Exhibit 10.1
REVOLVING CREDIT
AND
SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS ADMINISTRATIVE AGENT)
WHITEHALL BUSINESS CREDIT CORPORATION
(AS DOCUMENTATION AGENT)
PNC CAPITAL MARKETS, INC.
(AS LEAD ARRANGER)
AND
THE OTHER LENDERS NAMED HEREIN
WITH
CIT SOUTHEAST, INC.,
UNIFORCE SERVICES, INC.,
BRENTWOOD OF CANADA, INC.,
BRENTWOOD SERVICE GROUP, INC.,
BXI NET, INC.,
CAMELOT COMMUNICATIONS GROUP, INC.,
CAMELOT CONTROL GROUP, INC.,
COMFORCE CODING SERVICES, INC.,
COMFORCE INFORMATION TECHNOLOGIES, INC.,
COMFORCE TECHNICAL ADMINISTRATIVE SERVICES, INC.,
COMFORCE TECHNICAL SERVICES, INC.,
COMFORCE TELECOM, INC.,
XXXXX X., INC.,
CLINICAL LABFORCE OF AMERICA, INC.,
COMFORCE TECHNICAL NW, INC.
LABFORCE SERVICES OF AMERICA, INC.,
PRO UNLIMITED, INC.,
TEMPORARY HELP INDUSTRY SERVICING COMPANY, INC.,
UNIFORCE PAYROLLING SERVICES, INC.,
UNIFORCE PAYROLLING TRI-STATE INC.,
UNIFORCE STAFFING SERVICES, INC.,
SUMTEC CORPORATION,
THISCO OF CANADA, INC.,
AND
COMFORCE TECHNICAL SERVICES OF WASHINGTON, INC.
(AS BORROWERS)
AND
COMFORCE OPERATING, INC.,
(AS BORROWING AGENT)
June 25, 2003
[LOGO OF TORYS LLP NEW YORK TORNOTO]
Table of Contents
Page
I. DEFINITIONS.................................................................2
1.1. Accounting Terms...................................................2
1.2. General Terms......................................................2
1.3. Uniform Commercial Code Terms.....................................22
1.4. Certain Matters of Construction...................................22
II. ADVANCES, PAYMENTS........................................................23
2.1. (a) Revolving Advances..........................................23
(b) Discretionary Rights........................................23
2.2. Procedure for Revolving Advances Borrowing........................24
2.3. Disbursement of Advance Proceeds..................................26
2.4. Maximum Advances..................................................26
2.5. Repayment of Advances.............................................26
2.6. Repayment of Excess Advances......................................27
2.7. Statement of Account..............................................27
2.8. Letters of Credit.................................................27
2.9. Issuance of Letters of Credit.....................................27
2.10. Requirements For Issuance of Letters of Credit...................28
2.11. Additional Payments..............................................29
2.12. Manner of Borrowing and Payment..................................30
2.13. Mandatory Prepayments............................................31
2.14. Use of Proceeds..................................................32
2.15. Defaulting Lender................................................32
III. INTEREST AND FEES........................................................33
3.1. Interest..........................................................33
3.2. Letter of Credit Fees.............................................33
3.4. Computation of Interest and Fees..................................34
3.5. Maximum Charges...................................................34
3.6. Increased Costs...................................................35
3.7. Basis For Determining Interest Rate Inadequate or Unfair..........36
3.8. Capital Adequacy..................................................37
3.9. Gross Up for Taxes................................................37
3.10. Withholding Tax Exemption........................................37
IV. COLLATERAL: GENERAL TERMS................................................38
4.1. Security Interest in the Collateral...............................38
4.2. Perfection of Security Interest...................................38
4.3. Disposition of Collateral.........................................39
4.4. Preservation of Collateral........................................39
4.5. Ownership and Location of Collateral..............................40
4.6. Defense of Administrative Agent's and Lenders' Interests..........41
4.7. Books and Records.................................................41
4.8. Financial Disclosure..............................................41
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4.9. Compliance with Laws..............................................42
4.10. Inspection of Premises...........................................42
4.11. Insurance........................................................42
4.12. Failure to Pay Insurance.........................................43
4.13. Payment of Taxes.................................................43
4.14. Payment of Leasehold Obligations.................................44
4.15. Receivables......................................................44
(a) Nature of Receivables.......................................44
(b) Solvency of Customers.......................................44
(c) Locations of Executive Offices of Borrowers Borrower........44
(d) Collection of Receivables...................................45
(e) Notification of Assignment of Receivables...................45
(f) Power of Administrative Agent to Act on Borrowers'
Behalf.....................................................45
(g) No Liability................................................46
(h) Establishment of a Lockbox Account, Dominion Account........46
(i) Adjustments.................................................47
4.16. Inventory........................................................47
4.17. Maintenance of Equipment.........................................47
4.18. Exculpation of Liability.........................................47
4.19. Environmental Matters............................................47
4.20. Financing Statements.............................................49
V. REPRESENTATIONS AND WARRANTIES.............................................50
5.1. Authority; Enforceable Obligations................................50
5.2. Formation and Qualification.......................................50
5.3. Survival of Representations and Warranties........................51
5.4. Tax Returns.......................................................51
5.5. Financial Statements..............................................51
5.6. Corporate Name....................................................52
5.7. O.S.H.A. and Environmental Compliance.............................52
5.8. Solvency; No Litigation, Violation, Indebtedness or Default.......52
5.9. Patents, Trademarks, Copyrights and Licenses......................54
5.10. Licenses and Permits.............................................54
5.11. Default of Indebtedness..........................................54
5.12. No Default.......................................................54
5.13. No Burdensome Restrictions.......................................54
5.14. No Labor Disputes................................................55
5.15. Margin Regulations...............................................55
5.16. Investment Company Act...........................................55
5.17. Disclosure.......................................................55
5.18. Delivery of Senior Note Documentation and Subordinated
Note Documentation..............................................55
5.19. Swaps............................................................55
5.20. Conflicting Agreements...........................................56
5.21. Application of Certain Laws and Regulations......................56
5.22. Business and Property of Borrower................................56
5.23. Section 20 Subsidiaries..........................................56
ii
5.24. Receivables......................................................56
5.24. Bank Accounts....................................................56
VI. AFFIRMATIVE COVENANTS.....................................................56
6.1. Payment of Fees...................................................57
6.2. Conduct of Business and Maintenance of Existence and Assets.......57
6.3. Violations........................................................57
6.4. Government Receivables............................................57
6.5. Net Worth.........................................................57
6.7. Execution of Supplemental Instruments.............................58
6.8. Payment of Indebtedness...........................................58
6.9. Standards of Financial Statements.................................58
6.10. Bank Accounts....................................................58
6.11. Account Agreements...............................................58
VII. NEGATIVE COVENANTS.......................................................58
7.1. Merger, Consolidation, Acquisition and Sale of Assets.............58
7.2. Creation of Liens.................................................61
7.3. Guarantees........................................................61
7.4. Investments.......................................................62
7.5. Loans.............................................................62
7.6. Capital Expenditures..............................................63
7.7. Dividends.........................................................63
7.8. Indebtedness......................................................63
7.9. Nature of Business................................................64
7.10. Transactions with Affiliates.....................................64
7.11. Leases...........................................................64
7.12. Subsidiaries.....................................................64
7.13. Fiscal Year and Accounting Changes...............................65
7.14. Pledge of Credit.................................................65
7.15. Amendment of Articles of Incorporation, By-Laws..................65
7.16. Compliance with ERISA............................................65
7.17. Prepayment of Indebtedness.......................................66
7.18. Derivative Transactions..........................................66
7.19. Senior 12% Notes.................................................66
7.20. Other Agreements.................................................66
VIII. CONDITIONS PRECEDENT....................................................66
8.1. Conditions to Initial Advances....................................66
(a) Note........................................................66
(b) Filings, Registrations and Recordings.......................66
(c) Corporate Proceedings of Borrowers..........................67
(d) Incumbency Certificates of Borrowers........................67
(e) Certificates................................................67
(f) Good Standing Certificates..................................67
(g) Legal Opinion...............................................67
(h) No Litigation...............................................68
(i) Financial Condition Certificates............................68
(j) Collateral Examination......................................68
iii
(k) Fees........................................................68
(l) Pro Forma Financial Statements..............................68
(m) Other Loan Documents........................................68
(n) Insurance...................................................68
(o) Payment Instructions........................................68
(p) Blocked Accounts............................................68
(q) Consents....................................................69
(r) No Adverse Material Change..................................69
(s) Leasehold Agreements........................................69
(t) Pledge Agreement............................................69
(u) Guarantees and Other Documents..............................69
(v) Contract Review.............................................69
(w) Closing Certificate.........................................69
(x) Borrowing Base..............................................69
(y) Undrawn Availability........................................69
(z) Compliance with Laws........................................70
(aa) Indebtedness...............................................70
(bb) Other......................................................70
8.2. Conditions to Each Advance........................................70
(a) Representations and Warranties..............................70
(b) No Default..................................................70
(c) Maximum Advances............................................70
IX. INFORMATION AS TO BORROWERS...............................................70
9.1. Disclosure of Material Matters....................................71
9.2. Schedules.........................................................71
9.3. Environmental Reports.............................................71
9.4. Litigation........................................................71
9.5. Material Occurrences..............................................71
9.6. Government Receivables............................................72
9.7. Annual Financial Statements.......................................72
9.8. Quarterly Financial Statements....................................73
9.9. Monthly Financial Statements......................................73
9.10. Other Reports....................................................73
9.11. Additional Information...........................................73
9.12. Projected Operating Budget.......................................74
9.13. Variances From Operating Budget..................................74
9.14. Notice of Suits, Adverse Events..................................74
9.15. ERISA Notices and Requests.......................................74
9.16. Additional Documents.............................................75
9.17. Rollforward Reports and Listings and Agings......................75
X. EVENTS OF DEFAULT..........................................................75
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT................................78
11.1. Rights and Remedies..............................................78
11.2. Administrative Agent's Discretion................................79
11.3. Setoff...........................................................80
11.4. Rights and Remedies not Exclusive................................80
iv
11.5. Allocation of Payments After Event of Default....................80
XII. WAIVERS AND JUDICIAL PROCEEDINGS.........................................81
12.1. Waiver of Notice.................................................81
12.2. Delay............................................................81
12.3. Jury Waiver......................................................81
XIII. EFFECTIVE DATE AND TERMINATION..........................................81
13.1. Term.............................................................81
13.2. Termination......................................................82
XIV. REGARDING ADMINISTRATIVE AGENT...........................................82
14.1. Appointment......................................................82
14.2. Nature of Duties.................................................83
14.3. Lack of Reliance on Administrative Agent and Resignation.........83
14.4. Certain Rights of Administrative Agent...........................84
14.5. Reliance.........................................................84
14.6. Notice of Default................................................84
14.7. Indemnification..................................................84
14.8. Administrative Agent in its Individual Capacity..................85
14.9. Delivery of Documents............................................85
14.10. Borrowers' Undertaking to Administrative Agent..................85
XV. BORROWING AGENCY..........................................................85
15.1. Borrowing Agency Provisions......................................85
15.2. Waiver of Subrogation............................................86
15.3. Certain Limitations..............................................86
XVI. MISCELLANEOUS............................................................86
16.1. Governing Law....................................................86
16.2. Entire Understanding.............................................87
16.3. Successors and Assigns; Participations; New Lenders..............89
16.4. Application of Payments..........................................90
16.5. Indemnity........................................................91
16.6. Notice...........................................................91
16.7. Survival.........................................................93
16.8. Severability.....................................................93
16.9. Expenses.........................................................93
16.10. Injunctive Relief...............................................93
16.11. Consequential Damages...........................................93
16.12. Captions........................................................94
16.13. Counterparts; Facsimile Signatures..............................94
16.14. Construction....................................................94
16.15. Confidentiality; Sharing Information............................94
16.16. Publicity.......................................................95
v
REVOLVING CREDIT
AND
SECURITY AGREEMENT
This Revolving Credit and Security Agreement is dated as of June 25, 2003
among COMFORCE Operating, Inc., a corporation organized under the laws of the
State of Delaware ("COI" or "Borrowing Agent"), CIT Southeast, Inc., a
corporation organized under the laws of the State of New York ("CIT Southeast"),
Uniforce Services, Inc., a corporation organized under the laws of the State of
New York ("USI"), Brentwood of Canada, Inc., a corporation organized under the
laws of the State of New York ("BOCI"), Brentwood Service Group, Inc., a
corporation organized under the laws of the State of New York ("Brentwood"), BXI
Net, Inc., a corporation organized under the laws of the State of California
("BXI"), Camelot Communications Group, Inc., a corporation organized under the
laws of the State of New Jersey ("Camelot Comm"), Camelot Control Group, Inc., a
corporation organized under the laws of the State of New Jersey ("Camelot
Control"), COMFORCE Coding Services, Inc., a corporation organized under the
laws of the State of New York ("CC Services"), COMFORCE Information
Technologies, Inc., a corporation organized under the laws of the State of New
York ("CIT"), COMFORCE Technical Administrative Services, Inc., a corporation
organized under the laws of the State of New York ("CTAS"), COMFORCE Technical
Services, Inc., a corporation organized under the laws of the State of Delaware
("CTS"), COMFORCE Telecom, Inc., a corporation organized under the laws of the
State of Delaware ("CTI"), Xxxxx X., Inc., a corporation organized under the
laws of the State of New York ("Xxxxx"), Clinical Labforce of America, Inc., a
corporation organized under the laws of the State of New York ("CLOA"), COMFORCE
Technical NW, Inc., a corporation organized under the laws of the State of New
York ("CTNW"), Labforce Services of America, Inc., a corporation organized under
the laws of the State of New York ("LSOA"), PrO Unlimited, Inc., a corporation
organized under the laws of the State of New York ("PUI"), Temporary Help
Industry Servicing Company, Inc., a corporation organized under the laws of the
State of New York ("THISCI"), Uniforce Payrolling Services, Inc., a corporation
organized under the laws of the State of New York ("UPSI"), Uniforce Payrolling
Tri-State Inc., a corporation organized under the laws of the State of New York
("UPTSI"), Uniforce Staffing Services, Inc., a corporation organized under the
laws of the State of New York ("USSI"), Sumtec Corporation, a corporation
organized under the laws of the State of Delaware ("Sumtec"), Thisco of Canada,
Inc., a corporation organized under the laws of the State of New York
("Thisco"), COMFORCE Technical Services of Washington, Inc., a corporation
organized under the laws of the State of New York ("CTSOWI"), (USI, BOCI,
Brentwood, BXI, Camelot Comm, Camelot Control, CIT Southeast, CC Services, CIT,
CTAS, CTS, CTI, Gerri, CLOA, CTNW, LSOA, PUI, Thisco, UPSI, UPTSI, USSI, Sumtec,
Thisco and CTSOWI, each a "Borrower" and collectively "Borrowers"), Whitehall
Business Credit Corporation, as a Lender and as Documentation Agent, JPMorgan
Chase Bank, Xxxxxxx Xxxxx Capital, the other financial institutions which are
now or which hereafter become a party hereto (collectively, the "Lenders" and
individually, a "Lender") and PNC BANK, NATIONAL ASSOCIATION ("PNC"), as
Administrative Agent for Lenders (PNC, in such capacity, "Administrative
Agent").
IN CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrowers, Lenders and Administrative Agent hereby agree as follows:
I. DEFINITIONS.
1.1. Accounting Terms. As used in this Agreement, the Other Documents or
any certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrowers for the fiscal year ended December 29,
2002.
1.2. General Terms. For purposes of this Agreement the following terms
shall have the following meanings:
"Account Agreements" means all agreements pursuant to which
Purchased Accounts are purchased or Service Fee Accounts are generated.
"Accountants" shall have the meaning set forth in Section 9.7
hereof.
"Account Seller" means, in the case of any Purchased Account, the
Person from whom such Purchased Account was purchased and, in the case of any
Service Fee Account, means the independent supplemental staffing firm or
licensee which provided the services creating such Service Fee Account.
"Adjustment Date" shall mean, the first day of each March, June,
September or December next succeeding the date on which Administrative Agent
receives the financial statements required to be delivered pursuant to
subsection 9.8 for the most recently completed fiscal quarter, commencing with
September 1, 2003 as the initial Adjustment Date.
"Administrative Agent" shall have the meaning set forth in the
preamble to this Agreement and shall include its successors and assigns.
"Advances" shall mean and include the Revolving Advances and Letters
of Credit.
"Advance Rate" shall have the meaning set forth in Section 2.1(a)
hereof.
"Affiliate" of any Person shall mean (a) any Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with such Person, or (b) any Person who is a director or officer (i) of such
Person, (ii) of any Subsidiary of such Person or (iii) of any Person described
in clause (a) above. For purposes of this definition, control of a Person shall
mean the power, direct or indirect, (x) to vote 5% or more of the Stock having
ordinary voting power for the election of directors of such Person or other
Persons performing similar functions for any such Person, or (y) to direct or
cause the direction of the management and policies of such Person whether by
ownership of Stock, contract or otherwise.
"Agreement" shall mean this Revolving Credit and Security Agreement,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
"Alternate Base Rate" shall mean, for any day, a rate per annum
equal to the higher of (i) the Base Rate in effect on such day and (ii) the
Federal Funds Rate in effect on such day plus 1/2 of 1%.
"Applicable Law" shall mean all laws, rules and regulations
applicable to the Person, conduct, transaction, covenant, Other Document or
contract in question, including all applicable common law and equitable
principles; all provisions of all applicable state, federal and foreign
constitutions, statutes, rules, regulations and orders of any Governmental Body,
and all orders, judgments and decrees of all courts and arbitrators.
"Applicable Margin" shall mean, at any date, the applicable
percentage set forth below opposite the Level of Fixed Charge Coverage Ratio as
of such date (as reflected, except as provided below, in the then most recent
financial statements delivered pursuant to subsection 9.8 hereof):
Level of Fixed Charge Coverage Ratio Applicable Margin
----------------------------------------------------------- -----------------
Level I: Fixed Charge Coverage Ratio is equal to or
less than 1.05:1.00 3.00
Level II: Fixed Charge Coverage Ratio is greater than
1.05:1.00 but less than or equal to 1.30:1.00 2.75
Level III: Fixed Charge Coverage Ratio is greater than
1.30:1.00 2.50
; provided that (a) the Applicable Margin shall be that set forth above opposite
Level II from the Closing Date until the first Adjustment Date and (b) the
Applicable Margin determined for any Adjustment Date shall remain in effect
until a subsequent Adjustment Date for which the Fixed Charge Coverage Ratio
falls within a different Level, (c) if the financial statements (and all
required covenant calculations) for any fiscal period are not delivered by the
date due pursuant to subsection 9.8, the Applicable Margin shall be that set
forth above opposite Level I until the next subsequent Adjustment Date, and (d)
during the continuance of any Event of Default, the Applicable Margin shall at
no time be less than the Applicable Margin immediately prior to such Event of
Default notwithstanding the Fixed Charge Coverage Ratio during such period.
"Authority" shall have the meaning set forth in Section 4.19(d).
"Base Rate" shall mean the base commercial lending rate of PNC as
publicly announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from time to time by PNC as a means of
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by PNC to any particular class or category of customers of PNC.
"Blocked Accounts" shall have the meaning set forth in Section
4.15(h).
"Borrower" or "Borrowers" shall have the meaning set forth in the
preamble to this Agreement and shall extend to all permitted successors and
assigns of such Persons and shall extend to any Subsidiary that becomes a
Borrower pursuant to Section 7.12(a)(ii) hereof.
"Borrowers' Account" shall have the meaning set forth in Section
2.7.
"Borrowing Agent" shall have the meaning set forth in the preamble.
"Borrowing Base Certificate" shall mean a certificate duly executed
by an officer of Borrowing Agent appropriately completed and in substantially
the form of Exhibit 1.2(a) hereto.
"Business Day" shall mean any day other than Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required by law to be
closed for business in New York, New York, and, if the applicable Business Day
relates to any Eurodollar Rate Loans, such day must also be a day on which
dealings are carried on in the London interbank market.
"Camelot Subsidiary" shall mean each of Camelot Comm and Camelot
Control.
"Capital Expenditures" shall mean expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including the total principal portion of Capitalized Lease Obligations,
which, in accordance with GAAP, would be classified as capital expenditures.
"Capitalized Lease Obligation" shall mean any Indebtedness of
Borrower represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Captive Insurance Company" shall mean a newly formed wholly-owned
Subsidiary of any Borrower duly licensed in its respective jurisdiction of
incorporation to reinsure worker compensation risk for the Borrower through an
insurer in the United States of America licensed to underwrite such risks in
each respective jurisdiction in which the Borrower is required to maintain
workers compensation insurance.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et
seq.
"Change of Control" shall mean the occurrence of any of the
following events: (a) any sale, lease, exchange or other transfer (collectively,
a "Transfer") (whether in one or more transactions) of all or substantially all
of the assets of Holdings and its Subsidiaries; or (b) a majority of the Board
of Directors of Holdings or of any direct or indirect holding company thereof
shall consist of Persons who are not Continuing Directors of Holdings; or (c)
the acquisition by any Person or Group (other than the Management Group) of the
power, directly or indirectly, to vote or direct the voting of securities having
more than 35% of the ordinary voting power for the election of directors of
Holdings or of any direct or indirect holding company thereof; provided that no
Change of Control shall be deemed to occur pursuant to this clause (c),
so long as the Management Group owns an amount of securities representing a
greater portion of such ordinary voting power than such Person or Group; or (d)
the acquisition by any Person or Group (including, but not limited to, the
Management Group) of the power, directly or indirectly, to vote or direct the
voting of securities having more than 49.9% of the ordinary voting power for the
election of directors of Holdings or any direct or indirect holding company
thereof; or (e) Holdings ceases to own and control all of the ordinary voting
power for the election of directors of COI; or (f) COI ceases to own and
control, directly or indirectly, all of the ordinary voting power for the
election of directors of each Borrower; or (g) any Change of Control as defined
in the Senior Notes Indenture.
"Charges" shall mean all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property
taxes, custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the Pension Benefit Guaranty Corporation
or any environmental agency or superfund), upon the Collateral, any Borrower or
any of its Affiliates.
"Closing Date" shall mean June 25, 2003 or such other date as may be
agreed to by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Investment Property;
(f) all Real Property;
(g) all Subsidiary Stock and all Intercompany Notes;
(h) the Leasehold Interests;
(i) all of each Borrower's right, title and interest in and to
(i) its respective goods and other property including, but not limited to, all
merchandise returned or rejected by Customers, relating to or securing any of
the Receivables; (ii) all of each Borrower's rights as a consignor, a consignee,
an unpaid vendor, mechanic, artisan, or other lienor, including
stoppage in transit, setoff, detinue, replevin, reclamation and repurchase;
(iii) all additional amounts due to any Borrower from any Customer or Account
Seller relating to the Receivables; (iv) other property, including warranty
claims, relating to any goods securing the Obligations; (v) all of each
Borrower's contract rights, rights of payment which have been earned under a
contract right, instruments (including promissory notes), documents, chattel
paper (including electronic chattel paper), warehouse receipts, deposit
accounts, letters of credit, letter of credit rights, and money, securities and
investment property; (vi) all commercial tort claims (whether now existing or
hereafter arising); (vii) if and when obtained by any Borrower, all real and
personal property of third parties in which such Borrower has been granted a
Lien as security for the payment or enforcement of Receivables; and (viii) any
other goods, personal property or real property now owned or hereafter acquired
in which any Borrower has expressly granted a Lien or may in the future xxxxx x
Xxxx to Administrative Agent hereunder, or in any amendment or supplement hereto
or thereto, or under any other agreement between Administrative Agent and any
Borrower;
(j) all of each Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers, computer
software (owned by any Borrower or in which it has an interest), computer
programs, tapes, disks and documents relating to (a), (b), (c), (d), (e), (f),
(g), (h) or (i) of this paragraph;
(k) all proceeds and products of (a), (b), (c), (d), (e), (f),
(g), (h), (i) and (j) in whatever form, including, but not limited to: cash,
deposit accounts (whether or not comprised solely of proceeds), certificates of
deposit, insurance proceeds (including hazard, flood and credit insurance),
negotiable instruments and other instruments for the payment of money, chattel
paper, security agreements, documents, eminent domain proceeds, condemnation
proceeds and tort claim proceeds; and
(l) notwithstanding anything herein to the contrary,
Collateral shall not include any Stock of COI.
"Commitment Percentage" of any Lender shall mean the percentage set
forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 16.3(b) hereof.
"Commitment Transfer Supplement" shall mean a document in the form
of Exhibit 16.3 hereto, properly completed and otherwise in form and substance
satisfactory to Administrative Agent by which the Purchasing Lender purchases
and assumes a portion of the obligation of Lenders to make Advances under this
Agreement.
"Consents" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Bodies and other third Persons, domestic or foreign, necessary to carry on any
Borrower's business or necessary (including to avoid a conflict or breach under
any agreement, instrument, other document, license, permit or other
authorization) for the execution, delivery or performance of this Agreement, the
Other Documents, the Senior Note Documentation, or the Subordinated Note
Documentation, including, without limitation, any Consents required under all
applicable federal, state or other applicable law.
"Continuing Director" of any Person shall mean, as of the date of
determination, any Person who (i) was a member of the Board of Directors of such
Person on the date hereof or (ii) was nominated for election or elected to the
Board of Directors of such Person with the affirmative vote of a majority of the
Continuing Directors of such Person who were members of such Board of Directors
at the time of such nomination or election.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.
"Corporate Overhead" means payments made in cash by Holdings or COI
in the ordinary course of business in connection with the supervision and
management of the businesses and operations of Borrowers including, without
limitation, in respect of maintaining Holdings' status as a public company
listed on the American Stock Exchange and in respect of compensation for
executive officers and other employees of Holdings and/or COI who participate in
such supervision and management, and financial, accounting, legal, computer
service, insurance and other similar payments made in cash relating thereto, in
all such cases being reasonable in amount.
"Customer" shall mean and include the account debtor with respect to
any Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with any Borrower,
pursuant to which such Borrower is to deliver any personal property or perform
any services, and shall include, without limitation, all Account Sellers.
"Default" shall mean an event, circumstance or condition which, with
the giving of notice or passage of time or both, would constitute an Event of
Default.
"Default Rate" shall have the meaning set forth in Section 3.1
hereof.
"Defaulting Lender" shall have the meaning set forth in Section
2.15(a) hereof.
"Depository Accounts" shall have the meaning set forth in Section
4.15(h) hereof.
"Documents" shall have the meaning set forth in Section 8.1(c)
hereof.
"Dollar" and the sign "$" shall mean lawful money of the United
States of America.
"Domestic Rate Loan" shall mean any Advance that bears interest
based upon the Alternate Base Rate.
"Earnings Before Interest and Taxes" shall mean for any period the
sum of (i) net income (or loss) of Holdings on a consolidated basis for such
period (excluding extraordinary gains), plus (ii) all interest expense of
Holdings on a consolidated basis for such period, plus (iii) all charges against
income of Holdings on a consolidated basis for such period for federal, state
and local taxes.
"EBITDA" shall mean for any period the sum of (i) Earnings Before
Interest and Taxes for such period plus (ii) depreciation expenses for such
period, plus (iii) amortization expenses for such period.
