EXHIBIT 10.1
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 30, 2004
AMONG
COMSYS SERVICES LLC,
VENTURI TECHNOLOGY PARTNERS, LLC,
COMSYS IT PARTNERS, INC.,
PFI CORP.,
COMSYS INFORMATION TECHNOLOGY SERVICES, INC.,
COMSYS HOLDING, INC.,
XXXXXXX XXXXX CAPITAL,
A DIVISION OF XXXXXXX XXXXX BUSINESS FINANCIAL SERVICES INC.,
AS ADMINISTRATIVE AGENT, AS A LENDER AND AS SOLE BOOKRUNNER AND SOLE LEAD
ARRANGER
ING CAPITAL LLC,
AS DOCUMENTATION AGENT AND AS A LENDER,
GMAC COMMERCIAL FINANCE LLC,
AS SYNDICATION AGENT AND AS A LENDER,
AND
THE ADDITIONAL LENDERS
FROM TIME TO TIME PARTY HERETO
[XXXXXXX XXXXX LOGO]
ARTICLE I DEFINITIONS........................................................................ 2
Section 1.1 Certain Defined Terms.............................................................. 2
Section 1.2 Accounting Terms and Determinations................................................ 25
Section 1.3 Other Definitional Provisions...................................................... 25
ARTICLE II LOANS AND LETTERS OF CREDIT........................................................ 26
Section 2.1 Term Loan.......................................................................... 26
Section 2.2 Revolving Loans.................................................................... 28
Section 2.3 Interest, Interest Calculations and Certain Fees................................... 30
Section 2.4 Notes.............................................................................. 34
Section 2.5 Letters of Credit and Letter of Credit Fees........................................ 34
Section 2.6 General Provisions Regarding Payment; Loan Account................................. 37
Section 2.7 Maximum Interest................................................................... 37
Section 2.8 Taxes.............................................................................. 38
Section 2.9 Appointment of the Funds Administrator............................................. 39
ARTICLE III REPRESENTATION AND WARRANTIES...................................................... 41
Section 3.1 Existence and Power................................................................ 41
Section 3.2 Organization and Governmental Authorization; No Contravention...................... 41
Section 3.3 Binding Effect..................................................................... 41
Section 3.4 Capitalization..................................................................... 42
Section 3.5 Financial Information.............................................................. 42
Section 3.6 Litigation......................................................................... 44
Section 3.7 Ownership of Property.............................................................. 44
Section 3.8 No Default......................................................................... 44
Section 3.9 Labor Matters...................................................................... 44
Section 3.10 Regulated Entities................................................................. 44
Section 3.11 Margin Regulations................................................................. 45
Section 3.12 Compliance With Laws............................................................... 45
Section 3.13 Taxes.............................................................................. 45
Section 3.14 Compliance with ERISA.............................................................. 45
Section 3.15 Brokers............................................................................ 46
Section 3.16 Related Transactions............................................................... 46
Section 3.17 Employment, Equityholders and Subscription Agreements.............................. 46
Section 3.18 Compliance with Environmental Requirements; No Hazardous Materials................. 47
Section 3.19 Intellectual Property.............................................................. 48
Section 3.20 Real Property Interests............................................................ 48
Section 3.21 Solvency........................................................................... 48
Section 3.22 Full Disclosure.................................................................... 48
Section 3.23 Representations and Warranties Incorporated from Other Operative Documents......... 49
ARTICLE IV AFFIRMATIVE COVENANTS.............................................................. 49
Section 4.1 Financial Statements and Other Reports............................................. 49
Section 4.2 Payment and Performance of Obligations............................................. 53
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Section 4.3 Conduct of Business and Maintenance of Existence................................... 53
Section 4.4 Maintenance of Property; Insurance................................................. 54
Section 4.5 Compliance with Laws............................................................... 55
Section 4.6 Inspection of Property, Books and Records.......................................... 55
Section 4.7 Use of Proceeds.................................................................... 55
Section 4.8 Lenders' Meetings.................................................................. 56
Section 4.9 COMSYS Limited..................................................................... 56
Section 4.10 Real Estate........................................................................ 56
Section 4.11 Intentionally Omitted.............................................................. 56
Section 4.12 Further Assurances................................................................. 56
ARTICLE V NEGATIVE COVENANTS................................................................. 57
Section 5.1 Debt............................................................................... 57
Section 5.2 Liens.............................................................................. 58
Section 5.3 Contingent Obligations............................................................. 59
Section 5.4 Restricted Distributions........................................................... 60
Section 5.5 Restrictive Agreements............................................................. 61
Section 5.6 Payments and Modifications of Second Lien Debt..................................... 61
Section 5.7 Consolidations, Mergers and Sales of Assets........................................ 62
Section 5.8 Purchase of Assets, Investments.................................................... 62
Section 5.9 Transactions with Affiliates....................................................... 63
Section 5.10 Modification of Organizational Documents........................................... 64
Section 5.11 Fiscal Year........................................................................ 64
Section 5.12 Conduct of Business................................................................ 64
Section 5.13 Investor Fees...................................................................... 64
Section 5.14 Lease Payments..................................................................... 64
Section 5.15 Bank Accounts...................................................................... 64
ARTICLE VI ACCOUNTS REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS..................... 65
Section 6.1 Accounts and Account Collections................................................... 65
ARTICLE VII FINANCIAL COVENANTS................................................................ 68
Section 7.1 Minimum EBITDA..................................................................... 68
Section 7.2 Fixed Charge Coverage Ratio........................................................ 68
Section 7.3 Total Debt to EBITDA Ratio......................................................... 68
Section 7.4 Minimum Revolving Loan Borrowing Availability...................................... 69
ARTICLE VIII CONDITIONS......................................................................... 69
Section 8.1 Conditions to Closing.............................................................. 69
Section 8.2 Conditions to Each Loan and Support Agreement...................................... 71
ARTICLE IX EVENTS OF DEFAULT.................................................................. 71
Section 9.1 Events of Default.................................................................. 71
Section 9.2 Acceleration and Suspension or Termination of Revolving Loan Commitment............ 74
Section 9.3 Cash Collateral.................................................................... 75
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Section 9.4 Default Rate of Interest and Suspension of LIBOR Rate Options...................... 75
Section 9.5 Setoff Rights...................................................................... 75
Section 9.6 Application of Proceeds............................................................ 75
ARTICLE X EXPENSES, INDEMNITY, TAXES AND RIGHT TO PERFORM.................................... 76
Section 10.1 Expenses........................................................................... 76
Section 10.2 Indemnity.......................................................................... 76
Section 10.3 Taxes.............................................................................. 77
Section 10.4 Right to Perform................................................................... 77
ARTICLE XI AGENT.............................................................................. 78
Section 11.1 Appointment and Authorization...................................................... 78
Section 11.2 Agent and Affiliates............................................................... 78
Section 11.3 Action by Agent.................................................................... 78
Section 11.4 Consultation with Experts.......................................................... 78
Section 11.5 Liability of Agent................................................................. 79
Section 11.6 Indemnification.................................................................... 79
Section 11.7 Right to Request and Act on Instructions........................................... 79
Section 11.8 Credit Decision.................................................................... 80
Section 11.9 Collateral Matters................................................................. 80
Section 11.10 Agency for Perfection.............................................................. 80
Section 11.11 Notice of Default.................................................................. 81
Section 11.12 Successor Agent.................................................................... 81
Section 11.13 Disbursements of Revolving Loans; Payment.......................................... 81
Section 11.14 Additional Titled Agents........................................................... 84
ARTICLE XII MISCELLANEOUS...................................................................... 84
Section 12.1 Survival........................................................................... 84
Section 12.2 No Waivers......................................................................... 84
Section 12.3 Notices............................................................................ 84
Section 12.4 Severability....................................................................... 85
Section 12.5 Amendments and Waivers............................................................. 85
Section 12.6 Assignments; Participations........................................................ 85
Section 12.7 Headings........................................................................... 87
Section 12.8 Confidentiality.................................................................... 87
Section 12.9 GOVERNING LAW; SUBMISSION TO JURISDICTION.......................................... 88
Section 12.10 WAIVER OF JURY TRIAL............................................................... 88
Section 12.11 Publication; Advertisement......................................................... 88
Section 12.12 Counterparts; Integration.......................................................... 89
ARTICLE XIII LIABILITY OF THE BORROWERS......................................................... 89
Section 13.1 Joint and Several Liability........................................................ 89
Section 13.2 Waivers by the Borrowers........................................................... 89
Section 13.3 Benefit............................................................................ 90
Section 13.4 Waiver of Subrogation, Etc......................................................... 90
Section 13.5 Election of Remedies............................................................... 90
Section 13.6 Limitation......................................................................... 91
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Section 13.7 Contribution with Respect to Obligations........................................... 91
Section 13.8 Liability Cumulative............................................................... 92
ANNEX AND EXHIBITS
ANNEXES
Annex A - Commitment Annex
Annex B - Closing Checklist
Annex C - Existing Letters of Credit
Annex D - Existing Debt
EXHIBITS
Exhibit A - Assignment Agreement
Exhibit B - Excess Cash Flow Certificate
Exhibit C - Compliance Certificate
Exhibit D - Borrowing Base Certificate
Exhibit E - Notice of Borrowing
Exhibit F - Form of Reconciliation Report
Exhibit G - Restructuring Reserve Certificate
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CREDIT AGREEMENT
CREDIT AGREEMENT dated as of September 30, 2004 among COMSYS SERVICES LLC,
a Delaware limited liability company ("COMSYS SERVICES"), VENTURI TECHNOLOGY
PARTNERS, LLC, a North Carolina limited liability company ("VTP"), COMSYS
INFORMATION TECHNOLOGY SERVICES, INC., a Delaware corporation ("COMSYS IT";
COMSYS Services, VTP and COMSYS IT are referred to herein each individually as a
"BORROWER" and collectively as the "BORROWERS"), COMSYS IT PARTNERS, INC., a
Delaware corporation ("HOLDINGS"), PFI CORP., a Delaware corporation ("PFI
HOLDINGS"), COMSYS HOLDING, INC., a Delaware corporation ("COMSYS HOLDINGS"),
COMSYS Services, acting in its capacity as borrowing agent and funds
administrator for the Borrowers (in such capacity, the "FUNDS ADMINISTRATOR"),
the financial institutions from time to time parties hereto, each as a Lender,
and XXXXXXX XXXXX CAPITAL, a division of Xxxxxxx Xxxxx Business Financial
Services Inc., individually as a Lender, as administrative agent (the "AGENT"),
Sole Bookrunner and Sole Lead Arranger, ING CAPITAL LLC, as documentation agent
(the "DOCUMENTATION AGENT") and as a Lender, and GMAC COMMERCIAL FINANCE LLC, as
syndication agent (the "SYNDICATION AGENT") and as a Lender.
RECITALS:
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of
July 19, 2004 (the "MERGER AGREEMENT") among Holdings, VTP, Inc., a Delaware
corporation ("MERGER CO."), VTP, COMSYS Holdings, COMSYS IT and the shareholders
of Holdings party thereto, Merger Co. has merged with and into COMSYS Holdings,
with COMSYS Holdings as the surviving entity (the "MERGER");
WHEREAS, the Borrowers desire that Lenders extend certain term credit and
working capital facilities to the Borrowers to (i) provide funds necessary in
connection with the Venturi Staffing Sale, (ii) provide funds necessary to
refinance existing indebtedness of the Borrowers and their Affiliates, (iii) pay
fees and expenses related to this Agreement and the other Operative Documents
and (iv) provide working capital financing for the Borrowers; and
WHEREAS, each Borrower desires to secure all of its Obligations under the
Financing Documents by granting to Agent, for the benefit of Agent and Lenders,
a first priority security interest in and lien upon substantially all of its
personal and real property, including without limitation all of the outstanding
capital stock or other equity securities, as applicable, of each Domestic
Subsidiary and, to the extent provided herein, each Foreign Subsidiary; and
WHEREAS, Holdings, as the direct owner of all of the issued and
outstanding capital stock of PFI Holdings and COMSYS Holdings, and the indirect
owner of all of the issued and outstanding capital stock or membership
interests, as the case may be, in each Borrower, is willing to guarantee all of
the Obligations of the Borrowers to Lenders under the Financing Documents, and
to grant to Agent, for the benefit of Agent and Lenders, a first priority
security interest in and lien upon substantially all of its personal and real
property, including, without limitation, all of the outstanding capital stock or
other equity securities, as applicable, of each
Domestic Subsidiary (including, without limitation, all of the outstanding
capital stock of COMSYS Holdings and PFI Holdings) and, to the extent provided
herein, each Foreign Subsidiary; and
WHEREAS, COMSYS Holdings, as the direct owner of all of the issued and
outstanding membership interests of COMSYS IT, is willing to guarantee all of
the Obligations of the Borrowers to Lenders under the Financing Documents, and
to grant to Agent, for the benefit of Agent and Lenders, a first priority
security interest in and lien upon substantially all of its personal and real
property, including, without limitation, all of the outstanding capital stock or
other equity securities, as applicable, of each Domestic Subsidiary (including,
without limitation, all of the capital stock of COMSYS IT) and, to the extent
provided herein, each Foreign Subsidiary;
WHEREAS, PFI Holdings, as the direct owner of all of the issued and
outstanding membership interests of VTP, is willing to guarantee all of the
Obligations of the Borrowers to Lenders under the Financing Documents, and to
grant to Agent, for the benefit of Agent and Lenders, a first priority security
interest in and lien upon substantially all of its personal and real property,
including, without limitation, all of the outstanding capital stock or other
equity securities, as applicable, of each Domestic Subsidiary (including,
without limitation, all of the outstanding membership interests of VTP) and, to
the extent provided herein, each Foreign Subsidiary;
WHEREAS, each other Domestic Subsidiary of Holdings, other than the
Borrowers, is willing to guaranty all of the Obligations of the Borrowers to
Lenders under the Financing Documents, and to grant to Agent, for the benefit of
Agent and Lenders, a first priority security interest in and lien upon
substantially all of its personal and real property to the extent provided for
herein;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Borrowers, Holdings, COMSYS
Holdings, PFI Holdings, Lenders and Agent agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 CERTAIN DEFINED TERMS.
The following terms have the following meanings:
"ACCOUNT DEBTOR" means "account debtor," as defined in Article 9 of the
UCC.
"ACCOUNTS" means "accounts" (as defined in Article 9 of the UCC) of the
Borrowers, including without limitation any and all rights to payment for the
sale or lease of goods or rendition of services, whether or not they have been
earned by performance, in each case, for purposes of calculating the Borrowing
Base, net of any credits, rebates or offsets owed by any Borrower, to the
respective customer.
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"ADJUSTED EBITDA" has the meaning as defined pursuant to the terms of the
Compliance Certificate.
"ADJUSTMENT DATE" means the first Business Day of each February, May,
August and November of each year, commencing with the first Business day of May,
2005.
"AFFILIATE" means with respect to any Person (i) any Person that directly
or indirectly controls such Person, (ii) any Person which is controlled by or is
under common control with such controlling Person and (iii) in the case of an
individual, the parents, children, siblings and spouse of such individual. As
used in this definition, the term "control" of a Person means the possession,
directly or indirectly, of the power to vote ten percent (10%) or more of any
class of voting securities of such Person or to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"AGENT" means Xxxxxxx Xxxxx in its capacity as administrative agent for
the Lenders hereunder, as such capacity is established and subject to the
provisions of Article XI and the successors of Xxxxxxx Xxxxx in such capacity.
"AGENT ADVANCES" has the meaning set forth in Section 2.2(a)(ii).
"AGREEMENT" means this Credit Agreement, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"APPROVED FUND" means any (i) investment company, trust, securitization
vehicle or conduit that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business or (ii) any Person (other than a natural
person) which temporarily warehouses loans for any Lender or any entity
described in the preceding clause (i) and that, with respect to each of the
preceding clauses (i) and (ii), is administered or managed by (a) a Lender, (b)
an Affiliate of a Lender or (c) a Person (other than a natural person) or an
Affiliate of a Person (other than a natural person) that administers or manages
a Lender.
"ASSET DISPOSITION" means any sale, lease, exclusive and irrevocable
license granted other than in the ordinary course of business or other
consensual disposition by any Credit Party of any asset, but excluding
dispositions of Cash Equivalents.
"ASSIGNEE" has the meaning set forth in Exhibit A to this Agreement.
"ASSIGNMENT AGREEMENT" means an agreement substantially in the form of
Exhibit A hereto.
"BLOCKED ACCOUNT" has the meaning set forth in Section 6.1(d).
"BORROWERS" has the meaning set forth in the Preamble to this Agreement.
"BORROWERS' ACCOUNT" means the accounts specified in Section G of the
Information Certificate into which Loans (other than Agent Advances, which shall
be disbursed by Agent in a manner permitted by Section 2.2(a)(ii)) shall be made
at the direction of the Funds
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Administrator, or such other account as the Funds Administrator may specify by
written notice to Agent.
"BORROWING BASE" means, as of any date of calculation, a dollar amount
calculated pursuant to the Borrowing Base Certificate most recently delivered to
Agent in accordance with the terms hereof, equal to the sum of eighty-five
percent (85%) (subject to adjustment as provided below) of Eligible Billed
Accounts plus eighty-five percent (85%) (subject to adjustment as provided
below) of Eligible Unbilled Accounts and minus (i) from the period commencing on
the Closing Date through and including June 30, 2005, the Restructuring Reserve
and (ii) any other Reserves then established by Agent. Agent may, from time to
time, in the exercise of its Permitted Discretion reduce or increase any
percentage amount set forth in the immediately preceding sentence (any such
increase not to exceed the percentages established on the Closing Date). Agent
shall provide the Funds Administrator with prior written notification of any
change in the percentage amount pursuant to the preceding sentence together with
a reasonably detailed description of the reason for such change.
"BORROWING BASE CERTIFICATE" means a certificate, duly executed by a
Responsible Officer of the Funds Administrator, appropriately completed and
substantially in the form of Exhibit D hereto.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which either the New York Stock Exchange is closed, or on which commercial banks
in Chicago are authorized by law to close and, in the case of a Business Day
which relates to a LIBOR Loan, a day on which dealings are carried on in the
London interbank eurodollar market.
"CAPITAL EXPENDITURES" has the meaning provided in the Compliance
Certificate.
"CAPITAL LEASE" of any Person means any lease of any property by such
Person as lessee which would, in accordance with GAAP, be required to be
accounted for as a capital lease on the balance sheet of such Person.
"CASH EQUIVALENTS" means any Investment in (i) direct obligations of the
United States or any agency thereof, or obligations guaranteed by the United
States or any agency thereof, (ii) commercial paper rated at least A-1 by
Standard & Poor's Ratings Service and P-1 by Xxxxx'x Investors Services, Inc.,
(iii) demand deposits and time deposits with, including certificates of deposit
issued by, any office located in the United States of any bank or trust company
which is organized under the laws of the United States or any State thereof and
has capital, surplus and undivided profits aggregating at least $500,000,000 and
which issues (or the parent of which issues) certificates of deposit or
commercial paper with a rating described in clause (ii) above, (iv) repurchase
agreements with respect to securities described in clause (i) above entered into
with an office of a bank or trust company meeting the criteria specified in
clause (iii) above, provided in each case that such Investment matures within
one (1) year from the date of acquisition thereof by any Credit Party, or (v)
any money market or mutual fund which invests only in the foregoing types of
investments and the liquidity of which is reasonably satisfactory to Agent.
"CLOSING CHECKLIST" means Annex B to this Agreement.
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"CLOSING DATE" means the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986.
"COLLATERAL" means all property, now existing or hereafter acquired,
mortgaged or pledged to, or purported to be subjected to a Lien in favor of,
Agent, for the benefit of Agent and Lenders, pursuant to the Security Documents.
"COMMITMENT ANNEX" means Annex A to this Agreement.
"COMMITMENT EXPIRY DATE" means the earliest to occur of (i) September 30,
2009 and (ii) ninety (90) days prior to the Junior Lien Maturity Date (as
defined in the Second Lien Credit Agreement).
"COMPLIANCE CERTIFICATE" means a certificate, duly executed by a
Responsible Officer of Holdings, appropriately completed and substantially in
the form of Exhibit C hereto.
"COMSYS CREDIT PARTIES" means COMSYS Holdings, COMSYS IT and COMSYS
Services.
"COMSYS HOLDINGS" has the meaning set forth in the Recitals to this
Agreement.
"COMSYS IT" has the meaning set forth in the Preamble to this Agreement.
"COMSYS LIMITED" means COMSYS VMS Limited, a company formed under the laws
of England and Wales.
"COMSYS SERVICES" has the meaning set forth in the Preamble to this
Agreement.
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or other Person
the accounts of which would be consolidated with those of Holdings in its
consolidated financial statements if such statements were prepared as of such
date.
"CONTINGENT OBLIGATIONS" means, with respect to any Person, any direct or
indirect liability of such Person: (i) with respect to any debt, lease, dividend
or other obligation of another Person if the purpose or intent of such Person
incurring such liability, or the effect thereof, is to provide assurance to the
obligee of such liability that such liability will be paid or discharged, or
that any agreement relating thereto will be complied with, or that any holder of
such liability will be protected, in whole or in part, against loss with respect
thereto; (ii) with respect to any letter of credit issued for the account of
such Person or as to which such Person is otherwise liable for the reimbursement
of any drawing; (iii) under any foreign exchange contract, currency swap
agreement, interest rate swap agreement or other similar agreement or
arrangement designed to alter the risks of such Person arising from fluctuations
in currency values or interest rates; (iv) to make take-or-pay or similar
payments if required regardless of nonperformance by any other party or parties
to an agreement; or (v) for any obligation of another Person pursuant to any
agreement to purchase or otherwise acquire any obligation or any property
constituting security therefor, to provide funds for the payment or discharge of
such obligation or to preserve the solvency, financial condition or level of
income of another Person.
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The amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if not a fixed determinable
amount, the maximum amount so guaranteed or otherwise supported.
"CONTROLLED GROUP" means all members of a group of corporations and all
members of a group of trades or businesses (whether or not incorporated) under
common control which, together with the Credit Parties, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.
"CREDIT EXPOSURE" means any period of time during which the Revolving Loan
Commitment is outstanding or any Loan, Reimbursement Obligation or other
Obligation remains unpaid or any Letter of Credit or Support Agreement remains
outstanding; provided, that no Credit Exposure shall be deemed to exist solely
due to the existence of contingent indemnification liability, absent the written
assertion of a claim with respect thereto.
"CREDIT PARTY" means Holdings, COMSYS Holdings, PFI Holdings, each
Borrower and each of their respective Subsidiaries.
"DEBT" of a Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising and payable in the ordinary
course of business, (iv) all Capital Leases of such Person, (v) all
non-contingent obligations of such Person to reimburse any bank or other Person
in respect of amounts paid under a letter of credit or similar instrument, (vi)
all equity securities of such Person subject to repurchase or redemption on a
date which is prior to the Commitment Expiry Date at the option of the holder
thereof, other than repurchases and redemptions (a) as a result of a change of
control with respect to such Person or a sale of all or substantially all of the
assets of such Person or (b) as a result of a "Fundamental Change" or a "Change
in Ownership" (in each case, as defined in the Holdings Certificate of
Designations), (vii) all obligations secured by a Lien on any asset of such
Person, whether or not such obligation is otherwise an obligation of such
Person, (viii) "earnouts" and similar payment obligations (provided, that, for
purposes of determining compliance by the Credit Parties with the respective
financial covenants set forth in Article VII, the amount at any time of any
"earnout" or similar payment obligation shall be determined in accordance with
GAAP)(and, in any event, shall not exceed the amount, if any, thereof which is
actually earned but remains unpaid at such time) and (ix) all Debt of others
Guaranteed by such Person.
"DEFAULT" means any condition or event which with the giving of notice or
lapse of time or both would, unless cured or waived, become an Event of Default.
"DEFAULTED LENDER" means, so long as such failure shall remain in
existence and uncured, any Lender which shall have failed to make any Loan or
other credit accommodation, disbursement or reimbursement required pursuant to
the terms of any Financing Documents.
"DEPOSIT ACCOUNT" means a "deposit account" (as defined in Article 9 of
the UCC) of any Credit Party.
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"DEPOSIT ACCOUNT CONTROL AGREEMENT" means an agreement, in form and
substance reasonably satisfactory to Agent, among Agent, any Credit Party or any
Subsidiary of any Credit Party maintaining a Deposit Account at any bank, and
such bank, which agreement provides that (x) such bank shall comply with
instructions originated by Agent directing disposition of the funds in such
Deposit Account without further consent by such Borrower or such Credit Party
(as applicable), and (y) such bank shall agree that it shall have no Lien on, or
right of setoff against, such Deposit Account or the contents thereof, other
than in respect of commercially reasonable fees and other items reasonably and
expressly consented to by Agent, and containing such other terms and conditions
as Agent may reasonably require, including as to any such agreement pertaining
to any Blocked Account, providing that all items received or deposited in such
Blocked Account are the property of Agent, and that such bank shall wire, or
otherwise transfer, in immediately available funds, on a daily basis to the
Payment Account all funds received or deposited into such Blocked Account.
"DOMESTIC SUBSIDIARY" means, with respect to any Person, a Subsidiary of
such Person, which Subsidiary is incorporated or otherwise organized under the
laws of a State of the United States of America.
"DOMESTIC WHOLLY-OWNED SUBSIDIARY" means any Domestic Subsidiary in which
(other than directors' qualifying shares required by law) one hundred percent
(100%) of equity securities, at the time as of which any determination is being
made, is owned, beneficially and of record, by any Borrower, or by one or more
of the other Domestic Wholly-Owned Subsidiaries, or both.
"EBITDA" has the meaning as defined pursuant to the terms of the
Compliance Certificate.
"ELIGIBLE ASSIGNEE" means (i) a Lender, (ii) an Affiliate of a Lender,
(iii) an Approved Fund, and (iv) any other Person (other than a natural person)
approved by (a) Agent and (b) unless an Event of Default has occurred and is
continuing, the Funds Administrator (each such approval not to be unreasonably
withheld or delayed, and shall be deemed provided unless expressly withheld by
the Funds Administrator within five (5) Business Days of request therefor);
provided that notwithstanding the foregoing, (x) "Eligible Assignee" shall not
include a Borrower or any Affiliates or Subsidiaries of any Borrower and (y) no
proposed assignee intending to assume all or any portion of the Revolving Loan
Commitment shall be an Eligible Assignee unless such proposed assignee either
already holds a portion of the Revolving Loan Commitment, or has been approved
as an Eligible Assignee by Agent.
"ELIGIBLE BILLED ACCOUNTS" has the meaning provided in the Borrowing Base
Certificate; provided, that Agent may, from time to time, change the criteria
for Eligible Billed Accounts set forth in the Borrowing Base Certificate, in the
exercise of its Permitted Discretion. In furtherance of and not in limitation of
the foregoing, Agent may change the criteria for Eligible Billed Accounts based
on either: (i) an event, condition or other circumstance arising after the
Closing Date, or (ii) an event, condition or other circumstance existing on the
Closing Date to the extent Agent has no written notice thereof from a Credit
Party prior to the Closing Date, in either case under clause (i) or (ii) which
materially adversely affects or, in the Permitted Discretion of Agent, could
reasonably be expected to materially adversely affect the Accounts as determined
7
by Agent in the exercise of its Permitted Discretion. Agent shall provide the
Funds Administrator with prior written notification of any change in the
criteria for Eligible Billed Accounts pursuant to the preceding sentence
together with a reasonably detailed description of the reason for such change.
For purposes of this Agreement, the net amount of Eligible Billed Accounts at
any time shall be the face amount of such Eligible Billed Accounts less any and
all returns, rebates, discounts (which may, at Agent's option, be calculated on
shortest terms), credits, allowances or excise taxes of any nature at any time
issued, owing, claimed by Account Debtors, granted, outstanding or payable in
connection with such Accounts at such time. Any Accounts which are not Eligible
Billed Accounts shall nevertheless be part of the Collateral.
"ELIGIBLE SWAP COUNTERPARTY" means Agent, any Affiliate of Agent, any
Lender and/or any Affiliate of any Lender that (i) from time to time enters into
a Swap Contract with any Borrower or any Subsidiary and (ii) in the case of a
Lender or an Affiliate of a Lender other than Agent, is expressly identified by
Agent, in its reasonable discretion, as an Eligible Swap Counterparty. Without
limitation of Agent's discretion to identify a Lender or Affiliate of a Lender
as an Eligible Swap Counterparty, no Lender or Affiliate of any Lender shall be
designated an Eligible Swap Counterparty unless such Person maintains reporting
systems reasonably acceptable to Agent with respect to Swap Contract exposure.
"ELIGIBLE UNBILLED ACCOUNTS" has the meaning provided in the Borrowing
Base Certificate; provided, that Agent may change the criteria for Eligible
Unbilled Accounts set forth in the Borrowing Base Certificate, from time to
time, in the exercise of its Permitted Discretion. In furtherance of and not in
limitation of the foregoing, Agent may change the criteria for Eligible Billed
Accounts based on either: (i) an event, condition or other circumstance arising
after the Closing Date, or (ii) an event, condition or other circumstance
existing on the Closing Date to the extent Agent has no written notice thereof
from a Credit Party prior to the Closing Date, in either case under clause (i)
or (ii) which materially adversely affects or, in the Permitted Discretion of
Agent, could reasonably be expected to materially adversely affect the Accounts
as determined by Agent in the exercise of its Permitted Discretion. Agent shall
provide the Funds Administrator with prior written notification of any change in
the criteria for Eligible Unbilled Accounts pursuant to the preceding sentence
together with a reasonably detailed description of the reason for such change.
For purposes of this Agreement, the net amount of Eligible Unbilled Accounts at
any time shall be the face amount of such Eligible Unbilled Accounts less any
and all returns, rebates, discounts (which may, at Agent's option, be calculated
on shortest terms), credits, allowances or excise taxes of any nature at any
time issued, owing, claimed by Account Debtors, granted, outstanding or payable
in connection with such Accounts at such time. Any Accounts which are not
Eligible Unbilled Accounts shall nevertheless be part of the Collateral.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, injunctions, permits, licenses, agreements and
governmental restrictions, whether now or hereafter in effect, relating to the
environment or the effect of the environment on human health or to emissions,
discharges or releases of Hazardous Materials into the environment, including
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials or the clean-up or other
remediation thereof.
8
"EQUIPMENT" means, collectively, "equipment" and "fixtures" (as each term
is defined in Article 9 of the UCC) of the Credit Parties and their respective
Subsidiaries.
"EQUITY DOCUMENTS" means the Holdings Certificate of Designations and the
Holdings Charter.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA PLAN" means any "employee benefit plan," as such term is defined in
Section 3(3) of ERISA (other than a Multiemployer Pension Plan), which any
Credit Party maintains, sponsors or contributes to, or, which is subject to
Section 412 of the Code or Title IV of ERISA, to which any Credit Party or any
member of the Controlled Group may have any liability, including any liability
by reason of having been a substantial employer within the meaning of Section
4063 of ERISA at any time during the preceding five (5) years, or by reason of
being deemed to be a contributing sponsor under Section 4069 of ERISA.
"EVENT OF DEFAULT" has the meaning set forth in Section 9.1.
"EXCESS CASH FLOW" has the meaning provided in the Excess Cash Flow
Certificate.
"EXCESS CASH FLOW CERTIFICATE" means a certificate, duly executed by a
Responsible Officer of Holdings, appropriately completed and substantially in
the form of Exhibit B hereto.
