EXHIBIT 4
THIRD AMENDED AND RESTATED CREDIT
FACILITY AND SECURITY AGREEMENT
As of this 21st day of January, 1997, PERSONNEL
MANAGEMENT, INC., an Indiana corporation, PMI
ADMINISTRATION, INC., an Indiana corporation, PMI LP I,
an Indiana limited partnership, and PMI XX XX, an
Indiana limited partnership (collectively the
"Borrowers" and each a "Borrower") and KEYBANK NATIONAL
ASSOCIATION, a national banking association and the
successor in interest to Society National Bank, Indiana
(the "Bank"), in consideration of the premises, and the
covenants and agreements contained herein, hereby
mutually agree as follows:
I. DEFINITIONS
Terms Defined. As used in this Third Amended and
Restated Credit Facility and Security Agreement, the
following terms have the following respective meanings:
"Account" means (a) any account and (b) any right
to payment for Goods sold or leased or for services
rendered which is not evidenced by an Instrument or
Chattel Paper, whether or not it has been earned by
performance.
"Account Debtor" means the Person who is obligated
on an Account Receivable.
"Account Receivable" means:
(a) any account receivable, Account, Chattel
Paper, or Document owned, acquired, or received by a
Person;
(b) any other indebtedness owed to or receivable
owned, acquired, or received by a Person of whatever
kind and however evidenced; and
(c) any right, title, and interest in a Person's
Goods which were sold, leased, or furnished by that
Person and gave rise to either (a) or (b) above, or
both of them. This includes, without limitation:
(1) any rights of stoppage in transit of a
Person's sold, leased, or furnished Goods;
(2) any rights to reclaim a Person's sold,
leased, or furnished Goods; and
(3) any rights a Person has in such sold,
leased, or furnished Goods that have been returned
to or repossessed by that Person.
"Acquisition" means any acquisition of the shares
or assets of any company by any Borrower, together with
any merger, joint venture or other similar transaction
to which a Borrower is a party, including without
limitation any transaction involving the lease, sale or
transfer of all or substantially all of the property,
assets, and/or business of a Borrower by any other
Person or involving the lease, sale or transfer of all
or substantially all of the property, assets, and/or
business of any other Person by a Borrower.
"Advance" means an advance made by Bank to any of
the Borrowers under the revolving line of credit
provided to the Borrowers by the Bank pursuant to
Section 2.1 of the Agreement.
"Affiliate" means any company that, directly or
indirectly, controls, is controlled by, or is under
common control with a Borrower.
"Agreement" means this Third Amended and Restated
Credit Facility and Security Agreement between the
Borrowers and Bank, and includes any partial or total
amendment, renewal, restatement, extension, or
substitution of or for such Agreement.
"Bank" means KEYBANK NATIONAL ASSOCIATION, a
national banking association and the successor in
interest to Society National Bank, Indiana, with its
current principal office located at 00 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, and any successor
or assign.
"Borrowers" mean, collectively, PERSONNEL
MANAGEMENT, INC., an Indiana corporation, PMI
ADMINISTRATION, INC., an Indiana corporation, PMI LP I,
an Indiana limited partnership, and PMI XX XX, an
Indiana limited partnership, all with their principal
offices located at 0000 Xxxxxxxxx Xxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxx 00000.
"Borrowers' Closing Certificates" mean those
certificates, substantially in the form attached as
Exhibit A, properly completed and executed.
"Borrowers' Location" means 0000 Xxxxxxxxx Xxx,
Xxxxx 000, Xxxxxxxxx, Xxxxxxx 00000, or such other
location(s) from which a Borrower may subsequently
manage the main part of its business operations and
where persons dealing with the Borrowers would normally
look for credit information, provided that such notices
and consents required by the terms of this Agreement
with respect to a change in the Borrowers' Location are
given by the Borrowers.
"Borrowing Base" means, as of that date for which
an Advance is requested, monthly reporting is made in
accordance with Section V, or the Borrowing Base is
otherwise tested, as applicable, an amount equal to
eighty-five percent (85%) of the amount due and owing
on Qualified Accounts Receivable, less the aggregate
amount of all outstanding Letter of Credit Commitments.
"Borrowing Base Certificate" means a certificate,
substantially in the form of attached Exhibit E,
properly completed and executed.
"Business Day" means a day which is not a
Saturday, Sunday or legal holiday on which banks
located in the State of Indiana are authorized or
required by law to be closed.
"Capital Distributions" means any payment made,
liability incurred, or other consideration, including
without limitation any stock dividend or stock split or
similar distribution payable only in capital stock of a
Borrower, given for the purchase, acquisition,
redemption, or retirement of any capital stock of a
Borrower or as a dividend, return of capital, or other
distribution of any kind on any of a Borrower's capital
stock outstanding at any time.
"Capital Expenditures" means expenditures made or
liabilities incurred, either directly or indirectly,
for the acquisition of any fixed assets or
improvements, replacements, substitutions or additions
thereto which have a useful life of more than one year.
"Cash Flow Coverage Ratio" means the ratio of (a)
the sum of net income after Capital Distributions
(other than stock dividends, stock splits or similar
distributions payable only in capital stock of a
Borrower) plus depreciation, amortization and interest
expense to (b) the sum of current maturities of long-
term debt (including without limitation scheduled
senior term debt principal payments and Subordinated
Debt principal payments, if any, and excluding any
amounts in the Loan Account representing principal
amounts due under the revolving line of credit),
capitalized lease payments, interest expense, and
unfunded Capital Expenditures.
"Cash Security" means all cash, Instruments,
Deposit Accounts, and other cash equivalents, whether
matured or unmatured, whether collected or in the
process of collection, upon which Borrowers presently
have or may hereafter have any claim, that are
presently or may hereafter be existing or maintained
with, issued by, drawn upon, or in the possession of
Bank.
"Chattel Paper" means (a) any chattel paper, and
(b) any writing or writings which evidence both a
monetary obligation and a security interest in or a
lease of specific Goods. If a transaction is evidenced
both by such an agreement for security or a lease and
by an Instrument or a series of Instruments, the group
of writings taken together constitutes Chattel Paper.
"Closing Date" means January 21, 1997, or such
other date as the parties shall mutually agree.
"Collateral" means:
(a) all of Borrowers' rights, title and/or
interest in and to any and all Accounts Receivable,
whether now owned or hereafter acquired or received by
Borrowers;
(b) all of Borrowers' rights, title and/or
interest in and to any and all Equipment, whether now
owned or hereafter acquired by Borrowers;
(c) all of Borrowers' rights, title and/or
interest in and to any and all Cash Security;
(d) all of Borrowers' rights, title and/or
interest in and to any and all General Intangibles,
whether now owned or hereafter acquired by Borrowers;
(e) all of Borrowers' rights, title and/or
interest in and to any and all Contract Rights, whether
now owned or hereafter acquired by Borrowers; and
(f) any and all Proceeds, products, profits, and
rents of or from Borrowers' rights, title and/or
interest in and to any and all Accounts Receivable,
Equipment, Cash Security, General Intangibles and
Contract Rights.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Contract Right" means (a) any contract right,
including any and all rights under any lease agreements
to which a Borrower is a party, including but not
limited to those described in Schedule 4.16 attached
hereto, and (b) any right to payment under a contract
not yet earned by performance and not evidenced by an
Instrument or Chattel Paper.
"Deposit Account" means (a) any deposit account,
and (b) any demand, time, savings, passbook, or a
similar account maintained with a bank, savings and
loan association, credit union, or similar
organization, other than an account evidenced by a
certificate of deposit.
"Document" means (a) any document, (b) any
document of title, including a xxxx of lading, dock
warrant, dock receipt, warehouse receipt or order for
the delivery of Goods, and any other document which in
the regular course of business or financing is treated
as adequately evidencing that the Person in possession
of it is entitled to receive, hold, and dispose of the
document and the Goods it covers, and (c) any receipt
covering Goods stored under a statute requiring a bond
against withdrawal or a license for the issuance of
receipts in the nature of warehouse receipts even
though issued by a Person who is the owner of the Goods
and is not a warehouseman.
"EBITDA" shall mean, for any twelve (12) month
period, the Net Income of the Borrowers for such
period, plus interest charges, income taxes of the
Borrowers and depreciation and amortization expense of
the Borrowers for such period to the extent deducted in
determining such Net Income, all as determined in
accordance with generally accepted accounting
principles.
"Environmental Law" means all Federal, state,
district, local and foreign statutes, laws, ordinances,
codes, rules, regulations, orders and decrees relating
to health, safety, hazardous substances, pollution and
environmental matters, as now or at any time hereafter
in effect, applicable to Borrowers' businesses and
facilities (whether or not owned by it), including laws
relating to emissions, discharges, releases or
threatened releases of pollutants, contamination,
chemicals, or hazardous waste, toxic or dangerous
substances, materials or wastes into the environment
(including, without limitation, ambient air, surface
water, ground water, land surface or surface strata) or
otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants,
contaminants, chemicals, or hazardous, toxic or
dangerous substances, materials or wastes.
"Equipment" means:
(a) all equipment including without limitation,
machinery, office equipment and furniture and tools of
the Borrowers;
(b) all Goods that are used or bought for use
primarily in the Borrowers' businesses;
(c) all Goods that are not consumer goods, farm
products, or inventory; and
(d) all substitutes or replacements for, and all
parts, accessories, additional, attachments, or
accessions to (a) to (c) above.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time.
"ERISA Affiliate" means each Person (whether or
not incorporated) which together with Borrower or any
Affiliate would be treated as a single employer under
ERISA.
"Event of Default" means the occurrence of any of
the events set forth in Section VI of the Agreement.
"Financial Impairment" means the distressed
economic condition of a Person manifested by any one or
more of the following events:
(a) adjudicated bankruptcy or insolvency or death
or discontinuation of the business of the Person;
(b) the Person ceases, is unable, or admits in
writing its inability, to make timely payment upon the
Person's debts, obligations, or liabilities as they
mature or come due;
(c) assignment by the Person for the benefit of
creditors;
(d) voluntary institution by the Person or
consent granted by the Person to the involuntary
institution [whether by petition, complaint,
application, default, answer (including, without
limitation, an answer or any other permissible or
required responsive pleading admitting (1) the
jurisdiction of the forum or (2) any material
allegations of the petition, complaint, application, or
other writing to which such answer serves as a
responsive pleading thereto), or otherwise] of any
bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation,
receivership, trusteeship, or similar proceeding
pursuant to or purporting to be pursuant to any
bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation,
receivership, trusteeship, or similar law of any
jurisdiction;
(e) voluntary application by the Person for or
consent granted by the Person to the involuntary
appointment of any receiver, trustee, or similar
officer (1) for the Person or (2) of or for all or any
substantial part of the Person's property;
(f) entry, without the Person's application,
approval, or consent, of any order that is not
dismissed, stayed, or discharged within sixty (60) days
from its entry, which is pursuant to or purporting to
be pursuant to any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt,
dissolution, liquidation, receivership, trusteeship or
similar law of any jurisdiction (1) approving an
involuntary petition seeking an arrangement of the
Person's creditors, (2) approving an involuntary
petition seeking reorganization of the Person, or (3)
appointing any receiver, trustee, or similar officer
(i) for the Person, or (ii) of or for all or any
substantial part of the Person's property; or
(g) any judgment, writ, warrant of attachment,
execution, or similar process is issued or levied
against all or any substantial part of the Person's
property and such judgment, writ, warrant of
attachment, execution, or similar process is not
released, vacated, or fully bonded within sixty (60)
days after its issue or levy.
