Boston Connecticut, acting in such capacity under subsection 2.1A, or any
successor in such capacity.
"Swingline Commitment": the obligation of the Swingline Bank to make
Swingline Loans in an aggregate amount not to exceed at any one time outstanding
the lesser of (a) $5,000,000 and (b) the aggregate amount of the Commitments.
"Swingline Loan Maturity Date": as defined in subsection 2.1A.
"Swingline Loans": the loans provided for by subsection 2.1A.
18
"Swingline Note": the promissory note provided for by subsection 2.1A
and any promissory note delivered as a replacement, in substitution or in
exchange therefor, as the same shall be amended, supplemented, restated or
otherwise modified and in effect from time to time.
"Swingline Rate": for any day, a rate per annum equal to the rate for
Alternate Base Rate Loans plus the Applicable Margin. A change in the Swingline
Rate shall take effect at the time of each change in the Alternate Base Rate or
the Applicable Margin, as the case may be.
"Tandem": a trademark of OutSource Franchising, Inc. registered with
the United States Patent and Trademark Office and used by OutSource Franchising,
Inc. and its franchisees in marketing temporary flexible industrial staffing
personnel.
"Tax Return": as defined in subsection 4.11.
"Termination Date": July 27, 2003.
"Total Debt Service": at any particular date, the sum of (a)
Consolidated Indebtedness, including the principal portion of Capital Leases,
scheduled and permitted to be paid during the applicable period (reduced by
increases during such period in Subordinated Indebtedness or shareholder's
equity in an amount not exceeding, and incurred to replace, such scheduled
payments) and excluding (i) a one time payment of $1,325,000 made by the
Borrower in connection with the Borrower's purchase of the Borrower's
headquarters building, payments in respect of Indebtedness to shareholders to
the extent permitted hereunder (including the items listed in (c) of the
definition of Operating Cash Flow) and payments in respect of previous term
Indebtedness to Bank of Boston, LaSalle National Bank and Comerica Bank paid
from the proceeds of the original February 21, 1997 loan and (ii) an amount not
exceeding in any year $1,500,000 of regularly scheduled principal payments due
on Subordinated Indebtedness incurred by the Borrower or any Subsidiary to
finance Permitted Acquisitions or acquisitions identified in Note 1 to the
Unaudited Pro Forma Consolidated Financial Information contained in the
Prospectus, provided that such Subordinated Indebtedness matures at least one
(1) year after the date of its incurrence and bears interest not exceeding ten
percent (10%) per annum, plus (b) Consolidated Interest Expense, it being
understood that principal payments with respect to any Indebtedness that has
been refinanced shall be determined on and after the refinancing on the basis of
the payment schedule in such refinancing.
"Trademark Security Agreement": the Trademark Security Agreement,
substantially in the form of Exhibit H, executed and delivered by the Borrower
and OutSource Franchising, Inc. in favor of the Agent for the benefit of the
Agent and the ratable benefit of the Banks, as the same may be amended,
supplemented or otherwise modified from time to time.
19
"Tranche": the collective reference to Eurodollar Loans having
Eurodollar Interest Periods which begin on the same date and end on the same
later date (whether such Loans shall originally have been made on the same day
or not).
"Transferee": as defined in subsection 10.6(f).
"Triumph/Bachow": Triumph-Connecticut Limited Partnership and Bachow
Investment Partners III, L.P. or an entity controlled by them which is a party
to the Securities Purchase Agreement.
"Type": as to any Loan, its nature as an Alternate Base Rate Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.
"Voting Stock": with respect to a corporation, all classes of Capital
Stock then outstanding of such corporation normally entitled to vote in
elections of directors.
"Voting Trust Agreement": the Voting Trust Agreement, dated as of
February 21, 1997, among the Borrower, Xxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxxx,
as trustees, and certain shareholders of the Borrower, as the same may, with the
prior written consent of the Banks, be amended, supplemented or otherwise
modified from time to time.
"WAD, Inc.": a corporation organized and existing under the laws of the
State of Delaware.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
SCHEDULE and Exhibit references are to this Agreement unless otherwise
specified.
20
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
1.3 Change in Accounting Principles. Except as otherwise provided
herein, any changes in GAAP which are hereafter made and adopted by the Borrower
with the agreement of its independent certified public accountants shall not
affect the method of calculation of any of the financial covenants, standards or
terms found in subsection 1.1 or Section 7.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
------------------------------------------
2.1 Revolving Credit Commitments. Subject to the terms and conditions
hereof, and provided that no Default or Event of Default shall have occurred and
be continuing, each Bank severally agrees to make Revolving Credit Loans to the
Borrower from time to time on or after the Amendment Effective Date and
continuing throughout the Commitment Period in an aggregate principal amount at
any one time outstanding not to exceed the amount of such Bank's Available
Revolving Credit Commitment; provided, however, that (i) the aggregate
borrowings hereunder at any one time (giving effect to all Revolving Credit
Loans, Swingline Loans and L/C Obligations at such time) to the Borrower shall
not exceed $34,000,000 and (ii) the aggregate amount of all borrowings available
to the Borrower to be advanced to CSF shall not exceed $7,500,000 outstanding at
one time. From and after the Amendment Effective Date and continuing throughout
the Commitment Period, the Borrower may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans or Swingline Loans, in whole or
in part, and reborrowing in accordance with the terms and conditions hereof. On
the Termination Date, the Borrower hereby unconditionally promises to pay to the
Agent for the account of each Bank the then unpaid principal amount of each
Loan.
2.1A. Swingline Loans.
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(a) Subject to the terms and conditions hereinafter set forth, upon
notice by the Borrower made to the Swingline Bank in accordance with paragraph
(b) of this subsection 2.1A , the Swingline Bank agrees to make Swingline Loans
to the Borrower on any Business Day during the Commitment Period in an aggregate
principal amount not to exceed the Swingline Commitment. Unless the Borrower has
entered into an arrangement with the Swingline Bank for automated borrowings as
described in subsection 2.1A(b) below, each Swingline Loan shall be in the
minimum amount of $250,000 or a multiple of $100,000 in excess thereof.
Notwithstanding any other provisions of this Agreement and in addition to the
limit set forth above, at no time shall the aggregate principal amount of all
outstanding Swingline Loans exceed the total Commitments of the Banks then in
effect minus the Aggregate Outstanding Extensions of Credit. Each Swingline Loan
shall mature on the earlier of (i) the date on which a Default or Event of
Default has occurred or (ii) a date mutually agreed upon by the Borrower and the
Swingline Bank, which date may be up to seven days after the Borrowing Date
thereof (the "Swingline Loan Maturity Date"). Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow up to the amount of the
Swingline Commitment, except that the Borrower shall not use the proceeds of a
Swingline Loan to repay any other Swingline Loan.
(b) When the Borrower desires the Swingline Bank to make a Swingline
Loan (except in the case of automated borrowings as described below), it shall
send to the Agent (which shall promptly notify the Swingline Bank) a notice in
the form of Exhibit A-1, which shall set forth the principal amount of the
proposed Swingline Loan and the proposed Borrowing Date. Each such Loan request
must be received by the Swingline Bank not later than 12:00 p.m. (Eastern time)
on the date of the proposed borrowing. Each such Loan request shall be
irrevocable and binding on the Borrower and shall obligate the Borrower to
borrow the Swingline Loan on the Borrowing Date thereof. Upon satisfaction of
the applicable conditions set forth in this Agreement, on the proposed Borrowing
Date the Swingline Bank shall make the Swingline Loan available to the Agent, at
an account designated by the Agent, in Dollars and immediately available funds,
for the account of the Borrower. The amount so received by the Agent, shall,
subject to the terms and conditions of this Agreement, be made available by the
Agent to the Borrower by depositing the same, in immediately available funds, in
an account of the Borrower designated by the Borrower by 5:00 p.m. (Eastern
time) on the proposed Borrowing Date by crediting the amount of the Swingline
Loan to the Borrower's account maintained with the Agent; provided that the
Swingline Bank shall not advance any Swingline Loans after it has received
notice from the Borrower, the Agent or any Bank that a Default or Event of
Default has occurred and is continuing. No new Swingline Loan shall be made
until such Default or Event of Default has been cured or waived in accordance
with the provisions of this Agreement.
It is understood that the Borrower and the Swingline Bank may
administer Swingline Loans on an automated basis pursuant to which Swingline
Loans will be made (up to the Swingline Commitment) or repaid automatically on a
daily basis in an amount equal to the net of the Borrower's receipts and
disbursements at the Swingline Bank. If such an automated system is used, the
provisions dealing with notice and minimum borrowing amount set forth in
subsection 2.1A(b) above shall not be applicable.
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(c) The Borrower shall repay each outstanding Swingline Loan on or
prior to the Swingline Loan Maturity Date. Upon notice by 11:00 a.m. (Eastern
time) on any Business Day by the Swingline Bank to the Agent, which notice is
hereby authorized by the Borrower, the Borrower shall be deemed irrevocably to
have requested, and each of the Banks hereby agrees to make, a Revolving Credit
Loan to the Borrower by 2:00 p.m. (Eastern time) on such Business Day, in an
amount equal to such Bank's Commitment Percentage of the aggregate amount of the
outstanding Swingline Loans. Such Revolving Credit Loan shall bear interest at
the Alternate Base Rate plus the Applicable Margin. The proceeds thereof shall
be applied by the Agent directly to repay the Swingline Bank for such
outstanding Swingline Loans. In the event that it is impracticable for such
Revolving Credit Loan to be made for any reason on the date otherwise required
above, then each Bank hereby agrees that it shall forthwith purchase (as of the
date such Revolving Credit Loan would have been made, but adjusted for any
payments received from the Borrower on or after such date and prior to such
purchase) from the Swingline Bank, and the Swingline Bank shall sell to each
Bank, such participations in the Swingline Loans (including all accrued and
unpaid interest thereon) outstanding as shall be necessary to cause the Banks to
share in such Swingline Loans pro rata based on their respective Commitment
Percentages by making available to the Swingline Bank an amount equal to such
Bank's participation in the Swingline Loans; provided that all interest payable
on the Swingline Loans shall be for the account of the Swingline Bank as a
funding and administrative fee until the date as of which the respective
participation is purchased. The obligation of each Bank to make such Revolving
Credit Loan, or as the case may be, to purchase such participation in a
Swingline Loan, upon notice as set forth above, is absolute, unconditional and
irrevocable under any and all circumstances whatsoever and shall not be subject
to set-off, counterclaim or defense to payment that such Bank may have or may
have had against the Borrower, the Agent, the Swingline Bank or any other Bank
and, without limiting any of the foregoing, shall be unconditional
notwithstanding (i) that the amount of such Loan may not comply with the
applicable minimum set forth in subsection 2.1 hereof, (ii) the failure of the
Borrower to meet the conditions set forth in Section 5 hereof, (iii) the
occurrence or continuance of a Default or an Event of Default hereunder, (iv)
the date of such Revolving Credit Loan or participation or (v) the financial
condition of the Borrower or any Subsidiary; provided, however, a Bank shall not
be obligated to make any such Revolving Credit Loan (or to purchase such
participation) if before the making of such Swingline Loan, such Bank had
notified the Swingline Bank that a Default or Event of Default had occurred and
was continuing and that such Bank would not refinance such Swingline Loan.
(d) The obligation of the Borrower to repay the Swingline Loans made
pursuant to this Agreement and to pay interest thereon as set forth in this
Agreement shall be evidenced by a promissory note of the Borrower with
appropriate insertions substantially in the form of Exhibit A-3 (the "Swingline
Note"), and any promissory note delivered as a replacement, in substitution or
in exchange therefor, as the same may be amended, modified or otherwise
supplemented and in effect from time to time, payable to the order of the
Swingline Bank. The Borrower irrevocably authorizes the Swingline Bank to make
or cause to be made, at or about the time of the Borrowing Date of any Swingline
Loan or at the time of receipt of any payment of principal on the Swingline
Note, an appropriate notation on the books of the Swingline Bank reflecting the
making of such Swingline Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Swingline Loans set forth on such books
shall be prima facie evidence of the principal amount thereof owing and unpaid
to the Swingline Bank, but the failure to record, or any error in so recording,
any such amount on such books shall not limit or otherwise affect the actual
amount of the obligations of the Borrower hereunder or under the Swingline Note
to make payments of principal of or interest on the Swingline Note when due.
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2.2 Designation of Interest Rates; Eurodollar Interest Periods.
(a) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof, as the
Borrower may determine and notify to the Agent in accordance with subsections
2.4 and 2.5. In the event the Borrower fails to designate the Type of all or any
portion of a Loan (whether initially or upon expiration of a Eurodollar Interest
Period), the per annum rate of interest applicable thereto shall be or become
the rate of interest applicable to Alternate Base Rate Loans.
(b) The Borrower may not select a Eurodollar Interest Period pursuant
to subsections 2.2(a), 2.5 or otherwise, if (i) an Event of Default has occurred
and is continuing, or (ii) such Eurodollar Interest Period would expire on a day
after the Termination Date. If any Eurodollar Interest Period would otherwise
end on a day that is not a Business Day, such Eurodollar Interest Period shall
be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Eurodollar Interest Period into another
calendar month in which event such Eurodollar Interest Period shall end on the
immediately preceding Business Day. If any Eurodollar Interest Period begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Eurodollar Interest Period), such Eurodollar Interest Period shall end on the
last Business Day of a calendar month.
2.3 Interest Rates and Payment Dates.
(a) Each Eurodollar Loan shall bear interest, during the applicable
Eurodollar Interest Period, at a rate per annum equal to the applicable
Eurodollar Rate plus the Applicable Margin, and each Alternate Base Rate Loan
shall bear interest for so long as it is outstanding and unpaid at a rate per
annum equal to the Alternate Base Rate plus the Applicable Margin.
(b) The Applicable Margin for Eurodollar Loans and Alternate Base Rate
Loans shall be determined based upon the calculations submitted to the Banks
pursuant to subsection 6.2(b) and, except as otherwise provided in the
definition of Pricing Grid, shall be effective as of the first day of the fiscal
quarter next following the date such calculations are submitted to the Banks. In
the event the Applicable Margin cannot be determined at any time because the
Borrower's financial statements for the immediately preceding fiscal quarter are
not available at such time, the Applicable Margin shall be presumed to be the
same as the Applicable Margin as of the last FQED for which the Borrower's
financial statements were available.
(c) Each Swingline Loan shall bear interest for so long as it is
outstanding and unpaid at a rate per annum equal to the Swingline Rate.
24
(d) If all or a portion of the principal amount of any Loan or any
interest payable thereon shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum (the "Default Rate") which is equal to the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus two percent (2%) from the date of such non-payment until such
amount is paid in full (after, as well as before, judgment).
(e) Interest shall be payable in arrears on each Interest Payment Date
and be identified for each Type of Loan; provided, that interest accruing at the
Default Rate pursuant to subsection 2.3(d) shall be payable on receipt of
written demand. In the event the rate of interest applicable to any Eurodollar
Loan increases or decreases as a consequence of an increase or decrease in the
Applicable Margin with respect thereto, the amount of interest due shall be
adjusted on the next Interest Payment Date to reflect such increase or decrease,
as the case may be.
