1
EXHIBIT 10.11
CREDIT AGREEMENT
Dated as of December 11, 1997
among
STAFF LEASING, INC.
as Borrower,
THE SUBSIDIARIES OF THE BORROWER,
as Guarantors,
THE LENDERS
AND
NATIONSBANK, N.A.,
as Agent
2
TABLE OF CONTENTS
SECTION 1 DEFINITIONS......................................................1
1.1 Definitions........................................................1
1.2 Computation of Time Periods.......................................21
1.3 Accounting Terms..................................................21
SECTION 2 CREDIT FACILITIES...............................................21
2.1 Revolving Loans...................................................21
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES..................23
3.1 Default Rate......................................................23
3.2 Extension and Conversion..........................................23
3.3 Prepayments.......................................................24
3.4 Fees..............................................................25
3.5 Capital Adequacy..................................................25
3.6 Inability To Determine Interest Rate..............................25
3.7 Illegality........................................................26
3.8 Requirements of Law...............................................26
3.9 Taxes.............................................................27
3.10 Indemnity........................ ...............................29
3.11 Pro Rata Treatment...............................................30
3.12 Sharing of Payments..............................................30
3.13 Payments, Computations, Etc......................................31
3.14 Evidence of Debt.................................................33
3.15 Replacement Lenders..............................................33
SECTION 4 GUARANTY........................................................34
4.1 The Guarantee.....................................................34
4.2 Loans Unconditional...............................................34
4.3 Reinstatement.....................................................35
4.4 Remedies..........................................................36
4.5 Rights of Contribution............................................36
4.6 Continuing Guarantee..............................................37
SECTION 5 CONDITIONS......................................................37
5.1 Conditions to Closing.............................................37
5.2 Conditions to All Extensions of Credit............................40
SECTION 6 REPRESENTATIONS AND WARRANTIES..................................41
6.1 Financial Condition...............................................41
6.2 No Changes or Restricted Payments.................................41
6.3 Organization; Existence; Compliance with Law......................41
i
3
6.4 Power; Authorization; Enforceable Loans...........................42
6.5 No Legal Bar......................................................42
6.6 No Material Litigation............................................42
6.7 No Default........................................................43
6.8 Ownership of Property; Liens......................................43
6.9 Intellectual Property.............................................43
6.10 No Burdensome Restrictions.......................................43
6.11 Taxes............................................................43
6.12 ERISA............................................................44
6.13 Governmental Regulations, Etc....................................45
6.14 Purpose of Extensions of Credit..................................46
6.15 Environmental Matters............................................46
6.16 First Priority Lien..............................................47
6.17 Subsidiaries.....................................................47
6.18 Chief Executive Office...........................................47
SECTION 7 AFFIRMATIVE COVENANTS...........................................47
7.1 Financial Statements..............................................47
7.2 Certificates; Other Information...................................48
7.3 Notices...........................................................49
7.4 Payment of Loans..................................................50
7.5 Conduct of Business and Maintenance of Existence..................51
7.6 Maintenance of Property; Insurance................................51
7.7 Inspection of Property; Books and Records; Discussions............51
7.8 Environmental Laws................................................52
7.9 Financial Covenants...............................................52
7.10 Use of Proceeds..................................................53
7.11 Additional Guaranties and Stock Pledges..........................53
7.12 Subsidiaries.....................................................54
7.12 Principal Place of Business......................................54
SECTION 8 NEGATIVE COVENANTS..............................................54
8.1 Indebtedness......................................................54
8.2 Liens.............................................................55
8.3 Nature of Business................................................55
8.4 Consolidation, Merger, Sale or Purchase of Assets.................56
8.5 Advances, Investments and Loans...................................56
8.6 Restricted Payments...............................................56
8.7 Transactions with Affiliates......................................57
8.8 Fiscal Year.......................................................57
8.9 Limitation on Restrictions........................................57
8.10 Sale Leasebacks..................................................57
8.11 No Further Negative Pledges......................................57
8.12 Capital Expenditures.............................................58
8.13 Management.......................................................58
ii
4
8.14 Subordinated Debt................................................58
SECTION 9 EVENTS OF DEFAULT...............................................58
9.1 Events of Default.................................................58
9.2 Acceleration; Remedies............................................61
SECTION 10 AGENCY PROVISIONS..............................................62
10.1 Appointment......................................................62
10.2 Delegation of Duties.............................................62
10.3 Exculpatory Provisions...........................................62
10.4 Reliance on Communications.......................................63
10.5 Notice of Default................................................63
10.6 Non-Reliance on Agent and Other Lenders..........................64
10.7 Indemnification..................................................64
10.8 Agent in its Individual Capacity.................................65
10.9 Successor Agent..................................................65
SECTION 11 MISCELLANEOUS..................................................65
11.1 Notices..........................................................65
11.2 Right of Set-Off.................................................66
11.3 Benefit of Agreement.............................................66
11.4 No Waiver; Remedies Cumulative...................................68
11.5 Payment of Expenses, etc.........................................69
11.6 Amendments, Waivers and Consents.................................69
11.7 Counterparts.....................................................70
11.8 Headings.........................................................70
11.9 Survival.........................................................70
11.10 Governing Law; Submission to Jurisdiction; Venue................71
11.11 Severability....................................................71
11.12 Entirety........................................................72
11.13 Binding Effect; Termination.....................................72
11.14 Confidentiality.................................................72
11.15 Time............................................................73
11.16 Conflict........................................................73
iii
5
SCHEDULES
Schedule 1.1(a) Investments
Schedule 1.1(b) Liens
Schedule 1.1(c) Schedule of Lenders and Commitments
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 3.2 Form of Notice of Extension/Conversion
Schedule 6.2 Restricted Payments
Schedule 6.17 Subsidiaries
Schedule 6.18 Chief Executive Offices
Schedule 7.2(b) Form of Officer's Compliance Certificate
Schedule 7.11 Form of Joinder Agreement
Schedule 8.1 Indebtedness
Schedule 8.7 Transactions with Affiliates
Schedule 11.1 Notices
Schedule 11.3(b) Form of Assignment and Acceptance
iv
6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of December 11, 1997 (the "Credit
Agreement"), is by and among STAFF LEASING, INC., a Florida corporation (the
"Borrower"), each of the Borrower's Subsidiaries (the "Guarantors"), the
lenders named herein and such other lenders as may become a party hereto (the
"Lenders"), and NATIONSBANK, N.A., as Agent for the Lenders (in such capacity,
the "Agent").
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a
$20,000,000 credit facility for the purposes hereinafter set forth;
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINITIONS.
As used in this Credit Agreement, the following terms shall
have the meanings specified below unless the context otherwise requires:
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or
under direct or indirect common control with such Person or (ii)
directly or indirectly owning or holding five percent (5%) or more of
the equity interest in such Person. For purposes of this definition,
"control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Agent" shall have the meaning assigned to such term in the
heading hereof, together with any successors or assigns.
"Applicable Percentage" means, (i) prior to the Rate Change
Event for the Loans and the Unused Fee, the appropriate applicable
percentages corresponding to the Leverage Ratio in effect as of the
most recent determination date as shown in Table 1 below and (ii)
after the Rate Change Event, for the Loans and the Unused Fee, the
7
appropriate applicable percentages corresponding to the Leverage Ratio
in effect as of the most recent determination date as shown in Table 2
below:
TABLE 1
---------------------------------------------------------------------------------------------------
Applicable Applicable Applicable
Percentage For Percentage For Percentage for
Pricing Leverage Eurodollar Base Rate For
Level Ratio Loans Loans Unused Fees
---------------------------------------------------------------------------------------------------
I -- 1.0 to 1.0 1.25% 0% 0.25%
II >1.0 to 1.0 but 1.50% 0% 0.35%
-- 1.5 to 1.0
III >1.5 to 1.0 but 1.75% 0% 0.45%
-- 2.0 to 1.0
IV >2.0 to 1.0 2.0% 0% 0.50%
TABLE 2
---------------------------------------------------------------------------------------------------
Applicable Applicable Applicable
Percentage For Percentage For Percentage for
Pricing Leverage Eurodollar Base Rate For
Level Ratio Loans Loans Unused Fees
---------------------------------------------------------------------------------------------------
I --1.0 to 1.0 1.00% 0% 0.20%
II >1.0 to 1.0 but 1.25% 0% 0.25%
--1.5 to 1.0
III >1.5 to 1.0 but 1.50% 0% 0.30%
--2.0 to 1.0
IV >2.0 to 1.0 1.75% 0% 0.35%
For purposes hereof, "Rate Change Event" means Lenders' receipt of (i)
audited consolidated financial statements of the Borrower and its
Subsidiaries as of the end of fiscal year 1997 in compliance with the
terms of Section 7.1(a) hereof and (ii) an actuarial study of the
healthcare plan of the Borrower in form and substance satisfactory to
the Agent; provided that at the time of the receipt of the items
referenced in subclauses (i) and (ii) above, no Default or Event of
Default has occurred.
The Applicable Percentages shall be determined and adjusted quarterly
on the date (each a "Calculation Date") five Business Days after the
date by which the Agent receives the
2
8
officer's certificate provided by the Borrower in accordance with the
provisions of Section 7.2(b); provided, however, that (i) the initial
Applicable Percentages shall be based on Pricing Level I in Table 1
until the first Calculation Date to occur after the Closing Date, and,
thereafter, the Applicable Percentages shall be determined by the then
current Leverage Ratio, and (ii) if the Borrower fails to provide the
officer's certificate to the Agent as required by Section 7.2(b), the
Applicable Percentages from the date five Business Days after the date
by which the Borrower should have provided the officer's certificate
required by Section 7.2(b) shall be based on Pricing Level IV until
such time as an appropriate officer's certificate is provided,
whereupon the Pricing Level shall be determined by the then current
Leverage Ratio. Except as set forth above, each Applicable Percentage
shall be effective from one Calculation Date until the next
Calculation Date. Any adjustment in the Applicable Percentages shall
be applicable to all existing Loans as well as any new Loans made.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of
the United States Code, as amended, modified, succeeded or replaced
from time to time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property
or ordering the winding up or liquidation of its affairs; or (ii)
there shall be commenced against such Person an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or any case, proceeding or other action for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any
substantial part of its Property or for the winding up or liquidation
of its affairs, and such involuntary case or other case, proceeding or
other action shall remain undismissed, undischarged or unbonded for a
period of sixty (60) consecutive days; or (iii) such Person shall
commence a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consent to the
entry of an order for relief in an involuntary case under any such
law, or consent to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property
or make any general assignment for the benefit of creditors; or (iv)
such Person shall be unable to, or shall admit in writing its
inability to, pay its debts generally as they become due.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (i) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (ii) the Prime Rate in effect on such day. If
for any reason the Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable after due
inquiry to ascertain the Federal Funds Rate for any reason, including
the inability or failure of the Agent to obtain
3
9
sufficient quotations in accordance with the terms hereof, the Base
Rate shall be determined without regard to clause (i) of the first
sentence of this definition until the circumstances giving rise to
such inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective
on the effective date of such change in the Prime Rate or the Federal
Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Borrower" means Staff Leasing, Inc., a Florida corporation.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Sarasota, Florida or Charlotte,
North Carolina are authorized or required by law to close, except
that, when used in connection with a Eurodollar Loan, such day shall
also be a day on which dealings between banks are carried on in U.S.
dollar deposits in London interbank market.
"Capital Expenditures" means all expenditures which in
accordance with GAAP would be classified as capital expenditures,
including, without limitation, Capital Leases.
"Capital Lease" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as
lessee which, in accordance with GAAP, is or should be accounted for
as a capital lease on the balance sheet of that Person.
"Cash Equivalents" means (a) securities issued or directly
and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits, certificates
of deposit or bankers' acceptances of (i) any Lender, or (ii) any
domestic commercial bank of recognized standing (y) having capital and
surplus in excess of $500,000,000 and (z) whose short-term commercial
paper rating from S&P is at least A-1 or the equivalent thereof or
from ▇▇▇▇▇'▇ is at least P-1 or the equivalent thereof (any such
Lender being an "Approved Lender"), in each case with maturities of
not more than 364 days from the date of acquisition, (c) commercial
paper and variable or fixed rate notes issued by any Approved Lender
(or by the parent company thereof) and maturing within twelve months
of the date of acquisition, (d) repurchase agreements entered into by
a Person with a bank or trust company (including any of the Lenders)
or recognized securities dealer having capital and surplus in excess
of $500,000,000 for direct obligations issued by or fully guaranteed
by the United States of America in which such Person shall have a
perfected first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market value of at
least 100% of the amount of the repurchase obligations, (e)
obligations of any State of the United States or any political
subdivision thereof, the interest with respect to which is exempt from
federal income taxation under Section 103 of the Code, having a long
term rating of at least AA- or Aa-3 by S&P or Moody's,
4
10
respectively, and maturing within three years from the date of
acquisition thereof, (f) Investments in municipal auction preferred
stock (i) rated AAA (or the equivalent thereof) or better by S&P or
Aaa (or the equivalent thereof) or better by Moody's and (ii) with
dividends that reset at least once every 365 days and (g) Investments,
classified in accordance with GAAP as current assets, in money market
investment programs registered under the Investment Company Act of
1940, as amended, which are administered by reputable financial
institutions having capital of at least $100,000,000 and the
portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a), (b), (c), (e) and (f).
"Change of Control" means any Person or two or more Persons
acting in concert shall have acquired beneficial ownership, directly
or indirectly, of, or shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, control
over, Voting Stock of the Borrower (or other securities convertible
into such Voting Stock) representing 15% or more of the combined
voting power of all Voting Stock of the Borrower. As used herein,
"beneficial ownership" shall have the meaning provided in Rule 13d-3
of the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to
time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Collateral" means all collateral referred to in and covered
by the Pledge Agreement, the Collateral Assignment of General
Partnership Interest and the Collateral Assignment of Limited
Partnership Interest.
"Collateral Assignment of General Partnership Interest" means
the Collateral Assignment and Pledge of General Partnership Interest
dated as of the date hereof entered into by Staff Acquisition in favor
of the Agent for the benefit of the Lenders (and affiliates of Lenders
as to certain obligations under Hedging Agreements) as amended and
modified.
"Collateral Assignment of Limited Partnership Interest" means
(i) the Collateral Assignment and Pledge of Limited Partnership
Interest dated as of the date hereof entered into by the Borrower in
favor of the Agent for the benefit of the Lenders (and affiliates of
Lenders as to certain obligations under Hedging Agreements), as
amended and modified, and (ii) the Collateral Assignment and Pledge of
Limited Partnership Interest dated as of the date hereof entered into
by Staff Capital in favor of the Agent for the benefit of the Lenders
(and affiliates of Lenders as to certain obligations under Hedging
Agreements), as amended or modified.
5
11
"Commitment" means the Revolving Commitment.
"Commitment Period" means the period from and including the
Closing Date to but not including the earlier of (i) the Maturity
Date, or (ii) the date on which the Revolving Commitments terminate in
accordance with the provisions of this Credit Agreement.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any material
agreement, instrument or undertaking to which such Person is a party
or by which it or any of its property is bound.
"Credit Documents" means a collective reference to this
Credit Agreement, the Notes, the Pledge Agreement, the Collateral
Assignment of General Partnership Interest, the Collateral Assignment
of Limited Partnership Interest and all other related agreements and
documents issued or delivered hereunder or thereunder or pursuant
hereto or thereto.
"Credit Party" means any of the Borrower and the Guarantors.
"Current Maturities Ratio" means, as of the end of each
fiscal quarter of the Borrower for the Borrower and its Subsidiaries
on a consolidated basis for the four consecutive quarters ending on
such date, the ratio of (a) the sum of EBITDA for such period less
Interest Expense for such period less any Federal, state or other
domestic and foreign income taxes for such period to (b) Scheduled
Funded Debt Payments for such period.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, at
such time, (i) has failed to make an Extension of Credit required
pursuant to the terms of this Credit Agreement, (ii) has failed to pay
to the Agent or any Lender an amount owed by such Lender pursuant to
the terms of the Credit Agreement or any other of the Credit
Documents, or (iii) has been deemed insolvent or has become subject to
a bankruptcy or insolvency proceeding or to a receiver, trustee or
similar proceeding.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Domestic Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the
laws of any State of the United States or the District of Columbia.
"EBITDA" means, for any period with respect to the Borrower
and its Subsidiaries on a consolidated basis, the sum of (a) Net
Income for such period (excluding the effect of any extraordinary or
other non-recurring gains or losses outside of the
6
12
ordinary course of business) plus (b) an amount which, in the
determination of Net Income for such period, has been deducted for (i)
Interest Expense for such period, (ii) Federal, state or other
domestic and foreign income taxes for such period and (iii)
depreciation expense and amortization expense for such period, in each
case determined in accordance with GAAP applied on a consistent basis.
Except as expressly provided otherwise, the applicable period shall be
for the four consecutive quarters ending as of the date of
determination.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes.
"Equity Issuance" means any issuance by any Credit Party to
any Person which is not a Credit Party of (a) shares of its capital
stock, (b) any shares of its capital stock pursuant to the exercise of
options or warrants or (c) any shares of its capital stock pursuant to
the conversion of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with the Borrower within the meaning of Section 4001(a)(14) of
ERISA, or is a member of a group which includes the Borrower and which
is treated as a single employer under Sections 414(b) or (c) of the
Code.