"EXISTING DEBT" means all Debt set forth in Annex D attached hereto to be
repaid in full in cash on the Closing Date.
"EXISTING LETTERS OF CREDIT" means letters of credit outstanding on the
Closing Date issued under that certain Credit Agreement dated as of August 18,
2004 by and among COMSYS Services, as the borrower, the other "Credit Parties",
the "Agent" and the "Lenders" (in each case, as defined therein) and listed on
Annex C.
"FEDERAL FUNDS RATE" means, for any day, the rate of interest per annum
(rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
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 on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (i) if such day is
not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day and (ii) if no such rate is
so published on such next preceding Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to Agent on such day on such
transactions as reasonably determined by Agent.
"FEE LETTER" means that certain letter agreement dated as of the Closing
Date between the Borrowers and the Agent.
"FINANCING DOCUMENTS" means this Agreement, the Notes, the Security
Documents, the Information Certificate, the Fee Letter, the Second Lien
Intercreditor Agreement, any fee letter between Xxxxxxx Xxxxx and any Borrower
relating to the transactions contemplated hereby, any Swap Contract entered into
between any Credit Party and any Eligible Swap Counterparty, and
9
all other documents, instruments and agreements contemplated herein or thereby
and executed concurrently by a Credit Party with or in favor of the Agent or the
Lenders in connection herewith or at any time and from time to time hereafter,
as any or all of the same may be amended, supplemented, restated or otherwise
modified from time to time.
"FISCAL YEAR" means a fiscal year of Holdings and its Subsidiaries, ending
on the last Sunday prior to, or the first Sunday immediately after, December 31
of each calendar year.
"FIXED CHARGE COVERAGE RATIO" has the meaning provided in the Compliance
Certificate.
"FOREIGN SUBSIDIARY" means, with respect to any Person, a Subsidiary of
such Person, which Subsidiary is not a Domestic Subsidiary of such Person.
"FUNDS ADMINISTRATOR" has the meaning set forth in the Preamble to this
Agreement.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"GUARANTEE" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"HAZARDOUS MATERIALS" means (i) any "hazardous substance" as defined in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, (ii) asbestos, (iii) polychlorinated biphenyls, (iv) petroleum, its
derivatives, by-products and other hydrocarbons, and (v) any other toxic,
radioactive, caustic or otherwise hazardous substance regulated under law.
"HAZARDOUS MATERIALS CONTAMINATION" means contamination (whether now
existing or hereafter occurring) of the improvements, buildings, facilities,
personality, soil, groundwater, air or other elements on or of the relevant
property by Hazardous Materials, or any derivatives thereof, or on or of any
other property as a result of Hazardous Materials, or any derivatives thereof,
generated on, emanating from or disposed of in connection with the relevant
property.
10
"HOLDINGS" has the meaning set forth in the Recitals to this Agreement.
"HOLDINGS CERTIFICATE OF DESIGNATIONS" means that certain Certificate of
Designation of Preferences and Rights of Series A-1 Preferred Stock of Venturi
Partners, Inc. filed with and certified by the Secretary of State of Delaware on
September 30, 2004.
"HOLDINGS CHARTER" means that certain Amended and Restated Certificate of
Incorporation of Venturi Partners, Inc., as in effect on the Closing Date.
"HOLDINGS LOANS" means intercompany loans made by a Borrower to Holdings,
PFI Holdings and/or COMSYS Holdings to the extent that, at the time such loan is
made, a Restricted Distribution from a Borrower to Holdings, PFI Holdings and/or
COMSYS Holdings, as the case may be, would be permitted pursuant to Section 5.4
and provided that (i) the proceeds of such loans are used for the purposes set
forth in Section 5.4, (ii) at the request of the Agent, such loans are evidenced
by promissory notes, the sole originally executed copy of which shall be pledged
to the Agent, for the benefit of the Agent and the Lenders, as security for the
Obligations and (iii) such Holdings Loans shall be treated as a Restricted
Distribution for purposes of this Agreement, including determining compliance
with Section 5.4 and Section 7.2.
"INDEMNITEES" has the meaning set forth in Section 10.2.
"INFORMATION CERTIFICATE" means that certain Information Certificate of
even date herewith executed by each Credit Party and delivered to Agent.
"INTELLECTUAL PROPERTY" means, with respect to any Person, all patents,
trademarks, trade names, copyrights, technology, know-how and processes, and all
applications therefor, used in or necessary for the conduct of business by such
Person.
"INTEREST PERIOD" means, as to any LIBOR Loan, (i) during the Primary
Syndication Period, the period commencing on the date such Loan is borrowed or
continued as, or converted into, a LIBOR Loan and ending on the date two (2)
weeks thereafter and (ii) thereafter, the period commencing on the date such
Loan is borrowed or continued as, or converted into, a LIBOR Loan and ending on
the date one (1), two (2), three (3) or six (6) months thereafter, or, if
available to all Lenders, ending on the date nine (9) or twelve (12) months
thereafter, as selected by the Funds Administrator pursuant to Section 2.3(f);
provided, that: (a) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period shall
end on the preceding Business Day; (b) any Interest Period that begins on a day
for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period shall end on the last Business Day of the calendar
month at the end of such Interest Period; (c) the Funds Administrator may not
select any Interest Period for a Revolving Loan which would extend beyond the
Commitment Expiry Date; and (d) the Borrowers may not select any Interest Period
for a Term Loan if, after giving effect to such selection, the aggregate
principal amount of such Term Loan having Interest Periods ending after any date
on which an installment of such Term Loan is scheduled to be repaid would exceed
the aggregate principal amount of such Term Loan scheduled to be outstanding
after giving effect to such repayment.
11
"INVENTORY" means "inventory" (as defined in Article 9 of the UCC) of the
Credit Parties.
"INVESTMENT" means any investment in any Person, whether by means of
acquiring or holding securities, capital contribution, loan, time deposit,
advance, Guarantee or otherwise.
"LC ISSUER" means a bank or trust company acceptable to Xxxxxxx Xxxxx, as
issuer of one or more Letters of Credit outstanding at any time.
"LENDER" means each of (i) Xxxxxxx Xxxxx, (ii) each other financial
institution party hereto, (iii) each other Eligible Assignee that becomes a
holder of a Note pursuant to Section 12.6, (iv) Agent, to the extent of any
Agent Advances and other Revolving Loans made by Agent which have not been
settled among the Lenders pursuant to Section 11.13, and (v) the respective
successors of all of the foregoing, subject to Section 12.6(a)(ii), and
"Lenders" means all of the foregoing. In addition to the foregoing, for the
purpose of identifying the Persons entitled to share in the Collateral and the
proceeds thereof under, and in accordance with the provisions of, this Agreement
and the Security Documents, the term "Lender" shall include Eligible Swap
Counterparties.
"LETTER OF CREDIT" means a standby letter of credit issued for the account
of any Borrower by an LC Issuer which expires by its terms within one (1) year
after the date of issuance and in any event at least thirty (30) days prior to
the Commitment Expiry Date. Notwithstanding the foregoing, a Letter of Credit
may provide for automatic extensions of its expiry date for one or more
successive one (1) year periods provided that the LC Issuer that issued such
Letter of Credit has the right to terminate such Letter of Credit on each such
annual expiration date and no renewal term may extend the term of the Letter of
Credit to a date that is later than the thirtieth (30th) day prior to the
Commitment Expiry Date.
"LETTER OF CREDIT LIABILITIES" means, at any time of calculation, the sum
of (i) the amount then available for drawing under all outstanding Letters of
Credit (without regard to whether any conditions to drawing thereunder can then
be met), to the extent subject to a Support Agreement plus (ii) the aggregate
unpaid amount of all reimbursement obligations in respect of previous drawings
made under such Letters of Credit, to the extent subject to a Support Agreement.
"LIBOR" means, with respect to any LIBOR Loan for any Interest Period, a
rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) equal
to (i) the rate of interest which is identified and normally published by
Bloomberg Professional Service Page BBAM 1 as the offered rate for loans in U.S.
dollars for the applicable Interest Period under the caption British Bankers
Association LIBOR Rates as of 11:00 a.m. (London time), on the second full
Business Day next preceding the first day of such Interest Period (unless such
date is not a Business Day, in which event the next succeeding Business Day will
be used); divided by (ii) the difference of one minus the daily average during
such Interest Period of the aggregate maximum reserve requirement (expressed as
a decimal) then imposed under Regulation D of the Board of Governors of the
Federal Reserve System (or any successor thereto) for "Eurocurrency Liabilities"
(as defined therein). If Bloomberg Professional Service no longer reports the
LIBOR or Agent determines in good faith that the rate so reported no longer
accurately reflects the rate
12
available to Agent in the London Interbank Market or if such index no longer
exists or if Page BBAM 1 no longer exists or accurately reflects the rate
available to Agent in the London Interbank Market, Agent may select a reasonable
replacement index or replacement page, as the case may be.
"LIBOR LOANS" means any Loans which accrue interest by reference to the
LIBOR, in accordance with the terms of this Agreement.
"LIBOR MARGIN" means (i) with respect to the Revolving Loans and other
Obligations (other than the Term Loan), (a) as of the Closing Date, 2.50% per
annum, and (b) thereafter, as of each Adjustment Date, the LIBOR Margin shall be
adjusted, if necessary, to the applicable percent per annum set forth in the
Pricing Table corresponding to the ratio of (x) Total Debt on the last day of
the most recently completed fiscal quarter prior to the applicable Adjustment
Date to (y) Adjusted EBITDA for the twelve (12) month period ending on the last
day of such fiscal quarter; provided, that if an Event of Default has occurred
and is continuing on an Adjustment Date, no reduction in the LIBOR Margin shall
occur on such Adjustment Date and (ii) with respect to the Term Loan, 3.00% per
annum.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement and the
other Financing Documents, a Credit Party shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"LOAN ACCOUNT" has the meaning set forth in Section 2.6(b).
"LOANS" means the Term Loan and the Revolving Loans, or any combination of
the foregoing, as the context may require.
"MAJOR CASUALTY PROCEEDS" means (i) the aggregate insurance proceeds
consisting of cash, checks or other cash equivalent financial instruments
(including Cash Equivalents) received in connection with one or more related
events under any Property Insurance Policy or (ii) any award or other
compensation consisting of cash, checks or other cash equivalent financial
instruments (including Cash Equivalents) with respect to any condemnation of
property (or any transfer or disposition of property in lieu of condemnation),
in each case, net of all fees, costs and expenses incurred in connection with
obtaining such proceeds, awards or other compensation.
"MARGIN STOCK" has the meaning assigned thereto in Regulation U of the
Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means, with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (i) the financial
condition,
13
operations, business or properties of the Credit Parties taken as a whole, (ii)
the rights and remedies of Agent or Lenders under any Financing Document, or the
ability of any Credit Party to perform any of its material obligations under any
Financing Document to which it is a party, (iii) the legality, validity or
enforceability of any Financing Document, or (iv) the existence, perfection or
priority of any security interest granted in any Financing Document or the value
of any material Collateral.
"MAXIMUM LAWFUL RATE" has the meaning set forth in Section 2.7(b).
"MERGER" has the meaning set forth in the Recitals to this Agreement.
"MERGER AGREEMENT" has the meaning set forth in the Recitals to this
Agreement.
"MERGER DOCUMENTS" means the Merger Agreement, the Certificate of Merger
certified by the Secretary of State of the State of Delaware and all documents,
agreements and instruments executed in connection therewith.
"XXXXXXX XXXXX" means Xxxxxxx Xxxxx Capital, a division of Xxxxxxx Xxxxx
Business Financial Services Inc., and its successors.
"MULTIEMPLOYER PENSION PLAN" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which any Credit Party or any member of the
Controlled Group may have any liability.
"NET BORROWING AVAILABILITY" has the meaning provided in the Borrowing
Base Certificate.
"NET CASH PROCEEDS" means, with respect to any transaction or event, an
amount equal to the cash proceeds received by the Credit Party from or in
respect of such transaction or event (including proceeds of any non-cash
proceeds of such transaction), less (i) any out-of-pocket expenses incurred by
such Person in connection therewith and (ii) in the case of an Asset
Disposition, (a) the amount of any Debt secured by a Lien on the related asset
and discharged from the proceeds of such Asset Disposition, (b) any taxes paid
or payable by such Person in respect of such Asset Disposition and (c) any
reserves for purchase price adjustments and reserves against retained
liabilities required to be maintained in accordance with the documentation
governing such Asset Disposition and/or in accordance with GAAP.
"NOTES" means the Term Notes and the Revolving Loan Notes, or any
combination of the foregoing, as the context may require.
"NOTICE OF BORROWING" means a written notice of a Responsible Officer of
the Funds Administrator, appropriately completed and substantially in the form
of Exhibit E hereto.
"NOTICE OF LC CREDIT EVENT" means a written notice from a Responsible
Officer to Agent with respect to any issuance, increase or extension of a Letter
of Credit specifying: (i) the date of issuance or increase of a Letter of
Credit; (ii) the expiry date of such Letter of Credit; (iii) the proposed terms
of such Letter of Credit, including the face amount; and (iv) the
14
transactions or additional transaction or transactions that are to be supported
or financed with such Letter of Credit or increase thereof.
"OBLIGATIONS" means all obligations, liabilities and indebtedness
(monetary (including post-petition interest, whether or not allowed) or
otherwise) of each Credit Party under this Agreement or any other Financing
Document, in each case howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, now or hereafter existing, or due or to
become due. The Obligations shall include, without limitation, all obligations,
liabilities and indebtedness arising from or in connection with all Support
Agreements and all Swap Contracts entered into with any Eligible Swap
Counterparty.
"OPERATIVE DOCUMENTS" means the Financing Documents, the Merger Documents,
the Venturi Staffing Purchase Agreement, the Equity Documents and the Second
Lien Debt Documents.
"ORGANIZATIONAL DOCUMENTS" means, with respect to any Person other than a
natural person, the documents by which such Person was organized (such as a
certificate of incorporation, certificate of limited partnership or articles of
organization, and including, without limitation, any certificates of designation
for preferred stock or other forms of preferred equity) and which relate to the
internal governance of such Person (such as by-laws, a partnership agreement or
an operating, limited liability or members agreement).
"PARTICIPANT" has the meaning set forth in Section 12.6(b).
"PAYMENT ACCOUNT" means the account specified in Section G of the
Information Certificate into which all payments by or on behalf of the Borrowers
to Agent under the Financing Documents shall be made, or such other account as
Agent shall from time to time specify by notice to the Funds Administrator.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" means any ERISA Plan that is subject to Section 412 of the
Code or Title IV of ERISA.
"PERMITTED ACQUISITION" means an acquisition by a Borrower of a Target
consummated at any time after June 30, 2005, which satisfies all of the
following conditions:
(1) The Agent shall receive not less than fifteen (15) Business Days'
prior written notice of such acquisition, which notice shall include a
reasonably detailed description of the proposed terms of such acquisition and
identify the anticipated closing date thereof;
(2) such acquisition shall be structured as (i) an asset acquisition by
a Borrower or a Domestic Wholly-Owned Subsidiary of a Borrower, (ii) a merger of
the applicable Target with and into a Borrower or a Domestic Wholly-Owned
Subsidiary of a Borrower, with such Borrower or such Subsidiary, as the case may
be, as the surviving corporation in such merger, (iii) a merger of a
Wholly-Owned Subsidiary of a Borrower with and into the applicable Target with
the applicable Target as the surviving corporation in such merger and as a
Domestic
15
Wholly-Owned Subsidiary of a Borrower, or (iv) a purchase of one hundred percent
(100%) of the Stock of the applicable Target, which is a domestic entity, by a
Borrower or a Domestic Wholly-Owned Subsidiary of a Borrower;
(3) The Agent shall receive, not less than ten (10) Business Days' prior
to the consummation of such acquisition, a due diligence package, reasonably
satisfactory to it, which package shall include, without limitation, the
following with regard to the acquisition of any Target:
(a) pro forma financial projections for the Borrowers and their
respective Subsidiaries for the current and next two Fiscal Years;
(b) in the event Accounts of the applicable Target will be
included in the Borrowing Base, a field exam with respect to such Target;
(c) historical financial statements of the applicable Target for
the three (3) fiscal years prior to such acquisition (or, if such Target
has not been in existence for three (3) years, for each year such Target
has existed or if such historical financial statements do not exist, then
such historical financial statements as are available);
(d) a general description of the applicable Target's business;
(e) pending material litigation involving the applicable Target;
(f) description of the proposed method of financing the
acquisition, including sources and uses;
(g) locations of all personal and real property of the applicable
Target, including the location of its chief executive office;
(h) a description of, and if requested by the Agent, copies of all
material agreements binding upon the applicable Target or any of its real
property;
(i) any other material due diligence information with respect to
such acquisition reasonably required by the Agent;
(j) if obtained in connection with the acquisition, Phase I
Environmental Reports and related information regarding any property
owned, leased or otherwise used by the applicable Target; and
(k) a financial due diligence report from a big four or other
nationally recognized accounting firm reasonably acceptable to the Agent
with respect to any Target whose Relative Contribution, as of the closing
date of such acquisition, would equal or exceed 20%. "Relative
Contribution" means, with respect to any Target, an amount (expressed as a
percentage) equal to: (x) Pro Forma EBITDA of such Target, divided by (y)
Adjusted EBITDA of the Borrowers and their Subsidiaries plus Pro Forma
EBITDA of such Target;
16
(4) the Agent shall receive evidence reasonably satisfactory to it that
the applicable Target has had a positive Pro Forma EBITDA for the immediately
preceding four fiscal quarters;
(5) evidence that (a) the applicable Target has in place, with
financially sound and reputable insurers, public liability and property damage
insurance with respect to its business and properties against loss or damage of
the kinds customarily carried or maintained by Persons of established reputation
engaged in similar businesses and in commercially reasonable amounts and (b)
pursuant to endorsements and/or assignments in form and substance reasonably
satisfactory to the Agent, (i) the Agent has been named as lender's loss payee,
for its benefit and the benefit of the Lenders, in the case of casualty
insurance, and (ii) the Agent and each of the Lenders have been named as
additional insureds in the case of all liability insurance;
(6) the Agent, for the benefit of the Agent and Lenders, (a) is granted
a first priority perfected Lien (subject only to Permitted Liens) on all real
and personal property being acquired pursuant to such acquisition (and, in the
case of an acquisition involving the purchase of any applicable Target's capital
stock, all of such capital stock shall be pledged to the Agent for the benefit
of the Agent and Lenders, and such Target shall guarantee the Obligations and
grant to the Agent, for the benefit of the Agent and Lenders, a first priority
perfected Lien (subject only to Permitted Liens) on such Person's assets) and
(b) will be provided such other documents and instruments as the Agent shall
reasonably request to perfect or maintain the perfection of its Lien on all real
and personal property of the applicable Target, as the case may be (including,
without limitation, in the event any Target maintains Collateral at any leased
locations or in any warehouse facility, the Borrowers shall use commercially
reasonable efforts to obtain any landlord agreements and/or bailee waivers in
form and substance reasonably acceptable to the Agent);
(7) after giving effect to such acquisition and the incurrence of any
Loans, other Debt or Contingent Obligations in connection therewith, (a) no
Default or Event of Default shall exist, (b) the Credit Parties shall be in
compliance on a pro forma basis with the covenants set forth in Article VII
recomputed for the most recently ended quarter of the Credit Parties for which
information is available regarding the business being acquired, (c) the Credit
Parties shall demonstrate to the Agent projected pro forma compliance with the
covenants set forth in Article VII, for the twelve (12) month period immediately
following the consummation of the proposed acquisition based on the combined
operating results of the applicable Target and of the Credit Parties and their
Subsidiaries for the twelve (12) month period ending on the last day of the
month for which financial statements for the applicable Target and for the
Credit Parties are available, and (d) if proceeds of Loans are being used to
finance the acquisition, the Borrowers shall have Net Borrowing Availability of
not less than $20,000,000;
(8) all material consents necessary for such acquisition (including such
consents as the Agent deems reasonably necessary) have been acquired and such
acquisition shall have been approved by the applicable Target's board of
directors or similar governing body;
(9) the applicable Target must be engaged in substantially the same type
of business as is currently conducted by the Borrowers;
17
(10) the Credit Parties' computation of Pro Forma EBITDA shall comply
with this Agreement;
(11) subject to clause (6) above, as soon as practicable after the
closing of such acquisition, and in any event within ten (10) Business Days
after such closing, the Borrowers shall deliver copies of all documents executed
in connection with such acquisition to the Agent; and
(12) (a) with respect to acquisitions financed with the proceeds of Loans
and/or with the proceeds of the issuance of stock of Holdings, the total
consideration paid or payable (including without limitation, any deferred
payment) for (i) any individual acquisition or group of related acquisitions
shall not exceed $10,000,000 and (ii) all acquisitions consummated during the
term of this Agreement shall not exceed $20,000,000 in the aggregate for all
such acquisitions and (b) with respect to acquisitions in which the sole
consideration for the consummation thereof is the issuance or exchange of common
stock of Holdings for the assets or stock of the Target, as the case may be, the
total consideration exchanged for (i) any individual acquisition or group of
related acquisitions shall not exceed $5,000,000 and (ii) all acquisitions
consummated during the term of this Agreement shall not exceed $15,000,000.
An acquisition of a Target that does not otherwise satisfy all of the
requirements in clauses (1) through (12) above shall constitute a "Permitted
Acquisition" if consented to by the Agent and Required Lenders. In the event
that prior to the consummation of such acquisition, the Borrowers obtain
knowledge of any material change to any of the documents or information
previously provided pursuant to clauses (3)(a) through (c), (3)(k), (4), (7) and
(10) above, the Borrowers shall promptly notify the Agent of such change.
"PERMITTED CONTEST" means a contest maintained in good faith by
appropriate proceedings promptly instituted and diligently conducted and with
respect to which such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made; provided that
compliance with the obligation that is the subject of such contest is
effectively stayed during such challenge.
"PERMITTED DISCRETION" means the Agent's judgment exercised in good faith
based upon its consideration of any reasonable factor which the Agent believes
in good faith could adversely affect the value of any Collateral, including any
Accounts of any Borrower, or the amount which the Agent and the Lenders would be
likely to receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral. In exercising such judgment,
the Agent may consider such factors which are already included in or tested by
the definition of Eligible Billed Accounts or Eligible Unbilled Accounts, as
well as any of the following: (i) the financial and business climate of any
Borrower's industry, (ii) changes in collection history and dilution with
respect to the Accounts of any Borrower, (iii) changes in any concentration of
risk with respect to Accounts of any Borrower, and (iv) any other factors that
change in any material respect the credit risk of lending to the Borrowers on
the security of the Accounts and other property of the Borrowers.
"PERMITTED LIENS" means Liens permitted pursuant to Section 5.2.
18
"PERSON" means any natural person, corporation, limited liability company,
professional association, limited partnership, general partnership, joint stock
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, and
any government or agency or political subdivision thereof.
"PFI HOLDINGS" has the meaning set forth in the Recitals to this
Agreement.
"PRICING TABLE" means the following table:
REVOLVING LOANS AND
ALL OTHER
OBLIGATIONS (OTHER
THAN THE TERM
LOAN)
TOTAL DEBT TO -------------------
ADJUSTED PRIME
EBITDA RATIO RATE LIBOR
--------------------- ----- -----
Greater than or equal
to 2.50 to 1.0 1.50% 2.50%
Less than 2.50 to 1.0 1.25% 2.25%
For purposes of the Pricing Table, if the Funds Administrator, on behalf
of the Borrowers, shall at any time fail to timely deliver a Compliance
Certificate, then effective as of the tenth (10th) Business Day following the
date on which such Compliance Certificate was due, each applicable Prime Rate
Margin and each applicable LIBOR Margin shall be conclusively presumed to equal
the highest applicable Prime Rate Margin and the highest applicable LIBOR Margin
specified in the Pricing Table until the date of delivery of such Compliance
Certificate.
"PRIMARY SYNDICATION PERIOD" means a period commencing on the Closing Date
and ending on the date the Agent notifies the Funds Administrator that it has
completed the Primary Syndication of the Loans (which notice shall be delivered
promptly after such Primary Syndication), which date shall in no event be later
than ninety (90) days following the Closing Date.
"PRIME RATE" means a variable per annum rate, as of any date of
determination, equal to the greater of (i) the Federal Funds Rate plus one-half
of one percent (0.50%) per annum and (ii) the rate from time to time published
in the "Money Rates" section of The Wall Street Journal as being the "Prime
Rate" (or, if more than one rate is published as the Prime Rate, then the
highest of such rates). The Prime Rate will change as of the date of publication
in The Wall Street Journal of a Prime Rate that is different from that published
on the preceding Business Day. In the event that The Wall Street Journal shall,
for any reason, fail or cease to publish the Prime Rate, Agent shall choose a
reasonably comparable index or source to use as the basis for the Prime Rate.
"PRIME RATE LOANS" means Loans which accrue interest by reference to the
Prime Rate, in accordance with the terms of this Agreement.
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"PRIME RATE MARGIN" means (i) with respect to the Revolving Loans and
other Obligations (other than the Term Loan), (a) as of the Closing Date, 1.50%
per annum, and (b) thereafter, as of each Adjustment Date, the Prime Rate Margin
shall be adjusted, if necessary, to the applicable percent per annum set forth
in the Pricing Table corresponding to the ratio of (x) Total Debt on the last
day of the most recently completed fiscal quarter prior to the applicable
Adjustment Date to (y) Adjusted EBITDA for the twelve (12) month period ending
on the last day of such fiscal quarter; provided, that if an Event of Default
has occurred and is continuing on an Adjustment Date, no reduction in the Prime
Rate Margin shall occur on such Adjustment Date and (ii) with respect to the
Term Loan, 2.00% per annum.
"PRO FORMA EBITDA" means (i) EBITDA attributable to each Permitted
Acquisition (with such pro forma adjustments as are reasonably acceptable to
Agent based upon data presented to Agent to its reasonable satisfaction)
consummated during the one (1) year period preceding the date of determination
calculated solely for a number of months immediately preceding the consummation
of the applicable Permitted Acquisition, which number equals twelve (12) minus
the number of months following the consummation of the applicable Permitted
Acquisition for which financial statements of Holdings and its Subsidiaries have
been delivered to Agent pursuant to Section 4.1, and (ii) for purposes of
determining compliance with the definition of "Permitted Acquisition," EBITDA of
the Target of any proposed Permitted Acquisition (adjusted with such pro forma
adjustments as are reasonably acceptable to Agent based upon data presented to
Agent to its reasonable satisfaction) calculated for the twelve (12) months
immediately preceding the consummation of the proposed Permitted Acquisition.
"PROPERTY INSURANCE POLICY" means any insurance policy maintained by any
Credit Party covering losses with respect to tangible real or personal property
or improvements or losses from business interruption.
"PRO RATA SHARE" means (i) with respect to a Lender's right to receive
payments of principal and interest with respect to the Term Loan, the Term Loan
Commitment Percentage of such Lender, (ii) with respect to a Lender's obligation
to make Revolving Loans, such Lender's right to receive payments of principal
and interest with respect thereto, such Lender's right to receive the unused
line fee described in Section 2.3(b), and such Lender's obligation to share in
Letter of Credit Liabilities and to receive the related Letter of Credit fee
described in Section 2.5(b), the Revolving Loan Commitment Percentage of such
Lender and (iii) for all other purposes (including without limitation the
indemnification obligations arising under Section 11.6) with respect to any
Lender, the percentage obtained by dividing (x) the sum of the Revolving Loan
Commitment Amount of such Lender (or, in the event the Revolving Loan Commitment
shall have been terminated, such Lender's then existing Revolving Loan
Outstandings), plus such Lender's then outstanding principal amount of the Term
Loan by (y) the sum of the Revolving Loan Commitment (or, in the event the
Revolving Loan Commitment shall have been terminated, the then existing
Revolving Loan Outstandings of all Lenders), plus the then outstanding principal
amount of the Term Loan.
"REAL PROPERTY" means real property of the Credit Parties or any of their
respective Subsidiaries, together with all buildings, structures and other
improvements thereon, and all licenses, easements and appurtenances related
thereto.
20
"REIMBURSEMENT OBLIGATIONS" means, at any date, the obligations of the
Borrowers then outstanding to reimburse Xxxxxxx Xxxxx for payments made by
Xxxxxxx Xxxxx under a Support Agreement.
"REINVESTMENT RESERVE" has the meaning set forth in Section 2.1(c).
"REQUIRED LENDERS" means at any time Lenders holding (i) fifty-one percent
(51%) or more of the sum of the Revolving Loan Commitment and the outstanding
principal balance of the Term Loan or (ii) if the Revolving Loan Commitment has
been terminated, fifty-one percent (51%) or more of the sum of (x) the aggregate
outstanding principal balance of the Loans plus (y) the aggregate amount of
Reimbursement Obligations.
"RESERVES" means such amounts as Agent may from time to time establish and
revise, in each case in the exercise of its Permitted Discretion, reducing the
amount of Revolving Loans and Support Agreements which would otherwise be
available to the Borrowers under the lending formula(s) provided for herein: (a)
to reflect events, conditions, contingencies or risks which, as determined by
Agent in the exercise of its Permitted Discretion, adversely affect, or could
reasonably be expected to adversely affect, any of: (i) the Collateral or any
other property which is security for the Obligations or its value, (ii) the
assets, business or prospects of any Credit Party or (iii) the Liens and other
rights of Agent or any Lender in the Collateral (including the enforceability,
perfection and priority thereof), (b) to reflect Agent's good faith belief that
any collateral report or financial information furnished by or on behalf of any
Credit Party to Agent is or may have been incomplete, inaccurate or misleading
in any material respect, or (c) to reflect accrued and unpaid interest and fees
hereunder. Agent shall provide the Funds Administrator with prior written
notification of the establishment of any Reserves or the change in any Reserves
in effect pursuant to the preceding sentence together with a reasonably detailed
description of the reason for such change. To the extent Agent may, in
accordance with any other terms hereof, revise the lending formula(s) used to
determine the Borrowing Base or establish new criteria or revise existing
criteria for Eligible Billed Accounts or Eligible Unbilled Accounts, Agent shall
not also establish a Reserve for the same purpose. The amount of any Reserve
established by Agent shall have a reasonable relationship to the event,
condition or other matter which is the basis for such Reserve as determined by
Agent in its Permitted Discretion. Without limitation of the foregoing, Agent
shall have the right to establish a Reserve for the amount by which the total
dilution of Accounts exceeds five percent (5%), with dilution referring to all
actual and potential offsets to an Account.
"RESPONSIBLE OFFICER" means any of the Chief Executive Officer, Chief
Financial Officer, Vice President of Finance or General Counsel of a Credit
Party.
"RESTRICTED ACCOUNT" means each bank account of the Credit Parties labeled
as a "Restricted Account" on the Bank Account Schedule of the Information
Certificate, as in effect on the Closing Date.
"RESTRICTED DISTRIBUTION" means as to any Person (i) any dividend or other
distribution on any equity interest in such Person (except those payable solely
in its equity interests of the same class) or (ii) any payment on account of (a)
the purchase, redemption, retirement, defeasance, surrender or acquisition of
any equity interests in such Person or any claim
21
respecting the purchase or sale of any equity interest in such Person or (b) any
option, warrant or other right to acquire any equity interests in such Person.