(f) In the event the total amount of any payment of principal or
interest or amounts due in respect of any Reimbursement Obligation or of any fee
required to be paid under this Agreement is not received by the Agent or the
Issuing Bank, as the case may be, within ten (10) days following the due date of
such payment, the Borrower shall, in addition to and together with such payment,
pay to the Agent or the Issuing Bank, as the case may be, a late charge equal to
five percent (5%) of the total amount of such payment or amount due; provided,
such late charge shall not be payable in respect of any overdue payment in the
event the Borrower was entitled to an advance in the amount of such payment
under the provisions of subsection 2.1 at the time such payment became due, the
Borrower duly requested such advance in compliance with the requirements of this
Agreement, and the Banks failed to provide such advance without cause. The
Borrower authorizes the Agent to debit any of the accounts of the Borrower or
its Subsidiaries at or assigned to the Agent on or after the due date of any
such payment and a late charge shall not be payable to the extent the balances
in such accounts are sufficient on the due date to meet such payment.
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2.4 Procedure for Borrowing. The Borrower may borrow under the
Revolving Credit Commitments on or after the Amendment Effective Date during the
Commitment Period on any Business Day by giving the Agent irrevocable notice in
the form of Exhibit A-1 (which notice must be received by the Agent prior to (x)
12:00 p.m., Eastern time, at least three (3) Business Days prior to the
requested Borrowing Date, if all or any part of the requested Revolving Credit
Loans are to be initially Eurodollar Loans, or (y) 12:00 p.m., Eastern time, on
the requested Borrowing Date, otherwise), specifying (i) the amount to be
borrowed, (ii) the requested Borrowing Date, (iii) the Type of the requested
borrowing, (iv) if the borrowing is to be entirely or partly of Eurodollar
Loans, the amounts and Eurodollar Interest Periods thereof and (v) the purpose
of such borrowing: e.g. whether the proceeds are to be used for working capital,
to make a Permitted Acquisition, to make advances or contributions to CSF, etc.
Each borrowing under the Revolving Credit Commitments shall be in an amount
equal to (A) in the case of Alternate Base Rate Loans, $250,000 or a whole
multiple of $100,000 in excess thereof (or, if the then Available Revolving
Credit Commitments are less than $250,000, such lesser amount) or (B) in the
case of Eurodollar Loans, $250,000 or a whole multiple of $100,000 in excess
thereof. Upon receipt of any such notice from the Borrower, the Agent shall
promptly notify each Bank thereof. Each Bank will make the amount of its pro
rata share (based on its Commitment Percentage) of each borrowing available to
the Agent for the account of the Borrower at the office of the Agent specified
in subsection 10.2 prior to 2:00 p.m., Eastern time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Agent. Such
borrowing will then be made available to the Borrower by the Agent crediting the
account of the Borrower on the books of such office with the aggregate of the
amounts made available to the Agent by the Banks and in like funds as received
by the Agent.
2.5 Conversion and Continuation Options.
(a) The Borrower may elect from time to time to convert Eurodollar
Loans to Alternate Base Rate Loans by giving the Agent at least two (2) Business
Days' prior irrevocable notice of such election; provided that any such
conversion of Eurodollar Loans may only be made as of the last day of a
Eurodollar Interest Period with respect thereto. The Borrower may elect from
time to time to convert Alternate Base Rate Loans to Eurodollar Loans by giving
the Agent at least three (3) Business Days' prior irrevocable notice of such
election, which notice shall specify the length of the initial Eurodollar
Interest Period or Eurodollar Interest Periods therefor. Upon receipt of any
such notice the Agent shall promptly notify each Bank thereof. All or any part
of outstanding Eurodollar Loans and Alternate Base Rate Loans may be converted
as provided herein, provided that no Loan may be converted into a Eurodollar
Loan when any Event of Default has occurred and is continuing or the Agent has
or the Required Banks have determined pursuant to subsection 2.12 that such a
conversion is not appropriate.
(b) The Borrower may elect to continue all or any portion of any
Eurodollar Loan upon the expiration of the designated Eurodollar Interest Period
in respect of such Eurodollar Loan by giving the Agent at least three (3)
Business Days' prior irrevocable notice of such election; provided that no
Eurodollar Loan may be continued as such when any Event of Default has occurred
and is continuing or the Agent has or the Required Banks have determined
pursuant to subsection 2.12 that such a continuation as a Eurodollar Loan is not
appropriate. The Borrower shall specify in the aforesaid notice the amount to be
continued as a Eurodollar Loan and the Eurodollar Interest Period with respect
thereto in accordance with subsection 2.2.
2.6 Minimum Amounts and Maximum Number of Tranches. All borrowings,
conversions and continuations of Loans hereunder and all selections of
Eurodollar Interest Periods hereunder shall be in such amounts and be made
pursuant to such elections so that, after giving effect thereto, the aggregate
principal amount of the Eurodollar Loans comprising each Tranche shall be equal
to $250,000 or a whole multiple of $100,000 in excess thereof and so that there
shall not be more than seven (7) Tranches at any one time outstanding.
26
2.7 Revolving Credit Notes. The Revolving Credit Loans made by each
Bank shall be evidenced by a promissory note of the Borrower, substantially in
the form of Exhibit A-2 with appropriate insertions as to payee, date and
principal amount (a "Revolving Credit Note"), and any promissory note delivered
as a replacement, in substitution or in exchange therefor, as the same may be
amended, modified or otherwise supplemented and in effect from time to time,,
payable to the order of such Bank and in a principal amount equal to the amount
of the initial Revolving Credit Commitment of such Bank. Each Bank is hereby
authorized to record the date, Type and amount of each Revolving Credit Loan
made by such Bank, each continuation thereof, each conversion of all or a
portion thereof to another Type, the date and amount of each payment or
prepayment of principal thereof and, in the case of Eurodollar Loans, the length
of each Eurodollar Interest Period and Eurodollar Rate with respect thereof, on
the SCHEDULE annexed to and constituting a part of its Revolving Credit Note,
and any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded. Each Revolving Credit Note shall (x) be dated
the Closing Date, (y) be stated to mature on the Termination Date and (z)
provide for the payment of interest in accordance with subsection 2.3.
2.8 Fees.
(a) The Borrower agrees to pay to the Agent for the benefit of the
Banks a commitment fee (the "Commitment Fee") on the unborrowed portion of the
aggregate Available Revolving Credit Commitment, as in effect from time to time,
for each day from the Closing Date through the Termination Date, at the
percentage rate per annum set forth opposite the applicable Consolidated
Indebtedness to Consolidated EBITDA Ratio in the Pricing Grid.
Such Commitment Fee shall be computed on the basis of a 360-day year
for the actual number of days elapsed, shall be payable in arrears on the last
day of each quarter during the term of this Agreement and on the Termination
Date, and shall be fully earned when due and non-refundable when paid.
(b) On or about February 28, of each year, on an annual basis, the
Borrower shall pay to the Agent administrative fees in the amounts set forth in
a letter agreement between the Agent and the Borrower. These administrative fees
are fully earned as of the date when due, are solely for the account of Agent
and are non-refundable.
(c) On the Closing Date, the Borrower shall pay to the Agent a
non-refundable closing fee in the amount set forth in a letter agreement between
the Agent and the Borrower.
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2.9 Termination or Reduction of Revolving Credit Commitments. The
Borrower shall have the right, upon not less than three (3) Business Days'
notice to the Agent, to terminate the Commitments or, from time to time, to
reduce the amount of the Revolving Credit Commitments provided that no such
termination or reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Revolving Credit Loans made on the effective date
thereof, the aggregate principal amount of the Revolving Credit Loans and
Swingline Loans then outstanding, when added to such Bank's Commitment
Percentage (as computed immediately prior to said termination or reduction) of
the L/C Obligations, would exceed the Revolving Credit Commitments then in
effect. Any such reduction shall be in an amount not less than $250,000, and
shall reduce permanently the Revolving Credit Commitments then in effect.
2.10 Optional Prepayments. The Borrower may at any time and from time
to time, prepay the Revolving Credit Loans, in whole or in part, upon at least
three (3) Business Days' irrevocable notice, in the case of prepayment of any
Revolving Credit Loans which are Eurodollar Loans, or upon irrevocable notice
(which notice must be received by 1:00 P.M., Eastern time, on or before the
proposed date of prepayment), in the case of prepayments of any Revolving Credit
Loans which are Alternate Base Rate Loans, to the Agent, specifying the date and
amount of prepayment and whether the prepayment is of Eurodollar Loans,
Alternate Base Rate Loans or a combination thereof, and, in each case if a
combination thereof, the amount allocable to each; provided that, if a
Eurodollar Loan is prepaid other than at the end of the Eurodollar Interest
Period applicable thereto, the Borrower shall also pay any amounts required to
be paid pursuant to subsection 2.17. Upon receipt of any such notice the Agent
shall promptly give notice thereof to each Bank. If any such notice is given by
the Borrower, the amount specified in such notice shall be due and payable on
the date specified therein. Partial prepayments of the Revolving Credit Loans
shall be in an aggregate principal amount of $250,000 or a whole $100,000
multiple in excess thereof.
2.11 Computation of Interest and Fees. Interest on the Loans, Letter of
Credit commissions and Commitment Fees shall be calculated on the basis of a
360-day year for the actual days elapsed. The Agent shall as soon as practicable
notify the Borrower and the Banks of each determination of a Eurodollar Rate.
Any change in the interest rate on a Loan resulting from a change in the
Alternate Base Rate or the Eurodollar Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Agent shall as soon as practicable notify the Borrower and the
Banks of the effective date and the amount of each such change in interest rate.
Each determination of an interest rate by the Agent pursuant to any provision of
this Agreement shall be conclusive and binding on the Borrower and the Banks in
the absence of manifest error.
2.12 Inability to Determine Interest Rate. If prior to the first day of
any Eurodollar Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Eurodollar Interest Period, or
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(b) the Agent shall have received notice from the Required Banks that
the Eurodollar Rate determined or to be determined for such Eurodollar Interest
Period will not adequately and fairly reflect the cost to such Banks (as
conclusively certified by such Banks) of making or maintaining their affected
Loans during such Eurodollar Interest Period,
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Banks as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Eurodollar
Interest Period shall be made as Alternate Base Rate Loans, (y) any Loans that
were to have been converted on the first day of such Eurodollar Interest Period
to Eurodollar Loans shall be converted to or continued as Alternate Base Rate
Loans, and (z) any outstanding Eurodollar Loans shall be converted, on the first
day of such Eurodollar Interest Period, to Alternate Base Rate Loans. Until such
notice has been withdrawn by the Agent, no further Eurodollar Loans shall be
made or continued as such, nor shall the Borrower have the right to convert
Loans to Eurodollar Loans.
2.13 Pro Rata Treatment and Payments.
(a) Unless the Agent shall have been notified in writing by any Bank
prior to 2:00 p.m., Eastern time, on the Borrowing Date that such Bank will not
make the amount that would constitute its Commitment Percentage of the borrowing
on such date available to the Agent, the Agent may assume that such Bank (a
"Reimbursing Bank") has made such amount available to the Agent on such
Borrowing Date, and the Agent or any Bank may (but shall not be obligated), in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is made available to the Agent on a date after such
Borrowing Date, the Reimbursing Bank shall pay to the Agent on demand an amount
equal to the product of (i) the daily average Federal Funds Effective Rate
during such period as quoted by the Agent, times (ii) the amount of such
Reimbursing Bank's Commitment Percentage of such borrowing, times (iii) a
fraction the numerator of which is the number of days that elapse from and
including such Borrowing Date to the date on which such Reimbursing Bank's
Commitment Percentage of such borrowing shall have become immediately available
to the Agent and the denominator of which is 365. A certificate of the Agent
submitted to any Reimbursing Bank with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error. If a
Reimbursing Bank's Commitment Percentage of such borrowing is not in fact made
available to the Agent by such Reimbursing Bank within one (1) Business Day of
such Borrowing Date, the Agent shall be entitled to recover such amount, with
interest thereon at the rate per annum applicable to Alternate Base Rate Loans
hereunder, on demand, from such Reimbursing Bank or the Borrower in such order
and manner as Agent may determine in its discretion.
29
(b) Each borrowing of Revolving Credit Loans by the Borrower from the
Banks hereunder shall be made by the Banks pro rata in accordance with the
respective Commitment Percentage of such Banks. Each payment by the Borrower on
account of the principal of and interest on the Revolving Credit Loans, and any
reduction of the Commitments of the Banks shall be payable to the Banks pro rata
in accordance with the respective Commitment Percentages of the Banks; provided
that in the event the Agent or any Bank pursuant to subsection 2.13(a) makes
available to the Borrower a Reimbursing Bank's Commitment Percentage of a
requested borrowing, the Agent or such Bank providing such funding shall be
entitled to receive all payments that would otherwise be payable to such
Reimbursing Bank until such time as the Agent or such Bank, as the case may be,
shall have received an amount equal to the amount so funded on behalf of such
Reimbursing Bank, together with interest thereon as provided in subsection
2.13(a). All payments (including prepayments) to be made by the Borrower
hereunder and under the Notes, whether on account of principal, interest, fees
or otherwise, shall be made without set off or counterclaim and shall be made
prior to 1:00 p.m., Eastern time, on the due date thereof to the Agent, for the
account of the Banks, at the Agent's office specified in subsection 10.2, in
Dollars and in immediately available funds. The Agent shall distribute such
payments to the Banks promptly upon receipt in like funds as received. If such
payment is not made available by the Agent to any Bank within one (1) Business
Day of the Agent's receipt of payment from the Borrower, such Bank shall be
entitled to recover such amount from the Agent with interest thereon at a rate
per annum equal to the Alternate Base Rate. If any payment hereunder becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
2.14 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Bank hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Alternate Base Rate Loans to Eurodollar Loans shall forthwith be
canceled and (b) such Bank's Loans then outstanding as Eurodollar Loans, if any,
shall be converted automatically to Alternate Base Rate Loans on the respective
last days of the then current Eurodollar Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Eurodollar Interest Period with respect thereto, the Borrower shall pay
to such Bank such amounts, if any, as may be required pursuant to subsection
2.17.
2.15 Requirements of Law.
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Bank with any
request or directive (whether having the force of law or not) from any central
bank or other Governmental Authority made subsequent to the date hereof:
30
(i) shall subject any Bank to any tax of any kind whatsoever
with respect to this Agreement, any Note or any Eurodollar Loan made by
it, or change the basis of taxation of payments to such Bank in respect
thereof (except for Non-Excluded Taxes covered by subsection 2.16 and
changes in the rate of tax on the overall net income of such Bank);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Bank which is not otherwise
included in the determination of the Eurodollar Rate hereunder; or
(iii) shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
an amount which such Bank deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Bank, upon its demand, any additional amounts necessary to
compensate such Bank for such increased cost or reduced amount receivable. If
any Bank becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify the Borrower through the Agent, of the
event by reason of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to this subsection submitted by such Bank,
through the Agent, to the Borrower shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
(b) If any Bank shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Bank or any
corporation controlling such Bank with any request or directive regarding
capital adequacy (whether having the force of law or not) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect or
reducing the rate of return on such Bank's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Bank
or such corporation could have achieved but for such change or compliance
(taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, after submission by such Bank to the Borrower (with a
copy to the Agent) of a written request therefore, the Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank for
such reduction.