"ERISA Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate from a Multiple Employer Plan during a plan year in
which it was a substantial employer (as such term is defined in
Section 4001(a)(2) of ERISA), or the termination of a Multiple
Employer Plan; (iii) the distribution of a notice of intent to
terminate or the actual termination of a Plan pursuant to Section
4041(a)(2) or 4041A of ERISA; (iv) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under
Section 4042 of ERISA; (v) any event or condition which could
reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial withdrawal of the
Borrower, any Subsidiary of the Borrower or any ERISA
7
13
Affiliate from a Multiemployer Plan; (vii) the conditions for
imposition of a lien under Section 302(f) of ERISA exist with respect
to any Plan; or (viii) the adoption of an amendment to any Plan
requiring the provision of security to such Plan pursuant to Section
307 of ERISA.
"Eurodollar Loan" means any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = Interbank Offered Rate
---------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined), whether or not a Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available
from time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" means such term as defined in Section 9.1.
"Extension of Credit" means, as to any Lender, the making of,
or participation in, a Loan by such Lender.
"Fees" means all fees payable pursuant to Section 3.4.
"Federal Funds Rate" means, for any day, the rate of interest
per annum (rounded upwards, if necessary, to the nearest whole
multiple of 1/100 of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Business Day and (ii) if no
such rate is so published on such next preceding Business Day, the
Federal Funds Rate for
8
14
such day shall be the average rate quoted to the Agent on such day on
such transactions as determined by the Agent.
"Fixed Charge Coverage Ratio" means, as of the end of each
fiscal quarter of the Borrower for the Borrower and its Subsidiaries
on a consolidated basis for the four consecutive quarters ending on
such date, the ratio of (a) the sum of Net Income for such period plus
an amount which, in the determination of Net Income for such period,
has been deducted for (i) Interest Expense for such period and (ii)
Federal, state or other domestic and foreign income taxes for such
period plus lease and rent expense for such period to (b) the sum of
Interest Expense for such period plus lease and rent expense for such
period, determined in each case in accordance with GAAP applied on a
consistent basis.
"Foreign Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is not Domestic Subsidiary of such
Person.
"Funded Debt" means, with respect to any Person, without
duplication, (i) all Indebtedness of such Person for borrowed money,
(ii) all purchase money Indebtedness of such Person, including without
limitation the principal portion of all obligations of such Person
under Capital Leases, (iii) all Guaranty Obligations of such Person
with respect to Funded Debt of another Person, (iv) the maximum
available amount of all standby letters of credit or acceptances
issued or created for the account of such Person not secured by cash
or Cash Equivalents, (v) all Funded Debt of another Person secured by
a Lien on any Property of such Person, whether or not such Funded Debt
has been assumed, provided that for purposes hereof the amount of such
Funded Debt shall be limited to the greater of (A) the amount of such
Funded Debt as to which there is recourse to such Person or (B) the
fair market value of the property which is subject to the Lien, (vi)
the principal balance outstanding under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product to which such Person is a party,
where such transaction is considered borrowed money indebtedness for
tax purposes but is classified as an operating lease in accordance
with GAAP. The Funded Debt of any Person shall include the Funded Debt
of any partnership or joint venture in which such Person is a general
partner or joint venturer, but only to the extent to which there is
recourse to such Person for the payment of such Funded Debt.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms
of Section 1.3 hereof.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guaranteed Obligations" means, as to each Guarantor, without
duplication, (i) all obligations of the Borrower to the Lenders and
the Agent, whenever arising, under this Credit Agreement, the Notes or
the Credit Documents relating to the Loans hereunder (including, but
not limited to, any interest accruing after the occurrence of a
Bankruptcy
9
15
Event with respect to any Credit Party, regardless of whether such
interest is an allowed claim under the Bankruptcy Code), and (ii) all
liabilities and obligations, whenever arising, owing from the Borrower
to any Lender, or any Affiliate of a Lender, arising under any Hedging
Agreement relating to the Loans hereunder.
"Guarantors" means such term as defined in the first
paragraph hereof.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or
any Property constituting security therefor, (ii) to advance or
provide funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including without limitation
keep well agreements, maintenance agreements, comfort letters or
similar agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or purchase
Property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (iv) to otherwise assure or hold
harmless the holder of such Indebtedness against loss in respect
thereof. The amount of any Guaranty Obligation hereunder shall
(subject to any limitations set forth therein) be deemed to be an
amount equal to the outstanding principal amount (or maximum principal
amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made.
"Health Care Agreement" means that certain agreement between
Blue Cross and Blue Shield of Florida, Inc./Health Options, Inc. and
Staff Acquisition.
"Hedging Agreements" means any interest rate protection
agreement or foreign currency exchange agreement between the Borrower
and any Lender, or any Affiliate of a Lender.
"Indebtedness" of any Person means (i) all obligations of
such Person for borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to Property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (iv) all obligations
of such Person issued or assumed as the deferred purchase price of
Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months
of the incurrence thereof) which would appear as liabilities on a
balance sheet of such Person, (v) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements,
(vi) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on, or payable out of
10
16
the proceeds of production from, Property owned or acquired by such
Person, whether or not the obligations secured thereby have been
assumed, (vii) all Guaranty Obligations of such Person, (viii) the
principal portion of all obligations of such Person under Capital
Leases, (ix) all obligations of such Person in respect of interest
rate protection agreements, foreign currency exchange agreements,
commodity purchase or option agreements or other interest or exchange
rate or commodity price hedging agreements (including, but not limited
to, the Hedging Agreements), (x) the maximum amount of all standby
letters of credit issued or bankers' acceptances facilities created
for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent unreimbursed), (xi) all preferred
stock issued by such Person and required by the terms thereof to be
redeemed, or for which mandatory sinking fund payments are due, by a
fixed date, and (xii) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet loan
or similar off-balance sheet financing product to which such Person is
a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease
in accordance with GAAP. The Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer, but only to the
extent to which there is recourse to such Person for payment of such
Indebtedness.
"Interbank Offered Rate" means, for the Interest Period for
each Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
(rounded upwards, if necessary, to the nearest whole multiple of 1/100
of 1%) equal to the rate of interest, determined by the Agent on the
basis of the offered rates for deposits in dollars for a period of
time corresponding to such Interest Period (and commencing on the
first day of such Interest Period), appearing on Telerate Page 3750
(or, if, for any reason, Telerate Page 3750 is not available, the
Reuters Screen LIBO Page) as of approximately 11:00 A.M. (London time)
two (2) Business Days before the first day of such Interest Period. As
used herein, "Telerate Page 3750" means the display designated as page
3750 by Dow ▇▇▇▇▇ Telerate, Inc. (or such other page as may replace
such page on that service for the purpose of displaying the British
Bankers Association London interbank offered rates) and "Reuters
Screen LIBO Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace
the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks).
"Interest Expense" means for any period with respect to the
Borrower and its Subsidiaries on a consolidated basis all interest
expense, including the amortization of debt discount and premium and
the interest component under Capital Leases, in each case determined
in accordance with GAAP applied on a consistent basis. Except as
expressly provided otherwise, the applicable period shall be for the
four consecutive quarters ending as of the date of determination.
"Interest Payment Date" means (i) as to any Base Rate Loan,
the last day of each fiscal quarter of the Borrower and the Maturity
Date and (ii) as to any Eurodollar Loan, the last day of each Interest
Period for such Loan and on the Maturity Date. If an Interest
11
17
Payment Date falls on a date which is not a Business Day, such
Interest Payment Date shall be deemed to be the next succeeding
Business Day, except that in the case of Eurodollar Loans where the
next succeeding Business Day falls in the next succeeding calendar
month, then on the next preceding Business Day.
"Interest Period" means a period of one, two or three month's
duration, as the Borrower may elect, commencing in each case, on the
date of the borrowing (including conversions, extensions and
renewals); provided, however, (a) if any Interest Period would end on
a day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day (except that in the case
of Eurodollar Loans where the next succeeding Business Day falls in
the next succeeding calendar month, then on the next preceding
Business Day), (b) no Interest Period shall extend beyond the Maturity
Date, and (c) in the case of Eurodollar Loans, where an Interest
Period begins on a day for which there is no numerically corresponding
day in the calendar month in which the Interest Period is to end, such
Interest Period shall end on the last Business Day of such calendar
month.
"Investment" means (a) any loan or advance to any Person, (b)
any purchase or other acquisition of any assets, capital stock,
warrants, rights, options, obligations or other securities of, or
equity interest in, any Person, (c) any capital contribution to any
Person or any other investment in such Person, including, without
limitation, any Guaranty Obligation incurred for the benefit of such
Person.
"Joinder Agreement" means a joinder agreement substantially
in the form of Schedule 7.11.
"Lenders" means each of the Persons identified as a "Lender"
on the signature pages hereto, and their successors and assigns.
"Leverage Ratio" means, as of the last day of any fiscal
quarter of the Borrower, with respect to the Borrower and its
Subsidiaries on a consolidated basis, the ratio of Funded Debt on such
day to EBITDA for the period of four consecutive fiscal quarters
ending as of such day.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory
or otherwise), preference, priority or charge of any kind (including
any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any financing or similar statement or
notice filed under the Uniform Commercial Code as adopted and in
effect in the relevant jurisdiction or other similar recording or
notice statute, and any lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans (or a portion of
any Revolving Loan bearing interest at the Base Rate or the Eurodollar
Rate and referred to as a Base Rate Loan or a Eurodollar Loan),
individually or collectively, as appropriate.
12
18
"Management Group" means collectively, the Chief Executive
Officer, the President, the Senior Vice President of Benefits and the
Chief Financial Officer of the Borrower.
"Material Adverse Change" means
(a) with respect to the Workers' Compensation Policy,
the Borrower's failure (prior to the termination of such
policy or any replacement policy thereof) to obtain a
workers' compensation policy satisfying the following
conditions: (i) such policy must be provided by an insurer
with an A.M. Best rating of "A" or better, (ii) such policy
must have a term of at least one year, (iii) such policy must
contain a guaranteed cost provision for the entire term of
the policy and (iv) such policy shall not provide for premium
payments or potential required premium payments in excess of
$3.75 per $100 of payroll;
(b) with respect to the Health Care Agreement, the
occurrence of any of the following events: (i) Staff
Acquisition's failure (prior to the termination of the Health
Care Agreement) to renew such Health Care Agreement with Blue
Cross and Blue Shield of Florida/Health Options, Inc. for a
term of at least one year; (ii) during the calendar year
ending December 31, 1998, the annual individual excess
liability limit per insured exceeds $3,099.00; (iii) during
the calendar year ending December 31, 1999, the annual
individual excess liability limit per insured exceeds
$3,409.00, (iv) during the calendar year ending December 31,
2000, the annual individual excess liability limit per
insured exceeds $3,750.00; or (v) the annual individual
excess liability limit per insured for any calendar year
exceeds the average premium per insured for such year (based
on a calculation performed annually following the annual
re-enrollment of insureds and final establishment of the
annual individual excess liability limit); and
(c) with respect to any Other Health Care Agreement,
the occurrence of any of the following events: (i) such Other
Health Care Agreement shall have a term less than one year;
(ii) during the calendar year ending December 31, 1998, the
annual individual excess liability limit per insured is more
than 107% of the amount of such liability limit for the
previous calendar year; (iii) for any calendar year
subsequent to December 31, 1998, the annual individual excess
liability per insured is more than 110% of the amount of such
liability limit for the previous calendar year; or (iv) the
annual individual excess liability limit per insured for any
calendar year exceeds the average premium per insured for
such year (based on a calculation performed annually
following the annual re-enrollment of insureds and final
establishment of the annual individual excess liability
limit).
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets, liabilities or prospects of the Borrower and its
13
19
Subsidiaries taken as a whole, (ii) the ability of the Borrower and
its Subsidiaries as a whole to perform any material obligation under
the Credit Documents to which it is a party or (iii) the rights and
remedies of the Lenders under the Credit Documents.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Maturity Date" means December 11, 2000.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate and at least one
employer other than the Borrower, any Subsidiary of the Borrower or
any ERISA Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. and its successors.
"Net Cash Proceeds" means gross cash proceeds (including any
cash received by way of deferred payment pursuant to a promissory
note, receivable or otherwise, but only as and when received) received
in connection with an Equity Issuance net of actual costs and taxes
incurred by such Person in connection with and attributable to such
Equity Issuance.
"Net Income" means, for any period, the net income with
respect to the Borrower and its Subsidiaries on a consolidated basis
as determined in accordance with GAAP applied on a consistent basis.
"Net Worth" means, as of any date, shareholders' equity or
net worth of the Borrower and its Subsidiaries on a consolidated
basis.
"Non-Excluded Taxes" means such term as is defined in Section
3.9.
"Note" or "Notes" means any Revolving Note, as the context
may require.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Schedule 2.1(b)(i), as required by Section
2.1(b)(i).
14
20
"Notice of Extension/Conversion" means the written notice of
extension or conversion in substantially the form of Schedule 3.2, as
required by Section 3.2.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Other Health Care Agreement" means any health care agreement
of the Borrower or any of its Subsidiaries (other than the Health Care
Agreement) which does not contain a guaranteed cost provision
acceptable to the Required Lenders.
"Participation Interest" means the purchase by a Lender of a
participation in Revolving Loans as provided in Section 3.12.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"Permitted Acquisition" means an acquisition by the Borrower
or any Guarantor of all of the capital stock of another Person, or all
or substantively all of the assets of another Person, provided that
each of the following conditions are satisfied:
(a) the acquisition is consummated pursuant to a
negotiated acquisition agreement and involves the purchase of
(i) assets related to or used in a business similar to the
business of the Credit Parties as of the date hereof or (ii)
a business similar to the business of the Credit Parties as
of the date hereof;
(b) (i) such Person to be acquired or (ii) the Person
from whom the related assets are acquired, must have
attained, for the most recently ending twelve month period,
earnings before any deductions for interest expense, taxes
paid, depreciation or amortization for such period greater
than $1.00;
(c) the purchase price paid (i) for any one
acquisition shall not exceed (A) $10,000,000 in cash, assumed
indebtedness and seller financing and (B) $20,000,000 in
total consideration and (ii) for multiple acquisitions shall
not exceed $30,000,000 in total consideration for any twelve
month period;
(d) after giving effect to the acquisition, the
representations and warranties set forth in Section 6 hereof
shall be true and correct in all material respects on and as
of the date of such acquisition; and
(e) no Default or Event of Default exists and is
continuing or would result from such acquisition.
15
21
"Permitted Investments" means Investments which are either
(i) cash and Cash Equivalents, (ii) accounts receivable created,
acquired or made in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms, (iii)
Investments consisting of stock, obligations, securities or other
property received in settlement of accounts receivable (created in the
ordinary course of business) from defaulting obligors or settlements
of litigation matters, (iv) Investments existing as of the Closing
Date and set forth in Schedule 1.1(a), (v) Investments in any Credit
Party, (vi) advances or loans to employees in the ordinary course of
business not to exceed $1,750,000 in the aggregate at any time
outstanding, (vii) Permitted Acquisitions and (viii) the purchases or
acquisitions of property and equipment in the ordinary course of
business, except as otherwise limited or prohibited hereunder.
"Permitted Liens" means:
(i) Liens in favor of the Agent on behalf of the
Lenders;
(ii) Liens (other than Liens created or imposed under
ERISA) for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes being contested in good
faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and
as to which the Property subject to any such Lien is not yet
subject to foreclosure, sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers
and other Liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary
course of business, provided that such Liens secure only
amounts not yet due and payable or, if due and payable, are
unfiled and no other action has been taken to enforce the
same or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under
ERISA) incurred or deposits made by the Borrower and its
Subsidiaries in the ordinary course of business in connection
with workers' compensation, health insurance, unemployment
insurance and other types of social security, or to secure
the performance of tenders, statutory obligations, bids,
leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the
judgments secured shall, within 45 days after the entry
thereof, have been discharged or execution thereof stayed
16
22
pending appeal, or shall have been discharged within 45 days
after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions
(including zoning restrictions), minor defects or
irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use
of the encumbered Property for its intended purposes;
(vii) Liens securing purchase money Indebtedness
(including Capital Leases) to the extent permitted under
Section 8.1(f), provided that any such Lien attaches only to
the Property financed and such Lien attaches thereto
concurrently with or within 90 days after the acquisition
thereof;
(viii) leases or subleases granted to others not
interfering in any material respect with the business of the
Borrower or any of its Subsidiaries;
(ix) any interest of title of a lessor under, and
Liens arising from UCC financing statements (or equivalent
filings, registrations or agreements in foreign
jurisdictions) relating to, leases permitted by this Credit
Agreement;
(x) normal and customary rights of setoff upon
deposits of cash in favor of banks or other depository
institutions;
(xi) inchoate Liens arising under ERISA to secure
current service pension liabilities as they are incurred
under the provisions of any Plan;
(xii) Liens existing as of the Closing Date granted to
landlords pursuant to the terms of certain leases providing
for the use of office space by the Borrower or any of its
Subsidiaries provided that (a) such Liens attach only to the
tangible Property located at the applicable office space and
(b) such Liens do not attach to any of the Property located
at the chief executive office and principal place of business
of the Borrower set forth on Schedule 6.18;
(xiii) Liens securing Indebtedness to the extent
permitted under Section 8.1(d); provided that any such Lien
does not attach to or encumber in any way any capital stock
or other equity interest of the Borrower or any of its
Subsidiaries;
(xiv) Liens on cash or Cash Equivalents securing
Indebtedness to the extent permitted under Section 8.1(h);
and
(xv) Liens existing as of the Closing Date and set
forth on Schedule 1.1(b); provided that no such Lien shall at
any time be extended to or cover any Property other than the
Property subject thereto on the Closing Date.
