LOAN AGREEMENT
dated as of June 25, 1997
by and among
COMFORCE Corporation and
the Subsidiaries of COMFORCE Corporation
named herein, as Borrowers
FLEET NATIONAL BANK and
U. S. BANK, WASHINGTON, as Banks
and
FLEET NATIONAL BANK, as Agent
$20,000,000 REVOLVING LOAN FACILITY
$20,000,000 TERM LOAN
TABLE OF CONTENTS
Page
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ARTICLE I CERTAIN DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms......................................
Section 1.02. Use of Defined Terms...............................
Section 1.03. Accounting Terms...................................
ARTICLE II AMOUNTS AND TERMS OF THE LOANS
Section 2.01. Revolving Loans....................................
Section 2.02. Requests for Floating Rate Revolving Loans.........
Section 2.03. Repayment of Principal of Revolving Loans..........
Section 2.04. Interest Payments on Revolving Loans...............
Section 2.05. LIBOR Rate Revolving Loans.........................
Section 2.06. Term Loan..........................................
Section 2.07. Repayment of Principal of the Term Loan............
Section 2.08. Interest Payments on Term Loan.....................
Section 2.09. Commitment and Other Fees..........................
Section 2.10. Rate Determination Protection......................
Section 2.11. Prepayment of LIBOR Loans..........................
Section 2.12. Increased Costs; Capital Adequacy..................
Section 2.13. Illegality or Impossibility........................
Section 2.14. Letters of Credit..................................
ARTICLE III LOAN PROCEEDS AND PAYMENTS
Section 3.01. Funding by Banks; Availability.....................
Section 3.02. Charges Against Accounts...........................
Section 3.03. Use of Loan Proceeds...............................
Section 3.04. Payments...........................................
Section 3.05. Payments on Non-Business Days......................
Section 3.06. Net Payments.......................................
ARTICLE IV CONDITIONS OF LENDING
Section 4.01. Conditions Precedent to Initial Loan...............
Section 4.02. Conditions Precedent to All Loans..................
Section 4.03. Pledged Notes......................................
ARTICLE V REPRESENTATIONS AND WARRANTIES
Section 5.01. Representations and Warranties.....................
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ARTICLE VI COVENANTS OF THE BORROWER
Section 6.01. Affirmative Covenants Other Than
Reporting Requirements...........................
Section 6.02. Negative Covenants.................................
Section 6.03. Reporting Requirements.............................
ARTICLE VII DEFAULT AND REMEDIES
Section 7.01. Events of Default..................................
Section 7.02. Rights and Remedies Upon Default...................
Section 7.03. Set-Off............................................
Section 7.04. Right to Cure......................................
Section 7.05. Remedies of Banks..................................
Section 7.06. Temporary Loans Payable on Demand..................
Section 7.07. Certain Payments with Respect to Letters of
Credit...........................................
ARTICLE VIII FURTHER PROVISIONS AS TO RECEIVABLES
Section 8.01. Title to Receivables...............................
Section 8.02. Furnishing Information.............................
Section 8.03. Disputes...........................................
Section 8.04. Collections........................................
Section 8.05. Trust Account......................................
ARTICLE IX CONCERNING THE AGENT
Section 9.01. Designation of Agent...............................
Section 9.02. Duties with Respect to Notes and Loans.............
Section 9.03. Duties with Respect to Administration..............
Section 9.04. Duties upon Default................................
Section 9.05. Other Obligations..................................
Section 9.06. Standard of Care...................................
Section 9.07. Expenses...........................................
Section 9.08. Resignation of Agent; Appointment of Successor
Agent............................................
Section 9.09. Borrowers' Acknowledgment..........................
Section 9.10. No Other Beneficiaries.............................
ARTICLE X GUARANTY
Section 10.01. Guaranty...........................................
Section 10.02. Further Agreement to Pay...........................
Section 10.03. Agent's and Banks' Freedom to Deal with Other
Borrowers and Other Parties........................
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Section 10.04. Unenforceability of Guaranteed Obligations;
Invalidity of Security or Other Guaranties.........
Section 10.05. Waivers by the Guarantors..........................
Section 10.06. Subrogation........................................
Section 10.07. No Contest with Agent or Banks.....................
Section 10.08. Stay of Acceleration...............................
ARTICLE XI FURTHER RIGHTS OF THE AGENT
Section 11.01. Further Assurances.................................
ARTICLE XII MISCELLANEOUS
Section 12.01. No Waiver; Cumulative Remedies.......................
Section 12.02. Amendment, Waivers and Consents......................
Section 12.03. Addresses for Notices, etc...........................
Section 12.04. Costs, Expenses and Taxes............................
Section 12.05. Reduction and Termination............................
Section 12.06. Representations and Warranties.......................
Section 12.07. Binding Effect; Assignment...........................
Section 12.08. Reproduction of Agreement............................
Section 12.09. Consent to Jurisdiction..............................
Section 12.10. Governing Law........................................
Section 12.11. Severability.........................................
Section 12.12. Headings.............................................
Section 12.13. WAIVER OF JURY TRIAL.................................
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EXHIBIT LIST
Exhibit A - Borrowing Base Certificate
Exhibits B-1 and B-2 - Revolving Notes
Exhibit C - Term Note
Exhibit D - Subsidiaries; partnerships; joint ventures
Exhibit E - 5% Shareholders
Exhibit F - Litigation; administrative proceedings
Exhibit G - Collateral Locations
Exhibit H - Existing Indebtedness and Liens
Exhibit I - Existing Guaranties
Exhibit J - Existing intercompany loans
Exhibit K - Investment in Subsidiaries
Exhibit L - Officers and Directors
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LOAN AGREEMENT dated as of June 25, 1997 by and among COMFORCE Corporation,
a Delaware corporation (the "Company"), the Subsidiaries of the Company whose
names are subscribed hereto or which subsequently join herein (the Company and
such Subsidiaries being hereinafter referred to collectively as the "Borrowers"
and individually as a "Borrower"), Fleet National Bank ("Fleet") and U. S. Bank,
Washington ("U. S. Bank"), (Fleet, U. S. Bank and any assignee of any of the
Loans made hereunder being hereinafter referred to collectively as the "Banks"
and individually as a "Bank"), and Fleet National Bank, as Agent for the Banks
hereunder (the "Agent").
The Borrowers, the Banks and the Agent, each party in consideration that
the others join herein, hereby respectively act and agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms. As used in this Agreement or in any
certificate or opinion delivered in connection with this Agreement, the
following terms shall have the meanings set out respectively after each:
"Acquisition" - Any purchase or other acquisition made by any Borrower or
any Subsidiary of a Borrower of all or substantially all of the business or
assets of any other corporation or other entity or any line of business of
another corporation or entity, all whether through the acquisition of stock or
assets or otherwise.
"Adjusted Consolidated EBITDA" - For any period, the Consolidated EBITDA of
the Company and Subsidiaries for such period; provided, however, that, with
respect to an Acquisition which is accounted for as a "purchase", for the four
fiscal quarters following the date of such Acquisition, Adjusted Consolidated
EBITDA shall include the results of operations of the Person or assets so
acquired determined on a historical pro forma basis as if such Acquisition had
been consummated as a "pooling of interests", plus, to the extent applicable,
any adjustments made in accordance with Securities and Exchange Commission Rule
17 CFR 210.11-02.
"Affiliate" - See Subsection 6.02(o).
"Aggregate Revolving Bank Liabilities" - At any time as of which same is to
be determined, the total of: (i) all Letter of Credit Liabilities then
outstanding, (ii) the then Aggregate Revolving Loans, and (iii) the aggregate
principal amount of all Temporary Loans then outstanding.
"Aggregate Revolving Loans" - The aggregate principal amount of all
Revolving Loans outstanding at any one time under this Agreement.
"Agreement" (as in "this Agreement") - This Loan Agreement, as the same may
be amended from time to time.
"Bank Certificate" - A certificate signed by an officer of a Bank setting
forth any additional amount required to be paid by the Borrowers to such Bank
pursuant to Section 2.05, Section 2.11 or Section 2.12 of this Agreement, which
certificate shall be submitted by such Bank to the Borrowers in connection with
each demand made at any time by such Bank upon the Borrowers with respect to
such additional amounts, and each such certificate shall, save for manifest
error, constitute conclusive evidence of the additional amount required to be
paid by the Borrowers to such Bank upon each demand. A claim by any Bank for all
or any part of any additional amount required to be paid by the Borrowers may be
made before and/or after the end of the Interest Period to which such claim
relates or during which such claim has arisen and before and/or after any
payment hereunder to which such claim relates. Each Bank Certificate shall set
forth in reasonable detail the basis for and calculation of the claim to which
it relates.
"Borrowing Base" - As at any date as of which same is to be determined, the
sum of: (i) 85% of the principal amount of Qualified Receivables of any Borrower
outstanding at that date, plus (ii) 50% of the Qualified Unbilled Receivables of
the Company and the other Borrowers outstanding at such date; provided that the
amount contributed to this clause (ii) shall at no time exceed $1,000,000.
"Borrowing Base Certificate" - A certificate from time to time submitted by
the Borrowers to the Agent, on a form and with such detail as may be required by
the Agent, setting forth the Borrowing Base and borrowing availability and the
Borrowers' calculation thereof as at the date of such certificate. Such
certificate shall be substantially in the form attached hereto as Exhibit A.
"Business Day" - Any day which is not a Saturday, nor a Sunday, nor a
public holiday under the laws of the United States of America or The
Commonwealth of Massachusetts applicable to a national banking association or
other day on which banks in Boston, Massachusetts are authorized or directed to
close; provided, however, that if the applicable provision relates to a LIBOR
Loan, the term "Business Day" shall not include any day on which dealings are
not carried on in the London interbank market or on which banks are not open for
business in London.
"Capital Expenditures" - All acquisitions of machinery, equipment, land,
leaseholds, buildings, leasehold improvements and all other expenditures for
purposes which are considered to be fixed assets under generally accepted
accounting principles consistently applied. When a fixed asset is acquired by a
lease which is required to be capitalized pursuant to generally accepted
accounting principles, the amount required to be capitalized pursuant thereto
shall be considered to be a Capital Expenditure in the year such asset is first
leased.
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"Capital Leases" - All leases which have been or should be capitalized in
accordance with generally accepted accounting principles as in effect from time
to time, including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereto.
"Cash Flow Available" - For any period, the Adjusted Consolidated EBITDA of
the Company and Subsidiaries for such period, minus each of the following: (i)
all federal and state income taxes actually paid by the Company) and/or any of
its Subsidiaries during such period, (ii) all dividends (other than dividends
payable in stock of the Company) actually paid in cash during such period, (iii)
all Capital Expenditures incurred by the Company and/or any of its Subsidiaries
during such period and not financed by Indebtedness for Money Borrowed and (iv)
cash payments (if any) made during such period by the Company and/or any its
Subsidiaries with respect to earn-out obligations.
"Charter" - The Certificate of Incorporation or other organizational
document of a corporation referred to, in each case as amended to date.
"Collateral" - All property of the Company or of any other Borrower in
which the Agent is granted (or is purported to be granted) a lien or security
interest pursuant to the Security Agreement, any Pledge Agreement or otherwise.
"Commitment" - As to each Bank, its agreement to make Revolving Loans to
the Borrowers pursuant to this Agreement.
"Consolidated" - When applied to the Company, means the accounts of the
Company and its Subsidiaries consolidated in accordance with generally accepted
accounting principles.
"Consolidated Capitalization Ratio" - As determined at any time, the ratio
of (x) Consolidated Funded Indebtedness to (y) the sum of Consolidated Funded
Indebtedness and Consolidated Shareholders' Equity.
"Consolidated EBITDA" - As to any Person, for any period, the Consolidated
Net Income (or Consolidated Net Loss, expressed as a negative number) of such
Person and its Subsidiaries for such period, plus, without duplication of any
item, (i) all federal and state income taxes (but not taxes in the nature of an
ad valorem property tax or a sales or excise tax) paid or accrued with respect
to such period and actually deducted on the consolidated books of such Person
for the purposes of computation of Consolidated Net Income (or Consolidated Net
Loss) for the period involved, (ii) the Consolidated Interest Expense paid or
accrued by such Person and/or any of its Subsidiaries for such period and
actually deducted on the consolidated books of such Person for the purposes of
computation of Consolidated Net Income (or Consolidated Net Loss) for the period
involved, and (iii) the amount of the provision for depreciation and/or
amortization expense actually deducted on the consolidated books of such Person
for the purposes of computation of Consolidated Net Income (or Consolidated Net
Loss) for the period involved.
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"Consolidated Fixed Charge Ratio" - For any fiscal period, the ratio of (x)
the Cash Flow Available of the Company and its Subsidiaries for such period to
(y) the sum of (i) Consolidated Interest Expense of the Company and its
Subsidiaries actually paid during such period (excluding amortization of
deferred financing costs), plus (ii) mandatory principal payments (not including
payments on account of Excess Cash Flow pursuant to Section 2.07) of
Consolidated Funded Indebtedness made or required to be made during such period.
"Consolidated Funded Indebtedness" - The aggregate of Indebtedness for
Money Borrowed of the Company and its Subsidiaries, any Indebtedness of an
Affiliate of a Borrower for which such Borrower is directly or indirectly
liable, all Letter of Credit Liabilities and any liability associated with an
earn-out obligation arising in connection with an Acquisition which is recorded
as a liability on the consolidated balance sheet of the Company and its
Subsidiaries, all as determined in accordance with generally accepted accounting
principles, but less that amount (if any) by which the Company's unencumbered
cash and cash-equivalents then exceed $3,000,000.
"Consolidated Interest Expense" - With respect to any period of computation
thereof, the gross interest expense of the Company and its Subsidiaries,
including, without limitation, (i) the amortization of debt discounts, (ii) the
amortization of all fees (including, without limitation, fees payable in respect
of any swap agreement or other hedging agreement and any letters of credit)
payable in connection with the incurrence of Indebtedness to the extent included
in interest expense, and (iii) the portion of any liabilities incurred in
connection with Capital Leases allocable to interest expense, all determined on
a consolidated basis in accordance with generally accepted accounting principles
applied on a consistent basis.
"Consolidated Leverage Ratio" - As determined at any date, the ratio of (x)
Consolidated Funded Indebtedness of the Company and its Subsidiaries as at that
date to (y) Adjusted Consolidated EBITDA of the Company and its Subsidiaries for
the 12-month period ending on such date.
"Consolidated Net Income" - As to any Person, for any period of computation
thereof, the gross revenues from operations of such Person and its Subsidiaries
less all operating and non-operating expenses of such Person and its
Subsidiaries, including taxes on income, all determined on a consolidated basis
in accordance with generally accepted accounting principles applied on a
consistent basis; but excluding as income: (i) net gains on the sale, conversion
or other disposition of capital assets (other than gains of up to $250,000 per
fiscal year resulting from disposition of tangible assets in the ordinary course
of business), (ii) net gains on the acquisition, retirement, sale or other
disposition of capital stock and other securities of such Person or its
Subsidiaries, (iii) net gains on the collection of proceeds of life insurance
policies, (iv) any write-up of any asset and (v) any other gain or credit of any
extraordinary nature as determined in accordance with generally accepted
accounting principles applied on a consistent basis (but excluding from the
aforesaid expenses extraordinary losses of up to $250,000 per fiscal year
recorded by such Person on its consolidated books). If the result described in
the immediately preceding sentence is less
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than zero, the amount by which it is less than zero will be known as the
"Consolidated Net Loss".
"Consolidated Pre-Tax Income" - For any period of computation thereof, the
gross revenues from operations of the Company and its Subsidiaries less all
operating and non-operating expenses of the Company and its Subsidiaries
excluding taxes on income, all determined on a consolidated basis in accordance
with generally accepted accounting principles applied on a consistent basis; but
excluding as income: (i) net gains on the sale, conversion or other disposition
of capital assets (other than gains of up to $250,000 per fiscal year resulting
from disposition of tangible assets in the ordinary course of business), (ii)
net gains on the acquisition, retirement, sale or other disposition of capital
stock and other securities of the Company or its Subsidiaries, (iii) net gains
on the collection of the proceeds of life insurance policies, (iv) any write-ups
of any asset, and (v) any other net gain or credit of any extraordinary nature
as determined in accordance with generally accepted accounting principles
applied on a consistent basis (but excluding from the aforesaid expenses
extraordinary losses of up to $250,000 per fiscal year recorded by the Company
on its consolidated books).
"Consolidated Shareholders' Equity" - At any time as of which the amount
thereof is to be determined, the consolidated shareholders' equity of the
Company as determined in accordance with generally accepted accounting
principles applied on a consistent basis.
"Consolidated Total Assets" - As of any date on which the amount thereof is
to be determined, the net book value of all assets of the Company and its
Subsidiaries as determined on a consolidated basis in accordance with generally
accepted accounting principles applied on a consistent basis.
"Default" - Any event or circumstance which, with the passage of time or
giving of notice or both, could become an Event of Default.
"Determination Date" - As defined in Subsection 6.01(r).
"Environmental Law" - Any federal, state or local statute, law, ordinance,
code, rule, regulation, order, decree, permit or license regulating, relating
to, or imposing liability or standards of conduct concerning, any environmental
matters or conditions, environmental protection or conservation, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended; the Resource Conservation and Recovery Act,
as amended; the Toxic Substance, Control Act, as amended; the Clean Air Act, as
amended; the Clean Water Act, as amended; together with all regulations
promulgated thereunder, and any other "Superfund" or "Superlien" law.
"ERISA" - As defined in Subsection 5.01(l).
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"Eurocurrency Liabilities" - Has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor), as in effect from time to time, or in any successor regulation
relating to the liabilities described in said Regulation D.
"Eurodollar Interest Rate" - For any Interest Period, an interest rate per
annum, expressed as a percentage, determined by the Agent pursuant to the
following formula:
* EIR = LIBOR + ERI
-----------
[1.00 - RR]
Where EIR = Eurodollar Interest Rate
LIBOR = See definition of LIBOR
RR = Reserve Rate
ERI = The then applicable Eurodollar Rate Increment
*EIR to be rounded upwards to the next higher 1/100 of 1%.
The Eurodollar Interest Rate will be adjusted during any Interest Period to
reflect any change in the Reserve Rate during such Interest Period.
"Eurodollar Rate Increment" - The Eurodollar Rate Increment for all
Revolving Loans is 3.5.
"Event of Default" - Any of the events specified in Section 7.01 hereof.
"Federal Claim" - Any Receivable consisting of a claim within the meaning
of, and subject to (for purposes of protection or perfecting the rights of an
assignee), the Assignment of Claims Act of 1940, as in effect from time to time.
"Floating Rate Revolving Loan" - Any Revolving Loan which bears interest at
a rate calculated with reference to the Prime Rate.
"Guaranteed Obligations" - All Indebtedness, liabilities and obligations
now or hereafter owed by any Borrower under this Agreement and/or under any of
the other Loan Documents.
"Hazardous Material" - Any pollutant, contaminant or hazardous, toxic or
dangerous waste, substance or material (including, without limitation, petroleum
products, asbestos-containing material and lead), the generation, handling,
storage, disposal, treatment, release, discharge or emission of which is subject
to any Environmental Law.
"Impositions" - All present and future taxes, levies, duties, impositions,
deductions, charges and withholdings applicable to any Bank with respect to any
LIBOR Loan,
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excluding, however, any taxes imposed directly on such Bank's income and any
franchise taxes imposed on it by the jurisdiction under the laws of which such
Bank is organized or any political subdivision thereof.
"Indebtedness" - The total of all obligations of a Person, whether current
or long-term, senior or subordinated, which in accordance with generally
accepted accounting principles would be included as liabilities upon such
Person's balance sheet at the date as of which Indebtedness is to be determined;
and shall also include such Person's liability in respect of guaranties,
endorsements (other than for collection in the ordinary course of business) or
other arrangements whereby responsibility is assumed for the obligations of
others, whether by agreement to purchase or otherwise acquire the obligations of
others, including any agreement, contingent or otherwise, to furnish funds
through the purchase of goods, supplies or services for the purpose of payment
of the obligations of others, as well as all obligations (whether matured or
contingent) in respect of letters of credit, swap agreements or hedging
agreements.
"Indebtedness for Money Borrowed" - All indebtedness in respect of money
borrowed, including, without limitation, all Capital Leases and the deferred
purchase price of any property or asset, as well as all Indebtedness evidenced
by a promissory note, bond or similar written obligation for the payment of
money (including, but not limited to, conditional sales or similar title
retention agreements).
"Interest Payment Date" - As to any LIBOR Loan, the last day of the
Interest Period applicable to such Loan.
"Interest Period" - As to each LIBOR Loan, the period commencing with the
date of the making of such LIBOR Loan and ending one, two or three months
thereafter, as the Borrowers may select; provided that (A) any such Interest
Period which would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day occurs in
a new calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day; (B) any such Interest Period which begins on
a day for which there is no numerically corresponding day in the calendar month
during which such Interest Period is to end shall end on the last Business Day
of such calendar month and (C) no Interest Period may be selected as to any
Revolving Loan which would end after the Revolving Expiration Date.
"Letter of Credit Liabilities" - As determined at any time, the total of
(i) the aggregate then undrawn stated amounts of all letters of credit hereafter
issued by Fleet pursuant to Section 2.14, plus (ii) all amounts then outstanding
representing unreimbursed draws on letters of credit issued as aforesaid.
"LIBOR" - With respect to each Interest Period, that rate per annum
(rounded upward, if necessary, to the nearest 1/16th of 1%) at which deposits in
United States Dollars are offered to the Agent in the London interbank market by
prime banks (as reasonably
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determined by the Agent), for a period coterminous with the term of such
Interest Period and in an amount approximately equal to the principal amount of
the LIBOR Loan to which such Interest Period is to apply, as determined by the
Agent on that date which is two Business Days prior to the first day of the
applicable Interest Period.
