▇-▇▇
▇▇▇▇▇▇▇ ▇▇. ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Resources, Inc.
Form 10-KSB
File No. 0-23170
______________________________________________________________
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 15, 1997
by and among
HEADWAY CORPORATE RESOURCES, INC.
as Borrower,
VARIOUS LENDERS
and
ING (U.S.) CAPITAL CORPORATION,
as Agent for the Lenders
______________________________________________________________
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS 1
SECTION 1.1. Defined Terms 1
SECTION 1.2. Use of Defined Terms 27
SECTION 1.3. Cross-References 27
SECTION 1.4. Accounting and Financial Determinations27
ARTICLE 2. COMMITMENTS 27
SECTION 2. 1. Term Loans and Revolving Loan Commitment27
SECTION 2. 1. 1. Term Loans.
27
SECTION 2.1.2. Revolving Loan Commitment 28
SECTION 2.1.3. Limitations on Revolving Credit Commitment
28
SECTION 2.1.4. Letter of Credit Commitment 28
SECTION 2.1.5. Notice of Issuance of Letter of Credit,
Agreement to Issue. 29
SECTION 2.1.6. Payment of Amounts drawn under Letters of
Credit, 29
SECTION 2.1.7. Payment by Lenders 30
SECTION 2.2. Changes in Advance Ratios; Establishment
of Reserves. 31
SECTION 2.2.1. Advance Ratios 31
SECTION 2.2.2. Establishment of Reserves 31
SECTION 2.3. Commitment Fee 31
SECTION 2.4. Increased Costs: Capital Adequacy 32
ARTICLE 3. LOANS AND NOTES 33
SECTION 3.1. Borrowing Procedure 33
SECTION 3.2. Notes 34
SECTION 3.3. Principal Payments 34
SECTION 3.3.1. Repayments and Prepayments 34
SECTION 3.3.2. Application 38
SECTION 3.3.3. Revolving Loans on Borrower's Behalf 38
SECTION 3.3.4. Reduction of Revolving Loan Commitment 38
SECTION 3.4. Interest 38
SECTION 3.4.1. Term Loan Rate 38
SECTION 3.4.2. Revolving Loan Rate 39
SECTION 3.4.3. Continuation Elections 39
SECTION 3.4.4. Post-Default Rates 40
SECTION 3.4.5. Payment Dates 40
SECTION 3.4.6. Rate Determinations 40
SECTION 3.4.7. Limitation on Types of Loans 40
SECTION 3.4.8. Illegality 41
SECTION 3.4.9. Treatment of Affected Loans 41
SECTION 3.4.10. Compensation
42
SECTION 3.5. Taxes 42
SECTION 3.6. Payments, Interest Rate Computations,
Other
Computations, etc. 44
SECTION 3.7. Proration of Payments 44
SECTION 3.8. Setoff 45
SECTION 3.9. Use of Proceeds 45
SECTION 3.10. Letter of Credit Obligations Absolute 45
ARTICLE 4. CONDITIONS TO LOANS 46
SECTION 4. 1. Initial Loan 46
SECTION 4. 1.1. Resolutions, etc.
46
SECTION 4.1.2. Notes 47
SECTION 4.1.3. Subsidiary Guaranty 47
SECTION 4.1.4. No Contest, etc. 47
SECTION 4.1.5. Certificate as to Completed Conditions,
Warranties,
No Default, etc. 47
SECTION 4.1.6. Opinions of Counsel 48
SECTION 4.1.7. Closing Fees, Expenses, etc., 48
SECTION 4.1.8. Security Documents and Perfection 48
SECTION 4.1.9. Employment Agreements; Compensation 49
SECTION 4.1.10. Pension and Welfare Liabilities
49
SECTION 4.1.11. Insurance
50
SECTION 4.1.12. Key Man Insurance
50
SECTION 4.1.13. Financial Information, etc.
50
SECTION 4.1.14. Solvency, etc.
50
SECTION 4.1.15. [INTENTIONALLY LEFT BLANK]
50
SECTION 4.1.16. [INTENTIONALLY LEFT BLANK]
50
SECTION 4.1.17. [INTENTIONALLY LEFT BLANK]
50
SECTION 4.1.18. Review of the Borrower's Operations
50
SECTION 4.1.19. Material Contracts
50
SECTION 4.1.20. Letter to Accountants
51
SECTION 4.1.21. Other Documents, Certificates, Etc.
51
SECTION 4.2. All Loans and Letters of Credit 51
SECTION 4.2. 1.Compliance with Warranties, No Default, e
tc., 51
SECTION 4.2.2. Request, etc. 52
SECTION 4.2.3. Satisfactory Legal Form 52
SECTION 4.2.4. Margin Regulations 52
SECTION 4.2.5. Adverse Change 52
SECTION 4.2.6. Change in Law 52
ARTICLE 5. WARRANTIES, ETC. 53
SECTION 5.1. Organization, Power, Authority, etc. 53
SECTION 5.2. Due Authorization 53
SECTION 5.3. Validity, etc., 53
SECTION 5.4. Financial Information: Solvency 53
SECTION 5.5. Material Adverse Change- 55
SECTION 5.6. Absence of Default 55
SECTION 5.7. Litigation, Legislation, etc. 55
SECTION 5.8. Regulations G, T, U and X 55
SECTION 5.9. Government Regulation 55
SECTION 5.10. Taxes 55
SECTION 5.11. Pension and Welfare Plans 55
SECTION 5.12. Labor Controversies 57
SECTION 5.13. Ownership of Properties: Collateral 58
SECTION 5.14. Intellectual Property 58
SECTION 5.15. Accuracy of Information 58
SECTION 5.16. Insurance 58
SECTION 5.17. Certain Indebtedness 59
SECTION 5.18. Environmental Matters 59
SECTION 5.19. No Burdensome Agreements 59
SECTION 5.20. Consents 59
SECTION 5.21. Contracts 59
SECTION 5.22. Employment Agreements 59
SECTION 5.23. Condition of Property 60
SECTION 5.24. Subsidiaries 60
SECTION 5.25. Trade Relations 60
ARTICLE 6. COVENANTS 60
SECTION 6.1. Affirmative Covenants. 60
SECTION 6.1.1. Financial Information, etc. 60
SECTION 6.1.2. Maintenance of Corporate Existence, etc.62
SECTION 6.1.3. Foreign Qualification 62
SECTION 6.1.4. Payment of Taxes, etc. 62
SECTION 6.1.5. Insurance 62
SECTION 6.1.6. Notice of Default, Litigation, etc. 63
SECTION 6.1.7. Books and Records 64
SECTION 6.1.8. Maintenance of Properties, Etc. 65
SECTION 6.1.9. Maintenance of Licenses and Permits 65
SECTION 6.1.10. Employee Plans
65
SECTION 6.1.11. Environmental Management.
65
SECTION 6.1.12. Compliance with Laws
65
SECTION 6.1.13. Interest Rate Protection
65
SECTION 6.1.14. Real Estate
65
SECTION 6.1.15.Underwriting Offering and Private Placeme
nt 66
SECTION 6.2. Negative Covenants, 66
SECTION 6.2.1. Business Activities 66
SECTION 6.2.2. Indebtedness 66
SECTION 6.2.3. Liens
SECTION 6.2.4. Financial Condition 68
SECTION 6.2.5. Capital Expenditures 73
SECTION 6.2.6. Lease Obligations 74
SECTION 6.2.7. Investments 75
SECTION 6.2.8. Restricted Payments, etc. 76
SECTION 6.2.9. Take or Pay Contracts: Sale/Leaseback 76
SECTION 6.2.10.Consolidation, Merger, Subsidiaries, etc.
77
SECTION 6.2.11. Asset Dispositions, etc.
77
SECTION 6.2.12. Modification of Organic Documents,
77
SECTION 6.2.13. Transactions with Affiliates
77
SECTION 6.2.14. Inconsistent Agreements
77
SECTION 6.2.15. Change in Accounting Method
78
SECTION 6.2.16. Change in Fiscal Year End.
78
SECTION 6.2.17. Compliance with ERISA
78
SECTION 6.2.18.Limitation on Restrictions on Subsidiary
Dividends 78
SECTION 6.2.19. Subsidiary Investments
78
ARTICLE 7. EVENTS OF DEFAULT 78
SECTION 7.1. Events of Default 78
SECTION 7.1.1. Non-Payment of Obligations 78
SECTION 7.1.2. Non-Performance of Certain Covenants 79
SECTION 7.1.3. Defaults Under Other Loan Documents-
Non-Performance of Other Obligations 79
SECTION 7.1.4. Bankruptcy, Insolvency, etc. 79
SECTION 7.1.5. Breach of Warranty 80
SECTION 7.1.6. Default on Other Indebtedness, etc. 80
SECTION 7.1.7. Failure of Valid, Perfected Security
Interest 80
SECTION 7.1.8. Employee Plans 80
SECTION 7.1.9. Judgments 81
SECTION 7.1.10. Cessation of Business; Dissolution
81
SECTION 7.2. Action if Bankruptcy 81
SECTION 7.3. Action if Other Event of Default 81
ARTICLE 8. THE AGENT 82
SECTION 8. 1. Actions 82
SECTION 8.2. Funding Reliance, etc. 83
SECTION 8.3. Exculpation 83
SECTION 8.4. Successor 83
SECTION 8.5. Loans by the Agent 84
SECTION 8.6. Credit Decisions 84
SECTION 8.7. Copies, etc. 84
ARTICLE 9. MISCELLANEOUS 84
SECTION 9.1. Waivers, Amendments, etc. 84
SECTION 9.2. Notices 86
SECTION 9.3. Costs and Expenses 87
SECTION 9.4. Indemnification 87
SECTION 9.5. Survival 89
SECTION 9.6. Severability 89
SECTION 9.7. Headings 89
SECTION 9.8. Counterparts, Effectiveness, etc. 89
SECTION 9.9. Governing Law; Entire Agreement 89
SECTION 9.10. Successors and Assigns 90
SECTION 9.11. Sale and Transfers, Participations, etc.90
SECTION 9.12. Other Transactions 93
SECTION 9.13. Confidentiality 93
SECTION 9.14. Change in Accounting Principles 93
SECTION 9.15. Waiver of Jury Trial, Etc. 94
SECTION 9.16. Limitation of Liability 94
SECTION 9.17. Usury Savings Clause 94
SCHEDULES AND EXHIBITS
Schedule I - Disclosure Schedule
Exhibit A - Form of Borrowing Request
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Continuation/Conversion Notice
Exhibit E-1 - Form of Revolving Note
Exhibit E-2 - Form of Term Note A
Exhibit E-3 - Form of Term Note B
Exhibit E-4 - Form of Term Note C
Exhibit F - Form of Transfer Supplement
Exhibit G - Letter of Credit Application
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT, dated
as of September 15, 1997, by and among HEADWAY CORPORATE
RESOURCES, INC., a Delaware corporation, various lenders as
are, or may from time to time become, parties hereto, and ING
(U.S.) CAPITAL CORPORATION (formerly known as Internationale
Nederlanden (U.S.) Capital Corporation), a Delaware
corporation, as Agent for the Lenders.
W I T N E S S E T H:
RECITALS.
A. The Borrower, the Agent and the Lenders have entered
into that certain Amended and Restated Credit Agreement dated
as of December 13, 1996, that certain Second Amended and
Restated Credit Agreement dated as of March 31, 1997, and that
certain Third Amended and Restated Credit Agreement dated as
of June 6, 1997 (as amended to the date hereof, the "Prior
Credit Agreement") providing certain credit facilities to the
Borrower;
B. The Borrower has requested, and the Agent and the
Lenders have agreed, to amend the Prior Credit Agreement to
increase the commitment and to make certain other amendments
as set forth herein;
C. The parties wish to amend and restate the Prior
Credit Agreement on the terms and conditions set forth below;
NOW, THEREFORE, for good and valuable consideration, the
receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE 1.
DEFINITIONS
A. SECTION 1.1 Defined Terms. The following terms
(whether or not underscored) when used in this Agreement,
including its preamble and recitals, shall, except where the
context otherwise requires, have the following meanings (such
meanings to be equally applicable to the singular and plural
forms thereof):
"Account" means any "account" (as such term is
defined in Section 9-106 of the UCC) of the Borrower or its
Eligible Subsidiaries arising from the sale or lease of goods
or providing of services in the ordinary course of business.
"Account Debtor" means any Person who is or may
become obligated to the Borrower or its Eligible Subsidiaries
under, with respect to, or on account of, an Account.
"Acquisition" means the acquisition by the Borrower
of the "Companies Stock" (as such term is defined in the
Acquisition Agreement) in exchange for the payment of the
"Preliminary Purchase Price" and the "Additional Amount" (as
such terms are defined in the Acquisition Agreement) pursuant
to the terms and conditions of the Acquisition Agreement.
"Acquisition - ASA" means the acquisition by ASA
Personnel Services, Inc. of certain assets of ASA
Temporaries, Inc. and ASA Associates, Inc. pursuant to the
Acquisition Agreement - ASA.