17
23
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is
(or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" within the meaning of
Section 3(5) of ERISA.
"Pledge Agreement" means the Pledge Agreement dated as of the
date hereof entered into by the Borrower in favor of the Agent for the
benefit of the Lenders (and affiliates of Lenders as to certain
obligations under Hedging Agreements), as amended and modified.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by NationsBank, N.A. as its prime rate in
effect at its principal office in Charlotte, North Carolina, with each
change in the Prime Rate being effective on the date such change is
publicly announced as effective (it being understood and agreed that
the Prime Rate is a reference rate used by NationsBank, N.A. in
determining interest rates on certain loans and is not intended to be
the lowest rate of interest charged on any extension of credit by
NationsBank, N.A. to any debtor).
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Register" shall have the meaning given such term in Section
11.3(c).
"Regulation G, T, U, or X" means Regulation G, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the environment (including the abandonment
or discarding of barrels, containers and other closed receptacles
containing any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
notice requirement has been waived by regulation.
"Required Lenders" means, at any time, Lenders which are then
in compliance with their obligations hereunder (as determined by the
Agent) and holding in the aggregate at least 51% of (i) the
Commitments, and (ii) if the Commitments have been terminated, the
outstanding Loans and Participation Interests.
18
24
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its material property is subject.
"Responsible Officer" means the President, Chief Executive
Officer, the Chief Financial Officer, any Vice President or other duly
authorized officer.
"Revolving Commitment" means, with respect to each Lender,
the Revolving Loans in an aggregate principal amount at any time
outstanding of up to such Lender's Revolving Commitment Percentage of
the Revolving Committed Amount as such amount may be reduced from time
to time in accordance with the provisions hereof.
"Revolving Commitment Percentage" means, for each Lender, the
percentage identified as its Revolving Commitment Percentage on
Schedule 1.1(c), as such percentage may be modified in connection with
any assignment made in accordance with the provisions of Section 11.3.
"Revolving Committed Amount" means TWENTY MILLION DOLLARS
($20,000,000).
"Revolving Loans" shall have the meaning assigned to such
term in Section 2.1(a).
"Revolving Note" or "Revolving Notes" means the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans in substantially the form attached as Schedule 2.1(e),
individually or collectively, as appropriate, as such promissory notes
may be amended, modified, supplemented, extended, renewed or replaced
from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of
such division in the business of rating securities.
"Scheduled Funded Debt Payments" means, as of the date of
determination, for the Borrower and its Subsidiaries on a consolidated
basis, the sum of all scheduled payments of principal on Funded Debt
for the applicable period ending on the date of determination
(including the principal component of payments due on Capital Leases
during the applicable period ending on the date of determination).
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple
Employer Plan.
19
25
"Solvent" or "Solvency" means, with respect to any Person as
of a particular date, that on such date (i) such Person is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in their
ordinary course, (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a
transaction, for which such Person's Property would constitute
unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged or
is to engage, (iv) the fair value of the Property of such Person is
greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person and (v) the present
fair saleable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured. In computing
the amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in light of all
the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
"Staff Acquisition" means Staff Acquisition, Inc., a Delaware
corporation.
"Subordinated Indebtedness" means any unsecured Indebtedness
incurred by any Credit Party which is subordinated on terms and
conditions satisfactory to the Required Lenders.
"Subsidiary" means, as to any Person, (a) any corporation
more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the
time, any class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through
Subsidiaries, and (b) any partnership, association, joint venture or
other entity in which such Person directly or indirectly through
Subsidiaries has more than 50% of the voting interests at any time.
Unless otherwise identified, "Subsidiary" or "Subsidiaries" shall mean
Subsidiaries of the Borrower.
"Total Capitalization" means, at any date of determination
calculated for the Borrower and its Subsidiaries on a consolidated
basis the sum of (i) Net Worth plus (ii) Funded Debt.
"Unused Fee" shall have the meaning given such term in
Section 3.4(a).
"Voting Stock" means, with respect to any Person, capital
stock issued by such Person the holders of which are ordinarily, in
the absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the happening
of such a contingency.
20
26
"Workers' Compensation Policy" means that certain Workers'
Compensation and Employees Liability policy no. WA1-65D-004110-297
issued by Liberty Mutual Insurance Company in favor of certain
Subsidiaries of the Borrower, as amended or modified from time to
time.
1.2 COMPUTATION OF TIME PERIODS.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1
hereof (or, prior to the delivery of the first financial statements pursuant to
Section 7.1 hereof, consistent with the annual audited financial statements
referenced in Section 6.1); provided, however, if (a) the Borrower shall object
to determining such compliance on such basis at the time of delivery of such
financial statements due to any change in GAAP or the rules promulgated with
respect thereto or (b) the Agent or the Required Lenders shall so object in
writing within 30 days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Borrower to the Lenders as to which no such
objection shall have been made.
SECTION 2
CREDIT FACILITIES
2.1 REVOLVING LOANS.
(a) Revolving Commitment. During the Commitment Period, subject to
the terms and conditions hereof, each Lender severally agrees to make revolving
credit loans (the "Revolving Loans") to the Borrower from time to time in the
amount of such Lender's Revolving Commitment Percentage of such Revolving Loans
for the purposes hereinafter set forth; provided that (i) with regard to the
Lenders collectively, the aggregate principal amount of Revolving Loans
outstanding at any time shall not exceed the Revolving Committed Amount and
(ii) with regard to each Lender individually, such Lender's outstanding
Revolving Loans shall not exceed such Lender's Revolving Commitment Percentage
of the Revolving Committed Amount. Revolving Loans may consist of Base Rate
Loans or Eurodollar Loans, or a combination thereof, as the Borrower may
request, and may be repaid and reborrowed in accordance with the provisions
hereof.
21
27
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by written notice (or telephone notice
promptly confirmed in writing) to the Agent not later than 11:00 A.M.
(Charlotte, North Carolina time) on the date of the requested
borrowing in the case of Base Rate Loans, and on the third Business
Day prior to the date of the requested borrowing in the case of
Eurodollar Loans. Each such request for borrowing shall be irrevocable
and shall specify (A) that a Revolving Loan is requested, (B) the date
of the requested borrowing (which shall be a Business Day), (C) the
aggregate principal amount to be borrowed, and (D) whether the
borrowing shall be comprised of Base Rate Loans, Eurodollar Loans or a
combination thereof, and if Eurodollar Loans are requested, the
Interest Period(s) therefor. If the Borrower shall fail to specify in
any such Notice of Borrowing (I) an applicable Interest Period in the
case of a Eurodollar Loan, then such notice shall be deemed to be a
request for an Interest Period of one month, or (II) the type of
Revolving Loan requested, then such notice shall be deemed to be a
request for a Base Rate Loan hereunder. The Agent shall give notice to
each Lender promptly upon receipt of each Notice of Borrowing pursuant
to this Section 2.1(b)(i), the contents thereof and each such Lender's
share of any borrowing to be made pursuant thereto.
(ii) Minimum Amounts. Each Revolving Loan shall be in a
minimum aggregate principal amount of $500,000, in the case of
Eurodollar Loans, or $500,000 (or the remaining Revolving Committed
Amount, if less), in the case of Base Rate Loans, and integral
multiples of $100,000 in excess thereof.
(iii) Advances. Each Lender will make its Revolving
Commitment Percentage of each Revolving Loan borrowing available to
the Agent for the account of the Borrower as specified in Section
3.13(a), or in such other manner as the Agent may specify in writing,
by 1:00 P.M. (Charlotte, North Carolina time) on the date specified in
the applicable Notice of Borrowing in Dollars and in funds immediately
available to the Agent. Such borrowing will then be made available to
the Borrower by the Agent (i) by crediting the account of the Borrower
on the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received by
the Agent or (ii) as directed by the Borrower in writing in the
aggregate of the amounts made available to the Agent by the Lenders
and in like funds as received by the Agent.
(c) Repayment. The principal amount of all Revolving Loans shall
be due and payable in full on the Maturity Date.
(d) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as Revolving Loans
shall be comprised in whole or in part of Base Rate Loans, such Base
Rate Loans shall bear interest at a per annum rate equal to the Base
Rate plus the Applicable Percentage;
22
28
(ii) Eurodollar Loans. During such periods as Revolving Loans
shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to the
Eurodollar Rate plus the Applicable Percentage.
Interest on Revolving Loans shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be
specified herein).
(e) Revolving Notes. The Revolving Loans shall be evidenced
by a duly executed Revolving Note in favor of each Lender
substantially in the form of Schedule 2.1(e).
(f) Maximum Number of Eurodollar Loans. The Borrower will be
limited to a maximum number of ten (10) Eurodollar Loans outstanding
at any time. For purposes hereof, Eurodollar Loans with separate or
different Interest Periods will be considered as separate Eurodollar
Loans even if their Interest Periods expire on the same date.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 DEFAULT RATE.
Upon the occurrence, and during the continuance, of an Event of
Default, the principal of and, to the extent permitted by law, interest on the
Loans and any other amounts owing hereunder or under the other Credit Documents
shall bear interest, payable on demand, at a per annum rate 2.5% greater than
the rate which would otherwise be applicable (or if no rate is applicable,
whether in respect of interest, fees or other amounts, then 2.5% greater than
the Base Rate).
3.2 EXTENSION AND CONVERSION.
Subject to the terms of Section 5.2, the Borrower shall have the
option, on any Business Day, to extend existing Loans into a subsequent
permissible Interest Period or to convert Loans into Loans of another interest
rate type; provided, however, that (i) except as provided in Section 3.7,
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
the Interest Period applicable thereto, (ii) Eurodollar Loans may be extended,
and Base Rate Loans may be converted into Eurodollar Loans, only if no Default
or Event of Default is in existence on the date of extension or conversion and
the conditions set forth in subsections (a), (b) and (c) of Section 5.2 have
been satisfied, (iii) Loans extended as, or converted into, Eurodollar Loans
shall be subject to the terms of the definition of "Interest Period" set forth
in Section 1.1 and shall be in such minimum amounts as provided in Section
2.1(b)(ii), and (iv) any request for extension or conversion of a Eurodollar
Loan which shall fail to specify an Interest Period shall be deemed to be a
request for an Interest Period of one month. Each such extension or conversion
shall be effected by the Borrower by giving a Notice of Extension/Conversion
(or telephone notice promptly confirmed in writing) to the Agent prior to 11:00
A.M. (Charlotte, North Carolina time) on the Business Day of, in the case of
the conversion of a Eurodollar Loan into a Base Rate Loan,
23
29
and on the third Business Day prior to, in the case of the extension of a
Eurodollar Loan as, or conversion of a Base Rate Loan into, a Eurodollar Loan,
the date of the proposed extension or conversion, specifying the date of the
proposed extension or conversion, the Loans to be so extended or converted, the
types of Loans into which such Loans are to be converted and, if appropriate,
the applicable Interest Periods with respect thereto. Each request for
extension or conversion shall be irrevocable and shall constitute a
representation and warranty by the Borrower of the matters specified in
subsections (a) through (c) of Section 5.2. In the event the Borrower fails to
request extension or conversion of any Eurodollar Loan in accordance with this
Section, or any such conversion or extension is not permitted or required by
this Section, then such Eurodollar Loan shall be automatically converted into a
Base Rate Loan at the end of the Interest Period applicable thereto. The Agent
shall give each Lender notice as promptly as practicable of any such proposed
extension or conversion affecting any Loan.
3.3 PREPAYMENTS.
(a) Voluntary Prepayments. Loans may be repaid in whole or in
part without premium or penalty; provided that (i) Eurodollar Loans
may not be prepaid other than at the end of the Interest Period
applicable thereto and only then on three (3) Business Days' prior
written notice to the Agent, (ii) any prepayment of Eurodollar Loans
will be subject to Section 3.10, (iii) Base Rate Loans may be prepaid
by the Borrower by giving notice to the Agent prior to 11:00 a.m.
(Charlotte, North Carolina time) on the date of the requested
prepayment, and (iv) each such partial prepayment shall be in a
minimum principal amount of $500,000, in the case of Eurodollar Loans,
and $500,000, in the case of Base Rate Loans, and in integral
multiples of $100,000 in excess thereof. Any such voluntary
prepayments shall be applied first to Base Rate Loans and then to
Eurodollar Loans in direct order of their Interest Period maturities.
(b) Mandatory Prepayments. If at any time, the aggregate
principal amount of Revolving Loans shall exceed the Revolving
Committed Amount, the Borrower shall immediately make payment on the
Revolving Loans in an amount sufficient to eliminate the deficiency.
Any such mandatory prepayments shall be applied first to Base Rate
Loans and then to Eurodollar Loans in direct order of their Interest
Period maturities. Amounts prepaid hereunder may be reborrowed in
accordance with the provisions hereof.
3.4 FEES.
(a) Unused Fee. In consideration of the Revolving Committed
Amount being made available by the Lenders, the Borrower agrees to pay
to the Agent, for the ratable benefit of the Lenders, an unused fee
(the "Unused Fee") equal to the Applicable Percentage for the Unused
Fee then in effect (calculated on the basis of actual number of days
elapsed in a year of 360 days) on the average daily unused portion of
the Revolving Committed Amount for the applicable period. The Unused
Fee shall be payable quarterly in arrears on the 15th day following
the last day of each calendar quarter for the immediately preceding
quarter (or portion thereof) beginning with the first such date to
occur after the Closing Date.
24
30
(b) Exit Fee. In the event the Borrower terminates the
Revolving Committed Amount on or before June 11, 1999, the Borrower
agrees to pay to the Agent, for the ratable benefit of the Lenders,
an exit fee in the amount of $50,000.
3.5 CAPITAL ADEQUACY.
If any Lender has determined, after the date hereof, that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or
administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's capital or assets as a consequence
of its commitments or obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender's policies with respect to
capital adequacy), then, upon notice from such Lender to the Borrower, the
Borrower shall be obligated to pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction. Each determination
by any such Lender of amounts owing under this Section shall, absent manifest
error, be conclusive and binding on the parties hereto.
3.6 INABILITY TO DETERMINE INTEREST RATE.
If prior to the first day of any Interest Period, the Agent shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, the Agent shall give telecopy or telephonic notice
thereof to the Borrower and the Lenders as soon as practicable thereafter. If
such notice is given (a) any Eurodollar Loans requested to be made on the first
day of such Interest Period shall be made as Base Rate Loans and (b) any Loans
that were to have been converted on the first day of such Interest Period to or
continued as Eurodollar Loans shall be converted to or continued as Base Rate
Loans. Until such notice has been withdrawn by the Agent, no further Eurodollar
Loans shall be made or continued as such, nor shall the Borrower have the right
to convert Base Rate Loans to Eurodollar Loans.
3.7 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof occurring after the Closing Date shall make it unlawful for any Lender
to make or maintain Eurodollar Loans as contemplated by this Credit Agreement,
(a) such Lender shall promptly give written notice of such circumstances to the
Borrower and the Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base
Rate Loan to Eurodollar Loans
25
31
shall forthwith be canceled and, until such time as it shall no longer be
unlawful for such Lender to make or maintain Eurodollar Loans, such Lender
shall then have a commitment only to make a Base Rate Loan when a Eurodollar
Loan is requested and (c) such Lender's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to Section 3.10.
3.8 REQUIREMENTS OF LAW.
If, after the date hereof, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable
to any Lender, or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority, in each case made subsequent to the Closing Date (or,
if later, the date on which such Lender becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Eurodollar Loans made by it or its
obligation to make Eurodollar Loans, or change the basis of taxation
of payments to such Lender in respect thereof (except for (i)
Non-Excluded Taxes covered by Section 3.9 (including Non-Excluded
Taxes imposed solely by reason of any failure of such Lender to comply
with its obligations under Section 3.9(b)) and (ii) changes in taxes
measured by or imposed upon the overall net income, or franchise tax
(imposed in lieu of such net income tax), of such Lender or its
applicable lending office, branch, or any affiliate thereof));
(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(c) shall impose on such Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, upon notice to
the Borrower from such Lender, through the Agent, in accordance herewith, the
Borrower shall be obligated to promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable, provided that, in any such case, the Borrower may
elect to convert the Eurodollar Loans made by such Lender hereunder to Base
Rate Loans by giving the Agent at least one Business Day's notice of such
election, in which case the Borrower shall promptly pay
26
32
to such Lender, upon demand, without duplication, such amounts, if any, as may
be required pursuant to Section 3.10. If any Lender becomes entitled to claim
any additional amounts pursuant to this subsection, it shall provide prompt
notice thereof to the Borrower, through the Agent, certifying (x) that one of
the events described in this paragraph (a) has occurred and describing in
reasonable detail the nature of such event, (y) as to the increased cost or
reduced amount resulting from such event and (z) as to the additional amount
demanded by such Lender and a reasonably detailed explanation of the
calculation thereof. Such a certificate as to any additional amounts payable
pursuant to this subsection submitted by such Lender, through the Agent, to the
Borrower shall be conclusive and binding on the parties hereto in the absence
of manifest error. This covenant shall survive for a period of one year the
termination of this Credit Agreement and the payment of the Loans and all other
amounts payable hereunder.