2.16 Taxes.
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(a) All payments made by the Borrower under this Agreement and the
Notes shall be made free and clear of, and without deduction or withholding for
or on account of any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on the Agent or any Bank as a result of a present or former
connection between the Agent or such Bank and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Agent or such Bank having executed, delivered or performed its obligations
or received a payment under, or enforced, this Agreement or the Notes). If any
such non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Agent or any Bank hereunder or under the Notes, the amounts so
payable to the Agent or such Bank shall be increased to the extent necessary to
yield to the Agent or such Bank (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement and the Notes, provided, however, that the
Borrower shall not be required to increase any such amounts payable to any Bank
that is not organized under the laws of the United States of America or a state
thereof if such Bank fails to comply with the requirements of paragraph (b) of
this subsection. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Agent for its own
account or for the account of such Bank, as the case may be, a certified copy of
an original official receipt received by the Borrower showing payment thereof.
If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and the
Banks for any incremental taxes, interest or penalties that may become payable
by the Agent or any Bank as a result of any such failure. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.
(b) Each Bank that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent (A) two (2) duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be, and (B) an
Internal Revenue Service Form W-8 or W-9, or successor applicable form,
as the case may be;
(ii) deliver to the Borrower and the Agent two (2) further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Agent.
32
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank so advises the Borrower and the Agent.
Such Bank shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Bank or a Participant pursuant
to subsection 10.6 shall, upon the effectiveness of the related transfer, be
required to provide all of the forms and statements required pursuant to this
subsection, provided that in the case of a Participant such Participant shall
furnish all such required forms and statements to the Bank from which the
related participation shall have been purchased.
2.17 Indemnity. The Borrower agrees to indemnify each Bank and to hold
each Bank harmless from any loss or expense which such Bank may sustain or incur
as a consequence of (a) failure by the Borrower to borrow, convert into or
continue Eurodollar Loans after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (b) failure by the
Borrower to make any prepayment after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an
Eurodollar Interest Period with respect thereto. Such indemnification may
include, without limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds obtained to fund or
maintain a Eurodollar Loan during any Eurodollar Interest Period, which any Bank
may incur as a consequence of such failure to borrow, convert or continue, as
the case may be. A certificate by Agent as to the amount of such loss, expense
or increased costs shall, when submitted to the Borrower, be conclusive, in the
absence of manifest error, unless the Borrower shall have provided the Agent
with written notice of the Borrower's objection to all or any portion of such
certificate not later than ten (10) days after the date on which such
certificate is submitted to the Borrower. Any such Eurodollar Loan shall not be
deemed paid or satisfied until all such additional amounts are paid. Agent
agrees to provide the Borrower with such information as the Borrower may
reasonably request with respect to the calculation of any such losses or
expenses. The covenant contained in this subsection 2.17 shall survive the
termination of this Agreement and the payment of the Notes and all other amounts
payable hereunder.
SECTION 3. LETTERS OF CREDIT
----------------------------
3.1 L/C Commitment.
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(a) Subject to the terms and conditions hereof, the Issuing Bank, in
reliance on the agreements of the other Banks set forth in subsection 3.5(a),
agrees to issue irrevocable standby letters of credit for the account of the
Borrower on any Business Day on or after the Amendment Effective Date until the
date which is thirty-five (35) Business Days prior to the end of the Commitment
Period in such form as may be approved from time to time by the Issuing Bank
(all such letters of credit outstanding on the date hereof and all letters of
credit to be issued hereunder, together with all extensions, renewals and
replacements thereof, are herein collectively referred to as the "Letters of
Credit"); provided that the Issuing Bank shall have no obligation to issue any
Letter of Credit if at the time of such issuance a Default exists or an Event of
Default has occurred and is continuing or if, after giving effect to such
issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the
aggregate Available Revolving Credit Commitments would be less than zero. Each
Letter of Credit shall (i) be denominated in Dollars, (ii) expire no later than
thirty (30) days prior to the Termination Date and (iii) expire no later than a
date one (1) year after its issuance, provided that any Letter of Credit with a
one-year term may provide for the renewal thereof for additional one-year
periods (which shall in no event extend beyond the date referred to in clause
(ii) above).
(b) Each Letter of Credit shall be subject to the Uniform Customs and,
to the extent not inconsistent therewith, the laws of the State of the Issuing
Bank's principal place of business.
(c) The Issuing Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
(d) The Issuing Bank shall not be liable to any L/C Participant for any
action taken or omitted by the Issuing Bank except for acts or omissions caused
by the Issuing Bank's gross negligence or willful misconduct.
3.2 Procedure for Issuance of Letters of Credit. The Borrower may from
time to time request that the Issuing Bank issue a Letter of Credit by
delivering to the Issuing Bank at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Bank, and
such other certificates, documents and other papers and information as the
Issuing Bank may request. Upon receipt of any Application, the Issuing Bank will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Bank be required to issue any Letter
of Credit earlier than three (3) Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereof) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Bank and the Borrower. The Issuing Bank shall furnish a copy of such Letter of
Credit to the Borrower and the other Banks promptly following the issuance
thereof.
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3.3 Fees, Commissions and Other Charges.
(a) After issuance of a Letter of Credit, the Borrower shall pay to the
Agent a letter of credit facility fee (the "L/C Fee") at the end of each
quarter, in arrears, in an amount equal to the product of (i) the face amount of
such Letter of Credit times (ii) the Letter of Credit Rate set forth opposite
the applicable Consolidated Indebtedness to Consolidated EBITDA Ratio in the
Pricing Grid, times (iii) the term of such Letter of Credit, expressed as a
fraction equal to the number of days of such term divided by three hundred sixty
(360).
In addition, as long as any letter of credit issued by The First National Bank
of Boston or any affiliate (the "FNBB Letters of Credit") for the account of the
Borrower or any Subsidiary is outstanding, the Borrower shall pay to the Issuing
Bank an additional fee, based on the face amount of all such letters of credit,
equal to the difference between the Letter of Credit Rate that would have
applied had such letters of credit been issued hereunder and the letter of
credit fee payable on the FNBB Letters of Credit. The applicable Letter of
Credit Rate shall be determined based upon the calculations submitted to the
Banks pursuant to subsection 6.2(b). In the event that the Letter of Credit Rate
cannot be determined at any time because the Borrower's financial statements for
the immediately preceding fiscal quarter are not available at such time, the L/C
Fee shall be presumed to be the same as the L/C Fee as of the last FQED for
which the Borrower's financial statements were available. Any change in the L/C
Fee as a consequence of a change in the Letter of Credit Rate shall be effective
as of the date of such change in the Letter of Credit Rate. Each L/C Fee payable
under this subsection 3.3 shall be shared ratably among the Banks in accordance
with their respective Commitment Percentages.
(b) The Agent shall, promptly following its receipt thereof, distribute
to the Issuing Bank and the L/C Participants all fees and commissions received
by the Agent for their respective accounts pursuant to this subsection.
3.4 Reimbursement Obligation of the Borrower. The Borrower agrees to
reimburse the Issuing Bank on each date on which the Issuing Bank notifies the
Borrower in writing of the date and amount of a draft presented under any Letter
of Credit and paid by the Issuing Bank for the amount of (a) such draft so paid
and (b) any taxes (other than income taxes), fees, charges or other costs or
expenses incurred by the Issuing Bank in connection with such payment. Each such
payment shall be made to the Issuing Bank at its address for notices specified
herein in Dollars and in immediately available funds. Interest shall be payable
on any and all amounts remaining unpaid by the Borrower under this subsection
from the date such amounts become outstanding until payment in full at the rate
which would be payable on any outstanding Loans which were then overdue under
subsection 2.3. Each drawing under any Letter of Credit shall constitute a
request by the Borrower to the Agent for the borrowing pursuant to subsection
2.1 of Revolving Credit Loans in the amount of such drawing and any
reimbursement made by an L/C Participant pursuant to subsection 3.5 shall
constitute a Revolving Credit Loan pursuant to subsection 2.3.
35
3.5 L/C Draws and Reimbursements.
(a) Each L/C Participant unconditionally and irrevocably agrees with
the Issuing Bank that, if a draft is paid under any Letter of Credit for which
the Issuing Bank is not reimbursed in full by the Borrower in accordance with
the terms of this Agreement, such L/C Participant shall pay to the Issuing Bank
upon demand at the Issuing Bank's address for notices specified herein an amount
equal to such L/C Participant's Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed through participation or
otherwise. In furtherance of the foregoing, the Issuing Bank irrevocably agrees
to grant and hereby grants to each L/C Participant, and, to induce the Issuing
Bank to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Bank, on the terms and conditions hereinafter stated, for such L/C Participant's
own account and risk an undivided interest equal to such L/C Participant's
Commitment Percentage in the Issuing Bank's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Bank thereunder.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Bank pursuant to subsection 3.5(a) in respect of any unreimbursed
portion of any payment made by the Issuing Bank under any Letter of Credit is
paid to the Issuing Bank within three (3) Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Bank on demand an
amount equal to the product of (1) such amount, times (2) the daily average
Federal Funds Effective Rate, as quoted by the Issuing Bank, during the period
from and including the date such payment is required to the date on which such
payment is immediately available to the Issuing Bank, times (3) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 365. If any such amount required to be paid by any L/C
Participant pursuant to subsection 3.5(a) is not in fact made available to the
Issuing Bank by such L/C Participant within three (3) Business Days after the
date such payment is due, the Issuing Bank shall be entitled to recover from
such L/C Participant, on demand, such amount with interest thereon calculated
from such due date at the rate per annum equal to the Alternate Base Rate. A
certificate of the Issuing Bank submitted to any L/C Participant with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Bank has made payment under
any Letter of Credit and has received from any L/C Participant its share of such
payment in accordance with subsection 3.5(a), the Issuing Bank receives any
payment related to such Letter of Credit (whether directly from the Borrower or
otherwise, including proceeds of collateral applied thereto by the Issuing
Bank), or any payment of interest on account thereof, the Issuing Bank will
distribute to such L/C Participant its share thereof; provided, however, that in
the event that any such payment received by the Issuing Bank shall be required
to be returned by the Issuing Bank, such L/C Participant shall return to the
Issuing Bank the portion thereof previously distributed by the Issuing Bank to
it.
36
3.6 Obligations Absolute. The Borrower's obligations under this Section
3 shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Bank or any beneficiary of a
Letter of Credit. The Borrower also agrees with the Issuing Bank that, subject
to its responsibilities under the Uniform Customs, the Issuing Bank shall not be
responsible for, and the Borrower's Reimbursement Obligations under Subsection
3.4 shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any dispute between or among
the Borrower and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee. The Issuing Bank shall not be liable to the Borrower or any Bank for
any error, omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by the Issuing Bank's gross
negligence or willful misconduct. The Borrower agrees that any action taken or
omitted by the Issuing Bank under or in connection with any Letter of Credit or
the related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in the
Uniform Commercial Code of the State of Connecticut, shall be binding on the
Borrower and shall not result in any liability of the Issuing Bank to the
Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Bank shall promptly notify the
Borrower and the Banks of the date and amount thereof. The responsibility of the
Issuing Bank to the Borrower in connection with any draft presented for payment
under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
3.8 Application. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
-----------------------------------------
To induce the Banks to enter into this Agreement and to make the Loans
and issue or participate in the Letters of Credit the Borrower hereby represents
and warrants to the Agent and each Bank that:
37
4.1 Financial Condition.
(a) The combined balance sheet of the Borrower and its Affiliates as at
December 31, 1997 and December 31, 1996 and the related combined statements of
income and retained earnings and of cash flows for the fiscal years ended on
such dates, reported on by Deloitte & Touche LLP, copies of which have
heretofore been furnished to each Bank, are complete and correct and present
fairly the consolidated financial condition of The Borrower and its Affiliates
as at such dates, and the results of their operations and their cash flows for
the fiscal years then ended. The unaudited combined balance sheet of the
Borrower and its Affiliates as at March 31, 1998, and the related unaudited
statement of income and retained earnings for the three-month period ended on
such date, certified by a Responsible Officer, copies of which have heretofore
been furnished to each Bank, are complete and correct and present fairly the
financial condition of the Borrower and its Affiliates as at such date, and the
results of their operations for the three-month period then ended (subject to
normal year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein).
(b) Except as set forth on SCHEDULE 4.1(b), neither the Borrower nor
any of its combined Affiliates had, at the date of the most recent balance sheet
referred to in subsection 4.1(a), any material Guarantee Obligation, contingent
liability or liability for taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
financial statements referred to in subsection 4.1(a) or in the notes thereto.
(c) Except as set forth on SCHEDULE 4.1(c), during the period from
December 31, 1997 to and including the date hereof there has been no sale,
transfer or other disposition by the Borrower or any of its combined Affiliates
of any material part of its business or property and no purchase or other
acquisition of any business or property (including any capital stock of any
other Person) material in relation to the financial condition of the Borrower
and its combined Affiliates at December 31, 1997.
(d) Substantially all of the books and records of the Borrower and its
Subsidiaries are located at the Borrower's headquarters at 0000 Xxxx Xxxxxxx
Xxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxxx.
38
4.2 No Change. Since December 31, 1997, (a) except as set forth on
SCHEDULE 4.2, there has been no development or event nor, to the best of our
knowledge, any prospective development or event which has had or could have a
Material Adverse Effect and (b) except as set forth on SCHEDULE 4.2 or as
permitted by this Agreement, no dividends or other distributions have been
declared, paid or made upon the Capital Stock of the Borrower or any of its
combined Affiliates nor has any of the Capital Stock of the Borrower been
redeemed, retired, purchased or otherwise acquired for value by the Borrower or
any of its combined Affiliates.
4.3 Corporate Existence; Compliance with Law. The Borrower and each
Subsidiary (a) is duly organized as a "C corporation", as defined in Section
1361(a)(2) of the Code, validly existing and in good standing under the laws of
the jurisdiction of its organization, (b) has the power and authority, and the
legal right, to own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently engaged in each
jurisdiction where the failure to have such power, authority or right would have
a Material Adverse Effect, (c) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except where the failure so to qualify could not have a Material Adverse Effect
and (d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not, in the aggregate, have a Material
Adverse Effect.
4.4 Corporate Power, Authorization; Enforceable Obligations. The
Borrower and each Subsidiary has the corporate power and authority, and the
legal right, to make, deliver and perform this Agreement, the Notes, each
Application and the other Loan Documents to which it is a party, to borrow
hereunder and to grant the Liens pursuant to the Security Documents to which it
is a party and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and the Notes, the
grant of the Liens pursuant to the Security Documents to which it is a party and
the execution, delivery and performance of this Agreement, the Notes, each
Application and each other Loan Document to which it is a party. No consent or
authorization of, filing with or other action by or in respect of, any
Governmental Authority or any other Person is required in connection with the
borrowings hereunder, the grant of the Liens pursuant to the Security Documents
or the execution, delivery, performance, validity or enforceability of this
Agreement, the Notes, each Application or any other Loan Document. This
Agreement and each other Loan Document to which the Borrower or a Subsidiary is
a party (except the Notes) has been, and each Note will be, duly executed and
delivered on behalf of the Borrower. This Agreement and each other Loan Document
to which the Borrower or a Subsidiary is a party (except the Notes) constitutes,
and each Note when executed and delivered will constitute, a legal, valid and
binding obligation of the Borrower or such Subsidiary, as the case may be,
enforceable against such Borrower or such Subsidiary in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
39
4.5 No Legal Bar. The execution, delivery and performance of this
Agreement, the Notes, each Application and each other Loan Document, the grant
of the Liens pursuant to the Security Documents, the borrowings hereunder and
the use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of the Borrower or of any Subsidiary and will not result
in, or require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
4.6 No Material Litigation. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or against any of its or their respective properties or revenues (a)
with respect to this Agreement, the Notes, any Application or any other Loan
Document or any of the transactions contemplated hereby or thereby or (b) which
could have a Material Adverse Effect. SCHEDULE 4.6 sets forth certain litigation
and proceedings presently pending against the Borrower or its Subsidiaries.