"Foreign Account Receivable" means any Account
Receivable which arises out of contracts with or orders
from an Account Debtor which is not a resident of the
United States.
"Funded Senior Indebtedness" means all liabilities
of the Borrowers for borrowed money, plus Indebtedness
incurred under any sale/leaseback or lease transaction,
less Subordinated Debt.
"General Intangible" means (a) any general
intangible, and (b) any personal property, including
but not limited to any licenses, trademarks, service
marks, patents, copyrights and franchises of the
Borrowers, described in Schedule 4.7 attached hereto,
other than Goods, Accounts, Contract Rights, Chattel
Paper, Documents, Instruments, and money.
"Goods" means (a) any goods, and (b) all things
which are movable at the time the security interest
granted Bank under the Agreement attaches or which are
fixtures but does not include money, Instruments,
Documents, Accounts, Chattel Paper, General
Intangibles, and Contract Rights.
"Government Account Receivable" means any Account
Receivable which arises out of contracts with or orders
from the United States or any of its departments
agencies, or instrumentalities.
"Indebtedness" shall mean, at a particular date,
the consolidated liabilities of the Borrowers, if any,
as determined in accordance with generally accepted
accounting principles, consistently applied, including,
without limitation, all indebtedness for money borrowed
or for the deferred purchase price of property and
lease obligations of the Borrowers, if any, which have
been, or which in accordance with Statement of
Financial Accounting Standards No. 13, as from time to
time amended, should be capitalized.
"Instrument" means:
(a) any instrument;
(b) any negotiable or nonnegotiable instrument
(including, without limitation, drafts, checks,
acceptances, certificates of deposit, and notes);
(c) any security; and
(d) any other writing which:
(1) evidences a right to the payment of
money,
(2) is not itself a security agreement or
lease, and
(3) is of a type which in the ordinary
course of business is transferred by delivery with
any necessary endorsement or assignment.
"Interest Period" means the period selected by the
Borrowers for an Advance or the Term Loan to carry an
interest rate based on either the Prime Rate or a LIBOR
Based Rate. This period for an Advance or the Term
Loan carrying an interest rate based on the Prime Rate
may be of any length, provided that such period ends on
an interest payment date or the Termination Date or
Maturity Date, as the case may be. The period for an
Advance or the Term Loan carrying a LIBOR Based Rate
shall be fixed for a period of 30, 60, 90 or 180 days
and shall end on an interest payment date (or such
shorter period if the Termination Date or the Maturity
Date, as the case may be, occurs sooner).
"Letter of Credit" means any outstanding letter of
credit issued by Bank for the account of any Borrower.
"Letter of Credit Commitment" means the commitment
of the Bank to pay under a Letter of Credit issued by
the Bank for the account of a Borrower pursuant to
Section 2.1(c) hereof.
"LIBOR" means the London interbank offered rate,
at which deposits in United States dollars are offered
by leading banks in the London interbank eurodollar
markets.
"Loan Account" means an account maintained by the
Bank on its books, which will evidence all Advances,
accrued interest thereon, other amounts due Bank with
respect to such Advances, and all payments thereof by
Borrowers.
"Master Promissory Note" means the Fourth Amended
and Restated Master Promissory Note executed by the
Borrowers and delivered to the Bank pursuant to Section
2.1 of this Agreement, in substantially the form
attached hereto as Exhibit B, as amended or modified
from time to time and together with any promissory note
or notes issued in exchange or replacement therefor.
"Maturity Date" means with respect to the Term
Loan made pursuant to Section 2.2 of this Agreement
means the earlier of (a) January 31, 2002 or (b) such
earlier date as all amounts due in connection with said
loan might become due and payable under this Agreement.
"Multiemployer Plan" means a multiemployer plan as
defined in ERISA Section 3(37) which covers employees of the
Borrowers, or any ERISA Affiliate.
"Net Income" means the consolidated net after tax
income of the Borrowers, determined in accordance with
generally accepted accounting principals, for a given
fiscal period, excluding the effects of any
extraordinary gains or losses.
"Notes" mean the Master Promissory Note and the
Term Note.
"Obligations" means any of the following
obligations, whether direct or indirect, absolute or
contingent, secured or unsecured, matured or unmatured,
originally contracted with Bank or another Person and
now owing to or hereafter acquired in any manner
partially or totally by Bank or in which Bank may have
acquired a participation, contracted by a Borrower
alone or jointly or severally with another Person:
(a) any and all indebtedness, obligations,
liabilities, contracts, indentures, agreements,
warranties, covenants, guaranties, representations,
provisions, terms, and conditions of whatever kind, now
existing or hereafter arising, and however evidenced,
that are now or hereafter owed, incurred, or executed
by a Borrower to, in favor of, or with Bank (including,
without limitation, those as are set forth or contained
in, referred to, evidenced by, or executed with
reference to the Agreement, the Loan Account, the
Notes, any other promissory notes, letter of credit
agreements, swap agreements, advance agreements,
indemnity agreements, guaranties, lines of credit,
mortgage deeds, security agreements, assignments,
pledge agreements, hypothecation agreements,
Instruments, and acceptance financing agreements), and
including any partial or total extension, restatement,
renewal, amendment, and substitution thereof or
therefor;
(b) any and all claims of whatever kind of Bank
against a Borrower, now existing or hereafter arising
including, without limitation, any arising out of or in
any way connected with warranties made by a Borrower to
Bank in connection with any Instrument deposited with
or purchased by Bank; and
(c) any and all of Bank's Related Expenses.
"Organization" means a corporation, government or
government subdivision or agency, business trust,
estate, trust, partnership, association, two or more
Persons having a joint or common interest, and any
other legal or commercial entity.
"Permitted Encumbrances" means those encumbrances
listed in Schedule 4.4.
"Person" means an individual or an Organization.
"Plan" means any plan (other than a Multiemployer
Plan) as defined in ERISA Section 3(3) in which a Borrower or
any ERISA Affiliate is, or has been at any time during
the preceding two (2) years, has sponsored, maintained
or participated as an "employer" or a "substantial
employer" as such terms are defined in ERISA.
"Prime Rate" means that interest rate established
from time to time by the Bank as the Bank's Prime Rate,
whether or not publicly announced; the Prime Rate may
not be the lowest interest rate charged by Bank for
commercial or other extensions of credit.
"Proceeds" means (a) any proceeds, and (b)
whatever is received upon the sale, exchange,
collection, or other disposition of Collateral or
proceeds, whether cash or non-cash. Cash proceeds
include, without limitation, money, checks, and Deposit
Accounts. Proceeds includes, without limitation, any
Account arising when the right to payment is earned
under a Contract Right, any insurance payable by reason
of loss or damage to the Collateral, and any return or
unearned premium upon any cancellation of insurance.
Except as expressly authorized in the Agreement, Bank's
right to Proceeds specifically set forth herein or
indicated in any financing statement shall never
constitute an express or implied authorization on the
part of Bank to a Borrower's sale, exchange,
collection, or other disposition of any or all of the
Collateral.
"Prohibited Transaction" means any prohibited
transaction as that term is defined for purposes of
ERISA or the Code.
"Qualified Account Receivable" means an Account
Receivable of a Borrower which, at all times until it
is collected in full, continuously meets the following
requirements:
(a) is not subject to any claim for credit,
allowance, or adjustment by the Account Debtor or any
set off or counter claim;
(b) arose in the ordinary course of a Borrower's
business from the performance (fully completed) of
services which have been performed for or at the
request of the Account Debtor, and not more than ninety
(90) days have elapsed since the date of invoice;
(c) Bank has not determined that the Account
Receivable is unsatisfactory in any respect;
(d) is not an Account Receivable due from another
Borrower or any other Affiliate, shareholder, partner
or employee of a Borrower;
(e) is not a Foreign Account Receivable, unless
such Foreign Account Receivable is secured by one or
more letters of credit; and
(f) is not evidenced by a promissory note or any
other negotiable instrument, unless otherwise agreed by
Bank.
"Related Expenses" means any and all reasonable
costs, liabilities, and expenses (including without
limitation, losses, damages, penalties, claims,
actions, reasonable attorney's fees, legal expenses,
judgments, suits, and disbursements) incurred by,
imposed upon, or asserted against, Bank in any attempt
by Bank:
(a) to obtain, preserve, perfect, or enforce any
security interest evidenced by (i) the Agreement, or
(ii) any other pledge agreement, mortgage deed,
hypothecation agreement, guaranty, security agreement,
assignment, or security instrument executed or given by
a Borrower to or in favor of Bank;
(b) to obtain payment, performance, and
observance of any and all of the Obligations;
(c) to maintain, insure, audit, collect,
preserve, repossess, and dispose of any of the
Collateral, including, without limitation, costs and
expenses for appraisals, assessments, and audits of a
Borrower or the Collateral; or
(d) incidental or related to (a) through (c)
above, including, without limitation, interest
thereupon from the date due and payable until paid at
the rate payable as set forth in Section II of the
Agreement, but in no event greater than the highest
rate permitted by law.
"Reportable Event" means any reportable event as
that term is defined for purposes of ERISA.
"Subordinated Debt" means Indebtedness which is
subordinated, as to payment, security or both, in a
manner satisfactory to the Bank, to all indebtedness
owing to the Bank.
"Subsidiary" shall mean any Person of which more
than fifty percent (50%) of (i) the voting stock
entitling the holders thereof to elect a majority of
the Board of Directors, manager, or trustees thereof,
or (ii) the interest in the capital or profits of such
Person, which at the time is owned or controlled,
directly or indirectly, by a Borrower.
"Tangible Net Worth" means the total shareholder
equity and Subordinated Debt of the Borrowers
determined on a consolidated basis in accordance with
generally accepted accounting principles, less the sum
of the aggregate amount of all intangible assets,
Accounts Receivable due from any other Borrower or any
other Affiliate, shareholder, partner or employee of
any Borrower (other than Accounts Receivable due from
non-officer employees of a Borrower that do not exceed
$50,000 in the aggregate), organizational costs and
goodwill.
"Term Loan" means the term loan made by the Bank
to the Borrowers in the principal amount of Two Million
Five Hundred Thousand Dollars ($2,500,000) and subject
to the provisions, terms and conditions of Section 2.2
of this Agreement, and evidenced by the Term Note.
"Term Note" means the Term Note executed by the
Borrowers and delivered to the Bank pursuant to Section
2.2 of this Agreement, in substantially the form
attached hereto as Exhibit C, as amended or modified
from time to time and together with any promissory note
or notes issued in exchange or replacement therefor.