"LIBOR Loan" - Any Revolving Loan which bears interest at a Eurodollar
Interest Rate.
"Loan" - Any obligation (matured or unmatured) of any Borrower to any Bank
now or hereafter arising under or in respect of this Agreement (including,
without limitation, any Revolving Loan, any Temporary Loan, the Term Loan and
any Letter of Credit Liabilities).
"Loan Documents" - This Agreement, the Notes, the Pledge Agreements, the
Personal Pledges, the Security Agreement and all other instruments, agreements
and documents now or hereafter entered into relating to any Loan and/or any
letter of credit issued hereunder.
"London" - The City of London in England.
"Material Subsidiary" - Each direct or indirect Subsidiary of the Company
existing on the date hereof and in the case of any Subsidiary acquired or
created after the date hereof each direct or indirect Subsidiary of the Company
which (i) has total assets equal to or greater than 5% of Consolidated Total
Assets (calculated as of the most recent fiscal period with respect to which the
Agent shall have received financial statements) of the Company or (ii) has
pre-tax income equal to or greater than 5% of Consolidated Pre-Tax Income
(calculated for the most recent period for which the Agent has received
financial statements) of the Company; provided; however, that notwithstanding
the foregoing, the term "Material Subsidiaries" shall in any event mean
Subsidiaries of the Company that together with the Company itself have assets
equal to not less than 85% of Consolidated Total Assets (calculated as described
above) and pre-tax income of not less than 85% of Consolidated Pre-Tax Income
(calculated as described above); provided further that if more than one
combination of Subsidiaries satisfies such threshold, then Subsidiaries so
determined by the Company to be "Material Subsidiaries" shall be specified by
the Company.
"Multi-employer Plan" - Any employee pension benefit plan covered by Title
IV of ERISA and in respect of which the Company or any Subsidiary is an
"employer" as described in Section 4001(b) of ERISA, which is also a
multi-employer plan as defined in Section 4001(a)(3) of ERISA.
"Notes" - Each of the Revolving Notes and the Term Note.
"PBGC" - As defined in Subsection 5.01(l).
"Permitted Acquisition" - Any Acquisition which either (A) is a Permitted
Financed Acquisition (defined below) or (B) meets all of the following criteria:
(1) at the time of such
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Acquisition and after giving effect thereto, there is no Default or Event of
Default hereunder, (2) after giving effect to such Acquisition, the Company is
in pro forma compliance with each of Subsection 6.01(r) (Consolidated Leverage
Ratio), Subsection 6.01(s) (Consolidated Fixed Charge Ratio), Subsection 6.01(t)
(Shareholders' Equity) and Subsection 6.01(u) (Consolidated Capitalization
Ratio) with compliance with each of said Subsections being determined on a pro
forma basis as at the date of such Acquisition, even if not a fiscal
quarter-end, (3) such Acquisition is in the same line of business as that
engaged in by the Company and Subsidiaries at the date of this Agreement, and
(4) the written approval of the Required Banks is obtained (i) as to any
Acquisition if the Company's Consolidated Leverage Ratio (calculated at the
Company's most recent fiscal quarter-end) is equal to or greater than 3.5 to 1
and (ii) as to any individual Acquisition for which the aggregate consideration
(in cash at closing) exceeds 5% of Consolidated Shareholders' Equity (calculated
as at the Company's most recent fiscal quarter-end) if the Company's
Consolidated Leverage Ratio (calculated at said most recent fiscal quarter-end)
is less than 3.5 to 1.
"Permitted Financed Acquisition" - Any Acquisition which is financed by
equity and/or Subordinated Debt on terms acceptable to the Required Banks;
provided that all of the following conditions are met: (1) such Acquisition
satisfies all of the criteria set forth in clauses (1) - (3) of the definition
of "Permitted Acquisition" above, (2) the Acquisition is consistent with a
business plan reasonably satisfactory to the Required Banks, (3) the aggregate
cash consideration payable at closing in connection with any such Acquisition
does not exceed the product of (x) 5.0 times (y) the acquired entity's
Consolidated EBITDA for the 12-months ended at the acquired entity's most recent
fiscal quarter-end (or the product of (x) 7.0 times (y) such Consolidated EBITDA
if the Acquisition is in the information technology or telecommunications
businesses), and (4) the aggregate cash consideration paid at closing for such
Acquisition will not exceed the net proceeds of the equity and/or Subordinated
Debt raised for this purpose by the Company.
"Person" - An individual, corporation, partnership, joint venture, trust or
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Personal Pledges" - As defined in Subsection 4.10(h) below.
"Personal Pledgors" - As defined in Subsection 4.01(h) below.
"Pledge Agreements" - All pledge agreements now or hereafter given by any
Borrower to the Agent with respect to stock of any Subsidiary of such Borrower.
"Premises" - All locations now or hereafter owned, leased or operated by
any Borrower.
"Prime Rate" - That rate of interest per annum announced by the Agent, from
time to time, as being its prime rate, it being understood that such rate is
merely a reference rate, not
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necessarily the lowest, which serves as the basis upon which effective rates of
interest are calculated for obligations making reference thereto.
"Prime Rate Increment" - The Prime Rate Increment for all Revolving Loans
is 0.75%. The Prime Rate Increment for the Term Loan is as follows: at all times
from the date of this Agreement through and including September 20, 1997 -
1.75%; from September 21, 1997 through and including December 20, 1997 - 2.25%;
from December 21, 1997 through and including March 20, 1998 - 2.75%; and from
March 21, 1998 and at all times thereafter - 3.25%.
"Principal Office" - The principal place of business of the Agent and each
Bank, now located as follows: (i) as to the Agent and Fleet, at Xxx Xxxxxxx
Xxxxxx, Xxxxxx, XX 00000, and (ii) as to U. S. Bank, at 0000 0xx Xxxxxx,
Xxxxxxx, XX 00000.
"Qualified Receivables" - Only those Receivables of the Company or any
other Borrower (each, an "Account Creditor") which have been duly billed by the
Account Creditor; and further provided that no Receivable will be deemed a
Qualified Receivable unless:
(i) such Receivable was promptly invoiced and remains unpaid not more
than 90 days from the date of invoicing;
(ii) such Receivable arose from the bona fide performance of services
or an outright sale of goods by the Account Creditor, such services have
been rendered and such goods have been shipped to the account debtor and
billing has been made in accordance with any applicable contract;
(iii) the Agent holds a fully perfected security interest in such
Receivable and such Receivable is not subject to any lien or claim by any
other Person, other than (A) the security interest in favor of the Agent
created by the Security Agreement and (B) any lien permitted by clause (i)
of Subsection 6.02(b) below;
(iv) such Receivable is not subject to any credit allowance or
adjustment by the account debtor and the account debtor has not complained
as to its liability thereon and has not returned any of the goods from the
sale of which the Receivable arose;
(v) such Receivable arose in the ordinary course of business of the
Account Creditor and did not arise from the performance of services for or
the sale of goods to any affiliate or any supplier or employee of the
Account Creditor or any other Borrower;
(vi) no notice of any bankruptcy or insolvency of the account debtor
has been received by or is known to the Account Creditor;
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(vii) the Agent has not notified the Account Creditor that the
Receivable or account debtor is, in the Agent's reasonable discretion,
unsatisfactory;
(viii) the Security Agreement is in full force and effect with respect
to such Account Creditor;
(ix) such Receivable is evidenced by entries made in the normal course
of business in the books and records of the Account Creditor, which books
and records are maintained at the principal office of such Account Creditor
(and, if the Account Creditor received the Receivable by assignment, such
assignment is evidenced by a written instrument in form and substance
satisfactory to the Agent and filed with the financial records of the
relevant Account Creditor);
(x) such Receivable is not a Federal Claim (or, if a Federal Claim,
the Account Debtor has complied with the Assignment of Claims Act so as to
provide the Agent a fully perfected assignment of such Receivable);
(xi) the account debtor is located in the United States; and
(xii) the account debtor has not failed to pay for more than 90 days
such amount of Receivables owed by the same account debtor to the Account
Creditor and/or to any other Borrower as constitutes 25% of the total
Receivables owed by said account debtor to the Company and/or to any other
Borrower.
"Qualified Unbilled Receivables" - All Receivables of any Borrower which
represent services actually rendered and not yet invoiced and which will, when
invoiced, constitute Qualified Receivables.
"Receivables" - All of each Borrower's present and future accounts and
accounts receivables for goods sold or services rendered.
"Required Banks" - All of the Banks party to this Agreement.
"Reserve Rate" - The aggregate rate, expressed as a decimal, at which the
Agent would be required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or similar regulation
relating to such reserve requirements) against Eurocurrency Liabilities, as well
as any other reserve which would be required of the Agent with respect to the
LIBOR Loans if such LIBOR Loans were made by the Agent. The Eurodollar Interest
Rate shall be adjusted automatically on and as of the effective date of any
change in the Reserve Rate.
"Revolving Commitment Amount" - Subject to reduction as provided in Section
12.05, Twenty Million ($20,000,000) Dollars.
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"Revolving Expiration Date" - July 10, 1998.
"Revolving Loan Percentage" - As to each of the Banks, the following
respective percentage:
Fleet - 50%
U.S. Bank - 50%
"Revolving Loans" - Loans made by any Bank to the Borrowers pursuant to
Section 2.01.
"Revolving Notes" - The joint and several promissory notes of the Borrowers
in the respective forms of Exhibits B-1 and B-2 attached hereto.
"Security Agreement" - That certain Security Agreement (All Assets) of even
date from the Borrowers to the Agent.
"Senior Debt" - All Indebtedness of the Company and/or its Subsidiaries
which is not Subordinated Debt.
"Subordinated Debt" - All Indebtedness of the Company which is fully
subordinated to the Loans pursuant to instruments satisfactory in form and
substance to the Required Banks.
"Subsidiary" - As to any Person, any corporation or other entity as to
which such Person and/or any of its Subsidiaries, directly or indirectly, owns,
or has the right to control or direct the voting of, more than fifty (50%)
percent of the outstanding capital stock or other ownership interest having
general voting power (under ordinary circumstances).
"Temporary Loan" - As defined in Section 3.01.
"Term Loan" - The Loan made by Fleet to the Borrowers pursuant to Section
2.05.
"Term Note" - The joint and several promissory note of the Borrowers in the
form of Exhibit C attached hereto.
Section 1.02. Use of Defined Terms. Any defined term used in the plural
preceded by the definite article shall be taken to encompass all members of the
relevant class. Any defined term used in the singular preceded by "any" shall be
taken to indicate any number of the members of the relevant class.
Section 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with United States generally
accepted accounting principles consistently applied on the basis used by the
concerned entity in prior years.
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ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
Section 2.01. Revolving Loans. Subject to the terms and conditions
hereinafter set forth, each Bank severally agrees that, upon the Borrowers'
request, such Bank will make a loan under this Section 2.01 (each, a "Revolving
Loan") to the Borrowers, as provided in Section 3.01, on any Business Day prior
to the first to occur of (i) the Revolving Expiration Date or (ii) the earlier
termination of such Bank's Commitment pursuant to Section 7.02 or 12.05, in an
amount equal to the product of (x) such Bank's Revolving Loan Percentage times
(y) the principal amount of the total Revolving Loans then being requested by
the Borrowers. The Commitment of each Bank to make Revolving Loans shall
terminate and such Bank shall have no further obligation or liability with
respect thereto upon the first to occur of said events described in clauses (i)
and (ii) of the preceding sentence. All Revolving Loans will be made jointly to
the Borrowers and repayment thereof will be the joint and several obligation of
the Borrowers. In no event shall the Aggregate Revolving Loans outstanding or
requested be such that, after giving effect to any such request, the Aggregate
Revolving Bank Liabilities would exceed the then-effective Revolving Commitment
Amount. Further, and without limitation of the foregoing, in no event shall the
Aggregate Revolving Loans outstanding or requested be such that, after giving
effect to any such request, the Aggregate Revolving Bank Liabilities would
exceed the then-effective Borrowing Base. Each request by the Borrowers for
LIBOR Loans hereunder shall be for an aggregate amount of $2,000,000 or an
integral multiple of $2,000,000 in excess of $2,000,000. Each Floating Rate
Revolving Loan requested will be in the amount of $100,000 or an integral
multiple thereof.
The Revolving Loans made hereunder shall be evidenced by the two Revolving
Notes of the Borrowers, dated as of the date hereof, payable to the order of the
respective Banks. The Borrowers hereby irrevocably authorize each Bank to make
or cause to be made, on a schedule attached to such Bank's Revolving Note or on
the books of such Bank, at or following the time of making each Revolving Loan
and of receiving payment or prepayment of principal of any Revolving Loan, an
appropriate notation reflecting such transaction (including the date, amount and
maturity of each Revolving Loan) and the then aggregate unpaid principal balance
of the Revolving Loans owed to such Bank. The aggregate unpaid principal amount
of each Revolving Loan made by a Bank, as noted by such Bank from time to time
on such a schedule or on its books, shall constitute presumptive evidence of
such amount. Failure of a Bank to make any such notation shall not, however,
affect any obligation of the Borrowers hereunder or under any of the Revolving
Notes.
Section 2.02. Requests for Floating Rate Revolving Loans. On each occasion
when the Borrowers request Floating Rate Revolving Loans, the Borrowers will
give the Agent telephonic or written notice, specifying the aggregate principal
amount of the Floating Rate Revolving Loans so requested and the date upon which
such Revolving Loans are to be made,
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which date shall be at least one (1) Business Day following that Business Day on
which the Agent shall have received such written or telephonic notice (except
that the Agent may, in its discretion, accept telephonic notice of any request
for Floating Rate Revolving Loans up to 10:00 a.m. on the date on which such
Floating Rate Revolving Loans are to be made). The Agent will promptly notify
each Bank that it has received a request from the Borrowers for Floating Rate
Revolving Loans and will inform each Bank of the aggregate principal amount
requested, the amount of each Bank's Revolving Loan Percentage of such aggregate
principal amount and the date on which each Floating Rate Revolving Loan is to
be made.
Section 2.03. Repayment of Principal of Revolving Loans. The Borrowers will
repay (and will be jointly and severally obligated to repay) in full all
Revolving Loans (together with all interest accrued thereon) on the first to
occur of (i) the Revolving Expiration Date or (ii) an acceleration under
Subsection 7.02(a) following an Event of Default. In the event that at any time
the Borrowing Base is in an amount which is less than the then-outstanding
Aggregate Revolving Bank Liabilities, the Borrowers will forthwith prepay (and
will be jointly and severally obligated to prepay) so much of the Revolving
Loans as may be required (or to cause the termination of such letters of credit
as may be required) so that the Aggregate Revolving Bank Liabilities will never
exceed the then effective Borrowing Base. In addition, payments will be made by
the Borrowers so that the Aggregate Revolving Bank Liabilities will never exceed
the Revolving Commitment Amount, as same may be from time to time reduced. Such
prepayments and payments will be made to the Agent for the account of all Banks
on a pro rata basis and will be applied first to Floating Rate Revolving Loans
and only thereafter to LIBOR Loans.
The Borrowers may prepay, at any time and from time to time, without
premium or penalty, the whole or any portion of the Floating Rate Revolving
Loans; provided that the outstanding Floating Rate Revolving Loans made by each
Bank shall be paid pro rata. Each LIBOR Loan must be repaid in full on the last
day of the Interest Period applicable thereto. The Borrowers may not make any
prepayment of a LIBOR Loan prior to the last day of the Interest Period
applicable thereto, unless the Borrowers shall forthwith pay all amounts owing
to the Banks pursuant to the provisions of Section 2.11. Any payment of LIBOR
Loans shall (except in the event of a prepayment pursuant to Section 2.13) be
made to all Banks on a pro rata basis. Each prepayment of Revolving Loans, if
less than the Aggregate Revolving Loans then outstanding, shall be in a
principal amount of at least $2,000,000 as to LIBOR Loans and at least $100,000
as to Floating Rate Revolving Loans. The Borrowers shall give the Agent at least
one Business Day's notice prior to making any prepayment of Revolving Loans. All
payments in respect of the Revolving Loans will be made by the Borrowers to the
Agent, for the respective accounts of the Banks entitled to same.
Prior to the Revolving Expiration Date and within the other limits and on
the conditions contained in this Agreement, the principal amounts of the
Revolving Loans (both LIBOR Loans and Floating Rate Revolving Loans) which are
prepaid or repaid are available for reborrowing hereunder. All Revolving Loans
not repaid prior to the Revolving
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Expiration Date will be due and payable in full on the Revolving Expiration
Date, together with all unpaid interest accrued thereon to the date of payment.
Section 2.04. Interest Payments on Revolving Loans. The Borrowers will pay
(and will be jointly and severally obligated to pay) interest on the principal
amount of the Revolving Loans outstanding from time to time, from the date of
the initial Revolving Loan hereunder until payment of all Revolving Loans and
the Revolving Notes in full. Interest on Floating Rate Revolving Loans will be
payable monthly in arrears on the first day of each month, commencing with the
first such date after the making of any Revolving Loan. Interest on any LIBOR
Loan will be paid on the Interest Payment Date applicable thereto. In any event,
interest shall also be paid on the date of payment of the Revolving Loans in
full. The rate of interest payable on Floating Rate Revolving Loans shall be a
fluctuating rate per annum which shall at all times be equal to the sum of (i)
0.75% per annum plus (ii) the Prime Rate as in effect from time to time (but in
no event in excess of the maximum rate permitted by then applicable law), with a
change in such rate of interest to become effective on the same day on which any
change in the Prime Rate is effective. The rate of interest payable on any LIBOR
Loan will be the Eurodollar Interest Rate applicable thereto. Overdue principal
of the Revolving Loans and, to the extent permitted by law, overdue interest on
the Revolving Loans shall bear interest at a rate per annum which at all times
shall be equal to the sum of (i) two (2%) percent per annum plus (ii) the rate
otherwise applicable to the Revolving Loans (but in no event in excess of the
maximum rate from time to time permitted by then applicable law), compounded
monthly and payable on demand.
Section 2.05. LIBOR Loans. Any Revolving Loan made under this Article II
will, except as provided in this Section 2.05, be a Floating Rate Revolving
Loan. Subject to the conditions set forth in this Agreement, the Borrowers may
elect that the Revolving Loans to be made on any date under Section 2.01 will be
made as LIBOR Loans. Such election shall be made by the Borrowers giving to the
Agent a written or facsimile notice (a "Fixed Rate Borrowing Notice") containing
the information described below, which Fixed Rate Borrowing Notice must be
received by the Agent not later than 12:00 noon (Boston time) three Business
Days prior to the date of the proposed borrowing. Each Fixed Rate Borrowing
Notice must state that LIBOR Loans are being requested, specify the aggregate
principal amount of the proposed LIBOR Loans requested and specify the date on
which such LIBOR Loans are to be made and the duration (one month, two months or
three months) of the Interest Period selected for such LIBOR Loans. Any Fixed
Rate Borrowing Notice shall, upon receipt by the Agent, become irrevocable and
binding on the Borrowers. The Agent shall promptly transmit to each Bank a copy
of each Fixed Rate Borrowing Notice which it receives. If the Borrowers submit a
Fixed Rate Borrowing Notice and then fail for any reason to borrow the LIBOR
Loans described therein, the Borrowers shall, upon submission by any Bank of a
Bank Certificate with respect thereto, forthwith indemnify such Bank (with
payment to be made to the Agent for the account of such Bank) against any loss
or expense incurred by such Bank as a result of any such failure by the
Borrowers, including, without limitation, any loss or expense incurred by reason
of the liquidation or redeployment of deposits or other funds acquired by such
Bank to fund or maintain the requested LIBOR
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Loans. Each LIBOR Loan will mature and be due and payable in full on the last
day of the Interest Period applicable thereto. The principal amount of any LIBOR
Loan so repaid may be reborrowed as a new LIBOR Loan to the extent and on the
terms and conditions contained in this Agreement by delivery to the Agent of a
new Fixed Rate Borrowing Notice conforming to the requirements set forth above
in this Section 2.05 or, to the extent and on the terms and conditions contained
in this Agreement, may be reborrowed as a Floating Rate Revolving Loan (and any
LIBOR Loan not so repaid and not so reborrowed as a new LIBOR Loan will be
deemed to have been so reborrowed as a Floating Rate Revolving Loan).
Any request for a LIBOR Loan and may be made on behalf of the Borrowers
only by a duly authorized officer of the Company; provided, however, that the
Agent may conclusively rely upon any written or facsimile communication received
from any individual whom the Agent believes in good faith to be such a duly
authorized officer.
Section 2.06. Term Loan. Pursuant to this Agreement, Fleet is this day
making a term loan (the "Term Loan") to the Borrowers in the original principal
amount of $20,000,000. The Term Loan is being made jointly to the Borrowers and
repayment thereof is the joint and several obligation of the Borrowers. The Term
Loan is evidenced by the Term Note. The Borrowers hereby irrevocably authorize
Fleet to make or cause to be made, on a schedule attached to the Term Note or on
the books of such Bank, at or following the time of receiving each payment or
prepayment of principal of the Term Note, an appropriate notation reflecting
such transaction and the then aggregate unpaid principal balance of the Term
Loan. The aggregate unpaid principal amount of the Term Loan, as recorded by
Fleet from time to time on such schedule or on such books, shall constitute
presumptive evidence of such amount. Failure of Fleet to make any such notation
shall not, however, affect any obligation of the Borrowers hereunder or under
the Term Note.