"Acquisition - ASS" means the acquisition by HNC of
certain assets of Advanced Staffing Solutions, Inc. pursuant
to the Acquisition Agreement - ASS.
"Acquisition Agreement" means that certain Stock
Purchase Agreement, dated as of April 10, 1996, between the
Borrower, ▇▇▇▇▇ ▇▇▇▇▇, CSA, CTS, and the Sellers, as amended,
modified or supplemented to the date hereof.
"Acquisition Agreement - ASA" means that certain
Asset Purchase Agreement, dated as of July 28, 1997 between
Borrower, ASA Personnel Services, Inc., ASA Temporaries, Inc.,
ASA Associates, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇.
"Acquisition Agreement - ASS" means that certain
Asset Purchase Agreement dated as of March 31, 1997 between
Borrower, HNC, Advanced Staffing Solutions, Inc., H. ▇▇▇▇
▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇.
"Affiliate" of any Person means any other Person
which, directly or indirectly, controls or is controlled by or
under common control with such Person (excluding any trustee
under, or any committee with responsibility for administering,
any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or
indirectly, power (a) to vote 5% or more of the securities
having ordinary voting power for the election of directors of
such Person, or (b) to direct or cause the direction of the
management or policies of such Person whether by contract or
otherwise; provided that no Lender shall be deemed to
constitute an Affiliate of the Borrower.
"Agent" means ING as agent for the Lenders pursuant
hereto, or such other Person as shall have subsequently been
appointed as the successor agent pursuant to Section 8.4.
"Agreement" means, on any date, this Amended and
Restated Credit Agreement as in effect on the date hereof and
as thereafter from time to time amended, supplemented, amended
and restated, extended or otherwise modified and in effect.
"Applicable Lending Office" means, with respect to
any Lender, the branch or office of such Lender at which Loans
of a certain type are maintained.
"Approved Acquisition Expenditures" means, in
connection with any purchase or other acquisition by Borrower
or any Subsidiary of any Temporary Staffing Business,
including the acquisition of all or substantially all of the
assets or stock of any Person (or of any operating division or
unit thereof), the net consideration paid in cash in
connection with such purchase or acquisition which shall have
been approved in advance in writing by the Required Lenders in
their discretion and (i) for which no Loan shall be made which
shall be used, directly or indirectly, to pay an aggregate
purchase price or consideration (excluding earnout payments
based upon post-acquisition actual EBITDA of the acquired
business or entity and excluding any accounts receivable and
cash acquired) exceeding 5.5 times Historical Pro Forma
Adjusted EBITDA and (ii) for which the aggregate purchase
price or consideration (excluding earnout payments based upon
post-acquisition actual EBITDA of the acquired business or
entity and excluding accounts receivable and cash acquired)
shall not exceed 6.5 times Historical Pro Forma Adjusted
EBITDA; provided, that nothing contained in this definition
shall in any event be deemed a consent to any purchase or
acquisition which is otherwise prohibited under the terms of
this Agreement or the other Loan Documents unless such
purchase or acquisition is consented to in writing by the
Required Lenders.
"ASA" means ASA Personnel Services, Inc., a Delaware
corporation.
"ASS" means Advanced Staffing Solutions, Inc., a
North Carolina corporation.
"Authorized Officer" means, relative to any Loan
Party those officers of such Loan Party whose signatures,
incumbency and authority shall have been certified to the
Agent and the Lenders pursuant to Section 4.1.1.
"Base Rate Loans" means Loans, or portions thereof,
interest rates on which are determined on the basis of the ING
Alternate Base Rate.
"Borrower" means Headway Corporate Resources, Inc.,
a Delaware corporation.
"Borrowing" means the Loans or portions thereof of
the same type and, in the case of Eurodollar Loans, having the
same Interest Period, in each case made, converted or
continued by the Lenders on the same Business Day pursuant to
the same Borrowing Request or Continuation/Conversion Notice
in accordance with Sections 3.1 or 3.4.3.
"Borrowing Request" means a loan request and
certificate duly executed by an Authorized Officer of the
Borrower in the form of Exhibit A.
"Borrower Pledge Agreement" means the Stock and
Notes Pledge Agreement, dated as of the Original Closing Date,
made by the Borrower in favor of the Agent, for its benefit
and the ratable benefit of the Lenders as originally in effect
on the Original Closing Date and as thereafter from time to
time amended, supplemented, amended and restated, extended or
otherwise modified and in effect, pursuant to which the
Borrower shall pledge to the Agent as security for the
Obligations all of the issued and outstanding Stock of its
direct Subsidiaries incorporated in the United States, sixty-
six percent (66%) of all the issued and outstanding Stock of
its direct Subsidiaries incorporated in countries other than
the United States, and all promissory notes, other instruments
and securities held by the Borrower (including without
limitation, the Subsidiary Notes).
"Borrower Trademark Assignment" means the Collateral
Assignment and Security Agreement (Trademarks), dated as of
the Original Closing Date, made by the Borrower in favor of
the Agent, for its benefit and the ratable benefit of the
Lenders, as originally in effect on the Original Closing Date
and as thereafter from time to time amended, supplemented,
amended and restated, extended or otherwise modified and in
effect.
"Borrowing Base" means an amount equal to: (a)
eighty-five percent (85%) of Eligible Accounts, as the
percentage set forth in this clause (a) may be decreased
pursuant to Section 2.2.1 hereof, minus (b) reserves
established from time to time pursuant to Section 2.2.2
hereof.
"Borrowing Base Certificate" means a certificate of
the chief executive, accounting or financial Authorized
Officer of the Borrower in the form of Exhibit B attached
hereto.
"Business Day" means:
(a) any day which is neither a Saturday or Sunday
nor a legal holiday on which banks are authorized or required
to be closed in New York, New York; and
(b) relative to the making, continuing, prepaying
or repaying of any Eurodollar Loans, any day on which dealings
in Dollars are carried on in the London interbank market.
"Capital" means the sum of Indebtedness plus net
worth, as determined in accordance with GAAP.
"Capitalized Lease Liabilities" means all monetary
obligations of the Borrower and its Subsidiaries under any
leasing or similar arrangement which, in accordance with GAAP,
are or would be classified as capitalized leases.
"Cash Equivalent Investment" means, at any time:
(a) any direct obligation issued or guaranteed by
the United States of America or any agency or instrumentality
thereof and backed by the full faith and credit of the United
States of America, or issued by any state or political
subdivision or public instrumentality thereof, (i) which has a
remaining maturity at the time of purchase of not more than
one (1) year or which is subject to a repurchase agreement
with any Lender or any Eligible Lending Institution
exercisable within one (1) year from the time of purchase so
long as such direct obligation remains in the possession of
the Borrower or in the possession of any Lender and (ii)
which, in the case of obligations of any state or political
subdivision or public instrumentality thereof, is rated AA or
better by ▇▇▇▇▇'▇ Investors Service, Inc.;
(b) certificates of deposit, time deposits, demand
deposits and bankers' acceptances, having a remaining maturity
at the time of purchase of not more than one (1) year, issued
by any Lender or by any Eligible Lending Institution;
(c) corporate obligations rated Prime-1 by ▇▇▇▇▇'▇
Investors Service, Inc. or A-1 by Standard & Poor's
Corporation, having a remaining maturity at the time of
purchase of not more than one (1) year; and
(d) shares of funds registered under the Investment
Company Act of 1940, as amended, having assets of at least
$100,000,000 which invest only in obligations described above
and which shares are rated by ▇▇▇▇▇'▇ Investors Service, Inc.
or Standard & Poor's Corporation in one of the two highest
rating categories assigned by such agencies for obligations of
such nature.
"Cash Flow" means, for any period, an amount equal
to (without duplication) the consolidated Net Income of the
Borrower and its Subsidiaries, plus depreciation, amortization
of intangible assets and other non-cash charges of the
Borrower and its Subsidiaries, minus non-cash credits and
revenues, plus decreases in the Borrower's and its
Subsidiaries' working capital (excluding changes in cash, Cash
Equivalent Investments and current maturities of
Indebtedness), minus increases in the Borrower's and its
Subsidiaries' working capital (excluding changes in cash, Cash
Equivalent Investments and current maturities of
Indebtedness).
"Change in Control" means (i) the failure of ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ to own at least 85% of the Stock of the Borrower
which he owned on the Original Closing Date, provided,
however, that any Stock of the Borrower sold or transferred to
the Borrower in satisfaction of the ▇▇▇▇▇▇▇▇▇ Note shall not
be considered for the purposes of this clause (i), or (ii) the
failure of either (A) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ to be the Chairman of
the Board and Chief Executive Officer of the Borrower and to
be actively involved in the management of the Borrower and its
Subsidiaries or (B) any two of the following individuals to be
actively involved in the management of the Borrower and its
Subsidiaries at any time prior to the third anniversary of the
Original Closing Date or, thereafter, at least one of the
following individuals to be actively involved in the
management of the Borrower and its Subsidiaries at any time
after the Original Closing Date: (1) ▇▇▇▇▇ ▇▇▇▇▇, (2) ▇▇▇▇▇▇▇
List, and (3) ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, (iii) the acquisition by any
Person or group of Persons of beneficial ownership of more
than 20% of the outstanding Stock of the Borrower (within the
meaning of Section 13(d) or 14(d) of the Securities and
Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder); provided, however, that this clause
(iii) shall not apply to an underwriter(s) who acquires Stock
of the Borrower in connection with a public offering of Stock
of the Borrower which is being underwritten by such
underwriter(s), or (iv) during any period of 12 consecutive
months (whether commencing before or after the Original
Closing Date), the failure of individuals who on the first day
of such period were directors of the Borrower (together with
any replacement or additional directors who were nominated or
elected by a majority of directors then in office) to
constitute a majority of the Board of Directors of the
Borrower.
"Charges" means all federal, state, county, city,
municipal, local, foreign or other governmental (including,
without limitation, PBGC) (a) taxes at the time due and
payable and (b) levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Collateral, (ii) the
Obligations, (iii) the Borrower's and its Subsidiaries'
employees, payroll, income or gross receipts, (iv) the
Borrower's and its Subsidiaries' ownership or use of their
assets, or (v) any other aspect of the Borrower's and its
Subsidiaries' business.
"Closing Date" means September 15, 1997.
"Collateral" means all property and interests in
property and proceeds thereof now owned or hereafter acquired
by the Borrower or any Subsidiary in or upon which a Lien is
granted to the Agent, for its benefit and the ratable benefit
of the Lenders, under any of the Loan Documents.
"Commitment" means, collectively, the Revolving Loan
Commitments, the Term Loan Commitment and the Letter of
Credit Commitment.
"Commonly Controlled Entity" means, with respect to
any Person, an entity or trade or business, whether or not
incorporated, which is from time to time a member of a
controlled group or a group under common control with such
Person within the meaning of Sections 414(b), 414(c), 414(m)
or 414(o) of the IRC or Section 4001(a)(14) of ERISA. Unless
otherwise indicated in this Agreement, Commonly Controlled
Entity shall refer to a Commonly Controlled Entity with
respect to the Borrower.
"Compliance Certificate" means a certificate duly
executed by the chief executive, operating, accounting or
financial Authorized Officer of the Borrower in the form of
Exhibit C, together with such changes as the Required Lenders
may from time to time reasonably request through the Agent for
purposes of monitoring the Borrower's compliance herewith.
"Consolidated Capital Expenditures" means, for any
period, without duplication, the sum of (a) the gross dollar
amount of additions during such period to property, plant,
equipment and other fixed assets of the Borrower and its
Subsidiaries, including those additions made in the ordinary
course of business, but excluding routine maintenance and
repairs, plus (b) the aggregate amount of Capitalized Lease
Liabilities incurred during such period by the Borrower and
its Subsidiaries.
"Continuation/Conversion Notice" means a notice of
continuation or conversion and certificate duly executed by
the chief executive, accounting or financial Authorized
Officer of the Borrower in the form of Exhibit D attached
hereto.
"Contract" means any agreement or agreements
pursuant to or under which an Account Debtor shall be
obligated to pay for services rendered or merchandise sold to
any Person from time to time.
"Contractual Obligation" means, relative to any
Person, any provision of any security issued by such Person or
of any Instrument or undertaking to which such Person is a
party or by which it or any of its property is bound.
"CSA" means Corporate Staffing Alternatives, Inc., a
New York corporation which is a wholly-owned Subsidiary of
HCSS.
"CTS" means Certified Technical Staffing, Inc., a
New York corporation which is a wholly-owned Subsidiary of
HCSS.
"Current Ratio" means, at any date, the ratio at
such date of (a) current assets at such date, to (b) current
liabilities excluding current maturities of the Obligations
at such date, determined on a consolidated basis for the
Borrower and its Subsidiaries in accordance with GAAP and
excluding the Earnout.
"Default" means any Event of Default or any
condition or event which, after notice or lapse of time or
both, would constitute an Event of Default.
"Disclosure Schedule" means the Disclosure Schedule
attached hereto as Schedule 1, as it may be amended,
supplemented or otherwise modified from time to time by the
Borrower with the consent of the Required Lenders as provided
in Section 4.2.2.