"RESTRUCTURING" means the integration and transition of the businesses of
the Venturi Credit Parties with the COMSYS Credit Parties, which such
Restructuring shall begin following the consummation of the Merger on the
Closing Date.
"RESTRUCTURING RESERVE" means a reserve against the Borrowing Base
established for the payment of the costs, expenses and liabilities associated
with the Restructuring relating to items described in the Restructuring Reserve
Certificate, in an original aggregate amount of $22,900,000, as reduced from
time to time on a dollar for dollar basis upon delivery to the Agent of a
Restructuring Reserve Certificate setting forth any payments in cash by the
Credit Parties of such costs, expenses and liabilities during such period.
"RESTRUCTURING RESERVE CERTIFICATE" means a certificate, duly executed by
a Responsible Officer of the Funds Administrator, appropriately completed and
substantially in the form of Exhibit G hereto.
"REVOLVING LOAN BORROWING" means a borrowing of a Revolving Loan.
"REVOLVING LOAN COMMITMENT" means the sum of each Lender's Revolving Loan
Commitment Amount.
"REVOLVING LOAN COMMITMENT AMOUNT" means, as to any Lender, the dollar
amount set forth opposite such Lender's name on the Commitment Annex under the
column "Revolving Loan Commitment Amount," or, if different, in the most recent
Assignment Agreement to which such Lender is a party.
"REVOLVING LOAN COMMITMENT PERCENTAGE" means, as to any Lender, the
percentage set forth opposite such Lender's name on the Commitment Annex under
the column "Revolving Loan Commitment Percentage," or, if different, in the most
recent Assignment Agreement to which such Lender is a party.
"REVOLVING LOAN LIMIT" means, at any time, the lesser of (i) the Borrowing
Base, plus any Agent Advances and (ii) the Revolving Loan Commitment.
"REVOLVING LOAN NOTE" has the meaning set forth in Section 2.4.
"REVOLVING LOAN OUTSTANDINGS" means at any time of calculation the sum of
the then existing aggregate outstanding principal amount of Revolving Loans and
the then existing Letter of Credit Liabilities.
"REVOLVING LOANS" has the meaning set forth in Section 2.2(a), and
includes all Agent Advances.
"SECOND LIEN AGENT" means Xxxxxxx Xxxxx, together with its successors and
assigns, solely in its capacity as administrative agent for the Second Lien
Lenders under the Second Lien Debt Documents.
22
"SECOND LIEN COLLATERAL AGENT" means Heritage Bank, SSB, a Texas-chartered
Savings Bank, together with its successors and assigns, in its capacity as
collateral agent for the Second Lien Lenders under the Second Lien Debt
Documents.
"SECOND LIEN CREDIT AGREEMENT" means that certain Term Loan Credit
Agreement of even date herewith, by and among the Second Lien Agent, the Second
Lien Collateral Agent, the Second Lien Lenders and the Borrowers, as the same
may be amended, restated, supplemented or otherwise modified from time to time
in accordance with the terms of the Second Lien Intercreditor Agreement.
"SECOND LIEN DEBT" means the Second Lien Term Loan owing by the Borrowers
to the Second Lien Lenders, together with capitalized interest, if any, and
fees, costs and other amounts, in each case, incurred pursuant to the terms of
the Second Lien Debt Documents.
"SECOND LIEN DEBT DOCUMENTS" means the Second Lien Credit Agreement,
including the exhibits and schedules thereto, and all agreements, documents and
instruments executed and delivered pursuant thereto or in connection therewith,
in each case, as amended, restated, supplemented or otherwise modified in
accordance with the terms of the Second Lien Intercreditor Agreement and this
Agreement.
"SECOND LIEN DEBT LIENS" means a Lien in favor of the Second Lien
Collateral Agent second in priority to the Liens granted to the Agent under the
Financing Documents (but in any event subject to Permitted Liens), for the
benefit of the Second Lien Collateral Agent and Second Lien Lenders, on the
assets and capital stock of the Credit Parties (other than the capital stock of
Holdings) and their Subsidiaries.
"SECOND LIEN INTERCREDITOR AGREEMENT" means that certain Intercreditor
Agreement of even date herewith, by and among the Second Lien Agent, the Second
Lien Collateral Agent, the Second Lien Lenders, Agent, the Credit Parties and
their Subsidiaries, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"SECOND LIEN LENDERS" means each "Lender" under and as defined in the
Second Lien Credit Agreement and any other lender thereunder, together with
their respective successors and assigns.
"SECOND LIEN TERM LOAN" means the term loan in the aggregate principal
amount of $70,000,000 made to the Borrowers on the date hereof by the Second
Lien Lenders pursuant to the Second Lien Credit Agreement.
"SECURITY DOCUMENTS" means any agreement, document or instrument executed
concurrently herewith or at any time hereafter pursuant to which one or more
Credit Parties or any other Person either (i) Guarantees payment or performance
of all or any portion of the Obligations and/or (ii) provides, as security for
all or any portion of the Obligations, a Lien on any of its assets in favor of
Agent for its own benefit and the benefit of the Lenders, as any or all of the
same may be amended, supplemented, restated or otherwise modified from time to
time.
"SETTLEMENT DATE" has the meaning set forth in Section 11.13(a).
23
"STATED RATE" has the meaning set forth in Section 2.7(b).
"SUBSIDIARY" means, with respect to any Person, any corporation, limited
liability company, limited partnership or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions (without
regard to the occurrence of any contingency) are at the time directly or
indirectly owned by such Person. Unless otherwise specified, the term Subsidiary
shall refer to a Subsidiary of the Borrowers.
"SUPPORT AGREEMENT" has the meaning set forth in Section 2.5(a).
"SWAP CONTRACT" means any "swap agreement," as defined in Section 101 of
the Bankruptcy Code, that is intended to provide protection against fluctuations
in interest or currency exchange rates.
"TARGET" means any Person or material group of assets (excluding a product
line, formula or recipe) acquired or proposed to be acquired pursuant to a
Permitted Acquisition.
"TAXES" has the meaning set forth in Section 2.8.
"TAXPAYER" means any Person described in Section 7701(a)(1) of the Code.
"TERM LOAN" has the meaning set forth in Section 2.1.
"TERM LOAN COMMITMENT PERCENTAGE" means, as to any Lender, the percentage
set forth opposite such Lender's name on the Commitment Annex under the column
"Term Loan Commitment Percentage," or, if different, in the most recent
Assignment Agreement to which such Lender is a party.
"TERM NOTE" has the meaning set forth in Section 2.4.
"TERMINATION DATE" has the meaning set forth in Section 2.2(c).
"TOTAL DEBT" has the meaning provided in the Compliance Certificate.
"TOTAL DEBT TO ADJUSTED EBITDA RATIO" has the meaning provided in the
Compliance Certificate.
"TRANSACTION" means all of the factual elements relevant to the expected
Tax treatment of any investment, entity, plan or arrangement contemplated
pursuant to this Agreement, and includes any series of steps carried out as part
of a plan.
"UCC" means the Uniform Commercial Code of the State of Illinois or of any
other state the laws of which are required to be applied in connection with the
perfection of security interests in any Collateral.
"VENTURI CREDIT PARTIES" means Holdings, PFI Holdings and VTP.
"VENTURI STAFFING" means Venturi Staffing Partners, Inc., a Delaware
corporation.
24
"VENTURI STAFFING PURCHASE AGREEMENT" means that certain Stock Purchase
Agreement dated as of July 19, 2004, by and among Holdings, PFI Holdings, as the
seller, and Compass CS Inc., as the buyer, and all agreements, documents and
instruments executed in connection therewith.
"VENTURI STAFFING SALE" means the sale by PFI Holdings on the Closing Date
of all of the issued and outstanding equity securities of Venturi Staffing to
CBS Personnel Holdings, Inc., formerly known as Compass CS Inc., in accordance
with the terms and provisions of the Venturi Staffing Purchase Agreement.
"VTP" has the meaning set forth in the Preamble to this Agreement.
"WHOLLY-OWNED SUBSIDIARY" means any Subsidiary in which (other than
directors' qualifying shares required by law) one hundred percent (100%) of
equity securities, at the time as of which any determination is being made, is
owned, beneficially and of record, by a Borrower, or by one or more of the other
Wholly-Owned Subsidiaries, or both.
Section 1.2 ACCOUNTING TERMS AND DETERMINATIONS.
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder (including without
limitation determinations made pursuant to the exhibits hereto) shall be made,
and all financial statements required to be delivered hereunder shall be
prepared on a consolidated basis in accordance with GAAP applied on a basis
consistent (except for changes concurred with by the Borrowers' independent
public accountants) with the most recent audited consolidated financial
statements of Holdings and its Consolidated Subsidiaries delivered to Agent and
each of the Lenders; provided that if (a) the Borrowers shall object to
determining compliance with the provisions of this Agreement on such basis by
written notice delivered to Agent and the Lenders at the time of delivery of
required financial statements due to any change in GAAP or the rules promulgated
with respect thereto or (b) Agent or the Required Lenders shall so object in
writing by written notice delivered to the Funds Administrator within sixty (60)
days after delivery of such financial statements, then such calculations shall
be made on a basis consistent with the most recent financial statements
delivered by the Borrowers to the Lenders as to which no such objection shall
have been made. All amounts used for purposes of financial calculations required
to be made herein shall be without duplication.
Section 1.3 OTHER DEFINITIONAL PROVISIONS.
References in this Agreement to "Articles," "Sections," "Annexes" or
"Exhibits" shall be to Articles, Sections, Annexes or Exhibits of or to this
Agreement unless otherwise specifically provided. Any term defined herein may be
used in the singular or plural. "Include," "includes" and "including" shall be
deemed to be followed by "without limitation." Except as otherwise specified
herein, references to any Person include the successors and assigns of such
Person. References "from" or "through" any date mean, unless otherwise
specified, "from and including" or "through and including," respectively.
References to any statute or act shall include all related current regulations
and all amendments and any successor statutes, acts and regulations.
25
ARTICLE II
LOANS AND LETTERS OF CREDIT
Section 2.1 TERM LOAN.
(a) Term Loan Amounts. On the terms and subject to the conditions set
forth herein, the Lenders hereby agree to make to the Borrowers on the Closing
Date a term loan in an original principal amount equal to $15,000,000 (the "TERM
LOAN"). Each Lender's obligation to fund the Term Loan shall be limited to such
Lender's Term Loan Commitment Percentage of the Term Loan, and no Lender shall
have any obligation to fund any portion of the Term Loan required to be funded
by any other Lender, but not so funded. The Term Loan Commitment of each Lender
shall expire concurrently with the making of the Term Loan on the Closing Date.
The Borrowers shall not have any right to reborrow any portion of the Term Loan
which is repaid or prepaid from time to time.
(b) Scheduled Repayments. The Borrowers shall repay the Term Loan in
equal installments of $1,875,000 due and payable on the last day of each
December, March, June and September of each Fiscal Year, commencing on December
31, 2004, with the remaining principal balance thereof, if any, being
immediately due and payable in full on September 30, 2006.
(c) Mandatory Prepayments. There shall become due and payable and the
Borrowers shall prepay the Term Loan (and the Revolving Loans, to the extent
required by Section 2.1(e)) in the following amounts and at the following times:
(i) for so long as any portion of the Term Loan remains
outstanding, on the ninety-fifth (95th) day following the last day of each
Fiscal Year, beginning with the Fiscal Year ending December 31, 2005, an amount
equal to (A) if the Total Debt to Adjusted EBITDA Ratio, determined as of the
last day of such Fiscal Year is greater than 3.25 to 1.00, seventy five percent
(75%) of Excess Cash Flow, or (B) if the Total Debt to Adjusted EBITDA Ratio,
determined as of the last day of such Fiscal Year is less than or equal to 3.25
to 1.00, fifty percent (50%) of such Excess Cash Flow, provided, that if the
Total Debt to Adjusted EBITDA Ratio calculated as of the last day of any Fiscal
Year is less than 2.00 to 1.00 for such Fiscal Year, then no prepayment shall be
required pursuant to this Section 2.1(c)(i) with respect to such Fiscal Year (in
each such case, Total Debt to Adjusted EBITDA Ratio shall be determined by
reference to the respective Compliance Certificate absent demonstrable error);
(ii) on the date on which any Credit Party other than a Foreign
Subsidiary (or Agent as loss payee or assignee thereof) receives any payment
which constitutes Major Casualty Proceeds, an amount equal to the amount of such
payment; provided, that such Credit Party, at its election, may either reinvest
such payment within one hundred twenty (120) days after the date of receipt of
such Major Casualty Proceeds or enter into a binding commitment to reinvest such
payment within said one hundred twenty (120) days (provided such Credit Party
subsequently consummates such reinvestment within one hundred eighty (180) days
following the receipt of such Major Casualty Proceeds), in productive assets
then used or usable in the business of such Credit Party, any Borrower or any
Domestic Wholly-Owned Subsidiary of any Borrower; provided further, that the
aggregate amount which may be reinvested by the Credit
26
Parties pursuant to the preceding proviso may not exceed $1,000,000 in any
Fiscal Year. If the applicable Credit Party does not intend to reinvest such
payment, or if the time period set forth in this sentence expires without such
Credit Party having reinvested such payment, the Borrowers shall prepay the
Loans in an amount equal to such payment;
(iii) (A) promptly upon receipt by any Credit Party of the proceeds
from the issuance and sale of any Debt securities or equity securities (other
than (1) proceeds of Debt securities expressly permitted pursuant to Section
5.1, (2) proceeds of the issuance of equity securities by Holdings received on
or before the Closing Date, (3) proceeds from the issuance of equity securities
to employees or members of the management of any Credit Party, (4) proceeds of
the issuance of equity securities to Holdings or any Subsidiary and (5) proceeds
from the issuance of equity securities for the purpose described in clause (B)
of this Section 2.1(c)(iii)), an amount equal to one hundred percent (100%) of
the Net Cash Proceeds, and (B) in the event the Credit Parties issue and sell
equity securities in connection with the financing of any Permitted Acquisition
or the repurchase of any "Series A-1 Preferred Stock" (as such term is defined
in the Holdings Certificate of Designations), an amount equal to fifty percent
(50%) of the Net Cash Proceeds of any such issuance and sale;
(iv) promptly upon receipt by any Credit Party (other than a
Foreign Subsidiary) of the proceeds of any Asset Disposition (other than the
Venturi Staffing Sale), an amount equal to one hundred percent (100%) of the Net
Cash Proceeds of such Asset Disposition; provided, that no prepayment shall be
required pursuant to this Section 2.1(c)(iv) unless and until the aggregate Net
Cash Proceeds received during any Fiscal Year (commencing after the Closing
Date) from Asset Dispositions exceeds $1,000,000 (in which case all Net Cash
Proceeds in excess of such amount shall be used to make prepayments pursuant to
this Section 2.1(c)(iv)), and provided, that the recipient of such Net Cash
Proceeds may reinvest such Net Cash Proceeds, within one hundred twenty (120)
days after the date of receipt of such Net Cash Proceeds or enter into a binding
commitment to reinvest such payment within said one hundred twenty (120) days
(provided such Credit Party subsequently consummates such reinvestment within
one hundred eighty (180) days following the receipt of such Net Cash Proceeds),
in replacement assets of a kind then used or usable in the business of such
Credit Party, any Borrower or any Domestic Wholly-Owned Subsidiary of any
Borrower. If the applicable Credit Party does not intend to so reinvest such Net
Cash Proceeds, or if the period set forth in the immediately preceding sentence
expires without such Credit Party having reinvested such Net Cash Proceeds, the
Borrowers shall prepay the Loans in an amount equal to such Net Cash Proceeds;
and
(v) for so long as any portion of the Term Loan remains
outstanding, promptly upon receipt by any Credit Party of any United States
federal tax refunds relating to the carryback of the net operating loss for the
tax year 2002, an amount equal to one hundred percent (100%) of such refund.
Any amounts permitted to be reinvested pursuant to the preceding clauses (ii) or
(iv) shall be immediately applied by the Borrowers as a prepayment against then
outstanding Revolving Loans, and Agent shall establish a Reserve (the
"REINVESTMENT RESERVE") against the Revolving Loan Limit in an amount equal to
such permitted reinvestment amount. Notwithstanding Section 8.2, so long as no
Event of Default then exists, Agent shall permit Revolving Loan Borrowings
27
upon receipt of a Notice of Borrowing from the Funds Administrator in accordance
with Section 2.2(b) to finance the making of reinvestments permitted pursuant to
the preceding clauses (ii) and (iv), and shall concurrently reduce the
Reinvestment Reserve by an equivalent amount. Any remaining portion of the
Reinvestment Reserve shall be reduced to zero (0) upon the expiration of the
applicable reinvestment periods pursuant to the preceding clauses (ii) and (iv).
(d) Optional Prepayments. Subject to the provisions of Section 2.1(e),
the Borrowers may from time to time, on at least one (1) Business Day's prior
written notice to the Agent specifying the date and amount of such prepayment,
prepay the Term Loan in whole or in part; provided that any such partial
prepayment shall be in an amount equal to $100,000 or a higher integral multiple
of $25,000. No payment pursuant to this Section 2.1(d) shall (except as
reflected in any determination of Excess Cash Flow), reduce the amount of any
payment required by Section 2.1(c).
(e) All Prepayments. Any prepayment of a LIBOR Loan on a day other than
the last day of an Interest Period therefor shall include interest on the
principal amount being repaid and shall be subject to Section 2.3(f)(iv). All
prepayments of a Loan shall be applied first to that portion of such Loan
comprised of Prime Rate Loans and then to that portion of such Loan comprised of
LIBOR Loans, in direct order of Interest Period maturities. All prepayments of
the Term Loan shall be applied pro rata to the remaining installments thereof.
Following the payment in full of the Term Loan, any remaining amounts required
by Section 2.1(c)(ii), (iii) and (iv) to be used to prepay the Term Loan shall
instead be applied as a repayment of the outstanding Revolving Loans (with any
excess to be held by the Agent as cash collateral to be applied to repay future
outstanding Revolving Loans as and when made), pro rata among all Lenders having
a Revolving Loan Commitment Percentage (with a permanent reduction of the
Revolving Loan Commitment to the extent required pursuant to Section
2.2(c)(iii)). Notwithstanding anything to the contrary contained in this Section
2.1, each holder of a Term Note may elect not to have such Lender's Pro Rata
Share of the Term Loan prepaid in the case of a mandatory prepayment pursuant
clause (c) of this Section 2.1, by notice to Agent received one (1) Business Day
prior to the date of such prepayment. The amount of any such prepayment which
would have been applied to the Term Loan but for such elections shall be applied
to the Second Lien Term Loan in accordance with the provisions of the Second
Lien Credit Agreement until paid in full and, thereafter (or, in the event the
Second Lien Lenders waive such prepayment in accordance with the terms of the
Second Lien Credit Agreement), such prepayment shall be retained by the
Borrowers.
(f) The Funds Administrator, on behalf of the Borrowers, shall give
prior written notice to Agent at least one (1) Business day prior to each
mandatory prepayment pursuant to Section 2.1(c) and each voluntary prepayment
pursuant to Section 2.1(d) and Agent shall promptly notify each Lender of such
notice.
Section 2.2 REVOLVING LOANS.
(a) Revolving Loans and Borrowings.
(i) On the terms and subject to the conditions set forth herein,
each Lender severally agrees to make Loans to the Borrowers from time to time as
set forth herein equal to
28
such Lender's Revolving Loan Commitment Percentage of revolving loans
("REVOLVING LOANS") requested by the Funds Administrator, on behalf of the
Borrowers, hereunder, provided that after giving effect thereto, the Revolving
Loan Outstandings shall not exceed the Revolving Loan Limit. Within the
foregoing limits, the Borrowers may borrow under this Section 2.2(a)(i), prepay
or repay Revolving Loans as required or permitted under this Section 2.2 and
reborrow Revolving Loans pursuant to this Section 2.2(a)(i).
(ii) Agent Advances. Subject to the limitations set forth in this
Section 2.2(a)(ii), Agent is hereby authorized by the Borrowers and Lenders,
from time to time in Agent's sole discretion, (A) after the occurrence of a
Default or an Event of Default, or (B) at any time that any of the other
applicable conditions precedent set forth in Section 8.2 have not been satisfied
(including without limitation the condition precedent that the Revolving Loan
Outstandings not exceed the Borrowing Base plus any other then outstanding Agent
Advances), to make Revolving Loans to the Borrowers on behalf of the Lenders
which Agent, in its reasonable business judgment, deems necessary or desirable
(1) to preserve or protect the business conducted by the Borrowers, the
Collateral, or any portion thereof, (2) to enhance the likelihood of, or
maximize the amount of, repayment of the Loans and other Obligations, (3) to pay
any amount chargeable to the Borrowers pursuant to the terms of this Agreement,
including required principal payments on the Term Loan, interest payments and
costs, fees and expenses as described in Section 10.1 and/or Section 10.4 or (4)
to satisfy payment obligations under Support Agreements (any of the advances
described in this Section 2.2(a)(ii) being hereafter referred to as "AGENT
ADVANCES"); provided, that (i) Required Lenders may at any time revoke Agent's
authorization to make Agent Advances, except Agent Advances applied in the
manner described in the preceding clauses (3) and (4), any such revocation to be
in writing and to become effective prospectively upon the Agent's receipt
thereof, (ii) Agent Advances shall be made solely as Prime Rate Loans, (iii) the
aggregate amount of Agent Advances outstanding at any time, exclusive of those
made pursuant to the preceding clauses (3) and (4), shall not exceed $10,000,000
and (iv) Agent shall be prohibited from making Agent Advances to the extent the
making thereof would cause the Revolving Loan Outstandings (inclusive of Agent
Advances) to exceed the Revolving Loan Commitment.
(b) Advancing Revolving Loans.
(i) The Funds Administrator, on behalf of the Borrowers, shall
deliver to Agent a Notice of Borrowing with respect to each proposed Revolving
Loan Borrowing (other than Agent Advances), such Notice of Borrowing to be
delivered no later than noon (Chicago time) (A) on the day of such proposed
borrowing, in the case of Prime Rate Loans in an aggregate principal amount
equal to or less than $10,000,000, (B) on the Business Day prior to such
proposed borrowing, in the case of Prime Rate Loans in an aggregate principal
amount greater than $10,000,000 and (C) on the third (3rd) Business Day prior to
such proposed borrowing, in the case of all LIBOR Loans. Once given, except as
provided in Section 2.3(f)(ii), a Notice of Borrowing shall be irrevocable and
the Borrowers shall be bound thereby.
(ii) The Borrowers hereby authorize Lenders and Agent to make
Revolving Loans (other than LIBOR Loans) based on telephonic notices made by any
Person which Agent, in good faith, believes to be a Responsible Officer of the
Funds Administrator. The Funds Administrator agrees to deliver to Agent a Notice
of Borrowing in respect of each Revolving
29
Loan requested by telephone no later than one (1) Business Day following such
request. If the Notice of Borrowing differs in any respect from the action taken
by Agent and Lenders, the records of Agent and the Lenders shall govern absent
manifest error. The Borrowers further hereby authorize Lenders and Agent to make
Revolving Loans based on electronic notices made by any Person which Agent, in
good faith, believes to be a Responsible Officer of the Funds Administrator
acting on behalf of the Borrowers, but only after Agent shall have established
procedures acceptable to Agent for accepting electronic Notices of Borrowing, as
indicated by Agent's written confirmation thereof.
(c) Mandatory Revolving Loan Repayments and Prepayments; Mandatory
Reductions in Revolving Loan Commitment.
(i) The Revolving Loan Commitment shall terminate upon the earlier
to occur of (A) the Commitment Expiry Date and (B) the date on which Agent or
Required Lenders elect to terminate the Revolving Loan Commitment pursuant to
Section 9.2 (such earlier date being the "TERMINATION DATE"), and there shall
become due and the Borrowers shall pay on the Termination Date, the entire
outstanding principal amount of each Revolving Loan, together with accrued and
unpaid interest thereon to but excluding the Termination Date.
(ii) If at any time the Revolving Loan Outstandings exceed the
Revolving Loan Limit, then, on the next succeeding Business Day, the Borrowers
shall repay the Revolving Loans or cash collateralize Letter of Credit
Liabilities in the manner specified in Section 2.5(e) or cancel outstanding
Letters of Credit, or any combination of the foregoing, in an aggregate amount
equal to such excess.
(iii) Upon repayment in full of the Term Loan, the Revolving Loan
Commitment shall be automatically and permanently reduced by an amount equal to
any prepayment required pursuant to Sections 2.1(c)(ii), (iii) and (iv) of this
Agreement, such reduction to be effective at the time such mandatory prepayment
is required to be made (such reduction to be applied to ratably reduce the
Revolving Loan Commitment Amount of all Lenders having a Revolving Loan
Commitment Percentage).
Section 2.3 INTEREST, INTEREST CALCULATIONS AND CERTAIN FEES.
(a) Interest. From and following the Closing Date, depending upon the
Borrowers' election from time to time, subject to the terms hereof, to have
portions of the Loans accrue interest determined by reference to the Prime Rate
or the LIBOR, the Loans and the other Obligations shall bear interest at the
applicable rates set forth below:
(i) If a Prime Rate Loan, or any other Obligation other than a
LIBOR Loan, then at the sum of the Prime Rate plus the applicable Prime Rate
Margin, but in no event in excess of the Maximum Lawful Rate.
(ii) If a LIBOR Loan, then at the sum of the LIBOR plus the
applicable LIBOR Margin, but in no event in excess of the Maximum Lawful Rate.
(b) Unused Line Fee. From and following the Closing Date, the Borrowers
shall pay Agent, for the benefit of all Lenders committed to make Revolving
Loans, in accordance with
30
their respective Pro Rata Shares, an aggregate fee in an amount equal to (1) (a)
the Revolving Loan Commitment less (b) the average daily balance of the
Revolving Loan Outstandings during the preceding quarter, multiplied by (2)
one-half of one percent (.50%) per annum. Such fee is to be paid quarterly in
arrears on the first day of each calendar quarter.
(c) Intentionally Omitted.
(d) Intentionally Omitted.
(e) Computation of Interest and Related Fees. All interest and fees
under each Financing Document shall be calculated on the basis of a 360-day year
for the actual number of days elapsed. The date of funding of a Prime Rate Loan
and the first day of an Interest Period with respect to a LIBOR Loan shall be
included in the calculation of interest. The date of payment of a Prime Rate
Loan and the last day of an Interest Period with respect to a LIBOR Loan shall
be excluded from the calculation of interest. If a Loan is repaid on the same
day that it is made, one (1) day's interest shall be charged. Interest on all
Prime Rate Loans is payable in arrears on the first day of each month and on the
maturity of such Loans, whether by acceleration or otherwise. Interest on LIBOR
Loans shall be payable on the last day of the applicable Interest Period, unless
the Interest Period is greater than three (3) months, in which case interest
will be payable on the last day of each three (3) month interval. In addition,
interest on LIBOR Loans is due on the maturity of such Loans, whether by
acceleration or otherwise.
(f) LIBOR Provisions.
(i) LIBOR Election. All Loans made on the Closing Date shall be
Prime Rate Loans and shall remain so until three (3) Business Days after the
Closing Date. Thereafter, the Borrowers may request that Revolving Loans to be
made be LIBOR Loans, that outstanding portions of Revolving Loans and
outstanding portions of each Term Loan be converted to LIBOR Loans and that all
or any portion of a LIBOR Loan be continued as a LIBOR Loan upon expiration of
the applicable Interest Period. Any such request will be made by submitting a
Notice of Borrowing to Agent. Once given, and except as provided in clause (ii)
below, a Notice of Borrowing shall be irrevocable and the Borrowers shall be
bound thereby. Upon the expiration of an Interest Period, in the absence of a
new Notice of Borrowing submitted to Agent not less than three (3) Business Days
prior to the end of such Interest Period, the LIBOR Loan then maturing shall be
automatically converted to a Prime Rate Loan. There may be no more than eight
(8) LIBOR Loans outstanding at any one time. Loans which are not requested as
LIBOR Loans in accordance with this Section 2.3(f)(i) shall be Prime Rate Loans.
Agent will notify Lenders, by telephonic or facsimile notice, of each Notice of
Borrowing received by Agent not less than two (2) Business Days prior to the
first day of the Interest Period of the LIBOR Loan requested thereby.
(ii) Inability to Determine LIBOR. In the event, prior to
commencement of any Interest Period relating to a LIBOR Loan, Agent shall
determine or be notified in writing by Required Lenders that adequate and
reasonable methods do not exist for ascertaining LIBOR, Agent shall promptly
provide notice of such determination to the Funds Administrator and Lenders
(which shall be conclusive and binding on the Borrowers and Lenders). In such
event (1) any request for a LIBOR Loan or for a conversion to or continuation of
a LIBOR Loan shall
31
be automatically withdrawn and shall be deemed a request for a Prime Rate Loan,
(2) each LIBOR Loan will automatically, on the last day of the then current
Interest Period relating thereto, become a Prime Rate Loan and (3) the
obligations of Lenders to make LIBOR Loans shall be suspended until Agent or
Required Lenders determine that the circumstances giving rise to such suspension
no longer exist, in which event Agent shall so notify the Funds Administrator
and Lenders.
(iii) Illegality. Notwithstanding any other provisions hereof, if
any law, rule, regulation, treaty or directive or interpretation or application
thereof shall make it unlawful for any Lender to make, fund or maintain LIBOR
Loans, such Lender shall promptly give notice of such circumstances to Agent,
the Funds Administrator and the other Lenders. In such an event, (1) the
commitment of such Lender to make LIBOR Loans or convert Prime Rate Loans to
LIBOR Loans shall be immediately suspended and (2) such Lender's outstanding
LIBOR Loans shall be converted automatically to Prime Rate Loans on the last day
of the Interest Period thereof or at such earlier time as may be required by
law.
(iv) LIBOR Breakage Fee. Upon (i) any default by the Borrowers in
making any borrowing of, conversion into or continuation of any LIBOR Loan
following the Funds Administrator's delivery to Agent of any applicable Notice
of Borrowing or (ii) any payment of a LIBOR Loan on any day that is not the last
day of the Interest Period applicable thereto (regardless of the source of such
prepayment and whether voluntary, by acceleration or otherwise), the Borrowers
shall pay Agent, for the benefit of all Lenders that funded or were prepared to
fund any such LIBOR Loan, an amount equal to the amount of any losses, expenses
and liabilities (including, without limitation, any loss (including interest
paid) in connection with the re-employment of such funds) that any Lender may
sustain as a result of such default or such payment. For purposes of calculating
amounts payable to a Lender under this paragraph, each Lender shall be deemed to
have actually funded its relevant LIBOR Loan through the purchase of a deposit
bearing interest at LIBOR in an amount equal to the amount of that LIBOR Loan
and having a maturity and repricing characteristics comparable to the relevant
Interest Period; provided, however, that each Lender may fund each of its LIBOR
Loans in any manner it sees fit, and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this subsection.