"Eligible Receivables" shall mean and include with respect to each
Borrower, each Receivable of such Borrower arising in the ordinary course of
such Borrower's business and which Administrative Agent, in its sole credit
judgment, shall deem to be an Eligible Receivable, based on such considerations
as Administrative Agent may from time to time deem appropriate. A Receivable
shall not be deemed eligible unless such Receivable is subject to Administrative
Agent's first priority perfected security interest and no other Lien (other than
those in favor of Administrative Agent, on behalf of Lenders), and, except for
up to a maximum amount of Unbilled Eligible Receivables for all Borrowers equal
to eight percent (8.0%) of all other Eligible Receivables, is evidenced by an
invoice or other documentary evidence satisfactory to Administrative Agent. In
addition, no Receivable shall be an Eligible Receivable if:
(a) it arises out of a sale made by any Borrower to an Affiliate of
any Borrower or to a Person controlled by an Affiliate of any Borrower;
(b) (i) it is due or unpaid more than (x) ninety (90) days after
the original invoice date or (y) only in the case of Customers set forth on
Schedule 1.2(E) hereto, one hundred twenty (120) days after the original invoice
date, or (ii) fifty percent (50%) or more of the Receivables from such Customer
owing to any Borrower or in the aggregate to all Borrowers have at any time
remained unpaid after the original due date;
(c) twenty-five percent (25%) or more of the Receivables from such
Customer are not deemed Eligible Receivables hereunder;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property or call
a meeting of its creditors, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is
filed against it in any involuntary case under such bankruptcy laws, or (viii)
take any action for the purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United States
of America, unless the sale is on letter of credit, guaranty or acceptance
terms, in each case acceptable to Administrative Agent in its sole discretion;
provided that if such sale is to a Customer in any province in Canada other than
Newfoundland, Northwest Territories or Territory of Nunavit, such sale shall not
be deemed ineligible by noncompliance with this clause (f), if such sale,
together with all other sales to Customers in Canada, are not in excess of
$7,500,000 in the aggregate;
(g) with respect to the sale of any goods, Equipment or Inventory,
the sale to the Customer is on a xxxx-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper;
(h) Administrative Agent believes, in its sole judgment, that
collection of such Receivable is insecure or that such Receivable may not be
paid by reason of the Customer's financial inability to pay;
(i) the Customer is the United States of America, or any
department, agency or instrumentality thereof, unless the applicable Borrower
assigns its right to payment of such Receivables to Administrative Agent
pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise
complied with other applicable statutes or ordinances; provided that to the
extent such Receivables, together with all other Receivables described in this
paragraph (i) above are not in excess of $10,000,000 in the aggregate, such
Receivables shall not be deemed ineligible by noncompliance with this clause
(i); provided further that the aggregate amount of all Eligible Receivables
described in this clause (i) and in clause (j) below with respect to which the
applicable statutes or ordinances have not been complied with shall at no time
be in excess of $12,500,000;
(j) the Customer is any state or any department, agency or
instrumentality thereof, unless the applicable Borrower assigns its right to
payment of such Receivable to Administrative Agent pursuant to the applicable
state statutes or ordinances, if any; provided that to the extent such
Receivables, together with all other Receivables described in this paragraph (j)
above are not in excess of $10,000,000 in the aggregate, such Receivables shall
not be deemed ineligible by noncompliance with this clause (j); provided further
that the aggregate amount of all Eligible Receivables described in this clause
(j) and in clause (i) above with respect to which the applicable statutes or
ordinances have not been complied with shall at no time be in excess of
$12,500,000;
(k) the goods giving rise to such Receivable have not been shipped
and delivered to and accepted by the Customer or the services giving rise to
such Receivable have not been performed by the applicable Borrower and accepted
by the Customer or the Receivable otherwise does not represent a final sale;
(l) the Receivables of the Customer exceed a credit limit
determined by Administrative Agent, in its Reasonable Discretion, to the extent
such Receivable exceeds such limit;
(m) the Receivable is subject to any offset, deduction, defense,
dispute, or counterclaim, the Customer is also a creditor or supplier of a
Borrower or the Receivable is contingent in any respect or for any reason;
(n) the applicable Borrower has made any agreement with any
Customer for any deduction therefrom, except for discounts or allowances made in
the ordinary course of
business for prompt payment, all of which discounts or allowances are reflected
in the calculation of the face value of each respective invoice related thereto;
(o) any return, rejection or repossession of the merchandise has
occurred or the rendition of services has been disputed;
(p) any Receivable with respect to which the customer is located in
New Jersey or Minnesota, or any other state denying creditors access to its
courts in the absence of a Notice of Business Activities Report or other similar
filing, unless the Borrower holding such Receivable has either qualified as a
foreign corporation authorized to transact business in such state or has filed a
Notice of Business Activities Report or similar filing with the applicable state
agency for the then current year;
(q) Purchased Accounts and Service Fee Accounts in which a first
priority perfected security interest has not been obtained (and continuously
maintained) by any Borrower to evidence and perfect its ownership of such
Accounts;
(r) Purchased Accounts and Service Fee Accounts with respect to
which any portion thereof has been charged back to the applicable Account Seller
or which has become a delinquent or defaulted receivable or as to which any
Borrower is entitled to a deduction as to any amount owing to an Account Seller
under an Account Agreement;
(s) Purchased Accounts and Service Fee Accounts with respect to
which Administrative Agent has not received copies of lien search results
indicating the applicable Borrower as having a first priority perfected
ownership interest in each such Account, subject to no Liens except those in
favor of Administrative Agent, on behalf of Lenders;
(t) Purchased Accounts and Service Fee Accounts (other than arising
from Licensing Agreements) which exceed, in the aggregate, 55% of otherwise
Eligible Receivables;
(u) Unbilled Eligible Receivables to the extent the aggregate
amount thereof for all Borrowers exceeds eight percent (8.0%) of all other
Eligible Receivables;
(v) any Receivable which is not an "Eligible Receivable" under the
Senior Notes Indenture;
(w) Purchased Accounts and Service Fee Accounts that constitute
Unauthorized Purchased Accounts or Unauthorized Service Fee Accounts;
(x) such Receivable is not payable to a Borrower;
(y) such Receivable is not otherwise satisfactory to Administrative
Agent as determined in good faith by Administrative Agent in the exercise of its
discretion in a reasonable manner; or
(z) such Receivable was acquired as part of, or in connection with,
any Permitted Acquisition; provided that no Receivable shall be considered
ineligible solely by virtue of this clause (z) following the completion by
Administrative Agent, to its satisfaction, of an
audit of the business and/or Person acquired in such Permitted Acquisition,
including, without limitation, an audit of the books and records of such
business and/or Person and the contracts to which such Receivable relates.
"Environmental Complaint" shall have the meaning set forth in
Section 4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"Equipment" shall mean and include as to each Borrower all of such
Borrower's goods (other than Inventory) whether now owned or hereafter acquired
and wherever located including, without limitation, all equipment, machinery,
apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions
thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the
then current Interest Period relating thereto the interest rate per annum
determined by PNC by dividing (the resulting quotient rounded upwards, if
necessary, to the nearest 1/100/th/ of 1% per annum) (i) the rate of interest
determined by PNC in accordance with its usual procedures (which determination
shall be conclusive absent manifest error) to be the average of the London
interbank offered rates for U.S. Dollars quoted by the British Bankers'
Association as set forth on Bridge Information Services (formerly known as Dow
Xxxxx Markets Service) (or appropriate successor or, if British Banker's
Association or its successor ceases to provide such quotes, a comparable
replacement determined by PNC) display page 3750 (or such other display page on
the Bridge Information Services system as may replace display page 3750) two (2)
Business Days prior to the first day of such Interest Period for an amount
comparable to such Eurodollar Rate Loan and having a borrowing date and a
maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus
the Reserve Percentage. The Eurodollar Rate may also be expressed by the
following formula:
Average of London interbank offered rates
quoted by BBA as shown on Bridge Information
Eurodollar Rate = Services display page 3750 or appropriate successor
-------------------------------------------------------
1.00 - Reserve Percentage
"Eurodollar Rate Loan" shall mean an Advance at any time that bears
interest based on the Eurodollar Rate.
"Event of Default" shall have the meaning set forth in Article X
hereof.
"Existing Bank Indebtedness" shall mean all Indebtedness of any
Borrower or any Guarantor under or with respect to the Existing Loan Agreement.
"Existing Letters of Credit" shall mean all letters of credit
outstanding under the Existing Loan Agreement as of the Closing Date.
"Existing Loan Agreement" shall mean that certain Loan and Security
Agreement dated as of December 14, 2000 among Holdings, COI, the other
subsidiaries named therein, Whitehall Business Credit Corporation, as
administrative agent and lender, Transamerica Business Capital Corporation, as
co-agent and lender, The CIT Group/Business Credit, Inc. as collateral agent and
lender, and the other lenders named therein, together with any and all
amendments through the date hereof.
"Federal Funds Rate" shall mean, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by PNC from three Federal funds brokers of recognized
standing selected by PNC.
"Fee Letter" shall mean the fee letter dated the Closing Date among
Borrowers and PNC.
"Fixed Charge Coverage Ratio" shall mean and include, with respect
to any fiscal period, the ratio of (a) EBITDA minus unfinanced Capital
Expenditures made during such period, minus taxes paid during such period, plus
tax refunds actually received during such period to (b) all Senior Debt Payments
plus all Subordinated Debt Payments made during such period.
"Formula Amount" shall have the meaning set forth in Section 2.1(a).
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"General Intangibles" shall mean and include as to each Borrower all
of such Borrower's general intangibles, whether now owned or hereafter acquired
including, without limitation, all payment intangibles, choses in action, causes
of action, corporate, or other business records, inventions, designs, patents,
patent applications, equipment formulations, manufacturing procedures, quality
control procedures, trademarks, service marks, trade secrets, goodwill,
copyrights, design rights, software, computer information, source codes, codes,
records and updates, registrations, licenses, franchises, customer lists, tax
refunds, tax refund claims, computer programs, all claims under guaranties,
security interests or other security held by or granted to such Borrower to
secure payment of any of the Receivables by a Customer (other than to the extent
covered by Receivables) all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).
"Governmental Body" shall mean any nation or government, any state
or other political subdivision thereof or any entity, authority, agency,
division or department exercising the legislative, judicial, regulatory or
administrative functions of or pertaining to a government.
"Group" shall mean any "group" for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended to date.
"Guarantor" shall mean Holdings and any other Person who may
hereafter guarantee payment or performance of the whole or any part of the
Obligations and "Guarantors" means collectively all such Persons.
"Guarantor Security Agreement" shall mean any Security Agreement
executed by any Guarantor in favor of Administrative Agent securing the Guaranty
of such Guarantor.
"Guaranty" shall mean any guaranty of the obligations of Borrowers
executed by a Guarantor in favor of Administrative Agent for its benefit and for
the ratable benefit of Lenders.
"Hazardous Discharge" shall have the meaning set forth in Section
4.19(d) hereof.
"Hazardous Substance" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
"Holdings" shall mean COMFORCE Corporation, a Delaware corporation.
"Holdings on a consolidated basis" shall mean all of the Borrowers
and Holdings, collectively.
"Indebtedness" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, all contingent earn-out or
similar payments, and all indebtedness secured by a Lien on assets owned by such
Person, whether or not such indebtedness actually shall have been created,
assumed or incurred by such Person. Any indebtedness of such Person resulting
from the acquisition by such Person of any assets subject to any Lien shall be
deemed, for the purposes hereof, to be the equivalent of the creation,
assumption and incurring of the indebtedness secured thereby, whether or not
actually so created, assumed or incurred.
"Ineligible Security" shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
"Intercompany Note" shall have the meaning set forth in Section 7.5
hereof.
"Interest Period" shall mean the period provided for any Eurodollar
Rate Loan pursuant to Section 2.2(b).
"Inventory" shall mean and include as to each Borrower all of such
Borrower's now owned or hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any consignment arrangement,
contract of service or held for sale or lease, all raw materials, work in
process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in such Borrower's business
or used in selling or furnishing such goods, merchandise and other personal
property, and all documents of title or other documents representing them.
"Investment Property" shall mean and include as to each Borrower,
all of such Borrower's now owned or hereafter acquired securities (whether
certificated or uncertificated), securities entitlements, securities accounts,
commodities contracts and commodities accounts (excluding Subsidiary Stock).
"Issuer" shall mean any Person who issues a Letter of Credit and/or
accepts a draft pursuant to the terms hereof.
"LC Indemnities" shall mean, without duplication, the sum of (a) the
aggregate face amount of all Existing Letters of Credit, and (b) the maximum
amount of indemnities pursuant to LC Indemnity Agreements provided by the
Lenders to any bank(s) that have issued any letters of credit on behalf of any
Borrower, together with all costs and expenses incurred by Lenders in connection
with such LC Indemnity Agreements.
"LC Indemnity Agreement" shall mean each agreement pursuant to which
Lenders have indemnified any bank(s) for amounts drawn on letters of credit
issued by such bank(s) on behalf of any Borrower.
"Leasehold Interests" shall mean all of each Borrower's right, title
and interest in and to the premises listed as leased premises on Schedule 4.19
hereto and any and all other real property now or hereafter leased by any
Borrower.
"Lender" and "Lenders" shall have the meaning ascribed to such term
in the preamble to this Agreement and shall include each Person which becomes a
transferee, successor or assign of any Lender.
"Letter of Credit Fees" shall have the meaning set forth in Section
3.2.
"Letters of Credit" shall have the meaning set forth in Section 2.8.
"Licensing Agreement" shall mean a licensing agreement between
Uniforce Staffing Services, Inc., as licensor and a licensee and providing for
the sharing of gross profit derived from the provision of staffing services.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction.
"Management Group" shall mean Xxxx Xxxxxxx and Xxxxx Xxxxxxxxxx.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the condition (financial or otherwise), results of operations, assets,
business, properties or prospects of the applicable Person or Persons, (b) any
Borrower's ability to duly and punctually pay or perform the Obligations in
accordance with the terms thereof, (c) the value of the Collateral, or
Administrative Agent's Liens on the Collateral or the priority of any such Lien
or (d) the practical realization of the benefits of Administrative Agent's and
each Lender's rights and remedies under this Agreement and the Other Documents.
"Maximum Lawful Rate" shall have the meaning set forth in Section
3.5 hereof.
"Maximum Revolving Advance Amount" shall mean $75,000,000.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
"Net Worth" at a particular date, shall mean the sum of (a) all
amounts which would be included under stockholders' equity on a balance sheet of
Holdings on a consolidated basis determined in accordance with GAAP as at such
date, and (b) the aggregate amount of all write-downs of goodwill required in
accordance with GAAP and made after the date hereof on a balance sheet of
Holdings on a consolidated basis at such date.
"Note" shall mean the Revolving Credit Note.
"Obligations" shall mean and include any and all loans, advances,
debts, liabilities, obligations, covenants and duties owing by each Borrower to
Lenders or Administrative Agent or to any other direct or indirect subsidiary or
affiliate of Administrative Agent or any Lender of any kind or nature, present
or future (including, without limitation, any interest accruing thereon after
maturity, or after the filing of any petition in bankruptcy, or the commencement
of any insolvency, reorganization or like proceeding relating to any Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether or not evidenced by any note, guaranty or other
instrument, whether arising under any agreement, instrument or document,
(including, without limitation, this Agreement and the Other
Documents) whether or not for the payment of money, whether arising by reason of
an extension of credit, opening of a letter of credit, loan, equipment lease or
guarantee, under any interest or currency swap, future, option or other similar
agreement, or in any other manner, whether arising out of overdrafts or deposit
or other accounts or electronic funds transfers (whether through automated
clearing houses or otherwise) or out of the Administrative Agent's or any
Lender's non-receipt of or inability to collect funds or otherwise not being
made whole in connection with depository transfer check or other similar
arrangements, whether direct or indirect (including those acquired by assignment
or participation), absolute or contingent, joint or several, due or to become
due, now existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, regardless of how such indebtedness or liabilities arise or by
what agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument, including, but not limited to, any and all of any
Borrower's Indebtedness and/or liabilities under this Agreement, the Other
Documents or under any other agreement between Administrative Agent or Lenders
and any Borrower and any amendments, extensions, renewals or increases and all
costs and expenses of Administrative Agent and any Lender incurred in the
documentation, negotiation, modification, enforcement, collection or otherwise
in connection with any of the foregoing, including but not limited to reasonable
attorneys' fees and expenses and all obligations of any Borrower to
Administrative Agent or Lenders to perform acts or refrain from taking any
action.
"Other Documents" shall mean the Notes, Questionnaire, the Fee
Letter, any Guaranty, any Guarantor Security Agreement and any and all other
agreements, instruments and documents, including, without limitation,
guaranties, pledges, powers of attorney, consents, interest or currency swap
agreements or other similar agreements and all other writings heretofore, now or
hereafter executed by any Borrower or any Guarantor and/or delivered to
Administrative Agent or any Lender in respect of the transactions contemplated
by this Agreement.
"Parent" of any Person shall mean a corporation or other entity
owning, directly or indirectly at least 50% of the Stock having ordinary voting
power to elect a majority of the directors of the Person, or other Persons
performing similar functions for any such Person.
"Participant" shall mean each Person who shall be granted the right
by any Lender to participate in any of the Advances and who shall have entered
into a participation agreement in form and substance satisfactory to such
Lender.
"Payroll Tax Reserve" shall mean a minimum of $2,500,000, or such
other greater amount as Administrative Agent shall deem proper or necessary from
time to time.
"Payment Office" shall mean initially 00 Xxxx 00/xx/ Xxxxxx, 00/xx/
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; thereafter, such other office of Administrative
Agent, if any, which it may designate by notice to Borrowing Agent and to each
Lender to be the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Acquisition" shall mean an acquisition by any Borrower or
any of its Subsidiaries of assets constituting all or substantially all of a
business, business unit, division or product line of any Person not already a
Subsidiary of any Borrower or 100% of the Stock of any
such Person; provided that such acquisition shall only be a Permitted
Acquisition so long as (a) those acquisitions that are structured as asset
acquisitions shall be consummated by such Borrower or through a new United
States Subsidiary formed by the Borrower, which shall be a wholly-owned
subsidiary of such Borrower, to effect such acquisition, (b) those acquisitions
that are structured as Stock acquisitions shall be effected through a purchase
of 100% of the Stock of such Person by such Borrower or through a merger between
such Person and a newly formed direct wholly-owned Subsidiary of such Borrower,
as the case may be, so that after giving effect to such merger 100% of the Stock
of the surviving corporation of such merger is owned by such Borrower, (c) those
acquisitions shall be (i) Stock of a United States company, (ii) United States
assets of a United States company, or (iii) United States assets of a United
States division of a foreign company; provided, further, that (a) Administrative
Agent reserves the right to perform all due diligence that Administrative Agent
reasonably deems necessary on such acquired business, Person, business unit,
division or product line (including, without limitation, with respect to the
calculation of the Formula Amount) and Borrowers shall cooperate with
Administrative Agent in connection therewith, (b) any such Permitted Acquisition
shall be on terms and conditions acceptable to Administrative Agent, and (c) an
acquisition shall be a Permitted Acquisition only if all conditions and
requirements of Section 7.1(c) with respect to such Permitted Acquisition are
satisfied with respect thereto.
"Permitted Camelot Disposition" shall mean the sale of Stock of the
Camelot Subsidiaries made in compliance with Section 7.1(d).
"Permitted Encumbrances" shall mean (a) Liens in favor of
Administrative Agent for the benefit of Administrative Agent and Lenders; (b)
Liens for taxes, assessments or other governmental charges not delinquent or
being contested in good faith and by appropriate proceedings and with respect to
which proper reserves have been taken by Borrowers; provided, that, the Lien
shall have no effect on the priority of the Liens in favor of Administrative
Agent or the value of the assets in which Administrative Agent has such a Lien
and a stay of enforcement of any such Lien shall be in effect; (c) deposits or
pledges to secure obligations which are not past due under worker's
compensation, social security or similar laws, or under unemployment insurance;
(d) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), leases, statutory obligations, surety and appeal
bonds and other obligations of like nature which are not past due and are
arising in the ordinary course of any Borrower's business; (e) judgment Liens
(other than those constituting an Event of Default under Section 10.6 hereof)
that have been stayed or bonded and mechanics', workers', materialmen's or other
like Liens arising in the ordinary course of any Borrower's business with
respect to obligations which are not due or which are being contested in good
faith by the applicable Borrower and for which appropriate reserves are
maintained on the Borrowers financial statements, books and records; (f) Liens
placed upon fixed assets hereafter acquired to secure a portion of the purchase
price thereof, provided that (x) any such lien shall not encumber any other
property of the Borrowers and (y) the aggregate amount of Indebtedness secured
by such Liens incurred as a result of such purchases during any fiscal year
shall not exceed the amount provided for in Section 7.6; and (g) Liens existing
on the Closing Date and disclosed on Schedule 1.2(P).
"Permitted Operating Account" shall mean any payroll and/or
operating account other than a Blocked Account, maintained by a Borrower at any
bank or other financial institution, into which any proceeds of Collateral are
deposited; provided, however,
notwithstanding the foregoing no account shall be a Permitted Operating Account
(i) if the aggregate amount of all Borrowers' deposits with the bank or
financial institution at which such account is maintained is in excess of
$3,000,000, (ii) payments of Receivables or any other proceeds of Collateral are
initially deposited directly into such account without first being deposited
into a Blocked Account, or (iii) all Borrowers' deposits in all accounts other
than Blocked Accounts are in excess of $4,000,000 in the aggregate.
"Person" shall mean any individual, sole proprietorship,
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization, association, limited liability company, limited
liability partnership, institution, public benefit corporation, joint venture,
entity or Governmental Body (whether Federal, state, county, city, municipal or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"PIK Note Indenture" shall mean the Indenture dated as of November
26, 1997, by and between Holdings and The Bank of New York, as Trustee, executed
and delivered by the parties thereto in connection with the issuance of the 15%
Senior Secured PIK Notes due 2009.
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA, maintained for employees of Borrowers or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Pledge Agreement" shall mean the Pledge Agreements executed by COI
and Holdings in favor of Administrative Agent securing 100% of all the Stock of
COI and all of its direct and indirect subsidiaries.
"Post-Closing Letter" shall mean that certain letter from the
Borrowers to the Administrative Agent dated the Closing Date with respect to
items to be completed by Borrowers after the Closing Date.
"Projections" shall have the meaning set forth in Section 5.5(a)
hereof.
"Purchased Accounts" means those Receivables of Persons engaged in
the business of providing temporary employment personnel to clients, which
Receivables have been purchased by Borrowers from such Persons in the ordinary
course of Borrowers' business and have been identified by Borrowing Agent as a
"funding only" Receivable.
"Purchasing Lender" shall have the meaning set forth in Section 16.3
hereof.
"Questionnaire" shall mean the Documentation Information
Questionnaire and the responses thereto provided by Borrowers and delivered to
Administrative Agent.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901 et seq., as same may be amended from time to time.
"Reasonable Discretion" shall mean Administrative Agent's reasonable
and good faith judgment based upon any factor which Administrative Agent
believes in good faith could (a) adversely affect the value of any Collateral,
the enforceability or priority of Administrative
Agent's Liens or the amount that Lenders would be likely to receive upon a
liquidation of the Collateral; (b) suggest that any report of Collateral or
financial information is incomplete, inaccurate or misleading in any material
respect; (c) reasonably be expected to create a Default or Event of Default or
increase the likelihood of an insolvency or bankruptcy proceeding or (d)
adversely affect the ability of any Borrower or any Guarantor to repay the
Obligations when due. In exercising such judgment with respect to matters
relating to the determination of Eligible Receivables, changes in advance rates
or the imposition, increase or reduction of reserves, Administrative Agent may
reasonably take into account factors included in the definition of Eligible
Receivables, as well as changes in concentration of risk of Receivables, changes
in collection history and dilution, and other changes that may tend to increase
the credit risk of lending to Borrowers on the security of Inventory or
Receivables. The burden of establishing lack of good faith or reasonableness
shall be on Borrowers.
"Real Property" shall mean all of each Borrower's right, title and
interest in and to the owned and leased premises identified on Schedule 4.19
hereto.
"Receivables" shall mean and include, as to each Borrower, all of
such Borrower's accounts, contract rights, instruments (including those
evidencing indebtedness owed to Borrowers by their Affiliates), documents,
chattel paper (including electronic chattel paper), general intangibles relating
to accounts, drafts and acceptances, credit card receivables, and all other
forms of obligations owing to such Borrower arising out of or in connection with
the sale or lease of Inventory or the rendition of services, all supporting
obligations, guarantees and other security therefor, whether secured or
unsecured, now existing or hereafter created, and whether or not specifically
sold or assigned to Administrative Agent hereunder.
"Release" shall have the meaning set forth in Section 5.7(c)(i)
hereof.
"Reportable Event" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least sixty-six and
two-thirds percent (66 2/3%) of the Advances and, if no Advances are
outstanding, shall mean Lenders holding sixty-six and two-thirds percent (66
2/3%) of the Commitment Percentages.
"Reserve Percentage" shall mean the maximum effective percentage in
effect on any day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including,
without limitation, supplemental, marginal and emergency reserve requirements)
with respect to eurocurrency funding.
"Responsible Officer" means as to any Borrower or Guarantor, each of
the chief executive officer, president, chief financial officer, senior vice
president-finance and vice president-finance/corporate controller of such
Borrower or Guarantor.
"Revolving Advances" shall mean all advances made pursuant to
Section 2.1(a).
"Revolving Credit Note" shall mean, collectively, the promissory
notes referred to in Section 2.1(a) hereof.
"Revolving Interest Rate" shall mean an interest rate per annum
equal to (a) the Alternate Base Rate with respect to Domestic Rate Loans, and
(b) the sum of the Eurodollar Rate plus the Applicable Margin with respect to
Eurodollar Rate Loans.
"Rollforward Report" means a report duly executed by a Responsible
Officer of Borrowing Agent appropriately completed and in substantially the form
of Exhibit 1.2(b).
"SEC" shall mean the United States Securities and Exchange
Commission.
"Section 20 Subsidiary" shall mean the Subsidiary of the bank
holding company controlling PNC, which Subsidiary has been granted authority by
the Federal Reserve Board to underwrite and deal in certain Ineligible
Securities.
"Seller Notes" shall mean promissory notes issued as consideration
in a Permitted Acquisition to any seller of stock and/or assets in such
Permitted Acquisition, which promissory notes shall be subordinated, in form and
substance satisfactory to Administrative Agent, to the payment in full of all
Obligations.
"Senior Debt Payments" shall mean and include all cash actually
expended by Borrowers to make (a) interest payments on any Advances hereunder,
plus (b) payments for all fees, commissions and charges set forth herein and
with respect to any Advances (except for such fees, commissions and charges
payable as of the Closing Date), plus (c) capitalized lease payments, plus (d)
payments with respect to any other Indebtedness for borrowed money, including,
without limitation, the Senior 12% Notes and the Intercompany Note.
"Senior 12% Notes" shall mean the Notes issued under and pursuant to
the Senior Note Documentation, as amended, restated, supplemented or otherwise
modified from time to time in accordance with its terms and the terms hereof.
"Senior Note Documentation" shall mean and include the Senior Notes
Indenture, together will all such notes, agreements, and other documents entered
into or executed in connection therewith.
"Senior Notes Indenture" shall mean the Indenture dated as of
November 26, 1997, by and between COI and Wilmington Trust Company, as Trustee,
executed and delivered by the parties thereto in connection with the issuance of
the Senior 12% Notes as in effect on the Closing Date (including the First and
Second Supplements thereto) and as amended, restated, supplemented or otherwise
modified from time to time in accordance with its terms and the terms hereof.
"Service Fee Accounts" means those Receivables (excluding Purchased
Accounts) of Borrowers arising under service agreements entered into by
Borrowers with independent supplemental staffing firms in the ordinary course of
business and under Licensing Agreements.
"Settlement Date" shall mean the Closing Date and thereafter
Wednesday or Thursday of each week or more frequently if Administrative Agent
deems appropriate unless such day is not a Business Day in which case it shall
be the next succeeding Business Day.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, member interests, participation or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or other entity whether voting or nonvoting, including,
without limitation, common stock, preferred stock, convertible securities or any
other "equity security" (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended).
"Subordinated Debt Payments" shall mean and include all cash
actually expended to make payments of principal and interest on the Subordinated
Note.
"Subordinated Lenders" shall mean Fanning CPD Assets LP, Xxxx X
Xxxxxxx Irrevocable Trust (Xxxxx X Xxxxxxxxxx Trustee) and Fanning Asset
Partners LP.
"Subordinated Note" shall mean the 8% subordinated convertible
promissory notes issued by Holdings in favor of Subordinated Lenders due
December 2, 2009, as amended, restated, supplemented or otherwise modified from
time to time in accordance with its terms and the terms hereof.
"Subordinated Note Documentation" shall mean and include the
Subordinated Note, together will all such notes, agreements, and other documents
entered into or executed in connection therewith.
"Subsidiary" shall mean, with respect to any Person, a corporation
or other entity of whose shares of stock or other ownership interests having
ordinary voting power (other than stock or other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the directors of such corporation, or other Persons performing similar functions
for such entity, are owned, directly or indirectly, by such Person.
"Subsidiary Stock" shall mean all of the outstanding Stock of any
direct or indirect Subsidiary of Holdings (not to exceed 65% of the Stock of any
foreign Subsidiary).
"Term" shall have the meaning set forth in Section 13.1 hereof.
"Termination Event" shall mean (i) a Reportable Event with respect
to any Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower or any
member of the Controlled Group from a Plan or Multiemployer Plan during a plan
year in which such entity was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan
in a distress termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Plan or Multiemployer
Plan; (v) any event or condition (a) which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or Multiemployer Plan, or (b) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi)
the partial or complete withdrawal within the meaning of Sections 4203 and 4205
of ERISA, of any Borrower or any member of the Controlled Group from a
Multiemployer Plan.
"Toxic Substance" shall mean and include any material present on the
Real Property or the Leasehold Interests which has been shown to have
significant adverse effect on
human health or which is subject to regulation under the Toxic Substances
Control Act (TSCA), 15 U.S.C. Sections 2601 et seq., applicable state law, or
any other applicable Federal or state laws now in force or hereafter enacted
relating to toxic substances. "Toxic Substance" includes but is not limited to
asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
"Transferee" shall have the meaning set forth in Section 16.3(b)
hereof
"Unauthorized Purchased Account" shall mean any Purchased Account of
an Account Seller if as of the time of acquisition thereof by a Borrower,
Purchased Accounts and Service Fee Accounts (other than arising from Licensing
Agreements) of all Account Sellers constitute more than 55% of otherwise
Eligible Receivables (as determined by Administrative Agent).
"Unauthorized Service Fee Account" shall mean any Service Fee
Account of an Account Seller if as of the time of creation or acquisition
thereof by a Borrower, Purchased Accounts and Service Fee Accounts (other than
arising from Licensing Agreements) of all Account Sellers constitute more than
55% of otherwise Eligible Receivables (as determined by Administrative Agent).
"Unbilled Eligible Receivables" means any Receivable (other than a
Receivable which is or may become a Purchased Account) for which no invoice has
been sent to any Customer, as to which less than 45 days has elapsed since the
date of creation or accrual of such Receivable.
"Undrawn Availability" at a particular date shall mean an amount
equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving
Advance Amount, minus (b) the sum of (i) the outstanding amount of Advances plus
(ii) all amounts due and owing to Borrowers' trade creditors which are more than
sixty (60) days past due, plus (iii) fees and expenses for which Borrowers are
liable but which have not been paid or charged to Borrowers' Account.
"Uniform Commercial Code" shall have the meaning set forth in
Section 1.3 hereof.
"Week" shall mean the time period commencing with the opening of
business on a Wednesday and ending on the end of business the following Tuesday,
except that for purposes of Section 9.2(b), Week shall mean the time period
commencing with the opening of business on a Monday and ending on the following
Sunday.
1.3. Uniform Commercial Code Terms. All terms used herein and defined in
the Uniform Commercial Code as adopted in the State of New York from time to
time (the "Uniform Commercial Code") shall have the meaning given therein unless
otherwise defined herein. To the extent the definition of any category or type
of collateral is expanded by any amendment, modification or revision to the
Uniform Commercial Code, such expanded definition will apply automatically as of
the date of such amendment, modification or revision.