3.9 TAXES.
(a) Except as provided below in this subsection, all payments
made by the Borrower under this Credit Agreement and any Notes shall
be made free and clear of, and without deduction or withholding for or
on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by
any court, or governmental body, agency or other official, excluding
taxes measured by or imposed upon the overall net income of any Lender
or its applicable lending office, or any branch or affiliate thereof,
and all franchise taxes, branch taxes, taxes on doing business or
taxes on the overall capital or net worth of any Lender or its
applicable lending office, or any branch or affiliate thereof, in each
case imposed in lieu of net income taxes, imposed: (i) by the
jurisdiction under the laws of which such Lender, applicable lending
office, branch or affiliate is organized or is located, or in which
its principal executive office is located, or any nation within which
such jurisdiction is located or any political subdivision thereof; or
(ii) by reason of any connection between the jurisdiction imposing
such tax and such Lender, applicable lending office, branch or
affiliate other than a connection arising solely from such Lender
having executed, delivered or performed its obligations, or received
payment under or enforced, this Credit Agreement or any Notes. If any
such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Agent or any Lender hereunder
or under any Notes, (A) the amounts so payable to the Agent or such
Lender shall be increased to the extent necessary to yield to the
Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or
in the amounts specified in this Credit Agreement and any Notes,
provided, however, that the Borrower shall be entitled to deduct and
withhold any Non-Excluded Taxes and shall not be required to increase
any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof if such Lender
fails to comply with the requirements of paragraph (b) of this
subsection whenever any Non-Excluded Taxes are payable by the
Borrower, and (B) as promptly as possible thereafter the Borrower
shall send to the Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the
Borrower fails
27
33
to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Agent and the Lenders for any incremental taxes, interest or penalties
that may become payable by the Agent or any Lender as a result of any
such failure. The agreements in this subsection shall survive the
termination of this Credit Agreement and the payment of the Loans and
all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of
the United States of America or a state thereof shall:
(X) (i) on or before the date of any payment by the
Borrower under this Credit Agreement or Notes to such
Lender, deliver to the Borrower and the Agent (A) two (2)
duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor applicable form,
as the case may be, certifying that it is entitled to
receive payments under this Credit Agreement and any
Notes without deduction or withholding of any United
States federal income taxes and (B) an Internal Revenue
Service Form W-8 or W-9, or successor applicable form, as
the case may be, certifying that it is entitled to an
exemption from United States backup withholding tax;
(ii) deliver to the Borrower and the Agent two (2)
further copies of any such form or certification on or
before the date that any such form or certification
expires or becomes obsolete and after the occurrence of
any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably
be requested by the Borrower or the Agent; or
(Y) in the case of any such Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Internal
Revenue Code, (i) represent to the Borrower (for the
benefit of the Borrower and the Agent) that it is not a
bank within the meaning of Section 881(c)(3)(A) of the
Internal Revenue Code, (ii) agree to furnish to the
Borrower on or before the date of any payment by the
Borrower, with a copy to the Agent two (2) accurate and
complete original signed copies of Internal Revenue
Service Form W-8, or successor applicable form certifying
to such Lender's legal entitlement at the date of such
certificate to an exemption from U.S. withholding tax
under the provisions of Section 881(c) of the Internal
Revenue Code with respect to payments to be made under
this Credit Agreement and any Notes (and to deliver to the
Borrower and the Agent two (2) further copies of such form
on or before the date it expires or becomes obsolete and
after the occurrence of any event requiring a change in
the most recently provided form and, if necessary, obtain
any extensions of time reasonably
28
34
requested by the Borrower or the Agent for filing and
completing such forms), and (iii) agree, to the extent
legally entitled to do so, upon reasonable request by the
Borrower, to provide to the Borrower (for the benefit of
the Borrower and the Agent) such other forms as may be
reasonably required in order to establish the legal
entitlement of such Lender to an exemption from
withholding with respect to payments under this Credit
Agreement and any Notes;
unless in any such case any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form with respect to it
and such Lender so advises the Borrower and the Agent. Each Person
that shall become a Lender or a participant of a Lender pursuant to
subsection 11.3 shall, upon the effectiveness of the related transfer,
be required to provide all of the forms, certifications and statements
required pursuant to this subsection, provided that in the case of a
participant of a Lender the obligations of such participant of a
Lender pursuant to this subsection (b) shall be determined as if the
participant of a Lender were a Lender except that such participant of
a Lender shall furnish all such required forms, certifications and
statements to the Lender from which the related participation shall
have been purchased.
3.10 INDEMNITY.
The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur (other
than through such Lender's gross negligence or willful misconduct) as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar Loan after
the Borrower has given a notice thereof in accordance with the provisions of
this Credit Agreement or (c) the making of a prepayment of Eurodollar Loans on
a day which is not the last day of an Interest Period with respect thereto.
With respect to Eurodollar Loans, such indemnification may include an amount
equal to the excess, if any, of (i) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of the applicable Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Eurodollar Loans provided for herein over
(ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank Eurodollar
market. The covenants of the Borrower set forth in this Section 3.10 shall
survive for a period of one year the termination of this Credit Agreement and
the payment of the Loans and all other amounts payable hereunder.
3.11 PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
29
35
(a) Loans. Each Extension of Credit in respect of Revolving
Loans and payments of principal, interest and fees (including the
Unused Fee) on or in respect thereof and each reduction in Revolving
Committed Amount, relating thereto, and each conversion or extension
of such Revolving Loans, shall be allocated pro rata among the Lenders
in accordance with the respective principal amounts of their
outstanding Revolving Loans and Participation Interests.
(b) Advances. Unless the Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not
make the amount that would constitute its ratable share of such
borrowing available to the Agent, the Agent may assume that such
Lender is making such amount available to the Agent, and the Agent
may, in reliance upon such assumption, make available to the Borrower
a corresponding amount. If such amount is not made available to the
Agent by such Lender within the time period specified therefor
hereunder, such Lender shall pay to the Agent, on demand, such amount
with interest thereon at a rate equal to the Federal Funds Rate for
the period until such Lender makes such amount immediately available
to the Agent. A certificate of the Agent submitted to any Lender with
respect to any amounts owing under this subsection shall be conclusive
in the absence of manifest error.
3.12 SHARING OF PAYMENTS.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan or any other obligation owing to
such Lender under this Credit Agreement through the exercise of a right of
setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided
for in this Credit Agreement, such Lender shall promptly purchase from the
other Lenders a participation in such Loans and other obligations in such
amounts, and make such other adjustments from time to time, as shall be
equitable to the end that all Lenders share such payment in accordance with
their respective ratable shares as provided for in this Credit Agreement. The
Lenders further agree among themselves that if payment to a Lender obtained by
such Lender through the exercise of a right of setoff, banker's lien,
counterclaim or other event as aforesaid shall be rescinded or must otherwise
be restored, each Lender which shall have shared the benefit of such payment
shall, by repurchase of a participation theretofore sold, return its share of
that benefit (together with its share of any accrued interest payable with
respect thereto) to each Lender whose payment shall have been rescinded or
otherwise restored. The Borrower agrees that any Lender so purchasing such a
participation may, to the fullest extent permitted by law, exercise all rights
of payment, including setoff, banker's lien or counterclaim, with respect to
such participation as fully as if such Lender were a holder of such Loan or
other obligation in the amount of such participation. Except as otherwise
expressly provided in this Credit Agreement, if any Lender or the Agent shall
fail to remit to the Agent or any other Lender an amount payable by such Lender
or the Agent to the Agent or such other Lender pursuant to this Credit
Agreement on the date when such amount is
30
36
due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to the
Agent or such other Lender at a rate per annum equal to the Federal Funds Rate.
If under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 3.12
applies, such Lender shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Lenders under this Section 3.12 to share in the benefits of any recovery on
such secured claim.
3.13 PAYMENTS, COMPUTATIONS, ETC.
(a) Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Agent in dollars in
immediately available funds, without offset, deduction, counterclaim
or withholding of any kind, at the Agent's office specified in Section
11.1 not later than 2:00 P.M. (Charlotte, North Carolina time) on the
date when due. Payments received after such time shall be deemed to
have been received on the next succeeding Business Day. The Agent may
(but shall not be obligated to) debit the amount of any such payment
which is not made by such time to any ordinary deposit account of the
Borrower maintained with the Agent (with notice to the Borrower). The
Borrower shall, at the time it makes any payment under this Credit
Agreement, specify to the Agent the Loans, Fees, interest or other
amounts payable by the Borrower hereunder to which such payment is to
be applied (and in the event that it fails so to specify, or if such
application would be inconsistent with the terms hereof, the Agent
shall distribute such payment to the Lenders in such manner as the
Agent may determine to be appropriate in respect of obligations owing
by the Borrower hereunder, subject to the terms of Section 3.11(a)).
The Agent will distribute such payments to such Lenders, if such
payment is received prior to 12:00 Noon (Charlotte, North Carolina
time) on a Business Day in like funds as received prior to the end of
such Business Day and otherwise the Agent will distribute such payment
to such Lenders on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for
the period of such extension), except that in the case of Eurodollar
Loans, if the extension would cause the payment to be made in the next
following calendar month, then such payment shall instead be made on
the next preceding Business Day. Except as expressly provided
otherwise herein, all computations of interest and fees shall be made
on the basis of actual number of days elapsed over a year of 360 days,
except with respect to computation of interest on Base Rate Loans
which (unless the Base Rate is determined by reference to the Federal
Funds Rate) shall be calculated based on a year of 365 or 366 days, as
appropriate. Interest shall accrue from and include the date of
borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit Agreement to the
contrary, after the occurrence and during the continuance of an Event
of Default, all amounts collected or received by the Agent or any
Lender on account of the Loans or any other amounts outstanding under
any of the Credit Documents shall be paid over or delivered as
follows:
31
37
FIRST, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation reasonable
attorneys' fees actually incurred) of the Agent in connection
with enforcing the rights of the Lenders under the Credit
Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation, reasonable
attorneys' fees actually incurred) of each of the Lenders in
connection with enforcing its rights under the Credit
Documents or otherwise with respect to the Loans owing to
such Lender;
FOURTH, to the payment of all accrued interest and fees
on or in respect of the Loans;
FIFTH, to the payment of the outstanding principal amount
of the Loans;
SIXTH, to all other obligations which shall have become
due and payable under the Credit Documents or otherwise and
not repaid pursuant to clauses "FIRST" through "FIFTH" above;
and
SEVENTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied
in the numerical order provided until exhausted prior to application
to the next succeeding category; and (ii) each of the Lenders shall
receive an amount equal to its pro rata share (based on the proportion
that the then outstanding Loans held by such Lender bears to the
aggregate then outstanding Loans) of amounts available to be applied
pursuant to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH" above.
3.14 EVIDENCE OF DEBT.
(a) Each Lender shall maintain an account or accounts
evidencing each Loan made by such Lender to the Borrower from time to
time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Credit Agreement. Each
Lender will make reasonable efforts to maintain the accuracy of its
account or accounts and to promptly update its account or accounts
from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section
11.3(c) hereof, and a subaccount for each Lender, in which Register
and subaccounts (taken together) shall be recorded (i) the amount,
type and Interest Period of each such Loan hereunder, (ii) the amount
of any principal or interest due and payable or to become due and
payable
32
38
to each Lender hereunder and (iii) the amount of any sum received by
the Agent hereunder from or for the account of the Borrower and each
Lender's share thereof. The Agent will make reasonable efforts to
maintain the accuracy of the subaccounts referred to in the preceding
sentence and to promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register and
subaccounts maintained pursuant to subsection (b) of this Section 3.14
(and, if consistent with the entries of the Agent, subsection (a))
shall be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that
the failure of any Lender or the Agent to maintain any such account,
such Register or such subaccount, as applicable, or any error therein,
shall not in any manner affect the obligation of the Borrower to repay
the Loans made by such Lender in accordance with the terms hereof.
3.15 REPLACEMENT LENDERS.
At any time after the payment by the Borrower to any Lender of any
amount pursuant to Section 3.8 or 3.9 that the Borrower reasonably deems
material, the Borrower may, by writing addressed to the Agent and each Lender
that requested the payment of such amount, nominate or propose any bank or
other financial institution that is willing to become the assignee of the
Commitment and other obligations of such Lender (a "Replacement Lender")
pursuant to Section 11.3, and within fifteen (15) Business Days after receipt
of such proposal from the Borrower, each such Lender shall execute and deliver
to the Agent an assignment agreement whereby such Lender shall assign its
entire Commitment in favor of the proposed Replacement Lender in accordance
with Section 11.3 unless, prior to the expiration of such period, the Agent
shall have notified the Borrower and such Lender that the proposed Replacement
Lender is not reasonably acceptable to the Agent; provided, that in no event
will (i) any Lender be required to enter into an Assignment Agreement at a
price less than par plus accrued interest and prorated fees and other costs due
hereunder to the effective date thereof, (ii) the Agent or any Lender be
obligated to assist the Borrower in identifying any bank or other financial
institution that is willing to become such a Replacement Lender or (iii) any
such assignment be required if the consummation thereof conflicts with any
Requirement of Law.
SECTION 4
GUARANTY
4.1 THE GUARANTEE.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender, to each Affiliate of a Lender that enters into a Hedging Agreement and
to the Agent as hereinafter provided the prompt payment of the Guaranteed
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Guaranteed Obligations are not paid in full when due
(whether at stated maturity, as
33
39
a mandatory prepayment, by acceleration, as mandatory cash collateralization
or otherwise), the Guarantors will, jointly and severally, promptly pay the
same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration or otherwise) in accordance with the
terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the
obligations of such Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
4.2 LOANS UNCONDITIONAL.
The obligations of the Guarantors under Section 4.1 hereof are joint
and several, absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Credit
Documents or Hedging Agreements, or any other agreement or instrument referred
to therein, or any substitution, release or exchange of any other guarantee of
or security for any of the Guaranteed Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 4.2 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that such Guarantor
shall have no right of subrogation, indemnity, reimbursement or contribution
against the Borrower or any other Guarantor of the Guaranteed Obligations for
amounts paid under this Guaranty until such time as the Lenders (and any
Affiliates of Lenders entering into Hedging Agreements) have been paid in full,
all Commitments under the Credit Agreement have been terminated and no Person
or Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received
under the Credit Documents or Hedging Agreements. Without limiting the
generality of the foregoing, it is agreed that, to the fullest extent permitted
by law, the occurrence of any one or more of the following shall not alter or
impair the liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements shall be done or omitted;
34
40
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be
modified, supplemented or amended in any respect, or any right under
any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any
Lender or Lenders as security for any of the Guaranteed Obligations
shall fail to attach or be perfected; or
(v) any of the Guaranteed Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the claims
of any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit
Documents, any Hedging Agreement or any other agreement or instrument referred
to in the Credit Documents or Hedging Agreements, or against any other Person
under any other guarantee of, or security for, any of the Guaranteed
Obligations.
4.3 REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.4 REMEDIES.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Guaranteed Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section
9.2) for purposes of Section 4.1 hereof notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing the Guaranteed
Obligations from becoming automatically due and payable) as against any other
Person and that,
35
41
in the event of such declaration (or the Guaranteed Obligations being deemed
to have become automatically due and payable), the Guaranteed Obligations
(whether or not due and payable by any other Person) shall forthwith become due
and payable by the Guarantors for purposes of said Section 4.1.
4.5 RIGHTS OF CONTRIBUTION.
The Guarantors hereby agree, as among themselves, that if any
Guarantor shall become an Excess Funding Guarantor (as defined below), each
other Guarantor shall, on demand of such Excess Funding Guarantor (but subject
to the succeeding provisions of this Section 4.5), pay to such Excess Funding
Guarantor an amount equal to such Guarantor's Pro Rata Share (as defined below
and determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment obligation of any Guarantor to any Excess
Funding Guarantor under this Section 4.5 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of such
Guarantor under the other provisions of this Section 4, and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For purposes
hereof, (i) "Excess Funding Guarantor" shall mean, in respect of any
obligations arising under the other provisions of this Section 4 (hereafter,
the "Guarantied Obligations"), a Guarantor that has paid an amount in excess of
its Pro Rata Share of the Guarantied Obligations; (ii) "Excess Payment" shall
mean, in respect of any Guarantied Obligations, the amount paid by an Excess
Funding Guarantor in excess of its Pro Rata Share of such Guarantied
Obligations; and (iii) "Pro Rata Share", for the purposes of this Section 4.5,
shall mean, for any Guarantor, the ratio (expressed as a percentage) of (a) the
amount by which the aggregate present fair saleable value of all of its assets
and properties exceeds the amount of all debts and liabilities of such
Guarantor (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of such Guarantor hereunder) to (b)
the amount by which the aggregate present fair saleable value of all assets and
other properties of the Borrower and all of the Guarantors exceeds the amount
of all of the debts and liabilities (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of the
Borrower and the Guarantors hereunder) of the Borrower and all of the
Guarantors, all as of the Closing Date (if any Guarantor becomes a party hereto
subsequent to the Closing Date, then for the purposes of this Section 4.5 such
subsequent Guarantor shall be deemed to have been a Guarantor as of the Closing
Date and the information pertaining to, and only pertaining to, such Guarantor
as of the date such Guarantor became a Guarantor shall be deemed true as of the
Closing Date).
4.6 CONTINUING GUARANTEE.
The guarantee in this Section 4 is a continuing guarantee, and shall
apply to all Guaranteed Obligations whenever arising. Each Guarantor further
agrees that until such time as the Lenders (and any Affiliates of Lenders
entering into Hedging Agreements) have been paid in full, all Commitments under
the Credit Agreement have been terminated and no Person or Governmental
Authority shall have any right to request any return or reimbursement of funds
from the Lenders in connection with monies received under the Credit Documents
or Hedging Agreement, no
36
42
Guarantor shall enforce any rights provided it under any reimbursement or
guaranty agreement between or among such Guarantor and any of the other
Guarantors.