(v) Increased Costs. If, after the Closing Date, the adoption of,
or any change in, any applicable law, rule or regulation, or any change in the
interpretation or administration of any applicable law, rule or regulation by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency: (i) shall impose, modify or deem
applicable any reserve (including any reserve imposed by the Board of Governors
of the Federal Reserve System, or any successor thereto, but excluding any
reserve included in the determination of the LIBOR pursuant to the provisions of
this Agreement), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by any Lender; or (ii)
shall impose on any Lender any other condition affecting its LIBOR Loans, its
Notes or its obligation to make LIBOR Loans; and the result of anything
described in clauses (i) above and (ii) is to increase the cost to (or to impose
a cost on) such Lender of making or maintaining any LIBOR Loan, or to reduce the
amount of any sum received or receivable by such Lender under this
32
Agreement or under its Notes with respect thereto, then upon demand by such
Lender (which demand shall be accompanied by a statement setting forth the basis
for such demand and a calculation of the amount thereof in reasonable detail, a
copy of which shall be furnished to Agent), the Borrowers shall pay directly to
such Lender such additional amount as will compensate such Lender for such
increased cost or such reduction, so long as such amounts have accrued on or
after the day which is one hundred eighty (180) days prior to the date on which
such Lender first made demand therefor.
(vi) Capital Adequacy. If any Lender shall reasonably determine
that any change in, or the adoption or phase-in of, any applicable law, rule or
regulation regarding capital adequacy, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or the
compliance by any Lender or any Person controlling such Lender with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's or such controlling
Person's capital as a consequence of such Lender's obligations hereunder or
under any Support Agreement to a level below that which such Lender or such
controlling Person could have achieved but for such change, adoption, phase-in
or compliance (taking into consideration such Lender's or such controlling
Person's policies with respect to capital adequacy) by an amount deemed by such
Lender or such controlling Person to be material, then from time to time, upon
demand by such Lender (which demand shall be accompanied by a statement setting
forth the basis for such demand and a calculation of the amount thereof in
reasonable detail, a copy of which shall be furnished to Agent), the Borrowers
shall pay to such Lender such additional amount as will compensate such Lender
or such controlling Person for such reduction, so long as such amounts have
accrued on or after the day which is one hundred eighty (180) days prior to the
date on which such Lender first made demand therefor. Notwithstanding any other
provision of this Section 2.3(f)(vi) to the contrary, a Lender shall not demand
any payment referred to in this subsection if it shall not be the general policy
or practice of such Lender to demand similar compensation in similar
circumstances with respect to similarly situated borrowers under comparable
provisions of like credit agreements.
(vii) Replacement of Lenders. Within thirty (30) days after: (i)
receipt by the Funds Administrator of written notice and demand from any Lender
(an "AFFECTED LENDER") for payment of additional amounts as provided in Sections
2.3(f)(v), 2.3(f)(vi) and 2.8, which demand shall not have been revoked; (ii)
any default by a Lender in its obligation to make Loans hereunder, provided such
default shall not have been cured; or (iii) any failure by any Lender to consent
to a requested amendment, waiver or modification to any Financing Document to
which Required Lenders have already consented but the consent of each Lender, or
each Lender affected thereby, is required with respect thereto, the Borrowers
may, at their option, notify the Agent and such Affected Lender (or defaulting
or non-consenting Lender, as the case may be) of the Borrowers' intention to
obtain, at Borrowers' expense, a replacement Lender ("REPLACEMENT LENDER") for
such Lender, which Replacement Lender shall be reasonably satisfactory to the
Agent. In the event the Borrowers obtain a Replacement Lender within ninety (90)
days following notice of their intention to do so, the Affected Lender (or
defaulting or non-consenting Lender, as the case may be) shall sell and assign
its Loans and Commitments to such Replacement Lender; provided, the Borrowers
have reimbursed such Lender for all increased
33
costs for which it is entitled to reimbursement under this Agreement through the
date of such sale and assignment. In the event that a replaced Lender does not
execute an Assignment Agreement pursuant to Section 12.6 within five (5)
Business Days after receipt by such replaced Lender of notice of replacement
pursuant to this Section 2.3(f)(vii) and presentation to such replaced Lender of
an Assignment Agreement evidencing an assignment pursuant to this Section
2.3(f)(viii), the Borrowers shall be entitled (but not obligated) to execute
such an Assignment Agreement on behalf of such replaced Lender, and any such
Assignment Agreement so executed by the Borrowers, the replacement Lender and,
to the extent required pursuant to Section 12.6, the Agent, shall be effective
for purposes of this Section 2.3(f)(vii) and Section 12.6. Upon any such
assignment and payment, such replaced Lender shall no longer constitute a
"Lender" for purposes hereof; provided, any rights of such replaced Lender to
indemnification hereunder shall survive as to such replaced Lender.
(viii) Mitigation of Claims. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.3(f)(v),
2.3(f)(vi) or 2.8, with respect to such Lender, it will, if requested by the
Borrowers, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event with the object of avoiding the consequences of such event; provided, that
such designation is made on terms that, in the sole judgment of such Lender,
cause such Lender and its lending officer(s) to suffer no economic, legal or
regulatory disadvantage, and provided, further, that nothing in this Section
shall affect or postpone any of the obligations of the Borrowers or the rights
of any Lender pursuant to Sections 2.3(f)(v), 2.3(f)(vi) or 2.8.
Section 2.4 NOTES.
The portion of the Term Loan made by each Lender shall be evidenced by a
promissory note executed by each Borrower (a "TERM NOTE"), and the portion of
the Revolving Loans made by each Lender shall be evidenced by a promissory note
executed by each Borrower (a "REVOLVING LOAN NOTE") in an original principal
amount equal to such Lender's Pro Rata Share of the Term Loan and the Revolving
Loan Commitment, respectively.
Section 2.5 LETTERS OF CREDIT AND LETTER OF CREDIT FEES.
(a) Letter of Credit. On the terms and subject to the conditions set
forth herein, Agent will prior to the Termination Date issue letters of credit
or guarantees (each, a "SUPPORT AGREEMENT") to induce an LC Issuer to issue or
increase the amount of, or extend the expiry date of, a Letter of Credit so long
as:
(i) Agent shall have received a Notice of LC Credit Event at least
two (2) Business days before the relevant date of issuance, increase or
extension; and
(ii) After giving effect to such issuance or increase (x) the
aggregate Letter of Credit Liabilities under all Letters of Credit do not exceed
$5,000,000 and (y) the Revolving Loan Outstandings do not exceed the Revolving
Loan Limit.
(b) Letter of Credit Fee. The Borrowers shall pay to Agent, for the
benefit of the Lenders which have committed to make Revolving Loans, a letter of
credit fee with respect to the Letter of Credit Liabilities for each Letter of
Credit, computed for each day from the date of
34
issuance of such Letter of Credit to the date that is the last day a drawing is
available under such Letter of Credit, at a rate per annum equal to the LIBOR
Margin then applicable to Revolving Loans. Such fee shall be payable in arrears
on the first Business Day of each calendar quarter prior to the Termination Date
and on such date. In addition, the Borrowers agree to pay promptly to the LC
Issuer any standard and customary fronting or other fees that it may charge in
connection with any Letter of Credit.
(c) Reimbursement Obligations of the Borrowers. If Agent shall make a
payment to an LC Issuer pursuant to a Support Agreement, the Borrowers shall
promptly reimburse Agent for the amount of such payment and, to the extent that
so doing would not, to Agent's knowledge, cause the Revolving Loan Outstandings
to exceed the Revolving Loan Limit, the Borrowers shall be deemed to have
requested a Revolving Loan, the proceeds of which will be used to satisfy such
Reimbursement Obligations. The Borrowers shall pay interest, on demand, on all
amounts so paid by Agent for each day until the Borrowers reimburse Agent
therefor at a rate per annum equal to the sum of two percent (2%) plus the
interest rate applicable to Revolving Loans (which are Prime Rate Loans) for
such day, but in no event in excess of the Maximum Lawful Rate.
(d) Reimbursement and Other Payments by the Borrowers. The obligations
of the Borrowers to reimburse Agent pursuant to Section 2.5(c) shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under all circumstances whatsoever,
including the following:
(i) any lack of validity or enforceability of, or any amendment or
waiver of or any consent to departure from, any Letter of Credit or any related
document;
(ii) the existence of any claim, set-off, defense or other right
which the Borrowers may have at any time against the beneficiary of any Letter
of Credit, the LC Issuer (including any claim for improper payment), Agent, any
Lender or any other Person, whether in connection with any Financing Document or
any unrelated transaction, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;
(iii) any statement or any other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever;
(iv) any affiliation between the LC Issuer and Agent; or
(v) to the extent permitted under applicable law, any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing.
(e) Deposit Obligations of the Borrowers. In the event any Letters of
Credit are outstanding at the time that the Borrowers prepay or are required to
repay the Obligations in full or the Revolving Loan Commitment is terminated,
the Borrowers shall (1) deposit with Agent for the benefit of all Lenders with a
portion of the Revolving Loan Commitment cash in an amount equal to one hundred
and five percent (105%) of the aggregate outstanding Letter of Credit
Liabilities to be available to Agent to reimburse payments of drafts drawn under
such Letters of Credit and pay any fees and expenses related thereto and (2)
prepay the fee payable
35
under Section 2.5(b) with respect to such Letters of Credit for the full
remaining terms of such Letters of Credit. Upon termination of any such Letter
of Credit, the unearned portion of such prepaid fee attributable to such Letter
of Credit shall be refunded to the Borrowers, together with the deposit
described in the preceding clause (1) to the extent not previously applied by
Agent in the manner described herein.
(f) Participations in Support Agreements.
(i) Concurrently with the issuance of each Letter of Credit, Agent
shall be deemed to have sold and transferred to each Lender, and each Lender
shall be deemed irrevocably and unconditionally to have purchased and received
from Agent, without recourse or warranty, an undivided interest and
participation in, to the extent of such Lender's Pro Rata Share of the Revolving
Loan Commitment, Agent's Support Agreement liabilities and obligations in
respect of such Letters of Credit and the Borrowers' Reimbursement Obligations
with respect thereto. If the Borrowers do not pay any Reimbursement Obligation
when due, then the Borrowers shall be deemed to have immediately requested that
Lenders make a Revolving Loan which is a Prime Rate Loan in a principal amount
equal to such Reimbursement Obligation. Agent shall promptly notify Lenders of
such deemed request and each Lender shall make available to Agent its Pro Rata
Share of such Loan. The proceeds of such Loan shall be paid over by Agent to the
LC Issuer for the account of the Borrowers in satisfaction of reimbursement
obligations then owing by the Borrowers to such LC Issuer in respect of
outstanding Letters of Credit.
(ii) If Agent makes any payment or disbursement under any Support
Agreement and (x) the Borrowers have not reimbursed Agent in full for such
payment or disbursement in accordance with Section 2.5(c), (y) a Revolving Loan
may not be made pursuant to the immediately preceding clause (i) or (z) any
reimbursement received by Agent from the Borrowers is or must be returned or
rescinded upon or during any bankruptcy or reorganization of any Credit Party or
otherwise, each Lender shall be irrevocably and unconditionally obligated to pay
to Agent its Pro Rata Share of such payment or disbursement (but no such payment
shall diminish the Obligations of the Borrowers under Section 2.5(c)). To the
extent any Lender shall not have made such amount available to Agent by noon
(Chicago time) on the Business Day on which such Lender receives notice from
Agent of such payment or disbursement, such Lender agrees to pay interest on
such amount to Agent forthwith on demand accruing daily at the Federal Funds
Rate, for the first three (3) days following such Lender's receipt of such
notice, and thereafter at the Prime Rate plus the Prime Rate Margin in respect
of Revolving Loans. Any Lender's failure to make available to Agent its Pro Rata
Share of any such payment or disbursement shall not relieve any other Lender of
its obligation hereunder to make available to Agent such other Lender's Pro Rata
Share of such payment, but no Lender shall be responsible for the failure of any
other Lender to make available to Agent such other Lender's Pro Rata Share of
any such payment or disbursement.
(g) Existing Letters of Credit. Notwithstanding anything to the contrary
herein, as of the Closing Date, all of the Existing Letters of Credit shall be
deemed to be Letters of Credit issued hereunder and shall be subject to all of
the terms and provisions of this Agreement and the other Financing Documents
applicable to Letters of Credit issued hereunder, and each Person liable as an
account party thereunder shall be automatically released and the Borrowers shall
be
36
deemed to be the account parties for all purposes thereunder and hereunder. Each
Lender agrees that its obligations with respect to Letters of Credit pursuant to
this Section 2.5 shall include the Existing Letters of Credit and the Borrowers
hereby (x) represent, warrant, agree, covenant and reaffirm that they have no
(and each Borrower permanently and irrevocably waives and releases the Agent and
the Lenders from any, to the extent arising on or prior to the Closing Date)
defense, set off, claim or counterclaim against the Agent and the Lenders with
regard to its Obligations in respect of such Existing Letters of Credit and (y)
reaffirm their obligations to reimburse LC Issuer for honored drawings under
such Existing Letters of Credit in accordance with the terms and provisions of
this Agreement and the other Financing Documents applicable to Letters of Credit
issued hereunder. With respect to each Existing Letter of Credit, for the period
commencing on the Closing Date to and including the expiration date of any such
Existing Letter of Credit, Borrowers shall pay all fees and commissions set
forth in Section 2.5 at the times and in the manner set forth therein.
Section 2.6 GENERAL PROVISIONS REGARDING PAYMENT; LOAN ACCOUNT.
(a) All payments to be made by the Borrowers under any Financing
Document, including payments of principal and interest on the Notes, and all
fees, expenses, indemnities and reimbursements, shall be made without set-off or
counterclaim, in lawful money of the United States of America and in immediately
available funds. 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. The Borrowers
shall make all payments in immediately available funds to the Payment Account
before noon (Chicago time) on the date when due. Notwithstanding anything to the
contrary set forth in this Section 2.6(a), Agent shall be permitted, in its sole
discretion, but subject to the limitations set forth in Section 2.2(a)(ii), to
satisfy any of the payment obligations described in this Section 2.6(a) through
the making of Agent Advances.
(b) Agent shall maintain a loan account (the "LOAN ACCOUNT") on its
books to record Loans and other extensions of credit made by the Lenders
hereunder or under any other Financing Document, and all payments thereon made
by the Borrowers. All entries in the Loan Account shall be made in accordance
with Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent's most recent printout or
other written statement, shall be conclusive and binding evidence of the amounts
due and owing to Agent by the Borrowers absent clear and convincing evidence to
the contrary; provided that any failure to so record or any error in so
recording shall not limit or otherwise affect the Borrowers' duty to pay all
amounts owing hereunder or under any other Financing Document. Unless the Funds
Administrator notifies Agent in writing of any objection to any such printout or
statement (specifically describing the basis for such objection) within thirty
(30) days after the date of receipt thereof, it shall be deemed final, binding
and conclusive upon the Borrowers in all respects as to all matters reflected
therein.
Section 2.7 MAXIMUM INTEREST.
(a) In no event shall the interest contracted for, charged or received
with respect to the Notes or any other obligations of the Borrowers under any
Financing Document exceed the
37
maximum amount permitted under the laws of the State of Illinois or of any other
applicable jurisdiction.
(b) Notwithstanding anything to the contrary herein or elsewhere, if at
any time the rate of interest payable hereunder or under any Note or other
Financing Document (the "STATED RATE") would exceed the highest rate of interest
permitted under any applicable law to be charged (the "MAXIMUM LAWFUL RATE"),
then for so long as the Maximum Lawful Rate would be so exceeded, the rate of
interest payable shall be equal to the Maximum Lawful Rate; provided, that if at
any time thereafter the Stated Rate is less than the Maximum Lawful Rate, the
Borrowers shall, to the extent permitted by law, continue to pay interest at the
Maximum Lawful Rate until such time as the total interest received is equal to
the total interest which would have received had the Stated Rate been (but for
the operation of this provision) the interest rate payable. Thereafter, the
interest rate payable shall be the Stated Rate unless and until the Stated Rate
again would exceed the Maximum Lawful Rate, in which event this provision shall
again apply.
(c) In no event shall the total interest received by any Lender exceed
the amount which it could lawfully have received had the interest been
calculated for the actual term hereof at the Maximum Lawful Rate. If,
notwithstanding the prior sentence, any Lender has received interest hereunder
or under any other Financing Document in excess of the Maximum Lawful Rate, such
excess amount shall be applied to the reduction of the principal balance of the
Loans or to other amounts (other than interest) payable hereunder or thereunder,
and if no such principal or other amounts are then outstanding, such excess or
part thereof remaining shall be paid to the Borrowers.
(d) In computing interest payable with reference to the Maximum Lawful
Rate applicable to any Lender, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made.
Section 2.8 TAXES.
(a) All payments of principal and interest on the Loans and all other
amounts payable hereunder shall be made free and clear of and without deduction
for any present or future income, stamp, documentary, property or franchise
taxes and other taxes, fees, duties, levies, withholdings or other charges of
any nature whatsoever imposed by any taxing authority, excluding taxes imposed
on or measured by Agent's or any Lender's receipts, capital or income by the
jurisdiction under which Agent or such Lender is organized or conducts business
(all non-excluded items being called "TAXES"). If any withholding or deduction
from any payment to be made by the Borrowers hereunder is required in respect of
any Taxes pursuant to any applicable law, rule or regulation, then the Borrowers
will: (a) pay directly to the relevant authority the full amount required to be
so withheld or deducted; (b) promptly forward to Agent an official receipt or
other documentation reasonably satisfactory to Agent evidencing such payment to
such authority; and (c) pay to Agent for the account of Agent and Lenders such
additional amount or amounts as is necessary to ensure that the net amount
actually received by Agent and each Lender will equal the full amount Agent and
such Lender would have received had no such withholding or deduction been
required. If any Taxes are directly asserted against Agent or any Lender with
respect to any payment received by Agent or such Lender hereunder, Agent or such
38
Lender may pay such Taxes and the Borrowers will promptly pay such additional
amounts (including any penalty, interest or expense) as is necessary in order
that the net amount received by such Person after the payment of such Taxes
(including any Taxes on such additional amount) shall equal the amount such
Person would have received had such Taxes not been asserted so long as such
amounts have accrued on or after the day which is one hundred eighty (180) days
prior to the date on which Agent or such Lender first made demand therefor.
(b) If the Borrowers fail to pay any Taxes when due to the appropriate
taxing authority or fails to remit to Agent, for the account of Agent and the
respective Lenders, the required receipts or other required documentary
evidence, the Borrowers shall indemnify Agent and Lenders for any incremental
Taxes, interest or penalties that may become payable by Agent or any Lender as a
result of any such failure.
(c) Each Lender that (i) is organized under the laws of a jurisdiction
other than the United States of America and (ii)(A) is a party hereto on the
Closing Date or (B) becomes an assignee of an interest under this Agreement
under Section 12.6(a) after the Closing Date (unless such Lender was already a
Lender hereunder immediately prior to such assignment) shall execute and deliver
to the Funds Administrator and Agent one or more (as the Funds Administrator or
Agent may reasonably request) Forms W-8ECI, W-8BEN, W-8IMY (as applicable) or
other applicable form, certificate or document prescribed by the United States
Internal Revenue Service certifying as to such Lender's entitlement to exemption
from withholding or deduction of Taxes. The Borrowers shall not be required to
pay additional amounts to any Lender pursuant to this Section 2.8 to the extent
that the obligation to pay such additional amounts would not have arisen but for
the failure of such Lender to comply with this paragraph.
Section 2.9 APPOINTMENT OF THE FUNDS ADMINISTRATOR.
(a) The Borrowers maintain an integrated cash management system
reflecting their interdependence on one another and the mutual benefits shared
among them as a result of their respective operations. In order to efficiently
fund and operate their respective businesses and minimize the number of
borrowings which they will make under this Agreement and thereby reduce the
administrative costs and record keeping required in connection therewith,
including the necessity to enter into and maintain separately identified and
monitored borrowing facilities, the Borrowers have requested, and the Agent and
the Lenders have agreed that, subject to Article XIII, (i) all Loans will be
advanced to and for the account of the Borrowers on a joint and several basis
pursuant to the instructions set forth in Section G of the Information
Certificate and (ii) all Letters of Credit and Support Agreements will be issued
pursuant to requests executed by the Funds Administrator on behalf of and for
the account of the Borrowers. Each Borrower hereby acknowledges that it will be
receiving a direct benefit from each Loan made and each Letter of Credit and
Support Agreement issued pursuant to this Agreement.
(b) Each Borrower hereby designates, appoints, authorizes and empowers
the Funds Administrator as its agent to act as specified in this Agreement and
each of the other Financing Documents and the Funds Administrator hereby
acknowledges such designation, authorization and empowerment, and accepts such
appointment. Each Borrower hereby irrevocably authorizes and directs the Funds
Administrator to take such action on its behalf under the provisions of this
39
Agreement and the other Financing Documents, and any other instruments,
documents and agreements referred to herein or therein, and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Funds Administrator by the respective terms and
provisions hereof and thereof, and such other powers as are reasonably
incidental thereto, including, without limitation, to take the following actions
for and on such Borrower's behalf (it being agreed that each Borrower retains
the right to act for itself):
(i) to submit on behalf of each Borrower Notices of Borrowing and
each Notice of LC Credit Event to the Agent in accordance with the provisions of
this Agreement;
(ii) to receive on behalf of each Borrower the proceeds of the
Loans in accordance with the provisions of this Agreement, such proceeds to be
disbursed to or for the account of the applicable Borrower as soon as
practicable after its receipt thereof;
(iii) to submit on behalf of each Borrower requests for the issuance
of Letters of Credit and Support Agreements in accordance with the provisions of
this Agreement, each such request for the issuance of a Letter of Credit or a
Support Agreement to be submitted by the Funds Administrator as soon as
practicable after its receipt of a request to do so from any Borrower; and
(iv) to submit on behalf of each Borrower all certificates, notices
and other communications given or required to be given hereunder.
The Funds Administrator is further authorized and directed by each Borrower to
take all such actions on behalf of such Borrower necessary to exercise the
specific powers granted in clauses (i) through (iv) above and to perform such
other duties hereunder and under the other Financing Documents, and deliver such
documents as delegated to or required of the Funds Administrator by the terms
hereof or thereof.
(c) The administration by the Agent and the Lenders of the credit
facility under this Agreement as a co-borrowing facility with a funds
administrator in the manner set forth herein is solely as an accommodation to
the Borrowers and at their request and neither Agent nor any Lender shall incur
any liability to any Borrower as a result thereof. The Agent shall be entitled
to rely upon, and shall be fully protected in relying upon, any Notice of
Borrowing, Notice of LC Credit Event or similar notice believed by the Agent in
good faith to be genuine. The Agent may assume that each Person executing and
delivering any notice in accordance herewith was duly authorized.
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ARTICLE III
REPRESENTATION AND WARRANTIES
To induce Agent and Lenders to enter into this Agreement and to make the
Loans and other credit accommodations contemplated hereby, each Credit Party
that is a party hereto hereby represents and warrants to Agent and each Lender
that:
Section 3.1 EXISTENCE AND POWER.
Each Credit Party is an entity as specified on the Information
Certificate, duly organized, validly existing and in good standing (or, with
respect to any Subsidiary that is a Foreign Subsidiary, licensed and authorized
to conduct its business and otherwise in the applicable foreign jurisdiction's
equivalent to good standing) under the laws of the jurisdiction specified on the
Information Certificate, has an organizational identification number (if any) as
specified on the Information Certificate, and has all powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except where the failure to have such powers,
licenses, authorizations, consents and approvals could not reasonably be
expected to have a Material Adverse Effect. Each Credit Party is qualified to do
business as a foreign entity in each jurisdiction in which it is required to be
so qualified (or, with respect to any Subsidiary that is a Foreign Subsidiary,
authorized to conduct its business and otherwise in the applicable foreign
jurisdiction's equivalent to good standing), which jurisdictions as of the
Closing Date are specified on the Information Certificate, except where the
failure to be so qualified could not reasonably be expected to have a Material
Adverse Effect.
Section 3.2 ORGANIZATION AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION.
The execution, delivery and performance by each Credit Party of the
Operative Documents to which it is a party are within its powers, have been duly
authorized by all necessary action pursuant to its Organizational Documents,
require no further action by or in respect of, or filing with, any governmental
body, agency or official (other than (a) routine corporate, tax, ERISA,
intellectual property, environmental filings and other filings from time to time
necessary in connection with the conduct of such Credit Party's business in the
ordinary course, and (b) recordings and filings in connection with the Liens
granted to the Agent under the Financing Documents) and do not violate, conflict
with or cause a breach or a default under any provision of applicable law or
regulation or of the Organizational Documents of any Credit Party or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
it, except for such failures to file, violations, conflicts, breaches or
defaults as could not reasonably be expected to have a Material Adverse Effect.
The Merger has been consummated and has become effective in accordance with the
terms of the Merger Documents and applicable law.
Section 3.3 BINDING EFFECT.
Each of the Operative Documents to which any Credit Party is a party
constitutes a valid and binding agreement or instrument of such Credit Party,
enforceable against such Credit Party in accordance with its respective terms,
except as the enforceability thereof may be limited by
41
bankruptcy, insolvency or other similar laws relating to the enforcement of
creditors' rights generally and by general equitable principles.
Section 3.4 CAPITALIZATION.
The authorized equity securities of each of the Credit Parties as of the
Closing Date is as set forth on the Information Certificate. All issued and
outstanding equity securities of each of the Credit Parties are duly authorized
and validly issued, fully paid, nonassessable, and, solely with respect to the
equity securities of COMSYS Holdings, PFI Holdings, each Borrower and each of
their respective Subsidiaries, free and clear of all Liens other than those in
favor of Agent for the benefit of Agent and Lenders, Second Lien Debt Liens and
other Liens permitted pursuant to Section 5.2(d) and Section 5.2(h), and all
such equity securities of each Credit Party were issued in compliance with all
applicable state, federal and foreign laws concerning the issuance of
securities. The identity of the holders of the equity securities of each of the
Credit Parties and the percentage of their fully-diluted ownership of the equity
securities of each of the Credit Parties as of the Closing Date is set forth on
the Information Certificate. Holdings owns all of the issued and outstanding
equity securities of PFI Holdings and COMSYS Holdings. COMSYS Holdings owns all
of the issued and outstanding equity securities of COMSYS IT. COMSYS IT owns all
of the issued and outstanding equity securities of COMSYS Services and COMSYS
Limited. PFI Holdings owns all of the issued and outstanding equity securities
of VTP. No shares of the capital stock or other equity securities of any Credit
Party, other than those described above, are issued and outstanding. Except as
set forth on the Information Certificate, as of the Closing Date there are no
preemptive or other outstanding rights, options, warrants, conversion rights or
similar agreements or understandings for the purchase or acquisition from any
Credit Party of any equity securities of any such entity.
Section 3.5 FINANCIAL INFORMATION.
(a) (i) The consolidated balance sheet of Holdings and its Consolidated
Subsidiaries as of December 28, 2003 and the related consolidated statements of
operations, stockholders' equity (or comparable calculation, if such Person is
not a corporation) and cash flows for the fiscal year then ended, reported on by
PriceWaterhouseCoopers, copies of which have been delivered to Agent, fairly
present, in all material respects, in conformity with GAAP, the consolidated
financial position of Holdings and its Consolidated Subsidiaries as of such date
and their consolidated results of operations, changes in stockholders' equity
(or comparable calculation) and cash flows for such period and (ii) the
consolidated balance sheet of COMSYS Holdings and its Consolidated Subsidiaries
as of December 31, 2003 and the related consolidated statements of operations,
stockholders' equity (or comparable calculation, if such Person is not a
corporation) and cash flows for the fiscal year then ended, reported on by Ernst
& Young, LLP, copies of which have been delivered to Agent, fairly present, in
all material respects, in conformity with GAAP, the consolidated financial
position of COMSYS Holdings and its Consolidated Subsidiaries as of such date
and their consolidated results of operations, changes in stockholders' equity
(or comparable calculation) and cash flows for such period.
(b) (i) The unaudited consolidated balance sheet of Holdings and its
Consolidated Subsidiaries as of August 24, 2004 and the related unaudited
consolidated statements of operations and cash flows for the eight (8) months
then ended, copies of which have been
42
delivered to Agent, fairly present, in all material respects, in conformity with
GAAP applied on a basis consistent with the financial statements referred to in
Section 3.5(a), the consolidated financial position of Holdings and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for the eight (8) months then ended (subject to normal
year-end adjustments and the absence of footnote disclosures) and (ii) the
unaudited consolidated balance sheet of COMSYS Holdings and its Consolidated
Subsidiaries as of August 31, 2004 and the related unaudited consolidated
statements of operations and cash flows for the eight (8) months then ended,
copies of which have been delivered to Agent, fairly present, in all material
respects, in conformity with GAAP applied on a basis consistent with the
financial statements referred to in Section 3.5(a), the consolidated financial
position of COMSYS Holdings and its Consolidated Subsidiaries as of such date
and their consolidated results of operations and cash flows for the eight (8)
months then ended (subject to normal year-end adjustments and the absence of
footnote disclosures).
(c) The pro forma balance sheet of Holdings and its Consolidated
Subsidiaries as of the Closing Date, copies of which has been delivered to
Agent, fairly presents, in all material respects, in conformity with GAAP
applied on a basis consistent with the financial statements referred to in
Section 3.5(a), the consolidated financial position of Holdings and its
Consolidated Subsidiaries as of such date, adjusted to give effect (as if such
events had occurred on such date) to (i) the transactions contemplated by the
Operative Documents (including, without limitation, the Merger), (ii) the making
of the Loans, (iii) the application of the proceeds therefrom as contemplated by
the Operative Documents and (iv) the payment of all legal, accounting and other
fees related thereto to the extent known at the time of the preparation of such
balance sheet. As of the date of such balance sheet and the date hereof, no
Credit Party had or has any material liabilities, contingent or otherwise,
including liabilities for taxes, long-term leases or forward or long-term
commitments, which are not properly reflected on such balance sheet in
conformity with GAAP.
(d) The information contained in the most recently delivered Borrowing
Base Certificate is complete and correct and the amounts shown therein as
"Eligible Billed Accounts" and "Eligible Unbilled Accounts" have been determined
as provided in the Financing Documents.
(e) (i) Since December 28, 2003, there has been no material adverse
change in the business, operations, properties or condition (financial or
otherwise) of Holdings and its Consolidated Subsidiaries taken as a whole and
(ii) since December 31, 2003, there has been no material adverse change in the
business, operations, properties or condition (financial or otherwise) of COMSYS
Holdings and its Consolidated Subsidiaries taken as a whole.
(f) Except as contemplated and permitted by this Agreement, and other
than administrative and other ministerial activities related to (i) its
investment in COMSYS Holdings and PFI Holdings, (ii) the maintenance of its
corporate existence, and (iii) the performance of its obligations under the
Operative Documents to which it is a party and any other agreement to which it
is a party, to the extent not otherwise prohibited by this Agreement, Holdings
has no significant assets or liabilities (other than the capital stock of COMSYS
Holdings and PFI Holdings).
43
Section 3.6 LITIGATION.
There is no action, suit or proceeding pending against, or to any Credit
Party's knowledge threatened against or affecting, any Credit Party or, to any
Credit Party's knowledge (without any inquiry), any party to any Operative
Document other than a Credit Party, before any court or arbitrator or any
governmental body or agency in which a decision could reasonably be expected to
be determined adversely to such Credit Party and have a Material Adverse Effect
or which in any manner draws into question the validity of any of the Operative
Documents.
Section 3.7 OWNERSHIP OF PROPERTY.
Each Credit Party is the lawful owner of, has good title to and is in
lawful possession of, or has valid leasehold interests in, all material
properties and other assets (real or personal, tangible, intangible or mixed)
purported to be owned or leased (as the case may be) by such Person on the pro
forma balance sheet referred to in Section 3.5(c), except as disposed of in the
ordinary course of business.