"Dollar" and the sign "$" mean lawful money of the
United States.
"Earnout" means the deferred amounts due to the
sellers under the Acquisition Agreement - ASS up to a maximum
amount of $3,000,000.
"Earnout - ASA" means the deferred amounts due to
the sellers under the Acquisition Agreement - ASA.
"EBITDA" means, for any period, an amount equal to
Net Income plus (to the extent deducted in determining Net
Income) interest expense, provisions for income taxes,
depreciation, amortization of intangible assets and other non-
cash charges, minus (to the extent included in determining Net
Income) non-cash credits and revenues, in each case for the
Borrower and its Subsidiaries on a consolidated basis.
"Eligible Accounts" means the net outstanding
balance, less all finance charges, late fees and other fees
which are unearned, of all Accounts of the Borrower and its
Eligible Subsidiaries, provided that no Account shall be
deemed eligible if:
(a) any representation or warranty contained in
this Agreement, the Security Agreement or any of the other
Loan Documents applicable either to Accounts in general or to
any such specific Account has been breached as of any date
made in any material respect with respect to such Account;
(b) fifty percent (50%) or more of the outstanding
Accounts from the Account Debtor are ineligible;
(c) the Account Debtor has (i) become insolvent or
generally failed to pay, or admitted in writing its inability
to pay, debts as they become due, (ii) applied for, consented
to, or acquiesced in, the appointment of a trustee, receiver,
sequestrator or other custodian for such Account Debtor or any
property thereof or made a general assignment for the benefit
of creditors, (iii) in the absence of such application,
consent or acquiescence, permitted or suffered to exist the
appointment of a trustee, receiver, sequestrator or other
custodian for such Account Debtor or for a substantial part of
its property, or (iv) permitted or suffered to exist the
commencement of any bankruptcy, reorganization, debt
arrangement or other case or proceeding under any bankruptcy
or insolvency law or any dissolution, winding up or
liquidation proceeding in respect of such Account Debtor;
(d) such Account is billed on other than standard
terms of payment;
(e) as of any date, such Account has remained
unpaid for a period exceeding 90 days after the due date of
the invoice issued with respect thereto;
(f) the sale represented by such Account is to an
Account Debtor outside the United States, unless the payment
of such Account is backed by a letter of credit denominated in
Dollars issued or confirmed by a United States bank or a
foreign bank with an office located in the United States, in
each case acceptable to the Agent and on terms acceptable to
the Agent, and the Agent has received an assignment of the
Borrower's or its Eligible Subsidiary's rights under such
letter of credit or acceptance or has been irrevocably
designated the payee of such letter of credit or acceptance;
(g) the Account Debtor is an Affiliate or employee
of the Borrower or any Subsidiary;
(h) the Account is subject to any set-off by the
Account Debtor, in which event such Account will be deemed
ineligible to the extent of such set-off;
(i) the Account is denominated in other than
Dollars or is payable outside the United States;
(j) based on the customary credit decisions of the
Agent, collection of such Account is insecure for any reason
or there is a reasonable probability that such Account may not
be paid provided that no such Account shall be excluded unless
the Agent shall have given to the Borrower not less than ten
(10) days prior written notice;
(k) the Account is subject to a material claim or
dispute by the Account Debtor;
(l) the Account is subject to any Lien whatsoever,
other than Liens in favor of the Agent, for its benefit and
the ratable benefit of the Lenders;
(m) the Account is not evidenced by an invoice or
other writing in form reasonably acceptable to the Agent;
(n) the Account is evidenced by chattel paper or an
instrument unless such chattel paper or instrument is pledged
to the Agent as security pursuant to the Borrower Pledge
Agreement or the Subsidiary Pledge Agreement;
(o) the Account or Accounts represent, individually
or when aggregated with all other outstanding Accounts of the
same Account Debtor, (i) more than fifteen percent (15%) of
the net outstanding balance of all Eligible Accounts of the
Borrower and the Eligible Subsidiaries (on a consolidated
basis) then outstanding for all Account Debtors other ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and Affiliates or (ii) more than twenty
percent (20%) of the net outstanding balance of all Eligible
Accounts of the Borrower and the Eligible Subsidiaries (on a
consolidated basis) then outstanding for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
and Affiliates as Account Debtor;
(p) the Account or Accounts exceed any credit limit
established by the Borrower or its Eligible Subsidiary (which
limit shall be reasonably satisfactory to the Agent) for the
Account Debtor based on the Borrower's customary credit
considerations, in which case such Account or Accounts will be
deemed ineligible to the extent of such excess;
(q) the Borrower or its Eligible Subsidiary, in
order to be entitled to collect such Account (or, if such
Account is evidenced by multiple invoices, the amount of such
Account evidenced by any such invoice), is required to perform
any additional service for, or perform or incur any additional
obligation to, the Account Debtor in respect of such Account
(or amount so invoiced);
(r) the Account is an account of the United States
government or any agency or instrumentality of the United
States, unless the Borrower or its Subsidiary has complied
with the requirements of the Federal Assignment of Claims Act
(31 U.S.C. 3727), or the Account is an account of any state
government or agency thereof unless the Borrower or its
Eligible Subsidiary has complied with any state assignment of
claims or similar laws relative to the assignment of such
Account to and the right to receive payment thereof by, the
Agent, for its benefit and the ratable benefit of the Lenders;
(s) the Borrower or its Eligible Subsidiary, as the
case may be, has not submitted all necessary documentation or
supplied all necessary information to the Account debtor for
payment of such Account or has not fulfilled all other
obligations in respect thereof, including verification of the
eligibility of the Account for payment by such Account Debtor;
(t) the Account or the Contract related thereto
contravenes in any material respect any laws, rules or
regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to usury, consumer
protection, truth-in-lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection
practices and privacy) or any party related to such Contract
is in violation of any such law, rule or regulation in any
material respect;
(u) the Account Debtor is located in the State of
Minnesota or any other state imposing conditions on the right
of a foreign (out-of-state) creditor to collect accounts
receivable from Accounts Debtors located in such state, and
the Borrower or the Eligible Subsidiary has not satisfied such
conditions for the then current year;
(v) the Account has not been adjusted to reflect
reimbursement policies of the Account Debtor with respect
thereto including, without limitation, any capitation
arrangement, fee schedule, discount formula, cost-based
reimbursement, or other adjustment or limitation to the usual
charges; and
(w) the related Contract is not, or was not at the
time of the services giving rise to the Account, in full force
and effect, such Contract does not constitute the legal, valid
and binding obligation of the Account Debtor enforceable
against such Account Debtor in accordance with its terms, or
such account was not created in accordance with the
requirements of the Contract or applicable Requirements of
Law, including, without limitation, compliance with any
restrictions on fees or charges.
The determination by the Agent that any Account shall be
deemed ineligible by virtue of its being described by one of
such categories shall not be deemed to indicate that such
Account may not also be deemed ineligible by virtue of being
described by any other such category or to preclude the Agent
from reclassifying such Account into such other category,
should the Account cease to be described by the first such
category.
"Eligible Lending Institution" means a financial
institution having a branch or office in the United States and
having capital and surplus and undivided profits aggregating
at least $100,000,000 and rated Prime-1 or better by ▇▇▇▇▇'▇
Investors Service, Inc. or A-1 or better by Standard & Poor's
Corporation.
"Eligible Subsidiaries" means, collectively, (a)
Furash, (b) Whitney Partners, (c) HCSS, (d) ▇▇▇▇▇ ▇▇▇▇▇, (e)
CSA, (f) CTS, (g) Headway Personnel, (h) HNC, (i) ASA, and any
other Subsidiary which executes and delivers to the Agent a
Subsidiary Note, a joinder in all appropriate Security
Documents and such other documents as the Lenders may require.
"Eligible Subsidiary" means any of the Eligible
Subsidiaries.
"Environment" means soil, surface waters, ground
waters, land, streams, sediments, surface or subsurface strata
and ambient air.
"Environmental Laws" means all federal, state, local
and foreign laws or regulations, codes, common law, consent
agreements, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder relating to
pollution or protection of the Environment, natural resource
or occupational health and safety.
"Environmental Liabilities and Costs" means all
liabilities, obligations, responsibilities, remedial actions,
losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including all reasonable
fees, disbursements and expenses of counsel, expert and
consulting fees and costs of investigation and feasibility
studies), fines, penalties, settlement costs, sanctions and
interest incurred as a result of any claim or demand, by any
Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, any
Environmental Law, permit, order, variance or agreement with a
Governmental Authority or other Person, arising from or
related to the administration of any Environmental Law or
arising from environmental, health or safety conditions or a
release or threatened release resulting from the past, present
or future operations of the Borrower or its Subsidiaries or
affecting any of their properties, or any release or
threatened release for which the Borrower or any of its
Subsidiaries is otherwise responsible under any Environmental
Law.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute of
similar import, together with the regulation thereunder, in
each case as in effect from time to time. References to
sections of ERISA also refer to any successor sections.
"ERISA Insolvency" or "ERISA Insolvent" means, at
any particular time, a Multiemployer Pension Plan is insolvent
within the meaning of Section 4245 of ERISA.
"Eurodollar Base Rate" means, with respect to any
Borrowing of Eurodollar Loans for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/16 of 1%) which appears on Telerate Page 3750
for Dollar deposits comparable to the amount of such Borrowing
in the London interbank market as of 11:00 a.m. London time
(or as soon thereafter as practicable) on the date two (2)
Business Days prior to the first day of such Interest Period
having a term comparable to such Interest Period. If such
Telerate Page is unavailable, the "Eurodollar Base Rate" shall
mean with respect to any Borrowing of Eurodollar Loans for any
Interest Period therefor, the arithmetic average (rounded
upwards, if necessary, to the nearest 1/16 of 1%) of the rates
per annum which appear on the Reuters Screen LIBO Page, or if
such Reuters Screen LIBO Page is unavailable, the "Eurodollar
Base Rate" shall mean with respect to any Borrowing of
Eurodollar Loans for any Interest Period therefor, the
arithmetic average (rounded upwards, if necessary, to the
nearest 1/16 of 1%) of the rates per annum for Dollar deposits
comparable to the amount of such Borrowing offered to each of
the Reference Lenders in the London interbank market as of
11:00 a.m. London time (or as soon thereafter as practicable)
on the date two (2) Business Days prior to the first day of
such Interest Period of Dollar deposits having a term
comparable to such Interest Period.
"Eurodollar Loans" means Loans or portions thereof
interest rates on which are determined on the basis of the
Eurodollar Rate.
"Eurodollar Rate" means, with respect to any
Borrowing of Eurodollar Loans for any Interest Period
therefor, the rate per annum (rounded upward, if necessary, to
the nearest 1/16 of 1%) determined by the Agent to be equal to
(i) the Eurodollar Base Rate for such Borrowing for such
Interest Period divided by (ii) one (1) minus the Reserve
Requirement. The Eurodollar Rate for any Interest Period will
be determined initially by the Agent on the basis of the
Reserve Requirement in effect on the date two (2) Business
Days prior to the commencement of such Interest Period and,
from time to time thereafter during such Interest Period, such
Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in the Reserve Requirement
during such Interest Period.
"Event of Default" means any of the events set forth
in Section 7.1.
"Excess Cash Flow" means, for any Fiscal Year, the
excess of : (a) Cash Flow for such Fiscal Year minus (b) the
sum of (i) the lesser of the amount of Consolidated Capital
Expenditures permitted during such Fiscal Year pursuant to
Section 6.2.5 and actual Consolidated Capital Expenditures
during such Fiscal Year, provided, however, that to the extent
that such Consolidated Capital Expenditures are funded with
Capitalized Leases or Purchase Money Indebtedness, only the
annual principal amount of payments shall be included under
this clause (i), plus (ii) repayments of the Term Loan during
such Fiscal Year pursuant to clauses (c), (d) and (e) of
Section 3.3.1 and repayments by Borrower or any of its
Subsidiaries of promissory notes issued in connection with any
Acquisition approved hereunder, minus (c) Approved Acquisition
Expenditures to the extent not funded with Term Loan C, plus
the Earnout payments and Earnout ASA payments associated with
Approved Acquisition Expenditures to the extent not funded
with Term Loan C.
"Facility Fee Letter" means the letter agreement,
dated as of the Closing Date, between ING and the Borrower.
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day during
such period to:
(a) the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New
York; or
(b) if such rate is not so published for any day
which is a Business Day, the arithmetic average of the
quotations for such transactions received by the Agent, in its
sole discretion, either from (i) three federal funds brokers
of recognized standing selected by the Agent in its sole
discretion or (ii) the Reference Lenders.
"Financing Statements" means the financing
statements under the Uniform Commercial Codes of the
applicable jurisdictions, filed with respect to the Security
Documents pursuant to clause (c) of Section 4.1.8.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means, subject to Sections 6.2.16 and
9.14 (b), each twelve-month accounting period ending December
31. References to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "1996 Fiscal Year") refer to
the Fiscal Year ending on December 31 in such calendar year.
"Fixed Charge Coverage Ratio" means, for any period,
the ratio of (a) EBITDA for such period to (b) Fixed Charges
during such period.