1.4. Certain Matters of Construction. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular
section, paragraph or subdivision. Any pronoun used shall be deemed to cover all
genders. Wherever appropriate in the context, terms used herein in the singular
also include the plural and vice versa "or" has the inclusive meaning
represented by the phrase "and/or," and "including" has the meaning represented
by the phrase "including without limitation." All references to "shall" and
"will" are intended to have the same meaning. All references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations. Unless otherwise provided, all references to any
instruments or agreements to which Administrative Agent is a party, including,
without limitation, references to any of the Other Documents, shall include any
and all modifications or amendments thereto and any and all extensions or
renewals thereof. All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or otherwise
within the limitations of, another covenant shall not avoid the occurrence of a
default if such action is taken or condition exists. In addition, all
representations and warranties hereunder shall be given independent effect so
that if a particular representation or warranty proves to be incorrect or is
breached, the fact that another representation or warranty concerning the same
or similar subject matter is correct or is not breached will not affect the
incorrectness of a breach of a representation or warranty hereunder.
II. ADVANCES, PAYMENTS.
2.1. (a) Revolving Advances. Subject to the terms and conditions set
forth in this Agreement, including, without limitation, Section 2.1(b), each
Lender, severally and not jointly, will make Revolving Advances to Borrowers in
aggregate amounts outstanding at any time equal to such Lender's Commitment
Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the
aggregate amount of outstanding Letters of Credit or (y) an amount equal to the
sum of:
(i) up to the lesser of (A) 85%, subject to the provisions of
Section 2.1(b) hereof ("Advance Rate"), of Eligible Receivables and
(B) 90% of Eligible Receivables (as defined in the Senior Notes
Indenture), minus
(ii) the aggregate amount of outstanding Letters of Credit, minus
(iii) the aggregate amount of all LC Indemnities, minus
(iv) the Payroll Tax Reserve and such other reserves as
Administrative Agent may reasonably deem proper or necessary from
time to time.
The difference of (x) Section 2.1(a)(y)(i) minus (y) Sections 2.1
(a)(y)(ii), (iii) and (iv) at any time and from time to time shall be referred
to as the "Formula Amount." The Revolving Advances shall be evidenced by one or
more secured promissory notes (collectively, the "Revolving Credit Note")
substantially in the form attached hereto as Exhibit 2.1(a).
(b) Discretionary Rights. The Advance Rate may be decreased by
Administrative Agent at any time and from time to time in the exercise of its
Reasonable Discretion. Each Borrower consents to any such decreases and
acknowledges that decreasing the Advance Rate or increasing or imposing reserves
may limit or restrict Advances requested by Borrowing Agent.
2.2. Procedure for Revolving Advances Borrowing.
(a) Borrowing Agent on behalf of any Borrower may notify
Administrative Agent prior to 11:00 a.m. on a Business Day of a Borrower's
request to incur, on that day, a Revolving Advance hereunder, which Revolving
Advance shall be in a minimum amount of $100,000, and which request shall be
irrevocable. Should any amount required to be paid as interest hereunder, or as
fees or other charges under this Agreement or any other agreement with
Administrative Agent or Lenders, or with respect to any other Obligation, become
due, same shall be deemed a request for a Revolving Advance as of the date such
payment is due, in the amount required to pay in full such interest, fee, charge
or Obligation under this Agreement or any other agreement with Administrative
Agent or Lenders, and such request shall be irrevocable.
(b) Notwithstanding the provisions of subsection (a) above, in
the event any Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent
shall give Administrative Agent at least three (3) Business Days' prior written
notice by 10:00 a.m., specifying (i) the date of the proposed borrowing (which
shall be a Business Day), (ii) the type of borrowing and the amount on the date
of such Advance to be borrowed, which amount shall be in a minimum amount of
$500,000 and in integral multiples of $100,000 thereafter, and (iii) the
duration of the first Interest Period therefor. Interest Periods for Eurodollar
Rate Loans shall be for one, two, three or six months; provided, if an Interest
Period would end on a day that is not a Business Day, it shall end on the next
succeeding Business Day unless such day falls in the next succeeding calendar
month in which case the Interest Period shall end on the preceding Business Day.
No Eurodollar Rate Loan shall be made available to Borrower during the
continuance of a Default or an Event of Default.
(c) Each Interest Period of a Eurodollar Rate Loan shall commence
on the date such Eurodollar Rate Loan is made and shall end on such date as
Borrowing Agent may elect as set forth in subsection (b)(iii) above provided
that the exact length of each Interest Period shall be determined in accordance
with the practice of the interbank market for offshore Dollar deposits and no
Interest Period shall end after the last day of the Term.
Borrowing Agent shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Administrative Agent
pursuant to Section 2.2(b) or by its notice of conversion given to
Administrative Agent pursuant to Section 2.2(d), as the case may be. Borrowing
Agent shall elect the duration of each succeeding Interest Period by giving
irrevocable written notice to Administrative Agent of such duration not less
than three (3) Business Days prior to the last day of the then current Interest
Period applicable to such Eurodollar Rate Loan. If Administrative Agent does not
receive timely notice of the Interest Period elected by Borrowing Agent,
Borrowers shall be deemed to have elected to convert to a Domestic Rate Loan
subject to Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and be
continuing, any Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any
Business Day with respect to Domestic Rate Loans, convert any such loan into a
loan of another type in the same aggregate principal amount provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business
Day of the then current Interest Period applicable to such Eurodollar Rate Loan.
If a Borrower desires to convert a loan, Borrowing Agent shall give
Administrative Agent not less than three (3) Business Days' prior written notice
to convert from a Domestic Rate Loan to a Eurodollar Rate Loan or one (1)
Business Day's prior written notice to convert from a Eurodollar Rate Loan to a
Domestic Rate Loan, specifying the date of such conversion, the loans to be
converted and if the conversion is from a Domestic Rate Loan to any other type
of loan, the duration of the first Interest Period therefor. After giving effect
to each such conversion, there shall not be outstanding more than seven (7)
Eurodollar Rate Loans, in the aggregate.
(e) At its option and upon three (3) Business Days' prior written
notice, any Borrower may prepay the Eurodollar Rate Loans in whole at any time
or in part from time to time, without premium or penalty (except as set forth in
the Fee Letter), but with accrued interest on the principal being prepaid to the
date of such repayment. Such Borrower shall specify the date of prepayment of
Advances which are Eurodollar Rate Loans and the amount of such prepayment. In
the event that any prepayment of a Eurodollar Rate Loan is required or permitted
on a date other than the last Business Day of the then current Interest Period
with respect thereto, Borrowers shall indemnify Administrative Agent and Lenders
therefor in accordance with Section 2.2(f) hereof.
(f) Each Borrower shall indemnify Administrative Agent and
Lenders and hold Administrative Agent and Lenders harmless from and against any
and all losses or expenses that Administrative Agent and Lenders may sustain or
incur as a consequence of any prepayment, conversion of or any default by any
Borrower in the payment of the principal of or interest on any Eurodollar Rate
Loan or failure by any Borrower to complete a borrowing of, a prepayment of or
conversion of or to a Eurodollar Rate Loan after notice thereof has been given,
including, but not limited to, any interest payable by Administrative Agent or
Lenders to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Administrative Agent or
any Lender to Borrowing Agent shall be conclusive absent manifest error.
(g) Notwithstanding any other provision hereof, if after the date
hereof any applicable law, treaty, regulation or directive, or any change
therein or in the interpretation or application thereof, shall make it unlawful
for any Lender (for purposes of this subsection (g), the term "Lender" shall
include any Lender and the office or branch where any Lender or any corporation
or bank controlling such Lender makes or maintains any Eurodollar Rate Loans) to
make or maintain its Eurodollar Rate Loans, the obligation of Lenders to make
Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrowers
shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon
request from Administrative Agent, either pay all such affected Eurodollar Rate
Loans or convert such affected Eurodollar Rate Loans into loans of another type.
If any such payment or conversion of any Eurodollar Rate Loan is made on a day
that is not the last day of the Interest Period applicable to such Eurodollar
Rate Loan, Borrowers shall pay Administrative Agent, upon Administrative Agent's
request, such amount or amounts as may be necessary to compensate Lenders for
any loss or expense sustained or incurred by Lenders in respect of such
Eurodollar Rate Loan as a result of such payment or conversion, including (but
not limited to) any interest or other amounts payable by Lenders to lenders of
funds obtained by Lenders in order to make or maintain such Eurodollar Rate
Loan. A
certificate as to any additional amounts payable pursuant to the foregoing
sentence submitted by Lenders to Borrowing Agent shall be conclusive absent
manifest error.
2.3. Disbursement of Advance Proceeds. All Advances shall be disbursed
from whichever office or other place Administrative Agent may designate from
time to time and, together with any and all other Obligations of Borrowers to
Administrative Agent or Lenders, shall be charged to Borrowers' Account on
Administrative Agent's books. During the Term, Borrowers may use the Revolving
Advances by borrowing, prepaying and reborrowing, all in accordance with the
terms and conditions hereof. The proceeds of each Revolving Advance requested by
Borrowers or deemed to have been requested by Borrowers under Section 2.2(a)
hereof shall, with respect to requested Revolving Advances to the extent Lenders
make such Revolving Advances, be made available to the applicable Borrower on
the day so requested by way of credit to such Borrower's operating account at
PNC, or such other bank as Borrowing Agent may designate following notification
to Administrative Agent, in immediately available federal funds or other
immediately available funds or, with respect to Revolving Advances deemed to
have been requested by any Borrower, be disbursed to Administrative Agent to be
applied to the outstanding Obligations giving rise to such deemed request.
2.4. Maximum Advances. The aggregate balance of Advances outstanding at
any time shall not exceed the lesser of (a) Maximum Revolving Advance Amount or
(b) the Formula Amount.
2.5. Repayment of Advances.
(a) All Advances shall be due and payable in full on the last day
of the Term subject to earlier prepayment as herein provided.
(b) Each Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Administrative Agent on the date received.
In consideration of Administrative Agent's agreement to conditionally credit
Borrowers' Account as of the Business Day on which Administrative Agent receives
those items of payment, each Borrower agrees that, in computing the charges
under this Agreement, all items of payment shall be deemed applied by
Administrative Agent on account of the Obligations one (1) Business Day after
(i) the Business Day Administrative Agent receives such payments via wire
transfer or electronic depository check or (ii) in the case of payments received
by Administrative Agent in any other form, the Business Day such payment
constitutes good funds in Administrative Agent's account. Administrative Agent
is not, however, required to credit Borrowers' Account for the amount of any
item of payment which is unsatisfactory to Administrative Agent and
Administrative Agent may charge Borrowers' Account for the amount of any item of
payment which is returned to Administrative Agent unpaid. At the request of
Borrowing Agent, Administrative Agent will provide to Borrowing Agent invoices
or expense reports detailing any charges made to Borrowers' Account pursuant to
this Section 2.5(b).
(c) All payments (including prepayments) of principal, interest
and other amounts payable hereunder, or under any of the Other Documents shall
be made to Administrative Agent at the Payment Office not later than 1:00 P.M.
(New York Time) on the
due date therefor in lawful money of the United States of America in federal
funds or other funds immediately available to Administrative Agent.
Administrative Agent shall have the right to effectuate payment on any and all
Obligations due and owing hereunder by charging Borrowers' Account or by making
Advances as provided in Section 2.2 hereof.
(d) Borrowers shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.6. Repayment of Excess Advances. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.7. Statement of Account. Administrative Agent shall maintain, in
accordance with its customary procedures, a loan account ("Borrowers' Account")
in the name of Borrowers in which shall be recorded the date and amount of each
Advance made by Administrative Agent and the date and amount of each payment in
respect thereof; provided, however, the failure by Administrative Agent to
record the date and amount of any Advance shall not adversely affect
Administrative Agent or any Lender. Each month, Administrative Agent shall send
to Borrowing Agent a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Administrative Agent and Borrowers, during such month. The monthly statements
shall be deemed correct and binding upon Borrowers in the absence of manifest
error and shall constitute an account stated between Lenders and Borrowers
unless Administrative Agent receives a written statement of Borrowers' specific
exceptions thereto within thirty (30) days after such statement is received by
Borrowing Agent. The records of Administrative Agent with respect to the
Borrowers' Account shall be conclusive evidence absent manifest error of the
amounts of Advances and other charges thereto and of payments applicable
thereto.
2.8. Letters of Credit. Subject to the terms and conditions hereof,
Administrative Agent shall issue or cause the issuance of Letters of Credit
("Letters of Credit") on behalf of any Borrower; provided, however, that
Administrative Agent will not be required to issue or cause to be issued any
Letters of Credit to the extent that the face amount of such Letters of Credit
would then cause the sum of (i) the outstanding Revolving Advances plus (ii)
outstanding Letters of Credit to exceed the lesser of (x) the Maximum Revolving
Advance Amount or (y) the Formula Amount. The maximum amount of outstanding
Letters of Credit shall not exceed $10,000,000 in the aggregate at any time. All
disbursements or payments related to Letters of Credit shall be deemed to be
Domestic Rate Loans consisting of Revolving Advances and shall bear interest at
the Revolving Interest Rate for Domestic Rate Loans; Letters of Credit that have
not been drawn upon shall not bear interest.
2.9. Issuance of Letters of Credit.
(a) Borrowing Agent, on behalf of Borrowers, may request
Administrative Agent to issue or cause the issuance of a Letter of Credit by
delivering to Administrative Agent at the Payment Office by 10:00 a.m. at least
five (5) Business Days in advance of the requested
date of such issuance, Administrative Agent's form of Letter of Credit
Application (the "Letter of Credit Application") completed to the satisfaction
of Administrative Agent; and, such other certificates, documents and other
papers and information as Administrative Agent may reasonably request. Borrowing
Agent, on behalf of Borrowers, also has the right to give instructions and make
agreements with respect to any application, any applicable letter of credit and
security agreement, any applicable letter of credit reimbursement agreement
and/or any other applicable agreement, any letter of credit and the disposition
of documents, disposition of any unutilized funds, and to agree with
Administrative Agent upon any amendment, extension or renewal of any Letter of
Credit.
(b) Each Letter of Credit shall, among other things, (i) provide
for the payment of sight drafts, other written demands for payment or
acceptances of usance drafts when presented for honor thereunder in accordance
with the terms thereof and when accompanied by the documents described therein
and (ii) in the case of any trade Letter of Credit have an expiry date not later
than six (6) months after such trade Letter of Credit's date of issuance, and in
the case of any standby Letter of Credit have an expiry date not later than one
year (plus any automatic extensions or renewals thereof) after the date of
issuance thereof, and in no event shall any Letter of Credit have an expiry date
later than the last day of the Term. Each Letter of Credit shall be subject to
the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and any amendments or
revisions thereof adhered to by the Issuer and, to the extent not inconsistent
therewith, the laws of the State of New York. Notwithstanding anything in the
preceding sentence to the contrary, as agreed by the Borrowing Agent and the
Issuer, each standby Letter of Credit shall be subject to International Standby
Practices 1998, International Chamber of Commerce Publication No. 590, and any
amendments or revisions thereof. In addition, to the extent not inconsistent
with the Practices above, each Letter of Credit shall be subject to the laws of
the State of New York, or any such other state as agreed to between the Issuer
and Borrowing Agent.
(c) Administrative Agent shall use its reasonable efforts to
notify Lenders of the request by Borrowing Agent for a Letter of Credit
hereunder.
2.10. Requirements For Issuance of Letters of Credit.
(a) In connection with the issuance of any Letter of Credit,
Borrowers shall indemnify, save and hold Administrative Agent, each Lender and
each Issuer harmless from any loss, cost, expense or liability, including,
without limitation, payments made by Administrative Agent, any Lender or any
Issuer and expenses and reasonable attorneys' fees incurred by Administrative
Agent, any Lender or Issuer arising out of, or in connection with, any Letter of
Credit to be issued or created for any Borrower. Borrowers shall be bound by
Administrative Agent's or any Issuer's regulations and good faith
interpretations of any Letter of Credit issued or created for Borrowers'
Account, although this interpretation may be different from its own; and,
neither Administrative Agent, nor any Lender, nor any Issuer nor any of their
correspondents shall be liable for any error, negligence, or mistakes, whether
of omission or commission, in following Borrowing Agent's or any Borrower's
instructions or those contained in any Letter of Credit or any modifications,
amendments or supplements thereto or in issuing or paying any Letter of Credit,
except for Administrative Agent's, any Lender's, any Issuer's or such
correspondents' willful misconduct.
(b) Borrowing Agent shall authorize and direct any Issuer to name
the applicable Borrower as the "Applicant" or "Account Party" of each Letter of
Credit. If Administrative Agent is not the Issuer of any Letter of Credit,
Borrowing Agent shall authorize and direct the Issuer to deliver to
Administrative Agent all instruments, documents, and other writings and property
received by the Issuer pursuant to the Letter of Credit and to accept and rely
upon Administrative Agent's instructions and agreements with respect to all
matters arising in connection with the Letter of Credit and the application
therefor.
(c) In connection with all Letters of Credit issued or caused to
be issued by Administrative Agent under this Agreement, each Borrower hereby
appoints Administrative Agent, or its designee, as its attorney, with full power
and authority (i) to sign and/or endorse such Borrower's name upon any warehouse
or other receipts, letter of credit applications and acceptances; (ii) to sign
such Borrower's name on bills of lading; (iii) to clear Inventory through the
United States of America Customs Department ("Customs") in the name of such
Borrower or Administrative Agent or Administrative Agent's designee, and to sign
and deliver to Customs officials powers of attorney in the name of such Borrower
for such purpose; and (iv) to complete in such Borrower's name or Administrative
Agent's, or in the name of Administrative Agent's designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. Neither Administrative Agent nor its attorneys will be
liable for any acts or omissions nor for any error of judgment or mistakes of
fact or law, except for Administrative Agent's or its attorney's willful
misconduct. This power, being coupled with an interest, is irrevocable as long
as any Letters of Credit remain outstanding.
(d) Each Lender shall to the extent of the percentage amount
equal to the product of such Lender's Commitment Percentage times the aggregate
amount of all unreimbursed reimbursement obligations arising from disbursements
made or obligations incurred with respect to the Letters of Credit be deemed to
have irrevocably purchased an undivided participation in each such unreimbursed
reimbursement obligation. In the event that at the time a disbursement is made
the unpaid balance of Revolving Advances exceeds or would exceed, with the
making of such disbursement, the lesser of the Maximum Revolving Advance Amount
or the Formula Amount, and such disbursement is not reimbursed by Borrowers
within two (2) Business Days, Administrative Agent shall promptly notify each
Lender and upon Administrative Agent's demand each Lender shall pay to
Administrative Agent such Lender's proportionate share of such unreimbursed
disbursement together with such Lender's proportionate share of Administrative
Agent's unreimbursed costs and expenses relating to such unreimbursed
disbursement. Upon receipt by Administrative Agent of a repayment from any
Borrower of any amount disbursed by Administrative Agent for which
Administrative Agent had already been reimbursed by Lenders, Administrative
Agent shall deliver to each Lender that Lender's pro rata share of such
repayment. Each Lender's participation commitment shall continue until the last
to occur of any of the following events: (A) Administrative Agent ceases to be
obligated to issue or cause to be issued Letters of Credit hereunder; (B) no
Letter of Credit issued hereunder remains outstanding and uncancelled or (C) all
Persons (other than the applicable Borrower) have been fully reimbursed for all
payments made under or relating to Letters of Credit.
2.11. Additional Payments. Any sums expended by Administrative Agent or
any Lender due to any Borrower's failure to perform or comply with its
obligations under this
Agreement or any Other Document including, without limitation, any Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrowers' Account as a Revolving Advance and added to the
Obligations.
2.12. Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be advanced
according to the applicable Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrowers on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of Lenders. Except as expressly provided herein, all
payments (including prepayments) to be made by any Borrower on account of
principal, interest and fees shall be made without set off or counterclaim and
shall be made to Administrative Agent on behalf of the Lenders to the Payment
Office, in each case on or prior to 1:00 P.M., New York time, in Dollars and in
immediately available funds, and otherwise shall be made in accordance with the
terms and conditions hereof, including Sections 2.5 and 2.6 hereof.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.12(a) and (b) hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Advances shall be
advanced by Administrative Agent and each payment by any Borrower on account of
Revolving Advances shall be applied first to those Revolving Advances advanced
by Administrative Agent. On or before 1:00 P.M., New York time, on each
Settlement Date commencing with the first Settlement Date following the Closing
Date, Administrative Agent and Lenders shall make certain payments as follows:
(I) if the aggregate amount of new Revolving Advances made by Administrative
Agent during the preceding Week (if any) exceeds the aggregate amount of
repayments applied to outstanding Revolving Advances during such preceding Week,
then each Lender shall provide Administrative Agent with funds in an amount
equal to its applicable Commitment Percentage of the difference between (w) such
Revolving Advances and (x) such repayments and (II) if the aggregate amount of
repayments applied to outstanding Revolving Advances during such Week exceeds
the aggregate amount of new Revolving Advances made during such Week, then
Administrative Agent shall provide each Lender with funds in an amount equal to
its applicable Commitment Percentage of the difference between (y) such
repayments and (z) such Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at the
applicable Revolving Interest Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Administrative
Agent shall submit to each Lender a certificate with respect to payments
received and Advances made during the Week immediately preceding such Settlement
Date. Such certificate of Administrative Agent shall be conclusive in the
absence of manifest error.
(d) If any Lender or Participant (a "benefitted Lender") shall at
any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than
any such payment to and Collateral received by any other Lender, if any, in
respect of such other Lender's Advances, or interest thereon, and such greater
proportionate payment or receipt of Collateral is not expressly permitted
hereunder, such benefitted Lender shall purchase for cash from the other Lenders
a participation in such portion of each such other Lender's Advances, or shall
provide such other Lender with the benefits of any such Collateral, or the
proceeds thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such Collateral or proceeds ratably with each
of the other Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest. Each Lender so purchasing
a portion of another Lender's Advances may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
(e) Unless Administrative Agent shall have been notified by
telephone, confirmed in writing, by any Lender that such Lender will not make
the amount which would constitute its applicable Commitment Percentage of the
Advances available to Administrative Agent, Administrative Agent may (but shall
not be obligated to) assume that such Lender shall make such amount available to
Administrative Agent on the next Settlement Date and, in reliance upon such
assumption, make available to Borrowers a corresponding amount. Administrative
Agent will promptly notify Borrowers of its receipt of any such notice from a
Lender. If such amount is made available to Administrative Agent on a date after
such next Settlement Date, such Lender shall pay to Administrative Agent on
demand an amount equal to the product of (i) the daily average Federal Funds
Rate (computed on the basis of a year of 360 days) during such period as quoted
by Administrative Agent, times (ii) such amount, times (iii) the number of days
from and including such Settlement Date to the date on which such amount becomes
immediately available to Administrative Agent. A certificate of Administrative
Agent submitted to any Lender with respect to any amounts owing under this
paragraph (e) shall be conclusive, in the absence of manifest error. If such
amount is not in fact made available to Administrative Agent by such Lender
within three (3) Business Days after such Settlement Date, Administrative Agent
shall be entitled to recover such an amount, with interest thereon at the rate
per annum then applicable to such Revolving Advances hereunder, on demand from
Borrowers; provided, however, that Administrative Agent's right to such recovery
shall not prejudice or otherwise adversely affect Borrowers' rights (if any)
against such Lender.
2.13. Mandatory Prepayments. Subject to Section 4.3 hereof, when any
Borrower sells or otherwise disposes of any Collateral, Borrowers shall repay
the Advances in an amount equal to the net proceeds of such sale (i.e., gross
proceeds less the reasonable costs of such sales or other dispositions), such
repayments to be made promptly but in no event more than one (1) Business Day
following receipt of such net proceeds, and until the date of payment, such
proceeds shall be held in trust for Administrative Agent. The foregoing shall
not be deemed to be implied consent to any such sale otherwise prohibited by the
terms and conditions hereof. Such repayments shall be applied to the Advances in
such order as Administrative Agent may determine, subject to Borrower's ability
to reborrow Revolving Advances in accordance with the terms hereof.
2.14. Use of Proceeds.
(a) Borrowers shall apply the proceeds of Advances to (i) repay
Existing Bank Indebtedness, (ii) provide for the repurchase of certain (or all)
of the Senior 12% Notes to the extent otherwise permitted hereunder, (iii) pay
fees and expenses relating to the transactions contemplated by this Agreement,
and (iv) to provide for their working capital and for general corporate purposes
needs not prohibited by the terms of this Agreement.
(b) Without limiting the generality of Section 2.14(a) above,
neither the Borrowers, the Guarantors nor any other person which may in the
future become party to this Agreement or the Other Documents as Borrower or
Guarantor, intend to use nor shall they use any portion of the proceeds of the
Advances, directly or indirectly, to purchase during the underwriting period, or
for 30 days thereafter, Ineligible Securities being underwritten by a Section 20
Subsidiary.
(c) Notwithstanding anything herein, Borrowers shall not use the
proceeds of Advances to fund the acquisition of any Person, or the business of
any Person, unless such acquisition is permitted by, and made in accordance with
Section 7.1 hereof.
2.15. Defaulting Lender.
(a) Notwithstanding anything to the contrary contained herein, in
the event any Lender (x) has refused (which refusal constitutes a breach by such
Lender of its obligations under this Agreement) to make available its portion of
any Advance or (y) notifies either Administrative Agent or Borrowing Agent that
it does not intend to make available its portion of any Advance (if the actual
refusal would constitute a breach by such Lender of its obligations under this
Agreement) (each, a "Lender Default"), all rights and obligations hereunder of
such Lender (a "Defaulting Lender") as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.15 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give instructions
to Administrative Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the Other Documents. All amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and,
for purposes of the definition of "Required Lenders," a Defaulting Lender shall
be deemed not to be a Lender and not to have Advances outstanding.
(d) Other than as expressly set forth in this Section 2.15, the
rights and obligations of a Defaulting Lender (including the obligation to
indemnify Administrative Agent) and the other parties hereto shall remain
unchanged. Nothing in this Section 2.15 shall be deemed to release any
Defaulting Lender from its obligations under this Agreement and the Other
Documents, shall alter such obligations, shall operate as a waiver of any
default by such Defaulting Lender hereunder, or shall prejudice any rights which
any Borrower, Administrative Agent or any Lender may have against any Defaulting
Lender as a result of any default by such Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to the
satisfaction of Administrative Agent the breach which caused a Lender to become
a Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting
Lender and shall be treated as a Lender under this Agreement.
III. INTEREST AND FEES.
3.1. Interest. Interest on Advances shall be payable in arrears on the
first day of each calendar month with respect to Domestic Rate Loans and, with
respect to Eurodollar Rate Loans, at the end of each Interest Period or, for
Eurodollar Rate Loans with an Interest Period in excess of three months, at the
earlier of (a) each three months on the three-month anniversary date of the
commencement of such Eurodollar Rate Loan or (b) the end of the Interest Period.
Interest charges shall be computed on the actual principal amount of Advances
outstanding during the month at a rate per annum equal to the Revolving Interest
Rate. Whenever, subsequent to the date of this Agreement, the Alternate Base
Rate is increased or decreased, the Revolving Interest Rate for Domestic Rate
Loans shall be similarly changed without notice or demand of any kind by an
amount equal to the amount of such change in the Alternate Base Rate during the
time such change or changes remain in effect. The Eurodollar Rate shall be
adjusted with respect to Eurodollar Rate Loans without notice or demand of any
kind on the effective date of any change in the Reserve Percentage as of such
effective date. Upon and after the occurrence of an Event of Default, and during
the continuation thereof, at the option of Administrative Agent or at the
direction of the Required Lenders, the Obligations shall bear interest at the
Revolving Interest Rate for Domestic Rate Loans plus two percent (2%) per annum
(the "Default Rate").
3.2. Letter of Credit Fees.
(a) Borrowers shall pay (x) to Administrative Agent, for the
benefit of Lenders, fees for each Letter of Credit for the period from and
excluding the date of issuance of same to and including the date of expiration
or termination, equal to the average daily face amount of each outstanding
Letter of Credit multiplied by two percent (2.00%) per annum, such fees to be
calculated on the basis of a 360-day year for the actual number of days elapsed
and to be payable monthly in arrears on the first day of each calendar month and
on the last day of the Term, plus customary administrative, issuance, amendment,
payment and negotiation charges with respect to Documentary Letters of Credit,
and (y) to the Issuer, any and all fees and expenses as agreed upon by the
Issuer and the Borrowing Agent in connection with any Letter of
Credit, including, without limitation, in connection with the opening, amendment
or renewal of any such Letter of Credit and any acceptances created thereunder
and shall reimburse Administrative Agent for any and all fees and expenses, if
any, paid by Administrative Agent to the Issuer (all of the foregoing fees, the
"Letter of Credit Fees"). All such charges shall be deemed earned in full on the
date when the same are due and payable hereunder and shall not be subject to
rebate or proration upon the termination of this Agreement for any reason. Any
such charge in effect at the time of a particular transaction shall be the
charge for that transaction, notwithstanding any subsequent change in the
Issuer's prevailing charges for that type of transaction. All Letter of Credit
Fees payable hereunder shall be deemed earned in full on the date when the same
are due and payable hereunder and shall not be subject to rebate or proration
upon the termination of this Agreement for any reason.
On demand at anytime following and during the continuance of any
Event of Default, Borrowers will cause cash to be deposited and maintained in an
account with Administrative Agent, as cash collateral, in an amount equal to one
hundred and five percent (105%) of the outstanding Letters of Credit, and each
Borrower hereby irrevocably authorizes Administrative Agent, in its discretion,
on such Borrower's behalf and in such Borrower's name, to open such an account
and to make and maintain deposits therein, or in an account opened by such
Borrower, in the amounts required to be made by such Borrower, out of the
proceeds of Receivables or other Collateral or out of any other funds of such
Borrower coming into any Lender's possession at any time. Administrative Agent
will invest such cash collateral (less applicable reserves) in such short-term
money-market items as to which Administrative Agent and such Borrower mutually
agree and the net return on such investments shall be credited to such account
and constitute additional cash collateral. No Borrower may withdraw amounts
credited to any such account except upon payment and performance in full of all
Obligations and termination of this Agreement.
3.3 Facility Fee; Fee Letter. (a) If, for any calendar quarter during
the Term, the average daily unpaid balance of the Advances for each day of such
quarter is less than the Maximum Revolving Advance Amount, then Borrowers shall
pay to Administrative Agent, for the ratable benefit of the Lenders, a facility
fee at a rate equal to three-eighths of one percent (.375%) per annum on the
amount by which the Maximum Revolving Advance Amount exceeds such average daily
unpaid balance. Such facility fee shall be payable to Administrative Agent in
arrears on the first day of each calendar quarter.