Section 3.8 NO DEFAULT.
No Default or Event of Default has occurred and is continuing and no
Credit Party is in breach or default under or with respect to any contract,
agreement, lease or other instrument to which it is a party or by which its
property is bound or affected, which breach or default could reasonably be
expected to have a Material Adverse Effect.
Section 3.9 LABOR MATTERS.
As of the Closing Date, there are no strikes or other labor disputes
pending or, to any Credit Party's knowledge, threatened against any Credit
Party. Hours worked and payments made to the employees of the Credit Parties in
the United States have not been in violation of the Fair Labor Standards Act or
any other applicable law dealing with such matters in any material respect. All
payments due from the Credit Parties, or for which any claim may be made against
any of them, on account of wages and employee and retiree health and welfare
insurance and other benefits have been paid or accrued as a liability on their
books, as the case may be. The consummation of the transactions contemplated by
the Financing Documents and the other Operative Documents will not give rise to
a right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which it is a party or by which it is
bound.
Section 3.10 REGULATED ENTITIES.
No Credit Party is an "investment company" or a company "controlled" by an
"investment company" or a "subsidiary" of an "investment company," all within
the meaning of the Investment Company Act of 1940. No Credit Party is a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company," within
the meaning of the Public Utility Holding Company Act of 1935.
44
Section 3.11 MARGIN REGULATIONS.
None of the proceeds from the Loans have been or will be used, directly or
indirectly, for the purpose of purchasing or carrying any Margin Stock, for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry any Margin Stock or for any other purpose which might cause
any of the Loans to be considered a "purpose credit" within the meaning of
Regulation T, U or X of the Federal Reserve Board.
Section 3.12 COMPLIANCE WITH LAWS.
Each Credit Party and each of its Subsidiaries is in compliance with the
requirements of all applicable laws, ordinances, rules, regulations and requests
of governmental authorities, except for such noncompliance as could not
reasonably be expected to have a Material Adverse Effect.
Section 3.13 TAXES.
Except to the extent subject to a Permitted Contest, all Federal, state
and local tax returns, reports and statements required to be filed by or on
behalf of each Credit Party have been filed with the appropriate governmental
agencies in all jurisdictions in which such returns, reports and statements are
required to be filed, and all material Taxes (including real property Taxes) and
other material charges shown to be due and payable in respect thereof have been
timely paid prior to the date on which any fine, penalty, interest, late charge
or loss may be added thereto for nonpayment thereof. Except to the extent
subject to a Permitted Contest, all material state and local sales and use Taxes
required to be paid by each Credit Party have been paid. Except to the extent
subject to a Permitted Contest, all Federal and state returns have been filed by
each Credit Party for all periods for which returns were due with respect to
employee income tax withholding, social security and unemployment taxes, and the
amounts shown thereon to be due and payable have been paid in full or adequate
provisions therefor have been made. All payroll, employee income and other
employment related Taxes required to be paid by each Credit Party have been
paid.
Section 3.14 COMPLIANCE WITH ERISA.
(a) Each ERISA Plan (and the related trusts and funding agreements)
complies in form and in operation with, has been administered in compliance
with, and the terms of each ERISA Plan satisfy, the applicable requirements of
ERISA and the Code in all material respects. Each ERISA Plan which is intended
to be qualified under Section 401(a) of the Code is so qualified, and the United
States Internal Revenue Service has issued a favorable determination letter with
respect to each such ERISA Plan which may be relied on currently. No Credit
Party has incurred liability for any material excise tax under Sections 4971
through 5000 of the Code.
(b) During the thirty-six (36) month period prior to the Closing Date or
the making of any Loan or the issuance of any Letter of Credit, (i) no steps
have been taken to terminate any Pension Plan under Section 4041(c) or 4042 of
ERISA and (ii) no contribution failure has occurred with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to any
Pension Plan which could result in the incurrence by any Credit Party of any
liability, fine or penalty
45
which could reasonably be expected to result in a Material Adverse Effect. No
Credit Party has incurred liability to the PBGC (other than for current
premiums) with respect to any employee Pension Plan in an amount which could
reasonably be expected to result in a Material Adverse Effect. All contributions
(if any) have been made on a timely basis to any Multiemployer Pension Plan that
are required to be made by any Credit Party or any other member of the
Controlled Group under the terms of the plan or of any collective bargaining
agreement or by applicable Law; no Credit Party nor any member of the Controlled
Group has withdrawn or partially withdrawn from any Multiemployer Pension Plan
which could reasonably be expected to result in a Material Adverse Effect,
incurred any withdrawal liability with respect to any such plan or received
notice of any claim or demand for withdrawal liability or partial withdrawal
liability from any such plan which could reasonably be expected to result in a
Material Adverse Effect, and no condition has occurred which, if continued,
could reasonably be expected to result in a withdrawal or partial withdrawal
from any such plan, and no Credit Party nor any member of the Controlled Group
has received any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of any excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent which could reasonably be expected to result in a
Material Adverse Effect.
Section 3.15 BROKERS.
Except as set forth in the Information Certificate, no broker, finder or
other intermediary has brought about the obtaining, making or closing of the
transactions contemplated by the Operative Documents, and no Credit Party has or
will have any obligation to any Person in respect of any finder's or brokerage
fees in connection herewith or therewith.
Section 3.16 RELATED TRANSACTIONS.
The Merger has been consummated pursuant to the provisions of the Merger
Documents, true and complete copies of which have been delivered to Agent, and
in compliance with all applicable provisions of law. The transactions
contemplated by the Equity Documents and the Second Lien Debt Documents to be
consummated on or prior to the date hereof have been so consummated (including
without limitation the disbursement and transfer of all funds in connection
therewith) in all material respects pursuant to the provisions of the applicable
Operative Documents, true and complete copies of which have been delivered to
Agent, and in compliance with all applicable provisions of law. The Venturi
Staffing Sale has been consummated pursuant to the provisions of the Venturi
Staffing Purchase Agreement, true and complete copies of which have been
delivered to Agent, and in compliance with all applicable provisions of law.
Section 3.17 EMPLOYMENT, EQUITYHOLDERS AND SUBSCRIPTION AGREEMENTS.
Except for the Operative Documents and the other agreements set forth in
the Information Certificate, as of the Closing Date there are no (i) employment
agreements covering the management of any Credit Party, (ii) collective
bargaining agreements or other labor agreements covering any employees of any
Credit Party, (iii) agreements for managerial,
46
consulting or similar services to be provided to any Credit Party pursuant to
which such Credit Party has a contractual obligation to make payments in excess
of $200,000 or (iv) agreements regarding any Credit Party, its assets or
operations or any investment therein to which any of its equityholders is a
party or by which it is bound.
Section 3.18 COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS; NO HAZARDOUS
MATERIALS.
(a) No Hazardous Materials are located on any properties now or
previously owned, leased or operated by any Credit Party or have been released
into the environment, or deposited, discharged, placed or disposed of at, on,
under or near any of such properties in a manner that would require the taking
of any action under any Environmental Law and which could reasonably be expected
to have a Material Adverse Effect. No portion of any such property is being
used, or has been used at any previous time, for the disposal, storage,
treatment, processing or other handling of Hazardous Materials in violation of
any Environmental Law, which could reasonably be expected to have a Material
Adverse Effect, nor is any such property affected by any Hazardous Materials
Contamination which, in the case of any of the foregoing, would reasonably be
expected to have a Material Adverse Effect.
(b) No underground storage tanks are located on any properties now or
previously owned, leased or operated by any Credit Party, or were located on any
such property and subsequently removed or filled, which would reasonably be
expect to have a Material Adverse Effect.
(c) No notice, notification, demand, request for information, complaint,
citation, summons, investigation, administrative order, consent order and
agreement, litigation or settlement with respect to Hazardous Materials or
Hazardous Materials Contamination is in existence or, to any Borrower's
knowledge, proposed, threatened or anticipated with respect to or in connection
with the operation of any properties now or previously owned, leased or operated
by any Credit Party, which, in the case of any of the foregoing, would
reasonably be expected to have a Material Adverse Effect. All such properties
and their existing and prior uses, and any disposal of Hazardous Materials from
any thereof, comply and at all times have complied with all Environmental Laws
except for any non-compliance that would not reasonably be expected to have a
Material Adverse Effect. There is no condition on any of such properties which
is in violation of any Environmental Laws and no Credit Party has received any
communication from or on behalf of any governmental authority that any such
condition exists which would reasonably be expected to have a Material Adverse
Effect.
(d) There has been no material environmental investigation, study,
audit, test, review or other analysis conducted of which any Credit Party has
knowledge in relation to the current or prior business of such Credit Party or
any property or facility now or previously owned, leased or operated by any
Credit Party which has not been delivered to Agent.
(e) For purposes of this Section 3.18, each Credit Party shall be deemed
to include any business or business entity (including a corporation) which is,
in whole or in part, a predecessor of such Credit Party and for which such
Credit Party would have liability under Environmental Law.
47
Section 3.19 INTELLECTUAL PROPERTY.
Each Credit Party owns, is licensed to use or otherwise has the right to
use, all Intellectual Property that is material to the condition (financial or
other), business or operations of such Credit Party, and all such Intellectual
Property existing as of the Closing Date and registered with the U.S.
government, any foreign government or any agency or department thereof is set
forth on the Information Certificate. All material Intellectual Property of each
Credit Party is fully protected and/or duly and properly registered, filed or
issued in the appropriate office and jurisdictions for such registrations,
filings or issuances. To each Credit Parties' knowledge, each Credit Party
conducts its business without infringement or claim of infringement of any
Intellectual Property rights of others and there is no infringement or claim of
infringement by others of any Intellectual Property rights of any Credit Party,
which infringement or claim of infringement could reasonably be expected to have
a Material Adverse Effect.
Section 3.20 REAL PROPERTY INTERESTS.
Except for the ownership, leasehold or other interests set forth in the
Information Certificate, no Credit Party has, as of the Closing Date, any
ownership, leasehold or other interest in real property.
Section 3.21 SOLVENCY.
The Credit Parties taken as a whole, after giving effect to their rights
of contribution: (a) own and will own assets the fair saleable value of which
are (i) greater than the total amount of their liabilities (including contingent
liabilities) and (ii) greater than the amount that will be required to pay the
probable liabilities of their then existing debts as they become absolute and
matured considering all financing alternatives and potential asset sales
reasonably available to them; (b) have capital that is not unreasonably small in
relation to their business as presently conducted or after giving effect to any
contemplated transaction; and (c) do not intend to incur and do not believe that
they will incur debts beyond their ability to pay such debts as they become due.
Section 3.22 FULL DISCLOSURE.
None of the information (financial or otherwise) furnished by or on behalf
of any Credit Party to Agent or any Lender in connection with the consummation
of the transactions contemplated by the Operative Documents, including without
limitation the information set forth in the Information Certificate, contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading in
the light of the circumstances under which such statements were made. All
financial projections delivered to Agent and the Lenders have been prepared on
the basis of the assumptions stated therein. Such projections represent the
Credit Parties' best estimate of the Credit Parties' future financial
performance and such assumptions are believed by the Credit Parties to be fair
in light of current business conditions; provided that the Credit Parties can
give no assurance that such projections will be attained.
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Section 3.23 REPRESENTATIONS AND WARRANTIES INCORPORATED FROM OTHER
OPERATIVE DOCUMENTS.
As of the Closing Date, each of the representations and warranties made in
the Operative Documents by each of the Credit Parties thereto and, to the Credit
Parties' knowledge, each of the representations and warranties made in the
Operative Documents by each party other than a Credit Party, is true and correct
in all material respects, and such representations and warranties are hereby
incorporated herein by reference with the same effect as though set forth in
their entirety herein, as qualified therein, except to the extent that such
representation or warranty relates to a specific date, in which case such
representation and warranty shall be true as of such earlier date.
ARTICLE IV
AFFIRMATIVE COVENANTS
Each Credit Party that is a party hereto agrees that, so long as any
Credit Exposure exists:
Section 4.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
The Credit Parties will maintain a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in accordance with GAAP and to provide the information
required to be delivered to the Lenders hereunder, and will deliver to Agent,
and, in the case of the deliveries required by paragraphs (a) through (f) and
(l) through (s), with adequate copies for each Lender:
(a) as soon as practicable and in any event within thirty (30) days
after the end of each fiscal month (including the last month of Holdings' Fiscal
Year), a consolidated balance sheet of Holdings and its Consolidated
Subsidiaries as at the end of such month and the related consolidated statements
of operations and cash flows for such month, and for the portion of the Fiscal
Year ended at the end of such month setting forth in each case in comparative
form the figures for the corresponding periods of the previous Fiscal Year and
the figures for such month and for such portion of the Fiscal Year ended at the
end of such month set forth in the annual operating and capital expenditure
budgets and cash flow forecast delivered pursuant to Section 4.1(l), all in
reasonable detail and certified by a Responsible Officer of Holdings as fairly
presenting in all material respects the financial condition and results of
operations of Holdings and its Consolidated Subsidiaries and as having been
prepared in accordance with GAAP applied on a basis consistent with the audited
financial statements of Holdings, subject to changes resulting from audit and
normal year-end adjustments and the absence of footnote disclosures;
(b) as soon as available and in any event within ninety (90) days after
the end of each Fiscal Year, a consolidated balance sheet of Holdings and its
Consolidated Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of operations, stockholders' equity (or the comparable
item, if Holdings is not a corporation) and cash flows for such Fiscal Year,
setting forth in each case in comparative form the figures for the previous
Fiscal Year and the figures for such Fiscal Year set forth in the annual
operating and capital expenditure budgets and cash flow forecast delivered
pursuant to Section 4.1(l), certified (solely with respect to such
49
consolidated statements) without qualification by Ernst & Young, LLP or any
other independent public accountants reasonably acceptable to Agent of
nationally recognized standing;
(c) together with each delivery of financial statements pursuant to
Sections 4.1(a) and 4.1(b), a Compliance Certificate and together with each
delivery of financial statements pursuant to Section 4.1(b), an Excess Cash Flow
Certificate;
(d) together with each delivery of financial statements pursuant to
Section 4.1(b) above, a written statement by the independent public accountants
giving the report thereon stating that their audit examination has included a
review of the terms of this Agreement as it relates to accounting matters;
(e) promptly upon receipt thereof, copies of all reports submitted to
any Credit Party by independent public accountants in connection with each
annual, interim or special audit of the financial statements of any Credit Party
made by such accountants, including the comment letter submitted by such
accountants to management in connection with their annual audit;
(f) promptly upon their becoming available, copies of (i) all financial
statements, reports, notices and proxy statements sent or made available
generally by any Credit Party to its security holders, (ii) all regular and
periodic reports and all registration statements and prospectuses filed by any
Credit Party with any securities exchange or with the Securities and Exchange
Commission or any successor, (iii) all press releases and other statements made
available generally by any Credit Party concerning material developments in the
business of any Credit Party and (iv) all Swap Contracts entered into by any
Credit Party;
(g) promptly upon any officer of any Credit Party obtaining knowledge
(i) of the existence of any Event of Default or Default, or becoming aware that
the holder of any Debt of any Credit Party has given any notice or taken any
other action with respect to a claimed default thereunder, (ii) of any change in
any Credit Party's certified accountant or any resignation, or decision not to
stand for re-election, by any member of any Credit Party's board of directors
(or comparable body), (iii) that any Person has given any notice to any Credit
Party or taken any other action with respect to a claimed default under any
material agreement or instrument (other than the Financing Documents) to which
any Credit Party is a party or by which any of its assets is bound or (iv) of
the institution of any litigation or arbitration involving an alleged liability
of any Credit Party equal to or greater than $2,000,000 or any adverse
determination in any litigation or arbitration involving a potential liability
of any Credit Party equal to or greater than $2,000,000, a certificate of a
Responsible Officer of the Funds Administrator, on behalf of the Borrowers
specifying the nature and period of existence of any such condition or event, or
specifying the notice given or action taken by such holder or Person and the
nature of such claimed default (including any Event of Default or Default),
event or condition, and what action the applicable Credit Party has taken, is
taking or proposes to take with respect thereto;
(h) promptly upon any officer of any Credit Party obtaining knowledge of
(i) the institution of any steps by any member of the Controlled Group or any
other Person to terminate any Pension Plan under Section 4041(c) or 4042 of
ERISA, (ii) the failure of any member of the Controlled Group to make a required
contribution on a timely basis to any ERISA Plan or to any Multiemployer Pension
Plan in an amount that is material, (iii) the taking of any action with
50
respect to a Pension Plan which could result in the requirement that any Credit
Party or any Subsidiary of any Credit Party furnish a bond or other security to
the PBGC or such Pension Plan, (iv) the occurrence of a reportable event under
Section 4043 of ERISA (for which a reporting requirement is not waived) with
respect to any Pension Plan, (v) the occurrence of any event with respect to any
Pension Plan or Multiemployer Pension Plan which could result in the incurrence
by any member of the Controlled Group of any material liability, fine or penalty
(including any claim or demand for withdrawal liability or partial withdrawal
from any Multiemployer Pension Plan), (vi) any material increase in the
contingent liability of any Credit Party or any Subsidiary of any Credit Party
with respect to any post-retirement welfare plan benefit or (vii) the receipt by
any Credit Party of any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of an excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent, a certificate of a Responsible Officer of the Funds
Administrator, on behalf of the Borrowers, specifying the nature and period of
existence of any such condition or event, or specifying the notice given or
action taken by such holder or Person, and what action the applicable Credit
Party has taken, is taking or proposed to take with respect thereto;
(i) promptly upon any officer of any Credit Party obtaining knowledge of
any complaint, order, citation, notice or other written communication from any
Person delivered to any Credit Party with respect to, or if any officer of any
Credit Party becomes aware of the following, except as would not reasonably be
expected to have a Material Adverse Effect: (x) the existence or alleged
existence of a violation of any Environmental Law or the incurrence of any
liability, obligation, loss, damage, cost, expense, fine, penalty or sanction or
the requirement to commence any remedial action resulting from or in connection
with any air emission, water discharge, noise emission, Hazardous Material or
any other environmental, health or safety matter at, upon, under or within any
of the properties now or previously owned, leased or operated by any Credit
Party, or due to the operations or activities of any Credit Party or any other
Person on or in connection with any such property or any part thereof or (y) any
release on any of such properties of Hazardous Materials in a quantity that is
reportable under any applicable Environmental Law, a certificate of a
Responsible Officer of the Funds Administrator, on behalf of the Borrowers,
specifying the nature and period of existence of any such condition or event, or
specifying the notice given or action taken by such holder or Person, and what
action the applicable Credit Party has taken, is taking or proposes to take with
respect thereto;
(j) promptly upon any officer of any Credit Party obtaining knowledge
that any Credit Party has either (x) registered or applied to register any
Intellectual Property with the U.S. government, any foreign government or any
agency or department thereof, or (y) acquired any interest in real property
(including leasehold interests in real property), a certificate of a Responsible
Officer of the Funds Administrator, on behalf of the Borrowers, describing such
Intellectual Property and/or such real property in such detail as Agent shall
reasonably require;
(k) copies of any reports or notices related to any material taxes and
any other material reports or notices received by any Credit Party from, or
filed by any Credit Party with, any Federal, state or local governmental agency
or body;
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(l) within thirty (30) days after the conclusion of each Fiscal Year,
the Credit Parties' annual operating plans, operating and capital expenditure
budgets, and financial forecasts, including cash flow projections covering
proposed fundings, repayments, additional advances, investments and other cash
receipts and disbursements, each presented on a monthly basis for the then
current Fiscal Year and annually for the two (2) subsequent Fiscal Years, all of
which shall be in a format reasonably consistent with projections, budgets and
forecasts theretofore provided to the Lenders, and promptly following the
preparation thereof, updates to any of the foregoing from time to time prepared
by management of the Credit Parties;
(m) as soon as available and in any event within fifteen (15) Business
Days after the end of each fiscal month through and including December, 2004 and
within ten (10) Business Days after the end of each fiscal month ending
thereafter, and from time to time upon the request of Agent (which request may
be made as frequently as daily), a Borrowing Base Certificate as of the last day
of the month most recently ended (or, in the case of Borrowing Base Certificates
requested more frequently than monthly, as of the second preceding Business
Day);
(n) as soon as available and in any event within fifteen (15) Business
Days after the end of each fiscal month through and including December, 2004 and
within ten (10) Business Days after the end of each fiscal month ending
thereafter, and from time to time upon the request of Agent (which request may
be made as frequently as daily) schedules of sales made, credits issued and cash
received for and during such month (or, in the case of such schedules requested
more frequently than monthly, as of the second preceding Business Day);
(o) together with each delivery of a Borrowing Base Certificate pursuant
to Section 4.1(m), during the period commencing on the Closing Date through and
including the delivery of the Borrowing Base Certificate for the fiscal month
ending June 30, 2005, a Restructuring Reserve Certificate;
(p) as soon as available and in any event within fifteen (15) Business
Days after the end of each fiscal month through and including December, 2004 and
within ten (10) Business Days after the end of each fiscal month ending
thereafter, on a monthly basis or more frequently as Agent may reasonably
request, (i) agings of Accounts, (ii) unbilled revenue from the general ledger,
(iii) vworx unbilled accounts, (iv) fixed price contracts report, (v) accrued
rebates report, (vi) schedules of contra-accounts, (vii) schedules of deferred
revenue, (viii) schedule of unapplied debits and credits, (ix) federal
government receivables report, (x) schedule of unapplied cash, (xi) schedule of
eliminating entries, (xii) schedule of foreign accounts, (xiii) schedule of
customer refunds, (xiv) schedule of discount reserves, (xv) schedule of accounts
payable and (xvi) a reconciliation report in the form set forth in Exhibit F,
with respect to the Borrowing Base Certificate most recently delivered to Agent,
the financial statements of the Credit Parties delivered to Agent, the
Borrowers' general ledger and/or the reports required pursuant to this
paragraph, each in form and substance, and with such supporting detail and
documentation, as may be reasonably requested by Agent;
(q) upon Agent's reasonable request, (i) copies of customer statements
and credit memos, remittance advices and reports and copies of deposit slips and
bank statements, (ii) copies of shipping and delivery documents, and (iii)
copies of purchase orders, invoices and delivery documents for material
Equipment acquired by any Credit Party;
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(r) within two (2) Business Days after any request therefor, such
additional information in such detail concerning the amount, composition and
manner of calculation of the Borrowing Base as Agent or any Lender may
reasonably request;
(s) upon the request of Agent, which may be made no more than four (4)
times each year prior to an Event of Default and at any time while and so long
as an Event of Default shall be continuing, a report of an independent
collateral auditor satisfactory to Agent (which may be, or be affiliated with, a
Lender) with respect to the components of the Borrowing Base, which report shall
indicate whether or not the information set forth in the Borrowing Base
Certificate most recently delivered is accurate and complete in all material
respects based upon a review by such auditors of the Accounts (including
verification with respect to the amount, aging, identity and credit of the
respective Account Debtors and the billing practices of the Borrowers);
(t) with reasonable promptness, such other information and data with
respect to any Credit Party as from time to time may be reasonably requested by
Agent or any Lender;
(u) promptly after delivery to the recipient thereof, copies of all
notices and financial information of the Credit Parties delivered to any Person
in accordance with the provisions of the Second Lien Credit Agreement; and
(v) without limiting or being limited by any other provision of any
Financing Document, the Credit Parties shall retain and use Ceridian Corporation
and its Affiliates or any other third-party reasonably acceptable to Agent to
process, manage and pay the payroll taxes of the Credit Parties and shall, upon
the request of Agent, cause to be delivered to Agent within ten (10) calendar
days of such request, a report of such payroll taxes of the Credit Parties for
the immediately preceding calendar month and evidence of payment thereof.
Section 4.2 PAYMENT AND PERFORMANCE OF OBLIGATIONS.
(i) Each Credit Party will pay and discharge, and cause each of its
Subsidiaries to pay and discharge, at or before maturity, all of their
respective obligations and liabilities, including tax liabilities, except (x)
where the same may be the subject of a Permitted Contest and (y) for such
obligations and/or liabilities the nonpayment or nondischarge of which could not
reasonably be expected to have a Material Adverse Effect, (ii) Each Credit Party
will pay, and will cause each of its Subsidiaries to pay, all payroll and other
employment related taxes as and when due and payable, (iii) Each Credit Party
will maintain, and cause each of its Subsidiaries of such Credit Party to
maintain, in accordance with GAAP, appropriate reserves for the accrual of all
of their respective obligations and liabilities and (iv) No Credit Party will
breach nor will any Credit Party permit any Subsidiary of such Credit Party to
breach, or permit to exist any default under, the terms of any lease,
commitment, contract, instrument or obligation to which it is a party, or by
which its properties or assets are bound, except for such breaches or defaults
which could not reasonably be expected to have a Material Adverse Effect.
Section 4.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
Each Borrower will continue, and will cause each Subsidiary to continue,
to engage in business of the same general type as they now conduct and will
preserve, renew and keep in full force and effect, and, except as permitted
pursuant to Section 5.7, will cause each Subsidiary to
53
preserve, renew and keep in full force and effect their respective existence and
their respective rights, privileges and franchises necessary or desirable in the
normal conduct of business.
Section 4.4 MAINTENANCE OF PROPERTY; INSURANCE.
(a) Each Credit Party will keep, and will cause each of its Subsidiaries
to keep, all property useful and necessary in any material respect in its
business in good working order and condition, ordinary wear and tear excepted.
(b) Each Credit Party will maintain, and will cause each of its
Subsidiaries to maintain, (i) physical damage insurance on all real and personal
property on an all risks basis (including the perils of flood and quake),
covering the repair and replacement cost of all such property and consequential
loss coverage for business interruption and public liability insurance
(including products/completed operations liability coverage) in each case of the
kinds customarily carried or maintained by Persons of established reputation
engaged in similar businesses and in amounts reasonably acceptable to Agent and
(ii) such other insurance coverage in such amounts and with respect to such
risks as Agent may reasonably request. All such insurance shall be provided by
insurers having an A.M. Best policyholders rating reasonably acceptable to
Agent.
(c) On or prior to the Closing Date, the Credit Parties will cause Agent
to be named as an additional insured, assignee and loss payee, as applicable, on
each insurance policy required to be maintained pursuant to this Section 4.4
pursuant to endorsements in form and content reasonably acceptable to Agent. The
Credit Parties will deliver to Agent (i) on the Closing Date, a certificate from
the Credit Parties' insurance broker dated as of a date within thirty (30) day
of the Closing Date showing the amount of coverage as of such date, and that
such policies will include effective waivers (whether under the terms of any
such policy or otherwise) by the insurer of all rights of subrogation against
all loss payees and additional insureds, and that if all or any part of such
policy is canceled, terminated or expires, the insurer will forthwith give
notice thereof to each additional insured and loss payee and that no
cancellation, reduction in amount or material change in coverage thereof shall
be effective until at least thirty (30) days after receipt by each additional
insured and loss payee of written notice thereof (or, in the case of non-payment
of premiums, at least ten (10) days after receipt by each additional insured and
loss payee of written notice thereof), (ii) on an annual basis, and upon the
request of any Lender through Agent from time to time, full information as to
the insurance carried, (iii) within five (5) days of receipt of notice from any
insurer, a copy of any notice of cancellation, nonrenewal or material change in
coverage from that existing on the date of this Agreement and (iv) forthwith,
notice of any cancellation or nonrenewal of coverage by the Credit Parties.
(d) In the event the Credit Parties fail to provide Agent with evidence
of the insurance coverage required by this Agreement, Agent may purchase
insurance at the Credit Parties' expense to protect Agent's interests in the
Collateral. This insurance may, but need not, protect the Credit Parties'
interests. The coverage purchased by Agent may not pay any claim made by the
Credit Parties or any claim that is made against the Credit Parties in
connection with the Collateral. The Credit Parties may later cancel any
insurance purchased by Agent, but only after providing Agent with evidence that
the Credit Parties have obtained insurance as required by this
54
Agreement. If Agent purchases insurance for the Collateral, the Credit Parties
will be responsible for the costs of that insurance, including interest and
other charges imposed by Agent in connection with the placement of the
insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the Obligations. The costs
of the insurance may be more than the cost of insurance the Credit Parties are
able to obtain on their own.
Section 4.5 COMPLIANCE WITH LAWS.
The Credit Parties will comply, and cause each of their respective
Subsidiaries to comply, with the requirements of all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including Environmental Laws and ERISA and the rules and regulations
thereunder), except for such noncompliance which could not reasonably be
expected to have a Material Adverse Effect.
Section 4.6 INSPECTION OF PROPERTY, BOOKS AND RECORDS.
The Credit Parties will keep, and will cause each of their respective
Subsidiaries to keep, proper books of record and account in accordance with GAAP
in which full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities; and will permit, and
will cause each of their respective Subsidiaries to permit, at the sole cost of
such Credit Party or any applicable Subsidiary of such Credit Party,
representatives of Agent and of any Lender (but at such Lender's expense unless
such visit or inspection is made concurrently with Agent) to visit and inspect
any of their respective properties, to examine and make abstracts or copies from
any of their respective books and records, to conduct a collateral audit and
analysis of their respective Inventory and Accounts and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants as often as may reasonably be
desired; provided that so long as no Default or Event of Default has occurred
and is continuing, the Credit Parties shall only be required to pay for two (2)
such inspections or visits per year. In the absence of an Event of Default,
Agent or any Lender exercising any rights pursuant to this Section 4.6 shall
give the Funds Administrator commercially reasonable prior written notice of
such exercise. No notice shall be required during the existence and continuance
of any Event of Default.
Section 4.7 USE OF PROCEEDS.
The Borrowers will use the proceeds of the Term Loan solely for (i)
payment of amounts due under the Merger Agreement, if any, (ii) transaction fees
incurred in connection with the Operative Documents, (iii) payment of funds
necessary in connection with the Venturi Staffing Sale in an amount not to
exceed $2,500,000 in the aggregate and (iv) the repayment on the Closing Date of
Existing Debt (including, without limitation, certain guaranteed obligations) of
the Credit Parties. The proceeds of Revolving Loans shall be used by the
Borrowers solely for the purposes set forth in the preceding sentence and for
working capital needs of the Borrowers including, without limitation, for making
Permitted Acquisitions and for the making of Restricted Distributions to the
extent permitted pursuant to Section 5.4.
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Section 4.8 LENDERS' MEETINGS.
Within forty-five (45) days after the end of each Fiscal Year (or more
frequently upon the request of the Agent upon the occurrence and during the
continuance of an Event of Default), the Credit Parties will conduct a meeting
of Agent, the Lenders, the Second Lien Agent, the Second Lien Collateral Agent
and the Second Lien Lenders to discuss such Fiscal Year's results and the
financial condition of the Credit Parties and their respective Subsidiaries at
which shall be present a Responsible Officer and such officers of the Credit
Parties as may be reasonably requested to attend by Agent or any Lender, such
request or requests to be made within a reasonable time prior to the scheduled
date of such meeting. Such meetings shall be held at a time and place convenient
to the Lenders and to the Credit Parties.
Section 4.9 INTENTIONALLY OMITTED.
Section 4.10 REAL ESTATE.