4.7 No Default. Neither the Borrower nor any Subsidiary is in default
under or with respect to any of its Contractual Obligations or Capital Stock in
any respect which could have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of the Borrower and each
Subsidiary has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to all its other
property except for any defect in title thereto or leasehold interest therein
which could not in the aggregate have a Material Adverse Effect, and none of the
property owned or leased by the Borrower or any Subsidiary is subject to any
Lien except as permitted by subsection 7.3 or which could not in the aggregate
have a Material Adverse Effect.
4.9 Intellectual Property. The Borrower and each Subsidiary owns, or is
licensed to use, all trademarks, trade names, copyrights, technology, know-how
and processes necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not have a Material
Adverse Effect (the "Intellectual Property"). Except as provided in SCHEDULE
4.6, no claim has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property; nor does the Borrower know of
any valid basis for any such claim which could or might have a Material Adverse
Effect. To the best of the Borrower's knowledge, the use of such Intellectual
Property by the Borrower and each Subsidiary does not infringe on the rights of
any Person, except for such claims and infringements that, in the aggregate,
could not have a Material Adverse Effect.
4.10 No Burdensome Restrictions. Neither the Borrower nor any
Subsidiary is a party to any Contractual Obligation or Requirement of Law,
compliance with the terms of which could have a Material Adverse Effect.
40
4.11 Taxes. Each of the Borrower and its Subsidiaries has filed or
caused to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed (the "Tax Returns") and has paid all taxes shown to be due
and payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be) where the failure
to so file such Tax Returns or to pay such taxes could or might have a Material
Adverse Effect; no tax Lien has been filed, and, to the knowledge of the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge. SCHEDULE 4.11 sets forth a complete and correct list of all audits
concerning any Tax Return that are being conducted by any Governmental Authority
or are otherwise in progress on the Closing Date.
4.12 Federal Regulations. No part of the proceeds of any Loans will be
used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect or for any purpose which violates the provisions of the Regulations of
such Board of Governors. If requested by any Bank or the Agent, the Borrower
will furnish to the Agent and each Bank a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said Regulation
U.
4.13 ERISA. Neither the Borrower nor any Commonly Controlled Entity
participates currently or has during the five-year period prior to the date on
which this representation is made participated in or is required currently or
has during the five-year period ending on the date on which this representation
is made been required to contribute to or otherwise participate in any plan,
program or arrangement subject to Title IV of ERISA. Except as set forth in
SCHEDULE 4.13, each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code. The present value of all accrued
benefits under each Single Employer Plan maintained by the Borrower or any
Commonly Controlled Entity (based on those assumptions used to fund the Plans)
did not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits. Neither the Borrower nor any Commonly
Controlled Entity participates currently or has during the five-year period
prior to the date on which this representation is made participated in or is
required currently or has during the five-year period ending on the date on
which this representation is made been required to contribute to or otherwise
participate in any Multiemployer Plan. Neither the Borrower nor any Commonly
Controlled Entity participates currently or has during the five-year period
prior to the date on which this representation is made participated in or is
required currently or has during the five-year period ending on the date on
which this representation is made been required to contribute to or otherwise
participate in any welfare benefit plans (as defined in Section 3(1) of ERISA)
that provide post-retirement benefits to their current or former employees.
41
4.14 Investment Company Act; Other Regulations. Neither the Borrower
nor any Subsidiary is an "investment company", or, to the best of the Borrower's
knowledge, a company "controlled" by an "investment company", within the meaning
of the Investment Company Act of 1940, as amended (the "1940 Act"). Neither the
Borrower nor any Subsidiary is subject to regulation under the 1940 Act or any
Federal or State statute or regulation which limits its ability to incur
Indebtedness.
4.15 Subsidiaries. All the Subsidiaries of the Borrower are listed on
SCHEDULE 4.15. Neither Labor World, Inc. nor Labor World USA, Inc., which are
not Subsidiaries but are corporations whose shares are owned by certain
shareholders of the Borrower, has assets exceeding $10,000 or has or will have
any business activity of any kind.
4.16 Purpose of Loans. The Borrower shall use the Loans in the
following manner: (i) for the working capital needs and for the general
corporate purposes of itself and its Subsidiaries (other than CSF), including
for Capital Expenditures; (ii) to make Permitted Acquisitions; (iii) to make
advances to CSF, not exceeding an aggregate amount of $7,500,000 outstanding at
any one time, to fund the working capital needs of Labor World, Tandem and
Office Ours franchisees and (iv) with regard to the proceeds of Swingline Loans,
to fund the working capital needs of the Borrower and its Subsidiaries (other
than CSF).
4.17 Environmental Matters. To the best knowledge of any Responsible
Officer of the Borrower, each of the representations and warranties set forth in
paragraphs (a) through (e) of this subsection is true and correct with respect
to each parcel of real property heretofore or now owned or operated by the
Borrower or any Subsidiary (the "Properties"), except as set forth on SCHEDULE
4.17 and except to the extent that the facts and circumstances giving rise to
any such failure to be so true and correct could not have a Material Adverse
Effect:
(a) The Properties do not contain, and have not previously contained,
in, on, or under, including, without limitation, the soil and groundwater
thereunder, any Hazardous Materials.
(b) The Properties and all operations and facilities at the Properties
are in compliance with all Environmental Laws, and there is no Hazardous
Materials contamination or violation of any Environmental Law which could
interfere with the continued operation of any of the Properties or impair the
fair saleable value of any thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received any
complaint, notice of violation, alleged violation, investigation or advisory
action or of potential liability or of potential responsibility regarding
environmental protection matters or permit compliance with regard to the
Properties, nor is the Borrower aware that any Governmental Authority is
contemplating delivering to the Borrower or any of its Subsidiaries any such
notice.
42
(d) Hazardous Materials have not been generated, treated, stored,
disposed of, at, on or under any of the Properties, nor have any Hazardous
Materials been transferred from the Properties to any other location.
(e) There are no governmental, administrative or judicial proceedings
pending or contemplated under any Environmental Laws to which the Borrower or
any of its Subsidiaries is or will be named as a party with respect to the
Properties, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to any of the
Properties.
4.18 Security Documents.
(a) The provisions of the OI Pledge Agreement and the OSIA Pledge
Agreement are effective to create in favor of the Agent for the ratable benefit
of the Banks a legal, valid and enforceable security interest in all right,
title and interest of the pledgor in the Collateral as described therein. The OI
Pledge Agreement and the OSIA Pledge Agreement each constitutes a fully
perfected first lien on, and security interest in, all right, title and interest
of the pledgor in the Collateral described therein.
(b) The provisions of the OI Security Agreement are effective to create
in favor of the Agent for the ratable benefit of the Banks a legal, valid and
enforceable security interest in all right, title and interest of the Borrower
in the Collateral as described therein. Except where failure to file would not
have a material effect on Agent's ability to realize effectively on the
Collateral, and except as otherwise provided in the Intercreditor Agreement, as
a whole, the OI Security Agreement constitutes a fully perfected first lien on,
and security interest in, all right, title and interest of the Borrower in the
Collateral described therein, and no Uniform Commercial Code financing
statements have been filed by any other Person with respect to such Collateral
other than as may be filed in connection with this Agreement or with the
Receivables Securitization Transaction and except as described on SCHEDULE 4.18
hereto.
43
(c) The provisions of each Subsidiary Security Agreement are effective
to create in favor of the Agent for the ratable benefit of the Banks a legal,
valid and enforceable security interest in all right, title and interest of such
Subsidiary (other than OutSource Funding Corporation) in the Collateral as
described therein. Except where failure to file would not have a material effect
on the Agent's ability to effectively realize on the Collateral, and except as
otherwise provided in the Intercreditor Agreement, as a whole, each Subsidiary
Security Agreement constitutes a fully perfected first lien on, and security
interest in, all right, title and interest of such Subsidiary (other than
OutSource Funding Corporation) in the Collateral described therein, and no
Uniform Commercial Code financing statements have been filed by any other Person
with respect to such Collateral other than as may be filed in connection with
this Agreement or with the Receivables Securitization Transaction and except as
described on SCHEDULE 4.18 hereto.
(d) The provisions of the Trademark Security Agreement are effective to
create in favor of the Agent for the ratable benefit of the Banks a legal, valid
and enforceable security interest in all right, title and interest of the
Borrower and its Subsidiaries in the Collateral as described therein. Except
where failure to file would not have a material effect on the Agent's ability to
effectively realize on the Collateral, as a whole, the Trademark Security
Agreement constitutes a fully perfected first lien on, and security interest in,
all right, title and interest of such Subsidiary in the Collateral described
therein, and no Uniform Commercial Code financing statements or filings with the
United States Patent and Trademark Office have been filed by any other Person
with respect to such Collateral other than as may be filed in connection with
this Agreement and except as described on SCHEDULE 4.18 hereto.
4.19 [Intentionally Reserved].
4.20 Solvency. The Borrower and each Subsidiary is, and after giving
effect to the incurrence of all Indebtedness, including Subordinated
Indebtedness, and obligations being incurred in connection herewith will be and
will continue to be, Solvent.
4.21 Certain Stockholders. To the best of the Borrower's knowledge,
none of Xxxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxx or Xxxxx X. Xxxxxxx is a
beneficial owner, directly or indirectly, including without limitation through a
family member or trust, of any Voting Stock of the Borrower or its Subsidiaries
except such Voting Stock as is subject to the provisions of the Voting Trust
Agreement. As of the Closing Date, none of said individuals or any of his family
members has any direct or indirect affiliation with or business relationship
with the Borrower or its Subsidiaries except as is described in detail on
SCHEDULE 4.21.
4.22 Year 2000 Compatability. All of the Borrower's and each
Subsidiary's computer-based systems are able to operate and effectively process
data including dates on or after January 1, 2000, except for the Master Pack
System, as to which the Borrower is currently taking action to ensure compliance
with the coverage contained in Section 6.11 hereof.
SECTION 5. CONDITIONS PRECEDENT
-------------------------------
5.1 Amendment Effective Date. The effectiveness of the amendment and
restatement of the Existing Credit Agreement provided for hereby is subject to
the receipt by the Agent of the following documents, each of which shall be
satisfactory to the Agent and each Bank in form and substance:
(a) Agreement. The Agent shall have received, with a counterpart for
each Bank, this Agreement, executed and delivered by a duly authorized officer
of the Borrower.
44
(b) Revolving Credit Notes. The Revolving Credit Notes, duly completed
and executed and, in the case of the Existing Banks parties hereto, in exchange
for the promissory notes issued under the Existing Credit Agreement.
(c) Swingline Note. The Swingline Note, duly completed and executed in
exchange (in the case of the Swingline Bank) for the promissory note issued
under the Existing Credit Agreement.
(d) Reaffirmation, Amendment and Execution of Loan Documents. The Agent
shall have received, with a counterpart for each Bank and in each case executed
and delivered by a duly authorized officer of the Borrower or its Subsidiaries,
as the case may be, (i) a reaffirmation and, to the extent required by the
Agent, amendment, of the Security Documents, and (ii) a Subsidiary Security
Agreement and a Subsidiary Guarantee executed and delivered by each of MASS
STAFF, INC. and STAFF ALL, INC.
(e) Legal Opinion. The Agent and each Bank shall have received the
executed legal opinion of Xxxxxx & Xxxxx LLP, counsel to the Borrower and its
Subsidiaries, satisfactory to the Agent and special counsel to the Agent and
substantially in the form of Exhibit E hereto.
(f) Corporate Proceedings. The Agent shall have received, with a copy
for each Bank, a copy of the resolutions, in form and substance satisfactory to
the Agent, of the Board of Directors of the Borrower and each Subsidiary
authorizing (i) in the case of the Borrower, the execution, delivery and
performance of this Agreement and the Notes and (ii) with respect to the
Borrower and each Subsidiary, the reaffirmation and, to the extent applicable,
amendment of the Security Documents to which each is a party.
(g) Incumbency Certificates. The Agent shall have received, with a copy
for each Bank, a certificate, dated the Closing Date, of the Secretary or an
Assistant Secretary of the Borrower and each Subsidiary as to the incumbency and
signature of the officer or officers signing this Agreement and the
reaffirmations of each Security Document, together with evidence of the
incumbency of such Secretary or Assistant Secretary.
(h) Corporate Documents. The Agent shall have received, with a
counterpart for each Bank, true and complete copies of the certificate of
incorporation and by-laws of the Borrower and each Subsidiary, certified at the
Closing Date as complete and correct copies thereof, by the Secretary or
Assistant Secretary of the Borrower or such Subsidiary.
(i) Good Standing Certificates. The Agent shall have received, with a
copy for each Bank, certificates dated as of a recent date from the Secretary of
State or other appropriate authority of such jurisdiction, evidencing the good
standing of the Borrower and each Subsidiary in its state of incorporation and
in each state where failure to obtain authority to do business as a foreign
corporation would have a Material Adverse Effect.
45
(j) Litigation. No suit, action, investigation, inquiry or other
proceeding (including, without limitation, the enactment or promulgation of a
statute or rule) by or before any arbitrator or any Governmental Authority shall
be formally instituted or threatened and no preliminary or permanent injunction
or restraining order by a state or federal court shall have been entered or
threatened (i) in connection with any Loan Document or any of the transactions
contemplated hereby or thereby or (ii) which, in the reasonable opinion of the
Banks, could have a Material Adverse Effect.
(k) No Violation. The consummation of the transactions contemplated by
this Agreement, the Notes, each Application and the other Loan Documents shall
not contravene, violate or conflict with, nor involve the Agent or any Bank in
any violation of, any Requirement of Law.
(l) Fees. The Agent and each Bank shall have received the fees to be
received by it on the Closing Date referred to in subsection 2.8 and the fees
and disbursements of Day, Xxxxx & Xxxxxx, special counsel for the Agent, shall
have been paid in full on the Closing Date.
(m) Consents, Licenses and Approvals. The Agent shall have received,
with a counterpart for each Bank, a certificate, dated the Closing Date,
executed by a duly authorized officer of the Borrower stating that all consents,
authorizations, notices and filings necessary or advisable in connection with
the financings contemplated by this Agreement and the continuing operations of
the Borrower have been obtained and are in full force and effect, except where
the failure to obtain such consents, authorizations, notices or filings could
not have a Material Adverse Effect.
(n) Representations and Warranties, Etc. The Agent shall have received,
with a counterpart for each Bank, a certificate of a Responsible Officer of the
Borrower, dated the Closing Date, certifying on behalf of the Borrower that (i)
the representations and warranties in Section 4 are true, complete and correct
in all material respects on such date as though made on and as of such date,
(ii) no event has occurred and is continuing which constitutes a Default or
Event of Default, (iii) the Borrower has performed and complied with all
agreements and conditions contained in this Agreement which are required to be
performed or complied with by the Borrower at or before the Closing Date, and
(iv) there has been no material adverse change in the financial condition,
operations, properties, business or prospects of the Borrower and its
Subsidiaries, taken as a whole, since December 31, 1997.
