Exhibit 10.2
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COMFORCE CORPORATION
as Issuer,
and
THE BANK OF NEW YORK,
as Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of November 29, 2000
15% Senior Secured PIK Debentures Due 2009, Series A
15% Senior Secured PIK Debentures Due 2009, Series B
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FIRST SUPPLEMENTAL INDENTURE, dated as of November 29, 2000 (the
"Supplemental Indenture"), between COMFORCE Corporation, a Delaware corporation
(together with its successors as provided for in the Indenture referred to
below, the "Company"), and The Bank of New York, as Trustee (the "Trustee"),
under an Indenture dated as of November 26, 1997 (the "Indenture").
Section 9.2(a) of the Indenture provides that, with the consent of the
Holders of at least a majority in outstanding principal amount of the
Securities, voting as a single class, the Company and the Trustee may amend the
Indenture or the Securities, unless such amendment accomplishes any of the
actions enumerated in subsections 1 through 11 of Section 9.2(a). The Company
and the Trustee are executing this Supplemental Indenture to amend Sections 1.1.
and 4.3(b)(i) of the Indenture for the following reasons, none of which affects
any of the actions specified under subsections 1 through 11 of Section 9.2(a):
(1) to allow the Company the flexibility to use securitization financing
techniques that may be more cost effective and flexible than current
financing arrangements (i) by amending the definition of "Asset
Disposition" in Section 1.1 to exclude permitted Securitizations therefrom
(see new clause (iii) in the definition), (ii) by adding a definition of
"Securitization" in Section 1.1 and (iii) by amending Section 4.3(b)(i) to
include Securitizations within the indebtedness limits;
(2) through the amendment of the definition of "Consolidated Net Income"
(see the proviso added to clause (iv)) to make clear that any gain or loss
realized by the Company upon the repurchase of Debentures will be treated
as an extraordinary gain or loss, and the costs incurred by the Company in
soliciting consents to amend the Indenture will not be treated as an
extraordinary loss; and
(3) to permit the Company to increase its borrowing (and securitization of
assets) (i) by amending Section 4.3(b)(i) to allow credit facility debt up
to the greater of (x) $75 million at any time outstanding, less the
aggregate principal amount thereof repaid with the net proceeds of Asset
Dispositions and (y) 90% of Eligible Accounts Receivable outstanding at any
time, and (ii) by adding a definition of "Eligible Accounts Receivable" in
Section 1.1.
Section 1.01. Amendment of Section 1.1 of the Indenture.
A. The existing definitions of "Asset Disposition" and "Consolidated Net
Income" are hereby amended and restated as follows:
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of
(or any other equity interests in) a Restricted Subsidiary (other than
directors' qualifying shares) or of any other property or other assets
(each referred to for the purposes of this definition as a "disposition")
by the Company or any of its Restricted Subsidiaries (including any
disposition by means of a merger, consolidation or similar transaction)
other than (i) a disposition by a Restricted Subsidiary to the Company or
by the Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary,
(ii) a disposition of inventory in the ordinary course of business, (iii) a
Securitization, to the extent permitted in Section 4.3 (b) (i) herein, (iv)
a disposition of obsolete or worn out equipment or equipment that is no
longer useful in the conduct of the business of the Company and its
Restricted
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Subsidiaries and that is disposed of in each case in the ordinary course of
business, (v) dispositions of property for net proceeds which, when taken
collectively with the net proceeds of any other such dispositions under
this clause (v) that were consummated since the beginning of the calendar
year in which such disposition is consummated, do not exceed $1.0 million,
and (vi) transactions permitted pursuant to Section 5.1 of this Indenture.
Notwithstanding anything to the contrary contained above, a Restricted
Payment made in compliance with Section 4.4 of this Indenture shall not
constitute an Asset Disposition except for purposes of determinations of
the Consolidated Coverage Ratio.