(b) The Borrowers shall pay the fees set forth in the Fee Letter
in the manner and at the times required by the Fee Letter.
3.4. Computation of Interest and Fees. Interest and fees hereunder shall
be computed on the basis of a year of 360 days and for the actual number of days
elapsed. If any payment to be made hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the Revolving
Interest Rate for Domestic Rate Loans during such extension.
3.5. Maximum Charges. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law (such
rate, the "Maximum Lawful Rate"). In the event interest and other charges as
computed hereunder would otherwise
exceed the highest rate permitted under law, such excess amount shall be first
applied to any unpaid principal balance owed by Borrowers, and if the then
remaining excess amount is greater than the previously unpaid principal balance,
Lenders shall promptly refund such excess amount to Borrowers and the provisions
hereof shall be deemed amended to provide for such permissible rate; provided,
however, that if at any time thereafter the rate of interest payable hereunder
is less than the Maximum Lawful Rate, Borrowers shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total interest
received by Administrative Agent, on behalf of Lenders, is equal to the total
interest that would have been received had the interest rate payable hereunder
been (but for the operation of this paragraph) the interest rate payable since
the Closing Date as otherwise provided in this Agreement. Thereafter, interest
hereunder shall be paid at the rate(s) of interest and in the manner provided in
Sections 3.1, unless and until the rate of interest again exceeds the Maximum
Lawful Rate, and at that time this paragraph shall again apply. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, 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. If,
notwithstanding the provisions of this Section 3.5, a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, such Lender shall deliver such
excess to Administrative Agent and Administrative Agent shall, to the extent
permitted by applicable law, promptly apply such excess to repay the outstanding
Advances and thereafter shall refund any excess to Borrowers or as a court of
competent jurisdiction may otherwise order.
3.6. Increased Costs. In the event that any applicable law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.6, the term "Lender" shall include Administrative Agent or any Lender and any
corporation or bank controlling Administrative Agent or any Lender) and the
office or branch where Administrative Agent or any Lender (as so defined) makes
or maintains any Eurodollar Rate Loans with any request or directive (whether or
not having the force of law) from any central bank or other financial, monetary
or other authority, shall:
(a) subject Administrative Agent or any Lender to any tax of any
kind whatsoever with respect to this Agreement or any Other Document or change
the basis of taxation of payments to Administrative Agent or any Lender of
principal, fees, interest or any other amount payable hereunder or under any
Other Documents (except for changes in the rate of tax on the overall net income
of Administrative Agent or any Lender by the jurisdiction in which it maintains
its principal office);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Administrative Agent or any Lender, including (without limitation)
pursuant to Regulation D of the Board of Governors of the Federal Reserve
System; or
(c) impose on Administrative Agent or any Lender or the London
interbank Eurodollar market any other condition with respect to this Agreement
or any Other Document;
and the result of any of the foregoing is to increase the cost to Administrative
Agent or any Lender of making, renewing or maintaining its Advances hereunder by
an amount that Administrative Agent or such Lender deems to be material or to
reduce the amount of any payment (whether of principal, interest or otherwise)
in respect of any of the Advances by an amount that Administrative Agent or such
Lender deems to be material, then, in any case Borrowers shall promptly pay
Administrative Agent or such Lender, upon its demand, such additional amount as
will compensate Administrative Agent or such Lender for such additional cost or
such reduction, as the case may be, provided that the foregoing shall not apply
to increased costs which are reflected in the Eurodollar Rate. Administrative
Agent or such Lender shall certify the amount of such additional cost or reduced
amount to Borrowers, and such certification shall be conclusive absent manifest
error.
3.7. Basis For Determining Interest Rate Inadequate or Unfair. In the
event that Administrative Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the Eurodollar
Rate pursuant to Section 2.2 hereof for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,
then Administrative Agent shall give Borrowing Agent prompt written, telephonic
or telegraphic notice of such determination. If such notice is given, (i) any
such requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan,
unless Borrowing Agent shall notify Administrative Agent no later than 10:00
a.m. (New York City time) two (2) Business Days prior to the date of such
proposed borrowing, that its request for such borrowing shall be cancelled or
made as an unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan
or Eurodollar Rate Loan which was to have been converted to an affected type of
Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate
Loan, or, if Borrowing Agent shall notify Administrative Agent, no later than
10:00 a.m. (New York City time) two (2) Business Days prior to the proposed
conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan,
and (iii) any outstanding affected Eurodollar Rate Loans, shall be converted
into a Domestic Rate Loan, or, if Borrowing Agent shall notify Administrative
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the last Business Day of the then current Interest Period applicable to such
affected Eurodollar Rate Loan, shall be converted into an unaffected type of
Eurodollar Rate Loan, on the last Business Day of the then current Interest
Period for such affected Eurodollar Rate Loans. Until such notice has been
withdrawn, Lenders shall have no obligation to make an affected type of
Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate Loans and
no Borrower shall have the right to convert a Domestic Rate Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate
Loan.
3.8. Capital Adequacy.
(a) In the event that Administrative Agent or any Lender shall
have determined that any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, 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 compliance
by Administrative Agent or any Lender (for purposes of this Section 3.8, the
term "Lender" shall include Administrative Agent or any Lender and any
corporation or bank controlling Administrative Agent or any Lender) and the
office or branch where Administrative Agent or any Lender (as so defined) makes
or maintains any Eurodollar Rate Loans 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 Administrative Agent or any Lender's capital as a consequence
of its obligations hereunder to a level below that which Administrative Agent or
such Lender could have achieved but for such adoption, change or compliance
(taking into consideration Administrative Agent's and each Lender's policies
with respect to capital adequacy) by an amount deemed by Administrative Agent or
any Lender to be material, then, from time to time, Borrowers shall pay upon
demand to Administrative Agent or such Lender such additional amount or amounts
as will compensate Administrative Agent or such Lender for such reduction. In
determining such amount or amounts, Administrative Agent or such Lender may use
any reasonable averaging or attribution methods. The protection of this Section
3.8 shall be available to Administrative Agent and each Lender regardless of any
possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition.
(b) a certificate of Administrative Agent or such Lender setting
forth such amount or amounts as shall be necessary to compensate Administrative
Agent or such Lender with respect to Section 3.8(a) hereof when delivered to
Borrowers shall be conclusive absent manifest error.
3.9. Gross Up for Taxes. If Borrower shall be required by Applicable Law
to withhold or deduct any taxes from or in respect of any sum payable under this
Agreement or any of the Other Documents, (a) the sum payable to Administrative
Agent or such Lender shall be increased as may be necessary so that, after
making all required withholding or deductions, Administrative Agent or such
Lender (as the case may be) receives an amount equal to the sum it would have
received had no such withholding or deductions been made, (b) Borrower shall
make such withholding or deductions, and (c) Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with Applicable Law.
3.10. Withholding Tax Exemption. Each Lender or assignee or participant of
a Lender that is not incorporated under the Laws of the United States of America
or a state thereof (and, upon the written request of Administrative Agent, each
other Lender or assignee or participant of a Lender) agrees that it will deliver
to Borrowing Agent and Administrative Agent two (2) duly completed appropriate
valid Withholding Certificates (as defined under Section 1.1441-1(c)(16) of the
Income Tax Regulations (the "Regulations")) certifying its status (i.e. U.S. or
foreign person) and, if appropriate, making a claim of reduced, or exemption
from, U.S. withholding tax on the basis of an income tax treaty or an exemption
provided by the Internal Revenue Code. The term "Withholding Certificate" means
a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-
8IMY and the related statements and certifications as required under Section
1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in Section
1.871-14(c)(2)(v) of the Regulations; or any other certificates under the
Internal Revenue Code or Regulations that certify or establish the status of a
payee or beneficial owner as a U.S. or foreign person. Each Lender, assignee or
participant required to deliver to Borrowing Agent and Administrative Agent a
Withholding Certificate pursuant to the preceding sentence shall deliver such
valid Withholding Certificate as follows: (A) each Lender which is a party
hereto on the Closing Date shall deliver such valid Withholding Certificate at
least five (5) Business Days prior to the first date on which any interest or
fees are payable by Borrowers hereunder for the account of such Lender; (B) each
assignee or participant shall deliver such valid Withholding Certificate at
least five (5) Business Days before the effective date of such assignment or
participation (unless Administrative Agent in its sole discretion shall permit
such assignee or participant to deliver such valid Withholding Certificate less
than five (5) Business Days before such date in which case it shall be due on
the date specified by Administrative Agent). Each Lender, assignee or
participant which so delivers a valid Withholding Certificate further undertakes
to deliver to Borrowing Agent and Administrative Agent two (2) additional copies
of such Withholding Certificate (or a successor form) on or before the date that
such Withholding Certificate expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent Withholding Certificate so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by Borrowing Agent or Administrative Agent.
Notwithstanding the submission of a Withholding Certificate claiming a reduced
rate of or exemption from U.S. withholding tax, Administrative Agent shall be
entitled to withhold United States federal income taxes at the full 30%
withholding rate if in its reasonable judgment it is required to do so under the
due diligence requirements imposed upon a withholding agent under Section
1.1441-7(b) of the Regulations. Further, the Agent is indemnified under Section
1.1461-1(e) of the Regulations against any claims and demands of any Lender or
assignee or participant of a Lender for the amount of any tax it deducts and
withholds in accordance with regulations under Section 1441 of the Internal
Revenue Code.
IV. COLLATERAL: GENERAL TERMS
4.1. Security Interest in the Collateral. To secure the prompt payment
and performance to Administrative Agent and each Lender of the Obligations, each
Borrower hereby assigns, pledges and grants to Administrative Agent for its
benefit and for the ratable benefit of each Lender a continuing security
interest in and to and lien on all of its Collateral, whether now owned or
existing or hereafter acquired or arising and wheresoever located. Each Borrower
shall xxxx its books and records as may be necessary or appropriate to evidence,
protect and perfect Administrative Agent's security interest and shall cause its
financial statements to reflect such security interest. Each Borrower shall
promptly provide Administrative Agent with written notice of all commercial tort
claims, such notice to contain the case title together with the applicable court
and a brief description of the claim(s). Upon delivery of each such notice, such
Borrower shall be deemed to hereby grant to Administrative Agent a security
interest and lien in and to such commercial tort claims and all proceeds
thereof.
4.2. Perfection of Security Interest. Each Borrower shall take all action
that may be necessary or desirable, or that Administrative Agent may request, so
as at all times to maintain the validity, perfection, enforceability and
priority of Administrative Agent's security interest in
and lien on the Collateral or to enable Administrative Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers, (iii)
delivering to Administrative Agent, endorsed or accompanied by such instruments
of assignment as Administrative Agent may specify, and stamping or marking, in
such manner as Administrative Agent may specify, any and all chattel paper,
instruments, letters of credits and advices thereof and documents evidencing or
forming a part of the Collateral, (iv) delivering to Administrative Agent, such
lien, judgment, litigation and bankruptcy searches as Administrative Agent shall
request, (v) entering into warehousing, lockbox and other custodial arrangements
satisfactory to Administrative Agent, (vi) executing and delivering financing
statements, control agreements, instruments of pledge, mortgages, notices and
assignments, in each case in form and substance satisfactory to Administrative
Agent, relating to the creation, validity, perfection, maintenance or
continuation of Administrative Agent's security interest and lien under the
Uniform Commercial Code or other applicable law, (vii) delivering to
Administrative Agent within forty-five (45) days after the Closing Date, such
UCC lien searches as requested by Administrative Agent, which lien searches
shall have been conducted as of a date no more than fifteen (15) days after the
Closing Date, and which lien searches shall show no Liens other than Permitted
Encumbrances, and (viii) following the occurrence and during the continuance of
a Default or an Event of Default, deliver to Administrative Agent, such lien,
bankruptcy and litigation searches as Administrative Agent shall request.
Administrative Agent is hereby authorized to file financing statements signed by
Administrative Agent instead of Borrower in accordance with the Uniform
Commercial Code. By its signature hereto, each Borrower hereby authorizes
Administrative Agent to file against such Borrower, one or more financing,
continuation, or amendment statements pursuant to the Uniform Commercial Code in
form and substance satisfactory to Administrative Agent (which statements may
have a description of collateral which is broader than that set forth herein).
All charges, expenses and fees Administrative Agent may incur in doing any of
the foregoing, and any local taxes relating thereto, shall be charged to
Borrowers' Account as a Revolving Advance of a Domestic Rate Loan and added to
the Obligations, or, at Administrative Agent's option, shall be paid to
Administrative Agent for its benefit and for the ratable benefit of Lenders
immediately upon demand.
4.3. Disposition of Collateral. Each Borrower will safeguard and protect
all Collateral for Administrative Agent's general account and make no
disposition thereof whether by sale, lease or otherwise except for the
disposition of obsolete and worn-out Equipment in the ordinary course of
business with a fair market value not in excess of $200,000 in the aggregate in
any calendar year and except for a Permitted Camelot Disposition made in
compliance with Section 7.1(d) hereof.
4.4. Preservation of Collateral. In addition to the rights and remedies
set forth in Section 11.1 hereof, Administrative Agent, upon and during the
continuance of a Default or Event of Default: (a) may at any time take such
steps as Administrative Agent deems necessary to protect Administrative Agent's
interest in and to preserve the Collateral, including the hiring of such
security guards or the placing of other security protection measures as
Administrative Agent may deem appropriate; (b) may employ and maintain at any of
any Borrower's premises a custodian who shall have full authority to do all acts
necessary to protect Administrative Agent's interests in the Collateral; (c) may
lease warehouse facilities to which Administrative Agent may
move all or part of the Collateral; (d) may use any Borrower's owned or leased
lifts, hoists, trucks and other facilities or equipment for handling or removing
the Collateral; and (e) shall have, and is hereby granted, a right of ingress
and egress to the places where the Collateral is located, and may proceed over
and through any of Borrower's owned or leased property. Each Borrower shall
cooperate fully with all of Administrative Agent's efforts to preserve the
Collateral and will take such actions to preserve the Collateral as
Administrative Agent may direct. All of Administrative Agent's expenses of
preserving the Collateral, including any expenses relating to the bonding of a
custodian, shall be charged to Borrowers' Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations.
4.5. Ownership and Location of Collateral.
(a) With respect to the Collateral, at the time the Collateral
becomes subject to Administrative Agent's security interest: (i) each Borrower
shall be the sole owner of and fully authorized and able to sell, transfer,
pledge and/or grant a first priority security interest in each and every item of
the its respective Collateral to Administrative Agent; and, except for Permitted
Encumbrances the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (ii) each document and agreement executed by each
Borrower or delivered to Administrative Agent or any Lender in connection with
this Agreement shall be true and correct in all respects; and (iii) all
signatures and endorsements of each Borrower that appear on such documents and
agreements shall be genuine and each Borrower shall have full capacity to
execute same.
(b) Each Borrower's Equipment and Inventory shall be located as
set forth on Schedule 4.5 and, without the prior written consent of
Administrative Agent, Borrowers shall not open any new office or place of
business and Inventory and Equipment shall not be removed from such locations or
stored at new locations; except that any Borrower may open a new office or place
of business or move Equipment or Inventory to a new location, provided that (i)
the aggregate amount of all Collateral at such location does not exceed
$25,000.00, (ii) each such new location shall be specifically identified on the
monthly lease report delivered to Administrative Agent pursuant to Section
9.2(a)(iii) hereof, and (iii) each Borrower hereby covenants and agrees promptly
to take all such actions reasonably requested by Administrative Agent to perfect
its security interest in any all Collateral at such location.
(c) Borrowers represent, warrant and covenant that the aggregate
fair market value of all Collateral maintained at each location set forth on
Schedule 4.5 for which Administrative Agent has not received an executed
landlord's waiver in form and substance satisfactory to Administrative Agent is
not greater as of the date hereof, and at no time shall be greater than $250,000
(unless Borrowing Agent shall have delivered to Administrative Agent a
landlord's waiver in form and substance satisfactory to Administrative Agent
with respect to such location); provided however, that following the occurrence
of any Default or Event of Default, at any time upon request by Administrative
Agent Borrowers shall use their best efforts to obtain and deliver to
Administrative Agent an executed landlord's waiver in form and substance
satisfactory to Administrative Agent with respect to each location requested by
Administrative Agent.
4.6. Defense of Administrative Agent's and Lenders' Interests. Until (a)
payment and performance in full of all of the Obligations and (b) termination of
this Agreement, Administrative Agent's interests in the Collateral shall
continue in full force and effect. During such period no Borrower shall, without
Administrative Agent's prior written consent, pledge, sell (except Inventory in
the ordinary course of business), assign, transfer, create or suffer to exist a
Lien upon or encumber or allow or suffer to be encumbered in any way except for
Permitted Encumbrances, any part of the Collateral. Each Borrower shall defend
Administrative Agent's interests in the Collateral against any and all Persons
whatsoever. At any time following demand by Administrative Agent for payment of
all Obligations, Administrative Agent shall have the right to take possession of
the indicia of the Collateral and the Collateral in whatever physical form
contained, including without limitation: labels, stationery, documents,
instruments and advertising materials. If Administrative Agent exercises this
right to take possession of the Collateral, Borrowers shall, upon demand,
assemble it in the best manner possible and make it available to Administrative
Agent at a place reasonably convenient to Administrative Agent. In addition,
with respect to all Collateral, Administrative Agent and Lenders shall be
entitled to all of the rights and remedies set forth herein and further provided
by the Uniform Commercial Code or other applicable law. Each Borrower shall, and
Administrative Agent may, at its option, instruct all suppliers, carriers,
forwarders, warehousers or others receiving or holding cash, checks, Inventory,
documents or instruments in which Administrative Agent holds a security interest
to deliver same to Administrative Agent and/or subject to Administrative Agent's
order and if they shall come into any Borrower's possession, they, and each of
them, shall be held by such Borrower in trust as Administrative Agent's trustee,
and such Borrower will immediately deliver them to Administrative Agent in their
original form together with any necessary endorsement.
4.7. Books and Records. Each Borrower shall (a) keep proper books of
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims and other charges; and (c) on a reasonably current basis set up on
its books, from its earnings, allowances against doubtful Receivables, advances
and investments and all other proper accruals (including, without limitation by
reason of enumeration, accruals for premiums, if any, due on required payments
and accruals for depreciation, obsolescence, or amortization of properties),
which should be set aside from such earnings in connection with its business.
All determinations pursuant to this subsection shall be made in accordance with,
or as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Borrowers. Borrowers
represent, warrant and covenant that all books and records (or true and complete
copies thereof) relating to Receivables are and shall be kept at Borrowing
Agent's office at 000 Xxxxxxxxx Xxxx Xxxxx, Xxxxxxxx, Xxx Xxxx.
4.8. Financial Disclosure. Each Borrower hereby irrevocably authorizes
and directs all accountants and auditors employed by such Borrower at any time
during the Term to exhibit and deliver to Administrative Agent and each Lender
copies of any of any Borrower's financial statements, trial balances, work
papers, or other accounting records of any sort in the accountant's or auditor's
possession, and to disclose to Administrative Agent and each Lender any
information such accountants and auditors may have concerning such Borrower's
financial status and business operations. Each Borrower hereby authorizes all
Governmental Bodies to
furnish to Administrative Agent and each Lender copies of reports or
examinations relating to such Borrower, whether made by such Borrower or
otherwise; however, Administrative Agent and each Lender will attempt to obtain
such information or materials directly from such Borrower prior to obtaining
such information or materials from such accountants, auditors or Governmental
Bodies.
4.9. Compliance with Laws. Each Borrower shall comply with all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to its respective Collateral or any part thereof or
to the operation of such Borrower's business, in any case, the non-compliance
with which could reasonably be expected to have a Material Adverse Effect on
such Borrower. Each Borrower may, however, contest or dispute in good faith any
acts, rules, regulations, orders and directions of those bodies or officials in
any reasonable manner, provided that any related Lien is inchoate or stayed and
sufficient reserves are established to the reasonable satisfaction of
Administrative Agent to protect Administrative Agent's Lien on and security
interest in the Collateral and provided that such contest or dispute could not
reasonably be expected to have a Material Adverse Effect on such Borrower. The
Collateral at all times shall be maintained in accordance with the requirements
of all insurance carriers which provide insurance with respect to the Collateral
so that such insurance shall remain in full force and effect.
4.10. Inspection of Premises. At all reasonable times, Administrative
Agent and each Lender shall have full access to and the right to audit, check,
inspect and make abstracts and copies from each Borrower's books, records,
audits, correspondence and all other papers relating to the Collateral and the
operation of each Borrower's business, provided that any more than three (3)
audits per calendar year performed by Administrative Agent or any Lender shall
be at the sole cost and expense of the Lenders (other than any and all audits
performed at any time (a) following and during the continuance of an Event of
Default, or (b) one audit in connection with each Permitted Acquisition, each of
which shall be at the sole cost and expense of Borrowers). Administrative Agent,
any Lender and their agents may enter upon any of each Borrower's premises at
any time during business hours (upon reasonable notice or, at any time without
notice, following and during the continuance of an Event Default) and at any
other reasonable time and from time to time, for the purpose of inspecting the
Collateral and any and all records pertaining thereto and the operation of such
Borrower's business.
4.11. Insurance. The assets and properties of Borrowers at all times shall
be maintained in accordance with the requirements of all insurance carriers
which provide insurance with respect to the assets and properties of Borrowers
so that such insurance shall remain in full force and effect. Each Borrower
shall bear the full risk of any loss of any nature whatsoever with respect to
the Collateral. At each Borrower's own cost and expense in amounts and with
carriers acceptable to Administrative Agent, each Borrower shall (a) keep all
its insurable properties and properties in which each Borrower has an interest
insured against the hazards of fire, flood, sprinkler leakage, those hazards
covered by extended coverage insurance and such other hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to such Borrower's including, without limitation, business interruption
insurance; (b) maintain a bond in such amounts as is customary in the case of
companies engaged in businesses similar to such Borrower insuring against
larceny, embezzlement or other criminal misappropriation of insured's officers
and employees who may either singly or jointly with others at any time have
access to the assets or funds of such Borrower either directly or through
authority to draw upon such funds or to direct generally the disposition of such
assets; (c) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others; (d) maintain all
such worker's compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which such Borrower is engaged in business,
whether maintained with a Captive Insurance Company, or otherwise; (e) furnish
Administrative Agent with (i) copies of all Workers' Compensation and general
liability policies and evidence of the maintenance of such policies by the
renewal thereof at least thirty (30) days before any expiration date, (ii)
summaries of all other insurance policies and evidence of the maintenance of
such policies by the renewal thereof at least thirty (30) days before any
expiration date, and (iii) appropriate loss payable endorsements in form and
substance satisfactory to Administrative Agent, naming Administrative Agent as a
co-insured and loss payee as its interests may appear with respect to all
insurance coverage referred to in clauses (a) and (c) above, and providing (A)
that all proceeds thereunder shall be payable to Administrative Agent, (B) no
such insurance shall be affected by any act or neglect of the insured or owner
of the property described in such policy, and (C) that such policy and loss
payable clauses may not be cancelled, amended or terminated unless at least
thirty (30) days' prior written notice is given to Administrative Agent. In the
event of any loss thereunder, the carriers named therein hereby are directed by
Administrative Agent and the applicable Borrower to make payment for such loss
to Administrative Agent and not to such Borrower and Administrative Agent
jointly. If any insurance losses are paid by check, draft or other instrument
payable to any Borrower and Administrative Agent jointly, Administrative Agent
may, and is hereby authorized to, endorse such Borrower's name thereon and do
such other things as Administrative Agent may deem advisable to reduce the same
to cash. Administrative Agent is hereby authorized to adjust and compromise
claims under insurance coverage referred to in clauses (a) and (b) above. All
loss recoveries received by Administrative Agent upon any such insurance may be
applied to the Obligations, in such order as Administrative Agent in its sole
discretion shall determine. Any surplus shall be paid by Administrative Agent to
Borrowers or applied as may be otherwise required by law. Any deficiency thereon
shall be paid by Borrowers to Administrative Agent, on demand.
4.12. Failure to Pay Insurance. If any Borrower fails to obtain insurance
as hereinabove provided, or to keep the same in force, Administrative Agent, if
Administrative Agent so elects, may obtain such insurance and pay the premium
therefor on behalf of such Borrower, and charge Borrowers' Account therefor as a
Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be
part of the Obligations.
4.13. Payment of Taxes. Each Borrower will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon such Borrower or
any of the Collateral including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes. If any tax by any Governmental
Body is or may be imposed on or as a result of any transaction between any
Borrower and Administrative Agent or any Lender which Administrative Agent or
any Lender may be required to withhold or pay or if any taxes, assessments, or
other Charges remain unpaid after the date fixed for their payment, or if any
claim shall be made which, in Administrative Agent's or any Lender's opinion,
may possibly create a valid Lien on the Collateral, Administrative Agent may
without notice to Borrowers pay the taxes, assessments or other
Charges and each Borrower hereby indemnifies and holds Administrative Agent and
each Lender harmless in respect thereof. Except during the continuance of an
Event of Default, Administrative Agent will not pay any taxes, assessments or
Charges, if any Borrower has contested or disputed those taxes, assessments or
Charges in good faith, by expeditious protest, administrative or judicial appeal
or similar proceedings provided Borrowing Agent has notified Administrative
Agent in writing of such protest or proceeding prior to any action by
Administrative Agent, any related tax Lien is stayed and sufficient reserves are
established to the reasonable satisfaction of Administrative Agent to protect
Administrative Agent's and Lenders' security interest in and Lien on the
Collateral. The amount of any payment by Administrative Agent under this Section
4.13 shall be charged to Borrowers' Account as a Revolving Advance of a Domestic
Rate Loan and added to the Obligations and, until Borrowers shall furnish
Administrative Agent with an indemnity therefor (or supply Administrative Agent
with evidence satisfactory to Administrative Agent that due provision for the
payment thereof has been made), Administrative Agent may hold without interest
any balance standing to Borrowers' credit and Administrative Agent shall retain
its security interest in and lien on any and all Collateral held by
Administrative Agent.
4.14. Payment of Leasehold Obligations. Each Borrower shall at all times
pay, when and as due, its rental obligations under all leases under which it is
a tenant, and shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and, at
Administrative Agent's request will provide evidence of having done so.
4.15. Receivables.
(a) Nature of Receivables. Each of the Receivables shall be a bona
fide and valid account representing a bona fide indebtedness incurred by the
Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of a Borrower, or work, labor or services theretofore
rendered by a Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with the applicable Borrower's standard terms of
sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Borrowers to Administrative Agent.
(b) Solvency of Customers. Each Customer, to the best of each
Borrower's knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of any Borrower who are not
solvent such Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.
(c) Locations of Executive Offices of Borrowers. Each Borrower's
chief executive office is located at the addresses set forth on Schedule 4.15(c)
hereto. Until written notice is given to Administrative Agent by Borrowing Agent
of any other office at which any Borrower keeps its records pertaining to
Receivables, all such records shall be kept at such executive office.
(d) Collection of Receivables. Until any Borrower's authority to do
so is terminated by Administrative Agent (which notice Administrative Agent may
give at any time following the occurrence of an Event of Default or a Default or
when Administrative Agent in its sole discretion deems it to be in Lenders' best
interest to do so), each Borrower will, at such Borrower's sole cost and
expense, but on Administrative Agent's behalf and for Administrative Agent's
account, collect as Administrative Agent's property and in trust for
Administrative Agent all amounts received on Receivables, and following the
occurrence and during the continuance of any Default or Event of Default, shall
not commingle such collections with any Borrower's funds or use the same except
to pay Obligations. Each Borrower shall deposit in the Blocked Account, or upon
request by Administrative Agent, deliver to Administrative Agent, in original
form and on the date of receipt thereof, all checks, drafts, notes, money
orders, acceptances, cash and other evidences of Indebtedness.
(e) Notification of Assignment of Receivables. At any time any
Default or Event of Default is continuing, Administrative Agent shall have the
right to send notice of the assignment of, and Administrative Agent's security
interest in and lien on, the Receivables to any and all Customers or any third
party holding or otherwise concerned with any of the Collateral. At any time
following the occurrence of an Event of Default or a Default, Administrative
Agent shall have the sole right to collect the Receivables, take possession of
the Collateral, or both. Administrative Agent's actual collection expenses,
including, but not limited to, stationery and postage, telephone and telegraph,
secretarial and clerical expenses and the salaries of any collection personnel
used for collection, may be charged to Borrowers' Account and added to the
Obligations.
(f) Power of Administrative Agent to Act on Borrowers' Behalf.
Administrative Agent shall have and is hereby granted the right to receive,
endorse, assign and/or deliver in the name of Administrative Agent or any
Borrower any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and each Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each
Borrower hereby constitutes Administrative Agent or Administrative Agent's
designee as such Borrower's attorney with power (A) at any time (i) to endorse
such Borrower's name upon any notes, acceptances, checks, drafts, money orders
or other evidences of payment or Collateral; (ii) to sign such Borrower's name
on any invoice or xxxx of lading relating to any of the Receivables, drafts
against Customers, assignments and verifications of Receivables; (iii) to send
verifications of Receivables to any Customer; (iv) to sign such Borrower's name
on all financing statements or any other documents or instruments deemed
necessary or appropriate by Administrative Agent to preserve, protect, or
perfect Administrative Agent's interest in the Collateral and to file same; and
(v) to do all other acts and things necessary to carry out this Agreement, and
(B) at any time following the occurrence and during the continuance of any
Default or Event of Default (i) to demand payment of the Receivables; (ii) to
enforce payment of the Receivables by legal proceedings or otherwise; (iii) to
exercise all of Borrowers' rights and remedies with respect to the collection of
the Receivables and any other Collateral; (iv) to settle, adjust, compromise,
extend or renew the Receivables; (v) to settle, adjust or compromise any legal
proceedings brought to collect Receivables; (vi) to prepare, file and sign such
Borrower's name on a proof of claim in bankruptcy or similar document against
any Customer; and (vii) to prepare, file and sign such Borrower's name on any
notice of Lien, assignment or satisfaction of Lien or similar document in
connection with the Receivables. All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission nor for any error of
judgment or mistake of fact or of law, unless done maliciously or with gross
(not mere) negligence; this power being coupled with an interest is irrevocable
while any of the Obligations remain unpaid. Administrative Agent shall have the
right at any time following the occurrence of an Event of Default or Default to
change the address for delivery of mail addressed to any Borrower to such
address as Administrative Agent may designate and to receive, open and dispose
of all mail addressed to any Borrower.