The Credit Parties shall use reasonable efforts to deliver, or caused to
be delivered, to Agent (i) within thirty (30) days following the Closing Date, a
collateral access agreement in form and substance reasonably acceptable to Agent
with respect to the leased real property located at 0000 Xxxxx 00xx Xxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx and (ii) within one hundred twenty (120) days
following the Closing Date, a collateral access agreement in form and substance
reasonably acceptable to Agent with respect to the leased real property located
at (a) 00000 Xxxxxxxx Xxx, Xxxxxxxx, Xxxxxxxxxx, (ii) Five Lakepointe Plaza,
Second Floor, 2709 Water Ridge Parkway, Charlotte, North Carolina and (iii) 0000
Xxx Xxxx, Xxxx Xxxxx, Xxxxxxxx.
Section 4.11 INTENTIONALLY OMITTED.
Section 4.12 FURTHER ASSURANCES.
Each Credit Party will, and will cause each Subsidiary to, at its own cost
and expense, cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may from time to
time be necessary or as Agent or the Required Lenders may from time to time
reasonably request in order to carry out the intent and purposes of the
Financing Documents and the transactions contemplated thereby, including all
such actions to establish, preserve, protect and perfect a first priority Lien
(subject only to Permitted Liens) in favor of Agent for the benefit of the
Lenders on the Collateral (including Collateral acquired after the date hereof),
subject to exceptions permitted by the Financing Documents, including on any and
all assets of each Credit Party, whether now owned or hereafter acquired.
Without limiting the generality of the foregoing and except as otherwise
approved in writing by Required Lenders, (i) each Credit Party (other than the
Borrowers) and each of its Subsidiaries (other than the Borrowers) shall
guaranty the Obligations and cause each such Subsidiary (other than the
Borrowers) to grant to Agent, for the benefit of Agent and Lenders, a security
interest in all of such Subsidiary's property to secure such guaranty, (ii) each
Credit Party (other than the Borrowers) shall pledge the stock or other equity
interests of each of their respective Subsidiaries to Agent, for the benefit of
Agent and Lenders, to secure such Credit Party's guaranty, and (iii) each
Borrower shall pledge the stock or other equity interest of each of its
Subsidiaries to Agent, for the benefit of Agent and Lenders, to secure the
Obligations; provided, that, anything
56
contained in this Section 4.12 to the contrary notwithstanding, no direct or
indirect Foreign Subsidiary of Holdings shall be required to deliver any such
guaranty or grant a security interest in any of its property to secure any such
guaranty, and neither Holdings nor any of its direct or indirect Subsidiaries
will be required to pledge more than sixty-five percent (65%) of the equity
interests of any Foreign Subsidiary, in any such case, to the extent but only
for so long as such guaranty or granting, or a pledge of more such equity
interests, would result in material and adverse tax consequences to Holdings
under Section 956 of the Code, as determined by Holdings in its reasonable
business judgment, provided that Holdings has delivered to Agent and the
Required Lenders evidence reasonably satisfactory to Agent and the Required
Lenders of such determination.
ARTICLE V
NEGATIVE COVENANTS
Each Credit Party that is a party hereto agrees that, so long as any
Credit Exposure exists:
Section 5.1 DEBT.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, create, incur, assume, guarantee or otherwise become or
remain directly or indirectly liable with respect to, any Debt except for:
(a) Debt, Letter of Credit Liabilities and all other Obligations under
the Financing Documents;
(b) Debt outstanding on the date of this Agreement as set forth in the
Information Certificate (other than Debt permitted pursuant to clause (d) of
this Section 5.1) to the extent set forth therein;
(c) Debt of the Borrowers incurred or assumed for the purpose of
financing all or any part of the cost of acquiring any fixed asset (including
through Capital Leases) and related costs and refinancings thereof, in an
aggregate principal amount at any time outstanding not greater than $1,500,000;
(d) intercompany Debt arising from loans made by a Borrower to (i) any
other Borrower or any Domestic Wholly-Owned Subsidiary of any Borrower and (ii)
its Foreign Subsidiaries which are Wholly-Owned Subsidiaries in an aggregate
amount under this clause (ii) not to exceed $500,000 at any time outstanding;
provided, however, in each case, such Debt shall be evidenced by promissory
notes having terms reasonably satisfactory to Agent, the sole originally
executed counterparts of which shall be pledged and delivered to Agent, for the
benefit of Agent and Lenders, as security for the Obligations;
(e) unsecured Debt of any Borrower not to exceed $1,000,000 in the
aggregate at any time outstanding which is subordinated to the Obligations in a
manner reasonably satisfactory to Agent;
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(f) net obligations to a counterparty under any Swap Contract permitted
pursuant to the terms of this Agreement;
(g) Debt consisting of Contingent Obligations, to the extent permitted
pursuant to Section 5.3;
(h) the Second Lien Debt and refinancings and replacements thereof, to
the extent permitted pursuant to the terms of the Second Lien Intercreditor
Agreement; and
(i) Debt arising from Holdings Loans.
Section 5.2 LIENS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, create, assume or suffer to exist any Lien on any asset
now owned or hereafter acquired by it, except:
(a) Liens created by the Security Documents;
(b) Liens existing on the date of this Agreement as set forth in the
Information Certificate;
(c) any Lien on any asset of any Borrower, as the case may be (including
additions and accessions to and proceeds of any such asset), securing Debt
permitted under Section 5.1(c) incurred or assumed for the purpose of financing
or refinancing all or any part of the cost of acquiring such asset, provided
that such Lien attaches to such asset concurrently with or within ninety (90)
days after the acquisition thereof;
(d) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or the subject of a Permitted
Contest;
(e) Liens on assets of any Credit Party arising in the ordinary course
of business (i) in favor of carriers, warehousemen, mechanics, landlords and
materialmen, and other similar Liens imposed by law or, with respect to
warehousemen and/or landlords, by contract and (ii) in connection with worker's
compensation, unemployment compensation and other types of social security
(excluding Liens arising under ERISA) or in connection with surety bonds, bids,
performance bonds and similar obligations) for sums not overdue or the subject
of a Permitted Contest and not involving any deposits or advances or borrowed
money or the deferred purchase price of property or services and, in each case,
for which it maintains adequate reserves;
(f) attachments, appeal bonds, judgments and other similar Liens on
assets of the Credit Parties, for sums not exceeding $1,000,000 in the aggregate
arising in connection with court proceedings; provided that the execution or
other enforcement of such Liens is effectively stayed and the claims secured
thereby are the subject of a Permitted Contest;
(g) banker's Liens and rights of set-off of financial institutions
arising in connection with items deposited in accounts maintained at such
financial institutions and subsequently
58
unpaid and unpaid fees and expenses that are charged to a Credit Party by such
financial institutions in the ordinary course of business of the maintenance and
operation of such accounts;
(h) the Second Lien Debt Liens to the extent securing permitted Second
Lien Debt;
(i) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any material
respect with the ordinary conduct of the business of the Credit Parties; and
(j) Prior to the replacement of all outstanding letters of credit issued
prior to the Closing Date by CIT Group/Business Credit, Inc., Liens on cash
collateral maintained in an account at JPMorgan Chase Bank, for the benefit of
CIT Group/Business Credit, Inc.
Section 5.3 CONTINGENT OBLIGATIONS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, create, assume, incur or suffer to exist any Contingent
Obligations, except for:
(a) Contingent Obligations arising under the Financing Documents;
(b) Contingent Obligations resulting from endorsements for collection or
deposit in the ordinary course of business;
(c) Contingent Obligations outstanding on the date of this Agreement as
set forth in the Information Certificate, to the extent set forth therein;
(d) Contingent Obligations incurred in the ordinary course of business
with respect to surety and appeal bonds, performance bonds and other similar
obligations not to exceed $1,000,000 in the aggregate at any time outstanding;
(e) Contingent Obligations arising under indemnity agreements with title
insurers to cause such title insurers to issue to Agent mortgagee title
insurance policies;
(f) so long as there exists no Event of Default both immediately before
and immediately after giving effect to any such transaction, Contingent
Obligations existing or arising under any Swap Contract, provided that such
obligations are unsecured and are (or were) entered into by a Credit Party in
the ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Person and not for purposes of speculation;
(g) Contingent Obligations arising with respect to customary
indemnification obligations in favor of purchasers in connection with
dispositions permitted under Section 5.8;
(h) Contingent Obligations representing guarantees by a Credit Party of
another Credit Party's Debt or other obligations, so long as (i) such Debt or
other obligations are permitted to exist pursuant to the terms of this Agreement
and (ii) if such Debt or other obligations are subordinated to the
59
Obligations, such guaranty shall be subordinated to the Obligations on the same
terms as such Debt or other obligations are subordinated to the Obligations;
(i) Prior to the replacement of all outstanding letters of credit issued
prior to the Closing Date by CIT Group/Business Credit, Inc., Contingent
Obligations arising under such letters of credit;
(j) Contingent Obligations arising under the Venturi Staffing Purchase
Agreement, as in effect on the date hereof, including, without limitation the
transition services and guarantees of leases contemplated therein in an amount
not to exceed $5,500,000 in the aggregate at any time outstanding; and
(k) Contingent Obligations arising under the Second Lien Debt Documents.
Section 5.4 RESTRICTED DISTRIBUTIONS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Distribution or accept any Restricted Distribution; provided that the
foregoing shall not restrict or prohibit Subsidiaries of any Borrower from
making dividends or distributions to such Borrower (and the acceptance by such
Borrower of such dividend and distribution) and shall not restrict or prohibit:
(a) dividends or distributions by COMSYS IT to COMSYS Holdings and by
VTP to PFI Holdings, which are immediately further distributed by COMSYS
Holdings or PFI Corp., as applicable, to Holdings, and which are immediately
used by Holdings to pay taxes payable by Holdings;
(b) a dividend or distribution by VTP to PFI Holdings, which is
immediately further distributed by PFI Holdings to Holdings on the Closing Date
to repay existing Debt of Holdings to the extent permitted by and as specified
in Section 4.7;
(c) dividends or distributions by COMSYS IT to COMSYS Holdings and by
VTP to PFI Holdings, which are immediately further distributed by COMSYS
Holdings or PFI Corp., as applicable, to Holdings, and which are immediately
used by Holdings to pay reasonable director fees payable by Holdings, so long as
before and after giving effect to any such dividend or distribution no Event of
Default shall have occurred and be continuing;
(d) dividends or distributions by COMSYS IT to COMSYS Holdings and by
VTP to PFI Holdings, which are immediately further distributed by COMSYS
Holdings or PFI Corp., as applicable, to Holdings, and immediately used by
Holdings to pay administrative expenses, including without limitation
reimbursements of directors for actual out-of-pocket expenses incurred in
connection with attending board of director meetings and attorney fees, so long
as (i) before and after giving effect to any such dividends or distributions no
Event of Default shall have occurred and be continuing and (ii) such payments do
not exceed $200,000 in the aggregate in any Fiscal Year;
(e) dividends or distributions by COMSYS IT to COMSYS Holdings and by
VTP to PFI Holdings, which are immediately further distributed by COMSYS
Holdings or PFI Corp., as
60
applicable, to Holdings, and which are immediately used by Holdings to pay, in
the ordinary course of business, liabilities of Holdings in respect of (i) lease
obligations, (ii) license obligations, (iii) insurance premiums, (iv) the
Restructuring Reserve, (v) the transactions contemplated by the Venturi Staffing
Purchase Agreement, (vi) other obligations of Holdings incurred prior to the
Closing Date and (vii) other liabilities customarily incurred by public holding
companies similarly situated, so long as (x) with respect to obligations arising
under leases and licenses, such leases and licenses were entered into by
Holdings prior to the Closing Date or constitute renewals or extensions thereof
(provided that such renewals or extensions are on substantially the same terms
and conditions as such leases and licenses in effect on the Closing Date) and
(y) all such payments (other than payments in respect of the Restructuring
Reserve and the transactions contemplated by the Venturi Staffing Purchase
Agreement) do not exceed $5,000,000 in the aggregate in any Fiscal Year; and
(f) in the event any holder of a Term Note elects to waive such holder's
Pro Rata Share of any mandatory prepayment in accordance with the terms and
provisions set forth in Section 2.1(e) and such mandatory prepayment is
subsequently waived by the Second Lien Lenders in accordance with the terms and
provisions of Section 2.1(e) of the Second Lien Credit Agreement, dividends or
distributions by COMSYS IT to COMSYS Holdings and by VTP to PFI Holdings, which
are immediately further distributed by COMSYS Holdings or PFI Corp., as
applicable, to Holdings, and which are immediately used by Holdings to redeem
"Series A-1 Preferred Stock" (as defined in the Holdings Certificate of
Designations) in an amount not exceeding such waived mandatory prepayment.
Section 5.5 RESTRICTIVE AGREEMENTS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly (i) enter into or assume any agreement (other than the
Financing Documents, the Second Lien Debt Documents and documents governing
Permitted Liens) prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired or (ii) create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind (except (A) as provided by the Second
Lien Credit Agreement, (B) by reason of customary provisions restricting
assignments, subletting or other transfers contained in leases, licenses and
joint venture agreements entered into in the ordinary course of business,
provided that, in each case, any such restriction contained therein relates only
to the asset or assets subject to such agreement and (C) as provided in other
agreements governing Permitted Liens) on the ability of any Subsidiary to: (1)
pay or make Restricted Distributions to any Credit Party; (2) pay any Debt owed
to any Credit Party; (3) make loans or advances to any Credit Party; or (4)
transfer any of its property or assets to any Credit Party.
Section 5.6 PAYMENTS AND MODIFICATIONS OF SECOND LIEN DEBT.
The Credit Parties will not, and will not permit their Subsidiaries to,
directly or indirectly:
(a) declare, pay, make or set aside any amount for payment in respect of
the Second Lien Debt, except for such payments required under and made pursuant
to the terms of the Second Lien Debt Documents and the Second Lien Intercreditor
Agreement; and
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(b) amend, alter, waive or modify the Second Lien Debt Documents, except
to the extent permitted pursuant to the Second Lien Intercreditor Agreement.
Section 5.7 CONSOLIDATIONS, MERGERS AND SALES OF ASSETS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly:
(a) consolidate or merge with or into any other Person (except, upon not
less than five (5) Business Days' prior written notice to Agent, (i) any
Subsidiary of any Borrower may merge with, or dissolve or liquidate into any
Borrower, provided that such Borrower shall be the continuing or surviving
entity, (ii) PFI Holdings and COMSYS Holdings may merge, and each may merge with
any Borrower, provided that such Borrower shall be the continuing or surviving
entity, (iii) PFI Holdings and COMSYS Holdings may merge with and into Holdings
and (iv) any Borrower may merge with any other Borrower, provided that, in the
case of clauses (i) through (iv) above, such Credit Party shall comply with the
provisions set forth in Section 4.12); or
(b) sell, lease, license or otherwise transfer, directly or indirectly,
any of its or their assets, other than:
(i) the granting of licenses of intellectual property (as
licensor) in the ordinary course of business;
(ii) dispositions of cash and Cash Equivalents; and
(iii) dispositions of Equipment for cash and fair value that the
board of directors (or comparable body) of such Credit Party determines in good
faith is no longer used or useful in the business of such Credit Party and its
Subsidiaries if all of the following conditions are met: (1) the market value of
assets sold or otherwise disposed of in any single transaction or series of
related transactions does not exceed $500,000 and the aggregate market value of
assets sold or otherwise disposed of in any Fiscal Year of the Credit Parties
does not exceed $1,000,000 in the aggregate; (2) the Net Cash Proceeds of such
Asset Disposition are applied as required by Section 2.1(c)(iv); (3) after
giving effect to the Asset Disposition and the repayment of Debt with the
proceeds thereof, the Credit Parties are in compliance on a pro forma basis with
the covenants set forth in Article VII recomputed for the most recently ended
quarter for which information is available and are in compliance with all other
terms and conditions of this Agreement; and (4) no Default or Event of Default
then exists or would result from such Asset Disposition. The Agent will upon the
written request of the Borrowers, release its Lien and security interest in any
Collateral that is sold or transferred in a transaction permitted by this
Section 5.7 (other than with respect to a transaction from one Credit Party to
another), provided that the Second Lien Collateral Agent concurrently releases
its Lien and security interest in such Collateral. To facilitate any such
release the Agent will, at the expense of the Borrowers, execute and deliver
release documentation as reasonably requested by the Borrowers.
Section 5.8 PURCHASE OF ASSETS, INVESTMENTS.
Such Credit Party will not, and will not permit any of its Subsidiaries
to, directly or indirectly acquire any assets other than, solely with respect to
the Borrowers and their respective
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Subsidiaries, (i) in the ordinary course of business or (ii) as otherwise set
forth in this Section 5.8. Such Credit Party will not, and will not permit any
Subsidiary to, directly or indirectly make, acquire or own any Investment in any
Person other than:
(a) Investments set forth on the Information Certificate, to the extent
set forth therein (other than (i) Investments in Subsidiaries permitted pursuant
to clause (c) and (j) of this Section 5.8);
(b) Cash Equivalents;
(c) Investments in Borrowers and Domestic Wholly-Owned Subsidiaries of
the Borrowers, so long as (i) all of the outstanding capital stock or other
equity interests of any such Subsidiary or such Borrower, as the case may be,
has been pledged to Agent and (ii) with respect to investments in Subsidiaries
that are not Borrowers, any such Subsidiary has Guaranteed the Obligations and
secured such Guarantee by granting in favor of Agent, for its benefit and the
benefit of the Lenders, a Lien on all or substantially all of the assets;
(d) intercompany loans to Foreign Subsidiaries to the extent permitted
pursuant to Section 5.1(d);
(e) bank deposits established in accordance with Section 5.15;
(f) Investments in securities of Account Debtors received pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such Account Debtors;
(g) Investments in the form of Holdings Loans;
(h) other Investments not described above in an aggregate amount not to
exceed $1,000,000 at any one time outstanding;
(i) Permitted Acquisitions, including the establishment and
capitalization of wholly-owned Subsidiaries in connection therewith; and
(j) Investments of Holdings (to the extent owned by Holdings on the
Closing Date) in the capital stock or other equity securities of (i)
Econometrix, Inc., a California corporation, (ii) AutoHire Development, Inc. and
(iii) VTP-CA, Inc., a North Carolina corporation, provided, in each case, all of
the outstanding capital stock or other equity interests of any such Person owned
by Holdings has been pledged to Agent.
Without limiting the generality of the foregoing, such Credit Party will not,
and will not permit any Subsidiary to, (i) acquire or create any Subsidiary
(other than in connection with a Permitted Acquisition) or (ii) engage in any
joint venture or partnership with any other Person.
Section 5.9 TRANSACTIONS WITH AFFILIATES.
Except (i) as otherwise disclosed in the Information Certificate, (ii) as
permitted pursuant to the terms of this Agreement, (iii) for transactions
between or among the Borrowers, and their
63
Domestic Wholly-Owned Subsidiaries in the ordinary course of business, (iv)
transactions contemplated by the Venturi Staffing Purchase Agreement and (v) for
transactions that are disclosed to Agent in writing in advance of being entered
into and which contain terms that are no less favorable to such Credit Party or
any Subsidiary, as the case may be, than those which might be obtained from a
third party not an Affiliate of any Credit Party, such Credit Party will not,
and will not permit any Subsidiary to, directly or indirectly, enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of the
Credit Parties.
Section 5.10 MODIFICATION OF ORGANIZATIONAL DOCUMENTS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly amend or otherwise modify any Organizational Documents of
such Person in any material respect in a manner that would be adverse to the
rights and remedies of Agent and Lenders or adversely impair the ability of such
Credit Party to perform its obligations under the Financing Documents.
Section 5.11 FISCAL YEAR.
Such Credit Party will not, and will not permit any Subsidiary to, change
its Fiscal Year.
Section 5.12 CONDUCT OF BUSINESS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, engage in any line of business other than those
businesses engaged in on the Closing Date and businesses reasonably related
thereto.
Section 5.13 INTENTIONALLY OMITTED.
Section 5.14 LEASE PAYMENTS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, incur or assume (whether pursuant to a Guarantee or
otherwise) any liability for rental payments under a lease (other than, with
respect to the Credit Parties, leases for real property) with a lease term of
one (1) year or more if, after giving effect thereto, the aggregate amount of
minimum lease payments that Holdings and its Consolidated Subsidiaries have so
incurred or assumed will exceed, on a consolidated basis, $1,000,000 for any
calendar year under all such leases (excluding, with respect to the Credit
Parties, Capital Leases and leases for real property).
Section 5.15 BANK ACCOUNTS.
Without limiting the provisions of Section 6.1(d), such Credit Party will
not, and will not permit any Subsidiary to, directly or indirectly, establish
any new bank account without prior written notice to Agent and unless Agent,
such Credit Party or such Subsidiary and the bank at which the account is to be
opened enter into a control agreement regarding such bank account pursuant to
which such bank acknowledges the security interest of Agent in such bank
account, agrees to comply with instructions originated by Agent directing
disposition of the funds in the bank account without further consent from any
Credit Party, and agrees to subordinate and limit
64
any security interest the bank may have in the bank account on terms reasonably
satisfactory to Agent.
ARTICLE VI
ACCOUNTS REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
To induce Agent and Lenders to enter into this Agreement and to make the
Loans and other credit accommodations contemplated hereby, each Credit Party
hereby represents and warrants to Agent and each Lender, and further agrees with
Agent and each Lender, that:
Section 6.1 ACCOUNTS AND ACCOUNT COLLECTIONS.
(a) Such Credit Party shall notify Agent promptly of: (i) any material
delay in the performance by such Credit Party or any of its Subsidiaries of any
of their material obligations to any Account Debtor or the assertion of any
material claims, offsets, defenses or counterclaims by any Account Debtor, or
any material disputes with Account Debtors, or any settlement, adjustment or
compromise thereof, (ii) all material adverse information known to any Credit
Party relating to the financial condition of any Account Debtor and (iii) any
event or circumstance which, to any Credit Party's knowledge, would result in
any Account no longer constituting an Eligible Account. Each Credit Party hereby
agrees not to grant to any Account Debtor, and to cause each of its Subsidiaries
not to grant to any Account Debtor, any material credit, discount, allowance or
extension, or to enter into any agreement for any of the foregoing, without
Agent's consent, except in the ordinary course of business in accordance with
past practices. So long as no Event of Default has occurred and is continuing,
any such Credit Party may settle, adjust or compromise, and may permit each of
its Subsidiaries to settle, adjust or compromise, any claim, offset,
counterclaim or dispute with any Account Debtor. At any time that an Event of
Default has occurred and is continuing, Agent shall, at its option, have the
exclusive right to settle, adjust or compromise any claim, offset, counterclaim
or dispute with Account Debtors of any Credit Party or grant any credits,
discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice
delivered to Agent or schedule thereof delivered to Agent shall be true and
complete in all material respects, (ii) no payments shall be made thereon except
payments immediately delivered to Agent pursuant to the terms of this Agreement
or any applicable Security Document (to the extent so required), (iii) there
shall be no setoffs, deductions, contras, defenses, counterclaims or disputes
existing or asserted with respect thereto except as reported to Agent in
accordance with the terms of this Agreement, and (iv) none of the transactions
giving rise thereto will violate any applicable laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.
(c) Agent shall have the right at any time or times, upon prior notice
to the Funds Administrator so long as no Default or Event of Default has
occurred and is continuing, in Agent's name or in the name of a nominee of
Agent, to verify the validity, amount or any other matter relating to any
Account or other Collateral, by mail, telephone, e-mail, facsimile transmission
or otherwise; provided, that so long as no Default or Event of Default has
occurred and
65
is continuing, Agent shall afford the Funds Administrator the opportunity to
participate in any such discussions with Account Debtors. To facilitate the
exercise of the right described in the immediately preceding sentence, each
Credit Party hereby agrees to provide Agent upon request the name and address of
each Account Debtor of any Credit Party or any of such Credit Party's
Subsidiaries.
(d) Each Credit Party (other than Foreign Subsidiaries) shall establish
and maintain, at its sole expense, and shall cause each Subsidiary to establish
and maintain, at its sole expense, blocked accounts or lockboxes and related
blocked accounts (in either case, "BLOCKED ACCOUNTS"), as Agent may reasonably
specify, with such banks as are reasonably acceptable to Agent into which such
Credit Party and its Subsidiaries shall promptly deposit and direct their
respective Account Debtors to directly remit all payments on Accounts and all
payments constituting proceeds of Collateral in the identical form in which such
payments are made, whether by cash, check or other manner. Each Credit Party
shall deliver, or cause to be delivered, to Agent a Deposit Account Control
Agreement duly authorized, executed and delivered by each bank where a Blocked
Account for the benefit of such Credit Party or any of its Subsidiaries is
maintained, and by each bank where any other Deposit Account is from time to
time maintained. Each Credit Party shall further execute and deliver, and shall
cause each of its Subsidiaries to execute and deliver, such agreements and
documents as Agent may reasonably require in connection with such Blocked
Accounts, Deposit Accounts and such Deposit Account Control Agreements. Without
limiting the provisions of Section 5.15, no Credit Party shall establish, and no
Credit Party (other than a Foreign Subsidiary) shall cause or permit any of its
Subsidiaries to establish, any Deposit Accounts not existing as of the Closing
Date, unless such Credit Party or its Subsidiaries (as applicable) have complied
in full with the provisions of this Section 6.1 with respect to such Deposit
Accounts. Each Credit Party agrees that all payments made to such Blocked
Accounts or other funds received and collected by Agent or any Lender, whether
in respect of the Accounts, as proceeds of Collateral or otherwise shall be
treated as payments to Agent and Lenders in respect of the Obligations and
therefore shall constitute the property of Agent and Lenders to the extent of
the then outstanding Obligations. The foregoing and anything contained in any
Financing Document to the contrary notwithstanding, the Credit Parties shall not
be required to deliver any such Deposit Account Control Agreements in respect of
(i) any "Payroll Account" or "Payroll Tax Account" (in each case, as defined on
the Bank Account Schedule to the Information Certificate) each maintained at
Wachovia Bank; provided, that, the Credit Parties shall not, and shall not cause
or permit any of their respective Subsidiaries to, deposit or maintain funds in
such account other than funds deposited therein in the ordinary course of
business for purposes of funding current payroll liabilities, (ii) the "Benefit
Accounts" (as defined on the Bank Account Schedule to the Information
Certificate) and the "Pre-Tax Parking Account" (as defined on the Bank Account
Schedule to the Information Certificate) maintained at Wachovia Bank, National
Association; provided, that, in each case, the Credit Parties shall not, and
shall not cause or permit any of their respective Subsidiaries to, deposit or
maintain funds in such accounts other than funds deposited therein at the
direction of such Credit Party's employees to be held therein for the benefit of
the employees of such Credit Party and the Credit Parties will at no time
deposit any of their own assets into such accounts and (iii) any other
Restricted Account; provided, that the Credit Parties shall not, and shall not
cause or permit any of their respective Subsidiaries to, deposit or maintain
funds in such Restricted Accounts other than funds deposited therein in the
ordinary course of business for funding current liabilities. At no time shall
any Credit Party or any of its Subsidiaries deposit, or permit or direct
66
any Account Debtor or any other Person (other than Agent) to deposit, funds
directly into any account maintained by any Credit Party other than the
"Depository Accounts," and/or the "Lockboxes" maintained at Bank of America,
N.A. and Wachovia Bank, National Association (in each case, as defined in the
Information Certificate), provided that VTP may continue to accept checks (to
the extent such arrangements have been established prior to the Closing Date)
from sub-tenants under real property leases so long as (i) the aggregate amount
of all checks received by VTP does not exceed $500,000 in the aggregate per
month and (ii) such checks are promptly deposited by VTP into the Depository
Account maintained at Bank of America, N.A.
(e) For purposes of calculating the amount of the Loans available to the
Borrowers, payments made to a Blocked Account will be applied (conditional upon
final collection) to the Obligations on the Business Day of receipt by Agent of
immediately available funds in the Payment Account provided such payments and
notice thereof are received in accordance with Agent's usual and customary
practices as in effect from time to time and with sufficient time to credit the
Loan Account on such day, and if not, then on the next Business Day. For the
purposes of calculating interest on the Obligations, such payments or other
funds received shall be deemed applied (conditional upon final collection) to
the Obligations one (1) Business Day following the date of receipt of
immediately available funds by Agent in the Payment Account provided such
payments or other funds and notice thereof are received in accordance with
Agent's usual and customary practices as in effect from time to time and with
sufficient time to credit the Loan Account on such day, and if not, then on the
next Business Day.
(f) The Credit Parties and their respective directors, employees,
agents, Subsidiaries and other Affiliates shall, acting as trustee for Agent,
receive, as the property of Agent, any monies, checks, notes, drafts or any
other payment relating to and/or proceeds of Accounts, Inventory or other
Collateral which come into their possession or under their control and
immediately upon receipt thereof, shall deposit or cause the same to be
deposited in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Agent. In no event shall the same be commingled with the
Credit Parties' own funds. Each Credit Party agrees to reimburse Agent on demand
for any amounts owed or paid to any bank at which a Blocked Account is
established or any other bank or Person involved in the transfer of funds to or
from the Blocked Accounts arising out of Agent's payments to or indemnification
of such bank or Person.
(g) as soon as reasonably practicable and in any event no later than
thirty (30) days following the Closing Date, the Borrowers shall cause the
Depository Account maintained at Wachovia Bank to be closed and the Borrowers
shall (a) open a new account at Wachovia Bank in the name of the Borrowers to
replace such account, (b) provide notice to Agent of such new account and direct
all borrowing of Revolving Loans to be deposited into such account and (c)
deliver, or cause to be delivered, to Agent an amended and restated Deposit
Account Control Agreement duly authorized, executed and delivered by Wachovia
and the Borrowers in a form substantially similar to the Deposit Account Control
Agreement entered by and among the Borrowers, and Agent on the Closing Date.
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ARTICLE VII
FINANCIAL COVENANTS
Credit Party that is a party hereto agrees that, so long as any Credit
Exposure exists:
Section 7.1 MINIMUM EBITDA.
The Credit Parties will not permit EBITDA for the four (4) fiscal quarter
period (or such shorter period commencing on October 1, 2004) ending on the last
day of any fiscal quarter ending closest to the date set forth below to be less
than the amount set forth below for such date:
Date Amount
---- ------
December 31, 2004 $ 9,300,000
March 31, 2005 $17,900,000
June 30, 2005 $27,500,000
September 30, 2005 $38,300,000
December 31, 2005 $38,300,000
March 31, 2006 $39,550,000
June 30, 2006 $40,800,000
September 30, 2006 $42,000,000
December 31, 2006 $43,300,000
March 31, 2007 $44,350,000
June 30, 2007 $45,400,000
September 30, 2007 $46,500,000
December 31, 2007 and the last day
of each calendar quarter thereafter $47,500,000
Section 7.2 FIXED CHARGE COVERAGE RATIO.
The Credit Parties will not permit the Fixed Charge Coverage Ratio for the
four (4) fiscal quarter period (or such shorter period commencing on October 1,
2004) ending on the last day of any fiscal quarter to be less than 1.25 to 1.00.
Section 7.3 TOTAL DEBT TO ADJUSTED EBITDA RATIO.