"Fixed Charges" means, for any period, the sum of
(a) Interest Expense during such period, plus (b) scheduled
repayments of Indebtedness (including, without limitation,
scheduled payments of principal in respect of Capitalized
Lease Liabilities), plus (c) Consolidated Capital Expenditures
by the Borrower and its Subsidiaries during such period (but
excluding any Capitalized Lease Liabilities included within
such Consolidated Capital Expenditures), plus (d) provisions
for taxes for such period.
"Foreign Lender" means any Lender organized under
the laws of a jurisdiction outside the United States.
"F.R.S. Board" means the Board of Governors of the
Federal Reserve System (or any successor).
"Furash" means Furash & Company, Inc., a Maryland
corporation which is a wholly-owned Subsidiary of the
Borrower.
"GAAP" means generally accepted accounting
principles in effect from time to time in the United States.
"▇▇▇▇▇▇▇▇▇ Note" means that certain promissory note
dated May 31, 1996 made by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ payable to the
order of the Borrower in the original principal amount of
$1,065,722 and having a balance on the Closing Date of
$928,189.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof
and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"HCSS" means Headway Corporate Staffing Services,
Inc., a Delaware corporation which is a wholly owned
Subsidiary of the Borrower.
"Headway Personnel" means Headway Personnel, Inc., a
Delaware corporation which is a wholly-owned Subsidiary of
HCSS.
"herein", "hereof", "hereto", "hereunder" and
similar terms contained in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular
Section, clause or provision of this Agreement or such other
Loan Document.
"Historical Pro Forma Adjusted EBITDA" means
trailing twelve month historical EBITDA adjusted for
reasonable non-recurring expenses to reflect historical
financial performance of the acquisition target as if Borrower
had been the owner and operator of such business, as adjusted
by the Borrower in accordance with GAAP.
"HNC" means Headway Corporate Staffing Services of
North Carolina, Inc., a Delaware corporation which is a wholly-
owned subsidiary of HCSS.
"Incepta Shares" means all shares of stock of
Incepta Group plc, an English company, owned by the Borrower
and its Subsidiaries which, as of the Closing Date, is equal
to 8,853,476 ordinary shares.
"including" means including without limiting the
generality of any description preceding such term.
"Indebtedness" of any Person means, without
duplication:
(a) all obligations of such Person for borrowed
money (including all notes payable and drafts accepted
representing extensions of credit) and all obligations of such
Person evidenced by bonds, debentures, notes or other similar
instruments on which interest charges are customarily paid;
(b) all obligations, contingent or otherwise,
relative to the face amount of all letters of credit, whether
or not drawn, and banker's acceptances issued for the account
of such Person;
(c) all Capitalized Lease Liabilities of such
Person (to the extent required by GAAP to be included on the
balance sheet of such Person);
(d) whether or not so included as liabilities in
accordance with GAAP (i) all obligations of such Person to pay
the deferred purchase price of property or services (excluding
trade accounts payable for other than borrowed money arising
in the ordinary course of business) and indebtedness secured
by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or
other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is
limited in recourse, and (ii) all obligations of such Person
in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise assure a creditor
against loss in respect of, Indebtedness of another Person;
(e) all net obligations of such Person under
Interest Rate Contracts; and
(f) all obligations of such Person to redeem,
purchase or otherwise retire or extinguish any of its Stock at
a fixed or determinable date (whether by operation of a
sinking fund or otherwise), at another's option or upon the
occurrence of a condition not solely within the control of
such Person (e.g., redemption from future earnings).
"Indemnified Liabilities" means any and all actions,
causes of action, suits, losses, costs, liabilities, damages
and expenses incurred by or asserted or awarded against any
Lender Party and against which the Borrower has indemnified
the Lender Parties as provided in Section 9.4.
"ING" means ING (U.S.) Capital Corporation, a
Delaware corporation.
"ING Alternate Base Rate" means a fluctuating rate
of interest per annum equal to the higher of:
(a) the arithmetic average of rates of interest
announced by each of the Reference Lenders from time to time
at such Reference Lender's principal New York City office as
its prime (or base) rate for U.S. domestic commercial loans;
and
(b) the Federal Funds Rate from time to time in
effect plus 1/2 of 1% (0.50%).
Changes in the rate of interest on the Base Rate Loans shall
take effect on the date of each change in the ING Alternate
Base Rate. The Agent shall give notice promptly to the
Borrower and the Lenders of changes in the ING Alternate Base
Rate.
"Instrument" means any contract, agreement, letter
of credit, indenture, mortgage, deed, certificate of title,
document or writing (whether by formal agreement, letter or
otherwise) under which any obligation is evidenced, assumed or
undertaken, any Lien (or right or interest therein) is granted
or perfected, or any property (or right or interest therein)
is conveyed.
"Intellectual Property" means, collectively, (a)
patents, patent rights and patent applications, copyrights and
copyright applications, trademarks, trademark rights, trade
names, trade name rights, service marks, service ▇▇▇▇ rights,
applications for registration of trademarks, trade names and
service marks, fictitious names registrations and trademark,
trade name and servicemark registrations, including, without
limitation, the names Whitney Group, Viva, On-Line, Vogue and
Vogue Personnel Services, Inc. and all derivations thereof,
and (b) patent licenses, trademark licenses, copyright
licenses and other licenses to use any of the items described
in clause (a), or any other items necessary to conduct or
operate the business of the Borrower and its Subsidiaries.
"Interest Coverage Ratio" means, for any period, the
ratio of (a) EBITDA for such period to (b) Interest Expense
during such period.
"Interest Expense" means, for any period, the sum of
the Borrower's consolidated interest expense accrued during
such period in respect of all Indebtedness of the Borrower and
its Subsidiaries.
"Interest Period" means, relative to any Eurodollar
Loans comprising part of the same Borrowing, the period
beginning on (and including) the date on which such Eurodollar
Loans are made or continued as, or converted into, Eurodollar
Loans pursuant to Section 3.1 or Section 3.4.3 and ending on
(but excluding) the date which numerically corresponds to such
date one, two, three or six months thereafter (or, if such
month has no numerically corresponding date, on the last
Business Day of such month), in either case as the Borrower
may select in its relevant notice pursuant to Section 3.1 or
Section 3.4.3; provided, however, that:
(a) the Borrower shall not be permitted to select
Interest Periods to be in effect at any one time which have
expiration dates occurring on more than five (5) dates with
respect to the Term Loans and two (2) dates with respect to
the Revolving Loans;
(b) if such Interest Period would otherwise end on
a day which is not a Business Day, such Interest Period shall
end on the next following Business Day (unless such next
following Business Day is the first Business Day of a calendar
month, in which case such Interest Period shall end on the
Business Day next preceding such numerically corresponding
date);
(c) in the case of Interest Periods for Revolving
Loans, no such Interest Period may end later than the Stated
Maturity Date for Revolving Loans; and
(d) in the case of Interest Periods for the Term
Loans no such Interest Period may end later than (i) the
Stated Maturity Date of the Term Loans or (ii) the date of any
principal repayment with respect to the Term Loans as set
forth in clauses (c), (d), and (e) of Section 3.3.1, if on
such date the Borrower otherwise would be required to repay
any portion of any Borrowing prior to the end of the Interest
Period relative to such Borrowing.
"Interest Rate Contract" means any interest rate cap
agreement, interest rate collar agreement, interest rate swap
agreement or other agreement or arrangement designed to
protect against fluctuations in interest rates.
"Internal Revenue Service" means the Internal
Revenue Service of the United States of America.
"Investment" means, relative to any Person:
(a) any loan or advance made by such Person to any
other Person (excluding commission, travel and similar
advances to officers, employees and consultants made in the
ordinary course of business);
(b) any ownership or similar interest held by such
Person in any other Person; and
(c) the purchase of any debt or equity securities
or instruments issued by any other Person (including, without
limitation, Stock, notes, debentures, drafts and acceptances,
trust certificates, partnership interests or units or
membership interests in limited liability companies).
The amount of any Investment of the nature referred to in
clause (a) or (b) shall be the original principal or capital
amount thereof less all returns of principal or equity thereon
(and without adjustment by reason of the financial condition
of such other Person) and shall, if made by the transfer or
exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the
fair market value of such property.
"IRC" means the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect
from time to time. References to sections of the IRC also
refer to any successor sections.
"▇▇▇▇▇ ▇▇▇▇▇" means ▇▇▇▇▇ ▇▇▇▇▇ Temps, Inc., a New
York corporation which is a wholly-owned Subsidiary of HCSS.
"Lender" means any of the various lenders as are, or
may from time to time become, parties to this Agreement.
"Lender Parties" means, collectively, the Agent and
each Lender, and each of their respective successors and
assigns, and each of the respective officers, directors,
employees, attorneys and agents of the Agent and each Lender
and of each of their respective successors and assigns,
indemnified by the Borrower as provided in Section 9.4.
"Letter of Credit Commitment" means the collective
commitments of the Lenders to issue, or jointly apply for,
Letters of Credit, not in excess of $500,000 in the aggregate,
pursuant to Section 2.1.4 if the conditions set forth in
Section 4.1 and 4.2 are met.
"Letter of Credit Percentage" of any Lender means,
at any time, in respect of the Letters of Credit, the
percentage set forth opposite such Lender's signature hereto
under the caption "Percentage," as the same may be adjusted
pursuant to Section 9.11.
"Letters of Credit" means the letters of credit
issued pursuant to Article 2 hereof for the account of the
Borrower or an Eligible Subsidiary, or the joint account with
the Agent, pursuant to the Letter of Credit Commitments.
"Leverage Ratio" means, for any period, the ratio of
(a) the aggregate outstanding principal amount of Indebtedness
of the Borrower and its Subsidiaries as of the last day of
such period to (b) EBITDA for such period.
"Lien" means any mortgage, pledge, hypothecation,
assignment, charge, deposit arrangement, encumbrance, lien
(statutory or other), adverse claim or preference, priority
or other security agreement or preferential arrangement of any
kind or nature whatsoever (including any conditional sale or
other title retention agreement, any financing lease involving
substantially the same economic effect as any of the foregoing
and the filing of any financing statement under the UCC or
comparable law of any jurisdiction).
"Loan" means, as the context may require, the Term
Loans or the Revolving Loans.
"Loan Documents" means, collectively, this
Agreement, the Notes, the Letters of Credit, each Security
Document, each Borrowing Request, any Interest Rate Contract
entered into by the Borrower with a Lender that has executed
and delivered to the Agent an acknowledgment in the form of
Exhibit F, and each other Instrument executed and delivered by
the Borrower as of the date hereof or at any time thereafter,
in connection with the transactions contemplated by this
Agreement, in each case, as amended, modified or supplemented
from time to time.
"Loan Party" means any of the Borrower, its
Subsidiaries which is a party to any of the Loan Documents.
"Loss" means any loss, damage, destruction, theft,
or seizure of, or any other casualty with respect to, or any
condemnation of, any property or asset of any Person in an
amount in excess of $100,000 individually or $250,000 in the
aggregate for any Fiscal Year; and the "amount" of any Loss
means (i) if such asset or property is repaired or replaced,
the greater of (A) the cost to repair or replace the property
or asset that was the subject of such Loss and (B) the amount
of insurance proceeds or condemnation awards payable as a
result of such Loss, and (ii) if such asset or property is not
repaired or replaced, the amount of insurance proceeds or
condemnation awards payable as a result of such loss.
"Material Adverse Change" means a material adverse
change in (a) the condition (financial or otherwise),
operations, performance, business, properties or prospects of
the Borrower and its Subsidiaries taken as a whole; or (b) the
rights and remedies of the Lenders or the Agent under the Loan
Documents; or (c) the ability of the Borrower to repay the
Obligations or of the Borrower or any Subsidiary to perform
their respective obligations under the Loan Documents; or (d)
the legality, validity or enforceability of any Loan Document;
or (e) the Liens granted the Agent pursuant to the Security
Documents.
"Maturity" means relative to any Loan or portion
thereof, the earlier of such Loan's Stated Maturity Date or
such other date when such Loan or portion thereof shall be or
become due and payable in accordance with the terms of this
Agreement, whether by required repayment, prepayment,
declaration or otherwise.
"Mortgage" means any mortgage, deed of trust, deed
to secure debt, leasehold mortgage, leasehold deed of trust or
leasehold deed to secure debt covering real property, as such
instruments are originally executed or supplemented, amended,
renewed, extended or otherwise modified from time to time.
"Multiemployer Pension Plan" means a Multiemployer
Plan which is subject to Subtitle E of Title IV of ERISA.
"Multiemployer Plan" means a Plan which is a
"multiemployer plan" within the meaning of Section 3(37) of
ERISA.
"Net Disposition Proceeds" means, with respect to
any disposition of the assets of the Borrower or any
Subsidiary, the excess of: (a) the gross cash proceeds
received by the Borrower or any Subsidiary from such
disposition (including any cash proceeds subsequently received
in respect of notes and other non-cash proceeds received by
the Borrower or any of its Subsidiaries from such
disposition), minus (b) the sum of (i) all reasonable out-of-
pocket fees and expenses incurred in connection therewith,
plus (ii) all taxes paid or payable in connection with such
sale.