(g) No Liability. Neither Administrative Agent nor any Lender
shall, under any circumstances or in any event whatsoever, have any liability
for any error or omission or delay of any kind occurring in the settlement,
collection or payment of any of the Receivables or any instrument received in
payment thereof, or for any damage resulting therefrom. Following the occurrence
of an Event of Default or Default, Administrative Agent may, without notice or
consent from any Borrower, xxx upon or otherwise collect, extend the time of
payment of, compromise or settle for cash, credit or upon any terms any of the
Receivables or any other securities, instruments or insurance applicable thereto
and/or release any obligor thereof. Administrative Agent is authorized and
empowered to accept the return of the goods represented by any of the
Receivables, without notice to or consent by any Borrower, all without
discharging or in any way affecting any Borrower's liability hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. Except as
expressly provided in paragraph 9 of the Post-Closing Letter with respect to
Canadian Receivables, all payments of Receivables and other proceeds of
Collateral (i) shall be deposited by Borrowers directly into a lockbox account,
dominion account or such other "blocked account" ("Blocked Accounts") as
Administrative Agent may require pursuant to an arrangement with such bank as
may be selected by Borrowers and be acceptable to Administrative Agent and (ii)
may be transferred from a Blocked Account and deposited into a Permitted
Operating Account and no other account; provided however, that notwithstanding
the foregoing, following any Event of Default, all proceeds of Collateral shall
be deposited only in Blocked Accounts. Borrowers shall issue to any such bank
with Blocked Accounts, an irrevocable letter of instruction directing said bank
to transfer such funds so deposited to Administrative Agent daily upon receipt
of notice from Administrative Agent that an Event of Default has occurred,
either to any account maintained by Administrative Agent at said bank or by wire
transfer to appropriate account(s) of Administrative Agent. Unless otherwise
agreed by the Required Lenders, Administrative Agent shall send such notice
following an Event of Default or at any time following the request of the
Required Lenders during the continuance of an Event of Default; provided, that,
no reasonable delay on the part of the Administrative Agent shall subject the
Administrative Agent to any liability hereunder. Upon the occurrence of any
Event of Default, all funds deposited in such Blocked Account shall immediately
become the property of Administrative Agent, and Borrowers shall obtain the
agreement by such bank to waive any offset rights against the funds so
deposited. Neither Administrative Agent nor any Lender assumes any
responsibility for such Blocked Account arrangement, including without
limitation, any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder. Alternatively, Administrative Agent
may establish depository accounts ("Depository Accounts") in the name of
Administrative Agent at a bank or banks for the deposit of such funds and
Borrowers shall deposit all proceeds of Collateral or cause same to be
deposited, in kind, in
such Depository Accounts of Administrative Agent in lieu of depositing same to
the Blocked Accounts.
(i) Adjustments. No Borrower will, without Administrative Agent's
consent, compromise or adjust any Receivables (or extend the time for payment
thereof) or accept any material returns of merchandise or grant any additional
discounts, allowances or credits thereon except for those compromises,
adjustments, returns, discounts, credits and allowances as have been heretofore
customary in the business of such Borrower.
4.16. Inventory. To the extent Inventory held for sale or lease has been
produced by any Borrower, it has been and will be produced by such Borrower in
accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder.
4.17. Maintenance of Equipment. The Equipment shall be maintained in good
operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved. No
Borrower shall use or operate the Equipment in violation of any law, statute,
ordinance, code, rule or regulation. Each Borrower shall have the right to sell
Equipment to the extent set forth in Section 4.3 and to the extent not otherwise
prohibited hereunder.
4.18. Exculpation of Liability. Nothing herein contained shall be
construed to constitute Administrative Agent or any Lender as any Borrower's
agent for any purpose whatsoever, nor shall Administrative Agent or any Lender
be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof. Neither Administrative Agent nor any Lender,
whether by anything herein or in any assignment or otherwise, assume any of any
Borrower's obligations under any contract or agreement assigned to
Administrative Agent or such Lender, and neither Administrative Agent nor any
Lender shall be responsible in any way for the performance by any Borrower of
any of the terms and conditions thereof.
4.19. Environmental Matters. (a) Borrowers shall ensure that the Real
Property described on Schedule 4.19 and all operations and businesses conducted
thereon remains in compliance with all Environmental Laws and they shall not
place or permit to be placed any Hazardous Substances on any Real Property
except as permitted by applicable law or appropriate governmental authorities.
(b) Borrowers shall establish and maintain a system to assure and
monitor continued compliance with all applicable Environmental Laws which system
shall include periodic reviews of such compliance.
(c) Borrowers shall (i) employ in connection with the use of the
Real Property appropriate technology necessary to maintain compliance with any
applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste
generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Borrowers shall use their best efforts to obtain certificates of disposal, such
as hazardous waste manifest receipts, from all treatment, transport, storage or
disposal
facilities or operators employed by Borrowers in connection with the transport
or disposal of any Hazardous Waste generated at the Real Property.
(d) In the event any Borrower obtains, gives or receives notice of
any Release or threat of Release of a reportable quantity of any Hazardous
Substances at the Real Property (any such event being hereinafter referred to as
a "Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions at the Real Property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental Laws affecting the Real Property or any
Borrower's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"), then Borrowing
Agent shall, within five (5) Business Days, give written notice of same to
Administrative Agent detailing facts and circumstances of which any Borrower is
aware giving rise to the Hazardous Discharge or Environmental Complaint. Such
information is to be provided to allow Administrative Agent to protect its
security interest in the Real Property and other Collateral and is not intended
to create nor shall it create any obligation upon Administrative Agent or any
Lender with respect thereto.
(e) Borrowers shall promptly forward to Administrative Agent copies
of any request for information, notification of potential liability, demand
letter relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances at any other site owned, operated or used by any
Borrower to dispose of Hazardous Substances and shall continue to forward copies
of correspondence between any Borrower and the Authority regarding such claims
to Administrative Agent until the claim is settled. Borrowers shall promptly
forward to Administrative Agent copies of all documents and reports concerning a
Hazardous Discharge at the Real Property that any Borrower is required to file
under any Environmental Laws. Such information is to be provided solely to allow
Administrative Agent to protect Administrative Agent's security interest in the
Real Property and the Collateral.
(f) Borrowers shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral or Real Property to
any Lien. If any Borrower shall fail to respond promptly to any Hazardous
Discharge or Environmental Complaint or any Borrower shall fail to comply with
any of the requirements of any Environmental Laws, Administrative Agent on
behalf of Lenders may, but without the obligation to do so, for the sole purpose
of protecting Administrative Agent's interest in the Collateral: (A) give such
notices or (B) enter onto the Real Property (or authorize third parties to enter
onto the Real Property) and take such actions as Administrative Agent (or such
third parties as directed by Administrative Agent) deem reasonably necessary or
advisable, to clean up, remove, mitigate or otherwise deal with any such
Hazardous Discharge or Environmental Complaint. All reasonable costs and
expenses incurred by Administrative Agent and Lenders (or such third parties) in
the exercise of any such rights, including any sums paid in connection with any
judicial or administrative investigation or proceedings, fines and penalties,
together with interest thereon from the date expended at the Default Rate for
Revolving Advances shall be paid upon demand by Borrowers, and until paid shall
be added to and become a part of the Obligations secured by the Liens
created by the terms of this Agreement or any other agreement between
Administrative Agent, any Lender and any Borrower.
(g) Promptly upon the written request of Administrative Agent from
time to time, Borrower shall provide Administrative Agent, at Borrowers'
expense, with an environmental site assessment or environmental audit report
prepared by an environmental engineering firm acceptable in the reasonable
opinion of Administrative Agent, to assess with a reasonable degree of certainty
the existence of a Hazardous Discharge and the potential costs in connection
with abatement, cleanup and removal of any Hazardous Substances found on, under,
at or within the Real Property. Any report or investigation of such Hazardous
Discharge proposed and acceptable to an appropriate Authority that is charged to
oversee the clean-up of such Hazardous Discharge shall be acceptable to
Administrative Agent. If such estimates, individually or in the aggregate,
exceed $100,000, Administrative Agent shall have the right to require Borrowers
to post a bond, letter of credit or other security reasonably satisfactory to
Administrative Agent to secure payment of these costs and expenses.
(h) Borrowers shall defend and indemnify Administrative Agent and
Lenders and hold Administrative Agent, Lenders and their respective employees,
Administrative Agents, directors and officers harmless from and against all
loss, liability, damage and expense, claims, costs, fines and penalties,
including attorney's fees, suffered or incurred by Administrative Agent or
Lenders under or on account of any Environmental Laws, including, without
limitation, the assertion of any Lien thereunder, with respect to any Hazardous
Discharge, the presence of any Hazardous Substances affecting the Real Property,
whether or not the same originates or emerges from the Real Property or any
contiguous real estate, including any loss of value of the Real Property as a
result of the foregoing except to the extent such loss, liability, damage and
expense is attributable to any Hazardous Discharge resulting from actions on the
part of Administrative Agent or any Lender. Borrowers' obligations under this
Section 4.19 shall arise upon the discovery of the presence of any Hazardous
Substances at the Real Property, whether or not any federal, state, or local
environmental agency has taken or threatened any action in connection with the
presence of any Hazardous Substances. Borrowers' obligation and the
indemnifications hereunder shall survive the termination of this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to Real
Property shall be deemed to include all of Borrowers' right, title and interest
in and to its owned and leased premises.
4.20. Financing Statements. Except with respect to the financing
statements filed by Administrative Agent, financing statements filed by a
Borrower with respect to a Purchased Account or Service Fee Account, and the
financing statements described on Schedule 1.2(P), no financing statement
covering any of the Collateral or any proceeds thereof is on file in any public
office.
V. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as follows:
5.1. Authority; Enforceable Obligations. Each Borrower and each Guarantor
has full power, authority and legal right to enter into this Agreement and the
Other Documents to which it is a party and to perform all of its respective
Obligations hereunder and thereunder. The execution, delivery and performance of
this Agreement and of the Other Documents (a) are within such Borrower's and
Guarantor's corporate powers, have been duly authorized by all necessary
corporate or other action, are not in contravention of law or the terms of such
Person's by-laws, certificate of incorporation or other applicable documents
relating to such Person's formation or to the conduct of such Person's business
or of any material agreement or undertaking to which such Person is a party or
by which such Person is bound, including, without limitation, the Senior Note
Documentation and Subordinated Note Documentation, (b) will not conflict with or
violate any law or regulation, or any judgement, order or decree of any
Governmental Body, (c) will not require the Consent of any Governmental Body or
any other Person, except those Consents set forth on Schedule 5.1 hereto, all of
which will have been duly obtained, made or compiled prior to the Closing Date
and which are in full force and effect, and (d) will not conflict with, nor
result in any breach in any of the provisions of or constitute a default under
or result in the creation of any Lien except Permitted Encumbrances upon any
asset of such Borrower under the provisions of any agreement, charter document,
instrument, by-law, or other instrument to which such Borrower or its property
is a party or by which it may be bound, including, without limitation, under the
provisions of any of the Senior Note Documentation and Subordinated Note
Documentation. This Agreement and the Other Documents have been duly executed
and delivered by each Borrower and each Guarantor which is a party thereto, and
this Agreement and the Other Documents constitute legal, valid and binding
obligations of each Borrower and each Guarantor party thereto, enforceable
against each such Borrower and each such Guarantor party thereto in accordance
with their respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization and other laws affecting creditor's
rights and remedies in general.
5.2. Formation and Qualification. (a) Each Borrower and Guarantor is duly
incorporated and in good standing under the laws of the state listed on Schedule
5.2(a) (i) and is qualified to do business and is in good standing in the states
listed on Schedule 5.2(a)(ii) which constitute all states in which qualification
and good standing are necessary for such Borrower or Guarantor to conduct its
business and own its property and where the failure to so qualify could
reasonably be expected to have a Material Adverse Effect on any such Borrower or
Guarantor. Borrower and each Guarantor has delivered to Administrative Agent
true and complete copies of its certificate of incorporation and by-laws and
will promptly notify Administrative Agent of any amendment or changes thereto.
Schedule 5.2(a)(iii) sets forth a list of all states from which Holdings on a
consolidated basis has derived revenues in excess of $4,000,000 in the 2001
fiscal year and each state from which Holdings or any Borrower projects as of
the Closing Date that Holdings on a consolidated basis will receive revenue in
excess of $4,000,000 in 2003 or during any other calendar year during the Term;
and each Borrower doing business in such state is in good standing therein.
(b) The only Subsidiaries of each Borrower and each Guarantor are
correctly listed on Schedule 5.2(b).
5.3. Survival of Representations and Warranties. All representations and
warranties of each Borrower and each Guarantor contained in this Agreement and
the Other Documents to which such Person is a party shall be true at the time of
such Borrower's and Guarantor's execution of this Agreement and the Other
Documents to which it is a party, and shall survive the execution, delivery and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.
5.4. Tax Returns. Each Borrower's and Guarantor's federal tax
identification number is set forth on Schedule 5.4. Each Borrower and Guarantor
has filed all federal, state and local tax returns and other reports each is
required by law to file and has paid all taxes, assessments, fees and other
governmental charges that are due and payable. Federal, state and local income
tax returns of each Borrower and Guarantor have been examined and reported upon
by the appropriate taxing authority or closed by applicable statute and
satisfied for all fiscal years prior to and including the fiscal year ending
December 27, 1998. The provision for taxes on the books of each Borrower are
adequate for all years not closed by applicable statutes, and for its current
fiscal year, and no Borrower has any knowledge of any deficiency or additional
assessment in connection therewith not provided for on its books.
5.5. Financial Statements.
(a) The twelve-month cash flow projections of Holdings on a
consolidated basis and its projected consolidated balance sheets as of the
Closing Date, copies of which are annexed hereto as Exhibit 5.5(b) (the
"Projections") were prepared by the Chief Financial Officer of Holdings, are
based on underlying assumptions which provide a reasonable basis for the
projections contained therein and reflect Borrowers' judgment based on present
circumstances of the most likely set of conditions and course of action for the
projected period. All financial statements referred to in this subsection
5.5(a), including the related schedules and notes thereto, have been prepared,
in accordance with GAAP, except as may be disclosed in such financial
statements.
(b) The consolidated and, in the case of the December 29, 2002
balance sheet, consolidating balance sheets of Holdings, its direct or indirect
Subsidiaries and such other Persons described therein (including the accounts of
all Subsidiaries for the respective periods during which a subsidiary
relationship existed) as of December 29, 2002 and March 30, 2003, and the
related statements of income, and changes in cash flow for the periods ended on
such dates, and the December 29, 2002 financial statements are accompanied by
reports thereon containing opinions without qualification by independent
certified public accountants, copies of which have been delivered to
Administrative Agent, have been prepared in accordance with GAAP, consistently
applied (except for changes in application in which such accountants concur) and
present fairly the financial position of the Borrowers and their Subsidiaries at
such dates and the results of their operations for such periods. Since December
29, 2002 there has been no change in the condition, financial or otherwise, of
Holdings, any Borrower or any of their Subsidiaries as shown on the consolidated
balance sheet as of such date and no change in the aggregate value of machinery,
equipment and Real Property owned by Borrowers and their
respective Subsidiaries, except changes in the ordinary course of business, none
of which individually or in the aggregate has been materially adverse.
5.6. Corporate Name and Locations. (a) No Borrower has been known by any
other corporate name in the past five years and does not sell Inventory under
any other name except as set forth on Schedule 5.6, nor has any Borrower been
the surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person during the preceding five (5)
years except as set forth on Schedule 5.6.
(b) There is no location at which any Borrower has any Inventory
(except for Inventory in transit) other than (i) those locations listed on
Schedule 4.5 hereto and (ii) any other locations in the continental United
States permitted pursuant to the terms of Section 4.5(b) hereof. Schedule 4.5
hereto contains a correct and complete list, as of the Closing Date, of the
legal names and addresses of each warehouse at which Inventory of any Borrower
is stored. Schedule 4.5 hereto sets forth a correct and complete list as of the
Closing Date of (A) each place of business of each Borrower and (B) the chief
executive office of each Borrower. Schedule 4.5 hereto sets forth a correct and
complete list as of the Closing Date of the location, by state and street
address, of all Real Property owned or leased by any Borrower.
5.7. O.S.H.A. and Environmental Compliance.
(a) Each Borrower has duly complied with, and its facilities,
business, assets, property, leaseholds, Real Property and Equipment are in
compliance in all material respects with, the provisions of the Federal
Occupational Safety and Health Act, the Environmental Protection Act, RCRA and
all other Environmental Laws; there have been no outstanding citations, notices
or orders of non-compliance issued to any Borrower or relating to its business,
assets, property, leaseholds, Real Property or Equipment under any such laws,
rules or regulations.
(b) Each Borrower has been issued all required federal, state and
local licenses, certificates or permits relating to all applicable Environmental
Laws.
(c) (i) There are no visible signs of releases, spills, discharges,
leaks or disposal (collectively referred to as "Releases") of Hazardous
Substances at, upon, under or within any Real Property or any premises leased by
any Borrower; (ii) there are no underground storage tanks or polychlorinated
biphenyls on the Real Property or any premises leased by any Borrower; (iii)
neither the Real Property nor any premises leased by any Borrower has ever been
used as a treatment, storage or disposal facility of Hazardous Waste; and (iv)
no Hazardous Substances are present on the Real Property or any premises leased
by any Borrower, excepting such quantities as are handled in accordance with all
applicable manufacturer's instructions and governmental regulations and in
proper storage containers and as are necessary for the operation of the
commercial business of any Borrower or of its tenants.
5.8. Solvency; No Litigation, Violation, Indebtedness or Default.
(a) After giving effect to the transactions contemplated hereby,
Borrowers will be able to pay their debts as they mature, will have capital
sufficient to carry on their business and all businesses in which they are about
to engage, and (i) as of the Closing Date, the
fair present saleable value of their assets, calculated on a going concern
basis, is in excess of the amount of their liabilities and (ii) subsequent to
the Closing Date, the fair saleable value of their assets (calculated on a going
concern basis) will be in excess of the amount of their liabilities.
(b) Except as disclosed in Schedule 5.8(b), no Borrower or
Guarantor has (i) any pending or threatened litigation, arbitration, actions or
proceedings which involve the possibility of having a Material Adverse Effect on
such Borrower, Guarantor or the Collateral (ii) any liabilities or indebtedness
for borrowed money other than the Obligations; and (iii) any Liens on any of its
assets or properties other than Permitted Encumbrances.
(c) No Borrower or Guarantor is in violation of any applicable,
law, rule, statute, regulation or ordinance in any respect which could
reasonably be expected to have a Material Adverse Effect on such Borrower, any
Guarantor or the Collateral, nor is any Borrower or any Guarantor in violation
of any order of any court, arbitration board, tribunal or other Governmental
Body.
(d) No Borrower nor any member of the Controlled Group maintains or
contributes to any Plan other than those listed on Schedule 5.8(d) hereto.
Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and each Borrower and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) no
Borrower nor any member of the Controlled Group has incurred any liability to
the PBGC other than for the payment of premiums, and there are no premium
payments which have become due which are unpaid, (iv) no Plan has been
terminated by the plan administrator thereof nor by the PBGC, and there is no
occurrence which would cause the PBGC to institute proceedings under Title IV of
ERISA to terminate any Plan, (v) at this time, the current value of the assets
of each Plan exceeds the present value of the accrued benefits and other
liabilities of such Plan and no Borrower nor any member of the Controlled Group
knows of any facts or circumstances which would materially change the value of
such assets and accrued benefits and other liabilities, (vi) no Borrower nor any
member of the Controlled Group has breached any of the responsibilities,
obligations or duties imposed on it by ERISA with respect to any Plan, (vii) no
Borrower nor any member of a Controlled Group has incurred any liability for any
excise tax arising under Section 4972 or 4980B of the Code, and no fact exists
which could give rise to any such liability, (viii) no Borrower nor any member
of the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has
engaged in a "prohibited transaction" described in Section 406 of the ERISA or
Section 4975 of the Code nor taken any action which would constitute or result
in a Termination Event with respect to any such Plan which is subject to ERISA,
(ix) each Borrower and each member of the Controlled Group has made all
contributions due and payable with respect to each Plan, (x) there exists no
event described in Section 4043(b) of ERISA, for which the thirty (30) day
notice period contained in 29 CFR Section 2615.3 has not been waived, (xi) no
Borrower nor any member of the Controlled Group has any fiduciary responsibility
for investments with respect to any plan existing for the benefit of persons
other than employees or former employees of any Borrower and any member of the
Controlled Group,
and (xii) no Borrower nor any member of the Controlled Group has withdrawn,
completely or partially, from any Multiemployer Plan so as to incur liability
under the Multiemployer Pension Plan Amendments Act of 1980.
5.9. Patents, Trademarks, Copyrights and Licenses. All patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by any Borrower are
set forth on Schedule 5.9, are valid and have been duly registered or filed with
all appropriate Governmental Bodies and constitute all of the intellectual
property rights which are necessary for the operation of its business; there is
no objection to or pending challenge to the validity of any such patent,
trademark, copyright, design rights, tradename, trade secret or license and no
Borrower is aware of any grounds for any challenge, except as set forth in
Schedule 5.9 hereto. Each patent, patent application, patent license, trademark,
trademark application, trademark license, service xxxx, service xxxx
application, service xxxx license, design rights, copyright, copyright
application and copyright license owned or held by any Borrower and all trade
secrets used by any Borrower consist of original material or property developed
by such Borrower or was lawfully acquired by such Borrower from the proper and
lawful owner thereof. Each of such items has been maintained so as to preserve
the value thereof from the date of creation or acquisition thereof. With respect
to all software used by any Borrower, such Borrower is in possession of all
source and object codes related to each piece of software or is the beneficiary
of a source code escrow agreement, each such source code escrow agreement being
listed on Schedule 5.9 hereto.
5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state
or local law, rule or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits could have a Material
Adverse Effect on such Borrower.
5.11. Default of Indebtedness. No Borrower or Guarantor is in default in
the payment of the principal of or interest on any material Indebtedness
(including, without limitation, any Indebtedness under the Senior Note
Documentation or the Subordinated Note Documentation) or under any instrument or
agreement under or subject to which any such Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12. No Default. No Borrower or Guarantor is in default in the payment or
performance of any of its contractual obligations under any material contract of
any such Person and no Default has occurred. Each Borrower has heretofore
delivered to the Administrative Agent true and complete copies of all material
contracts to which it is a party or to which it or any of its properties is
subject.
5.13. No Burdensome Restrictions. No Borrower or Guarantor is party to any
contract or agreement the performance of which could have a Material Adverse
Effect on such Borrower. No Borrower has agreed or consented to cause or permit
in the future (upon the happening of a
contingency or otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien which is not a Permitted Encumbrance.
5.14. No Labor Disputes. No Borrower or Guarantor is involved in any labor
dispute; there are no strikes or walkouts or union organization of any
Borrower's employees threatened or in existence and no labor contract is
scheduled to expire during the Term other than as set forth on Schedule 5.14
hereto.
5.15. Margin Regulations. No Borrower or Guarantor is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of any Advance
will be used for "purchasing" or "carrying" "margin stock" as defined in
Regulation U of such Board of Governors.
5.16. Investment Company Act. No Borrower or Guarantor is an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended, nor is it controlled by such a company.
5.17. Disclosure. No representation or warranty made by any Borrower or
Guarantor in this Agreement, the Senior Note Documentation or the Subordinated
Note Documentation or in any financial statement, report, certificate or any
other document furnished in connection herewith or therewith contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no fact known to
Borrowers or which reasonably should be known to Borrowers which Borrowers have
not disclosed to Administrative Agent in writing with respect to the
transactions contemplated by this Agreement which could reasonably be expected
to have a Material Adverse Effect on any Borrower or Guarantor.
5.18. Delivery of Senior Note Documentation and Subordinated Note
Documentation. Administrative Agent has received complete copies of the Senior
Note Documentation and Subordinated Note Documentation (including all exhibits,
schedules and disclosure letters referred to therein or delivered pursuant
thereto, if any) and all amendments thereto, waivers relating thereto and other
side letters or agreements affecting the terms thereof. None of such documents
and agreements has been amended or supplemented, nor have any of the provisions
thereof been waived, except pursuant to a written agreement or instrument which
has heretofore been delivered to Administrative Agent. All Indebtedness arising
under the PIK Note Indenture and all Existing Bank Indebtedness (other than the
Existing Letters of Credit) has been satisfied and repaid in full and all
commitments and other obligations thereunder and all Liens arising thereunder
have terminated.
5.19. Swaps. No Borrower is a party to, nor will it be a party to, any
swap agreement whereby such Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.
5.20. Conflicting Agreements. No provision of any mortgage, note,
indenture, loan agreement, judgment, decree or order or of any other material
contract binding on any Borrower or affecting the Collateral conflicts with, or
requires any Consent which has not already been obtained to, or would in any way
prevent the execution, delivery or performance of, the terms of this Agreement
or the Other Documents.
5.21. Application of Certain Laws and Regulations. No Borrower nor any
Affiliate of any Borrower, is subject to any law, statute, rule or regulation
which regulates the incurrence of any Indebtedness, including without
limitation, laws, statutes, rules or regulations relative to common or
interstate carriers or to the sale of electricity, gas, steam, water, telephone,
telegraph or other public utility services.
5.22. Business and Property of Borrowers. Upon and after the Closing Date,
Borrowers do not propose to engage in any business other than specialty
staffing, consulting and financial outsourcing services and activities necessary
to conduct the foregoing. On the Closing Date, each Borrower will own or have
the right to use all the property and possess all of the rights and Consents
necessary for the conduct of the business of such Borrower.
5.23. Section 20 Subsidiaries. Borrowers do not intend to use and shall
not use any portion of the proceeds of the Advances, directly or indirectly, to
purchase during the underwriting period, or for 30 days thereafter, Ineligible
Securities being underwritten by a Section 20 Subsidiary.
5.24. Receivables. As to each existing Receivable: (i) at the time of its
creation, such Receivable was a valid, bona find account, representing an
undisputed indebtedness incurred by the named account debtor for goods actually
sold and delivered or for services completely rendered; (ii) except to the
extent of Receivables not exceeding $100,000 outstanding at any time in the
aggregate (which $100,000 amount shall be deducted by Administrative Agent as a
reserve from the Borrowing Base), to the best of each of their knowledge, there
are not setoffs, offsets or counterclaims, genuine or otherwise, against such
Receivables; (iii) such Receivable does not represent a sale to an Affiliate or
a consignment, sale or return or a xxxx and hold transaction; (iv) no agreement
exists permitting any deduction or discount (other than the discount stated on
the invoice); (v) the Borrower that holds such Receivable is the lawful owner of
the Receivable and has the right to assign the same to Administrative Agent, for
the benefit of Lenders; (vi) such Receivable is free of all security interests,
liens and encumbrances other than those in favor of Administrative Agent, on
behalf of Lenders and, in the case of Purchased Accounts and Service Fee
Accounts, in favor of the Borrower which purchased or generated same; and (vii)
such Receivable is due and payable in accordance with its terms.
5.25. Bank Accounts. Schedule 5.25 sets forth the account numbers, bank
names and locations of each Borrower and Guarantor and sets forth whether such
account is subject to a blocked account agreement in favor of Administrative
Agent.
VI. AFFIRMATIVE COVENANTS.
Each Borrower and each Guarantor shall, until payment in full of the
Obligations and termination of this Agreement:
6.1. Payment of Fees. Pay to Administrative Agent on demand all usual and
customary fees and expenses which Administrative Agent incurs in connection with
(a) the forwarding of Advance proceeds and (b) the establishment and maintenance
of any Blocked Accounts or Depository Accounts as provided for in Section
4.15(h). Administrative Agent may, without making demand, charge Borrowers'
Account for all such fees and expenses.
6.2. Conduct of Business and Maintenance of Existence and Assets. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, tradenames, trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right included in the Collateral; (b) keep in full force and effect its
existence and comply in all material respects with the laws, rules and
regulations governing the conduct of its business where the failure to do so
(individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect on such Borrower; provided, however, any Subsidiary of
any Borrower that has transferred all of its assets to any Borrower in
compliance with Section 7.1 may subsequently wind-up and dissolve in accordance
with all applicable laws; and (c) make all such reports and pay all such
franchise and other taxes and license fees and do all such other acts and things
as may be lawfully required to maintain its rights, licenses, leases, powers and
franchises under the laws of the United States or any political subdivision
thereof where the failure to do so (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect on such Borrower.
6.3. Violations. Promptly notify Administrative Agent in writing of any
violation of any law, statute, rule, regulation, or ordinance of any
Governmental Body, or of any agency thereof, applicable to any Borrower which
could reasonably be expected to have a Material Adverse Effect on any Borrower.
6.4. Government Receivables. Take all steps necessary to protect
Administrative Agent's interest in the Collateral under the Federal Assignment
of Claims Act, the Uniform Commercial Code and all other applicable state or
local statutes or ordinances and deliver to Administrative Agent appropriately
endorsed, any instrument or chattel paper connected with any Receivable arising
out of contracts between any Borrower and the United States, any state or any
department, agency or instrumentality of any of them.
6.5. Net Worth. Maintain at all times a Net Worth in an amount not less
than -$15,000,000 provided such amount shall be increased commencing with
respect to each fiscal year (or portion thereof) commencing on January 1, 2004,
to an amount equal to the minimum Net Worth amount required for the immediately
preceding fiscal year pursuant to this Section 6.5 plus an amount equal to 50%
of the positive net income of Borrowers on a combined basis for such prior
fiscal year.