(o) Consummation of Receivables Securitization Transaction. The Agent
shall have entered into the Intercreditor Agreement and shall received evidence
satisfactory to the Agent that the Receivables Securitization Transaction shall
have been consummated on terms and conditions acceptable to the Agent.
46
(p) Reduction of Outstanding Revolving Credit Loans. The Borrower shall
have repaid all outstanding Revolving Credit Loans to the extent necessary to
reduce the Aggregate Outstanding Extensions of Credit to a level not exceeding
the Revolving Credit Commitment.
(q) Payment in Full of Outstanding Revolving Credit Loans of State
Street Bank and Trust Company and The Sumitomo Bank, Limited. The outstanding
Revolving Credit Loans of State Street Bank and Trust Company and The Sumitomo
Bank, Limited, together with accrued interest thereon, shall have been paid in
full.
(r) Other Documents. Such other documents as the Agent or any Bank or
special counsel to the Agent may reasonably request.
5.2 Conditions to Each Extension of Credit. The agreement of each Bank
to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction on such borrowing date of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower and each Subsidiary in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as of such
date as if made on and as of such date; provided that, with respect to
extensions of credit made after the Closing Date, Guarantee Obligations incurred
after the Closing Date and in accordance with the terms of this Agreement shall
not be deemed a breach of the representation and warranty set forth in
subsection 4.1(b) to the extent that such Guarantee Obligations are not
described in the financial statements described in subsection 4.1(a).
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the extension of credit
requested to be made on such date.
(c) Additional Documents. The Agent shall have received each additional
document, instrument, legal opinion or item of information reasonably requested
by it, including, without limitation, a copy of any debt instrument, security
agreement or other material contract to which the Borrower or any Subsidiary may
be a party.
(d) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be satisfactory in form and substance to the Agent, and the Agent shall have
received such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it shall
reasonably request.
47
Each borrowing by and Letter of Credit issued on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such Loan or Letter of Credit that the conditions contained in this
subsection 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
--------------------------------
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Note or any Letter of Credit remains outstanding and unpaid or any
other amount is owing to any Bank or the Agent hereunder, the Borrower shall and
(except in the case of delivery of financial information, reports and notices)
shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to each Bank:
(a) as soon as available, but in any event within ninety (90) days
after the end of each fiscal year of the Borrower, a copy of the consolidated
and consolidating balance sheets of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related consolidated and
consolidating statements of income and retained earnings and of cash flows for
such year, setting forth in each case in comparative form the figures for the
previous year, and, with respect to the consolidated financial statements,
reported on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit by Deloitte & Touche LLP or
other independent certified public accountants of nationally recognized standing
not unacceptable to the Required Banks;
48
(b) as soon as available, but in any event not later than forty-five
(45) days after the end of each of the first three (3) fiscal quarters of each
fiscal year of the Borrower, the unaudited consolidated and consolidating
balance sheets of the Borrower and its consolidated Subsidiaries as at the end
of such quarter, (i) the related unaudited consolidated and consolidating
statements of income and retained earnings of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through the end
of such quarter, and the related unaudited consolidated and consolidating
statements of cash flows of the Borrower and its consolidated Subsidiaries for
the portion of the fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects when
considered in relation to the consolidated and consolidating financial
statements of the Borrower and its consolidated Subsidiaries (subject to normal
year-end audit adjustments) and (ii) a statement setting forth the aggregate
amount of Capital Expenditures made by the Borrower and its consolidated
Subsidiaries during such fiscal period (which aggregate amount shall separately
specify the total amount of Capital Expenditures consisting of cash and the
total amount of Capital Expenditures consisting of Capital Leases and other
non-cash financings), in each case, certified by a Responsible Officer as being
fairly stated in all material respects when, in the case of the financial
statements delivered pursuant to clause (i) above, considered in relation to the
consolidated and consolidating financial statements of the Borrower and its
consolidated Subsidiaries(subject to normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than thirty (30)
days after the last day of each month of each fiscal year of the Borrower, the
unaudited consolidated and consolidating balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such fiscal period and the related
unaudited consolidated and consolidating statements of income and retained
earnings of the Borrower and its consolidated Subsidiaries for such fiscal
period and the portion of the fiscal year of the Borrower through the end of
such fiscal period, setting forth in each case in comparative form the figures
for the previous year;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to each Bank:
(a) concurrently with the delivery of the financial statements referred
to in subsection 6.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;
(b) concurrently with the delivery of each of the financial statements
referred to in subsections 6.1(a) and 6.1(b), a certificate of a Responsible
Officer (which certificate shall set forth, in detail, all interim and
preparatory figures and calculations used in determining the Borrower's
satisfaction of its covenants and agreements contained in subsection 7.1)
stating that, to the best of such Officer's knowledge, each of the Borrower and
its Subsidiaries during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in this
Agreement, the Notes and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate;
(c) if delivered, as soon thereafter as practicable but in no event
later than fifteen (15) days after receipt, a copy of the letter, if any,
addressed to the Borrower, of the certified public accountants who prepared the
financial statements referred to in subsection 6.1(a) for such fiscal year and
otherwise referred to as a "management letter";
49
(d) as soon as available, but in any event within thirty (30) days
after the end of each fiscal year of the Borrower a copy of (i) the projections
by the Borrower of the operating budget and cash flow budget of the Borrower and
its Subsidiaries for the succeeding three (3) fiscal years and (ii) the
projected consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the last day of each of such three (3) succeeding fiscal
years. Such projections and projected balance sheet to be accompanied by a
certificate of a Responsible Officer to the effect that such projections and
projected balance sheet have been prepared on the basis of sound financial
planning practice and that such Officer has no reason to believe they are
incorrect or misleading in any material respect;
(e) within five (5) days after the same are sent, copies of all
financial statements and reports which the Borrower sends to its stockholders
and within five (5) days after the same are filed, copies of all applications,
financial statements and reports which the Borrower may make to, or file with,
the Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(f) promptly following the release by the Borrower or any of its
Subsidiaries to the press of any material statement or other written
communication, a copy thereof; and
(g) promptly, such additional financial and other information as any
Bank may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, including without limitation all payroll and
other tax obligations, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books of the
Borrower or its Subsidiaries, as the case may be or except where the failure to
pay, discharge or otherwise satisfy could not have a Material Adverse Effect.
6.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to subsection 7.5 and comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance.
(a) Keep all property useful and necessary in its business in good
working order and condition except where the failure to do so could not have a
Material Adverse Effect; and
50
(b) maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks (but including in any event public liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business and furnish to each Bank upon written request, full
information as to the insurance carried.
6.6 Inspection of Property; Books and Records; Discussions. Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Bank, upon reasonable notice to the Borrower, to visit
and inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may be reasonably
desired ("Field Examinations") and to discuss the business, operations,
properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants. Up to two (2) Field
Examinations each year shall be at the Borrower's expense, which expense shall
not exceed $20,000 in the aggregate.
6.7 Notices. Promptly give notice to the Agent and each Bank of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries, or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Authority; which in either case, if
not cured or if adversely determined, as the case may be, would have a Material
Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $250,000 or more and not covered by
insurance or in which injunctive or similar relief is sought which individually
or in the aggregate could or might have a Material Adverse Effect; provided that
the Borrower shall not be required to give notice of any such litigation or
proceeding if the Borrower has reasonably determined, after consultation with
counsel, that the possibility is remote that such litigation or proceeding will
result in a judgment of $250,000 or more or in injunctive or similar relief
against the Borrower or its Subsidiaries;
(d) the following events, as soon as possible and in any event within
thirty (30) days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to any
Plan, or any withdrawal from, or the termination, Reorganization or Insolvency
of any Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or the Borrower or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan;
51
(e) as soon as the Borrower knows or has reason to know that it or any
Subsidiary has become liable for remediation and/or environmental compliance
expenses and/or fines, penalties or other charges which, in the aggregate, are
in excess of $250,000 at any one time outstanding (net of all reimbursements in
respect of such amounts from any state trust funds which have been or are
reasonably expected to be made to the Borrower or its Subsidiaries and have been
recognized as a receivable or may properly be set off as a credit against such
liabilities in accordance with GAAP); and
(f) a material adverse change in the business, operations, property,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
6.8 Environmental Laws.
(a) Comply with, and insure compliance by all tenants and subtenants,
if any, with, all Environmental Laws and obtain and comply with and maintain,
and ensure that all tenants and subtenants obtain and comply with and maintain,
any and all licenses, approvals, registrations or permits required by
Environmental Laws, except to the extent that failure to do so could not have a
Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities respecting Environmental Laws, except to the extent
that the same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not have a Material Adverse Effect;
(c) Defend, indemnify and hold harmless the Agent and the Banks, and
their respective employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of or noncompliance with
any Environmental Laws by the Borrower or any of its Subsidiaries, or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorneys' and consultants' fees,
investigation and laboratory fees, court costs and litigation expenses, except
to the extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor.
52
(d) Prepare and deliver to the Agent and to each other Bank, at least
as frequently as once each fiscal quarter after any accrual (as described below)
exists, a report setting forth a summary, as of the end of such fiscal quarter,
of (i) the gross amount of all sums accrued in respect of any remediation
required by applicable Environmental Laws, (ii) all reimbursements in respect of
such amounts from any state trust funds which have been or are reasonably
expected to be made to the Borrower or its Subsidiaries and have been recognized
as a receivable or may properly be set off as a credit against the cost of such
remediation under GAAP and (iii) the net amount of all sums accrued in respect
of such remediation costs.
6.9 Use of Proceeds. Use the proceeds of the Loans only for the
purposes described in Section 4.16.
6.10 Further Assurances. Execute and deliver such additional financing
statements, continuations of financing statements and other documents as Agent
shall reasonably request to perfect and maintain perfected the Agent's security
interest in the Collateral.
6.11 Year 2000 Compatibility. On or before December 31, 1998, take all
action necessary to ensure that the Borrower's and each Subsidiary's
computer-based systems are able to operate and effectively process data
including dates on or after January 1, 2000. At the request of the Agent, the
Borrower and its Subsidiaries shall provide the Agent reasonable assurance of
such "Year 2000 Compatibility."
SECTION 7. NEGATIVE COVENANTS
-----------------------------
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Note or any Letter of Credit remains outstanding and unpaid or any
other amount is owing to any Bank or the Agent hereunder, the Borrower shall
not, and (except with respect to subsection 7.1) shall not permit any of its
Subsidiaries to, directly or indirectly:
7.1 Financial Condition Covenants.
(a) Maximum Consolidated Indebtedness to Consolidated EBITDA Ratio.
Permit, as of the end of any month, the Consolidated Indebtedness to
Consolidated EBITDA Ratio to be greater than 3.75 to 1.
(b) Minimum Consolidated EBITDA to Consolidated Interest Expense Ratio.
Permit, as of the end of any month during each of the periods set forth below,
the Consolidated EBITDA to Consolidated Interest Expense Ratio to be less than
the amount set forth below opposite such period:
53
-------------------------------------------------------------------------------------------
Consolidated EBITDA to Consolidated
Period Interest Expense Ratio
-------------------------------------------------------------------------------------------
During the period beginning on April 1, 1998 2.5 to 1
and ending on June 30, 1998
-------------------------------------------------------------------------------------------
During the period beginning on July 1, 1998
and ending on September 30, 1998 3.5 to 1
-------------------------------------------------------------------------------------------
During the period beginning on October 1, 4.0 to 1
1998 and thereafter
-------------------------------------------------------------------------------------------
(c) Minimum Operating Cash Flow Ratio. Permit the Operating Cash Flow
Ratio of Borrower to be less than 1.50 to 1.00 as of the end of any month.
(d) Minimum Current Ratio. As of the end of any month, permit the
Current Ratio to be less than 1.50 to 1.00.
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness in respect of the Loans, the Notes and the Letters of
Credit and other obligations of the Borrower and its Subsidiaries under the Loan
Documents;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary;
(c) Indebtedness outstanding on the Closing Date and listed on Schedule
7.2 and any refinancings, refundings, renewals or extensions thereof (without
any increase in principal amount thereof);
(d) Subordinated Indebtedness of the Borrower and its Subsidiaries;
(e) Indebtedness secured by Liens permitted by Section 7.3(h) and under
Capital Leases incurred in an aggregate principal amount not exceeding (i)
$6,000,000 incurred in each of 1997 and 1998, $8,500,000 incurred in 1999,
$11,000,000 incurred in 2000 and $15,000,000 incurred in 2001 and each year
thereafter or (ii) $46,000,000 incurred during the term of this Agreement;
54
(f) Other unsecured (except as described in Section 7.3(h))
Indebtedness of the Borrower and its Subsidiaries not exceeding $250,000 in the
aggregate outstanding at any time; and
(g) Indebtedness created in connection with the Receivables
Securitization Transaction.
7.3 Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings; provided that adequate reserves with respect
thereto are maintained on the books of the Borrower or its Subsidiaries, as the
case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are not
overdue for a period of more than sixty (60) days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance arrangements;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or such Subsidiary;
and
(f) Liens in existence on the Closing Date listed on SCHEDULE 7.2,
securing Indebtedness permitted by subsection 7.2(c); provided that no such Lien
is expanded to cover any additional property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased;
(g) Liens created under the Security Documents;
55
(h) Liens securing Indebtedness of the Borrower or any Subsidiary
permitted by subsection 7.2(e); provided that (i) such Liens shall be created
promptly upon the acquisition, improvement or completion of the construction of
such fixed or capital asset (and in any event no later than the earlier of (A)
twelve (12) months from the date of which the construction of such fixed or
capital asset is completed, and (B) twenty-four (24) months from the date on
which the real estate on which such fixed or capital asset is located, was
purchased by the Borrower), (ii) such Liens do not at any time encumber any
property other than the property financed by the such Indebtedness, (iii) the
amount of Indebtedness secured by thereby is not increased, and (iv) the
principal amount of Indebtedness secured by any such Lien shall at no time
exceed 100% of the purchase price of such property;
(i) a first mortgage Lien on the headquarters of the Borrower at 0000
Xxxx Xxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxxx securing Indebtedness of the
Borrower incurred to purchase such headquarters pursuant to the exercise of its
option under the lease of such headquarters;
(j) any interest or title of a lessor under any lease entered into by
the Borrower or any Subsidiary in the ordinary course of its business and
covering only the assets so leased; and
(k) Liens created under the Receivables Securitization Transaction;
7.4 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) each Subsidiary Guarantee;
(b) Guarantee Obligations not exceeding $2,000,000 in the aggregate
with respect to the mortgage of the Borrower's old headquarters at 0000 Xxxxx
Xxxxxxx Xxxxxxx, Xxxx Xxxxx, Xxxxxxx; and
(c) Guarantee Obligations arising as a result of guarantees by the
Borrower of any Indebtedness of a consolidated Subsidiary that would appear as a
liability on a consolidated balance sheet of the Borrower and its consolidated
Subsidiaries.
7.5 Limitations on Fundamental Changes. 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, all or substantially all of its property, business or
assets, enter into a new line of business or make any material change in its
present method of conducting business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned Subsidiaries
of the Borrower (provided that the wholly-owned Subsidiary or Subsidiaries shall
be the continuing or surviving corporation and shall be a member of the
Borrower's consolidated group for financial reporting and tax purposes);
56
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
the Borrower or any other wholly-owned Subsidiary of the Borrower; and
(c) the Borrower and its Subsidiaries may enter into and perform the
transactions contemplated by the Receivables Securitization Transaction.