Section 2.07. Repayment of Principal of the Term Loan. The Borrowers will
repay (and will be jointly and severally obligated to repay) the principal
amount of the Term Loan in the following installments: seven (7) quarterly
installments, each in the amount of $750,000, payable on each of July 1, 1998,
September 30, 1998, December 31, 1998, March 31, 1999, June 30, 1999, September
30, 1999 and December 31, 1999; followed by ten (10) equal quarterly
installments, each in the amount of $1,475,000, payable on the last day of each
calendar quarter commencing March 31, 2000 and continuing on the last day of
each calendar quarter thereafter through and including June 30, 2002, when there
shall be due and payable an amount equal to all then unpaid principal of the
Term Loan and all accrued interest thereon. The Borrowers will also repay,
within 90 days after the end of each fiscal year, for each of their 1997, 1998
and 1999 fiscal years, an additional amount of principal of the Term Loan equal
to 75% of the Company's Excess Cash Flow for each such fiscal year. For each
such fiscal year, "Excess Cash Flow" is the result of (x) actual Consolidated
EBITDA of the Company and Subsidiaries for such fiscal year minus (y) the sum of
(i) all federal and state income taxes actually paid by the Company and/or any
of its Subsidiaries during such fiscal year, (ii) the Consolidated Interest
Expense actually paid by the Company and/or any of its Subsidiaries during such
fiscal year, (iii) all dividends (other than dividends
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paid in stock of the Company) paid by the Company during such fiscal year, (iv)
Capital Expenditures incurred by the Company and/or any of its Subsidiaries
during such fiscal year and not financed by Indebtedness for Money Borrowed, (v)
cash earn-out payments (if any) made during such fiscal year by the Company
and/or any of its Subsidiaries, and (vi) payments (if any) made by the Company
and/or any of its Subsidiaries during such fiscal year with respect to current
maturities of long-term debt (not including payments on account of Excess Cash
Flow pursuant to Section 2.07). The Borrowers may at their option prepay at any
time, without premium or penalty, the whole or any portion of the Term Loan;
provided that (i) each such optional prepayment, if less than the entire
principal amount of the Term Loan then outstanding, shall be in an amount of
$1,000,000 or an integral multiple thereof and (ii) each such prepayment shall
be accompanied by payment of all interest on the Term Loan accrued to the date
of such prepayment. Any partial prepayment of principal of the Term Loan shall
be applied to installments of principal of the Term Loan thereafter coming due
in inverse order of normal maturity. The Borrowers shall give the Agent not less
than 5 Business Days' prior written notice of any prepayment of the Term Loan.
All payments in respect of the Term Loan will be made by the Borrowers to the
Agent, for the account of Fleet. Amounts paid or prepaid with respect to the
Term Loan are not available for reborrowing.
In addition, and without limitation of the foregoing, Fleet may at any time
by written notice (the "Call Notice") to the Borrowers declare the Term Loan to
be fully matured and to be due and payable in full on any date (the "Accelerated
Maturity Date") designated for this purpose in the Call Notice, and if such Call
Notice is given the outstanding principal balance of the Term Loan will become
due and payable in full on the Accelerated Maturity Date, together with all
interest thereon to the Accelerated Maturity Date; provided that (i) the
Accelerated Maturity Date will not be earlier than July 10, 1998 and (ii) the
Call Notice will be given not less than 5 days prior to the Accelerated Maturity
Date. The Borrowers jointly and severally acknowledge and agree that (i) Fleet
may give the Call Notice at any time, whether or not any Default or Event of
Default has occurred under this Agreement and with or without any other cause
and (ii) upon the giving of such Call Notice in accordance with this paragraph,
the Term Loan will be due and payable in full on the designated Accelerated
Maturity Date, whether or nor any Default or Event of Default has occurred under
this Agreement and without regard to any other circumstance. The Borrowers
jointly and severally acknowledge and agree that the ability of Fleet to cause
the Term Loan to become due and payable in full at any time on or after July 10,
1998 (whether or not any Default or Event of Default or any other circumstance
has occurred) is a substantial inducement for Fleet to make the Term Loan.
The Borrowers agree to give Fleet written notice not less than 90 nor more
than 120 days prior to July 10, 1998 specifically referring to this Agreement
and stating that Fleet has the right pursuant to this Section 2.07 to give the
Call Notice referred to hereto with the result that the Term Loan would become
due and payable in full at any time on or after July 10, 1998.
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Section 2.08. Interest Payments on Term Loan. The Borrowers will pay (and
will be jointly and severally obligated to pay) interest on the principal amount
of the Term Loan outstanding from time to time, from the date hereof until
payment of the Term Loan and the Term Note in full. Such interest will be
payable monthly in arrears on the first day of each month (commencing with July
1, 1997) and on the date of payment in full of the Term Loan. The rate of
interest on the Term Loan shall be a fluctuating rate per annum which shall at
all times be equal to the sum of (1) the then applicable Prime Rate Increment
plus (2) the Prime Rate as in effect from time to time (but in no event in
excess of the maximum rate permitted by then applicable law), with a change in
such rate of interest to become effective on the same day on which any change in
the Prime Rate or in the applicable Prime Rate Increment is effective. Overdue
principal of the Term Loan and, to the extent permitted by law, overdue interest
on the Term Loan shall bear interest at a rate per annum which at all times
shall be equal to the sum of (i) two (2%) percent per annum plus (ii) the rate
otherwise applicable to the Term Loan (but in no event in excess of the maximum
rate from time to time permitted by then applicable law), compounded monthly and
payable on demand.
Section 2.09. Commitment and Other Fees. At the date of this Agreement, the
Borrowers are paying to the Agent, for the account of the respective Banks in
accordance with their respective Revolving Loan Percentages, a non-refundable
fee (the "Facility Fee") of $300,000. (If the within facility for Revolving
Loans is hereafter amended or extended, the fees paid in connection with such
amendment or extension will take into account the Facility Fee paid this day,
although additional amounts may also be charged for any such amendment or
extension.) Further, the Borrowers will pay (and will be jointly and severally
obligated to pay) to the Agent, for the account of each of the Banks, on the
first day of each calendar quarter, commencing on July 1, 1997 and on the
Revolving Expiration Date or date of earlier termination of the within facility
for Revolving Loans, commitment fees ("Commitment Fees") computed quarterly in
arrears (being computed through the last day of the immediately preceding
calendar quarter) on the daily average unused portion of such Bank's Revolving
Loan Percentage of the Revolving Commitment Amount (as such Revolving Commitment
Amount shall be in effect on the relevant day) during the calendar quarter (or
portion thereof) for which such Commitment Fees are to be determined. Such
Commitment Fees will be payable, based on such daily average unused portion of
each Bank's Revolving Loan Percentage of the Revolving Commitment Amount, at the
rate of 0.5% per annum. As used herein, the "unused portion" of a Bank's
Revolving Loan Percentage of the Revolving Commitment Amount on any date shall
mean that amount by which (x) such Bank's Revolving Loan Percentage of the
then-effective Revolving Commitment Amount exceeds (y) the total of (1) the then
total outstanding principal amount of all Revolving Loans made by such Bank plus
(2) the total Letter of Credit Exposure of such Bank at such date. As used
herein, the "Letter of Credit Exposure" of Fleet is the total outstanding
amounts of all letters of credit issued by Fleet for the account of any
Borrower, less the amounts participated to any other Bank hereunder. The "Letter
of Credit Exposure" of any Bank other than Fleet is the total outstanding amount
in which such other Bank has a participation interest with respect to letters of
credit issued by Fleet for the account of any Borrower. The Borrowers will also
pay (and will be jointly and severally obligated to pay) to Fleet certain
Agent's fees and a facility
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fee and other consideration with respect to the Term Loan, all as separately
agreed between Fleet and the Borrowers.
The Facility Fee, Commitment Fees and other fees and consideration provided
for in this Section 2.09 are in addition to any fees, balances or charges which
may be applicable to other services now or hereafter provided to any Borrower by
any Bank or by any of their respective affiliates.
Section 2.10. Rate Determination Protection. In the event that:
(i) any Bank shall determine that, by reason of circumstances affecting the
London interbank market or otherwise, adequate and reasonable methods do
not exist for ascertaining LIBOR for any Interest Period, or
(ii) any Bank shall determine that:
(A) the making or continuation of any LIBOR Loan has been made
impracticable or unlawful by (1) the occurrence of a contingency that
materially and adversely effects the London interbank market or (2)
compliance by such Bank in good faith with any applicable law or
governmental regulation, guideline or order or interpretation or
change thereof by any governmental authority charged with the
interpretation or administration thereof or with any request or
directive of any such governmental authority (whether or not having
the force of law); or
(B) LIBOR, as set by the Agent, will not adequately and fairly
reflect the cost to such Bank of funding its LIBOR Loans for such
Interest Period
then such Bank shall forthwith give notice of such determination (which shall be
conclusive and binding on the Borrowers) to the relevant Borrower or Borrowers.
In such event, the obligations of such Bank to make LIBOR Loans shall be
suspended until such Bank determines that the circumstances giving rise to such
suspension no longer exist, whereupon such Bank shall notify the Borrowers.
Section 2.11. Prepayment of LIBOR Loans. The following provisions shall be
effective only at such time as a Eurodollar Interest Rate shall have become
applicable to any Loan: If, due to acceleration of the maturity of any Note or
Notes, or due to optional or mandatory payment or prepayment, or for any other
reason, any Bank receives payment of all or any portion of principal of any
LIBOR Loan on any date prior to the last day of the then-current Interest Period
applicable thereto, then the Borrowers shall, upon demand and receipt of a Bank
Certificate from any Bank with respect thereto, pay (and shall be jointly and
severally obligated to pay) forthwith to the Agent for the account of the Bank
rendering same any amounts required to compensate such Bank for any losses,
costs or expenses which it may have incurred and may reasonably incur as a
result of such payment or conversion, including, without limitation, any loss or
expense incurred by reason of the liquidation or
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redeployment of funds acquired by such Bank to fund or maintain principal of the
relevant LIBOR Loan. No LIBOR Loan may be converted to a Floating Rate Revolving
Loan except as provided in Section 2.13.
Section 2.12. Increased Costs; Capital Adequacy.
(a) If the adoption or effectiveness, after the date hereof, of any
applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:
(i) shall subject any Bank to any Imposition or other charge with
respect to any LIBOR Loan or its obligation to make LIBOR Loans, or
shall change the basis of taxation of payments to any Bank of the
principal of or interest on any LIBOR Loan or any other amounts due
under this Agreement in respect of any LIBOR Loan or its obligation to
make LIBOR Loans (except for changes in the rate of tax on the overall
net income of such Bank); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit, deposit insurance or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System, but excluding any such requirement already
taken into account in determining the applicable Reserve Rate) against
assets of, deposits with or for the account of, or credit extended by,
any Bank or shall impose on any Bank or on the London interbank market
any other condition affecting any LIBOR Loan of such Bank, any Note
issued by such Bank or any Bank's obligations to make LIBOR Loans
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining any LIBOR Loan, or to reduce the amount of any sum
received or receivable by such Bank under this Agreement or under any Note with
respect thereto, by an amount deemed by such Bank to be material, then, upon
demand by such Bank and receipt of a Bank Certificate from such Bank with
respect thereto, the Borrowers shall pay (and shall be jointly and severally
obligated to pay) to the Agent for the account of such Bank such additional
amount or amounts as will compensate such Bank for such increased costs or
reduction in receipts.
(b) If any Bank shall have determined that the adoption or effectiveness
after the date hereof of any applicable law, rule or regulation regarding
capital requirements for banks or bank holding companies, or any change therein
after the date hereof, or any change after the date hereof in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by such Bank with any request or directive of such entity regarding
capital
-20-
adequacy (whether or not having the force of law) has or would have the effect
of reducing the return on such Bank's capital with respect to its Commitment or
with respect to any Loan or Loans (whether or not LIBOR Loans) to a level below
that which such Bank would have achieved (taking into consideration such Bank's
policies with respect to capital adequacy immediately before such adoption,
effectiveness, change or compliance and assuming that such Bank's capital was
then fully utilized) by any amount deemed by such Bank to be material: (i) such
Bank shall promptly after its determination of such occurrence give notice
thereof to the Borrowers; and (ii) the Borrowers shall pay (and shall be jointly
and severally obligated to pay) to the Agent for the account of such Bank as an
additional fee from time to time on demand such amount as such Bank certifies to
be the amount that will compensate it for such reduction. A certificate of any
Bank claiming compensation under this Section 2.12 shall be conclusive in the
absence of manifest error. Such certificate shall set forth the nature of the
occurrence giving rise to such compensation, the additional amount or amounts to
be paid to it hereunder and the method by which such amounts were determined. In
determining such amount, a Bank may use any reasonable averaging and attribution
methods.
(c) No failure on the part of any Bank to demand compensation on any one
occasion shall constitute a waiver of its right to demand such compensation on
any other occasion and no failure on the part of any Bank to deliver any Bank
Certificate in a timely manner shall in any way reduce any obligation of any
Borrower to such Bank under this Section 2.12.
Section 2.13. Illegality or Impossibility. Notwithstanding any other
provision of this Agreement, if the introduction of or any change in or in the
interpretation or administration of any law or regulation applicable to any Bank
or any Bank's activities in the London interbank market shall make it unlawful,
or any central bank or other governmental authority having jurisdiction over any
Bank or any Bank's activities in the London interbank market shall assert that
it is unlawful, or otherwise make it impossible, for any Bank to perform its
obligations hereunder to make LIBOR Loans or to continue to fund or maintain
such LIBOR Loans, then on notice thereof and demand therefor by such Bank to the
Agent and the Borrowers, (i) the obligation of such Bank to fund LIBOR Loans
shall terminate and (ii) the Borrowers shall within five (5) Business Days after
such Bank gives such notice prepay in full all affected LIBOR Loans.
Section 2.14. Letters of Credit. (a) Subject to the terms and conditions of
this Agreement (including, without limitation, satisfaction of the conditions
set forth in Section 4.02), at the request of the Borrowers made prior to the
Revolving Expiration Date, Fleet will from time to time issue stand-by letters
of credit for the account of any Borrower; provided that (i) the aggregate of
all Letter of Credit Liabilities outstanding will at no time exceed $2,500,000,
(ii) the letter of credit issuance fee for any such stand-by letter of credit
will be an annual payment (payable quarterly in arrears) equal to 1.5% of the
original stated amount of such letter of credit, and (iii) at the time of
issuance of any such letter of credit and after giving effect thereto the
Aggregate Revolving Bank Liabilities will not exceed the lesser of (x) the
then-effective Revolving Commitment Amount or (y) the then-effective Borrowing
-21-
Base. Further, no letter of credit may be issued with an expiry date later than
the Revolving Expiration Date. All letters of credit issued under this
Subsection 2.14(a) and the reimbursement agreements and other documentation
relating thereto will be in such form as Fleet may require and all transfer
fees, negotiations fees, drawing fees and other out-of-pocket expenses in
connection with such letters of credit will be solely for the account of Fleet.
Fleet will not be required to issue any such letter of credit if the Borrowers
have failed to satisfy any of the conditions of Section 4.02.
(b) If any letter of credit is issued hereunder by Fleet, each Bank other
than Fleet (each, a "Participant Bank") will be deemed thereupon automatically
to have purchased a participation in such letter of credit from Fleet in
proportion to such Participant Bank's respective Revolving Loan Percentage. The
terms of such participation will (1) require the Participant Bank to fund to
Fleet, on the same Business Day as any amount is drawn under the letter of
credit, the Participant Bank's Revolving Loan Percentage of any amount so drawn
and not immediately reimbursed by the Borrowers, (2) require Fleet to account to
the Participant Bank for an amount equal to the Participant Bank's Revolving
Loan Percentage of each letter of credit issuance fee (but not drawing fees,
transfer fees or other fees representing compensation for costs and expenses
incurred by Fleet) collected by Fleet in connection with such letter of credit,
(3) require Fleet to account to the Participant Bank for the Participant Bank's
share of any reimbursement payment made by the Borrowers to Fleet with respect
to any amount drawn under a letter of credit in which the Participant Bank has
participated in the funding as described in clause (1) above, and (4) require
Fleet to account to the Participant Bank for any interest collected by Fleet
from the Borrowers on the amount funded, as hereinabove provided, by the
Participant Bank. The Borrowers hereby authorize Fleet, without further request
from the Borrowers or from any other party, to cause the Borrowers' liability to
Fleet or the Banks (or any of them) for reimbursement of funds drawn under any
such letter of credit to be repaid from the proceeds of a Floating Rate
Revolving Loan to be made hereunder. The Borrowers hereby irrevocably request
that such Floating Rate Revolving Loans be made and each Bank agrees to fund its
pro rata share of same, notwithstanding that the amount thereof may not be in a
minimum amount or an integral multiple as otherwise required for a Floating Rate
Revolving Loan request and notwithstanding any default which may then exist;
provided that no such Floating Rate Revolving Loan shall be made so as to cause
the Aggregate Revolving Bank Liabilities to exceed the then effective Revolving
Commitment Amount. If such a Floating Rate Revolving Loan is for any reason not
made pursuant to the immediately preceding sentence, the Borrowers will be
deemed jointly and severally to owe to Fleet and to each Participant Bank a
demand loan (which will for all purposes be deemed a "Loan" under this
Agreement) in the amount of the letter of credit drawing funded by each of them,
respectively, and not reimbursed by the Borrowers.
-22-
ARTICLE III
LOAN PROCEEDS AND PAYMENTS
Section 3.01. Funding by Banks; Availability. Promptly after (and on the
same Business Day as) the receipt by the Agent of a request for the borrowing of
Revolving Loans, the Agent will give a telephonic notice thereof to each Bank.
On any Business Day on which Revolving Loans are to be made to the Borrowers
hereunder, each Bank will make available to the Agent, at the Principal Office
of the Agent, in immediately available funds, such Bank's Revolving Loan
Percentage of such Revolving Loans. Each Bank will make such funds available to
the Agent prior to 2:00 p.m. (Boston Time) (the "Wire Deadline") on such
Business Day, provided that, such Bank has received, prior to 11:00 a.m. (Boston
time) on such Business Day, written or telephonic notice of the aggregate amount
of the Revolving Loans to be made and such Bank's Revolving Loan Percentage
thereof. In the event that such immediately available funds are not received
from a Bank by the Wire Deadline on any Business Day, such Bank's portion of
such Revolving Loan will not be made for the account of such Bank until the
Business Day next following the day on which such immediately available funds
are received by the Agent. The Agent may make temporary loans (each, a
"Temporary Loan") to the Borrowers to cover any portion of a proposed Revolving
Loan which is not funded by the Wire Deadline, but shall have no obligation to
do so. Each Temporary Loan shall be upon such terms and conditions as the Agent
and the Borrowers may agree; all funds subsequently received by the Agent from
the relevant Bank with respect to this Agreement shall be applied to repayment
of the Temporary Loan made by the Agent until it is paid in full. Any Temporary
Loan will be payable by the Borrowers jointly and severally on demand and will
bear interest at the per annum rate equal to the sum of (i) 0.75% per annum plus
(ii) the Prime Rate.
The Commitment of each Bank under this Agreement is the several and
individual commitment of such Bank, and neither the Agent nor any other Bank
shall have any liability for the failure of a Bank to honor its Commitment
hereunder. No failure by a Bank to honor its Commitment hereunder will excuse
any other Bank from honoring its own Commitment.
Section 3.02. Charges Against Accounts. The Agent may charge any general
deposit account maintained with the Agent by any Borrower with the amount of all
payments of principal, interest and fees coming due in the normal course, from
time to time, under this Agreement and/or any of the Notes; and will thereafter
notify the Borrowers of the amount so charged. The failure of the Agent so to
charge any account or to give any such notice shall not affect the obligation of
any Borrower to pay interest, principal or other sums as provided herein and/or
in the Notes. Each Borrower hereby authorizes the Agent to pay the amounts so
charged to itself and/or the Banks, in the manner described in the second
sentence of Section 3.04.
-23-
Section 3.03. Use of Loan Proceeds. The proceeds of all Revolving Loans
will be used by the Borrowers solely for working capital and general corporate
purposes. The proceeds of the Term Loan will be used by the Borrowers solely to
refinance a portion of the existing indebtedness owed to certain subordinated
noteholders. Letters of credit will be used to support the Borrowers' workers'
compensation program and for other general corporate purposes.
Section 3.04. Payments. Except as otherwise provided in Section 3.02 and
Section 7.03, all payments of interest, principal and any other sum payable
hereunder and/or the Notes shall be made to the Agent at its Principal Office,
in immediately available funds. Subject to the provisions of Sections 9.04 and
12.04, all payments received by the Agent shall be applied as follows: First, to
fees, costs, charges and expenses of the Banks and/or the Agent payable by any
of the Borrowers under this Agreement or any of the other Loan Documents, being
applied pro rata among such Banks and the Agent in proportion to the respective
amounts then owed to each of them for such fees, costs, charges and expenses;
Second, to the payment of interest, being applied pro rata among the Banks
(including the Agent with respect to any Temporary Loans made by the Agent) in
proportion to the respective amounts then owed to each of them on account of
interest then accrued and unpaid on the Loans; Third, to the payment of
principal of the Revolving Loans and Temporary Loans, being applied pro rata
among the Banks (including the Agent with respect to any Temporary Loans made by
the Agent) in proportion to the respective amounts then owed to each of them on
account of principal of the Revolving Loans and Temporary Loans; Fourth, to the
payment of principal of the Term Loan; and Fifth, to the payment of any other
amounts owed hereunder or any of the other Loan Documents.
All payments received from any Borrower by the Agent after 2:00 p.m. on any
day shall be deemed received by the Agent as of the next succeeding Business
Day. Interest payable under the Notes and/or this Agreement shall be computed on
the basis of a year of 360 days for the number of days actually elapsed.
Section 3.05. Payment on Non-Business Days. Whenever any payment to be made
hereunder or under any of the Notes shall be stated to be due on a day which is
not a Business Day, such payment may be made on the next succeeding Business
Day, and interest payable on each such date shall include the amount thereof
which shall accrue during the period of such extension of time.
Section 3.06. Net Payments. All payments by each Borrower hereunder and/or
in respect of any Note shall be made without deduction, set-off or counterclaim,
notwithstanding any claim which any Borrower may now or at any time hereafter
have against the Agent or any Bank or any other Person.