6.6. Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio
at each fiscal quarter end of not less than 1.05:1.00 for (i) the two fiscal
quarters ending June 30, 2003, (ii) the three fiscal quarters ending September
30, 2003, and (iii) thereafter, the four fiscal quarters then ended.
6.7. Execution of Supplemental Instruments. Execute and deliver to
Administrative Agent from time to time, upon demand, such supplemental
agreements, statements, assignments and transfers, or instructions or documents
relating to the Collateral, and such other instruments as Administrative Agent
may request, in order that the full intent of this Agreement may be carried into
effect.
6.8. Payment of Indebtedness. Pay, discharge or otherwise satisfy and
perform at or before maturity (subject, where applicable, to specified grace
periods and, in the case of the trade payables, to normal and prudent payment
practices) all its obligations and liabilities of whatever nature, except when
the failure to do so (individually or in the aggregate) could not reasonably be
expected to have a Material Adverse Effect or when the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and each Borrower shall have provided for such reserves as Administrative Agent
may reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Lenders.
6.9. Standards of Financial Statements. Cause all financial statements
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and 9.14 as to
which GAAP is applicable to be complete and correct in all material respects
(subject, in the case of interim financial statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
concurred in by such reporting accountants or officer, as the case may be, and
disclosed therein).
6.10. Bank Accounts. Borrowing Agent will give Administrative Agent prompt
notice of any new bank accounts any Borrower intends to establish prior to its
opening same (and may open same only as provided in Section 4.15(h)).
6.11. Account Agreements. Borrowing Agent will deliver to Administrative
Agent a copy of each Account Agreement, or amendment to any Account Agreement,
entered into after the Closing Date, each certified as being a complete,
accurate and correct copy thereof by a Responsible Officer of Borrowing Agent,
together with, in the case of any Account Agreement entered into after the
Closing Date, copies of lien search results indicating the applicable Borrower
as having a first priority perfected ownership interest in each applicable
Account, subject to no Liens except those in favor of Administrative Agent on
behalf of Lenders. No Borrower shall waive any material rights under any Account
Agreement or settle or compromise any claim under any Account Agreement, in any
case, which would affect title of such Borrower to any Account or materially
increase the obligations of such Borrower to the applicable Account Seller
without, in each case, the prior written consent of Administrative Agent.
VII. NEGATIVE COVENANTS.
No Borrower nor Guarantor shall, until satisfaction in full of the
Obligations and termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale of Assets.
(a) Enter into any merger, consolidation or other reorganization
with or into any other Person or acquire all or a substantial portion of the
assets or Stock of any Person (or of any Subsidiary, division or operating unit
of any Person) or permit any other Person to
consolidate with or merge with it; except that, upon at least five (5) Business
Days' prior written notice to Administrative Agent, any Borrower may merge into
or transfer all or substantially all of its assets to any other Borrower in
compliance with all applicable laws and provided that (i) no Default or Event of
Default is in existence immediately prior to any such merger or transfer or
would exist after giving effect thereto, and (ii) Borrowing Agent, Borrowers and
Guarantors shall promptly execute and deliver to Administrative Agent all
agreements and other documents relating to any such merger or transfer as
reasonably requested by Administrative Agent.
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except (i) the sale of obsolete or worn-out Equipment in
the ordinary course of business and not in excess of $200,000 in the aggregate
in any calendar year, (ii) the transfer of assets by a Borrower to another
Borrower made in compliance with Section 7.1(a) above or (iii) the consummation
of the Permitted Camelot Disposition made in compliance with Section 7.1(d)
below.
(c) Notwithstanding anything contained in Section 7.1(a) to the
contrary, but subject to the other provisions hereof and the requirements
contained in the definition of Permitted Acquisition, Borrowers and their
Subsidiaries may, from time to time, effect Permitted Acquisitions, so long as
with respect to each Permitted Acquisition:
(i) (A) no Default or Event of Default is in existence at the time
of the consummation of such Permitted Acquisition or would exist after giving
effect thereto and all representations and warranties contained herein and in
the Other Documents shall be true and correct in all material respects with the
same effect as though such representations and warranties were made on and as of
the date of such Permitted Acquisition (both before and after giving effect
thereto);
(B) Borrowing Agent shall have given Administrative Agent at least
30 days' prior written notice of any such Permitted Acquisition (each such
notice, a "Permitted Acquisition Notice"), which notice shall (x) contain the
estimated date such Permitted Acquisition is scheduled to be consummated, (y)
attach a true and correct copy of the most recent draft purchase agreement,
letter of intent, description of material terms or similar agreement pursuant to
which such Permitted Acquisition is to occur, and (z) contain the estimated
aggregate purchase price of such Permitted Acquisition (and the form of purchase
price) and the amount of related fees, costs and expenses;
(C) Borrowers shall have delivered to Administrative Agent (x) as
soon as available but not more than three (3) Business Days after the execution
thereof a copy of the executed purchase agreement, (y) as soon as available but
not more than 10 days after execution of such purchase agreement, all related
agreements, schedules and exhibits with respect to such Permitted Acquisition
and (z) such other information related to the Person or business, division or
product line being acquired and the Permitted Acquisition as Administrative
Agent shall reasonably request;
(D) the character of the business or the business of the Person,
division or product line being acquired in the respective Permitted Acquisition
is not materially different
from the character of the business conducted by Borrowers and their Subsidiaries
on the Closing Date;
(E) during the period beginning 20 Business Days prior to any such
acquisition and ending 10 Business Days after giving effect to each such
Permitted Acquisition (including, without limitation, after taking into account
all consideration, fees, costs and expenses incurred in connection therewith),
Undrawn Availability shall be not less than $10,000,000, and no later than two
(2) Business Days prior to the closing of each Permitted Acquisition, Borrower
shall have delivered to Administrative Agent a certificate to such effect which
shall include all relevant calculations and an updated Borrowing Base
Certificate;
(F) the aggregate consideration for all Permitted Acquisitions
shall not exceed $5,000,000 in any calendar year (less all amounts invested in,
loaned to or contributed to any Captive Insurance Company during such period) or
$15,000,000 during the Term (less all amounts invested in, loaned to or
contributed to any Captive Insurance Company during such period), all of which
consideration shall be in the form of cash and/or Seller Notes;
(G) each such Permitted Acquisition shall be consummated within 90
days after the delivery to Administrative Agent of the Permitted Acquisition
Notice;
(H) prior to the closing of any such Permitted Acquisition,
Administrative Agent shall have received evidence to its reasonable
satisfaction, including without limitation, in the form of a revised business
plan containing projections, that each such Permitted Acquisition shall be
immediately accretive to earnings after giving effect to synergies and cost
savings in accordance with GAAP; and
(I) no such Permitted Acquisition is accomplished by means of a
hostile takeover.
(ii) At the time of each Permitted Acquisition involving the
creation or acquisition of a Subsidiary, not less than 100% of the Stock of such
Subsidiary shall be directly owned by a Borrower or Guarantor and all of such
Stock owned by such Borrower or Guarantor shall be pledged for the benefit of
the Lenders pursuant to a Pledge Agreement or pursuant to a similar agreement in
form and substance satisfactory to Administrative Agent.
(iii) On or prior to the date of each Permitted Acquisition,
Borrowers shall cause each Subsidiary which is formed to effect, or is acquired
pursuant to, the Permitted Acquisition either, as determined by Administrative
Agent, to become a Borrower pursuant to this Agreement or to execute and
deliver, on or prior to the date of each Permitted Acquisition, a guaranty
substantially similar to the Guaranties in existence on the Closing Date in form
and substance satisfactory to Administrative Agent.
(iv) A Borrower shall, on the date of a Permitted Acquisition,
grant or cause its Subsidiary (in the case of Permitted Acquisitions
accomplished through a Subsidiary of a Borrower) to grant to Administrative
Agent, for the benefit of the Lenders, a first priority perfected security
interest, free and clear of all Liens (other than Permitted Encumbrances), in
all property of such Borrower or such Subsidiary (whether real, personal or
otherwise), acquired in connection with such Permitted Acquisition and, in each
case, such Borrower or Subsidiary, as the case may be, shall take, or cause such
Subsidiary to take, as the case may be, all actions
requested by Administrative Agent (including, without limitation, the obtaining
of UCC-1's, the filing of UCC-1's, mortgages and the obtaining of mortgage
policies, title surveys and real estate appraisals) in connection with the
granting of such security interests. At the time of the execution and delivery
of such security documents, Borrowers shall cause to be delivered to
Administrative Agent such opinions of counsel, mortgage policies, environmental
appraisals, surveys and other related documents as may be requested by
Administrative Agent to assure that this Section 7.1(c) has been complied with.
(v) Each Borrower or Subsidiary, as the case may be, to effect a
Permitted Acquisition shall comply with all applicable laws and the terms of
this Agreement and all other agreements (including the Senior Note Indenture and
Subordinated Notes) to which Holdings or any of its Subsidiaries is a party or
by which any of them is bound.
(d) Notwithstanding anything in Section 7.1(b) above, Borrowers may
make the Permitted Camelot Disposition; provided that each of the following
conditions and requirements are satisfied in form and substance satisfactory to
Administrative Agent (i) no Default or Event of Default exists prior to such
sale or after giving effect thereto; (ii) all representations and warranties
contained herein and in the Other Documents shall be true and correct in all
material respects with the same effect as though such representations and
warranties were made on and as of the date of such sale (both before and after
giving effect thereto); (iii) Borrowing Agent shall give Administrative Agent
prior written notice not later than three (3) Business Days prior to the date of
the consummation of the Permitted Camelot Disposition, which notice shall (X)
contain the date the Permitted Camelot Disposition is scheduled to be
consummated, and (Y) contain the estimated aggregate sale price of such
Permitted Camelot Disposition and the amount of related costs and expenses; (iv)
Borrowing Agent shall have delivered to Administrative Agent (X) as soon as
available but not more than five (5) Business Days after the execution thereof a
true and correct copy of the executed purchase agreement pursuant to which such
Permitted Camelot Disposition was consummated, and any other document executed
in connection therewith, each of which shall expressly permit the assignment to
Administrative Agent as collateral security as contemplated herein, and (Y) such
other information related to the transaction as Administrative Agent shall
reasonably request; (v) all Indebtedness owing from or to such Camelot
Subsidiary with any other Borrower or Holdings shall have been fully repaid and
all net proceeds of such Permitted Camelot Distribution shall be applied as
required pursuant to Section 2.13 hereof; (vi) such Permitted Camelot
Disposition shall be on substantially the same terms and conditions as set forth
in the letter of intent with respect thereto previously provided to
Administrative Agent; and (vii) all promissory notes received by any Borrower or
Holdings in connection with such Permitted Camelot Disposition shall, within one
(1) Business Day of the closing of such transaction, be pledged and delivered to
Administrative Agent.
(e) Change its jurisdiction or effect any merger or other business
combination for the purpose of reincorporating in another state.
7.2. Creation of Liens. Create or suffer to exist any Lien or transfer
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.
7.3. Guarantees. Become liable upon the obligations or liabilities of any
Person by assumption, endorsement or guaranty thereof or otherwise (other than
to Lenders) except
(a) guarantees of operating leases of existing and new offices entered into in
the ordinary course of business up to an aggregate amount not to exceed
$5,000,000 at any time outstanding, and (b) the endorsement of checks in the
ordinary course of business.
7.4. Investments. Purchase or acquire obligations or Stock of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof, (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof, (e) pursuant to a Permitted Acquisition made in compliance with
Section 7.1(c) hereof, and (f) capital contributions, loans or other investments
in any Captive Insurance Company, provided that (i) the aggregate amount of all
investments in all Captive Insurance Companies shall not exceed $1,000,000 in
the aggregate in any calendar year, (ii) with respect to any such investment,
the sum of (x) the aggregate amount of such investment plus (y) the aggregate
amount of all consideration paid in connection with all Permitted Acquisitions
made since the Closing Date shall not exceed $5,000,000 in the aggregate with
respect to any calendar year and shall not exceed $15,000,000 in the aggregate
during the Term, and (iii) during the period beginning 20 Business Days prior to
any such contribution, loan or other investment and ending 10 Business Days
after giving effect to each such contribution, loan or other investment
(including, without limitation, after taking into account all consideration,
fees, costs and expenses incurred in connection therewith), Undrawn Availability
shall be not less than $10,000,000, and no later than two (2) Business Days
prior to making such contribution, loan or other investment, Borrower shall have
delivered to Administrative Agent a certificate to such effect which shall
include all relevant calculations and an updated Borrowing Base Certificate.
7.5. Loans. Make advances, loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate except (a)(i)
intercompany Indebtedness of any Borrower owed to any other Borrower, and (ii)
provided that no Default or Event of Default shall have occurred and be
continuing at the time of the incurrence thereof, or would result therefrom,
Indebtedness incurred by Holdings or COI made by any Borrower (or made by COI to
Holdings), (A) provided there are no available options to pay in kind, to permit
COI or Holdings to make regularly scheduled interest payments in cash then due
under and pursuant to the Senior 12% Notes and the Subordinated Notes as in
effect in the date hereof, respectively; provided that during the period
beginning 20 Business Days prior to any such payment and ending 10 Business Days
after giving effect to any such payment, the Borrowers shall have Undrawn
Availability of not less than $5,000,000, (B) to permit Holdings or COI to pay
Corporate Overhead, (C) to permit COI to make optional prepayments, repurchases
or redemptions of the Senior 12% Notes, and related payments of interest and
reasonable fees, costs and expenses, but only to the extent permitted pursuant
to Section 7.19 hereof; provided that, in each case under clauses (i) and (ii)
of this subsection 7.5(a), such Indebtedness must be unsecured and subordinated
in right of payment to the Obligations in a manner and upon terms acceptable to
Administrative Agent (and by its execution and delivery hereof, each Borrower
agrees that all such Indebtedness shall be so
unsecured and subordinate) and shall not be evidenced by any note or other
instrument unless the same is pledged to Administrative Agent (collectively, the
"Intercompany Note"); (b) advances in an aggregate amount not to exceed $200,000
at any time, made in the ordinary course of business consistent with current
practices at the Closing Date by THISCI and Brentwood to independent
supplemental staffing firms to induce such firms to enter into Account
Agreements; provided, that such advances are secured by a first priority
perfected security interest in the Receivables under such Account Agreements in
favor of THISCI or Brentwood, as the case may be, subject to no Liens other than
Permitted Encumbrances, and (c) in addition to advances made pursuant to clause
(b) above, advances not to exceed $500,000 outstanding at any time in the
aggregate made by Borrowers in the ordinary course of business consistent with
current practices at the Closing Date to Persons engaged in the business of
providing temporary employment personnel to clients to induce such Persons to
enter into, or remain party to, Account Agreements or Licensing Agreements.
7.6. Capital Expenditures. Contract for, purchase or make any expenditure
or commitments for fixed or capital assets (including capitalized leases) in any
fiscal year in an aggregate amount for all Borrowers in excess of $4,000,000.
7.7. Dividends. Declare, pay or make any dividend or distribution on any
shares of common stock or preferred stock (other than dividends or distributions
payable in its stock, or split-ups or reclassifications of its stock) or apply
any of its funds, property or assets to the purchase, redemption or other
retirement of any common or preferred stock, or of any options to purchase or
acquire any such shares of common or preferred stock.
7.8. Indebtedness.
(a) Create, incur, assume or suffer to exist any Indebtedness
(exclusive of trade debt incurred in the ordinary course of business to
non-Affiliates) except in respect of (a) Indebtedness to Lenders arising under
this Agreement or any Other Document; (b) Indebtedness incurred for Capital
Expenditures permitted under Section 7.6 hereof; (c) Indebtedness set forth on
Schedule 7.8 hereto; (d) intercompany Indebtedness among Borrowers, Holdings and
COI solely to the extent permitted pursuant to Section 7.5(a) hereof; (e)
guarantees permitted under Section 7.3; (f) Indebtedness not exceeding
$87,000,000 in aggregate principal amount outstanding at any time under the
Senior Note Documentation or such lesser principal amount as shall be
outstanding from time to time and as reduced by repayments of principal to the
extent permitted hereunder; (g) Indebtedness not exceeding $9,134,896 in
aggregate principal amount outstanding at any time under the Subordinated Note
Documentation or such lesser principal amount as shall be outstanding from time
to time and as reduced by repayments of principal to the extent permitted
hereunder , provided, however, that Holdings may issue additional "paid-in-kind"
Subordinated Notes pursuant to the terms thereof in lieu of cash interest
payments due thereunder ("PIK Notes") up to an aggregate amount of additional
PIK Notes not to exceed $5,865,104 in the aggregate (for the avoidance of doubt,
subject to the foregoing proviso, the maximum principal amount of Indebtedness
permitted under this clause (g) shall not exceed $15,000,000 in the aggregate.);
and (h) Indebtedness incurred by any Borrower under Seller Notes entered into in
connection with any Permitted Acquisition permitted under Section 7.1(c) above.
7.9. Nature of Business. Substantially change the nature of the business
in which it is presently engaged, nor except as specifically permitted hereby
purchase or invest, directly or indirectly, in any assets or property other than
in the ordinary course of business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted.
7.10. Transactions with Affiliates. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise enter into any transaction or deal with, any Affiliate, except
intercompany loans permitted by Sections 7.5 and 7.8 and transactions fully
disclosed to Administrative Agent by prior written notice, which are in the
ordinary course of business, on an arm's-length basis on terms and conditions no
less favorable than terms and conditions which would have been obtainable from a
Person other than an Affiliate.
7.11. Leases. Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property would exceed $5,000,000 in any one fiscal year in the aggregate for
Borrowers.
7.12. Subsidiaries.
(a) Except in connection with any Permitted Acquisition made in
compliance with Section 7.1(c) hereof, form any Subsidiary except a Borrower may
establish a newly formed Subsidiary provided that each of the following
conditions are fully satisfied in form and substance satisfactory to
Administrative Agent: (i) no Default or Event of Default is in existence
immediately prior to the formation of such Subsidiary or would exist after
giving effect thereto, (ii) prior to or simultaneously with such formation, such
Subsidiary (except for Captive Insurance Companies) expressly joins in this
Agreement as a borrower and becomes jointly and severally liable for the
obligations of Borrowers hereunder, under the Notes, and under any Other
Documents as Administrative Agent shall request, (iii) Administrative Agent
shall have received not less than five (5) Business Days' prior written notice
of such formation, which notice shall describe the purpose and proposed business
of such Subsidiary, (iv) prior to or simultaneously with such formation, not
less than one hundred percent (100%) of the Stock of such Subsidiary (other than
the Stock of a Captive Insurance Company, to the extent prohibited by applicable
law) shall be pledged for the benefit of the Lenders pursuant to a Pledge
Agreement or similar agreement in form and substance satisfactory to
Administrative Agent, (v) prior to such formation, Agent shall have received all
agreements and other documentation, including, without limitation, legal
opinions, UCC-1 financing statements and executed Notes, that it may require to
establish compliance with each of the foregoing conditions; provided further
however, in the event such Subsidiary is a Captive Insurance Company, the
following additional conditions shall also be fully satisfied in form and
substance satisfactory to Agent: (i) Borrowers shall have complied with all laws
relating to the formation and operation of such Captive Insurance Company
(including, without limitation, all applicable insurance laws, rules and
regulations), (ii) to the extent not prohibited by applicable law, such
Subsidiary shall become a Guarantor hereunder, (iii) Borrowers shall have
provided Administration Agent with copies of all information and executed and
delivered to Administration Agent all documents and agreements as shall be
reasonably requested by Administrative Agent in connection with the formation,
funding and legal compliance of such Captive Insurance Corporation, including,
without limitation, (A) legal opinions, in form and substance satisfactory to
Administration Agent and (B) evidence reasonably satisfactory to Administration
Agent that such Captive Insurance Company has complied with the requirements of
Section 4.11(d) hereof, and (iv) to the extent not prohibited by applicable law,
such Captive Insurance Company shall enter into a Guarantor Security Agreement
and take all such other action as requested by Administrative Agent in
connection with the pledge of all of its assets to Administrative Agent and to
establish compliance with each of the foregoing conditions, including, without
limitation, the execution and filing of UCC Financing Statements.
(b) Enter into any partnership, joint venture or similar
arrangement.
7.13. Fiscal Year and Accounting Changes. Change its fiscal year from the
last Sunday of December or make any change (i) in accounting treatment and
reporting practices except as required by GAAP or (ii) in tax reporting
treatment except as required by law.
7.14. Pledge of Credit. Now or hereafter pledge Administrative Agent's or
any Lender's credit on any purchases or for any purpose whatsoever or use any
portion of any Advance in or for any business other than such Borrower's
business as conducted on the date of this Agreement.
7.15. Amendment of Articles of Incorporation, By-Laws. Amend, modify or
waive any term or material provision of its Articles of Incorporation or By-Laws
unless required by law.
7.16. Compliance with ERISA. (i) (x) Maintain, or permit any member of the
Controlled Group to maintain, or (y) become obligated to contribute, or permit
any member of the Controlled Group to become obligated to contribute, to any
Plan, other than those Plans disclosed on Schedule 5.8(d), (ii) engage, or
permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction," as that term is defined in section 406 of ERISA and
Section 4975 of the Code, (iii) incur, or permit any member of the Controlled
Group to incur, any "accumulated funding deficiency," as that term is defined in
Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any
member of the Controlled Group to terminate, any Plan where such event could
result in any liability of any Borrower or any member of the Controlled Group or
the imposition of a lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any
member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (vii) fail promptly to notify Administrative Agent of the
occurrence of any Termination Event, (viii) fail to comply, or permit a member
of the Controlled Group to fail to comply, with the requirements of ERISA or the
Code or other applicable laws in respect of any Plan, (ix) fail to meet, or
permit any member of the Controlled Group to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay or allow any member of
the Controlled Group to postpone or delay any funding requirement with respect
of any Plan.
7.17. Prepayment of Indebtedness. Except as permitted pursuant to Section
7.19 hereof, at any time, directly or indirectly, prepay any Indebtedness (other
than to Lenders), or repurchase, redeem, retire or otherwise acquire any
Indebtedness of any Borrower or Guarantor.
7.18. Derivative Transactions. Engage, or permit any of its Subsidiaries
to engage, in any derivative transactions.
7.19. Senior 12% Notes; Subordinated Notes. At any time, directly or
indirectly, prepay, repurchase, redeem, retire or otherwise acquire, or make any
payment on account of any principal of, interest on or premium payable in
connection with the repayment or redemption of the Senior 12% Notes or
Subordinated Notes; provided that, notwithstanding the foregoing, (a) COI may
repurchase or prepay any portion of the Senior 12% Notes if (i) immediately
before and after giving effect to such repurchase or prepayment (and all fees,
penalties, costs and expenses incurred in connection therewith), no Default or
Event of Default shall exist hereunder, and (ii) during the period beginning 20
Business Days prior to any such repurchase or prepayment and ending 10 Business
Days after giving effect to such repurchase or prepayment, Borrowers shall have
Undrawn Availability of not less than $10,000,000, (b) provided there are no
available options to pay in kind, COI and Holdings may make regularly scheduled
interest payments in cash then due under and pursuant to the Senior 12% Notes
and the Subordinated Notes as in effect on the date hereof, respectively, if no
Default or Event of Default shall have occurred and be continuing immediately
before any such payment or after giving effect to any such payment, and (c) the
aggregate amount of all such prepayments and repurchases permitted by clause (a)
this Section 7.19 shall not exceed $15,000,000 in any calendar year.
7.20. Other Agreements. Enter into any (a) material amendment, waiver or
modification of any of the Subordinated Note Documentation or Senior Note
Documentation or any related agreements or (b) amendment, waiver or modification
of any of the Subordinated Note Documentation or Senior Note Documentation or
any related agreements or any other material agreement if it would conflict with
or violate any provision hereof or in any Other Document.
7.21. Financing Statements; Amendments; Termination Statements. File any
financing statement or amendment or termination statement with respect to any
financing statement without the prior written consent of the Administrative
Agent, subject to each Borrower's rights under Section 9-509(d)(2) of the
Uniform Commercial Code.
VIII. CONDITIONS PRECEDENT.
8.1. Conditions to Initial Advances. The agreement of Lenders to make the
initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:
(a) Note. Administrative Agent shall have received the Notes duly
executed and delivered by an authorized officer of each Borrower;
(b) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any
Other Document, any related agreement required under law or reasonably requested
by Administrative Agent to be filed, registered or recorded in order to create,
in favor of Administrative Agent, a perfected security interest in and Lien upon
the Collateral shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof is so
required or requested, and Administrative Agent shall have received an
acknowledgment copy, or other evidence satisfactory to it, of each such filing,
registration or recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto;
(c) Corporate Proceedings. Administrative Agent shall have received
a copy of the resolutions in form and substance reasonably satisfactory to
Administrative Agent, of the Board of Directors of each Guarantor and each
Borrower, as the case may be, authorizing (i) the execution, delivery and
performance of this Agreement, the Notes and any related agreements
(collectively, the "Documents"), and (ii) the granting by each Borrower of the
security interests in and liens upon the Collateral in each case certified by
the Secretary or an Assistant Secretary of each Borrower and each Guarantor as
of the Closing Date; and, such certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded as of
the date of such certificate;
(d) Incumbency Certificates of Borrowers. Administrative Agent
shall have received a certificate of the Secretary or an Assistant Secretary of
each Borrower and each Guarantor, dated the Closing Date, as to the incumbency
and signature of the officers of each Borrower executing this Agreement, any
certificate or other documents to be delivered by it pursuant hereto, together
with evidence of the incumbency of such Secretary or Assistant Secretary;
(e) Certificates. Administrative Agent shall have received a copy
of the Articles or Certificate of Incorporation of each Borrower and each
Guarantor, and all amendments thereto, certified by the Secretary of State or
other appropriate official of its jurisdiction of incorporation together with
copies of the By-Laws of each Borrower and each Guarantor and all agreements of
each Borrower's and each Guarantor's shareholders certified as accurate and
complete by the Secretary of each Borrower and each Guarantor;
(f) Good Standing Certificates. Administrative Agent shall have
received good standing certificates for each Borrower and each Guarantor, dated
not more than fifteen days prior to the Closing Date, issued by the Secretary of
State or other appropriate official of each Borrower's and each Guarantor's
jurisdiction of incorporation and each jurisdiction where such Borrower or
Guarantor conducts business in a state from which Borrowers derive an aggregate
of $4,000,000 in revenue annually;
(g) Legal Opinion. Administrative Agent shall have received the
executed legal opinion of DKW Law Group(R), PC in form and substance
satisfactory to Administrative Agent which shall cover such matters incident to
the transactions contemplated by this Agreement, the Notes, the Other Documents,
and related agreements as Administrative Agent may reasonably require and each
Borrower hereby authorizes and directs such counsel to deliver such opinions to
Administrative Agent and Lenders;
(h) No Litigation. (i) No litigation, investigation or proceeding
before or by any arbitrator or Governmental Body shall be continuing or
threatened against Holdings or any Borrower or any Guarantor or against the
officers or directors of any Borrower or any Guarantor (A) in connection with
this Agreement, the Other Documents, the Senior Note Documentation or the
Subordinated Note Documentation or any of the transactions contemplated thereby
and which, in the reasonable opinion of Administrative Agent, is deemed material
or (B) which could, in the reasonable opinion of Administrative Agent, have a
Material Adverse Effect on Borrowers or any Guarantor; and (ii) no injunction,
writ, restraining order or other order of any nature materially adverse to any
Borrower or any Guarantor or the conduct of its business or inconsistent with
the due consummation of the transactions contemplated hereby shall have been
issued by any Governmental Body;
(i) Financial Condition Certificates. Administrative Agent shall
have received an executed Financial Condition Certificate in the form of Exhibit
8.1(i);
(j) Collateral Examination. Administrative Agent shall have
completed Collateral examinations and received appraisals, the results of which
shall be satisfactory in form and substance to Lenders, of the Receivables,
Inventory, General Intangibles, Leasehold Interest and Equipment of each
Borrower and all books and records in connection therewith;
(k) Fees. Administrative Agent shall have received all fees payable
to Administrative Agent and Lenders on or prior to the Closing Date pursuant to
Article III hereof;
(l) Pro Forma Financial Statements. Administrative Agent shall have
received a copy of the Pro Forma Financial Statements which shall be
satisfactory in all respects to Lenders;
(m) Other Loan Documents. Administrative Agent shall have received
final executed copies of the Senior Note Documentation and the Subordinated Note
Documentation, and all related agreements, documents and instruments as in
effect on the Closing Date all of which shall be satisfactory in form and
substance to Administrative Agent;
(n) Insurance. Administrative Agent shall have received in form and
substance satisfactory to Administrative Agent, the insurance documentation
referred to in Section 4.11(e)(i) and (ii) hereof, together with loss payable
endorsements on Administrative Agent's standard form of loss payee endorsement
naming Administrative Agent as loss payee, and certified copies of Borrowers'
liability insurance policies, together with endorsements naming Administrative
Agent as a co-insured;
(o) Payment Instructions. Administrative Agent shall have received
written instructions from Borrowers directing the application of proceeds of the
initial Advances made pursuant to this Agreement;
(p) Blocked Accounts. Administrative Agent shall have received duly
executed agreements establishing the Blocked Accounts or Depository Accounts
with financial institutions acceptable to Administrative Agent for the
collection or servicing of the Receivables and proceeds of the Collateral;
(q) Consents. Administrative Agent shall have received any and all
Consents necessary to permit the effectuation of the transactions contemplated
by this Agreement and the Other Documents; and, Administrative Agent shall have
received such Consents and waivers of such third parties as might assert claims
with respect to the Collateral, as Administrative Agent and its counsel shall
deem necessary;
(r) No Adverse Material Change. (i) Since December 29, 2002, there
shall not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect on any Borrower or any
Guarantor and (ii) no representations made or information supplied to
Administrative Agent or any Lender shall have been proven to be inaccurate or
misleading in any material respect;
(s) Leasehold Agreements. Administrative Agent shall have received
landlord, mortgagee or warehouseman agreements satisfactory to Administrative
Agent with respect to the premises leased by Borrowers located at 00 Xxxxxxxxx
Xxxx Xxxxx X and 000 Xxxxxxxx Xxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000 and any other
premises at which any books or records relating to Receivables are located;
(t) Pledge Agreements. Administrative Agent shall have received the
executed Pledge Agreements in form and substance satisfactory to Administrative
Agent;
(u) Guarantees and Other Documents. Administrative Agent shall have
received (i) the executed Guarantee, (ii) the executed Guarantor Security
Agreement, and (iii) the executed Other Documents, all in form and substance
satisfactory to Administrative Agent;
(v) Contract Review. Administrative Agent shall have reviewed all
material contracts and other agreements to which any Borrower or Guarantor is a
party or is bound or which effects the business of any Borrower or Guarantor or
the Collateral including, without limitation, leases, union contracts, labor
contracts, vendor supply contracts, license agreements and distributorship
agreements and all such contracts and agreements shall be satisfactory in all
respects to Administrative Agent;
(w) Closing Certificate. Administrative Agent shall have received a
closing certificate signed by the Chief Financial Officer or Senior Vice
President - Finance of each Borrower and each Guarantor dated as of the date
hereof, stating that (i) all representations and warranties set forth in this
Agreement and the Other Documents are true and correct on and as of such date,
(ii) Borrowers and each Guarantor are on such date in compliance with all the
terms and provisions set forth in this Agreement and the Other Documents, (iii)
on such date no Default or Event of Default has occurred or is continuing, and
(iv) the Net Worth of Holdings on a consolidated basis is not less than the
amount set forth in Section 8.1(z);
(x) Borrowing Base. Administrative Agent shall have received
evidence from Borrowers that the aggregate amount of Eligible Receivables is
sufficient in value and amount to support Advances in the amount requested by
Borrowers on the Closing Date;
(y) Undrawn Availability. After giving effect to the initial
Advances hereunder, Borrowers shall have Undrawn Availability of at least
$15,000,000 as evidenced by a Borrowing Base Certificate delivered to
Administrative Agent;
(z) Net Worth. Net Worth of Holdings on a consolidated basis shall
not be less than -$15,000,000;
(aa) Compliance with Laws. Administrative Agent shall be reasonably
satisfied that each Borrower is in compliance with all pertinent federal, state,
local or territorial regulations, including, but not limited to those with
respect to EPA, OSHA and ERISA;
(bb) Indebtedness. Administrative Agent shall have received in form
and substance satisfactory to Administrative Agent evidence that all Existing
Bank Indebtedness and all Indebtedness under the PIK Note Indenture shall have
been fully repaid or satisfied and that all Liens securing such Indebtedness
have been terminated; and
(cc) Other. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated hereby shall be satisfactory in form and substance to
Administrative Agent and its counsel.