The Credit Parties will not permit the ratio of (i) Total Debt as of the
last day of the fiscal quarter ending closest to the date set forth below to
(ii) Adjusted EBITDA for the four (4) fiscal quarter period ending on such last
day to exceed the ratio set forth below opposite such date:
Date Maximum Ratio
---- -------------
December 31, 2004 4.40 to 1.00
March 31, 2005 4.40 to 1.00
June 30, 2005 4.40 to 1.00
September 30, 2005 4.10 to 1.00
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December 31, 2005 4.00 to 1.00
March 31, 2006 3.75 to 1.00
June 30, 2006 3.50 to 1.00
September 30, 2006 3.25 to 1.00
December 31, 2006 3.00 to 1.00
March 31, 2007 2.85 to 1.00
June 30, 2007 2.65 to 1.00
September 30, 2007 2.45 to 1.00
December 31, 2007 2.25 to 1.00
March 31, 2008 2.20 to 1.00
June 30, 2008 2.15 to 1.00
September 30, 2008 2.10 to 1.00
December 31, 2008 and the last day of each
calendar quarter thereafter 2.00 to 1.00
Section 7.4 MINIMUM REVOLVING LOAN BORROWING AVAILABILITY.
The Credit Parties will not at any time permit Net Borrowing Availability
to be less than $5,000,000. For purposes of this Section 7.4, Net Borrowing
Availability as of any date of calculation shall be calculated by reference to
the Borrowing Base Certificate most recently delivered to Agent in accordance
with the terms of this Agreement, with such adjustments as are appropriate to
accurately reflect outstanding Loan amounts and other credit exposure as of such
date of calculation. In the event the Borrowers shall at any time fail to
deliver to Agent a Borrowing Base Certificate within the time period required
under this Agreement, Agent shall calculate Net Borrowing Availability by
reference to the most recently delivered Borrowing Base Certificate, with such
adjustments to the values of Eligible Billed Accounts and Eligible Unbilled
Accounts as Agent deems appropriate in the exercise of its reasonable credit
judgment.
ARTICLE VIII
CONDITIONS
Section 8.1 CONDITIONS TO CLOSING.
The obligation of each Lender to make the initial Loans and of Agent to
issue any Support Agreements on the Closing Date shall be subject to the receipt
by Agent of each agreement, document and instrument set forth on the Closing
Checklist, each in form and substance reasonably satisfactory to Agent, and to
the consummation of the following conditions precedent, each to the satisfaction
of Agent and Lenders in their sole discretion:
(a) evidence of the consummation of the transactions contemplated by the
Operative Documents, including without limitation (i) the receipt by Agent of a
copy of the file-stamped Certificate of Merger effectuating the Merger under
applicable law and in accordance with the terms of the Merger Documents,
certified as true, correct and complete and recorded by the Secretary of State
of the State of Delaware and (ii) the issuance of the "Series A-1 Preferred
Stock" (as such term is defined in the Holdings Certificate of Designations),
(iii) the funding of the investments contemplated by the Second Lien Debt
Documents (consisting of, among other
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things, the funding of $70,000,000.00 of Second Lien Debt pursuant to the Second
Lien Debt Documents) and (iv) receipt by Agent of evidence of the consummation
of the Venturi Staffing Sale pursuant to the terms of the Venturi Staffing
Purchase Agreement;
(b) the payment of all fees, expenses and other amounts due and payable
under each Financing Document;
(c) the satisfaction of Agent and Lenders as to the absence, since
December 31, 2003, of any material adverse change in the business, operations,
properties or condition (financial or otherwise) of the Credit Parties taken as
a whole, or any event or condition which could reasonably be expected to result
in such a material adverse change;
(d) the receipt of the initial Borrowing Base Certificate, prepared as
of the Closing Date, which certificate shall evidence immediately available
excess borrowing capacity of Revolving Loans of not less than $17,500,000 after
giving effect to the initial funding of Loans on the Closing Date and the
consummation of the transactions contemplated by the Operative Documents;
(e) after giving effect to the initial funding of the Loans and the
consummation of the transactions contemplated by the Operative Documents, the
ratio of (x) Total Debt as of the Closing Date to (y) EBITDA for the twelve (12)
month period ending June 30, 2004 does not exceed 3.90 to 1.00;
(f) receipt by Agent of evidence of completion to the satisfaction of
the Agent of such investigations, reviews and audits with respect to the Credit
Parties as the Agent or any Lender may deem appropriate, including, without
limitation, the field exams conducted by KPMG;
(g) receipt by Agent of payoff letters and releases evidencing (i) the
repayment in full and cancellation of that certain demand intercompany note
issued by COMSYS IT to COMSYS Holdings on August 18, 2004 in the original
aggregate principal amount of $62,500,000 and that certain demand intercompany
note issued by COMSYS IT to COMSYS Holdings on August 18, 2004 in the original
aggregate principal amount of $197,000, (ii) the repayment in full of the Debt
of COMSYS IT owing to Wachovia Investors, Inc. incurred pursuant to the terms of
that certain Amended and Restated Senior Subordinated Credit Agreement dated as
of August 18, 2004 and the termination of all documents executed in connection
therewith, (iii) the repayment in full of the loan made by Bank of America, N.A.
to Xxxxxxx Xxxxxx on September 25, 2001 and, in connection therewith, the
termination of that certain Limited Guaranty dated as of September 25, 2001 by
COMSYS IT in favor of Bank of America, N.A. and that certain Reimbursement
Agreement dated as of September 25, 2001 by and among COMSYS IT, COMSYS
Holdings, GTCR Fund VI, L.P. and Wachovia Corporation, (iv) the repayment in
full of all Debt owing by COMSYS Services pursuant to that certain Credit
Agreement dated as of August 18, 2004 by and among COMSYS Services, COMSYS
Holdings, COMSYS IT, Xxxxxxx Xxxxx, as agent, and the lenders thereunder and (v)
the repayment in full of all Debt owing by the Venturi Credit Parties pursuant
to that certain Second Amended and Restated Credit Agreement dated as of April
14, 2003 by and among the Venturi Credit Parties and The CIT Group/Business
Credit, Inc., as successor in interest to Bank of America, N.A.; and
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(h) receipt by Agent of such other documents, instruments and/or
agreements as Agent may reasonably request.
Section 8.2 CONDITIONS TO EACH LOAN AND SUPPORT AGREEMENT.
Except as set forth in the final paragraph of Section 2.1(c), the
obligation of the Lenders to make a Loan or of Agent to issue any Support
Agreement (including on the Closing Date) is subject to the satisfaction of the
following additional conditions:
(a) in the case of a Revolving Loan Borrowing, receipt by Agent of a
Notice of Borrowing in accordance with Section 2.2(b) and, in the case of any
Support Agreement, receipt by Agent of a Notice of LC Credit Event in accordance
with Section 2.5(a);
(b) the fact that, immediately after such borrowing and after
application of the proceeds thereof or after such issuance, the Revolving Loan
Outstandings will not exceed the Revolving Loan Limit;
(c) the fact that, immediately before and after such borrowing or
issuance, no Default or Event of Default shall have occurred and be continuing;
and
(d) the fact that the representations and warranties of each Credit
Party contained in the Financing Documents shall be true and correct in all
material respects on and as of the date of such borrowing or issuance, except to
the extent that any such representation or warranty (i) relates to a specific
date in which case such representation or warranty shall be true and correct as
of such earlier date and (ii) is qualified by materiality or has Material
Adverse Effect qualifiers, in which case, such representations and warranties
shall be true and correct in all respects on and as of the date of such
borrowing or issuance.
Except as set forth in the final paragraph of Section 2.1(c), each borrowing,
each giving of a Notice of LC Credit Event hereunder and each giving of a Notice
of Borrowing hereunder shall be deemed to be a representation and warranty by
each Credit Party on the date of such borrowing or notice as to the facts
specified in Sections 8.2(b), 8.2(c) and 8.2(d).
ARTICLE IX
EVENTS OF DEFAULT
Section 9.1 EVENTS OF DEFAULT.
For purposes of the Financing Documents, the occurrence of any of the
following conditions and/or events, whether voluntary or involuntary, by
operation of law or otherwise, shall constitute an "Event of Default":
(a) The Borrowers shall fail to pay when due any principal, interest,
premium or fee under any Financing Document or any other amount payable under
any Financing Document;
(b) Any Borrower or other Credit Party shall fail to observe or perform
any covenant contained in the Fee Letter, Section 4.1, Section 4.4, Section 4.7,
Section 4.9, Section 4.10, Article V, Article VI or Article VII;
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(c) any Credit Party defaults in the performance of or compliance with
any term contained in this Agreement or in any other Financing Document (other
than occurrences described in other provisions of this Section 9.1 for which a
different grace or cure period is specified or which constitute immediate Events
of Default) and such default is not remedied or waived within fifteen (15) days
after the earlier of (1) receipt by the Funds Administrator of notice from Agent
or Required Lenders of such default or (2) actual knowledge of any Borrower or
any other Credit Party of such default;
(d) any representation, warranty, certification or statement made by any
Credit Party or any other Person in any Financing Document or in any
certificate, financial statement or other document delivered pursuant to any
Financing Document is incorrect in any respect (or in any material respect if
such representation, warranty, certification or statement is not by its terms
already qualified as to materiality) when made (or deemed made);
(e) (1) failure of any Credit Party to pay when due or within any
applicable grace period any principal, interest or other amount on Debt (other
than the Loans) or in respect of any Swap Contract, or the occurrence of any
breach, default, condition or event with respect to any Debt (other than the
Loans) or in respect of any Swap Contract, if the effect of such failure or
occurrence is to cause or to permit the holder or holders of any such Debt, or
the counterparty under any such Swap Contract, to cause, Debt or other
liabilities having an individual principal amount in excess of $1,000,000 or
having an aggregate principal amount in excess of $1,500,000 to become or be
declared due prior to its stated maturity; or (2) the occurrence of any "Event
of Default" (as defined in the Second Lien Credit Agreement) under the Second
Lien Debt Documents;
(f) any Credit Party shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(g) an involuntary case or other proceeding shall be commenced against
any Credit Party seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of sixty (60) days; or an order for relief
shall be entered against any Credit Party under the federal bankruptcy laws as
now or hereafter in effect;
(h) (1) institution of any steps by any Person to terminate a Pension
Plan if as a result of such termination any Credit Party or any member of the
Controlled Group could be required to make a contribution to such Pension Plan,
or could incur a liability or obligation to such Pension Plan, in excess of
$1,000,000, (2) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA, or (3) there
shall occur any withdrawal or partial withdrawal from a Multiemployer Pension
Plan and the
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withdrawal liability (without unaccrued interest) to Multiemployer Pension Plans
as a result of such withdrawal (including any outstanding withdrawal liability
that any Credit Party or any member of the Controlled Group have incurred on the
date of such withdrawal) exceeds $1,000,000;
(i) one or more judgments or orders for the payment of money aggregating
in excess of $2,000,000 shall be rendered against any or all Credit Parties and
such judgments or orders shall continue unsatisfied and unstayed for a period of
ten (10) days;
(j) (1) any person or group of persons (within the meaning of the
Securities and Exchange Act of 1934) (other than Wachovia Investors, Inc. and
its Affiliates) shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Act on 1934) of fifty
percent (50%) or more of the issued and outstanding shares of capital stock of
Holdings having the right to vote for the election of the directors of Holdings
under ordinary circumstances, (2) Holdings shall cease to directly own and
control one hundred percent (100%) of each class of the outstanding equity
interests of COMSYS Holdings and PFI Holdings, (3) COMSYS Holdings shall cease
to directly own and control one hundred percent (100%) of each class of the
outstanding equity interests of COMSYS IT, (4) COMSYS IT shall cease to directly
own and control one hundred percent (100%) of the equity interests of COMSYS
Services and COMSYS Limited, (5) PFI Holdings shall cease to directly own and
control one hundred percent (100%) of the equity interests of VTP, (6) each
Borrower shall cease to, directly or indirectly, own and control one hundred
percent (100%) of each class of the outstanding equity interests of each
Subsidiary of such Borrower (except, with respect to clauses (2), (3), (4), (5)
and (6), to the extent permitted in Section 5.7(a)), (7) any "Change in
Ownership," "Fundamental Change," or terms of similar import occurs under the
Holdings Certificate of Designations, or (8) a period of ninety (90) consecutive
days shall have elapsed during which Xxxxxxx Xxxxxx shall cease to be the
chairman of the board, chief executive officer or president of each Credit Party
for any reason unless prior to the expiration of such time, a replacement
reasonably satisfactory to Agent shall have been appointed and employed;
(k) the accountant's report or reports on the audited statements
delivered pursuant to Section 4.1(b) shall include any material qualification
(including with respect to the scope of audit) or exception;
(l) any Lien created by any of the Security Documents shall at any time
fail to constitute a valid and perfected Lien on all of the Collateral purported
to be secured thereby, subject to no prior or equal Lien except Permitted Liens,
or any Credit Party shall so assert in writing; provided that an Event of
Default shall occur if at any time the Liens in favor of Agent, for the benefit
of Agent and Lenders, do not have the priority contemplated in the Second Lien
Intercreditor Agreement;
(m) any Credit Party shall be prohibited or otherwise materially
restrained from conducting the business theretofore conducted by it by virtue of
any casualty, any labor strike, any determination, ruling, decision, decree or
order of any court or regulatory authority of competent jurisdiction or any
other event and such casualty, labor strike, determination, ruling, decision,
decree, order or other event remains unstayed and in effect for any period of
ten (10) days;
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(n) (i) any of the Financing Documents or the Second Lien Debt Documents
shall for any reason fail to constitute the valid and binding agreement of any
party thereto (other than, with respect to the Second Lien Debt Documents, to
the extent same are paid in full in accordance with the terms of the Financing
Documents), or any such party shall so assert in writing or (ii) any of the
other Operative Documents shall fail to constitute the valid and binding
agreement of any party thereto, or any such party shall so assert in writing,
and the result of any such failures or asserted failures, as the case may be, of
such Operative Document to be a valid and binding agreement could reasonably be
expected to result in a Material Adverse Effect;
(o) (i) any Security Document or other Financing Document to which
Holdings, PFI Holdings or COMSYS Holdings is a party shall for any reason be
partially (including with respect to future advances) or wholly revoked or
invalidated, or otherwise ceases to be in full force and effect; or (ii)
Holdings or any other Credit Party or any Affiliate thereof shall contest in any
manner the validity or enforceability thereof or deny that it has any further
liability or obligation thereunder; or (iii) Holdings shall engage in any
business activity other than (A) as contemplated by this Agreement, (B)
activities customarily engaged in by public holding companies similarly
situated, (C) activities of the type set forth in Section 5.4(e) and (D) the
performance of its obligations under this Agreement, the Financing Documents to
which it is a party, the Operative Documents and any other instruments,
documents or agreements entered into by Holdings, under the Operative Documents
and any other agreement to which Holdings is a party, to the extent not
otherwise prohibited by this Agreement, or (iv) COMSYS Holdings or PFI Holdings
shall engage in any business activity other than (A) as contemplated by this
Agreement, (B) activities incidental to maintenance of their corporate existence
and (C) the performance of their obligations under this Agreement, the Financing
Documents to which it is a party and the Operative Documents, or
(p) COMSYS Limited shall (i) incur, grant or suffer to exist any Liens
on any material portion of its assets, any Debt or any Contingent Obligations
(except as expressly permitted herein), (ii) issue, sell or dispose of any
equity securities other than to COMSYS IT or (iii) consummate any merger or
consolidation with any other Person.
Section 9.2 ACCELERATION AND SUSPENSION OR TERMINATION OF REVOLVING LOAN
COMMITMENT.
Upon the occurrence and during the continuance of an Event of Default,
Agent may, and shall if requested by Required Lenders, (i) by notice to the
Funds Administrator suspend or terminate the Revolving Loan Commitment, in whole
or in part (and, if in part, such reduction shall be pro rata among the Lenders
having a Revolving Loan Commitment Percentage) and/or (ii) by notice to the
Funds Administrator declare the Obligations to be, and the Obligations shall
thereupon become, immediately due and payable without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other notice
of any kind, all of which are hereby waived by the Borrowers and the Borrowers
will pay the same; provided that in the case of any of the Events of Default
specified in Section 9.1(f) or 9.1(g) above, without any notice to the Funds
Administrator or the Borrowers or any other act by Agent or the Lenders, the
Revolving Loan Commitment shall thereupon terminate and all of the Obligations
shall become immediately due and payable without presentment, demand, protest,
notice of intent to
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accelerate, notice of acceleration or other notice of any kind, all of which are
hereby waived by the Borrowers and the Borrowers will pay the same.
Section 9.3 CASH COLLATERAL.
If (i) any Event of Default specified in Section 9.1(f) or 9.1(g) shall
occur, (ii) the Obligations shall have otherwise been accelerated pursuant to
Section 9.2 or (iii) the Revolving Loan Commitment shall have been terminated
pursuant to Section 9.2, then without any request or the taking of any other
action by Agent or the Lenders, the Borrowers shall immediately comply with the
provisions of Section 2.5(e) with respect to the deposit of cash collateral to
secure the existing Letter of Credit Liability and future payment of related
fees.
Section 9.4 DEFAULT RATE OF INTEREST AND SUSPENSION OF LIBOR RATE OPTIONS.
At the election of Agent or Required Lenders, after the occurrence of an
Event of Default and for so long as it continues, the Loans and other
Obligations shall bear interest at rates that are two percent (2.0%) in excess
of the rates otherwise payable under this Agreement, but in no event in excess
of the Maximum Lawful Rate. Furthermore, at the election of Agent or Required
Lenders during any period in which any Event of Default is continuing (x) as the
Interest Periods for LIBOR Loans then in effect expire, such Loans shall be
converted into Prime Rate Loans and (y) the LIBOR election will not be available
to the Borrowers.
Section 9.5 SETOFF RIGHTS.
During the continuance of any Event of Default, each Lender is hereby
authorized by each Credit Party at any time or from time to time, with
reasonably prompt subsequent notice to the Funds Administrator (any prior or
contemporaneous notice being hereby expressly waived by the Credit Parties) to
set off and to appropriate and to apply any and all (A) balances held by such
Lender at any of its offices for the account of any Credit Party or any of its
Subsidiaries (regardless of whether such balances are then due to such Credit
Party or its Subsidiaries), and (B) other property at any time held or owing by
such Lender to or for the credit or for the account of any Credit Party or any
of its Subsidiaries, against and on account of any of the Obligations; except
that no Lender shall exercise any such right without the prior written consent
of Agent. Any Lender exercising a right to set off shall purchase for cash (and
the other Lenders shall sell) interests in each of such other Lender's Pro Rata
Share of the Obligations as would be necessary to cause all Lenders to share the
amount so set off with each other Lender in accordance with their respective Pro
Rata Share of the Obligations. Each Credit Party agrees, to the fullest extent
permitted by law, that any Lender may exercise its right to set off with respect
to the Obligations as provided in this Section 9.5.
Section 9.6 APPLICATION OF PROCEEDS.
Notwithstanding anything to the contrary contained in this Agreement, upon
the occurrence and during the continuance of an Event of Default, (a) each
Borrower irrevocably waives the right to direct the application of any and all
payments at any time or times thereafter received by Agent from or on behalf of
the Borrowers or any guarantor of all or any part of the Obligations, and, as
between the Borrowers on the one hand and Agent and Lenders on the other, Agent
shall have the continuing and exclusive right to apply and to reapply any and
all payments
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received against the Obligations in such manner as Agent may deem advisable
notwithstanding any previous application by Agent and (b) the proceeds of any
sale of, or other realization upon, all or any part of the Collateral shall be
applied: first, to all fees, costs, indemnities, liabilities, obligations and
expenses incurred by or owing to Agent (in its capacity as the Agent) with
respect to this Agreement, the other Financing Documents or the Collateral;
second, to all fees, costs, indemnities, liabilities, obligations and expenses
incurred by or owing to any Lender with respect to this Agreement, the other
Financing Documents or the Collateral; third, to accrued and unpaid interest on
the Obligations (including any interest which but for the provisions of the
Bankruptcy Code, would have accrued on such amounts); fourth, to the principal
amount of the Obligations outstanding; fifth, to any other indebtedness or
obligations of the Borrowers owing to Agent or any Lender under the Financing
Documents and sixth, to the obligations owing to any Eligible Swap Counterparty
in respect of any Swap Contracts. Any balance remaining shall be delivered, to
the extent applicable, in accordance with the Second Lien Debt Documents, to the
Borrowers or to whomever may be lawfully entitled to receive such balance or as
a court of competent jurisdiction may direct.
ARTICLE X
EXPENSES, INDEMNITY, TAXES AND RIGHT TO PERFORM
Section 10.1 EXPENSES.
Each Borrower hereby agrees to promptly pay (i) all costs and expenses of
Agent (including without limitation the fees, costs and expenses of counsel to,
and independent appraisers and consultants retained by Agent) in connection with
the examination, review, due diligence investigation, documentation,
negotiation, closing and syndication of the transactions contemplated by the
Financing Documents, in connection with the performance by Agent of its rights
and remedies under the Financing Documents and in connection with the continued
administration of the Financing Documents including any amendments,
modifications, consents and waivers to and/or under any and all Financing
Documents, (ii) without limitation of the preceding clause (i), all costs and
expenses of Agent in connection with the creation, perfection and maintenance of
Liens pursuant to the Financing Documents, including title investigations, (iii)
without limitation of the preceding clause (i), expenses of Agent in connection
with protecting, storing, insuring, handling, maintaining or selling any
Collateral and in connection with any workout, collection, bankruptcy,
insolvency and other enforcement proceedings under any and all of the Financing
Documents, and (iv) all costs and expenses incurred by Lenders in connection
with any workout, collection, bankruptcy, insolvency and other enforcement
proceedings under any and all Financing Documents, provided, that to the extent
that the costs and expenses referred to in this clause (iv) consist of fees,
costs and expenses of counsel, the Borrowers shall be obligated to pay such
fees, costs and expenses for only one counsel acting for all Lenders (other than
Agent).
Section 10.2 INDEMNITY.
Each Credit Party that is a party hereto hereby agrees to indemnify, pay
and hold harmless Agent and Lenders and the officers, directors, employees and
counsel of Agent and Lenders (collectively called the "INDEMNITEES") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and
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disbursements of any kind or nature whatsoever (including the fees and
disbursements of counsel for such Indemnitee) in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitee shall be designated a party thereto and including any such proceeding
initiated by or on behalf of a Credit Party, and the reasonable expenses of
investigation by engineers, environmental consultants and similar technical
personnel and any commission, fee or compensation claimed by any broker (other
than any broker retained by Agent or Lenders) asserting any right to payment for
the transactions contemplated hereby, which may be imposed on, incurred by or
asserted against such Indemnitee as a result of or in connection with the
transactions contemplated hereby or by the other Operative Documents (including
(i)(A) as a direct or indirect result of the presence on or under, or escape,
seepage, leakage, spillage, discharge, emission or release from, any property
now or previously owned, leased or operated by any Credit Party, any Subsidiary
of any Credit Party or any other Person of any Hazardous Materials or any
Hazardous Materials Contamination, (B) arising out of or relating to the offsite
disposal of any Hazardous Materials generated or present on any such property or
(C) arising out of or resulting from the environmental condition of any such
property or the applicability of any governmental requirements relating to
Hazardous Materials, whether or not occasioned wholly or in part by any
condition, accident or event caused by any act or omission of any Credit Party
or any Subsidiary of any Credit Party, and (ii) proposed and actual extensions
of credit under this Agreement) and the use or intended use of the proceeds of
the Notes and Letters of Credit, except that no Credit Party shall have any
obligation hereunder to an Indemnitee with respect to any liability resulting
from the gross negligence or willful misconduct of such Indemnitee, as
determined by a court of competent jurisdiction. To the extent that the
undertaking set forth in the immediately preceding sentence may be
unenforceable, each Credit Party shall contribute the maximum portion which it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all such indemnified liabilities incurred by the Indemnitees or
any of them.
Section 10.3 TAXES.
Each Credit Party agrees to pay all governmental assessments, charges or
taxes (except income or other similar taxes imposed on Agent or Lenders),
including any interest or penalties thereon, at any time payable or ruled to be
payable in respect of the existence, execution or delivery of this Agreement or
the other Financing Documents or the issuance of the Notes or Letters of Credit
and to indemnify and hold Agent and Lenders harmless against liability in
connection with any such assessments, charges or taxes.
Section 10.4 RIGHT TO PERFORM.
If any Credit Party fails to perform any obligation hereunder or under any
other Financing Document, Agent itself may, but shall not be obligated to, cause
such obligation to be performed at the Borrowers' expense and the Borrowers
agree to reimburse Agent therefor on demand. All amounts owing hereunder or
under any other Financing Document may be satisfied in full, subject to the
provisions of Section 2.2(a)(ii), through the making of Agent Advances.
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ARTICLE XI
AGENT
Section 11.1 APPOINTMENT AND AUTHORIZATION.
Each Lender hereby irrevocably appoints and authorizes Agent to enter into
each of the Security Documents and the Second Lien Intercreditor Agreement on
its behalf and to take such actions as Agent on its behalf and to exercise such
powers under the Financing Documents as are delegated to Agent by the terms
thereof, together with all such powers as are reasonably incidental thereto.
Except as otherwise expressly provided in Section 12.5 or by the terms of the
Financing Documents, Agent is authorized and empowered to amend, modify, or
waive any provisions of this Agreement or the other Financing Documents on
behalf of Lenders. The provisions of this Article XI are solely for the benefit
of Agent and Lenders (except for the consent rights granted for the benefit of
the Borrowers under Section 11.12 to the extent provided for therein) and
neither the Borrowers nor any other Credit Party shall have any rights as a
third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement, Agent shall act solely as agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for the Borrowers
or any other Credit Party. Agent may perform any of its duties hereunder, or
under the Financing Documents, by or through its agents or employees. Without
limiting the generality of the foregoing, each Lender (x) acknowledges that it
has received a copy of the Second Lien Intercreditor Agreement, (y) consents to
Agent's execution of the Second Lien Intercreditor Agreement on behalf of such
Lender and (z) agrees to be bound by the terms and provisions of the Second Lien
Intercreditor Agreement, including, without limitation, its agreement to sell
its Loans upon exercise of the purchase options contained therein.
Section 11.2 AGENT AND AFFILIATES.
Agent shall have the same rights and powers under the Financing Documents
as any other Lender and may exercise or refrain from exercising the same as
though it were not Agent, and Agent and its Affiliates may lend money to, invest
in and generally engage in any kind of business with each Credit Party or
Affiliate of any Credit Party as if it were not Agent hereunder.
Section 11.3 ACTION BY AGENT.
The duties of Agent shall be mechanical and administrative in nature.
Agent shall not have by reason of this Agreement a fiduciary relationship in
respect of any Lender. Nothing in this Agreement or any of the Financing
Documents, express or implied, is intended to or shall be construed to impose
upon Agent any obligations in respect of this Agreement or any of the Financing
Documents except as expressly set forth herein or therein.
Section 11.4 CONSULTATION WITH EXPERTS.
Agent may consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
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Section 11.5 LIABILITY OF AGENT.
Neither Agent nor any of its directors, officers, agents or employees
shall be liable to any Lender for any action taken or not taken by it in
connection with the Financing Documents, except that Agent shall be liable to
the extent of its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction. Neither Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with any Financing Document or any borrowing hereunder; (ii)
the performance or observance of any of the covenants or agreements specified in
any Financing Document; (iii) the satisfaction of any condition specified in any
Financing Document, except receipt of items required to be delivered to Agent;
(iv) the validity, effectiveness, sufficiency or genuineness of any Financing
Document, any Lien purported to be created or perfected thereby or any other
instrument or writing furnished in connection therewith; (v) the existence or
non-existence of any Default or Event of Default; or (vi) the financial
condition of any Credit Party. Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex, facsimile or electronic transmission or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties. Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith and if any such apportionment
or distribution is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made, shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such other Lenders hereby agree to return to such
Lender any such erroneous payments received by them).
Section 11.6 INDEMNIFICATION.
Each Lender shall, in accordance with its Pro Rata Share, indemnify Agent
(to the extent not reimbursed by the Credit Parties) against any cost, expense
(including counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from Agent's gross negligence or willful
misconduct as determined by a court of competent jurisdiction) that Agent may
suffer or incur in connection with the Financing Documents or any action taken
or omitted by Agent hereunder or thereunder. If any indemnity furnished to Agent
for any purpose shall, in the opinion of Agent, be insufficient or become
impaired, Agent may call for additional indemnity and cease, or not commence, to
do the acts indemnified against even if so directed by Required Lenders until
such additional indemnity is furnished. The obligations of Lenders under this
Section 11.6 shall survive the payment in full of the Obligations and the
termination of this Agreement.
Section 11.7 RIGHT TO REQUEST AND ACT ON INSTRUCTIONS.
Agent may at any time request instructions from Lenders with respect to
any actions or approvals which by the terms of this Agreement or of any of the
Financing Documents Agent is permitted or desires to take or to grant, and if
such instructions are promptly requested, Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Financing Documents until it shall
have received such
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instructions from Required Lenders or all or such other portion of the Lenders
as shall be prescribed by this Agreement. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting under this Agreement or any of the other
Financing Documents in accordance with the instructions of Required Lenders and,
notwithstanding the instructions of Required Lenders, Agent shall have no
obligation to take any action if it believes, in good faith, that such action
exposes Agent to any liability for which it has not received satisfactory
indemnification in accordance with the provisions of Section 11.6.
Section 11.8 CREDIT DECISION.
Each Lender acknowledges that it has, independently and without reliance
upon Agent or any other Lender, and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon Agent or any other Lender, and 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 any action under the Financing
Documents.
Section 11.9 COLLATERAL MATTERS.
Lenders irrevocably authorize Agent, at its option and in its discretion,
to release any Lien granted to or held by Agent under any Security Document (i)
upon termination of the Revolving Loan Commitment and payment in full of all
Obligations and the expiration, termination or cash collateralization (to the
satisfaction of Agent) of all Letters of Credit; or (ii) constituting property
sold or to be sold or disposed of as part of or in connection with any
disposition permitted under any Financing Document (it being understood and
agreed that Agent may conclusively rely without further inquiry on a certificate
of a Responsible Officer as to the sale or other disposition of property being
made in full compliance with the provisions of the Financing Documents). Upon
request by Agent at any time, Lenders will confirm in writing Agent's authority
to release particular types or items of Collateral pursuant to this Section
11.9.
Section 11.10 AGENCY FOR PERFECTION.
Agent and each Lender hereby appoint each other Lender as agent for the
purpose of perfecting Agent's security interest in assets which, in accordance
with the Uniform Commercial Code in any applicable jurisdiction, can be
perfected by possession or control. Should any Lender (other than Agent) obtain
possession or control of any such assets, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefore, shall deliver such assets
to Agent or in accordance with Agent's instructions or transfer control to Agent
in accordance with Agent's instructions. Each Lender agrees that it will not
have any right individually to enforce or seek to enforce any Security Document
or to realize upon any Collateral for the Loans unless instructed to do so by
Agent, it being understood and agreed that such rights and remedies may be
exercised only by Agent.
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Section 11.11 NOTICE OF DEFAULT.
Agent shall not be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default except with respect to defaults in the payment
of principal, interest and fees required to be paid to Agent for the account of
Lenders, unless Agent shall have received written notice from a Lender or a
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." Agent will notify
each Lender of its receipt of any such notice. Agent shall take such action with
respect to such Default or Event of Default as may be requested by Required
Lenders in accordance with the terms hereof. Unless and until Agent has received
any such request, 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 or in the best interests of Lenders.
Section 11.12 SUCCESSOR AGENT.