-24-
ARTICLE IV
CONDITIONS OF LENDING
Section 4.01. Conditions Precedent to Initial Loan. Prior to the making of
the initial Loan hereunder (or the issuance of any letter of credit hereunder),
the Borrowers shall deliver to each Bank a duly executed copy of this Agreement
and such Bank's respective Revolving Note (and, as to Fleet, the Term Note), and
shall deliver to the Agent the documents enumerated below in this Section 4.01,
all of which, as well as all legal matters incident to the transactions
contemplated hereby, shall be satisfactory in form and substance to the Agent
and its counsel:
(a) Certified copies of the resolutions of the Board of Directors (and, if
necessary, the stockholders) of each Borrower evidencing approval of this
Agreement, the Notes, the Pledge Agreements, the Security Agreement and the
other matters contemplated hereby and thereby and certified copies of all
documents evidencing other necessary corporate action or approvals, if any, with
respect to this Agreement, the Notes, the Pledge Agreements, the Security
Agreement and such other matters, including, without limitation, any required
approvals of governmental authorities and other Persons.
(b) A certificate, signed by the Clerk or Secretary of each Borrower,
setting forth the names and titles of the officers of such Borrower authorized
to sign this Agreement, the Notes, the Pledge Agreements, the Security Agreement
and any and all other agreements, certificates, notices and reports referred to
herein; such certificate shall contain the true signatures of such officers and
shall state that the Agent and the Banks may conclusively rely on the statements
made therein until the Agent shall receive a further certificate of such Clerk
or Secretary canceling or amending the prior certificate and submitting
signatures of the officers named in such further certificate.
(c) A copy of the Charter of each Borrower and all amendments thereto,
certified by the Secretary of State of the jurisdiction of incorporation of such
Borrower; a copy of the by-laws of each Borrower, as amended to date, as
certified by its respective Clerk or Secretary; certificates of legal existence
and good standing (including, without limitation, tax good standing) for each
Borrower in its respective jurisdiction of incorporation; and certificates of
the appropriate state officials and agencies in all other jurisdictions in which
each Borrower owns, leases or operates any real or personal property and in each
other jurisdiction in which each Borrower is required to qualify to do business,
in each case attesting as to such Borrower's qualification and good standing
(including, without limitation, tax good standing) in each such jurisdiction.
(d) A favorable written opinion of counsel to the Borrowers, in form and
substance satisfactory to the Agent.
-25-
(e) The Security Agreement, duly executed by all of the Borrowers.
(f) Pledge Agreements, duly executed by all relevant Borrowers, together
with stock certificates and stock powers signed in blank, so that the capital
stock of all Subsidiaries of each Borrower will be pledged to the Agent.
(g) Uniform Commercial Code Financing Statements and all such other
documents as shall be necessary or desirable to vest in the Agent, for the
benefit of the Banks, a first priority interest in and to all of the Collateral,
and evidence of all filings, recordations and other actions necessary or
desirable to perfect fully the Agent's security interests.
(h) Stock pledge agreements (the "Personal Pledges") in favor of Fleet from
each of Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxxx and Xxxxxxxxxxx Xxxxxx (collectively,
the "Personal Pledgors") covering an aggregate of not less than 1,500,000 shares
of common stock of the Company and all options of the Personal Pledgors to
acquire stock in the Company. The Personal Pledges will be duly executed by the
Personal Pledgors and accompanied by stock certificates and stock powers signed
in blank and other assignments and powers of attorney, so that the aforesaid
shares and options will be pledged to Fleet in order to secure the Borrowers'
obligations to Fleet with respect to the Term Loan.
(i) Such documents which, in the opinion of any Bank, are required to be
obtained in connection with the Loans to be made by such Bank by reason of the
provisions of any law or regulation applicable to such Bank, and the statements
made in such documents shall be such as, in the opinion of each Bank, will
permit such Loans from such Bank in accordance with such laws and regulations.
(j) Consolidated financial statements of the Company as at December 31,
1996 and for the fiscal year then ended, certified by the Company's independent
certified public accountants.
(k) Interim financial statements for the Company and Subsidiaries as at May
25, 1997 and for the fiscal period then ended.
(l) Certificates of the insurance required by this Agreement and/or the
Security Agreement.
(m) A certificate dated the date of the initial Loan or letter of credit
issuance, given by an authorized officer of each Borrower, affirming compliance
with the conditions of Subsections 4.02(a)-(d).
(n) An aging report as to the Receivables of the Borrowers in such detail
as may be required by the Agent.
-26-
(o) A certificate executed by the chief financial officer of the Company,
dated the date of such initial Loan or letter of credit issuance, setting forth
the Borrowing Base as of such date and demonstrating compliance with Subsection
6.01(t).
(p) Master notes signed by each Borrower other than the Company, as
described in Section 4.03.
(q) Such other documents, instruments, records, assignments, consents,
certificates, opinions, assurances and authorizations as the Agent shall
reasonably require.
Section 4.02. Conditions Precedent to All Loans. The obligation of each
Bank to make any Loan (including the initial Loan) and the obligation of Fleet
to issue any letter of credit for the account of any Borrower are subject to the
further conditions precedent that on the date on which such Loan is made or on
which such letter of credit is issued (and, in each case, after giving effect to
such transaction):
(a) The statements, representations and warranties of each Borrower made in
this Agreement shall continue to be correct as of the date of such Loan or
letter of credit issuance.
(b) The covenants and agreements of each Borrower contained herein shall
have been complied with on and as of the date of such Loan or letter of credit
issuance.
(c) No Default or Event of Default shall have occurred and be continuing.
(d) No material adverse change shall have occurred in the financial
condition of any Borrower from that disclosed in the financial statements then
most recently furnished to the Banks.
Each request for any Revolving Loan or any letter of credit issuance will
be accompanied by a Borrowing Base Certificate executed by a duly authorized
officer of the Company.
Section 4.03. Pledged Notes. The loans and advances made from time to time
by the Company to each other Borrower will be evidenced by a master note, in
form satisfactory to the Banks, executed by each such other Borrower. Each such
master note will be endorsed to the order of the Agent for the benefit of the
Banks and will be delivered to the Agent as further collateral for the Loans and
the obligations of the Borrowers under this Agreement. If, at any time after the
date hereof, any corporation or other entity becomes a Borrower, it will
promptly execute such a master note and endorse same to the order of the Agent
and deliver same to the Agent as further Collateral hereunder.
-27-
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Representations and Warranties. As an inducement to the Banks
to execute this Agreement and to make Loans hereunder to the Borrowers, each
Borrower hereby represents and warrants to the Agent and to each Bank as
follows:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of Delaware. Each other Borrower is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation, as set forth on Exhibit D hereto. Each
Borrower has the corporate power and authority to enter into and perform this
Agreement, to grant the liens contemplated by the Security Agreement and the
Pledge Agreements, to execute and deliver each of the Notes, to enter into and
perform all of the obligations required of such Borrower by all other
instruments and other documents referred to herein to which it is a party, to
fulfill its obligations set forth herein and therein and to carry out the
transactions contemplated hereby and thereby. Each Borrower has all requisite
corporate power to own and operate its properties and to carry on its business
as now conducted and as proposed to be conducted and is duly qualified to do
business and in good standing in each jurisdiction where such Borrower owns,
leases or operates any real or personal property and in each other jurisdiction
where the failure to be so qualified could (singly or in the aggregate with all
such other failures to be qualified) have a material adverse effect on the
business, prospects, condition, affairs or operations of any Borrower. At the
date of this Agreement, except as set forth on Exhibit D hereto, no Borrower has
any Subsidiaries and no Borrower is a member of any partnership or joint
venture.
(b) As of the date hereof, the Company knows of no Person who owns, of
record or beneficially, 5% or more of any class of capital stock of the Company,
except as listed on Exhibit E hereto. The Company owns 100% of the capital stock
of each of its Subsidiaries.
(c) The execution, delivery and performance of this Agreement, the Notes,
the Security Agreement and the other documents required to be executed by any
Borrower pursuant hereto have been duly authorized by all necessary corporate
action, will not require the consent of any third party, and will not conflict
with, violate the provisions of, or cause a default or constitute an event
which, with the passage of time or the giving of notice or both, could
constitute a default on the part of any Borrower under any contract, agreement,
law, rule, order, ordinance, franchise, instrument or other document or under
any provision of the Charter or by-laws of any Borrower, or result in the
imposition of any lien or encumbrance (except in favor of the Agent) on any
property or assets of any Borrower. This Agreement and the other documents
delivered to the Agent or to any Bank by any Borrower pursuant hereto
(including, without limitation, the Notes) are the legal, valid and binding
obligations of each Borrower named as a party therein, enforceable as against
each such Borrower in accordance with their respective terms.
-28-
(d) Except as disclosed on Exhibit F hereto, there are no actions, suits,
proceedings or investigations pending or, to the knowledge of any Borrower,
threatened, anticipated or contemplated (nor, to the knowledge of any Borrower,
is there any basis therefor) against or affecting any Borrower or any Subsidiary
of any Borrower by or before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which could
prevent or hinder the consummation of the transactions contemplated hereby or
call into question the validity of this Agreement, any Note or any other
instrument provided for or contemplated by this Agreement or any action taken or
to be taken in connection with the transactions contemplated hereby or thereby,
nor are there any such actions, suits, proceedings or investigations pending or,
to the knowledge of any Borrower, threatened, anticipated or contemplated (nor,
to the knowledge of any Borrower, is there any basis therefor) which, if
determined adversely to any Borrower or any Subsidiary of any Borrower, in any
single case or in the aggregate, could result in any material adverse change in
the business, prospects, condition, affairs or operations of any Borrower.
(e) No Borrower nor any Subsidiary of any Borrower is in violation of any
term of its Charter or by-laws, as now in effect, or in violation of any
mortgage, indenture or judgment, decree or order, any other instrument, contract
or agreement or any administrative determination, failure to comply with which,
singly or in the aggregate with all such other failures, could have a material
adverse effect upon the business, prospects, condition or operations of any
Borrower.
(f) Each Borrower and each Subsidiary of any Borrower has filed proper and
accurate federal, foreign, state and local tax returns, reports and estimates
for all years and periods for which any such returns, reports or estimates were
required to be filed and has paid all taxes, assessments, impositions, fees and
other governmental charges required to be paid in respect of the periods covered
by any such returns, reports or estimates. Neither any Borrower nor any such
Subsidiary is delinquent in the payment of any tax, assessment or governmental
charge, and no deficiencies for any tax, assessment or governmental charge have
been asserted or assessed, and no Borrower knows of any material governmental
liability or basis therefor for which adequate reserves have not been
established.
(g) Each Borrower and each Subsidiary of any Borrower is in compliance with
all requirements of law, federal, state and local, and all requirements of all
governmental bodies or agencies having jurisdiction over it, the conduct of its
business, the use of its properties and assets and all Premises occupied by it,
failure to comply with which could, singly or in the aggregate with all other
such failures, have a material adverse effect upon the business, prospects,
condition or operations of any Borrower. Without limiting the foregoing, each
Borrower and each Subsidiary of any Borrower has all the required franchises,
licenses, permits, certificates and authorizations needed for the conduct of its
business and the use of its properties and all premises occupied by it, as now
conducted, owned and used or as proposed to be conducted, owned and used. No
Borrower nor any Subsidiary of any Borrower has received any notice, not
heretofore complied with, from any federal, state or
-29-
local authority or any insurance or inspection body that any of its properties,
facilities, equipment or business procedures or practices fails to comply with
any applicable law, ordinance, regulation, building or zoning law or any other
requirement of any such authority or body. No authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary to the valid execution or delivery of, or for
the performance by any Borrower of any of its obligations under, this Agreement,
any Note or any other instrument provided for or contemplated by this Agreement.
(h) No Borrower is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any Loan will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock or in any other manner which would involve a violation of any of the
regulations of the Board of Governors of the Federal Reserve System. The Company
and the other Borrowers are primarily engaged in the business of providing
temporary manpower services. No Borrower is an "investment company" nor the
"affiliate" of an "investment company", as such terms are defined in the
Investment Company Act of 1940.
(i) Each Borrower and each Subsidiary of any Borrower has good and
marketable title to all assets now carried on its books, including those
reflected on its financial statements referred to in Subsection 5.01(j) or
acquired since the date of such statements, free of any mortgages, pledges,
charges, liens, security interests or other encumbrances, except as permitted
under Subsection 6.02(b). Each Borrower and each Subsidiary of any Borrower
enjoys peaceful and undisturbed possession under all leases under which it is
operating, and all of such leases are valid and subsisting and in full force and
effect.
(j) The financial statements of the Company and Subsidiaries for the fiscal
year ended December 31, 1996 and the fiscal quarter ended March 31, 1997,
respectively, heretofore delivered to the Agent, fairly present the financial
condition of the Company and Subsidiaries as at the dates thereof and for the
periods covered thereby. Said financial statements (and all financial statements
hereafter delivered pursuant to Section 6.03) are (and will be) prepared in
accordance with generally accepted accounting principles consistently applied
throughout the relevant periods. Neither any Borrower nor any Subsidiary of any
Borrower has any liability, contingent or otherwise, not disclosed in the
aforesaid financial statements or in any notes thereto that could materially
adversely affect the financial condition of any Borrower or of any Subsidiary of
any Borrower. The projections of the Company for its 1997 - 2001 fiscal years,
heretofore furnished to the Banks, continue to constitute the Company's best
estimation of the results which will be achieved for such years, based on
reasonable assumptions. The following representations are true at the date
hereof and shall be true at the date of each Loan, in each case since the date
of the most recently delivered financial statements: (i) there has been no
material adverse change in the business, assets or condition, financial or
otherwise, of any Borrower or of any of the Subsidiaries of any Borrower; (ii)
neither the business, condition or operations of any Borrower or any of the
Subsidiaries of
-30-
any Borrower nor any of their respective properties or assets have been
materially adversely affected as the result of any legislative or regulatory
change, any revocation or change in any franchise, license or right to do
business, or any other event or occurrence, whether or not insured against;
(iii) no Borrower nor any of the Subsidiaries of any Borrower has experienced
any material controversy or problem with its employees or with any labor
organization; and (iv) except as previously disclosed in writing to the Agent,
no Borrower nor any of the Subsidiaries of any Borrower has entered into any
material transaction other than in the ordinary course of its business.
(k) Each Borrower and each Subsidiary of any Borrower owns or has a valid
right to use the patents, patent rights or licenses, formulae, copyrights,
trademarks, trademark licenses, trademark applications, service marks, service
xxxx licenses, service xxxx applications and trade names now being used or
necessary to conduct its business; and the conduct of the respective businesses
of each Borrower and each of the Subsidiaries of any Borrower, as now operated,
does not conflict with valid patents, patent rights or licenses, copyrights,
trademarks, trademark licenses, service marks, service xxxx licenses or trade
names of others in any manner that could materially adversely affect the
business, prospects, assets or condition, financial or otherwise, of any
Borrower or any Subsidiary of any Borrower.
(1) Each Borrower represents and warrants that:
(i) None of the employee benefit plans maintained at any time by
any Borrower or any Subsidiary or the trusts created thereunder has
engaged in a prohibited transaction which could subject any such
employee benefit plan or trust to a material tax or penalty on
prohibited transactions imposed under Section 4975 of the Internal
Revenue Code or under the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
(ii) None of the employee benefit plans maintained at any time by
any Borrower or any Subsidiary which are employee pension benefit
plans and which are subject to Title IV of ERISA or the trusts created
thereunder has been terminated so as to result in a material liability
of any Borrower or any Subsidiary under ERISA nor has any such
employee benefit plan of the Borrower or any Subsidiary incurred any
material liability to the Pension Benefit Guaranty Corporation
("PBGC") established pursuant to ERISA; no Borrower nor any Subsidiary
has withdrawn from or caused a partial withdrawal to occur with
respect to any Multi-employer Plan resulting in any assessed and
unpaid withdrawal liability; each Borrower and each Subsidiary has
made or provided for all contributions to all such employee pension
benefit plans which they maintain and which are required as of the end
of the most recent fiscal year under each such plan; neither any
Borrower nor any Subsidiary has incurred any accumulated funding
deficiency with respect to any such plan, whether or not waived; nor
has there been any reportable event, or other event or condition,
which presents a material risk of termination of such employee benefit
plan by the PBGC.
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(iii) The present value of all vested accrued benefits under the
employee pension benefit plans which are subject to Title IV of ERISA
maintained by any Borrower or any Subsidiary did not, as of the most
recent valuation date for each such plan, exceed the then current
value of the assets of such employee benefit plans allocable to such
benefits.
(iv) The consummation of the Loans and the issuance of the
letters of credit provided for in Article II will not involve any
prohibited transaction under ERISA which is not subject to a statutory
or administrative exemption.
(v) To the best of the Borrowers' knowledge, each employee
pension benefit plan subject to Title IV of ERISA maintained by any
Borrower or any Subsidiary has been maintained in accordance with its
terms in all material respects and is in compliance in all material
respects with all applicable requirements of ERISA and other
applicable laws, regulations and rules.
(vi) There has been no material withdrawal liability incurred and
unpaid with respect to any Multi-employer Plan to which any Borrower
or any Subsidiary is or was a contributor.
(vii) As used in this Agreement, the terms "employee benefit
plan", "employee pension benefit plan", "accumulated funding
deficiency", "reportable event" and "accrued benefits" shall have the
respective meanings assigned to them in ERISA, and the term
"prohibited transaction" shall have the meaning assigned to it in
Section 4975 of the Internal Revenue Code and ERISA.
(vii) Neither any Borrower nor any Subsidiary has any liability
not disclosed on any of the financial statements furnished to the
Banks pursuant to Subsection 5.01(j) hereof, contingent or otherwise,
under any plan or program or the equivalent for unfunded
post-retirement benefits, including pension, medical and death
benefits, which liability could have a material adverse effect on any
Borrower or any such Subsidiary.
(m) The chief executive office and principal place of business of the
Company is located at 0000 Xxxxxx Xxxxxx, Xxxx Xxxxxxx, XX 00000. The chief
executive office and principal place of business of each other Borrower is
listed on Exhibit D hereto.
(n) The Borrowers maintain books and records relating to Receivables and
keep Collateral only at the respective locations described in Exhibit G hereto.
(o) None of the officers or key employees of any Borrower or of any
Subsidiary of any Borrower is subject to any agreement in favor of anyone other
than such Borrower of such Subsidiary, as the case may be, which limits or
restricts that person's right to engage in the type of business activity
conducted or proposed to be conducted by such Borrower or such Subsidiary, as
the case may be, or to use therein any property or confidential information or
which grants to anyone other than such Borrower or such Subsidiary, as the case
may be, any
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rights in any inventions or other ideas susceptible to legal protection
developed or conceived by any such officer or key employee.
(p) No Borrower nor any Subsidiary of any Borrower is now a party to any
contract or agreement, the terms of which now have or, as far as can be
reasonably foreseen, may have a material adverse effect on the financial
condition, business or properties of such Borrower or such Subsidiary, as the
case may be.
(q) Neither this Agreement, nor the financial statements referred to
herein, nor any certificate delivered pursuant to this Agreement, nor any other
agreement, document, certificate or statement furnished to any Bank or to the
Agent by or on behalf of any Borrower in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact within the special
knowledge of any of the executive officers of any Borrower which has not been
disclosed herein or in writing by them to the Banks and which materially
adversely affects, or in the future in their opinion may, insofar as they can
now foresee, materially adversely affect the business, properties, assets or
condition, financial or other, of any Borrower.
(r) After giving effect to the transactions contemplated thereby and to the
extension of financial accommodations contemplated by this Agreement, each
Borrower (A) is and will be able to pay its debts as they become due, (B) has
and will have funds and capital sufficient to carry on its business as now
conducted or as contemplated to be conducted, (C) owns property having a value
both at fair valuation and at present fair salable value greater than the amount
required to pay its debts as they become due, and (D) is not insolvent and will
not be rendered insolvent as determined by applicable law.
(s) The Company provides valuable administrative, management and accounting
services to each of the other Borrowers and may make loans to the other
Borrowers to the extent permitted by this Agreement, including loans of funds
which are proceeds of the Loans hereunder. The continued financial strength of
the Company and, in particular, its financing arrangements with the Banks are
thus of direct and substantial benefit to each of the other Borrowers and the
execution and delivery by each of the other Borrower of this Agreement and the
guaranty set forth herein is a substantial inducement for the Banks to enter
into and continue said financing arrangements.
(t) As of the date hereof, there does not exist any Default or Event of
Default hereunder.
(u) Each Borrower and each Subsidiary is in compliance with all applicable
Environmental Laws in all material respects. No Borrower nor any Subsidiary has
been notified of any action, suit, proceeding or investigation which calls into
question compliance by any Borrower or any Subsidiary with any Environmental
Laws or which seeks to suspend,
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revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Hazardous Material.
(v) No Borrower nor any Subsidiary is engaged in and none of them has
engaged in any course of conduct that could subject any of their respective
properties to any lien, seizure or other forfeiture under any criminal law,
racketeer influenced and corrupt organizations law, civil or criminal, or other
similar laws.
(w) Each Borrower and each Subsidiary is in compliance in all material
respects with all applicable laws, rules and regulations pertaining to labor or
employment matters, including, without limitation, those pertaining to wages,
hours, occupational safety and taxation and there is neither pending or
threatened any material litigation, administrative proceeding nor, to the
knowledge of any Borrower, any investigation, in respect of such matters which
could reasonably be expected to have a material adverse effect on any Borrower.
ARTICLE VI
COVENANTS OF THE BORROWERS
Section 6.01. Affirmative Covenants Other Than Reporting Requirements.
Without limiting any other covenants and provisions hereof, each Borrower
covenants and agrees that so long as any Commitment is in effect or any Loan is
outstanding or any other obligation of such Borrower to any Bank and/or the
Agent remains unpaid or any letter of credit issued by Fleet for the account of
any Borrower is outstanding:
(a) (Payment of Loans) Each Borrower will pay the principal of and interest
on each of the Notes at the times and place and in the manner provided for in
such Notes and herein, and will promptly pay when due any and all other amounts
owing to any Bank and/or the Agent, in respect of fees or otherwise.