7.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, business or assets (including,
without limitation, receivables and leasehold interests), whether now owned or
hereafter acquired, except as permitted by subsection 7.5.
7.7 Limitation on Restricted Payments. Purchase, redeem or otherwise
acquire or retire for value, or set apart assets for a sinking or other
analogous fund for the benefit of, any Capital Stock of the Borrower or any
Subsidiary, either directly or indirectly, whether in cash or property or in
obligations of the Borrower or any Subsidiary (collectively, a "Restricted
Payment") except that as long as no Default exists or would result therefrom,
the Borrower may repurchase warrants issued pursuant to the Securities Purchase
Agreement in accordance with the terms thereof but only if such repurchase is
paid for with Put Notes (as defined in said Agreement) which Notes are
subordinated pursuant to the Securities Purchase Agreement.
7.8 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in (each, an "Investment"), any
Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) loans and advances to employees of the Borrower or its Subsidiaries
in the ordinary course of business in an aggregate amount for the Borrower and
its Subsidiaries not to exceed $250,000 in the aggregate or $100,000 for any one
employee, at any one time outstanding (including the principal amount of the
loans listed on SCHEDULE 7.8);
(d) Investments by the Borrower in its Subsidiaries and investments by
a Subsidiary in the Borrower and in other Subsidiaries; provided that any
Subsidiary making an investment or receiving the proceeds thereof is a member of
the Borrower consolidated group for financial reporting and tax purposes;
57
(e) Investments of amounts held in depositary accounts (other than
accounts assigned to the Agent) in financial institutions geographically
proximate to the location of the Borrower's or a Subsidiary's operations;
provided, that such amounts do not exceed $20,000 at any single institution or
$150,000 in the aggregate;
(f) Loans by CSF to Labor World, Office Ours and Tandem franchisees;
provided that with respect to all such loans after the Closing Date such
franchisees shall have issued a negotiable promissory note to CSF evidencing
each loan which note has been endorsed and delivered to the Agent for the
ratable benefit of the Banks;
(g) Investments by the Borrower or any Subsidiary in any Person not a
Subsidiary on the Closing Date arising out of a Permitted Acquisition; provided
that (i) the Borrower has completed due diligence on the Person whose stock or
assets are being acquired, (ii) the Agent has received (A) the financial
statements of the Person whose stock or assets are being acquired covering the
most recent three (3) fiscal years of said Person, (B) the unaudited financial
statements for such Person covering the most recent available interim period and
(C) a certificate of a Responsible Officer of the Borrower certifying as to the
identity of the shareholders or owners of the selling Person and certifying that
none of Xxxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxx or Xxxxx X. Xxxxxxx is or has
been a beneficial owner, directly or indirectly, including without limitation
through a family member or trust, of the selling Person, (iii) to the extent
that an investment in a Person is a purchase of Capital Stock of an acquired
Person, (A) any such acquired Person executes and delivers to the Agent, with a
counterpart for each Bank, a supplement to the Subsidiary Guarantee,
satisfactory in form and substance to the Agent, whereby such acquired Person
guarantees the Obligations (as defined in the Subsidiary Guarantee) and agrees
to be bound by the terms and conditions of the Subsidiary Guarantee, (B) the
Capital Stock of any such acquired Person is pledged and delivered by the holder
thereof pursuant to a supplement to the OI Pledge Agreement to which such holder
is a party, duly authorized, executed and delivered by such holder and otherwise
in form and substance satisfactory to the Agent, (C) any such acquired Person
executes a Subsidiary Security Agreement, in form and substance satisfactory to
the Agent, (D) in connection with the matters contemplated by the foregoing
clauses (v)(A), (v)(B) and (v)(C) the Person executing such supplement
contemporaneously therewith causes to be delivered an opinion of counsel to such
Person so executing such supplement and such pledgor, addressed to the Agent and
the Banks and covering such matters as the Agent may request. Notwithstanding
the foregoing, the Borrower or any Subsidiary shall not make any Investment in
any Person which exceeds one percent (1%) of the voting power represented by the
Capital Stock then outstanding of such Person if the Board of Directors or other
governing body of such Person has disapproved or recommended against any such
Investment or refused to negotiate or terminated negotiations with the Borrower
or such Subsidiary.
58
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments. (a) Make any optional payment or prepayment on or redemption of any
Indebtedness other than Indebtedness under this Agreement, including without
limitation Subordinated Indebtedness (it being understood that regularly
scheduled payments of certain Indebtedness set forth on SCHEDULE 7.2 may be made
so long as no Default or Event of Default exists); (b) amend, modify or change,
or consent or agree to any amendment, modification or change to any of the terms
of the Securities Purchase Agreement, the Subordinated Indebtedness or the
Subordination Agreements, including, without limitation, any amendment to the
subordination provisions thereof; or (c) amend, modify or change, or consent or
agree to any amendment, modification or change to, any of the terms relating to
the payment or prepayment of principal of or interest on any Indebtedness (other
than Indebtedness pursuant to this Agreement), other than, with respect to the
Indebtedness described in the foregoing clauses (b) and (c), any such amendment,
modification or change the primary effect of which would extend the maturity or
reduce the amount of any payment of principal thereof or the primary effect of
which would reduce the rate or extend the date for payment of interest thereon.
Nothing in this Section 7.9 shall be deemed to prohibit Borrower or any of its
Subsidiaries from prepaying any obligations under the Receivables Securitization
Transaction or from entering into any amendments, modifications or changes to
the terms of the Receivables Securitization Transaction.
7.10 Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transaction is
not otherwise prohibited under this Agreement, is in the ordinary course of the
Borrower's or such Subsidiary's business (including in connection with the
Borrower's on-going franchise program) and is upon fair and reasonable terms no
less favorable to the Borrower or such Subsidiary, as the case may be, than it
would obtain in a comparable arm's length transaction with a Person not an
Affiliate. Nothing in this Section 7.10 shall be deemed to prohibit Borrower or
any of its Subsidiaries from consummating the ongoing sales of Receivables and
related transactions contemplated by the Receivables Securitization Transaction.
7.11 Sale and Leaseback. Enter into any arrangement with any Person
providing for the leasing by the Borrower or any Subsidiary of real or personal
property which has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Subsidiary (a "Sale/Leaseback Transaction")
unless the proceeds received therefrom are applied to reduce the Commitment.
59
7.12 Corporate Documents; Name/Location of Assets. (a) Amend its
Certificate of Incorporation (except to increase the number of authorized shares
of common stock) or (b) do any of the following, unless, in each case, it shall
provide the Agent with at least thirty (30) days prior written notice of such
action: (i) change its corporate name; (ii) change the location of its
equipment; (iii) change the location of the office where it maintains its
records pertaining to its accounts; (iv) change the location of its existing
places of business or open any new places of business; or (v) change the
location of its chief executive office; provided, however, that anything herein
to the contrary notwithstanding no notice need be provided pursuant to this
subsection so long as either (i) the Borrower or a Subsidiary, as the case may
be, executes and delivers to the Agent a Uniform Commercial Code financing
statement appropriate for filing to perfect the Agent's security interest in the
Collateral in its new location, or (ii) the Agent has previously filed a Uniform
Commercial Code financing statement which perfects the Agent's security interest
in the Collateral in its new location. As used herein, "equipment" and
"accounts" have the respective meanings ascribed to them in Title 42a of the
Connecticut General Statutes.
7.13 Fiscal Year. Permit the fiscal year of the Borrower to end on a
day other than on December 31 of each calendar year.
7.14 Limitation on Negative Pledge Clauses. Enter into any agreement,
other than (i) as permitted by this Agreement, (ii) as contemplated by the
Receivables Securitization Transaction, or (iii) any purchase money or other
mortgages, the Securities Purchase Agreement or Capital Leases (in which cases,
any prohibition or limitation shall only be effective against the assets
financed thereby), with any Person other than the Banks pursuant hereto which
prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.
7.15 No Limit on Upstream Payments by Subsidiaries. Permit any of its
Subsidiaries (other than OutSource Funding Corporation) to enter into or agree,
or otherwise become subject, to any agreement, contract or other arrangements
with any Person pursuant to the terms of which (a) such Subsidiary is or would
be prohibited from declaring or paying any cash dividends, or distributions or
making any other payment to the Borrower, or (b) such dividends, distributions
or other payments are, or would be limited or restricted on an annual or
cumulative basis or otherwise. The Borrower shall cause its Subsidiaries (other
than OutSource Funding Corporation), to the extent permitted by applicable law,
to make such distributions of funds, including dividends, as may be necessary to
meet in a timely manner all of the Borrower's obligations under this Agreement.
7.16 AASI and Voting Trust Agreement. Terminate, modify, amend,
supplement, or deviate from the terms of, or agree to terminate, modify, amend,
or deviate from the terms of, the AASI or the Voting Trust Agreement. The
Borrower shall use its best efforts to ensure compliance by Xxxxxxxx X.
Xxxxxxxx, Xxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxx with the terms of the AASI,
including without limitation requiring that said individuals deposit in the
voting trust created by the Voting Trust Agreement all Voting Stock of the
Borrower owned by any of them, by any of their family members or by any trust
created for their benefit.
7.17 Preparation of Monthly Financial Reports. Fail to close its books
for any one-month period within thirty (30) days of the end of such calendar
month.
60
7.18 Deposit Account. Fail to maintain a deposit account of the
Borrower with the Agent, through which deposit account not less than ninety
percent (90%) of all credit receipts of the Borrower and its Subsidiaries flow.
SECTION 8. EVENTS OF DEFAULT
----------------------------
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Note or any
Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or the Borrower shall fail to pay any interest on any Note or any
Reimbursement Obligation, or any other amount payable hereunder, within five (5)
days after any such interest or other amount becomes due in accordance with the
terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
or any Subsidiary in any Loan Document to which the Borrower or such Subsidiary
is a party or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this Agreement
or any other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) The Borrower shall default in the observance or performance of any
agreement contained in subsections 6.3, 6.4, 6.5, 6.6, 6.7, 6.9 or Section 7 of
this Agreement; or
(d) The Borrower shall default in the observance or performance of any
other agreement contained in this Agreement (other than as provided in
paragraphs (a) through (c) of this subsection), and such default shall continue
unremedied for a period of thirty (30) days after the earlier of (i) a
Responsible Officer of the Borrower becomes aware of such default or (ii) notice
of such default to the Borrower by Agent or any Bank; or
(e) Any Subsidiary shall default in the observance or performance of
any agreement contained in any Loan Document to which it is a party, and such
default shall continue unremedied for a period of thirty (30) days after the
earlier of (i) a Responsible Officer of any such Subsidiary becomes aware of
such default or (ii) notice of such default to such Subsidiary by Agent or any
Bank; or
61
(f) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the Notes)
which has an aggregate principal amount in excess of $100,000, individually or
in the aggregate, or in the payment of any Guarantee Obligation under which the
maximum liability of the Borrower or such Subsidiary exceeds $500,000,
individually or in the aggregate, beyond the period of grace (not to exceed
thirty (30) days), if any, provided in the instrument or agreement under which
such Indebtedness or Guarantee Obligation was created; or (ii) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or such Guarantee Obligation to become payable; or
(g) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief' of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Borrower or any
of its Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; or (iii) there shall be commenced
against the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within sixty (60) days from the
entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i),(ii), or (iii) above,
or (v) the Borrower or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
62
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether waived or not, shall exist with respect to any Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Required Banks, likely to result in the termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or
in the reasonable opinion of the Required Banks is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist, with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could subject the Borrower or any of its Subsidiaries to
any tax, penalty or other liabilities in the aggregate material in relation to
the business, operations, property or financial or other condition of the
Borrower and its Subsidiaries taken as a whole; or
(i) One or more judgments or decrees shall be entered against the
Borrower any of its Subsidiaries involving in the aggregate a liability (to the
extent not paid or covered by insurance) of $250,000 or more and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within sixty (60) days from the entry thereof; or
(j) If at any time the Borrower or all or any of its Subsidiaries shall
become liable for remediation and/or environmental compliance expenses and/or
fines, penalties or other charges which, in the aggregate, are in excess of
$250,000 at any one time outstanding (net of all reimbursements in respect of
such amounts from any state trust funds which have been or are reasonably
expected to be made to the Borrower or its Subsidiaries and have been recognized
as a receivable or may properly be set off as a credit against such liabilities
under GAAP); or
(k) A Change of Control shall have occurred; or
(l) Any Subsidiary Guarantee or any other Guarantee Obligation in
respect of the Borrower's Indebtedness hereunder shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect, or any Person having a Guarantee Obligation in respect of
the Borrower's Indebtedness hereunder, including without limitation each
Subsidiary (or any Person acting on behalf of any such Person) shall deny or
disaffirm such Guarantee Obligation; or
(m) Xxxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxx or Xxxxx X. Xxxxxxx becomes
the beneficial owner, directly or indirectly, including through a family member
or trust, of any Voting Stock of the Borrower or its Subsidiaries, except in
connection with purchases of Voting Stock which, in accordance with the terms of
the AASI, are required to be placed in the voting trust created by the Voting
Trust Agreement.
63
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C Obligations,
regardless of whether the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and the Notes
shall immediately become due and payable, and (B) if such event is any other
Event of Default, either or both of the following actions may be taken: (i) with
the consent of the Required Banks, the Agent may, or upon the request of the
Required Banks, the Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Banks, the
Agent may, or upon the request of the Required Banks, the Agent shall, by notice
of default to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement (including, without
limitation, all amounts of L/C Obligations, regardless of whether the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) and the Notes to be due and payable forthwith,
whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which presentment
for honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrower shall at such time deposit in a cash
collateral account to be opened by the Agent (the "Cash Collateral Account") an
amount equal to the aggregate then undrawn and unexpired amount of such Letters
of Credit. The Borrower hereby grants to the Agent, for the benefit of the
Issuing Bank and the L/C Participants, a security interest in the Cash
Collateral Account and all amounts from time to time on deposit therein to
secure all obligations of the Borrower in respect of such Letters of Credit
under this Agreement and the other Loan Documents. The Borrower shall execute
and deliver to the Agent, for the account of the Issuing Bank and the L/C
Participants, such further documents and instruments as the Agent may request to
evidence the creation and perfection of such security interest in the Cash
Collateral Account. Amounts held in the Cash Collateral Account shall be applied
by the Agent to the payment of drafts drawn under such Letters of Credit, and
the unused portion thereof after all such Letters of Credit shall have expired
or been fully drawn upon, if any, shall be applied to repay other obligations of
the Borrower hereunder and under the Notes. After all such Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement Obligations shall
have been satisfied and all other obligations of the Borrower hereunder and
under the Notes shall have been paid in full, the balance, if any, in the Cash
Collateral Account shall be returned to the Borrower.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 9. THE AGENT
--------------------
9.1 Appointment. Each Bank hereby irrevocably designates and appoints
BankBoston, N.A. as the Agent of such Bank under this Agreement and the other
Loan Documents, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto.
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9.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
9.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Loan Document (except
for its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by the Borrower or any officer thereof
contained in this Agreement or any other Loan Document or any certificate,
report, statement or other document referred to or provided for in, or received
by the Agent under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or the Notes or any other Loan Document or for
any failure of the Borrower to perform its obligations hereunder or thereunder.