"Consolidated Net Income" means, for any period, the consolidated net
income (loss) of the Company and its consolidated Subsidiaries determined
in accordance with GAAP; provided, however, that there shall not be
included in such Consolidated Net Income: (i) any net income (loss) of any
person acquired by the Company or any of its Restricted Subsidiaries in a
pooling of interests transaction for any period prior to the date of such
acquisition, (ii) any net income of any Restricted Subsidiary of the
Company if such Restricted Subsidiary is subject to restrictions, directly
or indirectly, on the payment of dividends or the making of distributions
by such Restricted Subsidiary, directly or indirectly, to the Company
(other than restrictions in effect on the Issue Date with respect to a
Restricted Subsidiary of the Company and other than restrictions that are
created or exist in compliance with Section 4.10 of this Indenture), (iii)
any gain or loss realized upon the sale or other disposition of any assets
of the Company or its consolidated Restricted Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) which are not sold or otherwise
disposed of in the ordinary course of business and any gain or loss
realized upon the sale or other disposition of any Capital Stock of any
Person, (iv) any extraordinary gain or loss, provided that for purposes of
this clause (iv), any gain or loss realized by the Company upon the
repurchase of Debentures shall be treated as an extraordinary gain or loss,
and the costs incurred by the Company in soliciting consents to amend this
Indenture from time to time (including, without limitation, the making of
consent solicitation payments) shall not be treated as an extraordinary
loss, (v) the cumulative effect of a change in accounting principles, (vi)
the net income of any Person, other than a Restricted Subsidiary, except to
the extent of the lesser of (A) cash dividends or distributions actually
paid to the Company or any of its Restricted Subsidiaries by such Person
and (B) the net income of such Person (but in no event less than zero), and
the net loss of such Person (other than an Unrestricted Subsidiary) shall
be included only to the extent of the aggregate Investment of the Company
or any of its Restricted Subsidiaries in such Person and (viii) any non-
cash expenses attributable to grants or exercises of employee stock
options. Notwithstanding the foregoing, for the purpose of Section 4.4 of
this Indenture only, there shall be excluded from Consolidated Net Income
any dividends, repayments of loans or advances or other transfers of assets
from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary to
the extent such dividends, repayments or transfers increase the amount of
Restricted Payments permitted pursuant to clause (a)(3)(D) thereof.
B. New definitions of "Eligible Account Receivable" and "Securitization"
are hereby added as follows:
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"Eligible Account Receivable" means any account receivable, net of any
prepayments, progress payments, deposits and retentions, owing to the Company or
to a special purpose entity upon assignment thereto by the Company in connection
with a Securitization, provided that the account meets the following
specifications:
(a) The account is not more than one hundred and twenty (120) days
from the date of the invoice therefor;
(b) The account is not subject to any prior assignment, claim, lien,
or security interest other than in connection with a Securitzation,
and the Company will not make any further assignment of the account or
create any further security interest in the account, nor permit its
rights in the account to be reached by attachment, levy, garnishment
or other judicial process;
(c) The account arose in the ordinary course of the Company's
business or was acquired by the Company;
(d) The account does not arise with respect to an account debtor from
whom fifty percent (50%) or more of the accounts are more than one
hundred and twenty days (120) from the date of the invoice therefore;
and
(e) No notice of bankruptcy, insolvency or material adverse change of
the account debtor has been received by or is known to the Company.
"Securitization" means the sale of accounts receivable for cash to a
special purpose entity without recourse to the seller of such accounts
receivable.
Section 1.02. Amendment of Section 4.3(b)(i) of the Indenture. Section
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4.3(b)(i) of the Indenture is hereby amended and restated as follows:
(i) Indebtedness Incurred pursuant to the New Credit Facility (including,
without limitation, any renewal, extension, refunding, restructuring,
replacement or refinancing thereof referred to in the definition thereof)
or any Securitization, provided, however, that the aggregate principal
amount of all Indebtedness Incurred and Securitization proceeds outstanding
pursuant to this clause (i) does not exceed the greater of (x) $75 million
at any time outstanding, less the aggregate principal amount thereof repaid
with the net proceeds of Asset Dispositions and (y) 90% of Eligible
Accounts Receivable outstanding at any time;
ARTICLE II
MISCELLANEOUS
Section 2.01. Definitions. All terms used in this Supplemental Indenture
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have the meanings specified in the Indenture unless otherwise defined herein or
unless the context otherwise specifies or requires.
Section 2.02. Successors and Assigns. All the covenants and agreements by
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the Company contained in this Supplemental Indenture shall bind its successors
and assigns. All agreements of the Trustee contained in this Supplemental
Indenture binds its successors.
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Section 2.03. Execution in Counterparts. This Supplemental Indenture may
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be executed in any number of counterparts, each of which when so executed shall
be deemed to be an original, but all of which counterparts shall together
constitute one and the same instrument.
Section 2.04 Governing Law. This Supplemental Indenture shall be governed
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by, and construed in accordance with, the laws of the State of New York, but
without giving effect to applicable principles of conflicts of laws to the
extent that the application of the laws of another jurisdiction would be
required thereby.
Section 2.05 Enforceability of Indenture. All terms and provisions of the
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Indenture as originally adopted that have not modified by this Supplemental
Indenture shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties have caused this Supplemental Indenture to
be duly executed as of the date first written above.
COMFORCE CORPORATION
By:_____________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By:______________________
Name:
Title:
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