8.2. Conditions to Each Advance. The agreement of Lenders to make any
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) Representations and Warranties. Each of the representations and
warranties made by any Borrower or any Guarantor in or pursuant to this
Agreement, the Other Documents and any related agreements to which it is a
party, and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement, the Other Documents or any related
agreement shall be true and correct in all material respects on and as of such
date as if made on and as of such date;
(b) No Default. No Event of Default or Default shall have occurred
and be continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date; provided, however, that Lenders, in
their sole discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and
(c) Maximum Advances. In the case of any Revolving Advances
requested to be made, after giving effect thereto, the aggregate Revolving
Advances shall not exceed the maximum amount of Revolving Advances permitted
under Section 2.1 hereof.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO BORROWERS.
Each Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:
9.1. Disclosure of Material Matters. Immediately upon learning thereof,
report to Administrative Agent all matters materially affecting the value,
enforceability or collectibility of any portion of the Collateral including,
without limitation, any Borrower's reclamation or repossession of, or the return
to any Borrower of, a material amount of goods or claims or disputes asserted by
any Customer or other obligor.
9.2. Schedules. Deliver to Administrative Agent (a) on or before the
fifteenth (15th) day of each month as and for the prior month (i) accounts
receivable agings inclusive of reconciliations to the general ledger, (ii)
accounts payable schedules inclusive of reconciliations to open invoices, and
(iii) a lease report setting forth all real property leases to which any
Borrower is a party which specifically identifies each new lease entered into
during such month and (b) on or before the third (3rd) day of each Week as and
for the prior Week, a Borrowing Base Certificate satisfactory to the
Administrative Agent (which shall be calculated as of the last day of the prior
Week and which shall not be binding upon Administrative Agent or restrictive of
Administrative Agent's rights under this Agreement). In addition, each Borrower
will deliver to Administrative Agent at such intervals as Administrative Agent
may require: (i) confirmatory assignment schedules, (ii) copies of Customer's
invoices, (iii) evidence of shipment or delivery, and (iv) such further
schedules, documents and/or information regarding the Collateral as
Administrative Agent may require including, without limitation, trial balances
and test verifications. Administrative Agent shall have the right to confirm and
verify all Receivables by any manner and through any medium it considers
advisable and do whatever it may deem reasonably necessary to protect its
interests hereunder. The items to be provided under this Section are to be in
form satisfactory to Administrative Agent and executed by each Borrower and
delivered to Administrative Agent from time to time solely for Administrative
Agent's convenience in maintaining records of the Collateral, and any Borrower's
failure to deliver any of such items to Administrative Agent shall not affect,
terminate, modify or otherwise limit Administrative Agent's Lien with respect to
the Collateral.
9.3. Environmental Reports. Furnish Administrative Agent, concurrently
with the delivery of the financial statements referred to in Sections 9.7 and
9.8, with a certificate signed by the President of each Borrower stating, to the
best of his knowledge, that each Borrower is in compliance in all material
respects with all federal, state and local Environmental Laws relating to
environmental protection and control and occupational safety and health. To the
extent any Borrower is not in compliance with the foregoing laws, the
certificate shall set forth with specificity all areas of non-compliance and the
proposed action such Borrower will implement in order to achieve full
compliance.
9.4. Litigation. Promptly notify Administrative Agent in writing of any
claim, litigation, suit or administrative proceeding affecting any Borrower or
any Guarantor, whether or not the claim is covered by insurance, and of any
litigation, suit or administrative proceeding, which in any such case affects
any of the Collateral or which could reasonably be expected to have a Material
Adverse Effect on any Borrower or Guarantor.
9.5. Material Occurrences. Promptly notify Administrative Agent in
writing upon the occurrence of (a) any Event of Default or Default; (b) any
event of default under the Senior Note Documentation or Subordinated Note
Documentation; (c) any event which with the giving of notice or lapse of time,
or both, would constitute an event of default under the Senior Note
Documentation or Subordinated Note Documentation; (d) any event, development or
circumstance whereby any financial statements or other reports furnished to
Administrative Agent fail in any material respect to present fairly, in
accordance with GAAP consistently applied, the financial condition or operating
results of any Borrower or Guarantor as of the date of such statements; (e) any
accumulated retirement plan funding deficiency which, if such deficiency
continued for two plan years and was not corrected as provided in Section 4971
of the Code, could subject any Borrower or Guarantor to a tax imposed by Section
4971 of the Code; (f) each and every default by any Borrower or Guarantor which
might result in the acceleration of the maturity of any Indebtedness, including
the names and addresses of the holders of such Indebtedness with respect to
which there is a default existing or with respect to which the maturity has been
or could be accelerated, and the amount of such Indebtedness; and (g) any other
development in the business or affairs of any Guarantor or any Borrower which
could reasonably be expected to have a Material Adverse Effect on any Guarantor
or any Borrower; in each case describing the nature thereof and the action
Borrowers propose to take with respect thereto.
9.6. Government Receivables. Notify Administrative Agent immediately if
any of its Receivables arise out of contracts between any Borrower and the
United States, any state, or any department, agency or instrumentality of any of
them.
9.7. Annual Financial Statements. Furnish Administrative Agent within
ninety (90) days after the end of each fiscal year of Holdings (or in the event
Holdings shall have filed with the SEC a Form 12b-25 with respect to its Annual
Report in Form 10-K for such fiscal year, 15 days thereafter), and in any event,
not later than the date that Holdings files its Annual Report on form 10-K,
financial statements of Holdings on a consolidated basis including, but not
limited to, statements of income and stockholders' equity and cash flow from the
beginning of the current fiscal year to the end of such fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in accordance with
GAAP applied on a basis consistent with prior practices, and in reasonable
detail and reported upon without qualification by an independent certified
public accounting firm selected by Borrowers and satisfactory to Administrative
Agent (the "Accountants"). The report of the Accountants shall be accompanied by
a statement of the Accountants certifying that (i) they have caused this
Agreement to be reviewed, (ii) in making the examination upon which such report
was based either no information came to their attention which to their knowledge
constituted an Event of Default or a Default under this Agreement or any related
agreement or, if such information came to their attention, specifying any such
Default or Event of Default, its nature, when it occurred and whether it is
continuing, and such report shall contain or have appended thereto calculations
which set forth Borrowers' compliance with the requirements or restrictions
imposed by Sections 6.5, 6.6, 7.6 and 7.11 hereof. In addition, the reports
shall be accompanied by a certificate of each Borrower's Chief Financial Officer
or Senior Vice President - Finance which shall state that, based on an
examination sufficient to permit him to make an informed statement, no Default
or Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default, its nature, when it occurred, whether it is continuing and
the steps being taken by such Borrower with respect to such event, and such
certificate shall have appended thereto calculations which set forth Borrowers'
compliance with the requirements or restrictions imposed by Sections 6.5, 6.6,
7.6 and 7.11 hereof.
9.8. Quarterly Financial Statements. Furnish Administrative Agent within
forty-five (45) days after the end of each fiscal quarter but, in any event, not
later than one (1) day after Holdings files its Quarterly Report on Form 10-Q,
an unaudited balance sheet of Holdings and its Subsidiaries on a consolidated
basis and unaudited statements of income and stockholders' equity and cash flow
of Holdings on a consolidated basis reflecting results of operations from the
beginning of the fiscal year to the end of such quarter and for such quarter,
prepared on a basis consistent with prior practices and complete and correct in
all material respects, subject to normal and recurring year end adjustments that
individually and in the aggregate are not material to the business of the
Borrowers. The reports shall be accompanied by a certificate signed by the Chief
Financial Officer or Senior Vice President-Finance of Holdings and each
Borrower, which shall state that, based on an examination sufficient to permit
him to make an informed statement, no Default or Event of Default exists, or, if
such is not the case, specifying such Default or Event of Default, its nature,
when it occurred, whether it is continuing and the steps being taken by
Borrowers with respect to such default and, such certificate shall have appended
thereto calculations which set forth Borrowers' compliance with the requirements
or restrictions imposed by Sections 6.5, 6.6, 7.6 and 7.11 hereof.
9.9. Monthly Financial Statements. Furnish Administrative Agent within
forty-five (45) days after the end of each month, an unaudited balance sheet of
Holdings and its Subsidiaries on a consolidated basis and unaudited statements
of income of Holdings on a consolidated basis reflecting results of operations
from the beginning of the fiscal year to the end of such month and for such
month, prepared on a basis consistent with prior practices and complete and
correct in all material respects, subject to normal and recurring year end
adjustments that individually and in the aggregate are not material to the
business of Borrowers. The reports shall be accompanied by a certificate of
Holdings and each Borrower's Chief Financial Officer or Senior Vice
President-Finance, which shall state that, based on an examination sufficient to
permit him to make an informed statement, no Default or Event of Default exists,
or, if such is not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps being taken by
Borrowers with respect to such event and, such certificate shall have appended
thereto calculations which set forth Borrowers' compliance with the requirements
or restrictions imposed by Sections 6.5, 6.6, 7.6 and 7.11 hereof.
9.10. Other Reports. Furnish Administrative Agent as soon as available,
but in any event within ten (10) days after the issuance thereof, (i) with
copies of such financial statements, reports and returns as Holdings shall send
to its stockholders, (ii) copies of all notices, reports, financial statements
and other materials sent pursuant to the Senior Note Documentation or the
Subordinated Note Documentation, simultaneously with the sending of such.
9.11. Additional Information. Furnish Administrative Agent with such
additional information as Administrative Agent shall reasonably request in order
to enable Administrative Agent to determine whether the terms, covenants,
provisions and conditions of this Agreement and the Other Documents have been
complied with by Borrowers and Guarantors including, without limitation and
without the necessity of any request by Administrative Agent, (a) copies of all
environmental audits and reviews, (b) at least three (3) Business Days prior
thereto (and subject to Section 4.5), notice of any Borrower's or any
Guarantor's opening of any new office or place of business or any Borrower's or
any Guarantor's closing of any existing office or place
of business, and (c) promptly upon any Borrower's or any Guarantor's learning
thereof, notice of any labor dispute to which any Borrower may become a party,
any strikes or walkouts relating to any of its plants or other facilities, and
the expiration of any labor contract to which any Borrower is a party or by
which any Borrower is bound.
9.12. Projected Operating Budget. Furnish Administrative Agent, no later
than thirty (30) days after the beginning of Holdings and each Borrower's fiscal
years commencing with fiscal year 2004, a quarter by quarter projected operating
budget and cash flow of Holdings and its Subsidiaries on a consolidated and
consolidating basis for such fiscal year (including an income statement for each
quarter and a balance sheet as at the end of each fiscal quarter), such
projections to be accompanied by a certificate signed by the President or Chief
Financial Officer of Holdings and each Borrower to the effect that such
projections have been prepared on the basis of sound financial planning practice
consistent with past budgets and financial statements and that such officer has
no reason to question the reasonableness of any material assumptions on which
such projections were prepared.
9.13. Variances From Operating Budget. Furnish Administrative Agent,
concurrently with the delivery of the financial statements referred to in
Section 9.7, a written report summarizing all material variances from budgets
submitted by Borrowers pursuant to Section 9.12 and a discussion and analysis by
management with respect to such variances.
9.14. Notice of Suits, Adverse Events. Furnish Administrative Agent with
prompt written notice of (i) any lapse or other termination of any Consent
issued to any Borrower or any Guarantor by any Governmental Body or any other
Person that is material to the operation of any Borrower's or any Guarantor's
business, (ii) any refusal by any Governmental Body or any other Person to renew
or extend any such Consent; and (iii) copies of any periodic or special reports
filed by any Borrower or any Guarantor with any Governmental Body or Person, if
such reports indicate any material change in the business, operations, affairs
or condition of any Borrower or any Guarantor, or if copies thereof are
requested by Lender, and (iv) copies of any material notices and other
communications from any Governmental Body or Person which specifically relate to
any Borrower or any Guarantor.
9.15. ERISA Notices and Requests. Furnish Administrative Agent with
immediate written notice in the event that (i) any Borrower or any member of the
Controlled Group knows or has reason to know that a Termination Event has
occurred, together with a written statement describing such Termination Event
and the action, if any, which such Borrower or any member of the Controlled
Group has taken, is taking, or proposes to take with respect thereto and, when
known, any action taken or threatened by the Internal Revenue Service,
Department of Labor or PBGC with respect thereto, (ii) any Borrower or any
member of the Controlled Group knows or has reason to know that a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred together with a written statement describing such transaction and the
action which such Borrower or any member of the Controlled Group has taken, is
taking or proposes to take with respect thereto, (iii) a funding waiver request
has been filed with respect to any Plan together with all communications
received by any Borrower or any member of the Controlled Group with respect to
such request, (iv) any increase in the benefits of any existing Plan or the
establishment of any new Plan or the commencement of contributions to any Plan
to which any Borrower or any member of the Controlled Group was not previously
contributing
shall occur, (v) any Borrower or any member of the Controlled Group shall
receive from the PBGC a notice of intention to terminate a Plan or to have a
trustee appointed to administer a Plan, together with copies of each such
notice, (vi) any Borrower or any member of the Controlled Group shall receive
any favorable or unfavorable determination letter from the Internal Revenue
Service regarding the qualification of a Plan under Section 401(a) of the Code,
together with copies of each such letter; (vii) any Borrower or any member of
the Controlled Group shall receive a notice regarding the imposition of
withdrawal liability, together with copies of each such notice; (viii) any
Borrower or any member of the Controlled Group shall fail to make a required
installment or any other required payment under Section 412 of the Code on or
before the due date for such installment or payment; (ix) any Borrower or any
member of the Controlled Group knows that (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
9.16. Additional Documents. Execute and deliver to Administrative Agent,
upon request, such documents and agreements as Administrative Agent may, from
time to time, reasonably request to carry out the purposes, terms or conditions
of this Agreement, including, without limitation, such as may be necessary or
desirable to confirm or perfect the Administrative Agent's and the Lenders'
interest in and Liens on the Collateral.
9.17. Rollforward Reports and Listings and Agings. Within fifteen (15)
Business Days after the last day of each month and from time to time upon the
request of Administrative Agent, Borrowing Agent will deliver to Administrative
Agent: (i) an aged trial balance of all then existing Receivables of each
Borrower; (ii) a detailed listing of all accruals, and an aged trial balance of
accounts payable; and (iii) a Rollforward Report as at the last day of such
period. All such reports shall be in form and substance reasonably satisfactory
to Administrative Agent.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
10.1. failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any Other Document;
10.2. any representation or warranty made or deemed made by any Borrower
or any Guarantor in this Agreement, any Other Document or any related agreement
or in any certificate, document or financial or other statement furnished at any
time in connection herewith or therewith shall prove to have been misleading in
any material respect on the date when made or deemed to have been made;
10.3. failure by any Borrower to (i) furnish financial information when
due under this Agreement which is unremedied for a period of five (5) days, (ii)
furnish any other financial
information when requested hereunder by Administrative Agent which is unremedied
for a period of ten (10) days, or (iii) permit the inspection of its books or
records;
10.4. issuance of a notice of Lien, levy, assessment, injunction or
attachment against any Borrower's Receivables or against a material portion of
any Borrower's or any Guarantor's other property which is not fully stayed or
lifted within thirty (30) days;
10.5. except as otherwise provided for in Sections 10.1 and 10.3, failure
or neglect of any Borrower or any Guarantor to perform, keep or observe any
term, provision, condition, covenant herein contained, or contained in any Other
Document or any other agreement or arrangement, now or hereafter entered into
between any Borrower or any Guarantor, on the one hand, and Administrative Agent
or any Lender, on the other hand, except for a failure or neglect of Borrower to
perform, keep or observe any term, provision, condition or covenant, contained
in Sections 4.6, 4.7, 4.9, 4.11, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is cured
within 15 days from the occurrence of such failure or neglect;
10.6. any judgment or judgments are rendered or judgment liens filed
against any Borrower or any Guarantor for an aggregate amount in excess of
$1,250,000 which within thirty (30) days of such rendering or filing is not
either fully satisfied, stayed or discharged of record;
10.7. any Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days,
any petition filed against it in any involuntary case under such bankruptcy
laws, or (vii) take any action for the purpose of effecting any of the
foregoing;
10.8. any Borrower shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business;
10.9. any Affiliate or any Subsidiary of any Borrower or any Guarantor,
shall (i) apply for, consent to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or similar fiduciary
of itself or of all or a substantial part of its property, (ii) admit in writing
its inability, or be generally unable, to pay its debts as they become due or
cease operations of its present business, (iii) make a general assignment for
the benefit of creditors, (iv) commence a voluntary case under any state or
federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a
bankrupt or insolvent, (vi) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vii) acquiesce to, or fail to
have dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10. any change in any Borrower's or any Guarantor's results of
operations or condition (financial or otherwise) or affairs which in
Administrative Agent's reasonable opinion has a Material Adverse Effect on such
Borrower or such Guarantor;
10.11. any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest;
10.12. an event of default has occurred and been declared under any of the
Senior Note Documentation or the Subordinated Note Documentation, in any case,
which default shall not have been cured or waived within any applicable grace
period and for which the lenders thereunder are permitted to accelerate the
Indebtedness thereunder;
10.13. a default of the obligations of any Borrower or any Guarantor under
any other agreement to which it is a party shall occur which materially
adversely affects its condition, affairs or prospects (financial or otherwise)
which default is not cured within any applicable grace period;
10.14. termination or breach of any Guaranty or Guaranty Security Agreement
or similar agreement executed and delivered to Administrative Agent in
connection with the Obligations of any Borrower, or if any Guarantor attempts to
terminate, challenges the validity of, or its liability under, any such Guaranty
or Guaranty Security Agreement or similar agreement;
10.15. any Change of Control shall occur;
10.16. any material provision of this Agreement or any Other Document
shall, for any reason, cease to be valid and binding on any Borrower or any
Guarantor, or any Borrower or any Guarantor shall so claim in writing to
Administrative Agent or any Lender;
10.17. (i) any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent trademark or tradename of any
Borrower, the continuation of which is material to the continuation of any
Borrower's business or (B) commence proceedings to suspend, revoke, terminate or
adversely modify any such license, permit, trademark, tradename or patent and
such proceedings shall not be dismissed or discharged within sixty (60) days, or
(C) schedule or conduct a hearing on the renewal of any license, permit,
trademark, tradename or patent necessary for the continuation of any Borrower's
business and the staff of such Governmental Body issues a report recommending
the termination, revocation, suspension or material, adverse modification of
such license, permit, trademark, tradename or patent; (ii) any agreement which
is necessary or material to the operation of any Borrower's business shall be
revoked or terminated and not replaced by a substitute acceptable to
Administrative Agent within thirty (30) days after the date of such revocation
or termination, and such revocation or termination and non-replacement would
reasonably be expected to have a Material Adverse Effect on any Borrower;
10.18. (a) any portion of the Collateral shall be seized or taken by a
Governmental Body, or (b) any Borrower or the title and rights of any Borrower
which is the owner of any material portion of the Collateral shall have become
the subject matter of claim, litigation, suit or other proceeding which, in the
case of this clause (b)(i) could, in the reasonable opinion of Administrative
Agent, upon final determination, result in impairment or loss of the security
provided by this Agreement or the Other Documents, or (ii) is not fully stayed,
vacated, or discharged of record within thirty (30) days;
10.19. an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Borrower or
any member of the Controlled Group shall incur, or in the opinion of
Administrative Agent be reasonably likely to incur, a liability to a Plan or the
PBGC (or both) which, in the reasonable judgment of Administrative Agent, would
have a Material Adverse Effect on any Borrower;
10.20 any Borrower or Guarantor is enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory agency
from conducting all or any material part of its business and such order
continues for more than thirty (30) days, if any such event or circumstance
could reasonably be expected to have a Material Adverse Effect;
10.21 there is filed against any Borrower or Guarantor, any civil or
criminal action, suit or proceeding under any federal or state racketeering
statute (including, without limitation, the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (1) is not dismissed
within ninety (90) days; and (2) could reasonably be expected result in the
confiscation or forfeiture of any material portion of the Collateral;
10.22 Holdings or COI shall engage in any business activities, other than
activities solely related to ownership of the stock of COI (in the case of
Holdings) and of the stock of Borrowers (in the case of COI), compliance with
the Senior Notes Documentation and Subordinated Note Documentation, Corporate
Overhead activities, and activities related to compliance with laws and
regulations applicable to Holdings as a publicly-owned corporation;
10.23 Undrawn Availability shall (a) at any time be less than $5,000,000,
or (b) at any time within ten (10) Business Days after the consummation of any
Permitted Acquisition, be less than $10,000,000; provided that no more than once
per calendar year if Undrawn Availability shall fall below $5,000,000, no Event
of Default shall exist solely be virtue thereof if within seven (7) days of the
date that Undrawn Availability fell below $5,000,000, Undrawn Availability shall
increase to at least $5,000,000, which such increased Undrawn Availability shall
be evidenced by a Borrowing Base Certificate delivered to Administrative Agent
in form and substance satisfactory to Administrative Agent; or
10.24 Except as expressly provided in paragraph 9 of the Post-Closing
Letter with respect to Canadian Receivables, the proceeds of any Collateral
shall be deposited in any account other than a Blocked Account or a Permitted
Operating Account.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. Rights and Remedies. (a) Upon the occurrence of (i) an Event of
Default pursuant to Section 10.7, 10.8 or 10.9 all Obligations shall be
immediately due and payable and this Agreement and the obligation of Lenders to
make Advances shall be deemed terminated; and, (ii) any of the other Events of
Default and at any time thereafter (such default not having previously been
cured), at the option of Required Lenders all Obligations shall be immediately
due and payable and Lenders shall have the right to terminate this Agreement and
to terminate the obligation of Lenders to make Advances and (iii) a filing of a
petition against Borrower in any involuntary case under any state or federal
bankruptcy laws, all Obligations shall be
immediately due and payable and the obligation of Lenders to make Advances
hereunder shall be terminated other than as may be required by an appropriate
order of the bankruptcy court having jurisdiction over any Borrower.
(b) Upon the occurrence of any Event of Default, Administrative
Agent shall have the right to exercise any and all rights and remedies provided
for herein, under the Other Documents, under the Uniform Commercial Code and at
law or equity generally, including, without limitation, the right to foreclose
the security interests granted herein and to realize upon any Collateral by any
available judicial procedure and/or to take possession of and sell any or all of
the Collateral with or without judicial process. Administrative Agent may enter
any of any Borrower's premises or other premises without legal process and
without incurring liability to any Borrower therefor, and Administrative Agent
may thereupon, or at any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such place as Administrative
Agent may deem advisable and Administrative Agent may require Borrowers to make
the Collateral available to Administrative Agent at a convenient place. With or
without having the Collateral at the time or place of sale, Administrative Agent
may sell the Collateral, or any part thereof, at public or private sale, at any
time or place, in one or more sales, at such price or prices, and upon such
terms, either for cash, credit or future delivery, as Administrative Agent may
elect. Except as to that part of the Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, Administrative Agent shall give Borrowers reasonable notification of
such sale or sales, it being agreed that in all events written notice mailed to
Borrowers at least five (5) days prior to such sale or sales is reasonable
notification. At any public sale Administrative Agent or any Lender may bid for
and become the purchaser, and Administrative Agent, any Lender or any other
purchaser at any such sale thereafter shall hold the Collateral sold absolutely
free from any claim or right of whatsoever kind, including any equity of
redemption and all such claims, rights and equities are hereby expressly waived
and released by each Borrower.
(c) In connection with the exercise of the foregoing remedies,
including without limitation, the sale of Inventory, Administrative Agent is
granted a perpetual nonrevocable, royalty free, nonexclusive license and
permission to use all of each Borrower's trademarks, trade styles, trade names,
patents, patent applications, copyrights, service marks, licenses, franchises
and other proprietary rights which are used or useful in connection with (i)
Inventory for the purpose of selling or otherwise disposing of such Inventory
and (ii) Equipment for the purpose of completing the manufacture of unfinished
goods.
(d) The proceeds realized from the sale or other disposition of any
Collateral shall be applied as follows: first, to the costs, expenses and
attorneys' fees and expenses incurred by Administrative Agent for collection and
for acquisition, completion, protection, removal, storage, sale and delivery of
the Collateral; second, to interest due upon any of the Obligations and any fees
payable under this Agreement; and, third, to the principal of the Obligations.
If any deficiency shall arise, Borrowers and Guarantors shall remain liable to
Administrative Agent and Lenders therefor.
11.2. Administrative Agent's Discretion. Administrative Agent shall have
the right in its sole discretion to determine which rights, Liens, security
interests or remedies Administrative Agent may at any time pursue, relinquish,
subordinate, or modify or to take any other action with
respect thereto and such determination will not in any way modify or affect any
of Administrative Agent's or Lenders' rights hereunder.
11.3. Setoff. In addition to any other rights which Administrative Agent
or any Lender may have under applicable law, upon the occurrence of an Event of
Default hereunder, Administrative Agent and such Lender shall have a right,
immediately and without notice of any kind, to apply any Borrower's property
held by Administrative Agent and such Lender to reduce the Obligations.
11.4. Rights and Remedies not Exclusive. The enumeration of the foregoing
rights and remedies is not intended to be exhaustive and the exercise of any
right or remedy shall not preclude the exercise of any other right or remedies
provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
11.5. Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Agreement to the contrary, after the occurrence and
during the continuance of an Event of Default, all amounts collected or received
by the Administrative Agent on account of the Obligations or any other amounts
outstanding under any of the Other Documents or in respect of the Collateral
may, at Administrative Agent's discretion, be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation, reasonable attorneys' fees) of the Administrative
Agent in connection with enforcing its rights and the rights of the Lenders
under this Agreement and the Other Documents and any protective advances made by
the Administrative Agent with respect to the Collateral under or pursuant to the
terms of this Agreement;
SECOND, to payment of any fees owed to the Administrative Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation, reasonable attorneys' fees) of each of the
Lenders in connection with enforcing its rights under this Agreement and the
Other Documents or otherwise with respect to the Obligations owing to such
Lender;
FOURTH, to the payment of all of the Obligations consisting of accrued fees
and interest;
FIFTH, to the payment of the outstanding principal amount of the
Obligations (including the payment or cash collateralization of any outstanding
Letters of Credit);
SIXTH, to all other Obligations and other obligations which shall have
become due and payable under the Other Documents or otherwise and not repaid
pursuant to clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses "THIRD," "FOURTH," "FIFTH" and "SIXTH" above; and (iii) to the extent
that any amounts available for distribution pursuant to clause "FIFTH" above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Administrative Agent in a cash collateral
account and applied (A) first, to reimburse the Issuer from time to time for any
drawings under such Letters of Credit and (B) then, following the expiration of
all Letters of Credit, to all other obligations of the types described in
clauses "FIFTH" and "SIXTH" above in the manner provided in this Section 11.5.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. Waiver of Notice. Each Borrower hereby waives notice of non-payment
of any of the Receivables, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of loans
or advances made, credit extended, Collateral received or delivered, or any
other action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.
12.2. Delay. No delay or omission on Administrative Agent's or any
Lender's part in exercising any right, remedy or option shall operate as a
waiver of such or any other right, remedy or option or of any Default or Event
of Default.