SECTION 5
CONDITIONS
5.1 CONDITIONS TO CLOSING.
This Credit Agreement shall become effective, and the initial
Extensions of Credit may be made, upon the satisfaction of the following
conditions precedent:
(a) Execution of Credit Agreement and Credit Documents.
Receipt of (i) multiple counterparts of this Credit Agreement, (ii) a
Revolving Note for each Lender, (iii) multiple counterparts of the
Pledge Agreement, (iv) multiple counterparts of the Collateral
Assignment of General Partnership Interest and the Collateral
Assignment of Limited Partnership Interest and UCC financing
statements relating thereto, if any, executed by a duly authorized
officer of each party thereto and in each case conforming to the
requirements of this Credit Agreement.
(b) Financial Information. Receipt of financial information
regarding the Borrower and its Subsidiaries, as may be requested by,
and in form and substance satisfactory to the Agent, including without
limitation, (i) the consolidated financial statements of the Borrower
and its Subsidiaries for the year ending December 31, 1996, including
balance sheets and income and cash flow statements, audited by
nationally recognized independent public accountants reasonably
satisfactory to the Required Lenders and containing an unqualified
opinion of such firm that such statements present fairly, in all
material respects, the consolidated financial position and results of
operations of the Borrower, and are prepared in conformity with GAAP
and (ii) the company-prepared consolidated balance sheet of the
Borrower and its Subsidiaries for the fiscal quarter ending September
30, 1997 and relating consolidated statements of income, retained
earnings, shareholders' equity and cash flows for such period,
prepared in conformity with GAAP.
(c) Absence of Legal Proceedings. The absence of any action,
suit, investigation or proceeding pending in any court or before any
arbitrator or governmental instrumentality which could reasonably be
expected to have a Material Adverse Effect on the Borrower or any of
its Subsidiaries.
(d) Legal Opinions. Receipt of opinions of counsel for the
Credit Parties relating to the Credit Documents and the transactions
contemplated herein, in form and substance satisfactory to the Agent
and the Required Lenders.
(e) Corporate Documents. Receipt of the following for the
Borrower, Staff Acquisition, Inc. and Staff Insurance:
37
43
(i) Articles of Incorporation. Copies of the
articles of incorporation or charter documents certified to
be true and complete as of a recent date by the appropriate
governmental authority of the state of its incorporation.
(ii) Resolutions. Copies of resolutions of the Board
of Directors approving and adopting the respective Credit
Documents, the transactions contemplated therein and
authorizing the execution and delivery thereof, certified by
a secretary or assistant secretary as of the Closing Date to
be true and correct and in force and effect as of such date.
(iii) Bylaws. Copies of the bylaws certified by a
secretary or assistant secretary as of the Closing Date to be
true and correct and in force and effect as of such date.
(iv) Good Standing. Copies, where applicable, of
certificates of good standing, existence or its equivalent
certified as of a recent date by the appropriate governmental
authorities of the state of incorporation and each other
state in which the failure to so qualify and be in good
standing would have a material adverse effect on the business
or operations in such state.
(v) Incumbency. An incumbency certificate certified
by a secretary or assistant secretary to be true and correct
as of the Closing Date.
(f) Partnership Documents. Receipt of the following for each
of the Guarantors other than Staff Acquisition, Inc. and Staff
Insurance:
(i) Partnership Agreement. Copy of the partnership
agreement certified to be true and correct and in full force
and effect as of the Closing Date.
(ii) Resolutions. Copies of resolutions approving
and adopting the respective Credit Documents, the
transactions contemplated therein and authorizing the
execution and delivery thereof, certified to be true and
correct and in full force and effect as of the Closing Date.
(iii) Good Standing. Copies, where applicable, of
certificates of good standing, existence or its equivalent
certified as of a recent date by the appropriate governmental
authorities of the state of formation and each other state in
which the failure to so qualify and be in good standing would
have a material adverse effect on the business or operations
in such state.
(iv) Incumbency. An incumbency certificate
certified by an authorized representative to be true and
correct as of the Closing Date.
38
44
(g) Personal Property Collateral. Receipt of the following in
form and substance satisfactory to the Agent:
(i) searches of Uniform Commercial Code ("UCC")
filings in the jurisdiction of the chief executive office of
each Credit Party and each jurisdiction where any Collateral
is located or where a filing would need to be made in order
to perfect the Lenders' security interest in the Collateral,
copies of the financing statements on file in such
jurisdictions and evidence that no Liens exist other than
Permitted Liens; and
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Agent's sole
discretion, to perfect the Lenders' security interest in the
Collateral.
(h) Evidence of Insurance. Receipt by the Agent of copies of
insurance policies or certificates of insurance of the Borrower
evidencing liability and casualty insurance meeting the requirements
set forth in the Credit Documents.
(i) Health Care Agreement. The Agent shall have received a
certified copy of the Health Care Agreement.
(j) Material Adverse Effect. There shall not have occurred a
change since December 31, 1996 that has had or could reasonably be
expected to have a Material Adverse Effect (including matters related
to litigation, tax, accounting, labor, insurance and pension
liabilities).
(k) Officer's Certificate. The Agent shall have received a
certificate or certificates executed by the chief financial officer of
the Borrower as of the Closing Date stating that (A) the Borrower and
each of the Borrower's Subsidiaries are in compliance with all
existing financial obligations, (B) all governmental, shareholder and
third party consents and approvals, if any, with respect to the Credit
Documents and the transactions contemplated thereby have been
obtained, (C) no action, suit, investigation or proceeding is pending
or, to the best of his knowledge, threatened in any court or before
any arbitrator or governmental instrumentality that purports to affect
any transaction contemplated by the Credit Documents, or could have or
might be reasonably expected to have a Material Adverse Effect, and
(D) immediately after giving effect to this Credit Agreement, the
other Credit Documents and all the transactions contemplated herein or
therein to occur on such date, (1) the Borrower and each of the
Borrower's Subsidiaries is Solvent, (2) no Default or Event of Default
exists, (3) all representations and warranties contained herein and in
the other Credit Documents are true and correct in all material
respects, and (4) the Borrower is in compliance with each of the
financial covenants set forth in Section 7.9.
(l) Fees. Payment by the Borrower to the Agent of an upfront
fee equal to 0.75% of the Revolving Committed Amount.
39
45
(m) Additional Matters. All other documents and legal matters
in connection with the transactions contemplated by this Credit
Agreement shall be reasonably satisfactory in form and substance to
the Agent and the Required Lenders.
5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The obligation of each Lender to make any Extension of Credit
hereunder (including the initial Extension of Credit to be made hereunder) is
subject to the satisfaction of the following conditions precedent on the date
of making such Extension of Credit:
(a) Notice of Borrowing. The Borrower shall have delivered
(i) in the case of any new Revolving Loan, a Notice of Borrowing, duly
executed and completed in accordance with the terms hereof and (ii) in
the case of any extension or conversion of a Loan, a duly executed and
completed Notice of Extension/Conversion by the time specified in
Section 3.2.
(b) Representations and Warranties. The representations and
warranties made by the Borrower herein or in any other Credit
Documents or which are contained in any certificate furnished at any
time under or in connection herewith shall be true and correct in all
material respects on and as of the date of such Extension of Credit as
if made on and as of such date (except for those which expressly
relate to an earlier date).
(c) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or after
giving effect to the Extension of Credit to be made on such date
unless such Default or Event of Default shall have been waived in
accordance with this Credit Agreement.
(d) No Material Adverse Effect. No circumstances, events or
conditions shall have occurred since the date of the audited financial
statements referenced in Section 6.1 which would have a Material
Adverse Effect.
Each request for Extension of Credit (including extensions and
conversions) and each acceptance by the Borrower of an Extension of Credit
(including extensions and conversions) shall be deemed to constitute a
representation and warranty by the Borrower as of the date of such Extension of
Credit that the applicable conditions in paragraphs (a), (b), (c) and (d) of
this subsection have been satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to make
Extensions of Credit herein provided for, each Credit Party hereby represents
and warrants to the Agent and to each Lender that:
40
46
6.1 FINANCIAL CONDITION.
The financial statements delivered to the Agent pursuant to Section
5.1(b) have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, are complete and correct in all
material respects and present fairly the financial condition and results from
operations of the entities and for the periods specified, subject in the case
of interim company-prepared statements to normal year-end adjustments.
6.2 NO CHANGES OR RESTRICTED PAYMENTS.
Since the date of the audited financial statements referenced
in Section 6.1, (a) there has been no circumstance, development or event
relating to or affecting the Borrower or any of its Subsidiaries which has had
or would be reasonably expected to have a Material Adverse Effect, and (b)
except as permitted herein or as identified on Schedule 6.2, (i) no dividends
or other distributions have been declared, paid or made upon the capital stock
or other equity interest in a Credit Party, (ii) no capital stock or other
equity interest in a Credit Party has been redeemed, retired, purchased or
otherwise acquired and (iii) nor has there been any prepayment, redemption,
defeasance or acquisition for value, or refund, refinance or exchange of any
Funded Debt.
6.3 ORGANIZATION; EXISTENCE; COMPLIANCE WITH LAW.
The Borrower and each of its Subsidiaries (a) is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the legal or other necessary power
and authority, and the legal right to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not, in the aggregate, have a Material
Adverse Effect, and (d) is in compliance with all Requirements of Law, except
to the extent that the failure to comply therewith would not, in the aggregate,
be reasonably expected to have a Material Adverse Effect.
6.4 POWER; AUTHORIZATION; ENFORCEABLE LOANS.
Each Credit Party has the legal or other necessary power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party and has taken all necessary legal action to
authorize the execution, delivery and performance by it of the Credit Documents
to which it is a party. No consent or authorization of, filing with, notice to
or other act by or in respect of, any Governmental Authority or any other
Person is required in connection with the borrowings hereunder or with the
execution, delivery or performance of any Credit Documents by any Credit Party
(other than those which have been obtained) or with the validity or
enforceability of any Credit Document against such Credit Party (except such
filings as are necessary in connection with the perfection of the Liens created
by such Credit Documents).
41
47
Each Credit Document to which it is a party constitutes a legal, valid and
binding obligation of each Credit Party enforceable against such Credit Party
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
6.5 NO LEGAL BAR.
The execution, delivery and performance of the Credit Documents, the
borrowings hereunder and the use of the Extensions of Credit will not violate
any Requirement of Law (including, without limitation, Regulation U or
Regulation X) or any Contractual Obligation of any Credit Party or any of its
Subsidiaries (except those as to which waivers or consents have been obtained,
and will not result in, or require, the creation or imposition of any Lien on
any of their respective properties or revenues pursuant to any Requirement of
Law or Contractual Obligation other than the Liens arising under or
contemplated in connection with the Credit Documents). None of the Credit
Parties nor any of its Subsidiaries is in default under or with respect to any
of its Contractual Obligations in any respect which would reasonably be
expected to have a Material Adverse Effect.
6.6 NO MATERIAL LITIGATION.
No claim, litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of
any Credit Party, threatened by or against, the Borrower or any of its
Subsidiaries or against any of their respective properties or revenues which
(a) relate to the Credit Documents or any of the transactions contemplated
hereby or thereby, or (b) if adversely determined, would reasonably be expected
to have a Material Adverse Effect.
6.7 NO DEFAULT.
No Default or Event of Default has occurred and is continuing.
6.8 OWNERSHIP OF PROPERTY; LIENS.
The Borrower and each of its Subsidiaries has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
material real property, and good title to, or a valid leasehold interest in,
all its other material property, and none of such property is subject to any
Lien, except for Permitted Liens.
6.9 INTELLECTUAL PROPERTY.
The Borrower and each of its Subsidiaries owns, or has the legal right
to use, all United States trademarks, tradenames, copyrights, technology,
know-how and processes, if any, necessary for each of them to conduct its
business as currently conducted (the "Intellectual Property") except for those
the failure to own or have such legal right to use would not be
42
48
reasonably expected to have a Material Adverse Effect. No claim has been
asserted and is pending by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does any Credit Party know of any such claim, and
the use of such Intellectual Property by the Borrower or any of its
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that in the aggregate, would not be reasonably
expected to have a Material Adverse Effect.
6.10 NO BURDENSOME RESTRICTIONS.
No Requirement of Law or Contractual Obligation of the Borrower or any
of its Subsidiaries would be reasonably expected to have a Material Adverse
Effect.
6.11 TAXES.
The Borrower and each of its Subsidiaries (a) has filed or caused to
be filed all United States federal income tax returns and all other material
tax returns which, to the best knowledge of the Credit Parties, are required to
be filed and (b) has paid (i) all taxes shown to be due and payable on said
returns, (ii) all taxes shown to be due and payable on any assessments of which
it has received notice made against it or any of its property and (c) all other
taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any (x) taxes, fees or other charges with
respect to which the failure to pay, in the aggregate, would not have a
Material Adverse Effect or (y) taxes, fees or other charges the amount or
validity of which are currently being contested and with respect to which
reserves in conformity with GAAP have been provided on the books of such
Person), and no tax Lien has been filed, and, to the best knowledge of the
Credit Parties, no claim is being asserted, with respect to any such tax, fee
or other charge.
6.12 ERISA
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no ERISA Event has
occurred, and, to the best knowledge of the Credit Parties, no event
or condition has occurred or exists as a result of which any ERISA
Event could reasonably be expected to occur, with respect to any Plan;
(ii) no "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not
waived, has occurred with respect to any Plan; (iii) each Plan has
been maintained, operated, and funded in compliance with its own terms
and in material compliance with the provisions of ERISA, the Code, and
any other applicable federal or state laws; and (iv) no lien in favor
of the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
(b) The actuarial present value of all "benefit liabilities"
(as defined in Section 4001(a)(16) of ERISA), whether or not vested,
under each Single Employer Plan, as of the last annual valuation date
prior to the date on which this representation is made or
43
49
deemed made (determined, in each case, in accordance with Financial
Accounting Standards Board Statement 87, utilizing the actuarial
assumptions used in such Plan's most recent actuarial valuation
report), did not exceed as of such valuation date the fair market
value of the assets of such Plan.
(c) Neither the Borrower, nor any of its Subsidiaries nor any
ERISA Affiliate has incurred, or, to the best knowledge of the Credit
Parties, could be reasonably expected to incur, any withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer
Plan. Neither the Borrower, nor any of its Subsidiaries nor any ERISA
Affiliate would become subject to any withdrawal liability under ERISA
if the Borrower, any of its Subsidiaries or any ERISA Affiliate were
to withdraw completely from all Multiemployer Plans and Multiple
Employer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. Neither the
Borrower, nor any of its Subsidiaries nor any ERISA Affiliate has
received any notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no
Multiemployer Plan is, to the best knowledge of the Credit Parties,
reasonably expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or may subject the Borrower, any of its Subsidiaries or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i), or 502(l)
of ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which the Borrower, any of its Subsidiaries or
any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability.
(e) Neither the Borrower, nor any of its Subsidiaries, nor
any ERISA Affiliates has any material liability with respect to
"expected post-retirement benefit obligations" within the meaning of
the Financial Accounting Standards Board Statement 106. Each Plan
which is a welfare plan (as defined in Section 3(1) of ERISA) to which
Sections 601-609 of ERISA and Section 4980B of the Code apply has been
administered in compliance in all material respects of such sections.
6.13 GOVERNMENTAL REGULATIONS, ETC.
(a) No part of the proceeds of the Loans will be used,
directly or indirectly, for the purpose of purchasing or carrying any
"margin stock" within the meaning of Regulation G, Regulation U, or
Regulation X. If requested by any Lender or the Agent, the Borrower
will furnish to the Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form U-1 referred to
in said Regulation U. No indebtedness being reduced or retired out of
the proceeds of the Loans was or will be incurred for the purpose of
purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation
T. None of the
44
50
transactions contemplated by this Credit Agreement (including, without
limitation, the direct or indirect use of the proceeds of the Loans)
will violate or result in a violation of the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, or
regulations issued pursuant thereto, or Regulation G, T, U or X.
(b) Neither the Borrower, nor any of its Subsidiaries, is
subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act or the Investment Company Act of 1940,
each as amended. In addition, neither the Borrower, nor any of its
Subsidiaries, is (i) an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended,
and is not controlled by such a company, or (ii) a "holding company",
or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(c) The Borrower and each of its Subsidiaries has obtained
all material licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its respective Property
and to the conduct of its business.
(d) Neither the Borrower, nor any of its Subsidiaries is in
violation of any applicable statute, regulation or ordinance of the
United States of America, or of any state, city, town, municipality,
county or any other jurisdiction, or of any agency thereof (including
without limitation, environmental laws and regulations), which
violation could reasonably be expected to have a Material Adverse
Effect.
(e) The Borrower and each of its Subsidiaries is current with
all material reports and documents, if any, required to be filed with
any state or federal securities commission or similar agency and is in
full compliance in all material respects with all applicable rules and
regulations of such commissions.
6.14 PURPOSE OF EXTENSIONS OF CREDIT.
The Loans will be used solely to finance acquisitions permitted by the
terms of this Credit Agreement.