Agent may resign at any time by giving written notice thereof to the
Lenders and the Funds Administrator (or immediately without notice to any Person
upon exercise of the purchase options contained in the Second Lien Intercreditor
Agreement). Upon any such resignation, Required Lenders shall have the right to
appoint a successor Agent; provided that, so long as no Default or Event of
Default exists, the Required Lenders shall obtain the consent of the Funds
Administrator (which consent shall not be unreasonably withheld or delayed)
prior to appointing any such successor agent. If no successor Agent shall have
been so appointed by Required Lenders, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent gives notice of resignation,
then the retiring Agent may, on behalf of Lenders, appoint a successor Agent,
which shall be an institution organized or licensed under the laws of the United
States of America or of any State thereof; provided that, so long as no Default
or Event of Default exists, the Required Lenders shall obtain the consent of the
Funds Administrator (which consent shall not be unreasonably withheld or
delayed) prior to appointing any such successor agent. Upon the acceptance of
its appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
Section 11.13 DISBURSEMENTS OF REVOLVING LOANS; PAYMENT.
(a) Revolving Loan Advances, Payments and Settlements; Interest and Fee
Payments.
(i) Agent shall have the right, on behalf of Lenders, to disburse
funds to the Borrowers (or to the Funds Administrator for the account of the
Borrowers) for all Revolving Loans requested by the Funds Administrator pursuant
to the terms of this Agreement. Absent the prior receipt by Agent of a written
notice from any Lender pursuant to which such Lender notifies Agent that such
Lender shall cease making Revolving Loans (whether due to the existence of a
Default or Event of Default or otherwise), Agent shall be conclusively entitled
to assume, for purposes of the preceding sentence, that each Lender will fund
its Pro Rata Share of all Revolving Loans requested by the Funds Administrator.
Each Lender shall reimburse Agent
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on demand, in accordance with the provisions of the immediately following
paragraph, for all funds disbursed on its behalf by Agent pursuant to the first
sentence of this clause (i), or if Agent so requests, each Lender will remit to
Agent its Pro Rata Share of any Revolving Loan before Agent disburses the same
to the Borrowers or the Funds Administrator. If Agent elects to require that
each Lender make funds available to Agent, prior to a disbursement by Agent to
the Funds Administrator or any Borrower, as the case may be, Agent shall advise
each Lender by telephone, facsimile or e-mail of the amount of such Lender's Pro
Rata Share of the Revolving Loan requested by the Funds Administrator no later
than noon (Chicago time) on the date of funding of such Revolving Loan, and each
such Lender shall pay Agent on such date such Lender's Pro Rata Share of such
requested Revolving Loan, in same day funds, by wire transfer to the Payment
Account, or such other account as may be identified in writing by Agent to
Lenders from time to time. If any Lender fails to pay the amount of its Pro Rata
Share within one (1) Business Day after Agent's demand, Agent shall promptly the
notify the Funds Administrator, and the Borrowers shall immediately repay such
amount to Agent. Any repayment required pursuant to this Section 11.13 shall be
without premium or penalty. Nothing in this Section 11.13 or elsewhere in this
Agreement or the other Financing Documents shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights that
Agent or the Borrowers may have against any Lender as a result of any default by
such Lender hereunder.
(ii) On a Business Day of each week as selected from time to time
by Agent, or more frequently (including daily), if Agent so elects (each such
day being a "SETTLEMENT DATE"), Agent will advise each Lender by telephone,
facsimile or e-mail of the amount of each such Lender's Pro Rata Share of the
Revolving Loan balance (including any Agent Advances) as of the close of
business of the Business Day immediately preceding the Settlement Date. In the
event that payments are necessary to adjust the amount of such Lender's actual
Pro Rata Share of the Revolving Loan balance to such Lender's required Pro Rata
Share of the Revolving Loan balance as of any Settlement Date, the party from
which such payment is due (i) shall be deemed, irrevocably and unconditionally,
to have purchased, without recourse or warranty, an undivided interest and
participation in the Revolving Loans sufficient to equate such Lender's actual
Pro Rata Share of the Revolving Loan balance as of such Settlement Date with
such Lender's required Pro Rata Share of the Revolving Loans as of such date and
(ii) shall pay Agent, without setoff or discount, in same day funds, by wire
transfer to the Payment Account not later than noon (Chicago time) on the
Business Day following the Settlement Date the full purchase price for such
interest and participation, equal to one hundred percent (100%) of the principal
amount of the Revolving Loans being purchased and sold. In the event settlement
shall not have occurred by the date and time specified in the immediately
preceding sentence, interest shall accrue on the unsettled amount at the Federal
Funds Rate, for the first three (3) days following the scheduled date of
settlement, and thereafter at the Prime Rate plus the Prime Rate Margin.
(iii) On each Settlement Date, Agent shall advise each Lender by
telephone, facsimile or e-mail of the amount of such Lender's Pro Rata Share of
principal, interest and fees paid for the benefit of Lenders with respect to
each applicable Loan, to the extent of such Lender's credit exposure with
respect thereto, and shall make payment to such Lender not later than noon
(Chicago time) on the Business Day following the Settlement Date of such amounts
in accordance with wire instructions delivered by such Lender to Agent, as the
same may be
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modified from time to time by written notice to Agent; provided, that, in the
case such Lender is a Defaulted Lender, Agent shall be entitled to set off the
funding short-fall against that Defaulted Lender's respective share of all
payments received from the Borrowers.
(iv) The provisions of this Section 11.13(a) shall be deemed to be
binding upon Agent and Lenders notwithstanding the occurrence of any Default or
Event of Default, or any insolvency or bankruptcy proceeding pertaining to any
Borrower or other Credit Party.
(b) Term Loan Principal Payments. Payments of principal of the Term Loan
will be settled on the date of receipt if received by Agent on the first
Business Day of a month or on the Business Day immediately following the date of
receipt if received on any day other than the first Business Day of a month.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from any Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind, together with interest accruing
on a daily basis at the Federal Funds Rate.
(ii) If Agent determines at any time that any amount received by
Agent under or in connection with this Agreement must be returned to any
Borrower or other Credit Party or paid to any other Person pursuant to any
insolvency law or otherwise, then, notwithstanding any other term or condition
of this Agreement or any other Financing Document, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Agent on demand any portion of such amount that Agent has distributed
to such Lender, together with interest at such rate, if any, as Agent is
required to pay to such Credit Party or such other Person, without setoff,
counterclaim or deduction of any kind.
(d) Defaulted Lenders. The failure of any Defaulted Lender to make any
Revolving Loan or any payment required by it hereunder shall not relieve any
other Lender of its obligations to make such Revolving Loan or payment, but
neither any Lender nor Agent shall be responsible for the failure of any
Defaulted Lender to make a Revolving Loan or make any other payment required
hereunder. Notwithstanding anything set forth herein to the contrary, a
Defaulted Lender shall not have any voting or consent rights under or with
respect to any Financing Document or constitute a "Lender" (or be included in
the calculation of "Required Lenders" hereunder) for any voting or consent
rights under or with respect to any Financing Document. At the Borrowers'
request, Agent or a Person reasonably acceptable to Agent shall have the right
with Agent's consent and in Agent's sole discretion (but shall have no
obligation) to purchase from any Defaulted Lender, and each Defaulted Lender
agrees that it shall, at Agent's request, sell and assign to Agent or such
Person, all of the lending commitments and commitment interests of that
Defaulted Lender for an amount equal to the principal balance of all Loans held
by such Defaulted Lender and all accrued interest and fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
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Section 11.14 ADDITIONAL TITLED AGENTS.
Except for rights and powers, if any, expressly reserved under this
Agreement to any bookrunner, arranger, syndication agent, documentation agent or
to any other titled agent named on the cover page of this Agreement, other than
Agent (collectively, the "ADDITIONAL TITLED AGENTS"), and except for
obligations, liabilities, duties and responsibilities, if any, expressly assumed
under this Agreement by any Additional Titled Agent, no Additional Titled Agent,
in such capacity, has any rights, powers, liabilities, duties or
responsibilities hereunder or under any of the other Financing Documents.
Without limiting the foregoing, no Additional Titled Agent shall have or be
deemed to have a fiduciary relationship with any Lender. At any time that any
Lender serving as an Additional Titled Agent shall have transferred to any other
Person (other than in connection with any assignment which, pursuant to Section
12.6, does not require the consent of the Agent or any Borrower prior to the
occurrence and continuance of an Event of Default) all of its interests in the
Loans and in the Revolving Loan Commitment, such Lender shall be deemed to have
concurrently resigned as such Additional Titled Agent. No successor or
replacement Additional Titled Agent shall be designated or elected to serve upon
the resignation or deemed resignation by any Person of its role as an Additional
Titled Agent.
ARTICLE XII
MISCELLANEOUS
Section 12.1 SURVIVAL.
All agreements, representations and warranties made herein and in every
other Financing Document shall survive the execution and delivery of this
Agreement and the other Financing Documents and the other Operative Documents
and the execution, sale and delivery of the Notes. The indemnities and
agreements set forth in Article VI and Article X shall survive the payment of
the Obligations and any termination of this Agreement.
Section 12.2 NO WAIVERS.
No failure or delay by Agent or any Lender in exercising any right, power
or privilege under any Financing Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein and therein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 12.3 NOTICES.
All notices, requests and other communications to any party hereunder
shall be in writing (including prepaid overnight courier, facsimile
transmission, e-mail transmission or similar writing) and shall be given to such
party at its address, facsimile number or e-mail address set forth on the
signature pages hereof (or, in the case of any such Lender who becomes a Lender
after the date hereof, in an Assignment Agreement or in a notice delivered to
the Funds Administrator, and Agent by the assignee Lender forthwith upon such
assignment) or at such other address, facsimile number or e-mail address as such
party may hereafter specify for the purpose by notice to Agent and the Funds
Administrator; provided, that notices, requests or other
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communications shall be permitted by e-mail only where expressly provided in the
Financing Documents. Each such notice, request or other communication shall be
effective (i) if given by facsimile or e-mail, when such notice is transmitted
to the facsimile number or e-mail address specified by this Section or (ii) if
given by mail, prepaid overnight courier or any other means, when received at
the applicable address specified by this Section.
Section 12.4 SEVERABILITY.
In case any provision of or obligation under this Agreement or the Notes
or any other Financing Document shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
Section 12.5 AMENDMENTS AND WAIVERS.
Any provision of this Agreement or the Notes may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the Funds
Administrator, each Borrower, each other Credit Party that is a party hereto and
the Required Lenders (and, if (x) any amendment would increase either such
Lender's Revolving Loan Commitment Amount or increase such Lender's funding
obligations in respect of any Term Loan, by such Lender and (y) the rights or
duties of Agent or LC Issuer are affected thereby, by Agent or the LC Issuer, as
the case may be); provided that no such amendment or waiver shall:
(a) unless signed by all the Lenders: (i) reduce the principal of, rate
of interest on or any fees with respect to any Loan or Reimbursement Obligation;
(ii) postpone the date fixed for any payment (other than a payment pursuant to
Section 2.1(c)) of principal of any Loan, or of any Reimbursement Obligation or
of interest on any Loan or any Reimbursement Obligation or any fees hereunder or
for any termination of any commitment; (iii) change the definition of the term
Required Lenders or the percentage of Lenders which shall be required for
Lenders to take any action hereunder; (iv) amend or waive this Section 12.5 or
the definitions of the terms used in this Section 12.5 insofar as the
definitions affect the substance of this Section 12.5; (v) consent to the
assignment, delegation or other transfer by any Credit Party of any of its
rights and obligations under any Financing Document; and
(b) unless signed by all the Lenders (other than Lenders who are also
Second Lien Lenders or Affiliates or Related Funds of Second Lien Lenders): (i)
increase the Revolving Commitment Amount; (ii) increase any of the advance rates
set forth in the Borrowing Base Certificate or (iii) increase any of the dollar
limitations set forth in Section 5.7.
Section 12.6 ASSIGNMENTS; PARTICIPATIONS.
(a) Assignments.
(i) Any Lender may at any time assign to one or more Eligible
Assignees all or any portion of such Lender's Loans and interest in the
Revolving Loan Commitment, together with all related obligations of such Lender
hereunder. Except as Agent may otherwise agree, the amount of any such
assignment (determined as of the date of the applicable Assignment Agreement or,
if a "Trade Date" is specified in such Assignment Agreement, as of such Trade
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Date) shall be in a minimum aggregate amount equal to $1,000,000 or, if less,
the assignor's entire interests in the Revolving Loan Commitment and outstanding
Loans. The Funds Administrator, the Borrowers and Agent shall be entitled to
continue to deal solely and directly with such Lender in connection with the
interests so assigned to an Eligible Assignee until Agent shall have received
and accepted an effective Assignment Agreement executed, delivered and fully
completed by the applicable parties thereto and a processing fee of $3,500.
(ii) From and after the date on which the conditions described in
clause (i) above have been met, (i) such Eligible Assignee shall be deemed
automatically to have become a party hereto and, to the extent of the interests
assigned to such Eligible Assignee pursuant to such Assignment Agreement, shall
have the rights and obligations of a Lender hereunder and (ii) the assigning
Lender, to the extent that rights and obligations hereunder have been assigned
by it pursuant to such Assignment Agreement, shall be released from such rights
(other than its indemnification rights) and obligations (other than those
obligations set forth in Section 11.6 or Section 12.8, respectively), and, in
the case of an assignment of all interests, shall cease to be a "Lender"
hereunder. Each Assignee (x) acknowledges that it has received a copy of the
Second Lien Intercreditor Agreement, (y) consents to Agent's execution and
delivery of the Second Lien Intercreditor Agreement on behalf of such Assignee
and (z) agrees to be bound by the terms and provisions of the Second Lien
Intercreditor Agreement, including, without limitation, its agreement to sell
its Loans upon exercise of the purchase options contained therein. Upon the
request of the Eligible Assignee (and, as applicable, the assigning Lender)
pursuant to an effective Assignment Agreement, Borrowers shall execute and
deliver to Agent for delivery to the Eligible Assignee (and, as applicable, the
assigning Lender) Notes in the aggregate principal amount of the Eligible
Assignee's percentage interest in the Revolving Loan Commitment plus the
principal amount of the Eligible Assignee's Term Loan (and, as applicable, Notes
in the principal amount of that portion of the Revolving Loan Commitment
retained by the assigning Lender plus the principal amount of the Term Loan
retained by the assigning Lender). Upon receipt by the assigning Lender of such
Note, the assigning Lender shall return to the Funds Administrator any prior
Note held by it.
(iii) Agent, acting solely for this purpose as an agent of the
Borrowers, shall maintain at its offices located in Chicago, Illinois a copy of
each Assignment Agreement delivered to it and a register for the recordation of
the names and addresses of each Lender, and the commitments of, and principal
amount of the Loans owing to, such Lender pursuant to the terms hereof. The
entries in such register shall be conclusive, and the Borrowers, Agent and
Lenders may treat each Person whose name is recorded therein pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. Such register shall be available for
inspection by the Borrowers and any Lender, at any reasonable time upon
reasonable prior notice to Agent.
(iv) Notwithstanding the foregoing provisions of this Section
12.6(a) or any other provision of this Agreement, any Lender may at any time
pledge or assign a security interest in all or any portion of its rights under
this Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
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(b) Participations.
Any Lender may at any time, without the consent of, or notice to, any
Borrower or any other Credit Party, or to Agent or any other Lender, sell to one
or more Persons participating interests in its Loans, commitments or other
interests hereunder (any such Person, a "PARTICIPANT"). In the event of a sale
by a Lender of a participating interest to a Participant, (a) such Lender's
obligations hereunder shall remain unchanged for all purposes, (b) the Borrowers
and Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations hereunder and (c) all
amounts payable by the Borrowers shall be determined as if such Lender had not
sold such participation and shall be paid directly to such Lender. Each
Participant (x) acknowledges that it has received a copy of the Second Lien
Intercreditor Agreement, (y) consents to Agent's execution and delivery of the
Second Lien Intercreditor Agreement on behalf of such Participant and (z) agrees
that its participating interest is subject to the terms and provisions of the
Second Lien Intercreditor Agreement. No Participant shall have any direct or
indirect voting rights hereunder except with respect to any event described in
Section 12.5 expressly requiring the unanimous vote of all Lenders or, as
applicable, all affected Lenders (provided that no Participant that is a Second
Lien Lender or an Affiliate or a Related Fund of a Second Lien Lender shall be
permitted to vote with respect to any event described in Section 12.5(b)). Each
Lender agrees to incorporate the requirements of the preceding sentence into
each participation agreement which such Lender enters into with any Participant.
Each Borrower agrees that if amounts outstanding under this Agreement are due
and payable (as a result of acceleration or otherwise), 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 with respect to any Letter of Credit
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement; provided that such right of
set-off shall be subject to the obligation of each Participant to share with
Lenders, and Lenders agree to share with each Participant, as provided in
Section 9.5.
Section 12.7 HEADINGS.
Headings and captions used in the Financing Documents (including the
Exhibits, Schedules and Annexes hereto and thereto) are included for convenience
of reference only and shall not be given any substantive effect.
Section 12.8 CONFIDENTIALITY.
In handling any confidential information of any Credit Party, Agent and
each Lender shall exercise the same degree of care that it exercises with
respect to its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement, except that disclosure of such information may be
made (i) subject to a confidentiality obligation similar to the one set forth in
this Section 12.8, to their respective agents, employees, Subsidiaries,
Affiliates, attorneys, auditors, professional consultants, rating agencies,
insurance industry associations and portfolio management services, (ii) to
prospective transferees or purchasers of any interest in the Loans, provided
that they have agreed to be bound by the provisions of this Section 12.8, (iii)
as required by law, subpoena, judicial order or similar order and in connection
with any litigation and (iv) as may be required in connection with the
examination, audit or similar investigation of
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such Person. Confidential information shall include only such information
identified as such at the time provided to Agent and shall not include
information that either: (i) is in the public domain, or becomes part of the
public domain after disclosure to such Person through no fault of such Person,
or (ii) is disclosed to such Person by a Person other than a Credit Party,
provided Agent does not have actual knowledge that such Person is prohibited
from disclosing such information. The obligations of Agent and Lenders under
this Section 12.8 shall supersede and replace the obligations of Agent and
Lenders under any confidentiality agreement in respect of this financing
executed and delivered by Agent or any Lender prior to the date hereof.
Section 12.9 GOVERNING LAW; SUBMISSION TO JURISDICTION.
THIS AGREEMENT, EACH NOTE AND EACH OTHER FINANCING DOCUMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
EACH CREDIT PARTY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF XXXX, STATE OF ILLINOIS AND IRREVOCABLY
AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE OTHER FINANCING DOCUMENTS SHALL BE
LITIGATED IN SUCH COURTS. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS TO
THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH CREDIT
PARTY BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO
SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE
SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
Section 12.10 WAIVER OF JURY TRIAL.
EACH CREDIT PARTY, AGENT AND LENDER EACH HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
Section 12.11 PUBLICATION; ADVERTISEMENT.
(a) Publication. Except as required by law, subpoena or judicial order,
no Credit Party will directly or indirectly publish, disclose or otherwise use
in any public disclosure, advertising material, promotional material, press
release or interview, any reference to the name, logo or any trademark of
Xxxxxxx Xxxxx or any of its Affiliates or any reference to this Agreement or the
financing evidenced hereby, in any case without Xxxxxxx Xxxxx'x prior written
consent.
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(b) Advertisement. Each Credit Party hereby authorizes Xxxxxxx Xxxxx to
publish the name of such Credit Party and the amount of the financing evidenced
hereby in any "tombstone" or comparable advertisement which Xxxxxxx Xxxxx elects
to publish. In addition, each Credit Party agrees that Xxxxxxx Xxxxx may provide
lending industry trade organizations with information necessary and customary
for inclusion in league table measurements after the Closing Date. With respect
to any of the foregoing, Xxxxxxx Xxxxx shall provide the Funds Administrator
with an opportunity to review and confer with Xxxxxxx Xxxxx regarding the
contents of any such tombstone, advertisement or information, as applicable,
prior to its publication or disclosure.
Section 12.12 COUNTERPARTS; INTEGRATION.
This Agreement and the other Financing Documents may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement and the other Financing Documents constitute the entire agreement and
understanding among the parties hereto and supersede any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.
ARTICLE XIII
LIABILITY OF THE BORROWERS
Section 13.1 JOINT AND SEVERAL LIABILITY.
Each Borrower hereby agrees that such Borrower is jointly and severally
liable for the full and prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of, all Obligations owed or hereafter
owing to the Agent and the Lenders. Each Borrower agrees that its obligations
under this Article XIII shall not be discharged until indefeasible payment and
performance, in full in cash, of the Obligations has occurred, and that its
obligations under this Agreement shall be absolute and unconditional,
irrespective of, and unaffected by,
(a) the genuineness, validity, regularity, enforceability or any future
amendment of, or change in, this Agreement, any other Financing Document or any
other agreement, document or instrument to which any Borrower or any other
Credit Party is or may become a party;
(b) the existence, value or condition of, or failure by the Agent or any
Lender to perfect its Lien against, any security for the Obligations, or any
action, or the absence of any action, by the Agent or any of the Lenders in
respect thereof (including the release of any such Lien); or
(c) the insolvency of any Credit Party.
Section 13.2 WAIVERS BY THE BORROWERS.
Each Borrower expressly waives all rights it may have now or in the future
under any statute, or at common law, or at law or in equity, or otherwise, to
compel the Agent or the Lenders to marshal assets or to proceed in respect of
the Obligations hereunder against any other
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Credit Party, any other Person or against any security for the payment,
performance and observance of the Obligations before proceeding against, or as a
condition to proceeding against, such Borrower. It is agreed among each
Borrower, Agent and the Lenders that the foregoing waivers are of the essence of
the transaction contemplated by this Agreement and the other Financing Documents
and that, but for the provisions of this Article XIII and such waivers, the
Agent and the Lenders would decline to enter into this Agreement.
Section 13.3 BENEFIT.
Each Borrower agrees that the provisions of this Article XIII are for the
benefit of the Agent and the Lenders and their respective successors,
transferees, endorsees and assigns, and nothing herein contained shall impair,
as between any other Borrower and the Agent or the Lenders, the obligations of
such other Borrower under the Financing Documents.
Section 13.4 WAIVER OF SUBROGATION, ETC.
Notwithstanding anything to the contrary in this Agreement or in any other
Financing Document, and except as set forth in Section 13.7, each Borrower
hereby expressly and irrevocably waives any and all rights at law or in equity
to subrogation, reimbursement, exoneration, contribution, indemnification or set
off and any and all defenses available to a co-obligor. Each Borrower
acknowledges and agrees that this waiver is intended to benefit the Agent and
the Lenders and shall not limit or otherwise affect such Borrower's liability
hereunder or the enforceability of this Article XIII, and that the Agent, the
Lenders and their respective successors and assigns are intended third party
beneficiaries of the waivers and agreements set forth in this Section 13.4.
Section 13.5 ELECTION OF REMEDIES.
If the Agent or any Lender may, under applicable law, proceed to realize
its benefits under any of the Financing Documents giving the Agent or such
Lender a Lien upon any Collateral, whether owned by any Borrower, any other
Credit Party or by any other Person, either by judicial foreclosure or by
non-judicial sale or enforcement, the Agent or such Lender may, at its sole
option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Article XIII. If, in the
exercise of any of its rights and remedies, the Agent or such Lender shall
forfeit any of its rights or remedies, including its right to enter a deficiency
judgment against any Borrower, any other Credit Party or any other Person,
whether because of any applicable laws pertaining to "election of remedies" or
the like, each Borrower and each other Credit Party hereby consents to such
action by the Agent or such Lender, as the case may be, and waives any claim
such Borrower or such other Credit Party may have based upon such action, even
if such action by the Agent or such Lender shall result in a full or partial
loss of any rights of subrogation or any other similar rights that such Borrower
might otherwise have had but for such action by the Agent or such Lender. Any
election of remedies that results in the denial or impairment of the right of
the Agent or any Lender to seek a deficiency judgment against any Borrower or
other Credit Party shall not impair any other Borrower's obligation to pay the
full amount of the Obligations. In the event the Agent or any Lender shall bid
at any foreclosure or trustee's sale or at any private sale permitted by law or
the Financing Documents, the Agent or such Lender may bid all or less than the
amount of the
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Obligations and the amount of such bid need not be paid by the Agent or such
Lender but shall be credited against the Obligations. The amount of the
successful bid at any such sale, whether the Agent, any Lender or any other
Person is the successful bidder, shall be conclusively deemed to be the fair
market value of the Collateral and the difference between such bid amount and
the remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations under this Article XIII, notwithstanding that any
present or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which the Agent or any Lender
might otherwise be entitled but for such bidding at any such sale.
Section 13.6 LIMITATION.
Notwithstanding any provision in this Article XIII to the contrary, each
Borrower's liability hereunder and under the other Financing Documents or in
respect of the Obligations shall be limited to an amount not to exceed as of any
date of determination the amount that could be claimed by the Agent and the
Lenders from such Borrower without rendering such claim voidable or avoidable
under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable
state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or
similar statute or common law after taking into account, among other things,
such Borrower's right of contribution and indemnification from each other
Borrower under Section 13.7.
Section 13.7 CONTRIBUTION WITH RESPECT TO OBLIGATIONS.
(a) To the extent that any Borrower shall make a payment in respect of
all or any of the Obligations (a "PAYMENT") that, taking into account all other
Payments then previously or concurrently made by any other Borrower, exceeds the
amount that such Borrower would otherwise have paid if each Borrower had paid
the aggregate Obligations satisfied by such Payment in the same proportion that
such Borrower's "Allocable Amount" (as defined below) (as determined immediately
prior to such Payment) bore to the aggregate Allocable Amounts of each of the
Borrowers as determined immediately prior to the making of such Payment, then,
following indefeasible payment in full in cash of the Obligations and
termination of the Commitments, such Borrower shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Borrower for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Payment.
(b) As of any date of determination, the "ALLOCABLE AMOUNT" of any
Borrower shall be equal to the maximum amount of the claim that could then be
recovered from such Borrower without rendering such claim voidable or avoidable
under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable
state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or
similar statute or common law.
(c) This Section 13.7 is intended only to define the relative rights of
Borrowers and nothing set forth in this Section 13.7 is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 13.1. Nothing contained in this Section
13.7 shall limit the liability of any Borrower to pay the Loans made to or for
the account of any Borrower and accrued interest, fees and expenses with respect
thereto.
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(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrowers to which such
contribution and indemnification is owing.
(e) The rights of the contributing and indemnifying Borrowers against
other Credit Parties under this Section 13.7 shall be exercisable upon the full
and indefeasible payment of the Obligations and the termination of the
Commitments.
Section 13.8 LIABILITY CUMULATIVE.
The liability of Borrowers under this Article XIII is in addition to and
shall be cumulative with all liabilities of each Borrower to the Agent and the
Lenders under this Agreement and the other Financing Documents to which such
Borrower is a party or in respect of any Obligations or obligation of the other
Borrowers, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.
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signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWERS AND FUNDS ADMINISTRATOR:
COMSYS SERVICES LLC, a Delaware limited
liability company, as the Funds Administrator
and as a Borrower
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Senior Vice President - Corporate Development
COMSYS INFORMATION TECHNOLOGY SERVICES, INC.,
a Delaware corporation, as a Borrower
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Senior Vice President - Corporate Development
VENTURI TECHNOLOGY PARTNERS, LLC,
a North Carolina limited liability company,
as a Borrower
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Senior Vice President - Corporate Development
Address:
0000 Xxxx Xxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn.: Xxxxx Xxxx and Xxxxx Xxxx
Fax: (000) 000-0000; (000) 000-0000
with a copy to:
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
000 Xxxx 0xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx, P.C.
Facsimile: (000) 000-0000
OTHER CREDIT PARTIES:
COMSYS IT PARTNERS, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Senior Vice President - Corporate Development
COMSYS HOLDING, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Senior Vice President - Corporate Development
PFI CORP., a Delaware corporation
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Senior Vice President - Corporate Development
Address:
0000 Xxxx Xxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn.: Xxxxx Xxxx and Xxxxx Xxxx
Fax: (000) 000-0000; (000) 000-0000
with a copy to:
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
000 Xxxx 0xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx, P.C.
Facsimile: (000) 000-0000
AGENT AND LENDER:
XXXXXXX XXXXX CAPITAL, a division of Xxxxxxx Xxxxx
Business Financial Services Inc., as Agent
and a Lender
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Vice President
Address:
000 Xxxxx XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Legal Department
Facsimile: 000-000-0000
Payment Account Designation:
Bank: LaSalle Bank National Association
ABA #000000000
Account #5800393182
Account Name MLBFS Corporate Finance
Other Ref: COMSYS
SYNDICATION AGENT AND LENDER:
GMAC COMMERCIAL FINANCE LLC, as Syndication Agent
and as a Lender
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Vice President
Address:
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
DOCUMENTATION AGENT AND LENDER:
ING CAPITAL LLC, as Documentation Agent and
as a Lender
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Vice President
Address:
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
ANNEX A
COMMITMENT ANNEX
Revolving Loan Revolving Loan Term Loan Term Loan
Commitment Commitment Commitment Commitment
Lender Amount Percentage Amount Percentage
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx Capital
GMAC Commercial Finance LLC
ING Capital LLC
----------------------------------------------------------------------------------------------
TOTALS $ 100,000,000 100% $15,000,000 100%
----------------------------------------------------------------------------------------------
ANNEX B
CLOSING CHECKLIST
ANNEX C
EXISTING LETTERS OF CREDIT
L/C # Amount Beneficiary Applicant
200894 $200,000 Hartford Fire Insurance Company COMSYS Services
200895 $225,000 Zurich American Insurance Company COMSYS Services
200896 $275,000 Zurich American Insurance Company COMSYS Services
200897 $465,000 One Penn Plaza, LLC COMSYS Services
ANNEX D
EXISTING DEBT
a. Debt evidenced by that certain Credit Agreement dated as of August 18,
2004 by and among COMSYS Services, as the borrower, COMSYS Holdings, as a
credit party, COMSYS IT, as a credit party, Xxxxxxx Xxxxx Capital, a
division of Xxxxxxx Xxxxx Business Financial Services Inc., as
administrative agent for the financial institutions from time to time
party thereto, GMAC Commercial Finance LLC, as a lender, and such other
"Lenders" (as defined therein) and all documents, agreement and
instruments executed in connection therewith.
b. Debt evidenced by that certain Amended and Restated Senior Subordinated
Credit Agreement dated as of August 18, 2004, by and among COMSYS
Services, COMSYS IT, COMSYS Holdings, Wachovia Investors, Inc. (successor
to First Union Investors, Inc.), including notes issued pursuant to such
agreement.
c. All obligations of COMSYS IT pursuant to that certain Limited Guaranty
dated as of September 25, 2001 by and between COMSYS IT, as guarantor, and
Bank of America, N.A., pursuant to which COMSYS IT has guaranteed the
payment of certain financing arrangements made by Bank of America, N.A. to
Xxxxxxx Xxxxxx on September 25, 2001.
d. All obligations of COMSYS IT pursuant to that certain Reimbursement
Agreement dated as of September 25, 2001 by and among GTCR Fund VI, L.P.,
Wachovia Corporation, COMSYS IT and COMSYS Holdings.
e. Debt evidenced by that certain Second Amended and Restated Credit
Agreement dated April 14, 2003 among Holdings, the subsidiaries of
Holdings named therein, The CIT Group/Business Credit, Inc., as the Agent,
and the Lenders named therein (This agreement was assigned to The CIT
Group/Business Credit, Inc. from Bank of America, N.A.).