12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. Term. This Agreement, which shall inure to the benefit of and shall
be binding upon the respective successors and permitted assigns of each
Borrower, Administrative Agent and each Lender, shall become effective on the
date hereof and shall continue in full force and
effect until June 24, 2007 (the "Term") unless sooner terminated as herein
provided. Borrowers may terminate this Agreement at any time upon ninety (90)
days' prior written notice upon payment in full of the Obligations.
13.2. Termination. The termination of the Agreement shall not affect any
Borrower's, Administrative Agent's or any Lender's rights, or any of the
Obligations having their inception prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into, rights or interests created or Obligations
have been fully and indefeasibly paid, disposed of, concluded or liquidated. The
security interests, Liens and rights granted to Administrative Agent and Lenders
hereunder and the financing statements filed hereunder shall continue in full
force and effect, notwithstanding the termination of this Agreement or the fact
that Borrowers' Account may from time to time be temporarily in a zero or credit
position, until all of the Obligations of each Borrower have been indefeasibly
paid and performed in full after the termination of this Agreement or each
Borrower has furnished Administrative Agent and Lenders with an indemnification
satisfactory to Administrative Agent and Lenders with respect thereto.
Accordingly, each Borrower waives any rights which it may have under Section
9-509 (d)(2) and 9-513(c) of the Uniform Commercial Code to demand the filing of
termination statements with respect to the Collateral, and Administrative Agent
shall not be required to send such termination statements to each Borrower, or
to file them with any filing office, unless and until this Agreement shall have
been terminated in accordance with its terms and all Obligations have been
indefeasibly paid in full in immediately available funds. All representations,
warranties, covenants, waivers and agreements contained herein shall survive
termination hereof until all Obligations are indefeasibly paid or performed in
full.
XIV. REGARDING ADMINISTRATIVE AGENT.
14.1. Appointment. Each Lender hereby designates PNC to act as
Administrative Agent for such Lender under this Agreement and the Other
Documents. Each Lender hereby irrevocably authorizes Administrative Agent to
take such action on its behalf under the provisions of this Agreement and the
Other Documents and to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of Administrative
Agent by the terms hereof and thereof and such other powers as are reasonably
incidental thereto and Administrative Agent shall hold all Collateral, payments
of principal and interest, fees (except the fees set forth in the Fee Letter)
charges and collections (without giving effect to any collection days) received
pursuant to this Agreement, for the ratable benefit of Lenders. Administrative
Agent may perform any of its duties hereunder by or through its agents or
employees. As to any matters not expressly provided for by this Agreement
(including without limitation, collection of the Note) Administrative Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding; provided, however, that Administrative
Agent shall not be required to take any action which exposes Administrative
Agent to liability or which is contrary to this Agreement or the Other Documents
or applicable law unless Administrative Agent is furnished with an
indemnification reasonably satisfactory to Administrative Agent with respect
thereto.
14.2. Nature of Duties. Administrative Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Other Documents. Neither Administrative Agent nor any of its officers,
directors, employees or agents shall be (i) liable for any action taken or
omitted by them as such hereunder or in connection herewith, unless caused by
their gross (not mere) negligence or willful misconduct, or (ii) responsible in
any manner for any recitals, statements, representations or warranties made by
any Borrower or any officer thereof contained in this Agreement, or in any of
the Other Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by Administrative Agent under or in
connection with, this Agreement or any of the Other Documents or for the value,
validity, effectiveness, genuineness, due execution, enforceability or
sufficiency of this Agreement, or any of the Other Documents or for any failure
of any Borrower to perform its obligations hereunder. Administrative Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any of the Other Documents, or to inspect the properties,
books or records of any Borrower. The duties of Administrative Agent as respects
the Advances to Borrowers shall be mechanical and administrative in nature;
Administrative Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to impose upon
Administrative Agent any obligations in respect of this Agreement except as
expressly set forth herein. Documentation Agent, solely in its capacity as such,
shall have no duties, responsibilities or rights under this Agreement or any
Other Document.
14.3. Lack of Reliance on Administrative Agent and Resignation.
Independently and without reliance upon Administrative Agent or any other
Lender, each Lender has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of each Borrower and
Guarantor in connection with the making and the continuance of the Advances
hereunder and the taking or not taking of any action in connection herewith, and
(ii) its own appraisal of the creditworthiness of each Borrower and Guarantor.
Administrative Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before
making of the Advances or at any time or times thereafter except as shall be
provided by any Borrower pursuant to the terms hereof. Administrative Agent
shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any agreement, document,
certificate or a statement delivered in connection with or for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any Other Document, or of the financial
condition of any Guarantor or Borrower, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement, the Notes, the Other Documents or the financial
condition of any Borrower, or Guarantor or the existence of any Event of Default
or any Default.
Administrative Agent may resign on sixty (60) days' written notice to each
of Lenders and Borrowing Agent and upon such resignation, the Required Lenders
will promptly designate a successor Administrative Agent reasonably satisfactory
to Borrowers.
Any such successor Administrative Agent shall succeed to the rights, powers
and duties of Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent
effective upon its appointment, and the former Administrative Agent's rights,
powers and duties as Administrative Agent shall be terminated, without any other
or further act or deed on the part of such former Administrative Agent. After
any Administrative Agent's resignation as Administrative Agent, the provisions
of this Article XIV shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement.
14.4. Certain Rights of Administrative Agent. If Administrative Agent
shall request instructions from Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any Other
Document, Administrative Agent shall be entitled to refrain from such act or
taking such action unless and until Administrative Agent shall have received
instructions from the Required Lenders; and Administrative Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against
Administrative Agent as a result of its acting or refraining from acting
hereunder in accordance with the instructions of the Required Lenders.
14.5. Reliance. Administrative Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram, order
or other document or telephone message believed by it to be genuine and correct
and to have been signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the Other
Documents and its duties hereunder, upon advice of counsel selected by it.
Administrative Agent may employ agents and attorneys-in-fact and shall not be
liable for the default or misconduct of any such Administrative Agents or
attorneys-in-fact selected by Administrative Agent with reasonable care.
14.6. Notice of Default. Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder or under the Other Documents, unless Administrative Agent has received
notice from a Lender or a Borrower referring to this Agreement or the Other
Documents, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that Administrative Agent receives
such a notice, Administrative Agent shall give notice thereof to Lenders.
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided, that, unless and until Administrative Agent shall have received such
directions, Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of Lenders.
14.7. Indemnification. To the extent Administrative Agent is not
reimbursed and indemnified by Borrowers, each Lender will reimburse and
indemnify Administrative Agent in proportion to its respective portion of the
Advances (or, if no Advances are outstanding, according to its Commitment
Percentage), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Administrative Agent in performing its duties hereunder, or in
any way relating to or arising out of this Agreement or any Other Document;
provided that, Lenders shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Administrative Agent's gross (not mere)
negligence or willful misconduct as determined by a court of competent
jurisdiction.
14.8. Administrative Agent in its Individual Capacity. With respect to the
obligation of Administrative Agent to lend under this Agreement, the Advances
made by it shall have the same rights and powers hereunder as any other Lender
and as if it were not performing the duties as Administrative Agent specified
herein; and the term "Lender" or any similar term shall, unless the context
clearly otherwise indicates, include Administrative Agent in its individual
capacity as a Lender. Administrative Agent may engage in business with any
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
14.9. Delivery of Documents. To the extent Administrative Agent receives
financial statements required under Sections 9.2, 9.7, 9.8, 9.9, 9.12 and 9.13
from any Borrower pursuant to the terms of this Agreement, Administrative Agent
will promptly furnish such documents and information to Lenders.
14.10. Borrowers' Undertaking to Administrative Agent. Without prejudice to
their respective obligations to Lenders under the other provisions of this
Agreement, each Borrower hereby undertakes with Administrative Agent to pay to
Administrative Agent from time to time on demand all amounts from time to time
due and payable by it for the account of Administrative Agent or Lenders or any
of them pursuant to this Agreement to the extent not already paid. Any payment
made pursuant to any such demand shall pro tanto satisfy the relevant Borrower's
obligations to make payments for the account of Lenders or the relevant one or
more of them pursuant to this Agreement.
XV. BORROWING AGENCY.
15.1. Borrowing Agency Provisions.
(a) Each Borrower hereby irrevocably designates Borrowing Agent to
be its attorney and agent and in such capacity to borrow, sign and endorse
notes, and execute and deliver all instruments, documents, writings and further
assurances now or hereafter required hereunder, on behalf of such Borrower or
Borrowers, and hereby authorizes Administrative Agent to pay over or credit all
loan proceeds hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing facility
with Borrowing Agent in the manner set forth in this Agreement is solely as an
accommodation to Borrowers and at their request. Neither Administrative Agent
nor any Lender shall incur liability to Borrowers as a result thereof. To induce
Administrative Agent and Lenders to do so and in consideration thereof, each
Borrower hereby indemnifies Administrative Agent and each Lender and holds
Administrative Agent and each Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or injury asserted
against Administrative Agent or any Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as
provided herein, reliance by
Administrative Agent or any Lender on any request or instruction from Borrowing
Agent or any other action taken by Administrative Agent or any Lender with
respect to this Section 15.1 except due to willful misconduct or gross (not
mere) negligence by the indemnified party.
(c) All Obligations shall be joint and several, and each Borrower
shall make payment upon the maturity of the Obligations by acceleration or
otherwise, and such obligation and liability on the part of each Borrower shall
in no way be affected by any extensions, renewals and forbearance granted to
Administrative Agent or any Lender to any Borrower, failure of Administrative
Agent or any Lender to give any Borrower notice of borrowing or any other
notice, any failure of Administrative Agent or any Lender to pursue or preserve
its rights against any Borrower, the release by Administrative Agent or any
Lender of any Collateral now or thereafter acquired from any Borrower, and such
agreement by each Borrower to pay upon any notice issued pursuant thereto is
unconditional and unaffected by prior recourse by Administrative Agent or any
Lender to the other Borrowers or any Collateral for such Borrower's Obligations
or the lack thereof. Each Borrower waives all suretyship defenses.
15.2. Waiver of Subrogation. Each Borrower expressly subordinates to the
payment of the Obligations and waives any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution of any other claim which
such Borrower may now or hereafter have against the other Borrowers or other
Person directly or contingently liable for the Obligations hereunder, or against
or with respect to the other Borrowers' property (including, without limitation,
any property which is Collateral for the Obligations), arising from the
existence or performance of this Agreement, until termination of this Agreement
and the indefeasible repayment in full of the Obligations.
15.3 Certain Limitations Notwithstanding any provision herein or in any
Other Document to the contrary, each Borrower's joint and several liability for
the Obligations of all other Borrowers (including without limitation under this
Agreement and each of the Notes) shall be limited to an amount not to exceed as
of any date of determination the greater of (a) the net amount of all Advances
advanced to any other Borrower under this Agreement and then re-loaned or
otherwise transferred to, or for the benefit of, such Borrower and (b) the
maximum amount which could be claimed by Administrative Agent and Lenders from
such Borrower without rendering such claim voidable or avoidable under Section
548 of Title II of the United States Code or under applicable provisions of
comparable state law, in each case after taking into account, among other
things, any and all rights of such Borrower to subrogation, reimbursement,
indemnification or contribution from each other Borrower (or any other Person)
pursuant to applicable law or pursuant to the terms of any agreement.
XVI. MISCELLANEOUS.
16.1. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by or against any Borrower with respect to any of the Obligations, this
Agreement, the Other Documents or any related agreement may be brought in any
Federal or State court of competent jurisdiction in the State of New York,
United States of America, and, by execution and delivery of this Agreement, each
Borrower accepts for itself and in connection with its properties, generally and
unconditionally, the non-
exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. Each
Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return
receipt requested) directed to Borrowing Agent at its address set forth in
Section 16.6 and service so made shall be deemed completed five (5) days after
the same shall have been so deposited in the mails of the United States of
America, or, at the Administrative Agent's and/or any Lender's option, by
service upon Borrowing Agent which each Borrower irrevocably appoints as such
Borrower's Administrative Agent for the purpose of accepting service within the
State of New York. Nothing herein shall affect the right to serve process in any
manner permitted by law or shall limit the right of Administrative Agent or any
Lender to bring proceedings against any Borrower in the courts of any other
jurisdiction. Each Borrower waives any objection to jurisdiction and venue of
any action instituted hereunder and shall not assert any defense based on lack
of jurisdiction or venue or based upon forum non conveniens. Borrower waives the
right to remove any judicial proceeding brought against Borrower in any state
court to any federal court. Any judicial proceeding by any Borrower against
Administrative Agent or any Lender involving, directly or indirectly, any matter
or claim in any way arising out of, related to or connected with this Agreement
or any related agreement, shall be brought only in a Federal or state court
located in the County of New York, State of New York.
16.2. Entire Understanding. (a) This Agreement and the documents executed
concurrently herewith contain the entire understanding between each Borrower,
Administrative Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and hereinafter
made shall have no force and effect unless in writing, signed by each
Borrower's, Administrative Agent's and each Lender's respective officers.
Neither this Agreement nor any portion or provisions hereof may be changed,
modified, amended, waived, supplemented, discharged, cancelled or terminated
orally or by any course of dealing, or in any manner other than by an agreement
in writing, signed by the party to be charged. Each Borrower acknowledges that
it has been advised by counsel in connection with the execution of this
Agreement and Other Documents and is not relying upon oral representations or
statements inconsistent with the terms and provisions of this Agreement.
(b) The Required Lenders, Administrative Agent with the consent in
writing of the Required Lenders, and Borrowers may, subject to the provisions of
this Section 16.2 (b), from time to time enter into written supplemental
agreements to this Agreement or the Other Documents executed by Borrowers, for
the purpose of adding or deleting any provisions or otherwise changing, varying
or waiving in any manner the rights of Lenders, Administrative Agent or
Borrowers thereunder or the conditions, provisions or terms thereof of waiving
any Event of Default thereunder, but only to the extent specified in such
written agreements; provided, however, that no such supplemental agreement
shall, without the consent of all Lenders:
(i) increase the Commitment Percentage or maximum dollar
commitment of any Lender, or the Maximum Revolving Advance Amount;
(ii) extend the maturity of any Note or the due date for any
amount payable hereunder, or decrease the rate of interest or reduce any fee
payable by Borrowers to Lenders pursuant to this Agreement;
(iii) alter the definition of the term Required Lenders or
alter, amend or modify this Section 16.2(b);
(iv) release any Collateral during any calendar year (other
than in accordance with the provisions of this Agreement) having an aggregate
value in excess of $1,000,000;
(v) change the rights and duties of Administrative Agent;
(vi) permit any Revolving Advance to be made if after giving
effect thereto the total of Revolving Advances outstanding hereunder would
exceed the Formula Amount;
(vii) increase the Advance Rate above the Advance Rate in
effect on the Closing Date; or
(viii) release any Guarantor.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrowers, Lenders and Administrative Agent and all future holders
of the Obligations. In the case of any waiver, Borrowers, Administrative Agent
and Lenders shall be restored to their former positions and rights, and any
Event of Default waived shall be deemed to be cured and not continuing, but no
waiver of a specific Event of Default shall extend to any subsequent Event of
Default (whether or not the subsequent Event of Default is the same as the Event
of Default which was waived), or impair any right consequent thereon.
In the event that Administrative Agent requests the consent of a Lender
pursuant to this Section 16.2 and such Lender shall not respond or reply to
Administrative Agent in writing within ten (10) business days of delivery of
such request, such Lender shall be deemed to have consented to the matter that
was the subject of the request. In the event that Administrative Agent requests
the consent of a Lender pursuant to this Section 16.2 and such consent is
denied, then PNC may, at its option, require such Lender to assign its interest
in the Advances to PNC or to another Lender or to any other Person designated by
Administrative Agent (the "Designated Lender"), for a price equal to the then
outstanding principal amount thereof plus accrued and unpaid interest and fees
due such Lender, which interest and fees shall be paid when collected from
Borrowers. In the event PNC elects to require any Lender to assign its interest
to PNC or to the Designated Lender, PNC will so notify such Lender in writing
within forty five (45) days following such Lender's denial, and such Lender will
assign its interest to PNC or the Designated Lender no later than five (5) days
following receipt of such notice pursuant to a Commitment Transfer Supplement
executed by such Lender, PNC or the Designated Lender, as appropriate, and
Administrative Agent.
The Administrative Agent is hereby authorized by the Borrowers and the
Lenders, from time to time in the Administrative Agent's sole discretion, (A)
after the occurrence and during
the continuation 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 hereof
have not been satisfied, to make Revolving Advances to the Borrowers on behalf
of the Lenders which the Administrative Agent, in its reasonable business
judgment, deems necessary or desirable (a) to preserve or protect the
Collateral, or any portion thereof, (b) to enhance the likelihood of, or
maximize the amount of, repayment of the Advances and other Obligations, or
(iii) to pay any other amount chargeable to the Borrowers pursuant to the terms
of this Agreement; provided, that at any time after giving effect to any such
Revolving Advances the outstanding Revolving Advances do not exceed one hundred
percent (100%) of the Formula Amount; and provided further, that, following any
Event of Default pursuant to Section 10.23 hereof which has not been cured, the
exercise of the Administrative Agent's discretion, as permitted hereby, to make
Revolving Advances to the Borrowers on behalf of the Lenders shall be limited to
the period beginning on the date that the Administrative Agent has been notified
of such Event of Default and ending forty-five (45) days thereafter.
16.3. Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the benefit
of Borrowers, Administrative Agent, each Lender, all future holders of the
Obligations and their respective successors and assigns, except that no Borrower
may assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of Administrative Agent and each Lender.
(b) Each Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that Borrowers shall not be
required to pay to any Transferee more than the amount which it would have been
required to pay to Lender which granted an interest in its Advances or other
Obligations payable hereunder to such Transferee had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder and in
no event shall Borrowers be required to pay any such amount arising from the
same circumstances and with respect to the same Advances or other Obligations
payable hereunder to both such Lender and such Transferee. Each Borrower hereby
grants to any Transferee a continuing security interest in any deposits, moneys
or other property actually or constructively held by such Transferee as security
for the Transferee's interest in the Advances.
(c) Any Lender may, with the consent of Administrative Agent, which
shall not be unreasonably withheld or delayed, and (so long as no Default or
Event of Default shall have occurred and be continuing) upon consultation with
Borrowing Agent, sell, assign or transfer all or any part of its rights under
this Agreement and the Other Documents to one or more additional banks or
financial institutions and one or more additional banks or financial
institutions may commit to make Advances hereunder (each, a "Purchasing
Lender"), in minimum amounts of not less than $5,000,000, pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Administrative Agent and delivered
to Administrative Agent for recording. Upon such execution, delivery, acceptance
and recording, from and after the transfer effective date determined pursuant to
such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender thereunder with a Commitment
Percentage as set forth therein, and (ii) the transferor Lender thereunder
shall, to the extent provided in such Commitment Transfer Supplement, be
released from its obligations under this Agreement, the Commitment Transfer
Supplement creating a novation for that purpose. Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the Commitment Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents. Borrowers hereby
consent to the addition of such Purchasing Lender and the resulting adjustment
of the Commitment Percentages arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Other Documents. Borrowers shall promptly
execute and deliver such further documents and do such further acts and things
in order to effectuate the foregoing.
(d) Administrative Agent shall maintain at its address a copy of
each Commitment Transfer Supplement delivered to it and a register (the
"Register") for the recordation of the names and addresses of each Lender and
the outstanding principal, accrued and unpaid interest and other fees due
hereunder. The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrowers, Administrative Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Borrowers or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Administrative Agent shall
receive a fee in the amount of $3,500 payable by the applicable Purchasing
Lender upon the effective date of each transfer or assignment to such Purchasing
Lender.
(e) Each Borrower authorizes each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such Lender's possession concerning
such Borrower which has been delivered to such Lender by or on behalf of such
Borrower pursuant to this Agreement or in connection with such Lender's credit
evaluation of such Borrower.
16.4. Application of Payments. Administrative Agent shall have the
continuing and exclusive right to apply or reverse and re-apply any payment and
any and all proceeds of Collateral to any portion of the Obligations. To the
extent that any Borrower makes a payment or Administrative Agent or any Lender
receives any payment or proceeds of the Collateral for any Borrower's benefit,
which are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, debtor in possession, receiver,
custodian or any other party under any bankruptcy law, common law or equitable
cause, then, to such extent, the Obligations or part thereof intended to be
satisfied shall be revived and continue as if such payment or proceeds had not
been received by Administrative Agent or such Lender.
16.5. Indemnity. Each Borrower shall indemnify Administrative Agent, each
Lender and each of their respective officers, directors, Affiliates, attorneys,
employees and agents from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
fees and disbursements of counsel) which may be imposed on, incurred by, or
asserted against Administrative Agent or any Lender in any claim, litigation,
proceeding or investigation instituted or conducted by any governmental agency
or instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the Other Documents, whether or not Administrative Agent or any
Lender is a party thereto, except to the extent that any of the foregoing arises
out of the gross (not mere) negligence or willful misconduct of the party being
indemnified as determined by a court of competent jurisdiction.
16.6. Notice. Any notice or request hereunder may be given to Borrowing
Agent or any Borrower or to Administrative Agent or any Lender at their
respective addresses set forth below or at such other address as may hereafter
be specified in a notice designated as a notice of change of address under this
Section. Any notice, request, demand, direction or other communication (for
purposes of this Section 16.6 only, a "Notice") to be given to or made upon any
party hereto under any provision of this Loan Agreement shall be given or made
by telephone or in writing (which includes by means of electronic transmission
(i.e., "e-mail") or facsimile transmission or by setting forth such Notice on a
site on the World Wide Web (a "Website Posting") if Notice of such Website
Posting (including the information necessary to access such site) has previously
been delivered to the applicable parties hereto by another means set forth in
this Section 16.6) in accordance with this Section 16.6. Any such Notice must be
delivered to the applicable parties hereto at the addresses and numbers set
forth under their respective names on Section 16.6 hereof or in accordance with
any subsequent unrevoked Notice from any such party that is given in accordance
with this Section 16.6. Any Notice shall be effective:
(a) In the case of hand-delivery, when delivered;
(b) If given by mail, four days after such Notice is deposited with
the United States Postal Service, with first-class postage prepaid, return
receipt requested;
(c) In the case of a telephonic Notice, when a party is contacted
by telephone, if delivery of such telephonic Notice is confirmed no later than
the next Business Day by hand delivery, a facsimile or electronic transmission,
a Website Posting or an overnight courier delivery of a confirmatory Notice
(received at or before noon on such next Business Day);
(d) In the case of a facsimile transmission, when sent to the
applicable party's facsimile machine's telephone number, if the party sending
such Notice receives confirmation of the delivery thereof from its own facsimile
machine;
(e) In the case of electronic transmission, when actually received;
(f) In the case of a Website Posting, upon delivery of a Notice of
such posting (including the information necessary to access such site) by
another means set forth in this Section 16.6; and
(g) If given by any other means (including by overnight courier),
when actually received.
Any Lender giving a Notice to Borrowing Agent or any Borrower shall
concurrently send a copy thereof to the Administrative Agent, and the
Administrative Agent shall promptly notify the other Lenders of its receipt of
such Notice.
(A) If to Administrative Agent or PNC at:
PNC Bank, National Association
00 Xxxx 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with copies to: Torys LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
- and -
PNC Bank, National Association
000 Xxxxx Xxxxxx, 00/xx/ Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
Telephone (000) 000-0000
Telecopier: (000) 000-0000
(B) If to a Lender other than Administrative Agent, as specified on the
signature pages hereof.
(C) If to Borrowing Agent
or any Borrower, at: COMFORCE Corporation
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: DKW Law Group(R), PC
000 Xxxxx Xxxxxx
X.X. Steel Tower - 58th Floor
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
16.7. Survival. The obligations of Borrowers under Sections 2.2(f), 3.6,
3.7, 3.8, 4.19(h), 14.7 and 16.5 shall survive termination of this Agreement and
the Other Documents and payment in full of the Obligations.
16.8. Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
16.9. Expenses. All costs and expenses including, without limitation,
reasonable attorneys' fees (including the allocated costs of in house counsel)
and disbursements incurred by Administrative Agent on its behalf or on behalf of
Lenders (a) in all efforts made to enforce payment of any Obligation or effect
collection of any Collateral, or (b) in connection with the entering into,
modification, amendment, administration and enforcement of this Agreement, or
any consents or waivers hereunder or thereunder and all related agreements,
documents and instruments, or (c) in instituting, maintaining, preserving,
enforcing and foreclosing on Administrative Agent's security interest in or Lien
on any of the Collateral or maintaining, preserving or enforcing any of
Administrative Agent's or any Lender's rights hereunder, under all related
agreements, in any case, whether through judicial proceedings or otherwise, or
(d) in defending or prosecuting any actions or proceedings arising out of or
relating to Administrative Agent's or any Lender's transactions with any
Borrower or any Guarantor or any other party to any Senior Note Documentation or
Subordinated Note Documentation, or (e) in connection with any advice given to
Administrative Agent or any Lender with respect to its rights and obligations
under this Agreement, and all related agreements, may be charged to Borrowers'
Account and shall be part of the Obligations; provided, however, that, in
addition to the foregoing fees and disbursements, during the continuance of an
Event of Default, Borrowers shall also be responsible for the reasonable counsel
fees and costs for each individual Lender up to a maximum amount of $7,500 per
annum and such amounts may be charged to Borrowers' Account and shall be part of
the Obligations.
16.10. Injunctive Relief. Each Borrower recognizes that, in the event any
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lenders; therefore, Administrative Agent, if Administrative Agent so
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving that actual damages are not an
adequate remedy.
16.11. Consequential Damages. Neither Administrative Agent nor any Lender,
nor any agent or attorney for any of them, shall be liable to any Borrower or
any Guarantor (or any
Affiliate of any such Person) for consequential damages arising from
any breach of contract, tort or other wrong relating to the establishment,
administration or collection of the Obligations.
16.12. Captions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
16.13. Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of and by different parties hereto on separate counterparts, all
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
16.14. Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
16.15. Confidentiality; Sharing Information. (a) Administrative Agent, each
Lender and each Transferee shall hold all non-public information obtained by
Administrative Agent, such Lender or such Transferee pursuant to the
requirements of this Agreement in accordance with Administrative Agent's, such
Lender's and such Transferee's customary procedures for handling confidential
information of this nature; provided, however, Administrative Agent, each Lender
and each Transferee may disclose such confidential information (a) to its
examiners, Affiliates, outside auditors, counsel and other professional
advisors, (b) to Administrative Agent, any Lender or to any prospective
Transferees and Purchasing Lenders, and (c) as required or requested by any
Governmental Body or representative thereof or pursuant to legal process;
provided, further that (i) unless specifically prohibited by applicable law or
court order, Administrative Agent, each Lender, each Transferee and each
Purchasing Lender shall use its reasonable best efforts prior to disclosure
thereof, to notify the applicable Borrower of the applicable request for
disclosure of such non-public information (A) by a Governmental Body or
representative thereof (other than any such request in connection with an
examination of the financial condition of a Lender or a Transferee by such
Governmental Body) or (B) pursuant to legal process and (ii) in no event shall
Administrative Agent, any Lender, or any Transferee or any Purchasing Lender, be
obligated to return any materials furnished by any Borrower other than those
documents and instruments in possession of Administrative Agent or any Lender in
order to perfect its Lien on the Collateral once the Obligations have been paid
in full and this Agreement has been terminated.
(b) Each Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
such Borrower or one or more of its Affiliates (in connection with this
Agreement or otherwise) by any Lender or by one or more Subsidiaries or
Affiliates of such Lender and each Borrower hereby authorizes each Lender to
share any information delivered to such Lender by such Borrower and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of
such Lender, it being understood that any such Subsidiary or Affiliate of any
Lender receiving such information shall be bound by the provision
of Section 16.15 as if it were a Lender hereunder. Such authorization shall
survive the repayment of the other Obligations and the termination of the Loan
Agreement.
16.16. Publicity. Each Borrower and each Lender hereby authorizes
Administrative Agent to make appropriate announcements of the financial
arrangement entered into among Borrowers, Administrative Agent and Lenders,
including, without limitation, announcements which are commonly known as
tombstones, in such publications and to such selected parties as Administrative
Agent shall in its sole and absolute discretion deem appropriate.
Each of the parties has signed this Agreement as of the day and year first
above written.
COMFORCE OPERATING, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
UNIFORCE SERVICES, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
BRENTWOOD OF CANADA, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
BRENTWOOD SERVICE GROUP, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
BXI NET, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
CAMELOT COMMUNICATIONS GROUP, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
CAMELOT CONTROL GROUP, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
CIT SOUTHEAST, INC..
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
COMFORCE CODING SERVICES, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
COMFORCE INFORMATION
TECHNOLOGIES, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
COMFORCE TECHNICAL
ADMINISTRATIVE SERVICES, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
COMFORCE TECHNICAL SERVICES, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
COMFORCE TELECOM, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
XXXXX X., INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
CLINICAL LABFORCE OF AMERICA, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
COMFORCE TECHNICAL NW, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
LABFORCE SERVICES OF AMERICA, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
PRO UNLIMITED, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
TEMPORARY HELP INDUSTRY
SERVICING COMPANY, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
UNIFORCE PAYROLLING SERVICES, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
UNIFORCE PAYROLLING TRI-STATE INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
UNIFORCE STAFFING SERVICES, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
SUMTEC CORPORATION
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
THISCO OF CANADA, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
COMFORCE TECHNICAL SERVICES OF
WASHINGTON, INC.
ATTEST:
By:
-------------------------------------
--------------------------------- Name:
[SEAL] -----------------------------------
Title:
----------------------------------
----------------------------------------
Address
PNC BANK, NATIONAL ASSOCIATION, as
Lender and as Administrative Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
70 East 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Commitment Percentage: ____%
WHITEHALL BUSINESS CREDIT
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
----------------------------------------
Address
Commitment Percentage: ____%
JPMORGAN CHASE BANK
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
----------------------------------------
Address
Commitment Percentage: ____%
XXXXXXX XXXXX CAPITAL
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
----------------------------------------
Address
Commitment Percentage: ____%