6.15 ENVIRONMENTAL MATTERS.
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) To the best knowledge of each of the Credit Parties, each
of the facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") and all
operations at the Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law
with respect to the Properties or the businesses operated by the
Borrower or any of its Subsidiaries (the
45
51
"Businesses"), and there are no conditions relating to the Businesses
or Properties that could give rise to liability under any applicable
Environmental Laws.
(b) To the best knowledge of each of the Credit Parties, none
of the Properties contains, or has previously contained, any Materials
of Environmental Concern at, on or under the Properties in amounts or
concentrations that constitute or constituted a violation of, or could
give rise to liability under, Environmental Laws.
(c) Neither the Borrower nor any of its Subsidiaries has
received any written or verbal notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Businesses, nor does the
Borrower or any of its Subsidiaries have knowledge or reason to
believe that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties, or generated, treated,
stored or disposed of at, on or under any of the Properties or any
other location, in each case by or on behalf of the Borrower or any of
its Subsidiaries in violation of, or in a manner that would be
reasonably likely to give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the best knowledge of the Credit Parties,
threatened, under any Environmental Law to which the Borrower or any
of its Subsidiaries is or will be named as a party, nor are there any
consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to
the Borrower or any of its Subsidiaries, the Properties or the
Businesses.
(f) To the best knowledge of each of the Credit Parties,
there has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or
related to the operations (including, without limitation, disposal) of
the Borrower or any of its Subsidiaries in connection with the
Properties or otherwise in connection with the Businesses, in
violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws.
6.16 FIRST PRIORITY LIEN.
The Agent, on behalf of the Lenders, holds a first priority lien,
subject to no other Liens, in the Collateral.
6.17 SUBSIDIARIES.
Set forth on Schedule 6.17 is a complete and accurate list of all
Subsidiaries of each Credit Party. Information on Schedule 6.17 includes
jurisdiction of incorporation, the number of shares
46
52
of each class of capital stock outstanding, the number and percentage of
outstanding shares of each class owned (directly or indirectly) by such Credit
Party; and the number and effect, if exercised, of all outstanding options,
warrants, rights of conversion or purchase and all other similar rights with
respect thereto. The outstanding capital stock of all such Subsidiaries is
validly issued, fully paid and non-assessable and is owned by each such Credit
Party, directly or indirectly, free and clear of all Liens (other than those
arising under or contemplated in connection with the Credit Documents).
6.18 CHIEF EXECUTIVE OFFICE.
Each Credit Party's chief executive office and principal place of
business is (and for the prior four months have been) located at the locations
set forth on Schedule 6.18 as such Schedule 6.18 may be updated from time to
time.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party covenants and agrees that on the Closing Date, and
so long as this Credit Agreement is in effect and until the Commitments have
been terminated, no Loans remain outstanding and all amounts owing hereunder or
in connection herewith have been paid in full, the Borrower and each of its
Subsidiaries shall:
7.1 FINANCIAL STATEMENTS.
Furnish, or cause to be furnished, to each of the Lenders:
(a) Audited Financial Statements. As soon as available, but
in any event within 120 days after the end of each fiscal year, an
audited consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of the fiscal year and the related
consolidated statements of income, retained earnings, shareholders'
equity and cash flows for the year, audited by independent certified
public accountants of nationally recognized standing reasonably
acceptable to the Required Lenders, setting forth in each case in
comparative form the figures for the previous year, reported without a
"going concern" or like qualification or exception, or qualification
indicating that the scope of the audit was inadequate to permit such
independent certified public accountants to certify such financial
statements without such qualification.
(b) Company-Prepared Financial Statements. As soon as
available, but in any event within 45 days after the end of each of
the first three fiscal quarters of each fiscal year, a
company-prepared consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such quarter and related
company-prepared consolidated statements of income, retained earnings,
shareholders' equity and cash flows for such period and for the fiscal
year to date in a format and with detail sufficient to calculate the
applicable financial covenants setting forth in comparative form the
consolidated figures for the corresponding
47
53
period or periods of the preceding fiscal year or the portion
of the fiscal year ending with such period, as applicable, in each
case subject to normal recurring year-end audit adjustments.
All such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and, in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied
consistently throughout the periods reflected therein) and further accompanied
by a description of, and an estimation of the effect on the financial
statements on account of, a change in the application of accounting principles
as provided in Section 1.3.
7.2 CERTIFICATES; OTHER INFORMATION.
Furnish, or cause to be furnished, to the Agent for distribution to
the Lenders:
(a) Accountant's Certificate and Reports. Concurrently with
the delivery of the financial statements referred to in subsection
7.1(a) above, a certificate of the independent certified public
accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default, except as specified in such
certificate.
(b) Officer's Certificate. Concurrently with the delivery of
the financial statements referred to in Sections 7.1(a) and 7.1(b)
above, a certificate of a Responsible Officer in the form of Schedule
7.2(b), (i) demonstrating compliance with the financial covenants
contained in Section 7.9 and (ii) stating that, to the best of such
Responsible Officer's knowledge and belief, (i) the financial
statements fairly present in all material respects the financial
condition of the parties covered by such financial statements, (ii)
during such period the Borrower and its Subsidiaries have observed or
performed the covenants and other agreements hereunder and under the
other Credit Documents relating to them, and satisfied the conditions
contained in this Credit Agreement to be observed, performed or
satisfied by them and (iii) such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate.
(c) Accountants' Reports. Promptly upon receipt, a copy of
any final (as distinguished from a preliminary or discussion draft)
"management letter" or other similar report submitted by independent
accountants or financial consultants to the Borrower or any of its
Subsidiaries in connection with any annual, interim or special audit.
(d) Public Information. Within thirty days after the same are
sent, copies of all reports (other than those otherwise provided
pursuant to subsection 7.1) and other financial information which the
Borrower or any of its Subsidiaries sends to its public stockholders,
and within thirty days after the same are filed, copies of all
financial statements and non-confidential reports which the Borrower
or any of its Subsidiaries may
48
54
make to, or file with, the Securities and Exchange Commission or any
successor or analogous Governmental Authority.
(e) Actuarial Reports. Promptly upon receipt, a copy of any
actuarial report submitted by the Borrower's independent actuarial
firm to the Borrower or any of its Subsidiaries relating to healthcare
plans for any state for which the Borrower or any of its Subsidiaries
does not have a guaranteed cost healthcare plan.
(f) Other Information. Promptly, such additional financial
and other information as the Agent, at the request of any Lender, may
from time to time reasonably request.
7.3 NOTICES.
Give notice to the Agent (which shall promptly transmit such notice to
each Lender) of:
(a) Defaults. Immediately after any Credit Party knows or has
reason to know thereof, the occurrence of any Default or Event of
Default.
(b) Contractual Loans. Promptly, the initiation of any
default or event of default under any Contractual Obligation of the
Borrower or any of its Subsidiaries which would reasonably be expected
to have a Material Adverse Effect.
(c) Legal Proceedings. Promptly, any litigation, or any
investigation or proceeding (including without limitation, any
environmental proceeding) known to the Borrower or any of its
Subsidiaries, or any material development in respect thereof,
affecting the Borrower or any of its Subsidiaries which, if adversely
determined, would reasonably be expected to have a Material Adverse
Effect.
(d) ERISA. Promptly, after any Responsible Officer of any
Credit Party knows or has reason to know of (i) any event or
condition, including, but not limited to, any Reportable Event, that
constitutes, or might reasonably lead to, an ERISA Event; (ii) with
respect to any Multiemployer Plan, the receipt of notice as prescribed
in ERISA or otherwise of any withdrawal liability assessed against any
of their ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both within the
meaning of Title IV of ERISA); (iii) the failure to make full payment
on or before the due date (including extensions) thereof of all
amounts which the Borrower or any of its Subsidiaries or any ERISA
Affiliate are required to contribute to each Plan pursuant to its
terms and as required to meet the minimum funding standard set forth
in ERISA and the Code with respect; or (iv) any change in the funding
status of any Plan that reasonably could be expected to have a
Material Adverse Effect; together with a description of any such event
or condition or a copy of any such notice and a statement by the chief
financial officer of the Credit Parties briefly setting forth the
details regarding such event, condition, or notice, and the action, if
any, which has been or is being taken or is proposed to be taken by
the Credit Parties with respect thereto. Promptly upon request, the
Borrower or
49
55
any of its Subsidiaries shall furnish the Agent and the Lenders with
such additional information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of each annual
report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and the Code,
respectively, for each "plan year" (within the meaning of Section
3(39) of ERISA).
(e) Guarantee Cost Provision. Immediately after the
cancellation or termination of any guaranteed cost provision contained
in any healthcare agreement of the Borrower or any of its
Subsidiaries.
(f) Other. Promptly, any other development or event which a
Responsible Officer determines could reasonably be expected to have a
Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Credit Parties propose to take with respect
thereto.
7.4 PAYMENT OF LOANS.
Pay, discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, in accordance with prudent business
practice (subject, where applicable, to specified grace periods) all material
obligations of the Borrower or any of its Subsidiaries of whatever nature
(including without limitation all taxes, assessments and governmental charges
or levies) and any additional costs that are imposed as a result of any failure
to so pay, discharge or otherwise satisfy such obligations, except when the
amount or validity of such obligations and costs is currently being contested
in good faith by appropriate proceedings and reserves, if applicable, in
conformity with GAAP with respect thereto have been provided on the books of
the Borrower or any of its Subsidiaries, as the case may be.
7.5 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
(a) Continue to engage in business of the same general type as now
conducted by it on the date hereof, (b) preserve, renew and keep in full force
and effect its legal existence, (c) maintain all material rights, material
privileges, material licenses and material franchises necessary or desirable in
the normal conduct of its business and (d) comply with all Contractual
Obligations and Requirements of Law applicable to it except to the extent that
failure to comply therewith would not, in the aggregate, have a Material
Adverse Effect.
7.6 MAINTENANCE OF PROPERTY; INSURANCE.
Keep all material property useful and necessary in its business in
reasonably good working order and condition (ordinary wear and tear excepted);
maintain with financially sound and reputable insurance companies casualty,
liability and such other insurance (which may include plans of self-insurance)
with such coverage and deductibles, and in such amounts as may be
50
56
consistent with prudent business practice and in any event consistent with
normal industry practice (except to any greater extent as may be required by
the terms of any of the other Credit Documents); and furnish to the Agent, upon
written request, full information as to the insurance carried.
7.7 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
(a) Keep proper books of records and accounts in which full,
true and correct entries in conformity with GAAP and all Requirements
of Law shall be made of all dealings and transactions in relation to
its businesses and activities; and permit, during regular business
hours and upon reasonable notice by the Agent, the Agent to visit and
inspect any of its properties and examine and make abstracts
(including photocopies) from any of its books and records at any
reasonable time, and to discuss the business, operations, properties
and financial and other condition of the Borrower and any of its
Subsidiaries with officers and employees of the Borrower and any of
its Subsidiaries and with their independent certified public
accountants. The cost of the inspection referred to in the preceding
sentence shall be for the account of the Lenders, unless an Event of
Default has occurred and is continuing, in which case the cost of such
inspection shall be for the account of the Credit Parties.
(b) In addition to the foregoing subsection (a), permit the
Agent to have agents or representatives conduct a "field audit" of its
inventory and accounts, including inspection of the inventory and
account records and a right to examine and make abstracts (including
photocopies) from its books and records relating to its inventory and
accounts on an annual basis, and more frequently after the occurrence
of an Event of Default. The cost of such "field audits" will be for
the account of, and will be promptly paid by, the Borrower.
7.8 ENVIRONMENTAL LAWS.
(a) Comply in all material respects with, and take reasonable
actions to ensure compliance in all material respects by all tenants
and subtenants of the Borrower or any of its Subsidiaries, if any,
with, all applicable Environmental Laws and obtain and comply in all
material respects with and maintain, and take reasonable actions to
ensure that all such tenants and subtenants obtain and comply in all
material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable
Environmental Laws except to the extent that failure to do so would
not reasonably be expected to have a Material Adverse Effect;
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all material
respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except to the extent that the
same are being contested in good faith by appropriate proceedings and
the failure to do or the pendency of such proceedings would not
reasonably be expected to have a Material Adverse Effect; and
51
57
(c) Defend, indemnify and hold harmless the Agent and the
Lenders, and their respective employees, agents, officers and
directors, from and against any and all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of,
noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower or any of its
Subsidiaries or the Properties, or any orders, requirements or demands
of Governmental Authorities related thereto, including, without
limitation, reasonable attorney's and consultant's fees, investigation
and laboratory fees, response costs, court costs and litigation
expenses, except to the extent that any of the foregoing arise out of
the gross negligence or willful misconduct of the party seeking
indemnification therefor. The agreements in this paragraph shall
survive repayment of the Loans and all other amounts payable
hereunder, and termination of the Commitments.
7.9 FINANCIAL COVENANTS.
(a) Leverage Ratio. There shall be maintained with respect to
the Borrower and its Subsidiaries on a consolidated basis as of the
end of each fiscal quarter to occur through the Maturity
Date, a Leverage Ratio of not greater than 2.5 to 1.0.
(b) Fixed Charge Coverage Ratio. There shall be maintained
with respect to the Borrower and its Subsidiaries on a consolidated
basis as of the end of each fiscal quarter to occur through the
Maturity Date, a Fixed Charge Coverage Ratio of at least 3.0 to 1.0.
(c) Funded Debt to Total Capitalization Ratio. There shall be
maintained with respect to the Borrower and its Subsidiaries on a
consolidated basis, as of the end of each fiscal quarter to occur
through the Maturity Date, a ratio of Funded Debt to Total
Capitalization no greater than 0.50 to 1.0.
(d) Net Worth. At all times Net Worth shall be no less than
$39,900,000 increased on a cumulative basis by an amount equal to, (i)
as of the last day of each fiscal quarter, 100% of Net Income for the
fiscal quarter then ended (without deductions for any losses) plus
(ii) 100% of the Net Cash Proceeds from any Equity Issuance subsequent
to the Closing Date, minus the amount of any repurchase or redemption
by the Borrower of shares of its capital stock in accordance with the
terms of Section 8.6(b)(ii).
(e) Current Maturities Ratio. There shall be maintained with
respect to the Borrower and its Subsidiaries on a consolidated basis
as of the end of each fiscal quarter to occur through the
Maturity Date, a Current Maturities Ratio of at least 2.0 to 1.0.
7.10 USE OF PROCEEDS.
Extensions of Credit will be used solely for the purposes provided in
Section 6.14.
52
58
7.11 ADDITIONAL GUARANTIES AND STOCK PLEDGES.
(a) Domestic Subsidiaries. At any time any Person becomes a
Domestic Subsidiary of the Borrower, the Borrower will promptly notify
the Agent thereof and cause such Domestic Subsidiary to become a
Guarantor hereunder by (i) execution of a Joinder Agreement, (ii)
delivery of supporting resolutions, incumbency certificates,
corporation formation and organizational documentation and opinions of
counsel as the Agent may reasonably request, (iii) delivery of stock
certificates and a related pledge agreement, pledge joinder agreement
or collateral assignment of partnership agreement evidencing the
pledge of 100% of the Voting Stock or partnership interest, as
applicable, of such Domestic Subsidiary and of 100% of the Voting
Stock or partnership interest, as applicable, of each of such Person's
Domestic Subsidiaries and 66% of the Voting Stock or partnership
interest, as applicable, of each of its Foreign Subsidiaries, together
in each case with undated stock transfer powers executed in blank and
(iv) delivery of any UCC financing statements required by the Agent.
(b) Foreign Subsidiaries. At any time any Person becomes a
Foreign Subsidiary of the Borrower, the Borrower will promptly notify
the Agent thereof and cause (i) delivery of supporting resolutions,
incumbency certificates, corporation formation and organizational
documentation and opinions of counsel as the Agent may reasonably
request, (ii) delivery of stock certificates (where required for
perfection under local law) and a related pledge agreement, pledge
joinder agreement or collateral assignment of partnership agreement
evidencing the pledge of 66% of the Voting Stock of such Foreign
Subsidiary, together in each case with undated stock transfer powers
executed in blank and (iii) delivery of UCC financing statements or
equivalent required by the Agent.
7.12 SUBSIDIARIES.
The Borrower shall, directly or indirectly, own at all times the
capital stock or partnership interest, as applicable, of each of its
Subsidiaries in the percentage as set forth on Schedule 6.17 (or such greater
percentage as may be hereafter acquired by the Borrower to the extent permitted
hereunder).
7.12 PRINCIPAL PLACE OF BUSINESS.
Not, without providing 30 days prior written notice to the Agent and
without filing such amendments to any previously filed financing statements as
the Agent may require, change the location of its chief executive office and
principal place of business from the locations set forth on Schedule 6.18.