"Net Income" means, as to any Person, for any
period, the net income (or loss) of such Person for such
period, determined in accordance with GAAP, but excluding
extraordinary gains or losses for such period.
"Net Indebtedness Proceeds" means, with respect to
the issuance or incurrence by the Borrower or any Subsidiary
of any Indebtedness, the excess of: (a) the gross cash
proceeds received by the Borrower or any Subsidiary from such
Indebtedness, minus (b) all reasonable out-of-pocket fees and
expenses incurred in connection therewith.
"Net Securities Proceeds" means, with respect to the
issuance or sale by the Borrower or any Subsidiary of any
equity securities (not including upon the exercise of existing
stock options or employee stock options or any dividend
investment plan), the excess of: (a) the gross cash proceeds
received by the Borrower or any Subsidiary from such issuance
and sale minus (b) all reasonable out-of-pocket fees and
expenses incurred in connection with such issuance and sale.
"Note" means, as the context may require, any Term
Note or any Revolving Note.
"Notes" means, collectively, the Term Notes and the
Revolving Notes.
"Obligations" means all payment and performance
obligations of the Loan Parties (monetary or otherwise)
arising under or in connection with this Agreement, the Notes,
the Letters of Credit and the other Loan Documents.
"Organic Document" means, relative to any Person,
its articles or certificate of incorporation or organization
or certificate of limited partnership or organization, its
bylaws, partnership or operating agreement or other
organizational documents, and all stockholders agreements,
voting trusts and similar arrangements applicable to any of
its Stock or partnership interests or other ownership
interests.
"Original Closing Date" means May 31, 1996.
"Participant" means the banks or other entities that
purchase participating interests in any Loan, Note, Revolving
Loan Commitment, or Letter of Credit or other interest
hereunder, as provided in clause (a) of Section 9.11.
"PBGC" means the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all of its
functions under ERISA.
"Pension Plan" means any Plan which is subject to
the provisions of Title IV of ERISA, or to the provisions of
Section 302 of ERISA or Section 412 of the IRC.
"Percentage" means, as the context requires, either
(a) the Revolving Percentage, (b) the Term Percentage, (c) the
Letter of Credit Percentage or (d) all of the above.
"Person" means any natural person, corporation,
partnership, limited liability company, firm, association,
government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"Plan" shall mean, at a particular time, any
employee benefit plan (within the meaning of Section 3(3) of
ERISA), which is covered by ERISA and in respect of which the
Borrower, a Subsidiary or a Commonly Controlled Entity is (or,
if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Plan Reorganization" means with respect to any
Multiemployer Pension Plan, the condition that such plan is in
reorganization within the meaning of such term as used in
Section 4241 of ERISA.
"Plan Reportable Event" means (i) a reportable event
described in Section 4043 of ERISA and regulations thereunder
(other than any reportable event described in Section
4043(b)(2) or (7)), (ii) a withdrawal by a "substantial
employer" (within the meaning of Section 4001(a)(2) of ERISA)
from a Single Employer Plan to which more than one employer
contributes, as referred to in Section 4063(b) of ERISA, or
(iii) a cessation of operations at a facility causing more
than twenty percent (20%) of participants under a Single
Employer Plan to be separated from employment, as referred to
in Section 4062(e) of ERISA.
"Post-Default Rate" means (a) in the case of each
Loan, the sum of the rate per annum otherwise applicable to
such Loan from time to time plus two percent (2%) per annum
and (b) in the case of all other Obligations, the sum of the
highest rate per annum then applicable to any Loan (other than
by application of the Post-Default Rate) plus two percent (2%)
per annum.
"Prior Closing Date" means June 6, 1997.
"Projections" means the projected balance sheets and
statements of operations and changes in cash flows of the
Borrower (after giving effect to the Acquisition - ASS and
Acquisition - ASA) for the Fiscal Years 1997-2005 inclusive,
together with supporting details and a statement of underlying
assumptions, which have been delivered to the Lenders prior to
the Closing Date.
"Purchase Money Indebtedness" means Indebtedness
incurred to finance part or all of (but not more than) the
purchase price of equipment in which neither the Borrower nor
any of its Subsidiaries had an interest at any time prior to
such purchase.
"Purchasing Lender" means any Person purchasing all
or any part of the rights and obligations under this Agreement
and the Notes of any Lender pursuant to a Transfer Supplement
in accordance with Section 9.11.
"Quarterly Payment Date" means the last day of each
March, June, September and December or, if such day is not a
Business Day, the immediately preceding Business Day.
"Reference Lenders" means, collectively, The Chase
Manhattan Bank, N.A. (or any successor thereto), Citibank,
N.A. and ▇▇▇▇▇▇ Guaranty Trust Company of New York.
"Register" means the register for the recordation of
the names and addresses of the Lenders and the Revolving Loan
Commitment of, and the principal amounts of the Loans owing
to, each Lender from time to time, as provided in clause (c)
of Section 9.11.
"Regulatory Approval" means each and every approval,
consent, filing and registration by or with any federal, state
or other regulatory authority (domestic or foreign) necessary
to authorize or permit the execution, delivery or performance
of this Agreement, the Notes or any other Loan Document, for
the granting of any security contemplated hereby or thereby,
for the validity or enforceability hereof or thereof, or for
the consummation of the transaction contemplated by the Loan
Documents, including, without limitation, the Acquisition.
"Regulatory Change" means, as to any or all of the
Lenders or the Agent, the adoption of or any change in
(including, without limitation, any change in the
interpretation of) any:
(a) United States federal or state law or foreign
law applicable to the Agent or such Lender; or
(b) regulation, interpretation, directive,
guideline or request (whether or not having the force of law)
applicable to the Agent or such Lender of any court or
Governmental Authority charged with the interpretation or
administration of any law referred to in clause (a) or of any
central bank or fiscal, monetary or other authority having
jurisdiction over the Agent or such Lender.
"Required Lenders" means, as the context may require
at any time, Lenders having, in the aggregate, 66-2/3% or more
of the Revolving Loan Commitment, the Revolving Loans, the
Term Loans, the Letters of Credit and the Letter of Credit
Commitment.
"Requirements of Law" means, as to any Person, the
Organic Documents of such Person, and all federal, state and
local laws, rules, regulations, orders, decrees or other
determinations of an arbitrator, court or other Governmental
Authority, including, without limitation, all disclosure and
other requirements of ERISA, the requirements of Environmental
Laws and Environmental Permits, the requirements of OSHA, in
each case applicable to or binding upon such Person or any of
its property or to which such Person or any of its property is
subject.
"Reserve Requirement" means, relative to any
Interest Period for any Eurodollar Loans, from time to time
during such Interest Period, the reserve percentage (expressed
as a decimal) equal to the maximum aggregate reserve
requirements (including all basic, emergency, supplemental,
marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve
requirements) specified under regulations issued from time to
time by the F.R.S. Board and then applicable to assets or
liabilities consisting of or including "Eurodollar
Liabilities", as currently defined under Regulation D of the
F.R.S. Board, having a term approximately equal or comparable
to such Interest Period.
"Responsible Officer" means the chief executive
officer, the chief operating officer or the chief financial
officer of any Person.
"Revolving Loan" means, relative to any Lender, any
Loan made by such Lender to the Borrower pursuant to Section
2.1.2.
"Revolving Loan Availability" means, on any date,
the excess of (a) the Revolving Loan Commitment Amount minus
(b) the then aggregate principal amount of all outstanding
Revolving Loans.
"Revolving Loan Commitment" means the collective
commitments of the Lenders to make Revolving Loans pursuant to
Section 2.1.2 if the conditions set forth in Section 4.1 and
4.2 are met.
"Revolving Loan Commitment Amount" means $16,500,000
plus the unused portion, if any, of the Letter of Credit
Commitment.
"Revolving Loan Commitment Termination Date" means
the earliest of:
(a) the Stated Maturity Date for Revolving Loans;
(b) immediately and without further action upon the
occurrence of any Event of Default described in Section 7.1.4;
(c) immediately when any other Event of Default
shall have occurred and be continuing and either:
(i) the Revolving Loans shall be declared to
be due and payable pursuant to Section 7.3; or
(ii) in the absence of such declaration, the
Agent, acting at the direction of the Required Lenders,
shall give notice to the Borrower that the Revolving Loan
Commitment has been terminated; and
(d) immediately upon the occurrence of a Change in
Control.
"Revolving Note" means a promissory note of the
Borrower dated the date hereof and substantially in the form
of Exhibit E-1, and shall also refer to all other promissory
notes accepted from time to time in substitution therefor or
renewal thereof.
"Revolving Percentage" of any Lender means, at any
time, in respect of the Revolving Loan Commitment and the
Revolving Loans, the percentage set forth opposite such
Lender's signature hereto under the caption "Percentage," as
the same may be adjusted pursuant to Section 9.11.
"Secretary" means, with respect to any Person, the
secretary, assistant secretary, clerk, assistant clerk or
comparable officer of such Person.
"Security Agreement" means the Security Agreement,
dated as of the Original Closing Date, made by the Borrower
and its Subsidiaries in favor of the Agent, for its benefit
and the ratable benefit of the Lenders as originally in effect
on the Original Closing Date and as thereafter from time to
time amended, supplemented, amended and restated, extended or
otherwise modified and in effect.
"Security Documents" means, collectively, the
Security Agreement, the Borrower Pledge Agreement, the
Borrower Trademark Assignment, the Subsidiary Guaranty, the
Subsidiary Pledge Agreement, the Subsidiary Trademark
Assignment, the assignment of "key-man" life insurance
described in clause (g) of Section 4.1.8, the assignment of
the Interest Rate Contracts described in Section 6.1.13, the
assignment of rights described in clause (f) of Section 4.1.8,
each other Instrument at any time delivered in connection with
this Agreement to secure the Obligations.
"Sellers" means the "Stockholders" as such terms is
defined in the Acquisition Agreement.
"Single Employer Plan" means any Plan which is
covered by Title IV of ERISA, other than a Multiemployer Plan.
"Solvent" means, with respect to any Person on a
particular date, that on such date (i) the fair value of the
assets of such Person (both at fair valuation and at present
fair saleable value) is, on the date of determination, greater
than the total amount of liabilities of such Person (including
all liabilities and obligations of such Person, fixed or
contingent, direct or indirect, disputed or undisputed, and
whether or not required to be reflected on a balance sheet
prepared in accordance with GAAP), (ii) such Person is able to
pay all liabilities of such Person as they mature, and (iii)
such Person does not have unreasonably small capital with
which to carry on its business. The amount attributed to
contingent liabilities shall be discounted to reflect the
likelihood that such liabilities shall become payable.
"Stated Maturity Date" means, with respect to (i)
the Revolving Loans, September 30, 2002, which may be subject
to a 21-month extension at the sole discretion of the Lenders;
(ii) Term Loan A, June 30, 2002; (iii) Term Loan B, June 30,
2004; (iv) Term Loan C, September 30, 2003, and (v) the
Letters of Credit Commitment, September 30, 2002, which may be
subject to a 21-month extension at the sole discretion of the
Lenders.
"Stock" means all shares of capital stock of or in a
corporation, whether voting or non-voting, and including,
without limitation, common stock and preferred stock.
"Subsidiary" of any corporation means any other
corporation greater than 50% of the outstanding shares of
Stock of which having ordinary voting power for the election
of directors is owned directly or indirectly by such
corporation, and, except as otherwise indicated herein,
references to Subsidiaries shall refer to Subsidiaries of the
Borrower. For purposes of this Agreement and the other Loan
documents, references to Subsidiaries of the Borrower shall
include, at all times, the Eligible Subsidiaries.
"Subsidiary Guaranty" means the Subsidiary Guaranty,
dated as of the Original Closing Date, made by each of the
Borrower's Subsidiaries in favor of the Agent and the Lenders
as originally in effect on the Original Closing Date and as
thereafter from time to time amended, supplemented, amended
and restated, extended or otherwise modified and in effect.
"Subsidiary Note" means a promissory note made by a
Subsidiary payable to the Borrower and meeting the
requirements of Section 6.2.7(e).
"Subsidiary Pledge Agreement" means the Stock and
Notes Pledge Agreement, dated as of the Original Closing Date,
made by each of HCSS and Whitney Partners (as successor by
merger to AFGL, Inc.) in favor of the Agent, for its benefit
and the ratable benefit of the Lenders, as originally in
effect on the Original Closing Date and as thereafter from
time to time amended, supplemented, amended and restated,
extended or otherwise modified and in effect, pursuant to
which each Subsidiary shall pledge to the Agent all of the
Stock of companies incorporated in the United States held by
such Subsidiary, all of the Stock of companies incorporated in
countries other than the United States (up to sixty-six
percent (66%) of all of the issued and outstanding Stock of
any such company) held by such Subsidiaries, and all
promissory notes, other instruments and securities held by
such Subsidiary as security for the Obligations.