The Agent shall not be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of the Borrower.
9.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
or it shall first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
Notes and the other Loan Documents in accordance with a request of the Required
Banks, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks and all future holders of the Notes.
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9.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Bank or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Banks. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks; provided that unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Banks.
9.6 Non-Reliance on Agent and Other Banks. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and credit worthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Bank also represents that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself, and keep itself informed,
as to the business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
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9.7 Indemnification. The Banks agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to the
respective amounts of their original Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Bank shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Notes and all
other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. The Agent and its Affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with the Borrower as though the Agent were not the Agent hereunder and under the
other Loan Documents. With respect to its Loans made or renewed by it and any
Note issued to it and with respect to any Letter of Credit issued or
participated in by it, the Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Bank and may exercise the
same as though it were not the Agent, and the terms "Bank" and "Banks" shall
include the Agent in its individual capacity.
9.9 Successor Agent. The Agent may resign as Agent upon ten (10) days'
notice to the Banks. If the Agent shall resign as Agent under this Agreement and
the other Loan Documents, then the Required Banks shall appoint a Successor
Agent, whereupon such Successor Agent shall succeed to the rights, powers and
duties of the Agent, and the term "Agent" shall mean such Successor Agent
effective upon its appointment, and the former Agent's rights, powers and duties
as Agent shall be terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement or any holders
of the Notes. After any retiring Agent's resignation as Agent, the provisions of
this subsection shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents.
SECTION 10. MISCELLANEOUS
-------------------------
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10.1 Amendments and Waivers. Neither this Agreement, any Note, any
other Loan Document nor any terms hereof or thereof may be amended, supplemented
or modified except in accordance with the provisions of this subsection. With
the written consent of the Agent and the Required Banks, the Agent, the Required
Banks and the Borrower may, from time to time, enter into written amendments,
supplements or modifications hereto and to the Notes and the other Loan
Documents for the purpose of adding any provisions to this Agreement, the Notes
or the other Loan Documents or changing in any manner the rights of the Banks or
of the Borrower hereunder or thereunder or waiving, on such terms and conditions
as are specified in such instrument, any of the requirements of this Agreement,
the Notes or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (a) reduce the amount or extend the maturity of
any Note or any installment thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any fee payable to any Bank hereunder, or
change the amount or extend the expiry date of any Bank's Revolving Credit
Commitment or change any Bank's Commitment Percentage, in each case without the
consent of the Bank affected thereby, or (b) amend, modify or waive any
provision of this subsection or reduce the percentage specified in the
definition of Required Banks, or consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement and the other
Loan Documents or release any Guarantee or any of the Collateral, in each case
without the written consent of the Agent and all the Banks, or (c) amend, modify
or waive any provision of Section 9 without the written consent of the then
Agent. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Banks and shall be binding upon the Borrower, the
Banks, the Agent and all future holders of the Notes. In the case of any waiver,
the Borrower, the Banks and the Agent shall be restored to their former position
and rights hereunder and under the outstanding Notes and any other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy, telegraph or telex), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or three
(3) days after being deposited in the mail, postage prepaid, or, in the case of
telecopy notice, when confirmed received, or, in the case of telegraphic notice,
when delivered to the telegraph company, or, in the case of telex notice, when
sent, answer back received, addressed as follows in the case of the Borrower and
the Agent, and as set forth in SCHEDULE A in the case of the other parties
hereto, or to such other address as may be hereafter notified by the respective
parties hereto and any future holders of the Notes:
The Borrower: OutSource International, Inc.
0000 Xxxx Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Chief Financial Officer
Xxxxx Xxxxxx, Esq., General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: (for all matters relating to the Receivables Securitization
Transaction):
Xxxxxx & Xxxxx LLP
0000 Xxxxx Xxxxxx
000 X. Xxxxxxxx
Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(for all other matters):
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Holland & Knight LLP
Xxx Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
The Agent: BankBoston, N. A.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Day, Xxxxx & Xxxxxx
CityPlace I
Hartford, Connecticut 06103-3499
Attn: Xxxxxxx X. XxxXxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
provided that any notice, request or demand to or upon the Agent or the Banks
pursuant to subsections 2.1A, 2.4, 2.5, 2.9 or 2.13 shall not be effective until
received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes.
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10.5 Payment of Expenses and Taxes. The Borrower agrees, on demand, (a)
to pay or reimburse the Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement, the Notes and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the fees and disbursements of counsel to
the Agent, (b) to pay or reimburse each Bank and the Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes, the other Loan Documents and any such
other documents, including, without limitation, fees and disbursements of
counsel to the Agent and to the several Banks, which fees are currently
estimated not to exceed $25,000, (c) to pay, indemnify, and hold each Bank and
the Agent harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the Notes, the
other Loan Documents and any such other documents, (d) to pay, indemnify and
hold each Bank harmless from any and all fees, costs and expenses incurred by
any such Bank after the occurrence and throughout the continuance of an Event of
Default in connection with any inspection or examination pursuant to subsection
6.6, and (e) to pay, indemnify, and hold each Bank and the Agent (and their
respective directors, officers, employees and agents) harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the Notes, the other Loan Documents and any
such other documents (all the foregoing, collectively, the "indemnified
liabilities"); provided that the Borrower shall have no obligation hereunder to
the Agent or any Bank with respect to indemnified liabilities arising from (i)
the gross negligence or willful misconduct of the Agent or any such Bank (or any
of their respective directors, officers, employees or agents), (ii) legal
proceedings commenced against the Agent or any such Bank by any security holder
or creditor thereof arising out of and based upon rights afforded any such
security holder or creditor solely in its capacity as such, or (iii) legal
proceedings commenced against the Agent or any such Bank by any other Bank or by
any Transferee. As long as no Default or Event of Default exists, the Agent
agrees to give the Borrower periodic reports of the costs and expenses subject
to payment or reimbursement under this subsection. The agreement in this
subsection shall survive repayment of the Notes and all other amounts payable
hereunder.
10.6 Successors and Assigns; Participations; Purchasing Banks.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Banks, the Agent, all future holders of the Notes and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Bank.
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(b) Without the consent of the Borrower, any Bank may, in the ordinary
course of its commercial banking business and in accordance with applicable law,
at any time sell to one or more banks or other entities (other than any entity
which, to the knowledge of such Bank, is a competitor of the Borrower or an
Affiliate of such a competitor ("Participants")) participating interests in any
Loan owing to such Bank, any Note held by such Bank, any Commitment of such Bank
or any other interest of such Bank hereunder and under the other Loan Documents.
In the event of any such sale by a Bank of participating interests to a
Participant, such Bank's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the holder of
any such Note for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement and the other Loan Documents. The Borrower agrees that if
amounts outstanding under this Agreement and the Notes are due or unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement
or any Note; provided that such Participant shall only be entitled to such right
of set-off if it shall have agreed in the agreement pursuant to which it shall
have acquired its participating interest to share with the Banks the proceeds
thereof as provided in subsection 10.7. The Borrower also agrees that each
Participant shall be entitled to the benefits of subsections 2.14, 2.15, 2.16
and 10.5 with respect to its participation in the Commitments and the Loans
outstanding from time to time; provided, that no Participant shall be entitled
to receive any greater amount pursuant to such subsections than the transferor
Bank would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Bank to such Participant had no
such transfer occurred.
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(c) Any Bank may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to any Bank or
any affiliate thereof and, with the consent of the Agent and (so long as no
Event of Default has occurred and is continuing) the Borrower if a Purchasing
Bank (as hereinafter defined) is not then a Bank party to this Agreement (which
shall not be unreasonably withheld), to one (1) or more additional banks or
financial institutions ("Purchasing Banks") all or any part of its rights and
obligations under this Agreement and the Notes in the minimum principal amount
of $5,000,000 and integral multiples of $1,000,000 in excess thereof, pursuant
to an Assignment and Acceptance executed by such Purchasing Bank, such
transferor Bank (and, in the case of a Purchasing Bank that is not then a Bank
or an affiliate thereof, by the Borrower and the Agent) and delivered to the
Agent for its acceptance and recording in the Register. Upon such execution,
delivery, acceptance and recording, from and after the effective date of such
Assignment and Acceptance, (x) the Purchasing Bank thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Bank hereunder with a Commitment as set forth
therein, and (y) the transferor Bank thereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of a transferor Bank's rights and obligations under this
Agreement, such transferor Bank shall cease to be a party hereto). Such
Assignment and Acceptance shall be deemed to amend this Agreement to the extent,
and only to the extent, necessary to reflect the addition of such Purchasing
Bank and the resulting adjustment of the appropriate Commitment Percentages
arising from the purchase by such Purchasing Bank of all or a portion of the
rights and obligations of such transferor Bank under this Agreement and the
Notes. On or prior to the effective date of such Assignment and Acceptance, the
Borrower shall execute and deliver to the Agent in exchange for the Revolving
Credit Note a new Revolving Credit Note to the order of such Purchasing Bank in
an amount equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the transferor Bank has retained a Commitment hereunder, new
Notes to the order of the transferor Bank in an amount equal to the Commitment
retained by it hereunder. Such new Notes shall be dated the Closing Date, and
shall otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the transferor Bank shall be returned by the Agent to the
Borrower marked "canceled".
(d) The Agent shall maintain at its address referred to in subsection
10.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Banks and
the Commitment of, and principal amount of the Loans owing to, each Bank from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Banks may treat each Person
whose name is recorded in the Register as the owner of the Loan recorded therein
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Bank at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by a
transferor Bank and Purchasing Bank (and, in the case of a Purchasing Bank that
is not then a Bank or an affiliate thereof, by the Borrower and the Agent)
together with, if such Purchasing Bank is not then a Bank hereunder, payment by
the transferor Bank and/or the Purchasing Bank (and not the Borrower) of a
registration and processing fee of $3,000, the Agent shall (i) promptly accept
such Assignment and Acceptance, and (ii) on the effective date of such
Assignment and Acceptance, record the information contained therein in the
Register and give notice of such acceptance and recordation to the Banks and the
Borrower.
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(f) The Borrower authorizes each Bank to disclose to any Participant or
Purchasing Bank (each, a "Transferee") and any prospective Transferee any and
all financial information in such Bank's possession concerning the Borrower and
its Affiliates which has been delivered to such Bank by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such Bank by
or on behalf of the Borrower in connection with such Bank's credit evaluation of
the Borrower and its affiliates prior to becoming a party to this Agreement;
provided that prior to receiving such information, such Transferee shall agree
to hold in confidence all confidential material or proprietary information
obtained by such Transferee with respect to the Borrower's business operations
that is plainly marked by the provider of such material or information as
confidential or proprietary except (a) to the extent that the production of such
information is required pursuant to any statute, ordinance, regulation, rule or
order or any subpoena or any governmental authority or by reason of any bank
regulation in connection with any bank examination, (b) to the extent already
publicly disclosed and (c) that any Bank shall not be prohibited from disclosing
any such information to any of their agents, attorneys, accountants,
consultants, participants, assignees, or prospective participants, who are aware
of such Bank's covenant in this subsection and who have agreed with such Bank,
for the benefit of the Borrower, to comply with such covenant.
(g) If, pursuant to this subsection, any interest in this Agreement or
any Note is transferred to any Transferee which is organized under the laws of
any jurisdiction other than the United States or any state thereof, the
transferor Bank shall cause such Transferee, concurrently with the effectiveness
of such transfer, (i) to represent to the transferor Bank (for the benefit of
the transferor Bank, the Agent and the Borrower) that under applicable law and
treaties no taxes will be required to be withheld by the Agent, the Borrower or
the transferor Bank with respect to any payments to be made to such Transferee
in respect of the Loans, (ii) to furnish to the transferor Bank (and, in the
case of any Purchasing Bank registered in the Register, the Agent and the
Borrower) either (A) United States Internal Revenue Service Form 4224 or United
States Internal Revenue Service Form 1001 or (B) United States Internal Revenue
Service Form W-8 or W-9, as applicable (wherein such Transferee claims
entitlement to complete exemption from United States federal withholding tax on
all interest payments hereunder), and (iii) to agree (for the benefit of the
transferor Bank, the Agent and the Borrower) to provide the transferor Bank
(and, in the case of any Purchasing Bank registered in the Register, the Agent
and the Borrower) a new Form 4224 or Form 1001 or Form W-8 or W-9, as
applicable, upon the expiration or obsolescence of any previously delivered form
and comparable statements in accordance with applicable United States laws and
regulations and amendments duly executed and completed by such Transferee, and
to comply from time to time with all applicable United States laws and
regulations with regard to such withholding tax exemption.
(h) Nothing herein shall prohibit any Bank from pledging or assigning
any Note to any Federal Reserve Bank in accordance with applicable law.
10.7 Adjustments; Set-off.
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(a) Subject to the provisions of subsection 2.13(b), if any Bank (a
"benefitted Bank") shall at any time receive any payment of all or part of its
Loans or the Reimbursement Obligations owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
subsection 8(g), or otherwise), in a greater proportion than any such payment to
or collateral received by any other Bank, if any, in respect of Loans or
Reimbursement Obligations owing to it, or interest thereon, then such benefitted
Bank shall purchase for cash from the other Bank such portion of such other
Bank's Loans or the Reimbursement Obligations owing to it, or shall provide such
other Bank with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Bank to share the excess payment or
benefits of such collateral or proceeds ratably with each of the other Banks;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Bank, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each Bank so purchasing
a portion of another Bank's Loan or the Reimbursement Obligations owing to it
may exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Bank were the direct
holder of such portion.
(b) In addition to any rights and remedies of the Banks provided by
law, each Bank shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder or under the Notes (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Bank to or for the credit or the
account of the Borrower. Each Bank agrees promptly to notify the Borrower and
the Agent after any such set-off and application made by such Bank; provided
that the failure to give such notice shall not affect the validity of such
set-off and application.
10.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Agent.
10.9 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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10.10 Integration. This Agreement represents the agreement of the
Borrower, the Agent and the Banks with respect to the subject matter hereof,
and, other than the fee letter and commitment letter, each dated October 6,
1997, between the Borrower and the Agent, there are no promises, undertakings,
representations or warranties by the Agent or any Bank relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
10.11 Governing Law. This Agreement and the Notes and the rights and
obligations of the parties under this Agreement and the Notes shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
Connecticut.
10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
Connecticut, the courts of the United States of America for the District of
Connecticut, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in subsection 10.2 or at such other address of which the Agent
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to xxx
in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this subsection any special, exemplary, punitive or consequential damages.
10.13 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, the Notes and the other Loan Documents;
(b) neither the Agent nor any Bank has any fiduciary relationship to
the Borrower, and the relationship between Agent and Banks, on one hand, and the
Borrower, on the other hand, is solely that of debtor and creditor;
75
(c) no joint venture exists among the Banks or among the Borrower and
the Banks; and
(d) each reference in the other Loan Documents to the Credit Agreement
shall mean the Existing Credit Agreement as amended and restated hereby, and as
the same shall be further amended, modified, supplemented or restated from time
to time, and each reference therein to "Bank" shall include the Swingline Bank
and to "Loan" shall include the Swingline Loans.
10.14 WAIVERS OF JURY TRIAL; COMMERCIAL TRANSACTIONS. (a) THE BORROWER,
THE AGENT AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR
ANY OTHER LOAN DOCUMENTS AND FOR ANY COUNTERCLAIM THEREIN.