(b) (Taxes and Other Obligations) Each Borrower will pay and discharge (and
will cause each of its Subsidiaries to pay and discharge) all taxes, assessments
and governmental charges or levies imposed upon it or them, or upon its or their
income or profits, or upon any properties belonging to it or them, prior to the
date on which penalties or interest would attach thereto, and all lawful claims
which, if unpaid, might become a lien or charge upon any properties of any
Borrower or any Subsidiary of any Borrower; provided that neither any Borrower
nor any such Subsidiary shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings which serve as a matter of law to stay the enforcement of any remedy
of the taxing authority or claimant and as to which the relevant Borrower or the
Subsidiary concerned, as the case may be, shall have set aside on its books
adequate reserves. Each Borrower will pay (and will cause each of its
Subsidiaries to pay) in a timely manner all material lease obligations, trade
debt and purchase money obligations, other than any such
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lease obligations, trade debt and purchase money obligations which the relevant
Borrower or the relevant Subsidiary (as the case may be) is contesting in good
faith, with adequate reserves having been established, under circumstances in
which no material asset or interest of such Borrower or such Subsidiary could be
jeopardized. Each Borrower will fully, faithfully and punctually perform and
fulfill (and will cause each of its Subsidiaries fully, faithfully and
punctually to perform and fulfill) all material covenants and agreements under
any leases of real estate, agreements relating to purchase money debt, equipment
leases and other material contracts, other than any such covenants and
agreements which the relevant Borrower or the relevant Subsidiary (as the case
may be) is contesting in good faith, with adequate reserves having been
established, under circumstances in which no material asset or interest of such
Borrower or such Subsidiary could be jeopardized.
(c) (Insurance) Each Borrower will maintain (and will cause each of its
Subsidiaries to maintain), with responsible and reputable insurance companies or
associations reasonably satisfactory to the Agent, insurance in such amounts and
covering such risks as are required by the Security Agreement and any other
coverages reasonably requested by the Agent. The Borrowers will provide to the
Agent (not less frequent, than annually) certificates of such insurance.
(d) (Legal Existence and Qualification) Each Borrower will preserve and
maintain (and will cause each of its Subsidiaries to preserve and maintain) its
corporate existence, rights, franchises and privileges and remain in good
standing in the jurisdiction of its incorporation. Each Borrower will qualify
and remain qualified and in good standing (and will cause each of its
Subsidiaries to qualify and remain qualified and in good standing) in each other
jurisdiction in which it maintains a plant, warehouse or office and in each
other jurisdiction in which the failure so to qualify could have a material
adverse effect on the business, prospects, condition or operations of any
Borrower.
(e) (Compliance with Laws) Each Borrower will comply (and will cause each
of its Subsidiaries to comply) with the requirements of all applicable laws
(including, without limitation, laws relating to environmental protection),
rules, regulations and the orders of any court or other tribunal or governmental
or administrative authority or agency applicable to it or to its business,
property or assets, all to the extent that failure to comply with any such laws,
rules, regulations or orders could, singly or in the aggregate with all other
such failures, have a material adverse effect on the business, prospects,
condition or operations of any Borrower; provided that such Borrower will not be
deemed to be required by this Subsection 6.01(e) to comply with any such laws,
rules, regulations or orders the applicability of which such Borrower is
challenging in good faith by appropriate proceedings promptly commenced and
diligently prosecuted thereafter, with appropriate reserves having been
established and maintained, so long as no material property or interests of such
Borrower would be jeopardized by such noncompliance. Each Borrower will obtain
and maintain (and will cause each of its Subsidiaries to obtain and maintain)
all licenses, permits and permissions relating to its properties or business,
failure to obtain or maintain which could, singly or in the
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aggregate with all other such failures, have a material adverse effect on the
business, prospects, condition or operations of any Borrower or any such
Subsidiary.
(f) (Inspection) Each Borrower will permit (and will cause each of its
Subsidiaries to permit) the Agent or any Bank, and any agents or representatives
thereof, to visit the properties of each Borrower and each such Subsidiary, and
to examine and make copies of and take abstracts from the records and books of
account of each Borrower and each such Subsidiary, and to discuss the affairs,
finances and accounts of each Borrower and any such Subsidiary with any of their
respective officers and with such other persons as may be designated by such
officers, all of whom are hereby authorized and directed to cooperate with the
Agent or such Bank, as the case may be, in carrying out the intent of this
Subsection 6.01(f). Without limitation of the foregoing, the Agent may conduct
quarterly field examinations with respect to Collateral, with the Borrowers to
be obligated to pay the reasonable expenses thereof. As long as no Event of
Default has occurred and is continuing, any visitation and/or examination under
this Subsection 6.01(f) will be made only at reasonable times upon reasonable
prior notice and will be conducted in such manner as not to unreasonably
interfere with the conduct of the relevant Borrower's business.
(g) (Books and Records) Each Borrower will keep proper and complete records
and books of account in which complete entries will be made in accordance with
generally accepted accounting principles consistently applied, reflecting all
financial transactions of such Borrower and its Subsidiaries. All financial
statements submitted to the Agent under this Agreement will be prepared in
accordance with generally accepted accounting principles consistently applied,
except that interim statements will be subject to normal year-end audit
adjustment and to the absence of footnotes.
(h) (Maintenance of Properties) Each Borrower will maintain and preserve
(and will cause each of its Subsidiaries to maintain and preserve) all of their
respective properties necessary or useful in the proper conduct of their
respective businesses in good working order and condition, making all necessary
repairs thereto and replacements thereof.
(i) (Management) Each Borrower will maintain experienced and competent
professional senior management with respect to its business and properties.
(j) (Continuation of Business) Each Borrower will continue to conduct (and
will cause each of its Subsidiaries to continue to conduct) in the ordinary
course, the business in which each of them is presently engaged. Neither
Borrower nor any of the Subsidiaries of any Borrower will, without the prior
written consent of the Agent, directly or indirectly enter into any lines of
business, businesses or ventures outside of the lines of business conducted by
the Company and its Subsidiaries immediately prior to the date hereof.
(k) (Bank Accounts) Each Borrower will maintain with the Agent its
principal operating and deposit accounts; provided that the Borrowers may
transition their accounts to the Agent over a reasonable period of time.
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(l) (Environmental Clean-Up) If any Borrower or any Subsidiary shall
receive notice from any governmental authority that such Borrower or Subsidiary
has violated any applicable Environmental Law, the Borrowers shall to the extent
required by law (and in any event within the time period permitted by the
applicable governmental authority) remove or remedy, or cause the applicable
Subsidiary to remove or remedy, such violation.
(m) (Indemnification) The Borrowers hereby jointly and severally agree to
defend, indemnify and hold the Agent and each Bank harmless from and against any
and all claims, losses, liabilities, damages and expenses (including, without
limitation, clean-up costs and reasonable attorneys' fees) arising directly or
indirectly from, out of or by reason of the handling, storage, treatment,
emission or disposal of any Hazardous Material by or in respect of any Borrower
or any Subsidiary or property owned or leased or operated by any Borrower or any
Subsidiary. The provisions of this Subsection 6.01(m) shall survive repayment of
the Loans, occurrence of the Revolving Expiration Date and the expiration or
termination of this Agreement.
(n) (Further Assurances) Each Borrower will, at its cost and expense, upon
request of the Agent, duly execute and deliver or cause to be delivered, to the
Agent such further instruments, documents, certificates, financing and
continuation statements, and do and cause to be done such further acts that may
be reasonably necessary or advisable in the reasonable opinion of the Agent to
carry out more effectively the provisions and purposes of this Agreement and the
other Loan Documents.
(o) (ERISA Requirement) Each Borrower will comply in all material respects
with all requirements of ERISA applicable to it and furnish to the Agent as soon
as possible and in any event (i) within thirty (30) days after any Borrower
knows or has reason to know that any reportable event with respect to any
employee benefit plan subject to Title IV of ERISA maintained by such Borrower
or any Subsidiary which could reasonably be expected to give rise to termination
or the imposition of any material tax or penalty has occurred, a written
statement of such Borrower describing in reasonable detail such reportable event
and any action which such Borrower or the applicable Subsidiary proposes to take
with respect thereto, together with a copy of the notice of such reportable
event given to the PBGC or a statement that said notice will be filed with the
annual report of the United States Department of Labor with respect to such plan
if such filing has been authorized, (ii) promptly after receipt thereof, a copy
of any notice that any Borrower or any Subsidiary may receive from the PBGC
relating to the intention of the PBGC to terminate any employee benefit plan or
plans of such Borrower or any Subsidiary or to appoint a trustee to administer
any such plan which could reasonably be expected to result in a material adverse
effect on any Borrower, and (iii) within 10 days after a filing with the PBGC
pursuant to Section 412(n) of the Internal Revenue Code of a notice of failure
to make a required installment or other payment with respect to a plan, a
certificate of an authorized officer of the relevant Borrower setting forth
details as to such failure and the action that such Borrower or its affected
Subsidiary, as
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applicable, proposes to take with respect thereto, together with a copy of such
notice given to the PBGC.
(p) (Use of Proceeds) The Borrowers will use the proceeds of the Loans
solely for the purposes specified in Section 3.03 hereof.
(q) (Material Subsidiaries) (i) Within thirty (30) days of the acquisition
or creation of any Material Subsidiary or of any existing Subsidiary becoming a
Material Subsidiary, the Borrowers will cause to be delivered to the Agent each
of the following:
(A) an instrument in form and substance satisfactory to the Agent
pursuant to which such Subsidiary shall join in the guaranty provided in
Article X below and in the Security Agreement, together with all relevant
financing statements;
(B) Pledge Agreements (together with appropriate stock certificates
and stock powers signed in blank) substantially similar in form and content
to those executed and delivered by the Borrowers as of the date hereof,
with appropriate revisions as to the identity of the pledgor and securing
the obligations of such pledgor under the aforesaid guaranty;
(C) an opinion of counsel to the relevant Subsidiary dated as of the
date of delivery of the instruments provided for in the foregoing clauses
and addressed to the Agent and the Banks, in form and substance reasonably
acceptable to the Agent, to the effect that:
(1) such Subsidiary is duly organized, validly existing and in
good standing in the jurisdiction of its organization, has the
requisite power and authority to own its properties and conduct its
business as then owned and then proposed to be conducted; and
(2) the execution, delivery and performance of the instrument
joining in said guaranty and in the Security Agreement and any
relevant Pledge Agreements have been duly authorized by all requisite
corporate action (including any required shareholder approval), such
instrument and such Pledge Agreements have been duly executed and
delivered and same constitute valid and binding obligations of such
Subsidiary, enforceable against such Subsidiary in accordance with
their terms; and
(D) current copies of the charter documents, including, partnership
agreements and certificate of limited partnership, if applicable, and
by-laws of such Subsidiary, minutes of duly called and conducted meetings
(or duly effected consent actions) of the Board of Directors, partners or
appropriate committees thereof (and, if required by such charter documents,
by-laws or by applicable laws, of the shareholders or partners) of such
Subsidiary authorizing the actions and the execution
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and delivery of the documents described above in this Subsection and
evidence satisfactory to the Agent that such Subsidiary is solvent as of
such date and after giving effect to its joinder in the guaranty.
(ii) The Borrowers will cause the Agent at all times to have a duly
perfected first priority security interest in all of the issued and outstanding
capital stock of all Material Subsidiaries.
(r) (Consolidated Leverage Ratio) As used herein, the term "Determination
Date" means the last day of each fiscal quarter of the Company, commencing with
June 30, 1997. The Company will maintain on a consolidated basis, as at each
Determination Date, a Consolidated Leverage Ratio of not more than the
following: as at June 30, 1997 - not more than 4.65 to 1; as at September 30,
1997 - not more than 4.35 to 1; as at December 31, 1997 - not more than 3.5 to
1; as at each of March 31, 1998 and June 30, 1998 - not more than 3.25 to 1; and
as at September 30, 1998 and as at each subsequent Determination Date - not more
than 3.00 to 1.
(s) (Fixed Charge Coverage) The Company will maintain, as at each
Determination Date, a Consolidated Fixed Charge Ratio of not less than the
following: as at June 30, 1997 - not less than 2.8 to 1; as at September 30,
1997 - not less than 1.8 to 1; as at December 31, 1997 - not less than 1.6 to 1;
as at March 31, 1998 - not less than 1.5 to 1; as at June 30, 1998 - not less
than 2.0 to 1; as at each of September 30, 1998, December 31, 1998, March 31,
1999, June 30, 1999; September 30, 1999 and December 31, 1999 - not less than
1.2 to 1; and as at March 31, 2000 and as at each subsequent Determination Date
- not less than 1.4 to 1. For the purpose of this Subsection, the Consolidated
Fixed Charge Ratio in effect at each Determination Date will be determined on
the basis of the Cash Flow Available achieved during the fiscal quarter ended at
such Determination Date and the Consolidated Interest Expense actually paid
(excluding amortization of deferred financing costs) for such fiscal quarter
ended at such Determination Date, except that for each of the Determination Date
occurring on March 31, 1998 and any Determination Date occurring on September
30, 1998 or any time thereafter, the Consolidated Fixed Charge Ratio will be
determined on the basis of the Cash Flow Available achieved during the 12-month
period ended at such Determination Date and the Consolidated Interest Expense
actually paid (excluding amortization of deferred financing costs) for such
12-month period ended at such Determination Date.
(t) (Shareholders' Equity) The Company will maintain, as at the date of
this Agreement and as at each Determination Date, Consolidated Shareholders'
Equity which shall not be less than the then-effective Equity Requirement. As
used herein, the "Equity Requirement" in effect as at the date of this Agreement
and as at June 30, 1997 is deemed to be $25,000,000 and the Equity Requirement
in effect at each subsequent Determination Date (commencing with September 30,
1997) will be deemed to be the sum of: (1) that Equity Requirement which had
been in effect as at the immediately preceding Determination Date, plus (2) 75%
of the Consolidated Net Income of the Company and Subsidiaries for the fiscal
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quarter ending on such Determination Date, but without giving effect to any
Consolidated Net Loss during any such fiscal quarter.
(u) (Capitalization Ratio) The Company will maintain on a consolidated
basis, as at each Determination Date, a Consolidated Capitalization Ratio of not
more than the following: as at each of June 30, 1997, September 30, 1997 and
December 31, 1997 - not more than 0.65 to 1; and as at March 31, 1998 and as at
each Determination Date thereafter - not more than 0.6 to 1.
Section 6.02. Negative Covenants. Without limiting any other covenants and
provisions hereof, each Borrower covenants and agrees that, so long as any
Commitment is in effect or any Loan is outstanding or any letter of credit
issued hereunder is outstanding or any other obligation of any Borrower to any
Bank and/or the Agent has not been fully performed:
(a) (Indebtedness) No Borrower will create, incur, assume or suffer to
exist (nor will any Borrower permit any of its Subsidiaries to create, incur,
assume or suffer to exist) any Indebtedness, except for:
(i) Indebtedness owed hereunder to any Bank or to the Agent, including
without limitation, the Indebtedness represented by the Notes;
(ii) Indebtedness of any Borrower or any such Subsidiary for taxes,
assessments and governmental charges or levies, to the extent payment
thereof shall not at the time be required under Subsection 6.01(b) above;
(iii) unsecured current liabilities of any Borrower or any such
Subsidiary (other than for money borrowed or for the deferred purchase
price of property) incurred upon customary terms in the ordinary course of
business and unsecured advances or progress payments under contracts
incurred on customary terms in the ordinary course of business;
(iv) purchase money Indebtedness and capital lease financing owed to
vendors or lessors of equipment used in the business of any Borrower or any
such Subsidiaries; provided that the aggregate the principal amount of
purchase money Indebtedness and capital lease financing permitted under
this clause (iv) will never exceed $1,000,000 in aggregate principal amount
outstanding at any one time;
(v) any Indebtedness now or hereafter owed to the Company or to any
Subsidiary of the Company; provided that each such Subsidiary to which any
loan is made by the Company or by another such Subsidiary has executed or
joined in this Agreement and the Security Agreement and remains legally
bound thereby;
(vi) other Indebtedness existing at the date hereof, but only to the
extent set forth on Exhibit H hereto;
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(vii) Subordinated Debt incurred after the date hereof on terms
acceptable to the Required Banks; and
(vii) existing guaranties expressly permitted pursuant to Subsection
6.02(c) below.
(b) (Liens) No Borrower will create, incur, assume or suffer to exist (nor
will any Borrower permit any of its Subsidiaries to create, incur, assume or
suffer to exist) any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance (including the lien or retained security title of a
conditional vendor) of any nature (collectively, "liens"), upon or with respect
to any of its property or assets, now owned or hereafter acquired, except that
the foregoing restrictions shall not apply to:
(i) liens for taxes, assessments or governmental charges or levies on
property of any Borrower or any of such Subsidiaries if the same shall not
at the time be delinquent or thereafter can be paid without interest or
penalty or are being contested in good faith and by appropriate proceedings
which serve as a matter of law to stay the enforcement of any remedies of
the taxing authorities and as to which adequate reserves have been made;
(ii) liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business for sums not yet due or which are being contested in good faith
and by appropriate proceedings which serve as a matter of law to stay the
enforcement thereof and as to which adequate reserves have been made;
(iii) pledges or deposits under workmen's compensation laws,
unemployment insurance, social security, retirement benefits or similar
legislation;
(iv) liens existing on the date hereof to the extent listed on Exhibit
H hereto;
(v) liens securing the performance of bids, tenders, contracts (other
than for the repayment of borrowed money), statutory obligations and surety
bonds arising in the ordinary course of business;
(vi) zoning restrictions, easements and rights or restrictions of
record on the use of real property which do not materially detract from its
value or impair its use; and
(vii) capital leases and liens securing the purchase price of property
(to the extent such capital leases and purchase money financing are
permitted by clause (iv) of Subsection 6.02(a) above), provided that each
such lien is given solely to
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secure the purchase price of (or lease payments in respect of) such
property, does not extend to any other property and is given at the time of
the acquisition of such property.
(c) (Guaranties) No Borrower will assume, guarantee, endorse or otherwise
become directly or contingently liable (nor will any Borrower permit any of its
Subsidiaries to assume, guarantee, endorse or otherwise become directly or
contingently liable), including, without limitation, liable by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in any debtor or otherwise to assure any creditor
against loss, in connection with any Indebtedness of any other Person, except
(i) guaranties by endorsement for deposit or collection in the ordinary course
of business, (ii) any guaranty in favor of the Agent for the benefit of the
Banks and (iii) existing guaranties described on Exhibit I hereto.
(d) (Mergers, Dispositions, etc.) No Borrower will merge or consolidate
with any other Person, except that the Company may merge with any other Person
which is a wholly-owned Subsidiary of the Company at the date of this Agreement
or which is acquired hereafter by the Company pursuant to a Permitted
Acquisition; provided that, in each such case, (i) the Company is the surviving
corporation, (ii) such merger does not result in any material change in the
executive officers of the Company, (iii) if made pursuant to an Acquisition,
such merger does not result in the issuance of capital stock of the Company in
such amount so that the former stockholders of the acquired company would
receive shares of any class of voting stock of the Company aggregating more than
50% of the total number of shares of such class of stock outstanding immediately
after such merger and (iv) at the time of such merger there is, and after giving
effect thereto there would be, no violation of any of the financial tests set
forth in any of Subsections 6.01(r), 6.01(s), 6.01(t) or 6.01(u). Compliance
with each of the financial tests described in clause (iv) of the immediately
preceding sentence will be determined on a pro forma basis based on the
Company's financial position as at the end of its most recently completed fiscal
quarter and giving effect to such merger on a pro forma basis as if same had
occurred at such fiscal quarter-end. No Borrower will liquidate or dissolve or
sell, assign, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) any item or items material to its business (whether now
owned or hereafter acquired) included in the assets of any Borrower (nor will
any Borrower permit any of its Subsidiaries to do any of the foregoing), except
that the Borrowers and their respective Subsidiaries may sell or dispose of
property through (i) sales of inventory in the ordinary course of business, (ii)
disposal of worn out or obsolete equipment in the ordinary course of business,
and (iii) sale or disposal in any one fiscal year of items aggregating not more
than $50,000; provided that the Borrowers may dispose of assets in excess of
said $50,000 limit in one or more arms'-length transactions, so long as the net
after-tax amount of such excess is promptly applied to prepayment of the Term
Loan.
(e) (No Factoring) No Borrower will sell, assign, factor or dispose in any
way of any of its receivables or other rights to payment, with or without
recourse, except for
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assignment for collection in the ordinary course of business, nor will any
Borrower permit any of its Subsidiaries to do any of the foregoing.
(f) (Loans and Advances) No Borrower will make or maintain, nor permit any
of its Subsidiaries to make or maintain, any loan or advance to any Person,
including, without limitation, any Borrower's directors, officers and employees
except (i) existing amounts owed by certain officers or employees aggregating
approximately $357,000, (ii) travel advances, advances against salary and loans
hereafter made to employees in the ordinary course (all of which loans and
advances described in this clause (ii) shall not exceed $250,000 in the
aggregate), (iii) existing loans to Subsidiaries as described on Exhibit J
hereto, and (iv) any loan hereafter made to a Subsidiary of the Company which
has joined in the Security Agreement and in the guaranty described in Article X
below and remains legally bound thereby. Each Person which now or hereafter
holds a loan described in clause (iii) or clause (iv) of the immediately
preceding sentence will execute and deliver to the Agent a subordination
agreement (in form and substance reasonably satisfactory to the Agent)
subordinating such Person's rights to the rights of the Banks and the Agent.