"Termination Date" with respect to the revolving
line of credit extended pursuant to Section 2.1 of this
Agreement means the earlier of (a) January 31, 1999 or
(b) such date on which the commitment of the Bank to
make Advances pursuant to Section 2.1 hereof shall have
been terminated in accordance with this Agreement.
The foregoing definitions shall be applicable to
the singulars and plurals of the foregoing defined
terms. Terms used in the foregoing definitions which
are defined in the Indiana Uniform Commercial Code,
unless otherwise indicated, shall have the meanings
ascribed thereto under the Indiana Uniform Commercial
Code. Accounting terms used in the foregoing
definitions shall have the meanings ascribed thereto
under generally accepted accounting principles.
II. STATEMENT OF TERMS
2.1 The Revolving Line of Credit
(a) Advances. The Bank will, subject to the
terms and conditions of this Agreement, up to and
including the Termination Date, make Advances to
or for the account of Borrowers up to but not
exceeding an aggregate unpaid principal amount
outstanding at any one time on Advances equal to
the lesser of (a) the revolving line of credit
approved for Borrowers, which is currently Eight
Million Five Hundred Thousand Dollars ($8,500,000)
less the then aggregate outstanding amount of all
Letter of Credit Commitments, or (b) the Borrowing
Base. Pursuant to Advances, the Borrowers may
borrow, repay and reborrow such maximum amount of
credit. The Bank shall debit to the Loan Account
the amount of each Advance made under this
Agreement and all interest, other compensation, or
other fees payable on all Advances and shall
credit to the Loan Account each payment of (a)
principal and interest on account of each Advance
and (b) other amounts payable under this
Agreement, by the appropriate entries. The Loan
Account shall constitute prima facie evidence of
all Advances made by Bank pursuant to this
Agreement. In the event of any discrepancy
between the records of Bank and Borrowers with
regard to the Loan Account, the records of Bank
shall prevail unless the Borrowers notify Bank of
an error within fifteen (15) Business Days after
having discovered any such error or unless
Borrowers and Bank mutually agree with regard to
an appropriate change in such records. Borrowers
shall execute and deliver to Bank the Master
Promissory Note to evidence all Advances under
this Agreement.
(b) Interest Rate and Fees on Advances.
(i) Payment of Interest. As compensation
for the Advances made by Bank, Borrowers undertake
and agree to pay to Bank on a monthly basis
commencing on March 3, 1997 and on the first
Business Day of each month thereafter through the
Termination Date, interest upon the outstanding
Advances from time to time at an annual rate with
respect to each Advance to be elected by Borrowers
from either (A) the Prime Rate or (B) the LIBOR
Based Rate described, respectively, in subparts
(ii) and (iii) of this Section 2.1(b). The
interest rate hereunder shall not exceed the
highest rate permitted by law.
(ii) Prime Rate. If the Borrowers elect the
Prime Rate for an Advance, that Advance shall
carry an interest rate per annum equal to the
Prime Rate. The rate charged to Borrowers under
this subsection will increase or decrease on the
day of and by an amount equal to, each increase or
decrease in the Prime Rate. Each Advance shall
carry an interest rate based on the Prime Rate
unless a LIBOR Based Rate is elected by the
Borrowers in accordance with the requirements of
subpart (iii) of this Section 2.1(b).
(iii) LIBOR Based Rate. If the Borrowers
elect a LIBOR Based Rate for an Advance, that
Advance shall carry a rate equal to:
(A) LIBOR plus one hundred twenty five basis
points (1.25%) if the Borrowers' Funded
Senior Indebtedness to EBITDA Ratio is less
than or equal to 1.50 to 1.0;
(B) LIBOR plus one hundred seventy five basis
points (1.75%) if the Borrowers' Funded
Senior Indebtedness to EBITDA Ratio is
greater than 1.50 to 1.0 but less than or
equal to 2.0 to 1.0;
(C) LIBOR plus two hundred twenty five basis
points (2.25%) if the Borrowers' Funded
Senior Indebtedness to EBITDA Ratio is
greater than 2.0 to 1.0 but less than or
equal to 2.5 to 1.0; or
(D) LIBOR plus two hundred seventy five basis
points (2.75%) if the Borrowers' Funded
Senior Indebtedness to EBITDA Ratio is
greater than 2.5 to 1.0 but less than or
equal to 3.5 to 1.0.
Advances elected by the Borrowers to be at a LIBOR
Based Rate must be in minimum amounts of $10,000,
shall be fixed for an Interest Period of 30, 60,
90 or 180 days, based on LIBOR at the outset of
such period with the rate remaining fixed during
the Bank's LIBOR commitment for each LIBOR Based
Rate Advance. For purposes of determining the
applicable LIBOR Based Rate, the Borrowers' Funded
Senior Indebtedness to EBITDA Ratio shall be
tested as of the most recent fiscal quarter
immediately preceding the commencement of the
applicable Interest Period.
(iv) Rate Following Maturity. After
maturity (whether by acceleration or otherwise),
the unpaid principal and accrued interest
evidenced by the Loan Account shall bear interest
at a rate per annum equal to three percent (3%) in
excess of the applicable interest rate described
in Section 2.1(b)(i) and (ii) above. Prior to
maturity, if any payment of principal or interest
is not paid within five (5) Business Days
following the due date, Borrowers shall pay a late
fee of an amount equal to the greater of ten
percent (10%) of such payment or one hundred
dollars ($100). Notwithstanding the Bank's
remedies as set forth in Section VII hereof, prior
to maturity hereof, upon the occurrence of any
Event of Default under this Agreement and until
such Event of Default is cured by Borrowers, at
Bank's option and upon written notice to
Borrowers, the unpaid principal and accrued
interest evidenced by the Loan Account shall bear
interest at a rate per annum equal to three
percent (3%) in excess of the applicable interest
rate described in Section 2.1(b)(i) and (ii)
above.
(c) Letters of Credit. Borrowers may from
time to time prior to the Termination Date request
that the Bank issue standby Letters of Credit for
the account of a Borrower, which shall be subject
to such terms and conditions, and the execution
and delivery by Borrower(s) of such customary
agreements and other documents as Bank shall in
its sole discretion specify. The aggregate amount
of all outstanding Letters of Credit hereunder
shall in no event at any time, however, exceed the
sum of Two Million Dollars ($2,000,000). As
compensation for the Letters of Credit by Bank,
Borrowers undertake and agree to pay Bank at the
time each Letter of Credit is issued a fee equal
to either (i) one hundred basis points (1.00%) per
annum on the maximum amount of the Letter of
Credit if the Borrowers' Funded Senior
Indebtedness to EBITDA Ratio is less than or equal
to 2.50 to 1.0 as of the most recent fiscal
quarter immediately preceding the commencement of
the quarterly period in which the Letter of Credit
is issued or (ii) one hundred twenty five basis
points (1.25%) per annum on the maximum amount of
the Letter of Credit if the Borrower's Funded
Senior Indebtedness to EBITDA Ratio is greater
than 2.50 to 1.0 as of the most recent fiscal
quarter immediately preceding the commencement of
the quarterly period in which the Letter of Credit
is issued. The Letter of Credit fees described in
this paragraph (c) shall be in addition to other
standard and customary Letter of Credit charges
imposed by the Bank. In addition to Borrowers'
other obligations under this and other agreements,
in the event amounts are drawn against such
Letters of Credit, Borrowers shall immediately and
without demand or notice (regardless of whether or
not they are the account party) repay to Bank such
amounts, plus all interest, fees and expenses of
Bank in connection therewith, which amounts,
interest, fees and expenses of Bank shall be
Obligations of Borrower to Bank fully secured by
this Agreement and evidenced by the Master
Promissory Note.
(d) Non-Use Fee. Borrowers agree to pay
Bank a non-use fee on the average daily unborrowed
portion of the maximum amount of Borrowers'
revolving line of credit hereunder (less
outstanding Letter of Credit Commitments) on and
from the date hereof to and including the
Termination Date at a rate of either (i) one-
eighth of one percent (0.125%) per annum (using a
day rate based upon a year of 360 days and charged
for the actual number of days elapsed) if the
Borrowers' Funded Senior Indebtedness to EBITDA
Ratio is equal to or less than 3.0 to 1.0, or (ii)
one-quarter of one percent (0.25%) per annum
(using a day rate based upon a year of 360 days
and charged for the actual number of days elapsed)
if the Borrowers' Funded Senior Indebtedness to
EBITDA Ratio is greater than 3.0 to 1.0. The non-
use fee shall be payable on a monthly basis at the
same time that interest payments are to be paid to
the Bank by the Borrowers as set forth in
paragraph (b)(i) of this Section 2.1.
(e) Prepayment of LIBOR Based Rate Advances.
If any prepayment of any LIBOR Based Rate Advance
occurs on any day other than the last day of the
30, 60, 90 or 180 day period for which the LIBOR
Rate was fixed, the Borrowers shall pay to the
Bank such additional amounts as are sufficient to
indemnify the Bank against any loss, cost, or
expense (including loss of margin) incurred by
Bank as a result of such prepayment. A
certificate as to the amount of any such loss,
cost, or expense submitted by Bank to Borrowers
shall be conclusive and binding for all purposes,
absent manifest error.
(f) Payment at Termination Date. Borrowers
shall repay to the Bank on the Termination Date
the entire outstanding balance of all principal,
accrued interest, fees, expenses and all other
amounts in the Borrowers' Loan Account; provided,
however, that in the event the Termination Date
occurs on or after January 31, 1999, the Bank
shall, if so requested by the Borrowers, convert a
portion of the balance of the Loan Account, in an
amount equal to the lesser of (i) Four Million
Dollars ($4,000,000) or (ii) the total aggregate
cost of all Acquisitions occurring after the
Closing Date, into a second term loan to the
Borrowers with a repayment term of five years and
other terms and conditions of repayment
substantially similar to those for the Term Loan.
2.2 Term Loan
(a) Amount. The Bank hereby agrees to make
a term loan to Borrowers in the principal amount
of Two Million Five Hundred Thousand Dollars
($2,500,000). The Bank's loan pursuant to this
Section 2.2 shall be evidenced by the Term Note.
(b) Payment of Principal. The Borrowers
shall repay the aggregate amount of principal on
the Term Note to the Bank in equal monthly
principal payments of Forty One Thousand Six
Hundred Sixty Seven Dollars ($41,667) commencing
on the twenty-first day of February, 1997 and on
the twenty-first day of each month thereafter (or
the next succeeding Business Day if such day is
not a Business Day) through the Maturity Date,
plus a final payment of the entire outstanding
principal balance on the Maturity Date.
(c) Interest.
(i) Payment of Interest. The Borrowers
shall pay to the Bank on a monthly basis
commencing on the twenty-first day of February,
1997 and on the twenty-first day of each month
thereafter (or the next succeeding Business Day if
such day is not a Business Day) through the
Maturity Date, interest upon the outstanding
principal balance on the Term Loan outstanding
from time to time based on an annual rate elected
by the Borrowers from either the Prime Rate or the
LIBOR Based Rate, as described in subparts (ii)
and (iii) of this Section 2.2(c), with a final
payment on the Maturity Date of all accrued
interest due under the Term Note, together with
any and all fees, expenses and other amounts due
thereunder. Interest on the Term Note shall be
calculated using a daily rate based upon a year of
360 days and charged for the actual number of days
elapsed. The interest rate on the Term Note shall
not exceed the highest rate permitted by law.