"Subsidiary Trademark Assignment" means the
Collateral Assignment and Security Agreement (Trademarks),
dated as of the Original Closing Date, made by the
Subsidiaries in favor of the Agent, for its benefit and the
ratable benefit of the Lenders as originally in effect on the
Original Closing Date and as thereafter from time to time
amended, supplemented, amended and restated, extended or
otherwise modified and in effect.
"Taxes" means all taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the
Agent, taxes imposed on or measured by its net income and
franchise taxes imposed on it.
"Temporary Staffing Business" means the business of
the placement or provision of temporary, permanent,
"payrolled" or leased personnel. For the purposes of this
definition, "payrolled" employees means (i) those employees
who are hired by an entity on behalf of a client and are
considered as full-time permanent employees of such client,
but whose compensation is paid by such entity, or (ii) those
employees of an entity who are considered to be payrolled
employees under industry practice or understanding prevailing
at the time.
"Term Loan A" means the Term Loan having an
outstanding principal balance of $9,000,000 as of the Closing
Date.
"Term Loan B" means the Term Loan in the maximum
principal amount of $8,000,000 as of the Closing Date.
"Term Loan C" means the facility to be used for
funding acquisitions by the Borrower which are approved by the
Required Lenders in the original maximum principal amount of
$16,000,000.
"Term Loans" means, collectively, Term Loan A in the
maximum principal amount of $9,000,000, Term Loan B in the
maximum principal amount of $8,000,000, and Term Loan C in the
maximum principal amount of $16,000,000, in an aggregate
principal amount equal to $33,000,000 made to the Borrower or
such lesser principal amounts outstanding on or after the
Closing Date by the Lenders pursuant to Section 2.1.1.
"Term Loan Commitment" means the collective
commitments of the Lenders to extend the Term Loans pursuant
to Section 2.1.1.
"Term Notes" means, collectively, Term Note A, Term
Note B, and Term Note C.
"Term Note A" means a promissory note of the
Borrower dated the date hereof and substantially in the form
of Exhibit E-2, and shall also refer to all other promissory
notes accepted from time to time in substitution therefor or
renewal thereof.
"Term Note B" means a promissory note of the
Borrower dated the date hereof and substantially in the form
of Exhibit E-3, and shall also refer to all other promissory
notes accepted from time to time in substitution therefor or
renewal thereof.
"Term Note C" means a promissory note of the
Borrower dated the date hereof and substantially in the form
of Exhibit E-4, and shall also refer to all other promissory
notes accepted from time to time in substitution therefor or
renewal thereof.
"Term Percentage" of any Lender means, at any time,
in respect of each of the Term Loans, the percentage set forth
opposite such Lender's signature hereto under the caption
"Percentage," as the same may be adjusted pursuant to Section
9.11.
"Transfer Supplement" means a Commitment Transfer
Supplement, substantially in the form of Exhibit F, executed
pursuant to Section 9.11.
"type" means, relative to any Borrowing or Loan, the
portion thereof being maintained as a Base Rate Loan or a
Eurodollar Rate Loan.
"UCC" means the Uniform Commercial Code of any
applicable jurisdiction, as in effect from time to time.
"United States" or "U.S." means the United States of
America, its 50 States and the District of Columbia.
"Whitney Asia Limited" means The Whitney Group
(Asia) Limited, a corporation organized under the laws of Hong
Kong which is 100% owned by Whitney Partners.
"Whitney Asia PTE" means Whitney Asia PTE Ltd., a
corporation organized under the laws of Singapore which is
100% owned by the Borrower.
"Whitney Group" means Whitney Group (Europe)
Limited, a corporation organized under the laws of the United
Kingdom which is 100% owned by Whitney Partners.
"Whitney Partners" means Whitney Partners, Inc., a
Delaware corporation which is a wholly-owned Subsidiary of the
Borrower.
"written" or "in writing" means any form of written
communication or a communication by means of telephonic
facsimile device.
SECTION 1.2 Use of Defined Terms. Unless
otherwise defined or the context otherwise requires, terms for
which meanings are provided in this Agreement shall have such
meanings when used in the Disclosure Schedule and each Note,
Borrowing Request, Compliance Certificate,
Continuation/Conversion Notice, notice and other communication
delivered from time to time in connection with this Agreement
or any other Loan Document.
SECTION 1.3 Cross-References. Unless
otherwise specified, references in this Agreement and in each
other Loan Document to any Article or Section are references
to such Article or Section of this Agreement or such other
Loan Document, as the case may be, and unless otherwise
specified, references in any Article, Section, or definition
to any clause are references to such clause of such Section,
Article or definition.
SECTION 1.4 Accounting and Financial
Determinations. Unless otherwise specified, all accounting
terms used herein or in any other Loan Document shall be
interpreted, all accounting determinations and computations
hereunder or thereunder shall be made, and all financial
statements required to be delivered hereunder or thereunder
shall be prepared in accordance with GAAP.
ARTICLE 2.
COMMITMENTS
SECTION 2.1 Term Loans and Revolving Loan
Commitment. Subject to the terms and conditions of this
Agreement, each Lender severally and for itself alone agrees
to make its Term Percentage of the Term Loans described in
Section 2.1.1 and to provide its Revolving Percentage of the
Revolving Loan Commitment described in Section 2.1.2.
SECTION 2.1.1 Term Loans.
(a) On the Closing Date, each Lender will make
a Term Loan A advance to the Borrower equal to its Term
Percentage of Term Loan A.
(b) On the Closing Date, each Lender will make
a Term Loan B advance to the Borrower equal to its Term
Percentage of Term Loan B.
(c) On and prior to September 30, 1998, each
Lender will make available Term Loans to the Borrower, upon
request of the Borrower and satisfaction of all conditions
precedent contained herein, equal to its Term Percentage of
Term Loan C up to the maximum aggregate amount of $16,000,000,
of which $13,500,000 will be available for 12 months
subsequent to the Closing Date for future Temporary Staffing
Business acquisitions which are Approved Acquisition
Expenditures. Of the funds remaining under Term Loan C,
$1,100,000 associated with Acquisition - ASS and $1,400,000
associated with Acquisition - ASA, will be reserved and shall
be available from July 30, 1998 to 37 months subsequent to the
Closing Date solely to fund not more than the lesser of the
Earnout or $1,100,000 with respect to Acquisition - ASS and
the Earnout - ASA or $1,400,000 with respect to Acquisition -
ASA.
SECTION 2.1.2. Revolving Loan Commitment. Subject
to the limitations in Section 2.1.3, each Lender will, from
time to time on any Business Day occurring during the period
commencing on the Closing Date and continuing to (but not
including) the Revolving Loan Commitment Termination Date,
make Revolving Loans to the Borrower equal to its Revolving
Percentage of the aggregate amount of any Borrowing of
Revolving Loans requested by the Borrower to be made on such
Business Day in accordance with Section 3.1.
SECTION 2.1.3. Limitations on Revolving Credit
Commitment. No Lender shall be required to make any Revolving
Loan, if after giving effect thereto:
(a) the then aggregate outstanding principal amount
of all Revolving Loans plus the aggregate outstanding face
amounts of all Letters of Credit would exceed the lesser of
(i) $17,000,000 or (ii) the Borrowing Base; or
(b) the then aggregate outstanding principal amount
of such Lender's Revolving Loans plus such Lender's Letter of
Credit Percentage of the aggregate outstanding face amounts of
all Letters of Credit would exceed its Revolving Percentage of
the lesser of (i) $17,000,000 or (ii) the Borrowing Base.
Subject to the terms hereof, the Borrower may from time to
time borrow, prepay and reborrow Revolving Loans, in all cases
pursuant to the Revolving Loan Commitment.
SECTION 2.1.4. Letter of Credit Commitment. Subject
to the terms and conditions of this Agreement, the Borrower
may request, in accordance with the provisions of this Section
2.1.4 and Section 2.1.5 and the other terms of this Agreement,
that on and after the date hereof but prior to the Stated
Maturity Date for the Letter of Credit Commitment, the Agent
issue or, as a joint applicant with Borrower or an Eligible
Subsidiary, that another institution issue a Letter or Letters
of Credit for the account of the Borrower or an Eligible
Subsidiary; provided (i) that the application for such Letters
of Credit shall be in the form substantially identical to
Exhibit G attached hereto, (ii) that no Letter of Credit shall
have an expiration date later than one year after the date of
issuance thereof (provided that a Letter of Credit may provide
that it is extendible for consecutive one year periods); (iii)
that no Letter of Credit issued hereunder shall have an
expiration date (or be extended so that it will expire) later
than the Stated Maturity Date for the Letter of Credit
Commitment; and (iv) that the Borrower shall not request the
issuance of any Letter of Credit, if, after giving effect to
such issuance, either (x) the aggregate outstanding face
amounts of all Letters of Credit would exceed $500,000.00 or
(y) the aggregate outstanding face amounts of all Letters of
Credit plus the aggregate outstanding principal amount of the
Revolving Loans would exceed the lesser of (i) $17,000,000 or
(ii) the Borrowing Base.
SECTION 2.1.5. Notice of Issuance of Letter of Credit;
Agreement to Issue.
(a) Whenever the Borrower desires the issuance of a
Letter of Credit, it shall, in addition to any application and
documentation procedures required by the Agent for the
issuance of or joint application for such Letter of Credit,
deliver to the Agent a written notice no later than 11:00 AM
(local time for the Agent) at least five (5) days in advance
of the proposed date of issuance and the Agent shall promptly
forward a copy of such notice to each of the Lenders. Each
such notice shall specify (i) the proposed date of issuance
(which shall be a Business Day); (ii) the face amount of the
Letter of Credit; (iii) the expiration date of the Letter of
Credit; and (iv) the name and address of the beneficiary with
respect to such Letter of Credit and shall attach a precise
description of the documentation and a verbatim text of any
certificate to be presented by the beneficiary of such Letter
of Credit which would require the issuer to make payment under
the Letter of Credit, provided that the Agent may require
changes in any such documents and certificates in accordance
with its customary letter of credit practices, and provided
further, that no Letter of Credit shall require payment
against a conforming draft to be made thereunder on the same
Business Day that such draft is presented if such presentation
is made after 11:00 AM (New York, New York time). In
determining whether to pay any draft under any Letter of
Credit, the Agent shall be responsible only to determine that
the documents and certificate required to be delivered under
its Letter of Credit have been delivered, and that they comply
on their face with the requirements of the Letter of Credit.
Promptly after receiving the notice of issuance of a Letter of
Credit, the Agent shall notify each Lender of such Lender's
respective participation therein, determined in accordance
with its respective Letter of Credit Percentage.
(b) The Agent agrees, subject to the terms and
conditions set forth in this Agreement, to issue for or
jointly apply for the issuance on the account of the Borrower
or an Eligible Subsidiary a Letter of Credit in a face amount
equal to the face amount requested under paragraph (a) above,
following its receipt of a notice required by Section
2.1.5(a). Immediately upon the issuance of or joint
application for each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased
from the Agent a participation in such Letter of Credit and
any drawing thereunder in an amount equal to such Letter of
Credit Percentage multiplied by the face amount of such Letter
of Credit. Upon issuance and amendment or extension of any
Letter of Credit, the Agent shall provide a copy of each such
Letter of Credit issued, amended or extended hereunder to each
of the Lenders.
SECTION 2.1.6. Payment of Amounts drawn under Letters of
Credit.
(a) In the event of any request for a drawing under
any Letter of Credit by the beneficiary thereof, the Agent
shall notify the Borrower and the Lenders on or before the
date on which the Agent or other issuer shall make any payment
under such Letter of Credit, and the Borrower shall reimburse
the Agent on the day on which such drawing is honored in an
amount, in same day funds, equal to the amount of such
drawing. If the Borrower does not reimburse the Agent on the
day on which such drawing is honored in an amount, in same day
funds, equal to the amount of such drawing, such drawing shall
be deemed to be a request by Borrower for a Base Rate
Revolving Loan in the amount of such drawing and such Base
Rate Revolving Loan may be used to repay the drawing under the
Letter of Credit.
(b) Notwithstanding any provision of this Agreement
to the contrary, to the extent that any Letter of Credit or
portion thereof will remain outstanding after the Stated
Maturity Date for the Letter of Credit Commitment, for any
reason whatsoever, the parties hereto hereby agree that the
beneficiary or beneficiaries thereof shall be deemed to have
made a drawing of all available amounts pursuant to such
Letters of Credit on the Stated Maturity Date for the Letter
of Credit Commitment which amount shall be held by the Agent
as cash collateral for its remaining obligations pursuant to
such Letters of Credit.
(c) As between the Borrower and the Agent, the
Borrower assumes all risk of the acts and omissions of, or
misuse of, the Letters of Credit by the respective
beneficiaries of such Letters of Credit, other than losses
resulting from the gross negligence and willful misconduct of
the Agent. In furtherance and not in limitation of the
foregoing but subject to the exception for the Agent's gross
negligence or willful misconduct set forth above, the Agent
shall not be responsible (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the
application for and issuance of such Letters of Credit, even
if it should in fact prove to be in any or all respects
insufficient, inaccurate, fraudulent or forged or otherwise
invalid; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer
or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part which may
prove to be invalid or ineffective for any reason; (iii) for
failure of the beneficiary of any such Letter of Credit to
comply fully with the conditions required in order to draw
upon such Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, telecopy or
otherwise; (v) for good faith errors in interpretation of
technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to
make a drawing under any such Letter of Credit or the proceeds
thereof; (vii) for the misapplication by the beneficiary of
any such Letter of Credit; and (viii) for any consequences
arising from causes beyond the control of the Agent.