(g) (Investments and Acquisitions) No Borrower will, without the Agent's
prior written consent, invest in, hold or purchase any stock or securities of
any Person (nor will any Borrower permit any of its Subsidiaries to invest in,
hold or purchase any such stock or securities) except (i) readily marketable
direct obligations of, or obligations guarantied by, the United States of
America or any agency thereof, (ii) other investment grade debt securities,
(iii) mutual funds, the assets of which are primarily invested in items of the
kind described in the foregoing clauses (i) and (ii) of this Subsection 6.02(g),
(iv) deposits with or certificates of deposit issued by the Agent and any other
obligations of the Agent or the Agent's parent, (v) deposits in any other bank
organized in the United States having capital in excess of $1,000,000,000, and
(vi) investments in Subsidiaries now existing or in any wholly-owned
Subsidiaries hereafter created by such Borrower; provided that in any event the
combined tangible net worths of the Borrowers alone (exclusive of any Borrower's
investment in Subsidiaries and any debt owed by any Subsidiary to any Borrower)
will not be less than 90% of the total of the consolidated tangible net worth of
the Company and its Subsidiaries. Each Borrower agrees that it will give the
Agent prompt written notice if it forms or acquires any Subsidiary, and the
Agent will promptly forward to each of the Banks a copy of any such written
notice which it receives. Exhibit K hereto sets forth all investments by any
Borrower in Subsidiaries existing at the date hereof. Without limitation of the
foregoing, no Borrower will make any Acquisition other than Permitted
Acquisitions. Nothing contained in this Subsection 6.02(g) shall permit any
Borrower to use, directly or indirectly, proceeds of any Loan for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying any "margin
stock" within the meaning of Regulation U.
(h) (ERISA) No Borrower will establish (nor will any Borrower permit any of
its Subsidiaries to establish) any new pension or defined benefit plan or modify
any such existing plan for employees subject to ERISA, which plan provides any
benefits based on past service
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without the advance consent of the Banks to the amount of the aggregate past
service liability thereby created.
(i) (No Waiver) No Borrower will waive (nor permit any of its Subsidiaries
to waive) any material debt or claim, except in the ordinary course of its
business.
(j) (Subordinated Debt) No Borrower will make, directly or indirectly, any
optional or voluntary prepayment or purchase of Subordinated Debt or any
long-term debt owed to any Person (other than the Banks), nor make any payment
of any Subordinated Debt except to the extent expressly permitted in the
subordination agreement relating thereto. No Borrower will at any time make any
payment on account of principal of and/or interest on any Subordinated Debt
unless there has not occurred (and after giving effect to any such payment of
principal and/or interest there will not have occurred) any event which
constitutes, or which, with notice or lapse of time or both, could constitute,
an Event of Default.
(k) (Collateral Locations) No Borrower will remove (or permit to be
removed) from the Premises listed on Exhibit G hereto any books or records
relating to Receivables or other intangible Collateral of any Borrower or remove
therefrom any Collateral (other than inventory sold to customers in the ordinary
course of a Borrower's business) until after receipt of a certificate from the
Agent, signed by an officer thereof, stating that the Agent has, to its
satisfaction, obtained all documentation that it deems necessary or desirable to
obtain, maintain, perfect and/or confirm the first priority security interests
granted or intended to be granted in the Security Agreement.
(1) (Principal Place of Business) No Borrower will move its chief executive
office or principal place of business from the address described in Subsection
5.01(m) nor change its name or identity or use any trade name or trade style
other than its corporate name nor make or suffer to be made any change in its
corporate structure until, in each case, after receipt of a certificate from the
Agent, signed by an officer thereof, stating that the Agent has, to its
satisfaction, obtained all documentation that it deems necessary or desirable to
obtain, maintain, perfect and confirm the first priority security interests
granted or intended to be granted in the Security Agreement.
(m) (Dividends) The Company will not, without the prior written consent of
the Agent, declare or pay any dividends (other than dividends payable in capital
stock of the Company), purchase, redeem, retire or otherwise acquire for value
any of its capital stock (or rights, options or warrants to purchase such
shares) now or hereafter outstanding, return any capital to its stockholders or
make any distribution of assets to its stockholders; provided that, so long as
no Event of Default exists under this Agreement and no Event of Default would
result therefrom, the Company may pay required dividends on its Series D and
Series F Preferred Stock in an aggregate amount not to exceed $105,000 per
fiscal quarter.
(n) (Partnerships) No Borrower nor any of their respective Subsidiaries
will become a member of any partnership or joint venture if the result of such
partnership or joint
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venture is that any Person which is not the Borrower or the Subsidiary concerned
has the ability to incur any Indebtedness on behalf of such Borrower or such
Subsidiary or to commit any assets of such Borrower or such Subsidiary without
the consent of such Borrower or such Subsidiary, as the case may be.
(o) (Affiliate Transactions) No Borrower will enter into (nor permit any of
its Subsidiaries to enter into) any transaction, including, without limitation,
the purchase, sale or exchange of any property or the rendering of any service,
with any present or former Affiliate (other than with one or more wholly-owned
Subsidiaries of the Company), except in the ordinary course of business and
pursuant to the reasonable requirements of its business and upon fair and
reasonable terms no less favorable to such Borrower or such Subsidiary, as the
case may be, than would be obtained in a comparable arms'-length transaction
with any Person not an Affiliate. As used herein, "Affiliate" of any entity
includes (i) any officer or director of such entity, (ii) any Person which,
directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such entity, and (iii) any Person
which owns, of record and/or beneficially, 5% or more of any class of equity
securities of such entity. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of any Person, whether through the ownership of voting securities, by
contract or otherwise.
(p) (Hazardous Materials) No Borrower will dispose of (nor permit any of
its Subsidiaries to dispose of) any Hazardous Material or oil on any Premises of
any Borrower or any such Subsidiary; nor shall any Borrower store or suffer or
permit to exist on any Premises of any Borrower or any such Subsidiary any
Hazardous Material or oil, nor transport or arrange the transport of (nor permit
any such Subsidiary to transport or arrange the transport of) any Hazardous
Material or oil, except under valid permits and licenses and otherwise in
compliance with all applicable laws and regulations. Each Borrower shall provide
the Agent with prompt written notice of (i) any material release or threat of
release of any Hazardous Material or oil at or from any site or vessel owned,
occupied or operated by such Borrower or any of its Subsidiaries and (ii) any
incurrence of any expense or loss by any governmental authority in connection
with the assessment, containment or removal of any Hazardous Material or oil for
which expense or loss such Borrower or any such Subsidiary may be liable.
Notwithstanding the foregoing, any Borrower and its Subsidiaries may use, store
and transport, and need not notify the Agent of the use, storage or
transportation of (x) oil in reasonable quantities, as fuel for heating of their
respective facilities or for vehicles or machinery used in the ordinary course
of their respective businesses and (y) hazardous materials that are solvents,
cleaning agents or other materials used in the ordinary course of the respective
business operations of such Borrower and its Subsidiaries, in reasonable
quantities, as long as in any case the Borrower or the Subsidiary concerned (as
the case may be), has obtained and maintains in effect all necessary
governmental permits, licenses and approvals, complies with all requirements of
applicable federal, state and local law relating to such use, storage or
transportation, follows the protective and safety procedures that a prudent
businessperson conducting a business the same as or similar to that of such
Borrower or such
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Subsidiary (as the case may be) would follow, and disposes of such materials
(not consumed in the ordinary course) only through licensed providers of
hazardous waste removal services.
(q) (Stock Ownership) the Company will not suffer or permit to exist any
circumstance in which it does not hold 100% of the voting stock of each
Subsidiary.
(r) (Change of Fiscal Year, etc.) No Borrower will make (nor will any
Borrower permit any of its Subsidiaries to make) any material change in the
nature of its business as conducted at the date hereof. Each Borrower agrees
that such Borrower will not change its fiscal year or, in any material respect,
its accounting principles or methods of applying same. If any accounting
treatment or classification is for any reason changed as to the accounts of any
Borrower and/or any of its Subsidiaries, the relevant Borrower will forthwith
notify the Agent of same in writing (the Agent agreeing to forward promptly to
each of the Banks a copy of any such written notice which it receives) and will
execute and deliver such amendments to this Agreement as the Agent may
reasonably deem necessary or desirable in order to preserve unimpaired the
rights of the Banks and the obligations of the Borrowers under this Agreement.
(s) (Asset Write-Up) No Borrower will write up (by creating an appraisal
surplus or otherwise) the value of any receivables or tangible assets of such
Borrower or any of its Subsidiaries above their cost to such Borrower or such
Subsidiary, as the case may be, less the depreciation regularly allowable
thereon.
(t) (No Margin Stock) No proceeds of any Loan shall be used directly or
indirectly to purchase or carry any margin stock.
Section 6.03. Reporting Requirements. Each Borrower agrees that so long as
any Loan shall be outstanding or any other obligation of any Borrower to any
Bank and/or the Agent shall remain unpaid or any letter of credit issued
hereunder is outstanding or any Commitment remains in effect hereunder, the
Borrowers shall furnish or cause to be furnished to the Agent:
(a) As soon as available and in any event within 90 days after the end of
each fiscal year of the Company, a copy of the annual financial statements for
such fiscal year for the Company, including therein consolidated and
consolidating balance sheets of the Company and its Subsidiaries as at the end
of such fiscal year and consolidated and consolidating statements of income and
retained earnings and consolidated statements of cash flow for the Company and
its Subsidiaries for such fiscal year. The annual consolidated statements of the
Company shall be certified by independent certified public accountants selected
by the Company and reasonably acceptable to the Agent, such certification to be
in such form as is generally recognized as "unqualified". The audited
consolidated annual financial statements submitted under this Subsection shall
be accompanied by a statement of the independent certified public accountants
stating whether in the course of their examination (which shall include a review
of this Agreement) they became aware of the
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existence as at the end of the fiscal year covered by such financial statements
of any event, transaction, occurrence or state of affairs which would contravene
or violate any of the financial covenants contained in this Agreement and, if
their examination has disclosed any such event, transaction, occurrence or state
of affairs, specifying the nature and period of the existence thereof. Such
accountants' statement shall also include a schedule setting forth the
computations necessary to determine compliance, as at the relevant fiscal
year-end, with each of Subsections 6.01(r), (s), (t) and (u).
(b) Within 25 days after the end of each month, consolidated and
consolidating balance sheets of the Company and its Subsidiaries and related
consolidated and consolidating statements of income and consolidated cash flow
statements of the Company and its Subsidiaries, unaudited but prepared in
accordance with generally accepted accounting principles consistently applied
(except that such monthly statements need not contain footnotes) and certified
as fairly presenting the financial condition of the Company and its Subsidiaries
in accordance with generally accepted accounting principles (subject to normal
year-end audit adjustments and subject to the information to be presented in
year-end schedules and footnotes) by the chief financial officer of the Company,
each such balance sheet to be as at the end of the relevant month and such
statements of income and cash flow to be for such month and for the fiscal year
to date. Each such income statement shall also be accompanied by a comparison to
budget.
(c) Within 45 days after the end of each fiscal quarter of the Company, a
certificate executed by the chief financial officer of each Borrower stating
that he or she has reviewed this Agreement and has no knowledge of any default
by such Borrower in the performance or observance of any of the provisions of
this Agreement or, if he or she has such knowledge, specifying each such default
and the nature thereof. Each such quarterly certificate shall be accompanied by
a statement of the chief financial officer of the Company setting forth in
detail the computations necessary to determine compliance with each of
Subsections 6.01(r), (s), (t) and (u).
(d) Promptly after receipt, a copy of all audits (annual or special)
submitted to any Borrower by its independent public accountants and any
"management letter" given by such accountants to the management of any Borrower,
such management letter to be provided in any event within 120 days following the
end of each fiscal year of the Company.
(e) Biweekly, as at every second Sunday following the date of this
Agreement, a Borrowing Base Certificate (and related Receivables aging in detail
reasonably satisfactory to the Agent) setting forth the Borrowing Base and
borrowing availability, together with the Borrowers' computations of same, such
Certificate to be submitted biweekly within five (5) days after each such
Sunday. The Borrowers will prepare and submit Borrowing Base Certificates at
more frequent intervals if requested by the Agent if any Default or Event of
Default has occurred and is continuing.
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(f) As soon as possible and in any event within five days after the
occurrence of any Default or Event of Default with respect to any Borrower, the
statement of such Borrower setting forth details of each such Default or Event
of Default and the action which such Borrower proposes to take with respect
thereto.
(g) Promptly after the commencement thereof, notice of all actions, suits
and proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, to which any Borrower or
any Subsidiary of any Borrower is a party; provided, however, that no such
notice need be given with respect to any such action, suit or proceeding which
seeks monetary damages only and in an amount of less than $250,000.
(h) Promptly upon the filing by the Company of any final registration
statement or listing application with the Securities and Exchange Commission
("SEC") or any successor agency or with any stock exchange or with the National
Association of Securities Dealers quotations system, a copy of same.
(i) A copy of each periodic or current report hereafter filed by the
Company with the SEC or any successor agency and each annual report, proxy
statement or press release disseminated by the Company, such copy to be provided
to the Agent promptly upon such filing with the SEC or such dissemination, as
the case may be.
(j) Promptly after any Borrower has knowledge thereof, written notice of:
(i) termination or potential termination of any consent, license,
permit or franchise material to the conduct of the business of any Borrower
or of any of its Subsidiaries or the ownership of its or their property and
assets;
(ii) any material loss, damage or destruction to or of any property or
assets of any Borrower or of any of its such Subsidiaries (regardless of
whether the same is covered by insurance);
(iii) any material controversy with employees of any Borrower or of
any of its Subsidiaries or with any labor organization; and
(iv) any other material development adversely affecting any Borrower,
any of their respective Subsidiaries or any of their respective business,
prospects, properties, assets or conditions, financial or otherwise.
(k) Promptly following the occurrence of any change in any of the present
executive officers or directors of any Borrower, all of whom are listed on
Exhibit L hereto, a notice of such change.
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(l) Such other information respecting the financial condition, operations
and assets of any Borrower and/or any of their Subsidiaries as any Bank or the
Agent may from time to time reasonably request.
ARTICLE VII
DEFAULT AND REMEDIES
Section 7.01. Events of Default. The occurrence of any of the following
events shall constitute an Event of Default under this Agreement:
(a) The Borrowers shall fail to make any payment of principal of or
interest on any Note or any Loan on the date when due or shall fail to make any
payment with respect to any letter of credit when due or shall fail to pay any
fees when due; or
(b) Any representation or warranty of any Borrower contained herein shall
at any time prove to have been incorrect in any material respect when made; or
any representation or warranty now or hereafter made by any Borrower or any
Personal Pledgor in connection with this Agreement or in connection with any
Loan or in connection with any letter of credit shall at any time prove to have
been incorrect in any material respect when made; or
(c) Any Borrower shall default in the performance or observance of any
agreement or obligation under any of Subsections 6.01(b) (first sentence only),
6.01(c), 6.01(d) (as applies to corporate existence only), 6.01(e), 6.01(r),
6.01(s), 6.01(t) or 6.01(u) or any provision of Section 6.02 or Section 6.03 or
the last sentence of Section 2.07; or
(d) Any Borrower shall default in the performance of any other term,
covenant or agreement contained in this Agreement and such default shall
continue unremedied for thirty (30) days after notice thereof shall have been
given to such Borrower; or
(e) Any default on the part of any Borrower shall exist, and shall remain
unwaived or uncured beyond the expiration of any applicable notice and/or grace
period, under any contract, agreement or understanding now existing or hereafter
entered into with or for the benefit of the Agent or any of the Banks in respect
of any of the Loans; or
(f) Any default shall exist and remain unwaived or uncured with respect to
any Indebtedness of any Borrower or of any Subsidiary of any Borrower in a
principal amount equal to or greater than $250,000, or any of the aforesaid
Indebtedness shall not have been paid when due, whether by acceleration or
otherwise, or shall have been declared to be due and payable prior its stated
maturity, or any event or circumstance shall occur which permits, or with the
lapse of time or the giving of notice or both would permit, the acceleration of
the maturity of any such Indebtedness by the holder or holders thereof; or
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(g) Any Borrower shall be dissolved; or any Borrower or any Subsidiary of
any Borrower shall become bankrupt or shall cease paying its debts generally as
they mature or shall make an assignment for the benefit of creditors, or a
trustee, receiver or liquidator shall be appointed for any Borrower or any
Subsidiary of any Borrower or for a substantial part of the property of any of
the foregoing, or bankruptcy, reorganization, arrangement, insolvency or similar
proceedings shall be instituted by or against any Borrower or any Subsidiary of
any Borrower under the laws of any jurisdiction (other than any involuntary
proceedings which are instituted against any Borrower or any such Subsidiary
without the acquiescence of the relevant Borrower or Subsidiary, as the case may
be, and which are dismissed of record within 60 days following the institution
thereof); or
(h) Any uninsured judgment or any writ, attachment, execution or similar
process in an amount of $250,000 or more shall be issued or levied against any
Borrower or any Subsidiary of any Borrower and, in any such case, such judgment,
writ, attachment, execution or similar process shall not be paid, released,
vacated or fully bonded within ten (10) days after its issue or levy; or
(i) Any Borrower or any Subsidiary of any Borrower shall fail to meet its
minimum funding requirements under ERISA with respect to any employee benefit
plan (or other class of benefit which the PBGC has elected to insure) or any
such plan shall be the subject of termination proceedings (whether voluntary or
involuntary) and there shall result from such termination proceedings a
liability of any Borrower or any Subsidiary of any Borrower to the PBGC which,
in the reasonable opinion of the Agent, would be likely to have a material
adverse effect upon the business, operations or financial condition of any
Borrower; or
(j) The security interest and lien of the Agent in and on any of the
Collateral shall not be in full force and effect as a fully perfected first
priority lien; or
(k) For any reason the Guaranty contained in Article X below shall not be
in full force and effect or any failure or default on the part of any Borrower
shall exist thereunder; or
(l) For any reason any Personal Pledge shall not be in full force and
effect or any failure or default on the part of any Personal Pledgor shall exist
under any of the Personal Pledges.
Section 7.02. Rights and Remedies Upon Default. Upon the occurrence of any
Event of Default and at any time thereafter, in addition to any other rights and
remedies available to the Agent and/or the Banks hereunder or otherwise, the
Agent may exercise any one or more of the following rights and remedies (all of
which shall be cumulative):
(a) Declare the entire unpaid principal amount of each Note and each of the
Loans then outstanding, all interest accrued and unpaid with respect to any and
all of the foregoing, and all other amounts payable under or with respect to
this Agreement to be forthwith due and
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payable, whereupon the same shall become forthwith due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrowers; provided, however, that upon the occurrence
of any Event of Default under Subsection 7.01(g), the Notes, all Loans and all
other amounts payable under this Agreement will automatically become due and
payable without any notice or any such declaration.
(b) Declare the Commitments to be terminated, whereupon the same and all
obligations of the Banks or any of them to make Revolving Loans and/or issue
letters of credit shall be terminated forthwith and without notice; provided,
however, that upon the occurrence of any Event of Default under Subsection
7.01(g), the Commitments will automatically terminate without any notice and
without any such declaration.
(c) Enforce the provisions of this Agreement by legal proceedings for the
specific performance of any covenant or agreement contained herein or for the
enforcement of any other appropriate legal or equitable remedy, and the Agent
may recover damages caused by any breach by any Borrower of the provisions of
this Agreement, including court costs, reasonable attorneys' fees and other
costs and expenses incurred in the enforcement of the obligations of any
Borrower hereunder.
(d) Exercise all rights and remedies under this Agreement, under the Notes,
under the Security Agreement, under the Pledge Agreements and under any other
agreement with the Agent, and exercise all other rights and remedies which the
Agent may have under applicable law.
Without limitation of the foregoing, upon the occurrence of any Event of
Default, Fleet may exercise its rights and remedies under the Personal Pledges.
Section 7.03. Set-off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Bank is hereby authorized at any time
or from time to time, without presentment, demand, protest or other notice of
any kind to any Borrower or to any other Person, all of which are hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(other than monies held in custody or trust accounts) and any other Indebtedness
at any time held or owing by such Bank or any affiliate of such Bank to or for
the credit or the account of any Borrower against and on account of the
obligations, liabilities and claims of such Borrower to such Bank under this
Agreement, irrespective of whether or not the Agent or any such Bank shall have
made any demand for payment and although said obligations, liabilities or
claims, or any of them, may then be contingent or unmatured and without regard
for the availability or adequacy of any collateral. Each Borrower also grants to
each Bank a security interest with respect to all its deposits and all
securities or other property (other than deposits, securities or other property
held in custody or trust accounts) in the possession of such Bank or any
affiliate of such Bank from time to time in order to secure the Loans, the Notes
and all other amounts now or hereafter due under this Agreement, and, upon the
occurrence of any Event of Default, each Bank may exercise all rights and
remedies
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of a secured party under the Uniform Commercial Code. If any of the Banks shall,
through the exercise of any right of counterclaim, set-off, banker's lien or
otherwise, receive payment of all or any portion of the aggregate amount of
principal and interest due with respect to the Loans held by that Bank which is
greater than the amount which would have been received by such Bank if such
payment had been made to the Agent and had been applied by the Agent in the
priorities and in the manner described in the first sentence of Section 9.04
(the "Agreed Application"), then that Bank receiving such greater payment shall
purchase participations (which it shall be deemed to have done simultaneously
upon the receipt of such payment) in the Loans held by each such other Bank so
that all such recoveries of principal and interest with respect to the Loans
shall be proportionate to the Banks' respective pro rata interests in accordance
with the Agreed Application; provided, that if all or any part of such
proportionately greater payment received by such purchasing Bank is thereafter
recovered from such Bank, then, to the extent of such recovery, the purchase
price for each participation shall be returned to the purchasing Bank by the
seller of such participation, but without interest. Each Borrower expressly
consents to the foregoing arrangements and agrees that any holder of a
participation in any such Loan so purchased and any other subsequent holder of a
participation in any such Loan otherwise acquired may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing such Borrower to that holder as fully as if that holder were a
holder of a Note in the amount of the participation held by that holder.