(ii) Prime Rate. If the Borrowers elect the
Prime Rate for an Interest Period, the outstanding
principal balance of the Term Note for that
Interest Period shall carry an interest rate per
annum equal to the Prime Rate. The rate charged
to Borrower under this subsection will increase or
decrease on the day of and by an amount equal to,
each increase or decrease in the Prime Rate during
the Interest Period.
(iii) LIBOR Based Rate. If the Borrowers
elect a LIBOR Based Rate for an Interest Period,
the outstanding balance of the Term Loan for that
Interest Period shall carry an interest rate per
annum equal to:
(A) LIBOR plus one hundred fifty basis points
(1.50%) of the Borrowers' Funded Senior
Indebtedness to EBITDA Ratio is less than or
equal to 1.50 to 1.0 for the most recent
fiscal quarter immediately preceding the
commencement of the Interest Period for which
the elected rate is to apply;
(B) LIBOR plus two hundred basis points
(2.00%) of the Borrowers' Funded Senior
Indebtedness to EBITDA Ratio is greater 1.50
to 1.0 but less than or equal to 2.0 to 1.0
for the most recent fiscal quarter
immediately preceding the commencement of the
Interest Period for which the elected rate is
to apply;
(C) LIBOR plus two hundred fifty basis points
(2.50%) of the Borrowers' Funded Senior
Indebtedness to EBITDA Ratio is greater than
2.0 to 1.0 but less than or equal to 2.50 to
1.0 for the most recent fiscal quarter
immediately preceding the commencement of the
Interest Period for which the elected rate is
to apply; or
(D) LIBOR plus three hundred basis points
(3.00%) of the Borrowers' Funded Senior
Indebtedness to EBITDA Ratio is greater than
2.5 to 1.0 but less than or equal to 3.5 to
1.0 for the most recent fiscal quarter
immediately preceding the commencement of the
Interest Period for which the elected rate is
to apply.
If the Borrowers elect a LIBOR Based Rate of any
Interest Period, the LIBOR Based Rate shall be
fixed for a period of 30, 60, 90 or 180 days,
based on LIBOR at the outset of such period. For
purposes of determining the applicable LIBOR Based
Rate, the Borrowers' Funded Senior Indebtedness to
EBITDA Ratio shall be tested as of the most recent
fiscal quarter immediately preceding the
commencement of the applicable Interest Period.
(iv) Rate Following Maturity. After
maturity (whether by acceleration or otherwise),
the unpaid principal balance of and accrued
interest on the Term Note shall bear interest at a
rate per annum equal to three percent (3%) in
excess of the applicable rate set forth in
subparagraph (c)(i) of this Section 2.2.
Notwithstanding the remedies set forth in Section
VII hereof, prior to maturity, upon the occurrence
of any Event of Default hereunder and until such
Event of Default is cured by the Borrowers, at the
Bank's option and upon written notice to
Borrowers, the unpaid principal balance of and
accrued interest on the Term Note shall bear
interest at a rate per annum equal to three
percent (3%) in excess of the applicable rate set
forth in paragraph (c)(i) of this Section 2.2.
2.3 Payment of Fees and Expenses
(a) Documentation Fees and Expenses.
Borrowers agree to pay upon demand (a) the Bank's
legal fees and expenses incurred in connection
with the preparation of this Agreement, the Notes
and other documentation relating thereto, which
fees the parties hereby agree shall not exceed the
sum of Five Thousand Dollars ($5,000), (b)
appraisal fees, fees and expenses incurred in
connection with UCC searches and filings and
related closing and collateral perfection costs,
and (c) all other related out-of-pocket expenses
incurred by the Bank in connection with the
negotiation, documentation and closing of the
transactions contemplated hereunder.
(b) Commitment Fee. Borrowers agree to pay
to the Bank on or before the Closing Date, and the
Bank hereby acknowledges receipt of, a commitment
fee of Ten Thousand Dollars ($10,000).
2.4 Adjustment of Fees and Charges Due to
Regulatory Changes. If (i) there shall be
introduced or changed any treaty, statute,
regulation, or other law, or there shall be any
change in the interpretation or administration
thereof, or there shall be made any request from
any central bank or other lawful governmental
authority, which introduction, change, or
compliance shall (a) impose, modify, or deem
applicable any reserve or special deposit
requirements against assets held by or deposits in
or loans by Bank or (b) subject Bank to any tax,
duty, fee, deduction, or withholding or (c) change
the basis of taxation of the overall net income
(otherwise than by a change in taxation of the
overall net income of Bank) or (d) impose,
modify, or deem applicable any capital adequacy or
similar requirement (including, without
limitation, any request or requirement which
affects the manner in which Bank allocates capital
resources to its commitments generally or those
under the Agreement) and (2) in Bank's sole
opinion any such event (A) reduces the amount of
any payment to be made to Bank under the Agreement
or (B) reduces the rate of return on the capital
of Bank that is reasonably allocable to Bank's
commitments under the Agreement to a level below
that which Bank would have achieved but for that
event, then, upon Bank's demand, Borrowers shall
pay Bank from time to time such additional amounts
as will compensate Bank for and indemnify it
against such increased costs or reduced payment or
reduced rate of return. Each demand shall be
accompanied by a certificate setting forth the
amount to be paid and the computations used in
determining the amount, which certificate shall be
presumed to be correct as to the matters set forth
therein in the absence of manifest error. In
determining any such amount, Bank may use any
reasonable averaging and attribution methods.
Bank shall provide Borrowers with prompt notice of
any change described herein and shall, before
imposing any such charges on Borrowers, give
Borrowers at least thirty (30) days' prior written
notice of type, reason and estimated amount of the
charge.
III. SECURITY INTEREST IN COLLATERAL
3.1 Grant of Security Interest in
Collateral. In consideration of and as security
for the full and complete payment, performance,
and observance of all Obligations, Borrowers
hereby collaterally assign, mortgage and pledge to
the Bank, its successors and assigns, and hereby
grant to the Bank, its successors and assigns, a
first lien and security interest in the Collateral
and any and all Proceeds and products of any of
the Collateral. Borrowers shall execute and
deliver such collateral assignments, security
agreements, financing statements and other
documents as may be necessary to create and
perfect a lien and security interest in all assets
of the Borrowers, which documents shall be in such
customary form as shall be reasonably requested by
Bank.
IV. REPRESENTATIONS AND WARRANTIES
Borrowers represent and warrant to Bank
(which representations and warranties shall
survive the execution of the Agreement and all
Advances) that:
4.1 Organization and Qualification.
Borrowers are duly organized and existing
corporations and limited partnerships, as the case
may be, under the laws of the state of Indiana and
are duly qualified, licensed and in good standing
in every state in which they are doing business
and in which such qualification or licensing is
required, except to the extent the absence of such
qualification does not have a material adverse
effect on any Borrower, its businesses or its
properties.
4.2 Due Execution and Delivery. The
execution, delivery, and performance hereof are
within Borrowers' respective corporate and
partnership powers, have been duly authorized, and
are not in contravention of law or the law or the
terms of the Borrowers' charters, articles of
incorporation, certificates of limited
partnership, bylaws, limited partnership
agreements or regulations or of any indenture,
agreement, or undertaking to which a Borrower is a
party or by which it is bound.
4.3 Borrower Representatives. The
undersigned representatives of the Borrowers are
duly appointed officers of the Borrowers or
officers of their general partners authorized to
execute and deliver this Agreement on behalf of
the Borrowers and bind the Borrowers by the terms
of this Agreement.
4.4 Borrowers' Title to Collateral. Except
for any Permitted Encumbrances or security
interests granted to or in favor of Bank,
Borrowers are, and as to Collateral to be acquired
after the date hereof will be, the owner of the
Collateral free from any claim, lien, encumbrance,
or security interest of any type, and Borrowers
agree that they will defend the Collateral against
all claims and demands of all Persons at any time
claiming the same or any interest therein.
4.5 Borrowers' Location; Location of
Collateral. The addresses of the offices where
the Borrowers keep all of their records pertaining
to the Collateral and operate their businesses and
maintain their Equipment set forth in Schedule 4.5
together with all other information contained in
said Schedule, including but not limited to the
name or names under which the Borrowers operate
their businesses and the locations of the
Collateral, are true and correct.
4.6 Disclosure. Subject to any limitation
stated herein or in connection herewith, all
information furnished to Bank concerning Borrowers
or the Collateral is, or will be, to the best of
the Borrowers' knowledge, at the time such
information is furnished, accurate and correct in
all material respects and complete insofar as is
necessary to give Bank true and accurate knowledge
of the subject matter thereof.
4.7 Collateral. Borrowers are the lawful
owners of and have full and unqualified right to
collaterally assign, pledge and grant a security
interest in all of the Collateral to Bank. Except
to evidence Permitted Encumbrances, such
Collateral is not subject to any adverse financing
statement, encumbrance, lien, or security interest
of any type except any granted to or in favor of
Bank, or to the best of Borrowers' knowledge, any
claim. Schedule 4.7 is an accurate list of all
patents, trademarks, service marks, copyrights,
and applications for any of the foregoing.
4.8 Accounts Receivable. Each Qualified
Account Receivable included with the aggregate
amount of Qualified Accounts Receivable set forth
on each Borrowing Base Certificate now or
hereafter furnished to Bank shall meet, as of the
date stated thereon, all eligibility requirements
specified in the Section 1.1 definition of
Qualified Account Receivable.
4.9 Litigation. Except as set forth in
Schedule 4.9, there is no pending or threatened
action, suit or proceeding affecting the Borrowers
before any court or other governmental authority
or any arbitrator which may materially adversely
affect the condition or operations, financial or
otherwise, of any Borrower or the ability of any
Borrower to perform its obligations under the
Agreement.
4.10 Compliance with Laws. The Borrowers
are in compliance in all material respects with
all applicable laws, rules, regulations and
orders, including Environmental Laws of all
governmental authorities having jurisdiction over
them, whether Federal, state, local or foreign,
except to the extent that any non-compliance will
not, in the aggregate, have a materially adverse
effect on any Borrower or the ability of any
Borrower to fulfill its obligations under this
Agreement or the Note.
4.11 Financial Statements. The consolidated
financial statements of Borrowers dated October
31, 1996, copies of which have been delivered to
Bank, fairly present the financial condition of
the Borrowers as at the date thereof and the
results of operations for the fiscal period ended
on the date thereof, all in accordance with
generally accepted accounting principles
consistently applied, and, except as set forth in
Schedule 4.11, since the date of such financial
statements, there has been no material adverse
change in condition or operations.
4.12 Consideration and Solvency. Borrowers
have received consideration which is the
reasonable equivalent value of the obligations and
liabilities that the Borrowers have incurred to
Bank. No Borrower is insolvent as defined in any
applicable state or federal statute, nor will any
Borrower be rendered insolvent by the execution
and delivery of this Agreement or the Notes to
Bank. No Borrower is engaged or about to engage
in any business or transaction for which the
assets retained by it shall be an unreasonably
small capital, taking into consideration the
obligations to Bank incurred hereunder. No
Borrower intends to, nor does it believe that it
will, incur debts beyond its ability to pay them
as they mature.