SECTION 2.1.7. Payment by Lenders. In the event that the
Borrower shall fail to reimburse the Agent as provided in
Section 2.1.6, the Agent shall promptly notify each Lender of
the unreimbursed amount of such drawing and of such Lender's
respective participation therein. Each Lender shall make
available to the Agent an amount equal to its respective
participation, in Dollars and in immediately available funds,
at the office of the Agent specified in such notice not later
than 1:00 P.M. (New York, New York time) on the Business Day
after the date notified by the Agent and such amount shall be
deemed to be outstanding hereunder as a Base Rate Revolving
Loan. Each Lender shall be obligated to make such Revolving
Loan hereunder regardless of whether the conditions precedent
in Article 4 are satisfied and regardless of whether such
Revolving Loan complies with the minimum borrowing
requirements hereunder. In the event that any such Lender
fails to make available to the Agent the amount of such
Lender's participation in such drawing under any Letter of
Credit, the Agent shall be entitled to recover such amount on
demand from such Lender together with interest as provided for
in Section 3.4.2. The Agent shall distribute to each Lender
which has paid all amounts payable under this Section with
respect to any Letter of Credit, such Lender's Revolving
Percentage of all payments received by the Agent from the
Borrower in reimbursement of drawings honored by the Agent
under such Letter of Credit when such payments are received.
SECTION 2.2. Changes in Advance Ratios;
Establishment of Reserves.
SECTION 2.2.1 Advance Ratios. The Borrower
acknowledges that the advance ratio against Eligible Accounts
provided for in the definition of "Borrowing Base" in Section
1.1 have been established based upon the Agent's determination
of the loan value of the Borrower's Eligible Accounts as of
the date of this Agreement. Upon the occurrence and during
the continuation of an Event of Default, based on the Agent's
customary credit considerations, the Agent may decrease the
advance ratios against Eligible Accounts, and any such
decrease shall become effective immediately upon the Agent's
giving notice thereof to the Borrower.
SECTION 2.2.2 Establishment of Reserves. The Agent
shall have the right to establish, in such amounts, and with
respect to such matters, as the Agent, based on the Agent's
customary credit considerations, shall deem necessary or
appropriate, reserves with respect to (i) Charges and Liens;
(ii) Environmental Liabilities and Costs, (iii) sums as to
which the Agent and the Lenders are permitted to make
Revolving Loans on the Borrower's behalf under Section 3.3.3
of this Agreement; and (iv) such other matters, events,
conditions or contingencies as to which the Agent, based on
the Agent's customary credit considerations, reasonably
determines reserves should be established from time to time
hereunder.
SECTION 2.3 Commitment Fee
(a) The Borrower agrees to pay to the Agent, for
the account of each Lender, a nonrefundable fee for the period
from the Closing Date to and including the Revolving Loan
Commitment Termination Date, equal to such Lender's Revolving
Percentage of one-half of one percent (0.50%) per annum of (i)
the difference between (A) the Revolving Loan Commitment
Amount and (B) the average daily aggregate outstanding
principal amount of all Revolving Loans and (ii) the unfunded
portion of the Term Loan Commitment with respect to Term Loan
C. The fee described in this Section 2.3(a) shall be
calculated on a daily basis and shall be payable by the
Borrower in arrears on each Quarterly Payment Date and on the
Revolving Loan Commitment Termination Date.
(b) The Borrower agrees to pay to the Agent, for
the account of each Lender, a nonrefundable fee for the period
from the date hereof to and including the Revolving Loan
Commitment Termination Date, equal to such Lender's Letter of
Credit Percentage of two and three-quarters percent (2.75%)
per annum of the aggregate outstanding face amounts of all
Letters of Credit. The fee described in this Section 2.3(b)
shall be calculated on a daily basis and shall be payable by
the Borrower in arrears on each Quarterly Payment Date and on
the Revolving Loan Commitment Termination Date.
SECTION 2.4. Increased Costs; Capital
Adequacy
(a) The Borrower shall pay to each Lender from time
to time on demand such amounts as such Lender may determine to
be reasonably necessary to compensate it or its holding
company for any costs which such Lender determines are
attributable to its making or maintaining Loans, issuing or
maintaining Letters of Credit (or participations therein), or
maintaining Commitments hereunder or its obligation to make
any such Loans or issue or maintain any Letters of Credit (or
participations therein) hereunder, or any reduction in any
amount receivable by such Lender hereunder in respect of any
such Loans, Letters of Credit Commitments or obligation, in
each case resulting from any Regulatory Change which: (i)
changes the basis of taxation of any amounts payable to such
Lender under this Agreement in respect of any of such Loans,
Letters of Credit (or participations therein) or Commitments
(other than taxes imposed on the overall net income of such
Lender or of its Applicable Lending Office); or (ii) imposes
or modifies any reserve, special deposit, deposit insurance or
assessment, minimum capital, capital ratio or similar
requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such
Lender or any holding company of such bank (including, without
limitation, a request or requirement which affects the manner
in which any Lender or the holding company of any thereof
allocates capital resources to commitments, including the
Commitments and obligations of such Lender hereunder). Each
Lender will notify the Borrower of any event occurring after
the date of this Agreement which will entitle such Lender to
compensation pursuant to this clause (a) as promptly as
practicable after it obtains knowledge thereof and determines
to request such compensation.
(b) Without limiting the effect of the foregoing
provisions of this Section 2.4 (but without duplication), the
Borrower shall pay to each Lender from time to time upon
demand by such Lender such amounts as the Lender may determine
to be reasonably necessary to compensate such Lender for any
costs which it determines are attributable to the maintenance
by it or its holding company, pursuant to any law or
regulation of any jurisdiction or any interpretation,
directive or request (whether or not having the force of law)
of any court or governmental or monetary authority, whether in
effect on the date of this Agreement or thereafter, of capital
in respect of its Loans or any Letters of Credit, its
obligation to make the Loans, or issue or participate in any
Letters of Credit hereunder (such compensation to include,
without limitation, an amount equal to any reduction in return
on assets or equity of such Lender or its holding company to a
level below that which it could have achieved but for such
law, regulation, interpretation, directive or request). The
Lender will notify the Borrower with a copy to the Agent) if
it is entitled to compensation pursuant to this clause (b) as
promptly as practicable after it determines to request such
compensation.
(c) Each notice delivered by any Lender pursuant to
this Section 2.4 shall contain a statement of such Lender as
to any such additional amount or amounts (including
calculations thereof in reasonable detail) which shall, in the
absence of manifest error, be conclusive of the matters
stated therein and be binding upon the Borrower. In
determining such amount, any Lender may use any method of
averaging and attribution that it in good faith shall deem
applicable.
(d) Without prejudice to the survival of any other
agreement of the Borrower hereunder or under any other Loan
Document, the agreements and obligations of the Borrower
contained in this Section 2.4 shall survive the payment in
full of principal, interest and other amounts payable
hereunder and under the other Loan Documents for a period of
one year after the date of the last payment.
(e) Notwithstanding anything in this Section 2.4 to
the contrary, to the extent that notice is given by any Lender
to the Borrower of any amount owing to such Lender under this
Section 2.4 more than 180 days after the occurrence of the
event giving rise to such obligation, such Lender shall not be
entitled to compensation under this Section 2.4 for any
amounts incurred or accruing 180 days prior to the giving of
such notice to the Borrower.
(f) Each Lender agrees that, upon the occurrence of
any event giving rise to a claim for any amount owing to such
Lender under this Section 2.4, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another Applicable
Lending Office, provided that such designation is made on
terms that such Lender suffers no economic, legal, regulatory
or other disadvantage, with the object of avoiding the
consequence which gave rise to the claim for any amount owing
under this Section 2.4.
ARTICLE 3.
LOANS AND NOTES
SECTION 3.1. Borrowing Procedure. By
delivering a Borrowing Request to the Agent at the Agent's
Atlanta Office on or before 11:00 a.m., New York City time, on
a Business Day, the Borrower may (a) request, on not less
than one (1) Business Day's advance notice in the case of Base
Rate Loans and not less than three (3) Business Days' advance
notice in the case of Eurodollar Loans, that Term Loan A and
Term Loan B be made on the Closing Date; and (b) from time to
time request, on not less than one (1) nor more than three (3)
Business Days' notice, in the case of Base Rate Loans, and not
less than three (3) nor more than five (5) Business Days'
notice in the case of Eurodollar Loans, that a Borrowing of
Revolving Loans or Term Loan C loans be made on the Business
Day specified in such Borrowing Request. The Agent shall
promptly notify the Lenders of each such Borrowing Request.
Subject to Section 2.1.6(a), Borrowings of Base Rate Loans
shall be in a minimum aggregate amount equal to $100,000 and
in integral multiples of $25,000 or, if less, the amount of
the Revolving Loan Availability immediately prior to such
Borrowing. Borrowings of Eurodollar Loans shall be in a
minimum aggregate amount of $250,000 and in integral multiples
of $50,000. Each Revolving Loan or Term Loan C loans shall be
made on the Business Day specified in the Borrowing Request
therefor (including the initial Revolving Loans to be made on
the Closing Date), which Business Day shall be on or after the
Closing Date. On such Business Day, each Lender shall, on or
before 2:00 p.m., New York City time, deposit same day funds
with the Agent in an amount equal to such Lender's Percentage
of the requested Borrowing, such deposit to be made to such
account as the Agent shall specify from time to time by notice
to the Lenders. The proceeds of all Borrowings shall be made
available to the Borrower on the Business Day specified in the
Borrowing Request by wire transfer of such proceeds to such
transferees, or to such accounts of the Borrower, as the
Borrower shall have specified in the Borrowing Request
therefor; provided, however, that in each case the Agent shall
be required to make available to the Borrower the proceeds of
any Borrowing only to the extent received by it in same day
funds from the Lenders. No Lender's obligation to make any
Loan shall be affected by any other Lender's failure to make
any Loan.
SECTION 3.2. Notes. All Loans made by each
Lender shall be evidenced:
(a) in the case of such Lender's portion of the
Term Loans, by a Term Note payable to the order of such Lender
in a principal amount equal to such Lender's Term Percentage
of the Term Loans; and
(b) in the case of such Lender's Revolving Loans,
by a Revolving Note payable to the order of such Lender in a
principal amount equal to such Lender's Revolving Percentage
of the Revolving Loan Commitment Amount.
The Borrower hereby irrevocably authorizes each Lender to make
(or cause to be made) appropriate notations on a grid schedule
attached to such Lender's Revolving Note (or on a continuation
of any such grid attached to any Revolving Note and made a
part thereof), which notations shall evidence, inter alia, the
date and outstanding principal amount of the Revolving Loans
evidenced thereby. The notations on any such grid (and on any
such continuation) indicating the outstanding principal amount
of such Lender's Revolving Loans shall be presumptive evidence
of the principal amount thereof owing and unpaid, but the
failure to record any such amount on any such grid (or on any
such continuation) shall not limit or otherwise affect the
obligations of the Borrower hereunder or under such Note to
make payments of principal of or interest on such Loans when
due.
SECTION 3.3 Principal Payments. Repayments
and prepayments of principal of the Loans shall be made in
accordance with this Section 3.3.