53
59
SECTION 8
NEGATIVE COVENANTS
Each Credit Party covenants and agrees that on the Closing Date, and
so long as this Credit Agreement is in effect and until the Commitments have
been terminated, no Loans remain outstanding and all amounts owing hereunder or
in connection herewith, have been paid in full, neither the Borrower nor any of
its Subsidiaries shall:
8.1 INDEBTEDNESS.
Contract, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness arising or existing under this Credit
Agreement and the other Credit Documents;
(b) Indebtedness set forth in Schedule 8.1, and renewals,
refinancings and extensions thereof on terms and conditions no less
favorable to the Borrower or any of its Subsidiaries, as appropriate,
than such existing Indebtedness;
(c) Indebtedness owing by one Credit Party to another
Credit Party;
(d) Indebtedness assumed in connection with a Permitted
Acquisition (so long as such Indebtedness (i) has been fully disbursed
by the lender and cannot be reborrowed following repayment and (ii)
was not incurred in anticipation of or in connection with the
respective acquisition) and renewals, refinancings and extensions
thereof on terms and conditions no less favorable to the Borrower or
any of its Subsidiaries, as appropriate, than the terms and conditions
of the Credit Agreement and the other Credit Documents, all of which
Indebtedness permitted by this Section 8.1(d), (A) in the case of
unsecured Indebtedness shall not exceed the aggregate principal amount
of $5,000,000 at any one time and (B) in the case of secured
Indebtedness, together with the Indebtedness permitted by Section
8.1(f), shall not exceed the aggregate principal amount of $1,000,000
at any one time;
(e) Subordinated Indebtedness owed to the seller in
connection with any acquisition permitted by Section 8.5 constituting
part of the purchase price thereof (so long as no more than
twenty-five percent (25%) of the principal amount of such Subordinated
Indebtedness shall be required to be repaid prior to the Maturity
Date), all of which Subordinated Indebtedness permitted by this
Section 8.1(e) together with the Indebtedness permitted by Section
8.1(d) shall not exceed the aggregate principal amount of $10,000,000
at any one time;
(f) Indebtedness with respect to Capital Leases, purchase
money Indebtedness or other unsecured Indebtedness which does not
exceed together with the secured Indebtedness permitted by Section
8.1(d), the aggregate principal amount of $1,000,000 at any time;
54
60
(g) Indebtedness and obligations owing under Hedging
Agreements entered into in the ordinary course of business to manage
existing or anticipated risks and not for speculative purposes; and
(h) (i) Indebtedness in respect of letters of credit issued
by NationsBank and (ii) indebtedness in respect of letters of credit
issued by financial institutions other than NationsBank to secure
excess liability obligations of the Borrower and its Subsidiaries in
an aggregate principal amount up to $500,000 at any one time
outstanding.
8.2 LIENS.
Contract, create, incur, assume or permit to exist any Lien with
respect to any of their respective property or assets of any kind (whether real
or personal, tangible or intangible), whether now owned or hereafter acquired,
except for Permitted Liens.
8.3 NATURE OF BUSINESS.
Alter the character of their business from that, or substantially
similar to that, conducted as of the Closing Date or engage in any business
other than the business conducted as of the Closing Date.
8.4 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS.
(a) Dissolve, liquidate or wind up their affairs or enter
into any transaction of merger or consolidation; provided, however
that (i) the Borrower may merge or consolidate with any Subsidiary so
long as the Borrower shall be the continuing or surviving corporation
and (ii) any Credit Party other than the Borrower may merge or
consolidate with any other Credit Party.
(b) Sell, lease, transfer or otherwise dispose of any
Property (including without limitation pursuant to any sale/leaseback
transaction) except (a) any Credit Party may sell, transfer or
otherwise dispose of any or all of its assets to another Credit Party;
(b) for the sale or other disposition of any property that, in the
reasonable judgment of the Borrower has become uneconomic, obsolete or
worn out, and which is sold or disposed of in the ordinary course of
business; and (c) the sale or other disposition of any property the
aggregate amount of net proceeds received in respect of which shall
not exceed $2,000,000 during the term of this Credit Agreement.
(c) Purchase or otherwise acquire (in a single transaction or
a series of related transactions) all or substantially all of the
assets or business of any Person except for Permitted Acquisitions.
55
61
8.5 ADVANCES, INVESTMENTS AND LOANS.
Lend money or extend credit or make advances to any Person, or
purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, or otherwise make an
Investment in, any Person except for Permitted Investments.
8.6 RESTRICTED PAYMENTS.
Directly or indirectly, (a) declare or pay any dividends or make any
other distribution upon any shares of its capital stock of any class or other
equity interest other than (i) stock dividends and (ii) dividends by
Subsidiaries of the Borrower to the Borrower or another Credit Party, as
applicable, (b) purchase, redeem or otherwise acquire or retire or make any
provisions for redemption, acquisition or retirement of any shares of its
capital stock of any class or other equity interest or any warrants, options or
other rights to purchase any such shares or equity interest other than (i)
Permitted Investments and (ii) a repurchase or redemption by the Borrower of
shares of its capital stock owned by employees or former employees of the
Borrower so long as such repurchases or redemptions of capital stock shall not
exceed $1,500,000 in the aggregate during the term of this Credit Agreement; or
(c) except with respect to the Loans as permitted hereunder, make any
prepayment, redemption, defeaseance or acquisition for value of (including
without limitation, by way of depositing money or securities with the trustee
with respect thereto before due for the purpose of paying when due), or refund,
refinance or exchange of any Funded Debt.
8.7 TRANSACTIONS WITH AFFILIATES.
Except as set forth on Schedule 8.7 and except for (a) loans or
advances to employees in the ordinary course of business (to the extent
permitted by clause (vi) of the definition of "Permitted Investments"), (b) the
performance of the Borrower's or any Subsidiary's obligations under any
employment contract or any other similar arrangement heretofore or hereafter
entered into in the ordinary course of business, (c) the payment of
compensation to employees, officers or directors in the ordinary course of
business , (d) customary fees or expenses paid to directors in the ordinary
course of business and (e) any repurchase or redemption of capital stock that
is permitted by Section 8.6, enter into or permit to exist any transaction or
series of transactions, whether or not in the ordinary course of business, with
any officer, director, shareholder, Subsidiary or Affiliate other than where
such transactions are on terms and conditions substantially as favorable as
would be obtainable in a comparable arm's-length transaction with a Person
other than an officer, director, shareholder, Subsidiary or Affiliate.
8.8 FISCAL YEAR.
Change its fiscal year.
56
62
8.9 LIMITATION ON RESTRICTIONS.
Create or permit to exist any restriction of any kind on the ability
of any Subsidiary to (i) pay dividends or make any other distributions to the
Borrower or any Credit Party, (ii) pay Indebtedness owed to the Borrower, (iii)
make loans or advances to the Borrower or (iv) except for any lease of a
Subsidiary with respect to office space, transfer any of its properties or
assets to the Borrower.
8.10 SALE LEASEBACKS.
Directly or indirectly, become or remain liable as lessee or as
guarantor or other surety with respect to any lease, whether an Operating Lease
or a Capital Lease, of any Property (whether real or personal or mixed),
whether now owned or hereafter acquired, (i) which such Person has sold or
transferred or is to sell or transfer to any other Person other than the
Borrower or (ii) which such Person intends to use for substantially the same
purpose as any other Property which has been sold or is to be sold or
transferred by such Person to any other Person in connection with such lease.
8.11 NO FURTHER NEGATIVE PLEDGES.
Except with respect to prohibitions against other encumbrances on
specific Property encumbered to secure payment of particular Indebtedness
(which Indebtedness relates solely to such specific Property, and improvements
and accretions thereto, and is otherwise permitted hereby), enter into, assume
or become subject to any agreement prohibiting or otherwise restricting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation.
8.12 CAPITAL EXPENDITURES.
Make or incur Capital Expenditures (i) from the Closing Date through
December 31, 1997 of more than $1,000,000, (ii) from January 1, 1998 through
December 31, 1998 of more than $8,000,000 and (ii) in any twelve month period
subsequent to December 31, 1998 of more than $6,000,000.
8.13 MANAGEMENT.
Make or permit to occur more than one change in the makeup of the
Management Group as of the Closing Date, except as may be approved in writing
in advance by the Required Lenders; provided, however, in the event of the
death of two or more members of the Management Group, the Borrower shall have a
period of 30 days to replace such deceased members of the Management Group with
individuals satisfactory to the Required Lenders, in their sole discretion,
before the Borrower shall be deemed to have violated this Section 8.13.
57
63
8.14 SUBORDINATED DEBT.
Effect or permit any change in or amendment to any document or
instrument pertaining to the subordination, or terms of payment of any
Subordinated Indebtedness, effect or permit any change in or amendment to any
document or instrument pertaining to the events of default of any Subordinated
Indebtedness if the effect of any such change or amendment is to make such
events of default more restrictive on the applicable Credit Party, or make any
payment of principal of or interest on or in redemption, retirement or
repurchase of any Subordinated Indebtedness, except for (a) the scheduled
payments of interest with respect to the Subordinated Indebtedness and (b) the
principal payments permitted by Section 8.1(e) so long as immediately before
and after giving effect to any of such payments, no Default or Event of Default
exists.
SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. The Borrower shall
(i) default in the payment when due of any principal
of any of the Loans,or
(ii) default, and such defaults shall continue for
three (3) or more Business Days, in the payment when due of
any interest on the Loans, or of any Fees or other amounts
owing hereunder, under any of the other Credit Documents or
in connection herewith or therewith; or
(b) Representations. Any representation, warranty or
statement of the Borrower or any Subsidiary made or deemed to be made
herein, in any of the other Credit Documents, or in any statement or
certificate delivered or required to be delivered pursuant hereto or
thereto shall prove untrue in any material respect on the date as of
which it was deemed to have been made; or
(c) Covenants.
(i) a default in the due performance or observance
of any term, covenant or agreement contained in Section 7.5
(a), 7.5(b), 7.9, 7.10 or 8.1 through 8.14, inclusive,
(ii) default in the due performance or observance of
any term, covenant or agreement contained in Section 7.3(a)
or 7.3(e) and such
58
64
default shall continue unremedied for a period of at least 5
days after a Responsible Officer becoming aware of such
default, or
(iii) a default in the due performance or observance
by it of any term, covenant or agreement (other than those
referred to in subsections (a), (b), or (c)(i) or (c)(ii) of
this Section 9.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at least 30
days after the earlier of a Responsible Officer of the
Borrower becoming aware of such default or notice thereof by
the Agent; or
(d) Other Credit Documents. (i) Any Credit Party shall
default in the due performance or observance of any term, covenant or
agreement in any of the other Credit Documents (subject to applicable
grace or cure periods, if any), or (ii) any Credit Document shall fail
to be in full force and effect or to give the Agent and/or the Lenders
any material part of the Liens, rights, powers and privileges
purported to be created thereby; or
(e) Bankruptcy, etc. Any Bankruptcy Event shall occur with
respect to the Borrower or any of its Subsidiaries; or
(f) Defaults under Other Agreements.
(i) The Borrower or any of its Subsidiaries shall
default in the performance or observance (beyond the
applicable grace period with respect thereto, if any) of any
obligation or condition of any contract or lease resulting in
liability of $250,000 or more in the aggregate for the
Borrower or any of its Subsidiaries; or
(ii) With respect to other Indebtedness (other than
Indebtedness outstanding under this Credit Agreement) of the
Borrower or any of its Subsidiaries in an aggregate principal
amount in excess of $250,000, (A) (1) the Borrower or any of
its Subsidiaries shall default in any payment (beyond the
applicable grace period with respect thereto, if any) with
respect to any such Indebtedness, or (2) the occurrence and
continuance of a default in the observance or performance
relating to such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any
other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to
cause, or permit, the holder or holders of such Indebtedness
(or trustee or agent on behalf of such holders) to cause
(after the giving of notice or lapse of time if required),
any such Indebtedness to become due prior to its stated
maturity; or (B) any such Indebtedness shall be declared due
and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated
maturity thereof; or
59
65
(g) Judgments. One or more judgments or decrees shall be
entered against one or more of the Credit Parties involving a
liability of $250,000 or more in the aggregate (to the extent not paid
or fully covered by insurance provided by a carrier who has
acknowledged coverage and has the ability to perform) and any such
judgments or decrees shall not have been vacated, discharged or stayed
or bonded pending appeal within 45 days from the entry thereof; or
(h) ERISA. Any of the following events or conditions, if such
event or condition could reasonably be expected to have a Material
Adverse Effect: (1) any "accumulated funding deficiency," as such term
is defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, shall exist with respect to any Plan, or any
lien shall arise on the assets of the Borrower or any of its
Subsidiaries or any ERISA Affiliate in favor of the PBGC or a Plan;
(2) an ERISA Event shall occur with respect to a Single Employer Plan,
which is, in the reasonable opinion of the Agent, likely to result in
the termination of such Plan for purposes of Title IV of ERISA; (3) an
ERISA Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the
Agent, likely to result in (i) the termination of such Plan for
purposes of Title IV of ERISA, or (ii) the Borrower or any of its
Subsidiaries or any ERISA Affiliate incurring any liability in
connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency of (within the
meaning of Section 4245 of ERISA) such Plan; or (4) any prohibited
transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) or breach of fiduciary responsibility shall occur
which may subject the Borrower or any of its Subsidiaries or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i), or 502(l)
of ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which the Borrower or any of its Subsidiaries
or any ERISA Affiliate has agreed or is required to indemnify any
person against any such liability; or
(i) Ownership. There shall occur a Change of Control.
(j) Workers Compensation. There shall occur a Material
Adverse Change to the Workers' Compensation Policy.
(k) Health Care. There shall occur a Material Adverse Change
to the Health Care Agreement.
(l) Cafeteria Plan. Any of the following events shall occur:
(a) the revocation by the Internal Revenue Service of the tax
qualified status of the Borrower's 401(k) retirement plan and/or (b)
the Internal Revenue Service determines that the "cafeteria plan" of
the Borrower does not meet the requirements of Section 125 of the
Code.
(m) Other Health Care. There shall occur a Material Adverse
Change to any Other Health Care Agreement.
60
66
9.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived in writing by the
Required Lenders (or the Lenders as may be required hereunder), the Agent
shall, upon the request and direction of the Required Lenders, by written
notice to the Borrower take any of the following actions:
(i) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(ii) Acceleration. Declare the unpaid principal of and any
accrued interest in respect of all Loans and any and all other
indebtedness or obligations of any and every kind owing by the
Borrower to the Agent and/or any of the Lenders hereunder to be due
whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.
(iii) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents and all
rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(e) shall occur, then the Commitments shall automatically terminate and all
Loans, all accrued interest in respect thereof, all accrued and unpaid Fees and
other indebtedness or obligations owing to the Agent and/or any of the Lenders
hereunder automatically shall immediately become due and payable without
presentment, demand, protest or the giving of any notice or other action by the
Agent or the Lenders, all of which are hereby waived by the Borrower.
SECTION 10
AGENCY PROVISIONS
10.1 APPOINTMENT.
Each Lender hereby designates and appoints NationsBank, N.A. as Agent
(in such capacity, the "Agent") of such Lender to act as specified herein and
the other Credit Documents, and each such Lender hereby authorizes the Agent as
the Agent for such Lender, to take such action on its behalf under the
provisions of this Credit Agreement and the other Credit Documents and to
exercise such powers and perform such duties as are expressly delegated by the
terms hereof and of the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere herein and in the other Credit Documents, the Agent shall
not have any duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Credit Agreement or any of the other Credit
Documents, or shall otherwise exist against the Agent. The provisions of this
Section are solely for the benefit of the Agent and the Lenders and
61
67
the Borrower shall have any rights as a third party beneficiary of the
provisions hereof. In performing its functions and duties under this Credit
Agreement and the other Credit Documents, the Agent shall act solely as Agent
of the Lenders and does not assume and shall not be deemed to have assumed any
obligation or relationship of agency or trust with or for the Borrower or any
of its Affiliates.
10.2 DELEGATION OF DUTIES.
The Agent may execute any of its duties hereunder or under the other
Credit Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
10.3 EXCULPATORY PROVISIONS.
The Agent and its officers, directors, employees, agents,
attorneys-in-fact or affiliates shall not be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Credit Documents (except for
its or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any of the Credit Parties contained
herein or in any of the other Credit Documents or in any certificate, report,
document, financial statement or other written or oral statement referred to or
provided for in, or received by the Agent under or in connection herewith or in
connection with the other Credit Documents, or enforceability or sufficiency
therefor of any of the other Credit Documents, or for any failure of the
Borrower to perform its obligations hereunder or thereunder. The Agent shall
not be responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Credit Agreement, or any
of the other Credit Documents or for any representations, warranties, recitals
or statements made herein or therein or made by the Borrower in any written or
oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Lenders or by or on behalf of the
Borrower to the Agent or any Lender or be required to ascertain or inquire as
to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or of the existence or possible existence of any Default
or Event of Default or to inspect the properties, books or records of the
Borrower or its Affiliates.
10.4 RELIANCE ON COMMUNICATIONS.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower, independent accountants and other experts
selected by the Agent with reasonable care). The Agent may deem and treat the
Lenders as the owner of their respective interests
62
68
hereunder for all purposes unless a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Agent in accordance with
Section 11.3(b) hereof. The Agent shall be fully justified in failing or
refusing to take any action under this Credit Agreement or under any of the
other Credit Documents unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or under any of the other
Credit Documents in accordance with a request of the Required Lenders (or to
the extent specifically provided in Section 11.6, all the Lenders) and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders (including their successors and assigns).
10.5 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or the Borrower referring to the Credit Document,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the Agent receives such a notice, the
Agent shall give prompt notice thereof to the Lenders. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders.