4.13 Compliance with all Material
Obligations. No Borrower is in default in the
performance, observance, or fulfillment of any of
the obligations, convents, or conditions contained
in any agreement or instrument to which it is a
party, which default materially adversely affects
the business, properties, assets, or financial
condition of any Borrower.
4.14 ERISA. Schedule 4.14 as attached
hereto sets forth all Plans. Borrowers do not
sponsor or maintain any defined benefit pension
plan subject to Title IV of ERISA, on any
Multiemployer Plan. All Plans are in material
compliance with the Code and ERISA as applicable,
and Borrowers have complied with all reporting and
disclosure requirements of the Code and ERISA for
the Plans. No Prohibited Transaction has occurred
and is continuing with respect to any Plan. No
fine, penalty, tax, or assessment has been made
against any of the Borrowers or an ERISA Affiliate
by any governmental entity with respect to any
Plan, and no audit or administrative investigation
has occurred or is continuing with respect to any
Plans.
4.15 Taxes. Borrowers have filed all
required Federal, state, local and foreign tax
returns, reports and other filings, have paid all
Federal, state, local and foreign taxes, duties
and similar charges due and owing, and no tax or
similar liens have been filed, nor does a basis
therefor exist.
4.16 Leases. Schedule 4.16 sets forth a
true and accurate list and description of all
leases of real property, fixtures or personal
property to which any Borrower is a party. All
such leases are in full force and effect, all
amounts due thereunder have been paid and there
exists no default, or event which upon notice of
lapse of time (or both) would constitute a default
thereunder.
4.17 No Margin Stock. No part of any Advance
will be used to purchase or carry, or to reduce or
retire or refinance any credit incurred to
purchase or carry, any margin stock (within the
meaning of Regulations U and X of the Board of
Governors of the Federal Reserve System) or to
extend credit to others for the purpose of
purchasing or carrying any margin stock. If
requested by Bank, each Borrower will furnish to
Bank statements in conformity with the
requirements of Federal Reserve Form U-1.
4.18 Governmental Authorization. Borrowers
have obtained any and all licenses, permits,
franchises, governmental authorizations, patents,
trademarks, copyrights or other rights necessary
for the ownership of its properties and the
advantageous conduct of their businesses, except
to the extent the absence of the same would not
have a material adverse effect on the Borrowers'
businesses, properties or prospects. Borrowers
possess adequate licenses, patents, patent
applications, copyrights, trademarks, trademark
applications, and trade names to continue to
conduct their businesses as heretofore conducted
by them, without any conflict with the rights of
any other Person. All of the foregoing are in
full force and effect and none of the foregoing
are in known conflict with the rights of others.
4.19 Affiliates. The Borrowers have no
Affiliates other than those identified in Schedule
4.19.
V. COVENANTS
The Borrowers undertake, covenant and agree
that, from the date of this Agreement and until
the Obligations of the Borrowers to the Bank
hereunder are satisfied in full, they will comply
with the following provisions:
5.1 Accounting; Financial Statements; Other
Information. The Borrowers will maintain a
standard system of accounting, established and
administered in accordance with generally accepted
accounting principles consistently followed
throughout the periods involved, and will set
aside on their books for each fiscal year the
proper amounts for depreciation, obsolescence,
amortization, bad debts, current and deferred
taxes, and other purposes as shall be required by
generally accepted accounting principles. The
Borrowers will deliver or cause to be delivered to
the Bank:
(a) Not later than ninety (90) days after
the end of each fiscal year, audited financial
statements of the Borrowers on a consolidated
basis covering such fiscal year and containing an
unqualified opinion by a certified public
accountant acceptable to Bank;
(b) At the time the same are filed with the
Securities and Exchange Commission (the "SEC"),
all reports, notices and other filings made by or
on behalf of any Borrower with the SEC, including,
but not limited to annual 10K Corporate Reports
and the quarterly 10Q Corporate Reports of
Personnel Management, Inc.
(c) Within forty-five (45) days after the
last day of each fiscal quarter, a balance sheet
and income statement of the Borrowers on a
consolidated basis, certified as complete and
correct by the chief financial officer or other
authorized officer(s) of the Borrowers.
(d) Within forty-five (45) days after the
last day of each fiscal quarter a certificate by
the chief financial officer or other authorized
officer of each of the Borrowers stating whether
or not there exists any Event of Default, or event
which, with the passage of time or service of
notice or both, will constitute an Event of
Default, specifying the nature and period of
existence thereof and what action, if any, the
Borrowers are taking or propose to take with
respect thereto;
(e) Within forty-five (45) days after the
last day of each fiscal quarter a report
designated "Financial Covenant Compliance Report"
showing the Borrowers' compliance with each of the
financial covenants set forth in Sections 5.27,
5.28 and 5.29 and certified as complete and
correct by the chief financial officer or other
authorized officer(s) of each of the Borrowers.
(f) Within fifteen (15) days after the last
day of each month, and at any other times required
by Bank, a Borrowing Base Certificate, fully
completed as to all figures and information called
for therein and certified as complete and correct
by an appropriate officer(s) of the Borrowers.
(g) With reasonable promptness, such other
data and information respecting the Borrowers'
financial condition or the Collateral, including
but not limited to all federal, state and local
income tax returns, as from time to time may be
reasonably requested by the Bank.
5.2 Adverse Changes or Events of Default.
Borrowers shall promptly notify the Bank in
writing of (a) any material adverse change in the
condition, business, or prospects, financial or
otherwise, of any of the Borrowers and (b) the
occurrence of any event or the existence of any
condition which would be, after notice or lapse of
applicable grace periods, if any, an Event of
Default. Borrowers shall promptly notify the Bank
in writing no less frequently than monthly of the
occurrence of any event which, if it had existed
on the date of this Agreement, would have required
qualification of the representations and
warranties set forth in Section IV hereof.
5.3 ERISA Matters. Borrowers shall provide
notice to the Bank promptly, and in any event
within ten (10) days of becoming aware of (i) any
Prohibited Transaction with respect to any Plan,
or (ii) any fine, penalty, tax, or assessment
against any Borrower or an ERISA Affiliate with
respect to any Plan. Notice to the Bank shall
include all material details regarding the
Prohibited Transaction or fine, penalty, tax, or
assessment.
5.4 Principal Banking Relationship.
Borrowers shall maintain their principal banking
relationships, including but not limited to their
primary Deposit Accounts, with the Bank.
5.5 Revolving Line of Credit. Borrowers
shall not permit their aggregate Obligations to
Bank pursuant to Section 2.1 hereof at any time
to exceed the lesser of (1) the Borrowing Base as
shown on the most recent Borrowing Base
Certificate or (2) the Borrowers' currently
approved revolving line of credit.
5.6 Use of Proceeds. Borrowers shall use
the proceeds of the Term Loan and any and all
Advances solely to (a) refinance existing
Indebtedness, (b) for working capital purposes and
(c) to fund Acquisitions as permitted by Section
5.24 of this Agreement.
5.7 Redemption of Capital Stock. In no
event shall any of the Borrowers at any time any
amounts are outstanding hereunder, without the
prior written consent of the Bank or except
pursuant to a transaction contemplated by the
Borrowers' 1993 and 1994 Employee Stock Option
Plans, purchase, acquire, redeem or retire any of
the capital stock of a Borrower.
5.8 Taxes and Assessments. Borrowers shall
promptly pay and discharge when due, all taxes,
assessments, and governmental charges of every
kind and nature that have been lawfully levied,
assessed, or imposed upon Borrowers, their
properties including the use thereof, or any of
the Obligations, which, if unpaid, would become
liens against its assets including, without
limitation, all sums due and owing any taxing
authority for income and other taxes withheld from
the wages and salaries of its employees, except to
the extent any Borrower is reasonably contesting
in good faith any such tax, assessment, or charge
with an adequate reserve provided therefor.
5.9 Inspection. Borrowers shall at all
reasonable times, upon notice, allow Bank by or
through any of their officers, agents, employees,
attorneys, or accountants to (1) examine, inspect,
and make extracts from the Borrowers' books and
other records, including, without limitation, the
tax returns of Borrowers, (2) arrange for
verification of Borrowers' Accounts Receivable,
under reasonable procedures, directly with Account
Debtors or by other methods, and (3) examine and
inspect Borrowers' Equipment wherever located.
Except to the extent resulting in a delay or
interference in the exercise of the Bank's rights
hereunder, Borrowers may at their own cost
accompany Bank in any examination or inspection of
Borrowers' facilities.
5.10 Additional Information. Borrowers
shall promptly furnish to Bank upon request (1)
additional statements and information with respect
to the Collateral, and all writings and
information relating to or evidencing any of
Borrowers' Accounts Receivable (including, without
limitation, computer printouts or typewritten
reports listing the mailing addresses of all
present Account Debtors), and (2) any other
writings and information as Bank may request.
5.11 Perfection of Security Interests. The
Borrowers hereby authorize Bank, and appoint Bank
as their attorney-in-fact, to sign on behalf of
Borrowers and file in such office or offices as
Bank deems necessary or desirable such financing
and continuation statements and amendments thereof
or supplements thereto, and such other deeds,
assurances, mortgages, instruments and documents
as Bank may from time to time require to perfect,
preserve and protect the security interests
granted herein including but not limited to any
assignments, lien notations or other instruments,
agreements or documents to perfect, preserve and
protect the security interest of the Bank in
Collateral. Borrowers shall, upon demand, furnish
to Bank such further information and shall execute
and deliver to Bank such financing statements,
mortgages and other documents and shall pay any
and all filing fees and costs with respect thereto
and shall do all such acts as Bank may at any time
or from time to time reasonably request to
establish and maintain perfected security
interests in the Collateral.
5.12 Related Expenses. Borrowers hereby
authorize Bank or Bank's designated agent (but
without obligation by Bank to do so) to incur
Related Expenses, and Borrowers shall promptly
repay, reimburse, and indemnify Bank for any and
all Related Expenses. Bank may, at its option,
upon notice, debit Related Expenses directly to
the Loan Account if such Related Expenses remain
unpaid for a period of thirty (30) days or more.
5.13 United States or Department or Agency
as Account Debtor. Borrower shall, if any of
Borrowers' Accounts Receivable arise out of
contracts with or orders from the United States or
any of its departments, agencies, or
instrumentalities, immediately notify Bank in
writing of same and shall execute any writing or
take any action required by Bank with reference to
the Federal Assignment of Claims Act.
5.14 Other Indebtedness. Borrowers shall
not, without the prior written consent of Bank,
borrow any money or, directly or indirectly,
create, incur, assume, guarantee, or otherwise
become or remain liable with respect to any
Indebtedness for borrowed money or advances other
than (1) Borrowers' Obligations, (2) trade
accounts payable in the ordinary course of
business, (3) Indebtedness for the purchase price
of real or personal property, which is secured
only by a mortgage or lien on the property
purchased provided that such Indebtedness does not
exceed Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate, (4) other
Indebtedness which does not exceed at any time
Fifty Thousand Dollars ($50,000) in the aggregate
and (5) Subordinated Debt related to an
Acquisition permitted by Section 5.24 of this
Agreement.