(b) THE BORROWER ACKNOWLEDGES THAT THE LOANS EVIDENCED HEREBY ARE
COMMERCIAL TRANSACTIONS WITHIN THE MEANING OF CHAPTER 903a OF THE CONNECTICUT
GENERAL STATUTES.
[SIGNATURE PAGES FOLLOW THIS PAGE]
76
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first written above.
OUTSOURCE INTERNATIONAL, INC.
By:/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
BANKBOSTON, N.A., successor by merger to BANK
OF BOSTON CONNECTICUT,
As a Bank and as the Agent
By:/s/ X. X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Director
COMERICA BANK
By:/s/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
S1
LASALLE NATIONAL BANK
By:/s/ Xxxx X. XxXxxxx
------------------------------------------
Name: Xxxx X. XxXxxxx
Title: Vice President
SUNTRUST BANK, SOUTH FLORIDA, NATIONAL ASSOCIATION
By:/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
FLEET NATIONAL BANK
By:/s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Senior Vice President
S2
SCHEDULE A
COMMITMENTS; ADDRESSES
Commitment
Bank Amount
---------------------------------------------------------------------------------------------------
BankBoston, N.A. $10,000,000
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx Corporate Banking
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Vice President
Phone: 000-000-0000
Telecopy No.: 000-000-0000
Comerica Bank $8,000,000
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx, Vice President
Phone: 000-000-0000
Telecopy No.: 313-222-3330
LaSalle National Bank $8,000,000
000 X. XxXxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. XxXxxxx, Vice President
Phone: 000-000-0000
Telecopy No.: 000-000-0000
Fleet National Bank $4,000,000
0 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx XxXxxxxx, Assistant Vice President
Phone: 000-000-0000
Telecopy No.: 000-000-0000
SunTrust Bank, South Florida, National Association $4,000,000
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxx, Vice President
Phone: 000-000-0000
Telecopy No.: 000-000-0000
------------
TOTAL: $34,000,000
EXHIBIT A-1
NOTICE OF BORROWING
[Date] 1
BankBoston, N.A., as Agent
for the Banks Party to the Credit
Agreement referred to below,
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Ladies and Gentlemen:
OutSource International, Inc. (the "Borrower") refers to the Third
Amended and Restated Credit Agreement, dated as of July 27, 1998 (the "Credit
Agreement"), among OutSource International, Inc., the Banks parties thereto and
BankBoston, N.A., successor by merger to Bank of Boston Connecticut, as Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The undersigned hereby
gives you notice pursuant to Section 2.1A(b) or 2.4 of the Credit Agreement that
it requests a borrowing under the Credit Agreement, and in that connection sets
forth below the terms on which such borrowing is requested to be made:
(A) Date of proposed borrowing
(which is a Business Day) ________________________
---------------
1 Except in the case of a Swingline Loan, the Notice of Borrowing must
be received by the Agent (i) in the case of a proposed Eurodollar Loan, by
telecopier or telex not later than 12:00 p.m. (Eastern time), three Business
Days prior to a proposed borrowing and (ii) in the case of a proposed Alternate
Base Rate Loan, by telecopier or telex not later than 12:00 p.m. (Eastern time),
on the day of a proposed borrowing. The Notice of Borrowing for a Swingline Loan
must be received not later than 12:00 p.m. (Eastern time) on the date of the
proposed Borrowing.
1
(B) Principal amount of borrowing (2) $___________________
(C) Type of Loan (3) ___________________
(D-1) Interest Period (4) ___________________
(D-2) Pricing Level (1, 2, 3 or 4): ___________________
(E) Purpose of Loan (check applicable boxes):
1. Permitted Acquisition (5) [ ]
If checked, name of selling
Person: ___________________
2. Working Capital and General
Corporate Purposes of Borrower
and its Subsidiaries (other than
CSF) [ ]
If checked, state purpose: ___________________
---------------------------
2 Not less than $250,000 and in whole multiples of $100,000.
3 Swingline Loan, Eurodollar Loan or Alternate Base Rate Loan.
4 If a Eurodollar Loan, 1, 2, 3 or 6 months but which shall end
not later than the Termination Date.
5 Attach to Notice of Borrowing financial statements required by
Section 7.8(g) of the Credit Agreement.
2
3. Advances to CSF (6) [ ] __________________
__________________
------------------------
6 If funds being advanced to Labor World, Office Ours or Tandem
franchisee, note must be issued by franchisee and endorsed to Agent.
3
4. Letter of Credit (7) [ ] __________________
(F) Aggregate amount of Loans and Letters of Credit outstanding:
Outstanding after
Loan Requested by
Outstanding on the this Notice is Made
Date of this Notice -------------------
Purpose Maximum Authorized -------------------
------- ------------------
1. Permitted Acquisition The lesser of $34,000,000 less $--------------------- $ ---------------------
amounts in first column of
F(1), F(2), F(3), F(4) and F(5)
2. Working Capital and The lesser of $34,000,000 less $--------------------- $ ---------------------
General Corporate Purposes amounts of F(1), F(2), F(3),
of Borrower and F(4) and F(5)
Subsidiaries (other than
CSF)
3. Advances to CSF $ 7,500,000 $ $ ---------------------
---------------------
4. Swingline Loans $5,000,000 $ $ ---------------------
---------------------
5. Letters of Credit $15,000,000 $ $
===================== =====================
Sum of (1) through (5) $ $
--------------------- ---------------------
-------------------------
7 Application for Letter of Credit must accompany Notice of Borrowing.
4
If the box in (E)1 above has been checked, the undersigned hereby
certifies that none of Xxxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxx or Xxxxx X.
Xxxxxxx is or has been a beneficial owner, directly or indirectly, including
without limitation through a family member or trust, of the selling Person
identified in (E)1, and that, with respect to the Permitted Acquisition
identified in (E)1, all of the requirements of a Permitted Acquisition set forth
in the definition thereof in the Credit Agreement and in Section 7.8(g) of the
Credit Agreement have been met.
As required by Section 5 of the Credit Agreement, the undersigned
officer on behalf of the Borrower hereby further certifies that:
(a) the representations and warranties contained in Section 4 of the
Credit Agreement are true and correct in all material respects on and as of the
date hereof (or if such representation or warranty is expressly stated to have
been made as of a specific date, as of the such specific date);
(b) the Borrower has performed and complied with and is in compliance
with all of the terms, covenants and conditions of the Credit Agreement;
(c) there does not exist any Default or Event of Default under the
Credit Agreement; and
(d) each of the other conditions precedent set forth in Section 5 of
the Credit Agreement have been satisfied and complied with.
Very truly yours,
OUTSOURCE INTERNATIONAL, INC.
By____________________________
Title:
5
EXHIBIT A-2
REVOLVING CREDIT NOTE
$_______ Hartford, Connecticut
________ ____, 1998
FOR VALUE RECEIVED, the undersigned, OUTSOURCE INTERNATIONAL, INC. (the
"Company"), promises to pay to the order of________________________________(the
"Bank"), at the office of BankBoston, N.A., successor by merger to Bank of
Boston Connecticut, located at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000,
the principal sum of
MILLION AND NO/100 DOLLARS ( )
-------------- -----------------
or the aggregate unpaid principal amount of all Loans made by the Bank to the
undersigned pursuant to the Credit Agreement, as hereinafter defined, whichever
is less, in lawful money of the United States of America. As used herein,
"Credit Agreement" means the Third Amended and Restated Credit Agreement, dated
as of July 27, 1998, as the same may hereafter be amended, modified,
supplemented or restated from time to time, among the Company, the Banks from
time to time parties thereto and BankBoston, N.A., as Agent. Capitalized terms
used herein but not defined herein shall have the meanings ascribed to them in
the Credit Agreement.
The undersigned also promises to pay interest on the unpaid principal
amount of each Loan from time to time outstanding, from the date of such Loan
until the payment in full thereof, at the rates per annum which shall be
determined in accordance with the provisions of the Credit Agreement.
The Bank is authorized to record the date and amount of each Loan made
by the Bank pursuant to the Credit Agreement and the date and amount of each
payment or prepayment of principal hereof on the reverse side hereof, or reflect
such information on the records of the Bank by such other methods as the Bank
may generally employ; provided, however, that the failure to make any such entry
shall in no way detract from the Company's obligations under this Note.
This Note is due and payable in full no later than on the Termination
Date. If this Note shall not be paid at maturity, whether such maturity occurs
by reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit Agreement, the principal hereof and the unpaid
interest thereon shall bear interest, from the date due until paid, at a rate
per annum which shall be two percent (2%) in excess of the rate of interest
which would otherwise be applicable thereto. All payments of principal of and
interest on this Note shall be made in immediately available funds. In the event
that the total amount of any payment required to be paid under this Note is not
paid within ten (10) days of the date when the same becomes due, the Bank may
collect and the undersigned agrees to pay a late charge equal to five percent
(5%) of the total amount then due.
This Note is the Revolving Credit Note referred to in the Credit
Agreement, is secured by the Security Documents and is entitled to the benefits
thereof. Reference is made to the Credit Agreement for a description of the
right of the undersigned to anticipate payments hereof, the right of the holder
hereof to declare this Note due prior to its stated maturity, and other terms
and conditions upon which this Note is issued.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CONNECTICUT.
Witness: OUTSOURCE INTERNATIONAL, INC.
_________________________ By:________________________________
Name: Name:
Title:
2
EXHIBIT A-3
SWINGLINE NOTE
$ ________ Hartford, Connecticut
________ ____, 1998
FOR VALUE RECEIVED, the undersigned, OUTSOURCE INTERNATIONAL, INC. (the
"Company"), promises to pay to the order of________________________(the "Bank"),
at the office of BankBoston, N.A., successor by merger to Bank of Boston
Connecticut, located at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, the
principal sum of
MILLION AND NO/100 DOLLARS ( )
------------------- -------------
or the aggregate unpaid principal amount of all Swingline Loans made by the Bank
to the undersigned pursuant to the Credit Agreement, as hereinafter defined,
whichever is less, in lawful money of the United States of America. As used
herein, "Credit Agreement" means the Third Amended and Restated Credit
Agreement, dated as of July 27, 1998, as the same may hereafter be amended,
modified, supplemented or restated from time to time, among the Company, the
Banks from time to time parties thereto and BankBoston, N.A., as Agent.
Capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in the Credit Agreement.
The undersigned also promises to pay interest on the unpaid principal
amount of each Swingline Loan from time to time outstanding, from the date of
such Swingline Loan until the payment in full thereof, at the rates per annum
which shall be determined in accordance with the provisions of the Credit
Agreement.
The Bank is authorized to record the date and amount of each Swingline
Loan made by the Bank pursuant to the Credit Agreement and the date and amount
of each payment or prepayment of principal hereof on the reverse side hereof, or
reflect such information on the records of the Bank by such other methods as the
Bank may generally employ; provided, however, that the failure to make any such
entry shall in no way detract from the Company's obligations under this Note.
This Note is due and payable in full no later than on the Termination
Date. If this Note shall not be paid at maturity, whether such maturity occurs
by reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit Agreement, the principal hereof and the unpaid
interest thereon shall bear interest, from the date due until paid, at a rate
per annum which shall be two percent (2%) in excess of the rate of interest
which would otherwise be applicable thereto. All payments of principal of and
interest on this Note shall be made in immediately available funds. In the event
that the total amount of any payment required to be paid under this Note is not
paid within ten (10) days of the date when the same becomes due, the Bank may
collect and the undersigned agrees to pay a late charge equal to five percent
(5%) of the total amount then due.
This Note is the Swingline Note referred to in the Credit Agreement, is
secured by the Security Documents and is entitled to the benefits thereof.
Reference is made to the Credit Agreement for a description of the right of the
undersigned to anticipate payments hereof, the right of the holder hereof to
declare this Note due prior to its stated maturity, and other terms and
conditions upon which this Note is issued.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CONNECTICUT.
Witness: OUTSOURCE INTERNATIONAL, INC.
_________________________ By:_________________________________
Name: Name:
Title:
2
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Third Amended and Restated Credit Agreement,
dated as of July 27, 1998 (as the same may be amended, supplemented, restated or
otherwise modified from time to time, the "Credit Agreement"), among OUTSOURCE
INTERNATIONAL, INC., a Florida corporation (the "Company"), the Banks named
therein and BANKBOSTON, N.A., successor by merger to Bank of Boston Connecticut,
as agent for the Banks (in such capacity, the "Agent"). Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the
meaning given to them in the Credit Agreement.
______________________ (the "Assignor") and _____________________
(the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), a ____% interest (the "Assigned Interest") in
and to the Assignor's rights and obligations under the Credit Agreement with
respect to the Assignor's Commitment thereunder in a principal amount as set
forth on Annex 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document or
in connection with the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Loan
Document or any other instrument or document furnished pursuant thereto, or any
collateral security granted in connection therewith, if any, other than that it
has not created any adverse claim upon the interest being assigned by it
hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Company, any of its Subsidiaries or
any other obligor or the performance or the observance by the Company, any of
its Subsidiaries or any other obligor of any of their respective obligations
under the Credit Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches the Note held by
it evidencing the Assignor's Commitment and requests that the Agent exchange
such Note for new Notes payable to the Assignee and the Assignor in amounts
which reflect the assignment being made hereby (and after giving effect to any
other assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement and any amendments thereto, together
with copies of the financial statements delivered pursuant to subsection 6.1
thereof and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it will, independently and without reliance upon the
Assignor, the Agent or any other Bank, based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement, the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; (d) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Credit
Agreement, the other Loan Documents or other instrument or document furnished
pursuant hereto or thereto as are delegated to the Agent by the terms thereof,
together with such powers as are incidental thereto; and (e) agrees that it will
be bound by the provisions of the Credit Agreement and will perform all the
obligations required, by the terms of the Credit Agreement, to be performed by
it as a Bank, including, if it is organized under the laws of a jurisdiction
outside the United States, its obligations pursuant to paragraph 2.16(b) of the
Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be
_____________, _____ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance and
recording by the Agent pursuant to subsection 10.6 of the Credit Agreement,
effective as of the Effective Date.
5. From and after the date of receipt of this Assignment and
Acceptance, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignee, whether such amounts have accrued prior to the Effective Date or
accrue subsequent to the Effective Date. The Assignor and the Assignee shall
make all appropriate adjustments in payments by the Agent for periods prior to
the Effective Date or with respect to the making of this assignment directly
between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party
to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and under the
other Loan Documents and shall be bound by the provisions thereof, and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. The Assignee advises the Agent that the address listed on Annex 1 is
its address for notices under the Credit Agreement.
8. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the state of Connecticut.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the _____ day of ________, 199_, by their
respective duly authorized officers on Annex 1 hereto.
2
Annex 1 to the
Assignment and Acceptance
-------------------------
Name of Assignor:
----------------
Name of Assignee:
----------------
Effective Date of Assignment:
----------------------------
Commitment Commitment
Percentage After Assignment Dollar Amount After Assignment
--------------------------------------------------------------------------------
Assignee
--------
Assignor
--------
ASSIGNEE: ASSIGNOR:
By:_________________________________ By:_________________________________
Title: Title:
Accepted: Consented To:
BANKBOSTON, N.A., successor by OUTSOURCE INTERNATIONAL, INC.
merger to BANK OF BOSTON
CONNECTICUT, as Agent
By:_________________________________ By:_______________________________
Title: Title:
3