10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each Lender expressly acknowledges that each of the Agent and its
officers, directors, employees, agents, attorneys-in-fact or affiliates has not
made any representations or warranties to it and that no act by the Agent or
any affiliate thereof hereinafter taken, including any review of the affairs of
the Borrower or any of its Affiliates, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents
to the Agent that it has, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower or its Affiliates and made its own decision to
make its Loans hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Credit Agreement, and
to make such investigation as it deems necessary to inform itself as to the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Borrower and its Affiliates. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial or other
conditions, prospects or creditworthiness of the Borrower or its respective
Affiliates which may come into
63
69
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
10.7 INDEMNIFICATION.
The Lenders agree to indemnify the Agent in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation
of the Borrower to do so), ratably according to their respective Commitments
(or if the Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation Interests
of the Lenders), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including without limitation at
any time following the final payment of all of the obligations of the Borrower
hereunder and under the other Credit Documents) be imposed on, incurred by or
asserted against the Agent in its capacity as such in any way relating to or
arising out of this Credit Agreement or the other Credit Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or willful misconduct of the
Agent. If any indemnity furnished to the Agent for any purpose shall, in the
opinion of the Agent, be insufficient or become impaired, the Agent may call
for additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished. The agreements in this
Section shall survive the repayment of the Loans, and other obligations under
the Credit Documents and the termination of the Commitments hereunder.
10.8 AGENT IN ITS INDIVIDUAL CAPACITY.
The Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower, its
Subsidiaries or their respective Affiliates as though the Agent were not the
Agent hereunder. With respect to the Loans made by and all obligations of the
Borrower hereunder and under the other Credit Documents, the Agent shall have
the same rights and powers under this Credit Agreement as any Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" shall include the Agent in its individual capacity.
10.9 SUCCESSOR AGENT.
The Agent may, at any time, resign upon twenty (20) days' written
notice to the Borrower and the Lenders. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment within 30 days after the notice of resignation, then
the retiring Agent shall select a successor Agent provided such successor is a
Lender hereunder or a commercial bank organized under the laws of the United
States of America or of any State thereof and has a combined capital and
surplus of at least $400,000,000. Upon the acceptance of
64
70
any appointment as Agent hereunder by a successor, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations as Agent, as appropriate, under this Credit
Agreement and the other Credit Documents and the provisions of this Section 10.9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) with
receipt confirmed, to the number set out below, (iii) the day following the day
on which the same has been delivered prepaid to a reputable national overnight
air courier service, or (iv) the third Business Day following the day on which
the same is sent by certified or registered mail, postage prepaid, in each case
to the respective parties at the address or telecopy numbers set forth on
Schedule 11.1 or at such other address as such party may specify by written
notice to the other parties hereto.
11.2 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable
law or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender (including, without
limitation branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of the Borrower against obligations and
liabilities of such Person to such Lender hereunder, under the Notes, the other
Credit Documents or otherwise, irrespective of whether such Lender shall have
made any demand hereunder and although such obligations, liabilities or claims,
or any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of such Lender
subsequent thereto. Any Person purchasing a participation in the Loans and
Commitments hereunder pursuant to Section 3.12 or Section 11.3(d) may exercise
all rights of set-off with respect to its participation interest as fully as if
such Person were a Lender hereunder.
11.3 BENEFIT OF AGREEMENT.
(a) Generally. This Credit Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided that the
Borrower may not assign or transfer any of its
65
71
interests without prior written consent of the Lenders; provided
further that the rights of each Lender to transfer, assign or grant
participations in its rights and/or obligations hereunder shall be
limited as set forth in this Section 11.3, provided however that
nothing herein shall prevent or prohibit any Lender from (i) pledging
its Loans hereunder to a Federal Reserve Bank in support of borrowings
made by such Lender from such Federal Reserve Bank, or (ii) granting
assignments or selling participations in such Lender's Loans and/or
Commitments hereunder to its parent company and/or to any Affiliate or
Subsidiary of such Lender.
(b) Assignments. Each Lender may assign all or a portion of
its rights and obligations hereunder, pursuant to an assignment
agreement substantially in the form of Schedule 11.3(b), to (i) any
Lender or any Affiliate or Subsidiary of a Lender, or (ii) any other
commercial bank, financial institution or "accredited investor" (as
defined in Regulation D of the Securities and Exchange Commission)
reasonably acceptable to the Agent and, so long as no Default or Event
of Default has occurred and is continuing, the Borrower; provided that
(i) any such assignment (other than any assignment to an existing
Lender) shall be in a minimum aggregate amount of $5,000,000 (or, if
less, the remaining amount of the Commitment being assigned by such
Lender) of the Commitments and in integral multiples of $1,000,000
above such amount and (ii) each such assignment shall be of a
constant, not varying, percentage of all such Lender's rights and
obligations under this Credit Agreement. Any assignment hereunder
shall be effective upon delivery to the Agent of written notice of the
assignment together with a transfer fee of $3,500 payable to the Agent
for its own account from and after the later of (i) the effective date
specified in the applicable assignment agreement and (ii) the date of
recording of such assignment in the Register pursuant to the terms of
subsection (c) below. The assigning Lender will give prompt notice to
the Agent and the Borrower of any such assignment. Upon the
effectiveness of any such assignment (and after notice to, and (to the
extent required pursuant to the terms hereof), with the consent of,
the Borrower as provided herein), the assignee shall become a "Lender"
for all purposes of this Credit Agreement and the other Credit
Documents and, to the extent of such assignment, the assigning Lender
shall be relieved of its obligations hereunder to the extent of the
Loans and Commitment components being assigned. Along such lines the
Borrower agrees that upon notice of any such assignment and surrender
of the appropriate Note or Notes, it will promptly provide to the
assigning Lender and to the assignee separate promissory notes in the
amount of their respective interests substantially in the form of the
original Note (but with notation thereon that it is given in
substitution for and replacement of the original Note or any
replacement notes thereof). By executing and delivering an assignment
agreement in accordance with this Section 11.3(b), the assigning
Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as
follows: (i) such assigning Lender warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear
of any adverse claim; (ii) except as set forth in clause (i) above,
such assigning Lender makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement,
any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or
66
72
thereto, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, any of the
other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto or the financial condition of the Borrower
or any of its Affiliates or the performance or observance by the
Borrower of any of its obligations under this Credit Agreement, any of
the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such
assignment agreement; (iv) such assignee confirms that it has received
a copy of this Credit Agreement, the other Credit Documents and such
other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such assignment
agreement; (v) such assignee will independently and without reliance
upon the Agent, such assigning Lender or any other Lender, and based
on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Credit Agreement and the other Credit
Documents; (vi) such assignee appoints and authorizes the Agent to
take such action on its behalf and to exercise such powers under this
Credit Agreement or any other Credit Document as are delegated to the
Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all the obligations which
by the terms of this Credit Agreement and the other Credit Documents
are required to be performed by it as a Lender.
(c) Maintenance of Register. The Agent shall maintain at one
of its offices in Charlotte, North Carolina a copy of each Lender's
assignment agreement delivered to it in accordance with the terms of
subsection (b) above and a register for the recordation of the
identity of the principal amount, type and Interest Period of each
Loan outstanding hereunder, the names, addresses and the Commitments
of the Lenders pursuant to the terms hereof from time to time (the
"Register"). The Agent will make reasonable efforts to maintain the
accuracy of the Register and to promptly update the Register from time
to time, as necessary. The entries in the Register shall be conclusive
in the absence of manifest error and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of
this Credit Agreement. The Register shall be available for inspection
by the Borrower and each Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(d) Participations. Each Lender may sell, transfer, grant or
assign participations in all or any part of such Lender's interests
and obligations hereunder; provided that (i) such selling Lender shall
remain a "Lender" for all purposes under this Credit Agreement (such
selling Lender's obligations under the Credit Documents remaining
unchanged) and the participant shall not constitute a Lender
hereunder, (ii) no such participant shall have, or be granted, rights
to approve any amendment or waiver relating to this Credit Agreement
or the other Credit Documents except to the extent any such amendment
or waiver would (A) reduce the principal of or rate of interest on or
Fees in respect of any Loans in
67
73
which the participant is participating or (B) postpone the date fixed
for any payment of principal (including extension of the Maturity Date
or the date of any mandatory prepayment), interest or Fees in which
the participant is participating, and (iii) sub-participations by the
participant (except to an affiliate, parent company or affiliate of a
parent company of the participant) shall be prohibited. In the case of
any such participation, the participant shall not have any rights
under this Credit Agreement or the other Credit Documents (the
participant's rights against the selling Lender in respect of such
participation to be those set forth in the participation agreement
with such Lender creating such participation) and all amounts payable
by the Borrower hereunder shall be determined as if such Lender had
not sold such participation, provided, however, that such participant
shall be entitled to receive additional amounts under Sections 3.7,
3.8, 3.9 and 3.10 on the same basis as if it were a Lender.
11.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Agent or any Lender and the
Borrower shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Agent or any Lender would otherwise have. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or the Lenders to any other or further action
in any circumstances without notice or demand.
11.5 PAYMENT OF EXPENSES, ETC.
The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and
expenses (A) of the Agent in connection with the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the
other Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of ▇▇▇▇▇ & ▇▇▇
▇▇▇▇▇, PLLC, special counsel to the Agent, subject to the limitation contained
in a separate agreement between the Agent and the Borrower) and any amendment,
waiver or consent relating hereto and thereto including, but not limited to,
any such amendments, waivers or consents resulting from or related to any
work-out, renegotiation or restructure relating to the performance by the
Borrower under this Credit Agreement and (B) after the occurrence of a Default
or Event of Default, of the Agent and the Lenders in connection with
enforcement of the Credit Documents and the documents and instruments referred
to therein (including, without limitation, in connection with any such
enforcement, the reasonable fees and disbursements of counsel for the Agent and
each of the Lenders); (ii) pay and hold each of the Lenders harmless from and
against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Lenders harmless from and
against any and all liabilities
68
74
with respect to or resulting from any delay or omission (other than to
the extent attributable to such Lender) to pay such taxes; and (iii)
indemnify each Lender, its officers, directors, employees,
representatives and Agents from and hold each of them harmless against
any and all losses, liabilities, claims, damages or expenses incurred
by any of them as a result of, or arising out of, or in any way
related to, or by reason of (A) any investigation, litigation or other
proceeding (whether or not any Lender is a party thereto) related to
the entering into and/or performance of any Credit Document or the use
of proceeds of any Loans (including other extensions of credit)
hereunder or the consummation of any other transactions contemplated
in any Credit Document, including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding or (B) the presence or
Release of any Materials of Environmental Concern at, under or from
any Property owned, operated or leased by the Borrower or any of its
Subsidiaries, or the failure by the Borrower or any of its
Subsidiaries to comply with any Environmental Law (but excluding, in
the case of either of clause (A) or (B) above, any such losses,
liabilities, claims, damages or expenses to the extent incurred by
reason of gross negligence or willful misconduct on the part of the
Person to be indemnified).
11.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any of the other Credit Documents,
nor any of the terms hereof or thereof may be amended, changed, waived,
discharged or terminated unless such amendment, change, waiver, discharge or
termination is in writing entered into by, or approved in writing by, the
Required Lenders and the Borrower, provided, however, that:
(a) no such amendment, change, waiver, discharge or
termination shall, without the consent of each Lender directly
affected thereby, (i) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) on any Loan or fees
hereunder, (ii) extend (A) the Commitments of the Lenders, or (B) the
final maturity of any Loan, or any portion thereof, or (iii) reduce
the principal amount on any Loan;
(b) no such amendment, change, waiver, discharge or
termination shall, without the consent of each Lender affected
thereby, (i) increase the Commitments of the Lenders over the amount
thereof in effect (it being understood and agreed that a waiver of any
Default or Event of Default or of a mandatory reduction in the total
commitments shall not constitute a change in the terms of any
Commitment of any Lender), (ii) release all or substantially all of
the Collateral, (iii) release all or substantially all of the
Guarantors from the Guaranty Obligations hereunder (iv) amend, modify
or waive any provision of this Section 11.6 or Section 3.5, 3.9, 3.10,
3.11, 3.12, 9.1(a), 11.2, 11.3, 11.5 or 11.9, (v) reduce any
percentage specified in, or otherwise modify, the definition of
"Required Lenders," or (vi) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under (or in respect
of) the Credit Documents to which it is a party; and
(c) and no provision of Section 10 may be amended without the
consent of the Agent.
69
75
11.7 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary
in making proof of this Credit Agreement to produce or account for more than
one such counterpart.
11.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 SURVIVAL.
All indemnities set forth herein, including, without limitation, in
Section 3.8 (subject to the limitation set forth in such Section 3.8), Section
3.10 (subject to the limitation set forth in such Section 3.10), Section 10.7
or Section 11.5 shall survive the execution and delivery of this Credit
Agreement, the making of the Loans, the repayment of the Loans and other
obligations under the Credit Documents and the termination of the Revolving
Commitments hereunder, and all representations and warranties made by the
Borrower herein shall survive delivery of the Notes and the making of the Loans
hereunder.
11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF FLORIDA. Any legal action or proceeding with
respect to this Credit Agreement or any other Credit Document may be
brought in the courts of the State of Florida, or of the United States
located in the State of Florida, and, by execution and delivery of
this Credit Agreement, the Borrower hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally,
the nonexclusive jurisdiction of such courts. The Borrower further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to
it at the address set out for notices pursuant to Section 11.1, such
service to become effective three (3) Business Days after such
mailing. Nothing herein shall affect the right of the Agent to serve
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against the Borrower in any other
jurisdiction.
70
76
(b) The Borrower hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection
with this Credit Agreement or any other Credit Document brought in the
courts referred to in subsection (a) hereof and hereby further
irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE
LENDERS AND THE BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.11 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 ENTIRETY.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
11.13 BINDING EFFECT; TERMINATION.
(a) This Credit Agreement shall become effective at such time
on or after the Closing Date when it shall have been executed by the
Borrower and the Agent, and the Agent shall have received copies
hereof (telefaxed or otherwise) which, when taken together, bear the
signatures of each Lender, and thereafter this Credit Agreement shall
be binding upon and inure to the benefit of the Borrower, the Agent
and each Lender and their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans
or any other amounts payable hereunder or under any of the other
Credit Documents shall remain outstanding and until all of the
Commitments hereunder shall have expired or been terminated.
71
77
11.14 CONFIDENTIALITY.
The Agent and the Lenders agree to keep confidential (and to cause
their respective affiliates, officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to the Agent or any such Lender by or on behalf of the Borrower
(whether before or after the Closing Date) which relates to the Borrower or any
of its Subsidiaries (the "Information"). Notwithstanding the foregoing, the
Agent and each Lender shall be permitted to disclose Information (i) to its
affiliates, officers, directors, employees, agents and representatives in
connection with its participation in any of the transactions evidenced by this
Credit Agreement or any other Credit Documents or the administration of this
Credit Agreement or any other Credit Documents; (ii) to the extent required by
applicable laws and regulations or by any subpoena or similar legal process, or
requested by any Governmental Authority; (iii) to the extent such Information
(A) becomes publicly available other than as a result of a breach of this
Credit Agreement or any agreement entered into pursuant to clause (iv) below,
(B) becomes available to the Agent or such Lender on a non-confidential basis
from a source other than the Borrower or (C) was available to the Agent or such
Lender on a non-confidential basis prior to its disclosure to the Agent or such
Lender by the Borrower; (iv) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) first specifically agrees in a writing
furnished to and for the benefit of the Borrower to be bound by the terms of
this Section 11.14; or (v) to the extent that the Borrower shall have consented
in writing to such disclosure. Nothing set forth in this Section 11.14 shall
obligate the Agent or any Lender to return any materials furnished by the
Borrower.
11.15 TIME
All references to time herein shall be references to Eastern Standard
Time or Eastern Daylight Time, as the case may be, unless specified otherwise.
11.16 CONFLICT.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Page to Follow]
72
78
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Credit Agreement to be duly executed and delivered as of
the date first above written.
BORROWER: STAFF LEASING, INC.,
a Florida corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
GUARANTORS: STAFF ACQUISITION, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
STAFF INSURANCE, INC., a Florida
corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
STAFF CAPITAL, L.P., a Delaware
limited partnership
By its sole general partner:
Staff Acquisition, Inc., a Delaware
corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
(Signatures Continue)
79
. STAFF LEASING, L.P., a Delaware
. limited partnership
. By its sole general partner:
. Staff Acquisition, Inc.,
. a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
STAFF LEASING II, L.P., a Delaware
limited partnership
By its sole general partner:
Staff Acquisition, Inc.,
a Delaware corporation
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
STAFF LEASING III, L.P., a Delaware
limited partnership
By its sole general partner:
Staff Acquisition, Inc.,
a Delaware corporation
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
(Signatures Continue)
80
STAFF LEASING IV, L.P., a Delaware
limited partnership
By its sole general partner:
Staff Acquisition, Inc.,
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
STAFF LEASING V, L.P., a Delaware
limited partnership
By its sole general partner:
Staff Acquisition, Inc.,
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
STAFF LEASING OF GEORGIA, L.P.,
a Delaware limited partnership
By its sole general partner:
Staff Acquisition, Inc.,
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
(Signatures Continue)
81
STAFF LEASING OF ▇▇▇▇▇▇▇ ▇▇, L.P.,
a Delaware limited partnership
By its sole general partner:
Staff Acquisition, Inc.,
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
STAFF LEASING OF GEORGIA III, L.P.,
a Delaware limited partnership
By its sole general partner:
Staff Acquisition, Inc.,
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
STAFF LEASING OF TEXAS, L.P.,
a Delaware limited partnership
By its sole general partner:
Staff Acquisition, Inc.,
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
(Signatures Continue)
82
STAFF LEASING OF TEXAS II, L.P.,
a Delaware limited partnership
By its sole general partner:
Staff Acquisition, Inc.,
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
LENDERS: NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Agent
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------