5.15 Loans and Investments. Borrowers shall
not, without the prior written consent of Bank,
loan any money to or guarantee or assume any
obligation of any other Person, or purchase any
evidence of indebtedness or securities (including
stock) other than direct obligations of the United
States of America or any agency thereof, banker's
acceptances, and certificates of deposit issued by
any commercial bank in the United States of
America. Further, Borrowers shall not make loans
or advances except as expressly permitted herein,
except that Borrowers may endorse checks, drafts,
and similar instruments for deposit or collection
in the ordinary course of business.
5.16 Loans and Advances to Officers and
Employees. Without the prior written consent of
the Bank, Borrowers shall make no loans or
advances to their officers or other employees
other than (i) those for reasonable and necessary
work-related travel, (ii) those made to temporary
employees in accordance with current established
business practices, (iii) those made for other
ordinary and necessary business expenses incurred
by their officers and employees in connection with
their work for the Borrowers, (iv) currently
outstanding loans by Personnel Management, Inc. to
Xxx X. Xxxxxx (including current and future
capitalized interest thereon) in the amount of
approximately $508,148 and (v) earnout payments to
current officers or other employees of the
Borrowers related to a prior Acquisition to which
one of the Borrowers were a party.
5.17 Transactions with Affiliates. Except
as provided in this Section 5.17, no Borrower
shall, without the prior written consent of the
Bank, engage in any transaction with any Affiliate
other than another Borrower, unless:
(i) such transaction is at arms length and
on terms that are at least as favorable to the
Borrower as those prevailing at the time for
comparable transactions with nonaffiliated
Persons,
(ii) such transaction does not require
Borrower to make payments, advances or loans to
any Affiliate in an amount exceeding $50,000, and
(iii) Borrower will receive no less than
fair market value for any assets or services
transferred or provided.
The foregoing limitations on Affiliate
transactions shall not, however, apply to any
agreement between a Borrower and JBD Real Estate,
Inc. ("JBD") in connection with a Borrower's lease
of commercial real estate from JBD, provided that
such lease contains commercially reasonable terms
and lease payments reflect the current market
value for the commercial property being leased.
5.18 Sale/Leaseback Transactions. Borrowers
shall not, without the prior written consent of
Bank, enter into any sale and leaseback
transaction or arrangement with any other Person
with respect to any of the assets of the Borrowers
(however, this shall not limit performance under
any lease contract existing on the date hereof and
disclosed in writing by Borrower to Bank).
5.19 Maintenance, Use and Insurance of
Equipment
(a) Maintenance and Use of Equipment.
Borrowers shall keep their Equipment (other than
vehicles) in good working order and repair, shall
not waste or destroy its Equipment (other than
vehicles), and shall not without the prior written
consent of Bank sell, lease, transfer, assign,
encumber, retire or otherwise dispose of its,
Equipment (other than vehicles) or other property
(including without limitation other Collateral)
other than in the ordinary course of business;
provided, however, that a sale or lease in the
ordinary course of business does not include a
transfer in partial or total satisfaction of a
debt, except for transfers in satisfaction of
partial or total purchase money prepayments by a
buyer in the ordinary course of the Borrowers'
businesses.
(b) Insurance. Borrowers shall obtain, and
at all times maintain, insurance upon all of their
assets, including without limitation the
Collateral, insuring the full replacement value of
such assets, in such form, written by such
companies, for such period, and against such risks
as may be reasonably acceptable to Bank, with
provisions satisfactory to Bank for payment of all
losses thereunder to the Bank and the Borrowers as
their interests may appear (loss payable
endorsement in favor of Bank), and, if required by
Bank, Borrowers will deposit the policies with
Bank. Any such policies of insurance shall
provide for no less than ten (10) days prior
written cancellation notice to Bank. Any sums
received by Bank in payment of insurance losses,
returns, or unearned premiums under the policies
may, following an Event of Default and at the
option of Bank, be applied upon any Obligation
whether or not the same is then due and payable,
or may be delivered to Borrower for the purpose of
replacing, repairing, or restoring its Equipment.
Effective upon an Event of Default, (i) Borrower
hereby assigns to Bank any return or unearned
premium which may be due upon cancellation of any
such policies for any reason and directs the
insurers to pay Bank any amount so due, and (ii)
Bank or Bank's designated agent, is hereby
constituted and appointed Borrower's attorney-in-
fact to (either in the name of a Borrower(s) or in
the name of the Bank), make adjustments of all
insurance losses, sign all applications, receipts,
releases, and other papers necessary for the
collection of any such loss, and any return or
unearned premium, execute proof of loss, make
settlements, and endorse and collect all
Instruments payable to a Borrower(s) or issued in
connection therewith. Notwithstanding any action
by Bank hereunder, any and all risk of loss or
damage to Borrowers' Equipment to the extent of
any and all deficiencies in the effective
insurance coverage thereof is hereby expressly
assumed by the Borrowers. Borrowers shall provide
to Bank such written evidence of the Borrowers'
compliance with the requirements of this paragraph
as the Bank may reasonably request.
5.20 Existence; Business; and Management.
Borrowers shall (a) maintain their corporate and
partnership existence, (b) engage primarily in
business of the same general character as that now
conducted, and (c) refrain from entering into any
lines of business substantially different from the
business or activities in which the Borrowers are
presently engaged.
5.21 Mortgages, Security Interests and
Liens. Borrowers shall not, so long as any
Borrower has any Obligations to Bank, without the
prior written consent of Bank, mortgage, pledge,
grant a security interest in or otherwise
voluntarily place or permit to be placed any lien,
encumbrance or claim of any type upon any real
estate or property of the Borrowers, including
without limitation the Collateral except in
connection with Permitted Encumbrances or as
permitted by Section 5.13.
5.22 Landlord Agreements. The Bank may
require a Borrower to use its best efforts to
provide to the Bank within sixty (60) days of a
request therefor, estoppel agreements in form and
substance satisfactory to the Bank, by and between
the respective Borrowers and each Person who is a
party to a lease of real property to which a
Borrower is a party.
5.23 Fixtures. Borrowers will not, through
any purposeful act, permit any item of Equipment
to become a fixture to real estate or accession to
other property and the Equipment is now and at all
times will remain and be personal property. If
any of the Collateral is or may become a fixture,
Borrower will obtain from all Persons with an
interest in the relevant real estate such waivers
or subordinations as Bank may reasonably require.
5.24 Acquisitions and Joint Ventures. So
long as any amounts are outstanding hereunder, no
Borrower shall, without the prior written consent
of the Bank, engage in or become a party to any
transaction or agreement involving an Acquisition.
Notwithstanding the foregoing, however, the
Borrowers may engage in or become a party to a
transaction or agreement involving an Acquisition
without the prior written consent of the Bank
provided that (a) no Event of Default has occurred
and is continuing hereunder, (b) the proposed
Acquisition will not cause an Event of Default
hereunder, and either (c)(i) the proposed
Acquisition is structured as a purchase of the
assets of the Company being acquired in the
Acquisition (the "Target"), (ii) no liabilities of
the Target (either direct or contingent) are being
assumed by a Borrower in connection with the
Acquisition and (iii) the consideration paid by
the Borrower for the assets of the Target consists
solely of the shares of common stock or other
equity securities issued by a Borrower, or (d)(i)
the Target has a Target-EBITDA for the applicable
twelve (12) month period preceding the closing
date of the Acquisition of not less than six and
one-half percent (6.5%) of the Target's sales for
the same twelve (12) month period and (ii) the
purchase price paid by the Borrower for the Target
in the Acquisition does not exceed six (6) times
Target-EBITDA. For purposes of this Section 5.24
"Target-EBITDA" shall mean after-tax net income of
the Target for designated twelve (12) month
period, plus interest charges, income taxes of the
Target and depreciation and amortization expense
of the Target for such period to the extent
deducted in determining such net income, plus
salaries for officers of the Target that are not
projected to be paid to such officers following
the Acquisition, all as determined in accordance
with generally accepted accounting principles.
Prior to the consummation of any such Acquisition
the Borrower shall provide written notice to the
Bank describing the transaction and/or agreement,
which notice shall include pro forma financial
information concerning the Acquisition
demonstrating continued compliance by the
Borrowers with the financial covenants contained
herein and such other information which the Bank
may reasonably request.
5.25 Borrowers' Location and Location of
Collateral. Borrowers shall promptly provide Bank
with prior written notification of:
(a) any change in any location where
Collateral or other property of a Borrower is
maintained, and any new locations where
Collateral, or other property of a Borrower is to
be maintained,
(b) any change in the location of the office
where the Borrowers' records pertaining to the
Collateral, including but not limited to its
Accounts and Contract Rights, are kept,
(c) the location of any new places of
business and the changing, creating or closing of
any of its existing places of business,
(d) any change in any Borrowers' name, and
(e) any change in any Borrowers' Location.
5.26 Compliance with Laws. Borrowers shall
not use any Collateral in violation of any
applicable statute, ordinance, or regulation, and
shall in the conduct of their businesses comply in
all material respects with all applicable laws,
rules, regulations and orders of all governmental
authorities, whether federal, state, local, or
foreign, including but not limited to
Environmental Laws and health and safety laws,
regulations, ordinances and rules, except to the
extent that any non-compliance will not, in the
aggregate, have a materially adverse effect on any
Borrower or the ability of any Borrower to fulfill
its obligations under this Agreement or the Note.
5.27 Cash Flow Coverage Ratio. Borrowers
shall maintain a minimum Cash Flow Coverage Ratio
of 1.25 to 1.0 at all times hereafter. The Cash
Flow Coverage Ratio shall be calculated on a
quarterly basis corresponding to the fiscal
quarters of the Borrowers, using a twelve (12)
month rolling cash flow.
5.28 Minimum Tangible Net Worth. Borrowers
shall maintain a minimum Tangible Net Worth,
tested on a quarterly basis corresponding to the
fiscal quarters of the Borrowers, of not less than
(a) One Million Dollars ($1,000,000) or (b) in the
event that any Borrower is party to an Acquisition
occurring after the Closing Date, an amount equal
to the sum of (i) One Dollar ($1) plus (ii) fifty
percent (50%) of Net Income for the Borrowers'
fiscal year-ending October 31, 1997 plus (iii)
fifty percent (50%) of the aggregate Net Income
for each of complete fiscal quarter of the
Borrower occurring after its fiscal year-ending
October 31, 1997.