Section 7.04. Right to Cure. In the event that any Borrower shall fail to
pay any tax, assessment, governmental charge or levy, except as the same may be
otherwise permitted hereunder, or in the event that any lien, encumbrance or
security interest prohibited hereby shall not be paid in full or discharged, or
in the event that any Borrower shall fail to pay or comply with any other
obligation hereunder, the Agent may, but shall not be required to, pay, satisfy,
perform, discharge or bond the same for the account of such Borrower, and all
moneys so paid by the Agent shall be payable by such Borrower to the Agent on
demand and shall bear interest from the date of demand until paid at a
fluctuating rate per annum which shall at all times be equal to the sum of (i)
two (2%) percent per annum plus (ii) the interest rate then applicable to the
Term Loan, but in no event in excess of the maximum rate permitted by then
applicable law.
Section 7.05. Remedies of Banks. The amounts payable by each Borrower under
each Note and with respect to each Loan shall be debts separate and independent
of the amounts owed under any other Note or with respect to any other Loan and
each Bank shall be entitled to protect and enforce its rights arising out of
this Agreement and its Note or Notes and any related letter of credit
documentation, and it shall not be necessary for any other Bank or the Agent to
consent to, or be joined as an additional party in, any proceedings for such
purposes; provided, however, that nothing herein shall permit any individual
Bank to accelerate payment of any Note, terminate its Commitment or have
recourse to any guaranty, collateral or other security to the extent that this
Agreement provides that such rights or remedies shall be exercised by the Agent
or by the Required Banks.
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Section 7.06. Temporary Loans Payable on Demand. The Borrowers acknowledge
that the Temporary Loans are and shall at all times be payable on demand by the
Agent and that it is a necessary inducement to the Agent to make any such
Temporary Loan that the Borrowers hereby grant to the Agent the unconditional
right at any time in such Agent's sole discretion to decline to make any further
such Temporary Loans and/or to demand payment in whole or in part of the
principal of and accrued interest on any or all such Temporary Loans, which
rights may be exercised by the Agent whether or not the Borrowers are then in
compliance with the provisions hereof. If any of the Events of Default described
in Section 7.01 above shall occur and be continuing, the Agent may, but shall
not be obligated to, make such demand for payment or withhold the making of
further Temporary Loans or both; however such events are described herein only
for purposes of illustration of circumstances in which the Agent may exercise
such rights, are not exclusive and shall not be a prerequisite to (or limit) the
Agent's making demand or withholding such Loans in any other circumstances.
Section 7.07. Certain Payments with Respect to Letters of Credit. Upon
acceleration of the Revolving Notes pursuant to Section 7.02 or termination of
the Commitments under Section 7.02 or occurrence of the Revolving Expiration
Date, and forthwith thereupon, the Borrowers shall, without limitation of their
obligations under this Agreement and the Notes, deliver to Fleet cash in an
amount equal to the aggregate stated amounts of all letters of credit which have
been issued by Fleet but which have not been drawn upon or, if drawn upon, have
not therefore been reimbursed to Fleet. Each Borrower hereby grants to Fleet a
continuing security interest in such cash, which shall constitute Collateral and
shall secure all obligations of such Borrower with respect to such letters of
credit, including, without limitation, all contingent obligations to reimburse
drawings that may be made thereunder.
ARTICLE VIII
FURTHER PROVISIONS AS TO RECEIVABLES
Section 8.01. Title To Receivables. The Borrowers jointly and severally
represent and warrant to the Banks and the Agent that each Receivable included
in any report or certification of any Borrower as to Qualified Receivables for
the purpose of the calculation of the Borrowing Base will be free and clear of
all adverse interests in favor of any Person other than the Agent. The Borrowers
jointly and severally represent and warrant to the Banks and the Agent that each
Receivable included in any report or certification of any Borrower as to
Qualified Receivables for the purpose of calculation of the Borrowing Base will
cover a bona fide sale and delivery of merchandise or rendering of service of
the type usually dealt in by the Borrower billing same, having arisen in the
ordinary course of such Borrower's business, will be for a liquidated amount,
and will mature as stated in the duplicate invoice covering such transaction,
and will not be subject to any deduction, offset, counterclaim or other
condition.
Section 8.02. Furnishing Information. Each Borrower will, at the Agent's
request, deliver
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confirmatory written assignments of Receivables, but the failure to execute or
deliver any such assignment shall not affect or limit the security interest of
the Agent in any Receivable. Together with each such assignment, if the Agent so
requests, the Borrowers will furnish the Agent with copies of invoices to
customers or the equivalent. Each Borrower shall promptly make, stamp or record
such entries or legends on the books and records of such Borrower as the Agent
shall request from time to time to indicate that the Agent has a security
interest in the Collateral.
Section 8.03. Disputes. The Borrowers shall notify the Agent promptly of
any Federal Claims owing to any Borrower. The Borrowers shall notify the Agent
promptly of all material disputes with account debtors and claims by account
debtors affecting any Receivables of any Borrower. The Borrowers shall not,
without the consent of the Agent, settle or adjust any dispute or claim in
excess of $125,000 per claim or $250,000 in the aggregate per calendar quarter.
Upon the occurrence of any Event of Default, and at any time thereafter, the
Agent may settle or adjust disputes or claims directly with customers or account
debtors for amounts and upon terms which it considers advisable. In all cases,
the Borrowers' account will be credited only with amounts actually received by
the Agent. When any Borrower receives collateral of any kind or nature by reason
of transactions between itself and its customers or account debtors, such
Borrower will hold the same on the Agent's behalf, subject to the Agent's
instructions, and as property forming part of the Receivables.
Section 8.04. Collections. After the occurrence and during the continuance
of an Event of Default, the Agent or its designee may at any time notify
customers or account debtors of the Agent's security interest in Receivables,
collect the same directly, and charge the collection costs and expenses to the
Borrowers' account. Whenever the Agent deems it desirable that any legal or
other action be instituted in order to effectuate collection of any Receivable,
the Agent may at its option assign or reassign any such Receivable to a Borrower
(and any such assignment or reassignment shall be deemed to be without recourse
to the Agent in any event) and require such Borrower to proceed with such legal
or other action at the Borrowers' sole liability, cost and expense, in which
event all amounts collected by them on such Receivable shall nevertheless be
subject to this Agreement.
Section 8.05. Trust Account. Notwithstanding anything provided elsewhere in
this Agreement, at any time after the occurrence and during the continuance of
an Event of Default the Agent may require the Borrowers to establish with the
Agent an account (the "Trust Account") and to deal with all of the Receivables
of the Borrowers subject to the provisions of this Section. Following such
election, the Borrowers will collect the Receivables of each Borrower as the
Agent's collection agent, hold such collections in trust for the Agent without
commingling the same with other funds of any Borrower and will promptly, on the
day of receipt thereof, transmit such collections to the Agent in the identical
form in which they were received by any Borrower, with such endorsements as may
be appropriate, accompanied by a report, on a form approved by the Agent,
showing the amount of such collections and the cash discounts applicable
thereto. At such intervals as the Agent may request, such reports shall also set
forth the amount of all merchandise returns, allowances, adjustments, discounts
(other than cash discounts) and other credits not
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previously reported to the Agent and the amount owing on Receivables which the
Borrowers deem should be charged off. With each such report of credits and
charge-offs, the Borrowers shall deliver to the Agent the Borrowers' check for
the aggregate amount of all such credits and charge-offs. The Agent may, in its
discretion, at any time after the occurrence and during the continuance of an
Event of Default require the Borrowers to establish a lock box with the Agent.
If such a lock box is established, the Borrowers will thereafter require their
account debtors to make payment directly to such lock box.
All collections in the form of cash, checks or other demand remittances so
transmitted to the Agent and any such required check of the Borrowers shall upon
receipt by the Agent be credited to the Trust Account. Each such credit shall be
conditional upon final payment to the Agent of all items giving rise to such
credit, and, if any item is not so paid, the credit for such item shall be
reversed whether or not the item has been returned. All collections in the form
of notes, drafts, acceptances or other instruments not payable on demand shall
be delivered by the Borrowers to the collection department of the Agent. When
such items are collected, the amount thereof shall be credited by the Agent to
the Trust Account, with appropriate advice to the Borrowers.
At such intervals as it may deem appropriate, but no less frequently than
monthly, the Agent, by charging the Trust Account, shall apply the full amount
then on deposit in the Trust Account in reduction or payment of Loans then
outstanding hereunder, such application to be subject to the final payment in
cash of all items theretofore credited to the Trust Account.
ARTICLE IX
CONCERNING THE AGENT
Section 9.01. Designation of Agent. Each Bank hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or to take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Banks and such
instructions shall be binding upon all Banks and all subsequent holders of
Notes; provided, however, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
this Agreement or applicable law.
Section 9.02. Duties with Respect to Notes and Loans. The Agent will
receive payments under the Notes for the benefit of the Banks in the proportions
described herein, subject to Section 9.04 of this Agreement; provided that the
Agent shall not be deemed a fiduciary for the Banks for any other purpose unless
otherwise expressly agreed by the Agent.
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Upon receipt of any payment from any Borrower, the Agent will remit to each Bank
the amount of such Bank's share of any such payment by wire transfer, credit to
an account with the Agent or in such other manner as such Bank may reasonably
request from time to time. The Agent will, promptly upon receipt, remit to each
Bank, the interest and fees owed to each Bank, respectively, with respect to the
Loans. Each Bank's share of interest payments with respect to the Revolving
Loans shall be determined by the Agent based on such Bank's pro rata share of
the Revolving Loans outstanding, and each Bank's share of Commitment Fee
payments shall be determined by the Agent based on its respective Revolving Loan
Percentage of the Revolving Commitment Amount, in respect of the relevant
period. Interest and fees with respect to the Term Loan will be payable to
Fleet.
Section 9.03. Duties With Respect to Administration. The Agent will receive
reports required under this Agreement and will administer the Loans in the
manner customarily employed by the Agent in administering loans in which it
alone has an interest. Each of the Banks agrees to keep the Agent informed
concerning its relations with the Borrowers and to share with the Agent all
material information relevant to administration of this Agreement. The Agent
will keep each Bank informed of all material actions taken by it hereunder with
respect to the Loans and Borrowers.
Section 9.04. Duties Upon Default. No Event of Default relating to the
payment of principal, interest or any other sum hereunder may be waived without
the consent of the Required Banks (except that Fleet may waive any default to
the extent that same relates to the Term Loan). Following an Event of Default,
and subject always to the ability of the requisite number of Banks to grant
waivers under the immediately preceding sentence, the Agent, at the direction of
any Bank or Banks holding any of the Revolving Loans, shall declare the
Revolving Notes and Revolving Loans to be due and payable and the Commitments to
be terminated. The Agent will thereafter seek to collect the Revolving Loans to
the extent and in the manner directed by the Required Banks and, prior to acting
hereunder, the Agent may (but shall not be required to) require indemnity
satisfactory to it for any costs and expenses which it may incur. Further, and
without limitation of the foregoing, following an Event of Default, and subject
always to the ability of the requisite number of Banks to grant waivers under
the first sentence of this Section 9.04, the Agent, at the direction of any Bank
or Banks holding any of the Term Loan, shall declare the Term Note and the Term
Loan to be due and payable. The Agent will thereafter seek to collect the Term
Loan to the extent and in the manner directed by the Banks holding the Term Loan
and, prior to acting hereunder, the Agent may (but shall not be required to)
require indemnity satisfactory to it for any costs and expenses which it may
incur.
Following acceleration of the Revolving Loans and/or the Term Loan (or if
any such Loan or Loans shall not have been paid at the maturity thereof), all
sums received by the Agent in respect of such Loans from the exercise of any
rights under any Note and/or this Agreement shall be applied by the Agent as
follows: First, to the payment of any fees, costs, charges and expenses owing to
the Agent for actions taken on behalf of the Banks; Second, to fees, costs,
charges and expenses of the Banks payable by any Borrower under this
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Agreement, being applied pro rata among the Banks (including, for this purpose,
the Agent as the maker of any Temporary Loan and Fleet as issuer of any letter
of credit) in proportion to the respective amounts then owed to each of them
therefor; Third, to the payment of interest on the accelerated Loan or Loans (or
matured Loan or Loans, as the case may be) or on any matured letter of credit
liabilities or any Temporary Loan, being applied pro rata among the Banks
(including, for this purpose, the Agent as maker of any Temporary Loan and Fleet
as issuer of any letter of credit) in proportion to the respective amounts then
owed to each of them therefor; Fourth, to the payment of principal outstanding
with respect to the accelerated Revolving Loan or Loans (or matured Revolving
Loan or Loans, as the case may be) or any matured letter of credit liabilities
or any Temporary Loan, being applied pro rata among the relevant Banks
(including, for this purpose, the Agent if it makes a Temporary Loan and Fleet
as issuer of any letter of credit) in proportion to the respective amounts then
owed to each of them on account of the principal of such Revolving Loans or any
matured letter of credit liabilities or any Temporary Loan; and Fifth, to
payment of principal of the Term Loan. For the purposes of the preceding
sentence, the phrase "then owed" refers to amounts owed at the time of
acceleration (or maturity, as the case may be). In the event that, due to
exercise of its rights under Section 7.03 or for any other reason, any Bank
shall receive more than the share of fees, costs, charges, expenses, principal
or interest to which it would be entitled under this Section 9.04 in respect of
any Loan or Loans, such Bank will promptly remit to each other Bank such amounts
as may be required to ensure that each Bank receives its pro rata share of each
item in order to effectuate the distribution set forth in this Section 9.04.
Notwithstanding anything to the contrary contained in this Agreement, in
connection with the distribution set forth in this Section 9.04, in the event
that any amounts are received by any Bank pursuant to a set-off against accounts
of any Borrower with such Bank, and for purposes of distribution of such amounts
only, principal and interest owed to each of the Banks will be deemed to include
the principal of and interest on any Other Obligations (as hereinafter defined)
then owed to each such Bank (principal of Other Obligations being deemed, for
this purpose only, included in clause Fifth above). Further, notwithstanding the
foregoing, any amounts received by Fleet as the result of exercise of rights and
remedies under the Personal Pledges may be applied by Fleet to any indebtedness
and liabilities now or hereafter owed by any Borrower to Fleet (including,
without limitation, the Term Loan) and need not be shared with any other Bank or
otherwise applied pursuant to the preceding sentences of this paragraph.
Further, notwithstanding anything provided above in this Section 9.04 or
elsewhere, any and all amounts received by the Agent as the result of the
exercise of rights and remedies under the Pledge Agreements will be as follows:
First, to the expenses of such exercise and any other costs, fees, expenses and
other amounts then owed to the Agent in its capacity as such; Second, to the
payment of interest on and principal of the Term Loans; and Third, to the
payment of interest on and principal of the Revolving Loans and to all of the
other items described in clauses Second, Third and Fourth of the first sentence
of this Section 9.04.
Section 9.05. Other Obligations. Any of the Banks may now or hereafter be
owed obligations by any Borrower which do not arise under this Agreement or any
Note ("Other Obligations"). Nothing contained herein shall be deemed to
constitute an agreement by any
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Bank to participate in or to grant a participation to any other Bank in any such
Other Obligations. Notwithstanding an Event of Default or acceleration of any
Note, any Bank may invoke any available right or remedy and proceed against any
security, collateral or other property and may apply the proceeds obtained
thereby to any Other Obligations owed to such Bank, without regard to the
provisions of this Agreement, except as provided in the last sentence of Section
9.04.
Section 9.06. Standard of Care. The Agent, in acting hereunder, shall not
be liable for any error of judgment or mistake of fact or for any acts of
omission or commission, unless the same are caused by its own willful misconduct
or gross negligence. The Agent may act in reliance (and will be protected in so
relying) on all instructions (written or telephonic), certificates, instruments,
documents or signatures believed by it to be genuine and may assume that any
person purporting to act or give notices, certificates, writings, advice or
instructions is duly authorized by the appropriate party to do so. The Agent may
rely upon an opinion of counsel and any action taken in reliance on such opinion
shall be deemed to have been reasonable.
Neither the Agent nor any of its shareholders, directors, officers or
employees or any other Person assisting the Agent in its duties, nor any agent
or employee thereof, shall be liable for any action taken or omitted to be taken
in good faith by it or them under this Agreement or any Note, or in connection
herewith or therewith, or be responsible for the consequences of any oversight
or error of judgment whatsoever, except that the Agent or such other Person, as
the case may be, may be liable for losses due to its own willful misconduct or
gross negligence. Without in any way limiting the generality of the foregoing,
the Agent may employ attorneys-in-fact and other agents and shall not be
accountable for the errors of any of them selected with reasonable care.
The Agent shall not be responsible for the authorization, execution,
legality, validity, perfection or enforceability of this Agreement, any Loan,
any Note or any instrument at any time constituting, or intending to constitute,
collateral security for any Note, or for the collectability of any amounts owing
with respect to this Agreement, any Loan or any Note, or for any recitals or
statements, warranties or representations in this Agreement or made in any
certificate or instrument heretofore or hereafter furnished by or on behalf of
any Borrower or for the financial condition of any Borrower, nor will the Agent
be bound to ascertain or inquire as to the performance or observance of any of
the terms, conditions, covenants or agreements in this Agreement or any other
instrument at any time constituting or intended to constitute collateral
security for any Note. The Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by any Borrower or any Bank
shall have been duly authorized or is true, accurate and complete. The Agent
shall have no responsibility for the performance of any Loans. The Agent has not
made nor does it now make any representations or warranties, express or implied,
nor does it assume any liability to the Banks with respect to, the
creditworthiness or financial condition of any Borrower; and each Bank
represents and warrants to the Agent that it has made its own independent
investigation and credit analysis of the creditworthiness of the Borrowers and
an independent
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review and analysis of this Agreement and all documents relating thereto and has
not relied upon the Agent or any material or information furnished by the Agent
in making any such evaluation, analysis or investigation.
If, in the opinion of the Agent, the distribution of any amount received by
it in such capacity under this Agreement or under any related instrument or
under any Note might subject it to liability, it may refrain from making such
distribution until its right to make such distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and distributed by the Agent
is to be repaid to or for the benefit of any Borrower, or its successors or
assigns, each Person to whom any such distribution shall have been made shall
either pay to the Agent its proportionate share of the amount so adjudged to be
repaid or shall pay over the same in such manner and to such Persons as shall be
determined by such court.
In its individual capacity, Fleet shall have the same obligations and the
same rights, powers and privileges in respect to its interest in the Loans, the
Notes and this Agreement as it would have were it not also the Agent. Neither
its service as Agent nor its participation as one of the Banks making Loans
pursuant to this Agreement shall in any way preclude Fleet from having other
financial relationships with any Borrower.
Section 9.07. Expenses. Each Bank severally agrees to reimburse the Agent
upon demand for its pro rata share (determined in proportion to its respective
Revolving Loan Percentage) of any costs and expenses other than normal overhead
expenses (fees of outside counsel not being deemed normal overhead expenses)
incurred by the Agent in connection with the administration of this Agreement,
the Loans or any related instrument or the collection or liquidation of
collateral, excluding, however, any expense reimbursed by any Borrower (the
Borrowers having the primary obligation to pay such costs and expenses). The
sums to be reimbursed under this Section shall, until paid, constitute a first
charge and lien upon any funds or property now or hereafter held by the Agent.
Without limiting the foregoing, the following shall be considered and treated as
costs and expenses payable under the foregoing provisions:
(i) any monies paid by the Agent in defending, settling or satisfying
any claim, action or demand asserted by any receiver, trustee in bankruptcy
or reorganization, assignee, creditor, stockholder or other Person in
connection with any Borrower or the Loans or any transaction or collateral
related thereto, on any theory of preference, fraudulent conveyance,
subordination, usury, ultra xxxxx, invalidity, lender liability or similar
theory;
(ii) any monies paid by the Agent in satisfying any prior lien
asserted with respect to any collateral, including any expenses, costs and
attorneys' fees which may be incurred in connection with any of the
foregoing; and
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(iii) any monies advanced by the Agent to or for the account of any
Borrower to the extent necessary in connection with the effectuation of an
orderly liquidation of the principal balance outstanding on the Loans.
Section 9.08. Resignation of Agent; Appointment of Successor Agent. The
Agent, or any successor Agent hereafter appointed, may at any time resign and be
discharged of its obligations as Agent hereunder by giving not less than thirty
(30) days' prior written notice of its intention to resign to the other parties
hereto.
In the event of the resignation of the Agent, a successor Agent shall be
appointed by unanimous concurrence of the Banks and with the consent of the
Borrowers. The appointment of a successor Agent shall be effective on the date
of resignation specified in the resigning Agent's notice or upon the acceptance
in writing by the successor Agent of the agency created hereunder, whichever
shall last occur. If, within thirty (30) days of the Agent's notice of intended
resignation, a successor Agent shall not have been appointed and accepted such
appointment, the resigning Agent may appoint a successor. The Borrowers agree to
execute and deliver to any successor Agent all such documents as may be deemed
necessary or desirable by such successor Agent in order to perfect, preserve and
protect the rights of the successor Agent and the Banks under this Agreement.
Section 9.09. Borrowers' Acknowledgment. Each Borrower acknowledges and
agrees that the Banks and the Agent may share with each other information with
respect to such Borrower and its Subsidiaries, the performance of such Borrower
and its Subsidiaries under this Agreement, and the business, operations and
financial condition of such Borrower and its Subsidiaries.
Section 9.10. No Other Beneficiaries. The provisions of this Article IX
shall be binding upon each Borrower, but neither any Borrower nor any other
Person (except the Banks and Agent) shall have any claim, defense or cause of
action based on any provision of this Article IX and nothing contained in this
Article IX shall derogate from any obligation of any Borrower or limit any right
or remedy of the Agent or any Bank contained elsewhere in this Agreement.