5.29 Maximum Funded Senior Indebtedness to
EBITDA Ratio. Borrowers' Maximum Funded Senior
Indebtedness to EBITDA Ratio, tested as of the end
of each of the Borrowers' fiscal quarters (for the
immediately preceding twelve (12) month period)
occurring during the period commencing after the
Closing Date and prior to October 31, 1997 shall
not be greater than 2.50 to 1.0; provided,
however, that in the event that any Borrower is a
party to an Acquisition during such period and the
Acquisition occurs during an applicable twelve
(12) month period the Borrowers' Maximum Funded
Senior Indebtedness to EBITDA tested at the end of
such fiscal quarter shall not be greater than 3.50
to 1.0. Regardless of whether an Acquisition has
or has not occurred, the Borrower's Maximum Funded
Senior Indebtedness to EBITDA Ratio tested as of
the end of each of the Borrowers' fiscal quarters
occurring on or after October 31, 1997 and prior
to April 30, 1998 shall not be greater than 3.50
to 1.0 for the respective immediately preceding
twelve (12) month periods. The Borrower's Maximum
Funded Senior Indebtedness to EBITDA Ratio as of
the end of each of the Borrowers' fiscal quarters
occurring on or after April 30, 1998 and prior to
October 31, 1998 may not be greater than 3.25 to
1.0 for the respective immediately preceding
twelve (12) month periods. The Borrower's Maximum
Funded Senior Indebtedness to EBITDA Ratio as of
the end of each of the Borrowers' fiscal quarters
occurring on or after October 31, 1998 and
thereafter may not be greater than 2.75 to 1.0 for
the respective immediately preceding twelve (12)
month periods.
VI. EVENTS OF DEFAULT
6.1 Events of Default. The occurrence of
any one or more of the following shall constitute
an Event of Default under this agreement:
(a) Failure of the Borrowers to promptly pay
within fifteen (15) days of when due, whether upon
demand, at maturity, by acceleration, or
otherwise, any principal or interest on any of the
Obligations, whether under this Agreement or
otherwise, or to promptly pay or perform when due
any other monetary Obligation, whether under this
Agreement or otherwise;
(b) Failure of the Borrowers to observe or
perform any covenant, condition or agreement
contained in this Agreement or any other agreement
of a Borrower in favor of Bank, or any other
Obligation, and the failure to observe or perform
such covenant, condition or agreement remains
unremedied for a period of thirty (30) days.
(c) Failure of the Borrowers, subject to the
expiration of any applicable grace period, to
promptly pay, perform, or observe when due,
whether upon demand, at maturity, by acceleration,
or otherwise, (or any event which either results
in or would result in (but for waiver by the
holder(s) or trustee(s) thereof) the acceleration
of the maturity of), any or all of the
indebtedness, obligations, liabilities, contracts,
indentures, and agreements (including, without
limitation, any and all warranties, covenants,
guaranties, provisions, terms, and conditions set
forth or contained therein) of whatever kind and
however evidenced, owed, incurred, or executed by
a Borrower to, in favor of, or with any and all
other Persons, and including any partial or total
extension, renewal, amendment, restatement, and
substitution thereof or therefor, if a default or
acceleration thereunder would have a material
adverse affect on a Borrower or the Bank's
exposure under the credit facilities provided to
the Borrowers hereunder;
(d) Any warranty, representation, or
statement made or furnished to Bank in connection
with the Agreement or any other writing evidencing
or given as security for any of the Obligations
by or on behalf of a Borrower proves to have been
false in any material respect when made,
furnished, or reaffirmed;
(e) Bank shall deem itself insecure in good
faith believing that the prospect of payment,
performance, or observance of any of the
Obligations herein secured is impaired;
(f) To the extent not fully insured, the
loss, damage, theft, destruction, levy, seizure,
or attachment to, of, or upon any of the
Collateral in excess of $250,000, including any
attempt to accomplish the foregoing;
(g) A final judgment is entered against the
Borrower enjoining the conduct of any material
part of any Borrower's business or requiring the
payment of money in excess of $250,000, which
judgment remains undischarged for ninety (90) days
during which execution is not effectively stayed;
(h) If any of the following events occur:
(a) any Plan incurs any "accumulated funding
deficiency" (as such term is defined in ERISA),
unless expressly waived by Bank, (b) a Borrower or
any ERISA Affiliate engages in any Prohibited
Transaction, (c) any Plan is terminated, (d) a
trustee is appointed by an appropriate United
States district court to administer any Plan, or
(e) the PBGC institutes proceedings to terminate
any Plan or to appoint a trustee to administer any
Plan; or
(i) Financial Impairment of any Borrower.
6.2 Rights of Acceleration and Termination.
If there shall occur any Event of Default set
forth in (a) through (h) above, Bank, by written
notice to the Borrowers, may (1) declare the
unpaid principal of and accrued interest on all
Obligations to be immediately due and payable and
(2) immediately terminate Bank's commitment to
make further Advances under the Agreement,
whereupon Obligations shall become and be
forthwith due and payable, and such commitment
shall be terminated, without any further notice,
presentment, or demand of any kind, all of which
are hereby expressly waived by the Borrowers. If
there shall occur any Event of Default set forth
in (i) above, all Obligations shall automatically
become and be immediately due and payable, and
Bank's commitment to make further Advances shall
automatically be terminated, without notice,
presentment, or demand of any kind, all of which
are hereby expressly waived by the Borrowers. The
termination of this Agreement will not affect any
rights of the parties or any obligation of the
parties to the other, arising prior to the
effective date of such termination, and the
provisions hereof shall continue to be fully
operative until all transactions entered into,
rights created or obligations incurred prior to
such termination have been fully disposed of,
concluded or liquidated. The security interest
granted to the Bank in the Collateral pursuant to
this Agreement will continue in full force and
effect, notwithstanding the termination of this
Agreement, until all of the obligations of the
Borrowers to the Bank have been paid in full.
VII. RIGHTS AND REMEDIES OF BANK
7.1 Remedies: Generally. Upon the
occurrence of any such Event of Default and during
the continuation thereof, Bank shall have the
rights and remedies of a secured party under the
applicable Uniform Commercial Code in addition to
the rights and remedies of a secured party
provided elsewhere within the Agreement or in any
other writing executed by a Borrower, or otherwise
provided at law or in equity. Bank will give the
Borrowers reasonable notice of the time and place
of any public sale of the Collateral or of the
time after which any private sale or other
intended disposition thereof is to be made. The
requirement of reasonable notice shall be met if
such notice is mailed (deposited for delivery,
postage prepaid, by U.S. mail) to the Borrowers'
addresses in Section 9.4 (as modified by any
change therein which a Borrower has supplied in
writing to Bank), at least ten (10) days before
the time of the public sale or the time after
which any private sale or other intended
disposition thereof is to be made. At any such
public or private sale, Bank may purchase the
Collateral. After deduction for Bank's Related
Expenses, the residue of any such sale or other
disposition shall be applied in satisfaction of
the Obligations in such order of preference as
Bank may determine. Any excess, to the extent
permitted by law, shall be paid to Borrowers, and
Borrowers shall remain liable for any deficiency.
7.2 Remedies: Collection of Accounts
Receivable, Instruments, Chattel Paper and
Documents
(a) Accounts Receivable. Borrowers hereby
constitute and appoint Bank, or Bank's designated
agent, as the Borrowers' attorney-in-fact to
exercise, at any time following the occurrence of
an Event of Default and during the continuation
thereof, all or any of the following powers which,
being coupled with an interest, shall be
irrevocable until the complete and full payment,
performance, and observance of all Obligations:
(i) to receive, retain, acquire, take,
endorse, assign, deliver, accept, and deposit, in
the Bank's name or any Borrower's name, any and
all of any Borrower's cash, Instruments, Chattel
Paper, Documents, Proceeds of Accounts Receivable,
collection of Accounts Receivable, and any other
writings relating to any of the Collateral;
(ii) to transmit to Account Debtors, on any
or all of any Borrower's Accounts Receivable,
notice of assignment to Bank thereof and Bank's
security interest therein and to request from such
Persons at any time, in the Bank's name or in a
Borrower's name, information concerning the
Accounts Receivable and the amounts owing thereon;
(iii) to notify and require Account Debtors
on any Borrower's Accounts Receivable to make
payment of their indebtedness directly to Bank;
(iv) to take or bring, in Bank's name or a
Borrower's name, all steps, actions, suits, or
proceedings deemed by Bank necessary or desirable
to effect the receipt, enforcement, and collection
of the Collateral; and
(v) to accept all collections in any form
relating to the Collateral, including remittances
which may reflect deductions, and to deposit the
same, into an account in the name of any of the
Borrowers at the Bank or, at the option of Bank,
to apply them as a payment against the Loan
Account.
(b) Instruments, Chattel Paper and
Documents. Following the occurrence of an Event
of Default and during the continuation thereof,
Borrowers shall, immediately upon being directed
to do so by the Bank, daily deliver, or cause to
be delivered to the Bank all of the Borrowers'
Instruments, Chattel Paper, and Documents,
appropriately endorsed to Bank's order, without
limitation or qualification. Borrowers hereby
constitute and appoint Bank, or Bank's designated
agent, Borrowers' attorney-in-fact with authority
and power to endorse any and all Instruments,
Documents and Chattel Paper upon any Borrower's
failure to do so, effective following the
occurrence of an Event of Default and during the
continuation thereof. Such authority and power
being coupled with an interest, shall be (i)
irrevocable until all obligations are paid,
performed, and observed in full, (ii) exercisable
by Bank at any time and without any request upon
any Borrower by Bank to so endorse, and (iii)
exercisable in Bank's name or any Borrower's name.
Borrowers hereby waive presentment, demand, notice
of dishonor, protest, notice of protest, and any
and all other similar notices with respect
thereto, regardless of the form of any endorsement
thereof. Bank shall not be bound or obligated to
take any action to preserve any rights therein
against prior parties thereto.
7.3 Set-Off. Bank has the right upon an
Event of Default, upon notice to any Borrower and
in addition to all other rights and remedies
available to it, to set off at any time all or any
part of the unpaid balance of the Loan Account and
any other Obligations against any indebtedness or
obligations owing to any Borrower by Bank
including, without limitation, all Cash Security.
7.4 Appraisals Following Default. In
addition, upon the occurrence of any such Event of
Default and at any time thereafter, Bank shall
have the right to obtain appraisals of all or any
of the Borrowers or the Collateral, the cost of
which shall be paid by the Borrowers.
7.5 No Remedy Exclusive. No remedy set
forth herein is exclusive of any other available
remedy or remedies, but each is cumulative and in
addition to every other remedy available under
this Agreement, or as may be now or hereafter
existing at law, in equity or by statute.
Borrowers hereby waive any requirement of
marshalling assets which secure the Borrowers'
Obligations to Bank.
VIII. CONDITIONS PRECEDENT
8.1 Conditions to Advances. The obligation
of Bank to make any Advance to Borrowers now or
after the date of the Agreement shall be subject
to the conditions precedent that on or before the
date of such Advance:
(a) Borrowers shall have executed and
delivered to Bank the Master Promissory Note;
(b) Borrowers shall have paid all fees,
costs, expenses, and taxes then payable by
Borrowers pursuant to Section II of the Agreement;
(c) The representations and warranties
contained in Section IV of the Agreement and in
each document, instrument, agreement, and
certificate delivered to Bank by Borrowers
pursuant to the Agreement shall be true and
correct on and as of such date as if made on and
as of such date, with only such exceptions as are
not material (as established to Bank's
satisfaction) to the Borrowers, their businesses
or properties, or to the Bank's exposure with
respect to the Obligations; no Event of Default or
event or condition that, with the serving of
notice or the lapse of time or both, would
constitute an Event of Default shall have occurred
and be continuing or would result from the making
of such Advance; and Bank shall have received, if
requested by Bank, a certificate of a duly
authorized officer of the Borrowers, dated as of
the date of such Advance, confirming the
conditions set forth in this subsection (in the
absence of Bank's request for such a certificate,
Borrowers' borrowing of the Advance shall itself
constitute a representation to Bank confirming the
conditions set forth in this subsection);
(d) The making of such Advance shall not
contravene any law, rule or regulation applicable
to Bank or to the Borrowers;
(e) Not later than 2:00 p.m., Indianapolis
time, on such date, Bank shall have received, in
writing, by facsimile or actual delivery, a
request by a Borrower to Bank for an Advance in
the requested amount and shall have received from
the Borrowers a Borrowing Base Certificate for the
most recently ended fiscal quarter of the
Borrowers;
(f) Bank shall have received such other
approvals, opinions, appraisals, or documents as
it may reasonably request.
8.2 Conditions to Closing. In addition to
the conditions set forth in Section 8.1 above
concerning Advances, the following are conditions
precedent to the Bank's obligations to the
Borrowers under this Agreement:
(a) Borrowers shall have delivered to Bank
an opinion of counsel dated as of the date of this
Agreement substantially in the form attached
hereto as Exhibit D;
(b) Bank shall have received a Borrowing
Base Certificate from the Borrowers reflecting the
most recently available financial information
available to the Borrowers;
(c) Bank shall have received Closing
Certificates from each of the Borrowers, all dated
the Closing Date, certifying the incumbency of the
respective officers and directors of the
Borrowers, the adoption of appropriate resolutions
and such other matters as Bank may reasonably
require, in form and substance satisfactory to
Bank;
(d) Bank shall have received from the
Borrowers evidence in such form as Bank may
reasonably require that the Borrowers have
insurance policies in place as required by Section
5.18(b) of this Agreement;
(e) Such other instruments, documents and
opinions as Bank shall reasonably require to
evidence and secure the Obligations and to comply
with the provisions hereof and the requirements of
regulatory authorities to which Bank is subject,
all of which, shall be satisfactory in form,
content and substance to Bank; and
(f) Bank shall have received such other
approvals, opinions, appraisals, or documents as
it may reasonably request.
IX. GENERAL
9.1 Joint and Several Liability; Agent
(a) The obligations and liabilities of the
Borrowers under this Agreement and the Notes shall
be joint and several in all respects whatsoever.
Whenever the term "Borrowers" is used in this
Agreement or the Notes, it shall mean each
individual Borrower and all Borrowers jointly and
severally.
(b) Bank may deal with each Borrower as if
it were the sole obligor, without impairing in any
way, the liability of the other Borrowers.
Without limiting the generality of that right,
Bank may in particular release or fail to perfect
its interest in any Collateral of any Borrower,
waive Events of Default by any Borrower, or extend
or compromise the liability of any Borrower,
without the consent of any other Borrower.
(c) Borrowers represent that they have
carefully considered the alternatives to and the
legal consequences of incurring joint and several
liability for the Obligations and have determined
that by such arrangement they are able to obtain
financing on terms more favorable than otherwise
and that under a joint and several loan facility,
they will each realize substantial interest
savings over alternative financing arrangements.
(d) Personnel Management, Inc., PMI
Administration, Inc., PMI LP I, and PMI XX XX each
hereby irrevocably appoint Personnel Management,
Inc. as its agent to deal with Bank on its behalf
in all respects in connection with the Agreement
and the transactions contemplated herein,
including requests for Advances and review and
approval of statements of account. Each Borrower
agrees to be bound by all actions of Personnel
Management, Inc. in all such respects.
9.2 Illegality and Invalidity. If any
provision, term, or portion, of the Agreement,
(including, without limitation, (1) any
indebtedness, obligation, liability, contract,
agreement, indenture, warranty, covenant,
guaranty, representation, or condition of the
Agreement made, assumed, or entered into, (2) any
act or action taken under the Agreement, or (3)
any application of the Agreement) is for any
reason held to be illegal or invalid, such
illegality or invalidity shall not affect any
other such provision, term, or portion of the
Agreement, each of which shall be construed and
enforced as if such illegal or invalid provision,
term, or portion were not contained in the
Agreement. Any illegality or invalidity of any
application of the Agreement shall not affect any
legal and valid application of the Agreement, and
each provision, term, and portion of the Agreement
shall be deemed to be effective, operative, made,
entered into, or taken in the manner and to the
full extent permitted by law.
9.3 Absence of Waiver. Bank shall not be
deemed to have waived any of Bank's rights under
the Agreement or under any other agreement,
instrument, or document executed by Borrowers,
unless such waiver be in writing and signed by
Bank. No delay or omission on part of Bank in
exercising any right shall operate as a waiver of
such right or any other right. A waiver on any
one occasion shall not be construed as a bar to or
waiver of any right or remedy on any future
occasion. All Bank's rights and remedies, whether
evidenced by the Agreement or by any other
agreement, instrument, or document shall be
cumulative and may be exercised singularly or
concurrently. Any determination by Bank as to the
nonmateriality of an exception or event for any
purpose under this Agreement in any instance shall
be treated in the same manner as a waiver under
this Section 9.2 and accordingly shall not
constitute a determination as to nonmateriality
for any other purpose or in any other instance.
If at any time or times, by assignment or
otherwise, Bank transfers any of the Obligations
or any part of the Collateral to another person,
such transfer shall carry with it Bank's powers
and rights under this Agreement with respect to
the Obligation or Collateral so transferred and
the transferee shall have said powers and rights,
whether or not they are specifically referred to
in the transfer. To the extent that Bank retains
any other of the Obligations or any part of the
Collateral, Bank will continue to have the rights
and powers with respect to the Obligations and the
Collateral as set forth in the Agreement.
9.4 Notices. All written notices, requests,
or other communications herein provided for must
be addressed:
To Borrowers as follows:
Personnel Management, Inc.
PMI Administration, Inc.
PMI I LP
PMI II LP
0000 Xxxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxxxx, Vice President
To the Bank as follows:
KeyBank National Association
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Rohs, Vice President
or at such other address as either party may
designated to the other in writing in accordance
with this Section 9.4. Such communication will be
effective (i) if given by mail, 72 hours after
such communication is deposited in the U.S. mail
certified mail return receipt requested, or (ii)
if given by other means, when delivered at the
address specified in this Section 9.4.
9.5 Governing Law. This Agreement and the
Notes will be governed by the domestic laws of the
State of Indiana. Borrowers agree that the state
and federal courts in Xxxxxx County, Indiana, or
any other court in which Bank initiates
proceedings have exclusive jurisdiction over all
matters arising out of this Agreement, and that
service of process in any such proceeding will be
effective if mailed to Borrowers at the address
described in Section 9.4 of this Agreement.
9.6 Termination. Borrowers may terminate
the Agreement by giving Bank not less than thirty
(30) days prior written notice of termination and
by paying, performing, and observing in full all
Obligations, on or before such termination date.
Notwithstanding the termination of the revolving
line of credit hereunder, the Agreement and the
security interest in the Collateral shall continue
in full force and effect after such termination
until all Obligations of all Borrowers to the Bank
have been paid, performed, and observed in full.
9.7 Construction of Certain Provisions. In
the Agreement unless the context otherwise
requires, words in the singular number include the
plural, and in the plural number include the
singular.
9.8 Indemnification. If after receipt of
any payment of all or part of the Obligations,
Bank is for any reason compelled to surrender such
payment to any person or entity, because such
payment is determined to be void or voidable as a
preference, impermissible setoff, or diversion of
trust funds, or for any other reason, this
Agreement will continue in full force and effect
and each Borrower will be liable to, and will
indemnify, save and hold Bank, its officers,
directors, attorneys, and employees harmless of
and from the amount of such payment surrendered.
The provisions of this Section 9.8 will be and
remain effective notwithstanding any contrary
action which may have been taken by Bank in
reliance on such payment, and any such contrary
action so taken will be without prejudice to
Bank's rights under this Agreement and will be
deemed to have been conditioned upon such payment
becoming final, indefeasible and irrevocable. In
addition, Borrowers will indemnify, defend, save
and hold Bank, its officers, directors, attorneys,
and employees harmless, of, from and against all
claims, demands, liabilities, judgments, losses,
damages, costs and expenses, joint or several
(including all accounting fees and attorneys' fees
reasonably incurred), that Bank or any such
indemnified party may occur arising out of this
Agreement or caused by any act or omission in
connection with this Agreement whether by omission
or commission, and regardless of whether based
upon any error of judgment, mistake of law or fact
negligence or strict liability, except for the
willful misconduct or gross negligence on the part
of the Bank, or its officers, agents, or
employees. The provisions of this Section will
survive the termination of this Agreement.
9.9 Completion of Documents. Bank is hereby
authorized to fill in all blank spaces in the
Agreement, to correct patent errors in the
Agreement, to complete or correct the description
of the Collateral, and to date the Agreement.
9.10 Binding Effect. This Agreement will be
binding upon and inure to the benefit of the
respective legal representatives, successors and
assigns of the parties hereto; however, no
Borrower may assign any of its rights or delegate
any of its obligations hereunder. Bank (and any
subsequent assignee) may transfer and assign this
Agreement or may assign partial interests or
participation in the loans to other Persons.
9.11 Integration. This Agreement, the Notes
and other writings executed and delivered by the
Borrowers to Bank in connection herewith integrate
all the terms and conditions mentioned herein or
incidental hereto and supersede all oral
representations and negotiations and prior
writings with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the parties hereto have caused
the Agreement to be executed on the day and year first
above written.
"BORROWER"
PERSONNEL MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxxxx, Vice President
PMI ADMINISTRATION, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxxxx, Vice President
PMI LP I
BY: PMI ADMINISTRATION, INC.
ITS GENERAL PARTNER
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxxxx, Vice President
PMI XX XX
BY: PMI ADMINISTRATION, INC.
ITS GENERAL PARTNER
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxxxx, Vice President
"BANK"
KEYBANK NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Rohs
Xxxxxx X. Rohs, Vice President
SCHEDULE 4.4 Permitted Encumbrances
SCHEDULE 4.5 Location/Collateral
SCHEDULE 4.7 Intellectual Property
SCHEDULE 4.9 Pending Litigation
SCHEDULE 4.10 Environmental Proceedings
SCHEDULE 4.11 Exceptions to Financial Statements
SCHEDULE 4.14 Plans
SCHEDULE 4.16 Leases
EXHIBIT A Borrowers' Closing Certificates
EXHIBIT B Master Promissory Note
EXHIBIT C Term Note
EXHIBIT D Form of Borrower's Counsel Opinion
EXHIBIT E Borrowing Base Certificate
For Form of Exhibit A, see Items 4 through 7
For Form of Exhibit B, see Item 2
For Form of Exhibit C, see Item 3
For Form of Exhibit D, see Item 10
For Form of Exhibit E, see Item 9