ARTICLE X
GUARANTY
Section 10.01. Guaranty. In consideration of the Banks entering into this
Agreement, each Borrower (each, for the purposes of this Article X, a
"Guarantor") hereby guaranties to the Agent and the Banks the due and punctual
payment and performance of all of the Guaranteed Obligations of each other
Borrower (each, an "Other Borrower") as and when the same shall become due and
payable, whether on demand or at maturity, by declaration or otherwise,
according to the terms thereof, and all losses, costs, expenses and attorneys'
fees and disbursements incurred by reason of a default under any of said
Guaranteed Obligations.
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In case of failure by any Other Borrower punctually to pay any of the Guaranteed
Obligations, each Guarantor hereby unconditionally agrees to cause such payment
to be made to the Agent punctually as and when the same shall become due and
payable, whether at maturity or by declaration or otherwise, and as if such
payment were made by such Other Borrower. The guaranty contained in this Article
(the "Guaranty") is an absolute, unconditional, unlimited and continuing
guaranty of the full and punctual payment and performance by each of the Other
Borrowers of the Guaranteed Obligations and not merely of their collectibility
and is in no way conditioned upon any requirement that the Agent or any Bank
first collect or attempt to collect the Guaranteed Obligations or any portion
thereof from any Other Borrower or from any other guarantor of any of same or
resort to any security or other means of obtaining payment of any of the
Guaranteed Obligations which the Agent or any Bank now has or may acquire after
the date hereof, or upon any other contingency whatsoever. Payments by any
Guarantor hereunder may be required by the Agent on any number of occasions.
Section 10.02. Further Agreement to Pay. Each Guarantor further agrees, as
a principal obligor and not as a guarantor, to pay to the Agent forthwith upon
demand, in funds immediately available to the Agent, all costs and expenses
(including court costs and attorneys' fees and disbursements) incurred or
expended by the Agent in connection with this Guaranty and the enforcement
hereof against any Other Borrower, together with interest on any sum now or
hereafter payable by such Guarantor under this Article X, such interest to
accrue from the date of any demand for payment of such sum to the date of
payment. Such interest will be payable at the rate set forth in Section 12.04
below.
Section 10.03. Agent's and Banks' Freedom to Deal with Other Borrowers and
Other Parties. The Agent and each Bank shall be at liberty, without giving
notice to or obtaining the assent of any Guarantor and without relieving any
Guarantor of any liability hereunder, to deal with each Other Borrower and with
each other party who now is or after the date hereof becomes liable in any
manner for any of the Guaranteed Obligations in such manner as the Agent or such
Bank, as the case may be, in its sole discretion deems fit. The Agent (and/or
each of the Banks, as applicable) has full authority in its sole discretion to
do any or all of the following things, none of which shall discharge or affect
the liability of any Guarantor hereunder: (i) extend credit, make loans and
afford other financial accommodations to any Other Borrower at such times, in
such amounts and on such terms as the Agent (or such Bank, as the case may be)
may approve; (ii) modify, amend, vary the terms and grant extensions or renewals
of any present or future indebtedness or of all or any of the Guaranteed
Obligations or any instrument relating to or securing same, and, without
limitation, this Guaranty shall survive payment of the Notes; (iii) grant time,
waivers and other indulgences in respect thereto; (iv) vary, exchange, release
or discharge, wholly or partially, or delay or abstain from perfecting and
enforcing any security or guaranty or other means of obtaining payment of any of
the Guaranteed Obligations which the Agent or any Bank now has or acquires after
the date hereof; (v) take or omit to take any of the actions referred to in this
Agreement or other instrument evidencing, securing or relating to any of the
Guaranteed Obligations; (vi) fail, omit or delay to enforce, assert or exercise
any right, power or remedy conferred on the Agent
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or any Bank in this Agreement or in any other instrument evidencing, securing or
relating to any of the Guaranteed Obligations or take or refrain from taking any
other action; (vii) accept partial payments from any Other Borrower or any other
party; (viii) release or discharge, wholly or partially, any Other Borrower, any
endorser or any guarantor, or accept additional collateral for the payment of
any Guaranteed Obligations; (ix) compromise or make any settlement or other
arrangement with any Other Borrower or any such other party; and (x) consent to
and participate in the proceeds of any assignment, trust or mortgage for the
benefit of creditors.
Section 10.04. Unenforceability of Guaranteed Obligations; Invalidity of
Security or Other Guaranties. If for any reason now or hereafter any Other
Borrower has no legal obligation to discharge any of the Guaranteed Obligations
undertaken or purported to be undertaken by it or on its behalf, or if any of
the moneys included in the Guaranteed Obligations have become irrecoverable from
any Other Borrower by operation of law or for any other reason, this Guaranty
shall nevertheless be binding on each Guarantor to the same extent as if such
Guarantor at all times had been the principal debtor on all such Guaranteed
Obligations. This Guaranty shall be in addition to any other guaranty or other
security for the Guaranteed Obligations, and it shall not be prejudiced or
rendered unenforceable by the invalidity of any such other guaranty or security.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be restored or returned by the Agent or any Bank, upon the
insolvency, bankruptcy or reorganization of any Other Borrower or otherwise, all
as though such payment had not been made.
Section 10.05. Waivers by the Guarantors. Each Guarantor waives: notice of
acceptance hereof and reliance hereon, notice of any action taken or omitted by
the Agent or any Bank in reliance hereon, any requirement that the Agent or any
Bank be diligent or prompt in making demands hereunder, any requirement as to
any presentment, demand, protest, giving notice of any default by any Other
Borrower or asserting any other right of the Agent or any Bank hereunder and all
demands, notices and all suretyship defenses generally.
Without limiting the generality of the foregoing provisions of this
Guaranty, the liability of each Guarantor shall not be released, discharged or
otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of any Other Borrower or any other guarantor of
any of the obligations guarantied hereby;
(ii) any change in the time, manner, amount or place of payment of any
Guaranteed Obligation or any modification or amendment of or supplement to
this Agreement or any related document;
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(iii) any release, non-perfection or invalidity of any direct or indirect
security for any obligation of any Other Borrower or any other guarantor of
any of the obligations guarantied hereby;
(iv) any change in the corporate existence, structure, record or beneficial
ownership or control of any Other Borrower, such Guarantor or any other
guarantor of any of the obligations guarantied hereby, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting any such
Person or its assets;
(v) the existence of any claim, set-off or other rights which such
Guarantor may have at any time against any Other Borrower, the Agent, any
Bank or any other guarantor of any of the obligations guarantied hereby or
any other Person, whether or not arising in connection with this Agreement;
(vi) any invalidity or unenforceability relating to or against any Other
Borrower for any reason under this Agreement or any related document; or
any provision of applicable law or regulation purporting to prohibit the
payment by any Person of the principal of or interest on any of the Notes
or any other amount payable under this Agreement or any related document;
or
(vii) any other act or omission to act or delay of any kind by any Other
Borrower, the Agent, any Bank or any other Person or any other
circumstances whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of such Guarantor's
obligations hereunder.
Section 10.06. Subrogation. Each Guarantor hereby irrevocably and
unconditionally waives any and all rights of subrogation, contribution or
similar rights which, but for this Section 10.06, it might otherwise have in
relation to any Other Borrower or any other Person as a result of this Agreement
or any payments hereunder.
Section 10.07. No Contest with Agent or Banks. No set-off, counterclaim,
reduction or diminution of any obligation, or any claim or defense of any kind
or nature which any Guarantor has or may have against any Other Borrower, the
Agent or any Bank shall be available hereunder to such Guarantor. No Guarantor
will, in any proceedings under the Bankruptcy Code or insolvency proceedings of
any nature, prove in competition with the Agent or any Bank in respect of any
payment hereunder or be entitled to have the benefit of any other security for
any Guaranteed Obligation which, now or hereafter, such Guarantor may hold in
competition with the Agent or any Bank.
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Section 10.08. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by any Other Borrower with respect to any Loans is
stayed upon the insolvency, bankruptcy or reorganization of any Other Borrower,
all such amounts otherwise subject to acceleration under the terms of this
Agreement shall nonetheless be payable by each Guarantor hereunder forthwith on
demand by the Agent.
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ARTICLE XI
FURTHER RIGHTS OF THE AGENT
Section 11.01. Further Assurances. Each Borrower shall do all things and
deliver all instruments reasonably requested by the Agent to protect or perfect
any security interest granted or intended to be granted hereunder and/or under
the Security Agreement. If any Borrower fails promptly to comply with any such
request, or if any Event of Default shall have occurred hereunder, each Borrower
authorizes the Agent to execute, in the name or on behalf of each Borrower, any
financing statements or other document or instrument that the Agent may require
to perfect, protect or establish any security interest or lien interest to which
the Agent may be then entitled hereunder and/or under the Security Agreement and
further authorizes the Agent to sign each Borrower's name on the same. Each
Borrower appoints (but only for the purposes of protecting the Agent's
interests) such Person or Persons as the Agent may designate as the
attorney-in-fact of such Borrower with the power to exercise the rights of the
Agent pursuant to the immediately preceding sentence as well as to endorse the
name of such Borrower on any checks, notes, drafts or other forms of payment or
security relating to any Collateral that may come into the possession of the
Agent; to sign the name of such Borrower on invoices or bills of lading, drafts
against customers, notices of assignment, verifications and schedules; to
demand, collect, receive payment of, receipt for, settle, compromise or adjust
and give discharges and releases in respect of the Receivables or any of them;
to commence and prosecute any suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to collect the Receivables or any of them
and to enforce any other rights in respect thereof or in respect of the goods
which have given rise thereto; to defend any suit, action or proceeding brought
against such Borrower in respect of any Receivables or the goods which have
given rise thereto; to settle, compromise or adjust any suit, action or
proceeding hereinbefore described and, in connection therewith, to give such
discharges or releases as the Agent may deem appropriate; to notify the U.S.
Postal Service authorities to change the address for delivery of mail to an
address designated by the Agent and to open and dispose of mail addressed to
such Borrower and, generally, to do all things necessary to carry out the intent
of this Agreement. This power, being coupled with an interest, is irrevocable,
and each Borrower approves all acts of such attorney-in-fact. The powers
conferred on the Agent by this Section are solely to protect the interests of
the Agent and the Banks and shall not impose any duty upon the Agent to exercise
any such power, and neither the Agent nor such attorneys-in-fact shall be liable
for any act or omission, error in judgment or mistake of law, except for its
actual willful misconduct or bad faith. The Agent shall have no duty as to the
collection or protection of any Collateral and shall have no duty as to the
preservation of rights pertaining thereto, except as provided by applicable law.
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ARTICLE XII
MISCELLANEOUS
Section 12.01. No Waiver; Cumulative Remedies. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or otherwise available to the Agent or any Bank. Such remedies may be exercised
without resort or regard to any other source of satisfaction of any liabilities
of any Borrower to the Agent or any Bank.
Section 12.02. Amendments, Waivers and Consents. Neither this Agreement nor
any provision hereof may be amended, waived, discharged or terminated orally. No
amendment or waiver of any provision of this Agreement, nor any consent to any
departure by any Borrower therefrom, shall be effective unless the same shall be
signed by the Borrowers, the Agent and the Required Banks; provided, however,
that no Bank which does not consent thereto in writing will be bound by (i) any
change in the aggregate Revolving Commitment Amount or the respective Revolving
Loan Percentages; (ii) any decrease in interest rate on any Loans; (iii) any
waiver or postponement of the time for payment of principal of or interest on
any Loans; or (iv) any change in the definition of "Required Banks" or in this
Section 12.02. Any waiver or consent may be given subject to satisfaction of
conditions stated therein and any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. In no event
will any amendment, waiver or consent be deemed effective if the result of same
is to decrease in any manner the compensation of the Agent or to increase in any
manner the Agent's expenses, duties or responsibilities unless the Agent has, in
each case, expressly assented thereto in writing.
Section 12.03. Addresses for Notices, etc. Except as otherwise expressly
provided in this Agreement, all notices, requests, demands and other
communications provided for hereunder shall be in writing and shall be mailed or
delivered to the applicable party at the address indicated below:
If to the Borrowers:
COMFORCE Corporation
and Subsidiaries
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx, Chief Financial Officer
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If to Fleet or the Agent:
Fleet National Bank
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx, Vice President
If to U. S. Bank:
U. S. Bank, Washington
X.X. Xxx 000
0000 0xx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx, Vice President
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the other parties complying as to delivery
with the terms of this Section. Except as otherwise provided herein, all such
notices, requests, demands and other communications shall be deemed sufficiently
given when delivered or two (2) Business Days after the date when mailed by
registered or certified mail, return receipt requested, postage and registration
or certification charges prepaid, addressed as aforesaid.
Section 12.04. Costs, Expenses and Taxes. The Borrowers jointly and
severally agree to pay on demand all costs and expenses (including, without
limitation, reasonable legal fees) of the Agent in connection with the
preparation, execution and delivery of this Agreement, the Notes and all other
instruments and documents to be delivered hereunder and any amendments or
modifications of any of the foregoing, or in connection with the examination,
review or administration of any of the foregoing, as well as the costs and
expenses (including, without limitation, the reasonable fees and out-of-pocket
expenses of legal counsel) incurred by the Agent or any Bank in connection with
preserving, enforcing or exercising any rights or remedies under this Agreement,
the Notes and all other instruments and documents to be delivered hereunder, all
whether or not legal action is instituted. In addition, each Borrower shall be
jointly and severally obligated to pay any and all stamp and other taxes payable
or determined to be payable in connection with the execution and delivery of
this Agreement, the Notes and all other instruments and documents to be
delivered hereunder, and agrees to save each Bank and the Agent harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes. Any fees, expenses or other charges
which the Agent or any Bank is entitled to receive from any Borrower hereunder
shall bear interest from the date of demand for payment until paid at a
fluctuating rate per annum which shall at all times be equal to the sum of (i)
two (2%) percent per annum plus (ii) the interest rate then applicable to the
Term Loan, but in no event in excess of the maximum rate permitted by then
applicable law.
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Section 12.05. Reduction and Termination. This Agreement may be terminated
by the Borrowers at any time upon written notice of such termination to the
Agent and the Banks; provided, however, that, unless and until all Loans made by
the Banks hereunder and all other Indebtedness hereunder of any Borrower to the
Agent or any Bank existing (whether or not due) as of the time of the receipt of
such notice by the Agent shall have been paid in full, such termination shall in
no way affect the rights and powers granted to the Agent and/or Banks in
connection with this Agreement, and until such payment in full all rights and
powers hereby granted to the Agent and to each Bank hereunder shall be and
remain in full force and effect.
The Borrowers may at any time, by written notice to the Agent, reduce the
Revolving Commitment Amount; provided that the notice to the Agent shall be
accompanied by such prepayment of principal as shall be necessary to ensure that
the Aggregate Revolving Loans do not exceed the Revolving Commitment Amount, as
same may be so reduced. Any such reduction notice will be irrevocable and any
such reduction will be permanent.
Section 12.06. Representations and Warranties. All covenants, agreements,
representations and warranties made herein or in any other document delivered by
or on behalf of any Borrower pursuant to or in connection with this Agreement
are material and shall be deemed to have been relied upon by the Agent and the
Banks, notwithstanding any investigation heretofore or hereafter made by the
Agent or any Bank, shall survive the making of the Loans as herein contemplated,
and shall continue in full force and effect so long as any of the Loans or other
amount due under this Agreement remains outstanding and unpaid. All statements
contained in any certificate or other paper delivered to the Agent or any Bank
at any time by or on behalf of any Borrower pursuant hereto shall constitute
representations and warranties by the Borrowers hereunder. Any request for a
borrowing hereunder, any acceptance of a Loan hereunder by the Borrowers and any
issuance of a letter of credit for the account of any Borrower will be deemed a
representation by the Borrowers that, as at the date of such borrowing or letter
of credit issuance, as the case may be, the Borrowers are in compliance with
Subsections 4.02(a)-(d) and that, after giving effect to such borrowing, the
Aggregate Revolving Bank Liabilities will not exceed the lesser of (x) the
Borrowing Base or (y) the Revolving Commitment Amount. All representations,
warranties, covenants and agreements of the Borrowers contained herein are joint
and several representations, warranties, convenants and agreements of the
Borrowers, whether or not expressly so stated herein.
Section 12.07. Binding Effect; Assignment. This Agreement shall be binding
upon each Borrower and its respective successors and assigns and shall inure to
the benefit of the Borrowers, the Agent, the Banks and their respective
permitted successors and assigns. No Borrower may assign this Agreement or any
rights hereunder without the express written consent of the Agent. Each Bank
may, in accordance with applicable law, sell to one or more banks or other
entities participations in all or a portion of such Bank's rights and
obligations under this Agreement (including all or a portion of its Commitment,
the Loans owing to it and the Note or Notes held by it). Further, any Bank may
assign all or any portion of its rights
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hereunder with respect to Loans provided that such Bank has offered in writing
to assign the same to the other Bank and such other Bank shall not have accepted
such offer within fourteen (14) days of receipt of such offer (or, having
accepted such offer, shall have failed to close the assignment transaction with
thirty (30) days after receipt of the offer). In addition, and without
limitation of the foregoing, any Bank may at any time and without any
requirement for an offer to the other Bank assign to any Federal Reserve Bank
any of such Bank's rights in respect of the Loans, this Agreement and/or such
Bank's Note or Notes.
Section 12.08. Reproduction of Agreement. This Agreement and all other
instruments, documents and papers which relate thereto which have been or may be
hereafter furnished to the Agent or any Bank may be reproduced by the Agent or
any Bank by any photographic, photostatic, micro-card, miniature photographic,
xerographic or similar process, and the Agent or any Bank may destroy the
original from which any document was so reproduced. Any such reproduction shall
be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made in the regular course of business).
Section 12.09. Consent to Jurisdiction. Each Borrower irrevocably submits
to the jurisdiction of any Massachusetts court or any federal court sitting
within The Commonwealth of Massachusetts over any suit, action or proceeding
arising out of or relating to this Agreement. Each Borrower irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding
brought in such a court and any claim that any such suit, action or proceeding
has been brought in an inconvenient forum. Each Borrower agrees that final
judgment in any such suit, action or proceeding brought in such a court shall be
enforced in any court of proper jurisdiction by a suit upon such judgment,
provided that service of process in such action, suit or proceeding shall have
been effect upon such Borrower in one of the manners specified in the following
paragraph of this Section 12.09 or as otherwise permitted by law.
Each Borrower hereby consents to process being served in any suit, action
or proceeding of the nature referred to in the preceding paragraph of this
Section 12.09 either (i) by mailing a copy thereof by registered or certified
mail, postage prepaid, return receipt requested, to it at its address set forth
in Section 12.03 or (ii) by serving a copy thereof upon it at its address set
forth in Section 12.03. Each Borrower irrevocably waives, to the fullest extent
permitted by law, all claims of error by reason of any service as contemplated
herein and agrees that such service shall (x) be deemed in every respect
effective service upon such Borrower in any such suit, action or proceeding and
(y) to the fullest extent permitted by law, be taken and held to be valid
personal service upon and personal delivery to such Borrower.
Section 12.10. Governing Law. This Agreement and the Notes shall be
governed by, and construed and enforced in accordance with, the laws of The
Commonwealth of Massachusetts.
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Section 12.11. Severability. In the event that any provision of this
Agreement or the application thereof to any Person, property or circumstances
shall be held to any extent to be invalid or unenforceable, the remainder of
this Agreement and the application of such provision to Persons, properties or
circumstances other than those as to which it has been held invalid or
unenforceable shall not be affected thereby, and each provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
Section 12.12. Headings. Article and Section headings in this Agreement and
any table of contents are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
Section 12.13. JURY TRIAL WAIVER. EACH OF THE PARTIES HERETO HEREBY WAIVES
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THEM
AGAINST ANY OTHER PARTY OR PARTIES ON ANY MATTERS WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT, THE NOTES OR ANY OTHER AGREEMENTS EXECUTED IN
CONNECTION HEREWITH OR THE ADMINISTRATION THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN OR THEREIN). THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY
DISCUSSED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as an instrument under seal, by their respective officers thereunto
duly authorized as of the date first above written.
COMFORCE CORPORATION
By: /s/ Xxxx X. Xxxxxx VP
------------------------
Name:
Title:
COMFORCE TELECOM, INC.
By: /s/ Xxxx X. Xxxxxx VP
------------------------
Name:
Title:
SUMTEC CORPORATION
By: /s/ Xxxx X. Xxxxxx VP
------------------------
Name:
Title:
COMFORCE TECHNICAL
SERVICES, INC.
By: /s/ Xxxx X. Xxxxxx VP
------------------------
Name:
Title:
PROJECT STAFFING SUPPORT
TEAM, INC.
By: /s/ Xxxx X. Xxxxxx VP
------------------------
Name:
Title:
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COMFORCE INFORMATION
TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxx VP
------------------------
Name:
Title:
FORCE FIVE, INC.
By: /s/ Xxxx X. Xxxxxx VP
------------------------
Name:
Title:
COMFORCE IT ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxx VP
------------------------
Name:
Title:
RHO ACQUISITION COMPANY
By: /s/ Xxxx X. Xxxxxx VP
------------------------
Name:
Title:
RHO COMPANY INCORPORATED
By: /s/ Xxxx X. Xxxxxx VP
------------------------
Name:
Title:
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FLEET NATIONAL BANK
By: /s/ Xxxxx X. Xxxxx
------------------------
Name: Xxxxx X. Xxxxx
Title: Sr. V.P.
U. S. BANK, WASHINGTON
By: /s/ Xxxxx Xxxxxxx
------------------------
Name: Xxxxx Xxxxxxx
Title: V.P.
FLEET NATIONAL BANK, as Agent
By: /s/ Xxxxx X. Xxxxx
------------------------
Name: Xxxxx X. Xxxxx
Title: Sr. V.P.
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