SECTION 3.3.1 Repayments and Prepayments. The
Borrower will make payment in full of all unpaid principal of
each Loan at its Stated Maturity Date (or such earlier date as
such Loan may become or be declared due and payable pursuant
to Article 7). Prior thereto, the Borrower:
(a) may, from time to time on any Business Day,
make a voluntary prepayment, in whole or in part, of the
outstanding principal amount of any Loans; provided, however,
that (i) as to partial prepayments of the Term Loans and
Revolving Loans, all such voluntary prepayments shall require
at least one (1) Business Day prior notice to the Agent, (ii)
as to the Term Loans and the Revolving Loans, all such
voluntary prepayments shall be in a minimum amount of $50,000
(subject to the Borrower's right to prepay in full the entire
unpaid principal amount of each Term Loan or the Revolving
Loans, as the case may be), (iii) as to the Term Loans, all
such voluntary prepayments shall be applied to such Term Loans
as the Borrower shall indicate in such notice, and (iv) as to
the voluntary prepayment in full of the Term Loans and the
termination of the Revolving Loan Commitment and the Letter of
Credit Commitment, such prepayment shall require at least five
(5) Business Days prior written notice to the Agent;
(b) shall, on any Business Day on which the
aggregate outstanding principal amount of all Revolving Loans
plus the aggregate outstanding face amounts of all Letters of
Credit exceeds the lesser of (i) $17,000,000 or (ii) the
Borrowing Base, make a mandatory prepayment of the outstanding
principal amount of Revolving Loans in an amount equal to such
excess amount;
(c) shall, on each Quarterly Payment Date,
commencing on September 30, 1997, make a scheduled payment of
a portion of the outstanding principal amount of the Term Loan
A equal to the amount shown below opposite each such Quarterly
Payment Date:
Quarterly
Principal
Quarterly Payment Dates Occurring During the Period from: Payment
Closing Date through (and including) June 30, 1998 362,500
July 1, 1998 through (and including) June 30, 1999 400,000
July 1, 1999 through (and including) June 30, 2000 437,500
July 1, 2000 through (and including) June 30, 2001 500,000
July 1, 2001 through (and including) June 30, 2002 550,000
(d) shall, on each Quarterly Payment Date,
commencing September 30, 1998, make a scheduled payment of a
portion of the outstanding principal amount of the Term Loan B
equal to the amount shown below opposite each such Quarterly
Payment Date:
Quarterly
Principal
Quarterly Payment Dates Occurring During the Period from:
Payment
Closing Date through (and including) June 30, 1998$ 20,000
July 1, 1998 through (and including) June 30, 1999$ 20,000
July 1, 1999 through (and including) June 30, 2000$ 20,000
July 1, 2000 through (and including) June 30, 2001$ 20,000
July 1, 2001 through (and including) June 30, 2002$ 20,000
July 1, 2002 through (and including) June 30, 2003$ 250,000
July 1, 2003 through (and including) June 30, 2004$1,650
,000
(e) shall, on each Quarterly Payment Date,
commencing December 31, 1998, make a scheduled payment of a
portion of the outstanding principal amount of the Term Loan C
in the amount shown below opposite each such Quarterly Payment
Date:
Quarterly Principal
Payment as a
Percentage
of the
Total Term
Loan C
outstanding
Quarterly Payment Dates Occurring During the Period from:
on September 30, 1998
December 31, 1998 through (and including) September 30, 1999
2.0%
October 1, 1999 through (and including) September 30, 2000
3.4375%
October 1, 2000 through (and including) September 30, 2001
4.9375%
October 1, 2001 through (and including) September 30, 2002
5.9375%
October 1, 2002 through (and including) September 30, 2003
8.6875%
provided, however, to the extent advances under Term Loan C
are made subsequent to September 30, 1998, such advances shall
be repaid pro rata among the remaining payments set forth
above, and, in any event, all amounts outstanding under Term
Loan C shall be due and payable on the stated Maturity Date.
(f) shall, concurrently with the receipt by the
Borrower or any Subsidiary of any Net Disposition Proceeds in
excess of $20,000 in the aggregate during any Fiscal Year,
make a mandatory prepayment of the Loans, in each case in an
aggregate amount equal to such Net Disposition Proceeds;
provided, that should Borrower or any Subsidiary receive any
Net Disposition Proceeds from the disposition of the Incepta
Shares and no Default or an Event of Default shall have
occurred and be continuing, (i) the mandatory prepayment of
the Loans Borrower shall be required to make under this clause
(f) of Section 3.3.1 shall be limited to one-third of such Net
Disposition Proceeds; (ii) an additional one-third of such Net
Disposition Proceeds shall be used to repay any outstanding
Revolving Loans, if any; and (iii) one-third of such Net
Disposition Proceeds shall be available to the Borrower or any
Subsidiary to pay Approved Acquisition Expenditures incurred
within one hundred eighty (180) days of such disposition, if
Approved Acquisition Expenditures are not incurred within such
period, the amounts subject to this clause (iii) shall be
divided equally and applied as set forth in clauses (i) and
(ii) above; provided, further, that this clause (f) of
Section 3.3.1 shall not in any event be deemed a consent to
any disposition by the Borrower or any Subsidiary which is
otherwise prohibited by the terms of this Agreement or of any
of the other Loan Documents;
(g) shall, concurrently with the receipt by the
Borrower or any Subsidiary of any Net Securities Proceeds in
excess of $2,000,000 in the aggregate during the term of this
Agreement, make a mandatory prepayment of the Loans if the
Leverage Ratio as of the last Fiscal Quarter exceeds 3.00:1.00
in an aggregate amount sufficient to reduce the Leverage Ratio
to 3.00:1.00; provided that this clause (e) of Section 3.3.1
shall not in any event be deemed a consent to any issuance of
Stock or the incurrence of Indebtedness by the Borrower or any
Subsidiary which is otherwise prohibited by the terms of this
Agreement or of any of the other Loan Documents;
(h) shall, concurrently with receipt by the
Borrower or any Subsidiary of any Net Indebtedness Proceeds in
excess of $50,000 in the aggregate during any Fiscal Year,
make a mandatory prepayment of the Loans, in an aggregate
amount equal to such Net Indebtedness Proceeds; provided that
this clause (f) of Section 3.3.1 shall not in any event be
deemed a consent to any issuance of Indebtedness by the
Borrower or any Subsidiary which is otherwise prohibited by
the terms of this Agreement or any of the other Loan
Documents;
(i) shall, concurrently with the delivery of the
financial information required under clause (a)(i) of Section
6.1.1 (but in no event later than the date such information is
required to be delivered), make a mandatory prepayment of a
portion of the outstanding principal amount of the Loans in an
amount equal to 70% of Excess Cash Flow for the Fiscal Year
with respect to which such financial information was delivered
or is required to be delivered;
(j) shall, within 180 days after receipt by the
Borrower or any Subsidiary or the Agent of any condemnation
awards with respect to any Loss, make a mandatory prepayment
of the Loans in an amount by which such condemnation awards
exceed the actual cost incurred to replace or restore the
property or asset which was the subject of such Loss as nearly
as practicable to conditions prior to such Loss;
(k) shall, within 180 days after receipt by the
Borrower or any Subsidiary or the Agent of any insurance
proceeds with respect to any Loss resulting from a casualty,
make a mandatory prepayment of the Loans in an amount by which
such insurance proceeds exceed the actual cost incurred by the
Borrower or such Subsidiary to repair or replace the property
or asset which was the subject of the Loss or deemed Loss
giving rise to such insurance proceeds;
(l) shall, within 180 days after receipt by the
Borrower or any Subsidiary or the Agent of any insurance
proceeds with respect to any Loss resulting from a liability,
make a mandatory prepayment of the Loans in an amount by which
such insurance proceeds exceed the amount of the liability to
be satisfied with such proceeds (to the extent such liability
is so satisfied);
(m) shall, concurrently with the receipt by the
Borrower of any proceeds of the life insurance policies
described in clause (b) of Section 6.1.5, make a mandatory
prepayment of the Loans in an amount equal to the amount of
such insurance proceeds;
(n) shall, concurrently with the receipt by the
Borrower of any amount payable by the Sellers to the Borrower
pursuant to or as a result of the breach by the Sellers of the
Acquisition Agreement, make a mandatory prepayment in an
aggregate amount equal to the amount so received;
(o) shall prepay the entire outstanding principal
amount of the Loans together with accrued and unpaid interest
and all of the outstanding Obligations hereunder upon the
occurrence of a Change in Control; and
(p) shall, concurrently with the delivery of the
Borrowing Base Certificate required under clause (i) of
Section 6.1.1, make a mandatory prepayment of Revolving Loans
in the amount, if any, by which the aggregate Revolving Loans
outstanding and Letters of Credit outstanding exceed the
Borrowing Base shown thereon.
SECTION 3.3.2. Application. Each prepayment or
repayment of principal required under clauses (f) through (o)
of Section 3.3.1 shall be applied (i) if made on or prior to
September 30, 1998, first, pro rata to the scheduled
installments due on Term Loan A under clause (c) of Section
3.3.1 and to the scheduled installments due on Term Loan B
under clause (d) of Section 3.3.1, each in inverse order of
maturity until Term Loan A and Term Loan B have been fully
repaid; then to scheduled installments due on Term Loan C
under clause (e) of Section 3.3.1 in inverse order of maturity
and to any Revolving Loans, in each case on a pro rata basis
until fully repaid, and (ii) if made thereafter, to the
scheduled installments due on the Term Loans under clauses
(c), (d), and (e) of Section 3.3.1 in inverse order of
maturity, in each case on a pro rata basis until repaid, and
then to any Revolving Loans.
SECTION 3.3.3. Revolving Loans on Borrower's Behalf.
The Lenders are authorized to, and at their option may, make
Revolving Loans on behalf of the Borrower for payment of all
fees, expenses, charges, costs, principal and interest owed by
the Borrower to the Lenders or the Agent under this Agreement
and the other Loan Documents. Such Revolving Loans shall be
made when and as the Borrower fails promptly to pay same, and
all such Revolving Loans shall constitute Revolving Loans
made to the Borrower and shall be secured by all of the
Collateral.
SECTION 3.3.4. Reduction of Revolving Loan
Commitment. The Revolving Loan Commitment shall be
permanently reduced by the amount of any prepayments required
to be applied to any Revolving Loans pursuant to Section 3.3.2
(such reduction to occur regardless of whether any Revolving
Loans are outstanding).
SECTION 3.4 Interest. Interest on the
outstanding principal amount of the Loans and other
outstanding Obligations shall accrue and be payable in
accordance with this Section 3.4.
SECTION Term Loan Rate. Subject to Section 3.4.4,
the Term Loans or any portion thereof shall accrue interest at
the following rates per annum, at the election of the
Borrower, pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice:
(a) during such periods as Term Loan A or Term Loan
C or any portion thereof are Base Rate Loans, the ING
Alternate Base Rate (as in effect from time to time) plus
1.75%;
(b) during such periods as Term Loan A or Term Loan
C or any portion thereof are Eurodollar Loans, for each
Interest Period relating thereto, the Eurodollar Rate for
such Interest Period plus 3.25%;
(c) during such periods as Term Loan B or any
portion thereof is a Base Rate Loan, the ING Alternate
Base Rate (as in effect from time to time) plus 2.00%;
(d) during such periods as Term Loan B or any
portion thereof is a Eurodollar Loan, for each Interest
Period relating thereto, the Eurodollar Rate for such
Interest Period plus 3.50%.
SECTION 3.4.2. Revolving Loan Rate. Subject to
Section 3.4.4, Borrowings of Revolving Loans shall accrue
interest at the following rates per annum, at the election of
the Borrower pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice:
(a) during such periods as such Borrowing consists
of Base Rate Loans, the ING Alternate Base Rate (as in
effect from time to time) plus 1.25%, and
(b) during such periods as such Borrowing consists
of Eurodollar Loans, for each Interest Period relating
thereto, the Eurodollar Rate for such Interest Period
plus 2.75%.
SECTION 3.4.3. Continuation and Conversion
Elections. By delivering a Continuation/Conversion Notice to
the Agent on or before 11:00 a.m., New York City time, on a
Business Day, the Borrower may from time to time irrevocably
elect, on not less than three (3) nor more than five (5)
Business Days' notice, that all or any portion in an aggregate
minimum amount of $250,000 and an integral multiple of $50,000
in excess thereof of Revolving Loans or the Term Loans be, in
the case of Base Rate Loans, converted to Eurodollar Loans or
continued as Eurodollar Loans; provided, however, that:
(a) each such continuation or conversion shall be
pro rata among the applicable outstanding Term Percentages of
the Term Loans or Revolving Percentages of Revolving Loans, as
the case may be, of all Lenders; and
(b) no portion of the outstanding principal amount
of any Loan may be continued as, or converted into, a
Eurodollar Loan when any Default has occurred and is
continuing.
The Agent shall give prompt telephonic notice to each Lender
of the interest rate determined pursuant to this Section 3.4.3
with respect to such Loans. Absent delivery of a
Continuation/Conversion Notice with respect to any Eurodollar
Loan at least three (3) Business Days before the last day of
the then current Interest Period with respect thereto, such
Eurodollar Loan shall, on such last day, automatically convert
to a Base Rate Loan.
SECTION 3.4.4. Post-Default Rates. From and after
the occurrence of an Event of Default and during the
continuance thereof, the Borrower shall pay interest (after as
well as before judgment) on the outstanding principal amount
of all Loans and other Obligations at a rate per annum equal
to the Post-Default Rate applicable to such Loans and
Obligations.
SECTION 3.4.5. Payment Dates. Accrued interest on
any Loans shall be payable, without duplication:
(a) on the Stated Maturity Date applicable to such
Loans;
(b) with respect to any portion of any Loan prepaid
or repaid pursuant to Section 3.3.1, on the date such
prepayment or repayment is due as provided in Section 3.3.1
and, in the case of a voluntary prepayment, on the date set
forth in any notice required for such prepayment;
(c) with respect to Base Rate Loans, on each
Quarterly Payment Date, commencing with the first such day
following the Closing Date;
(d) with respect to Eurodollar Loans, on the last
day of each applicable Interest Period (and if such Interest
Period shall exceed three months, also on the numerically
corresponding day of the third calendar month after the
commencement of such Interest Period);
(e) with respect to any Base Rate Loans converted
into Eurodollar Loans on a day which is not a Quarterly
Payment Date, on the date of such conversion; and
(f) on the date of acceleration of such Loans
pursuant to Section 7.2 or 7.3.
Interest accruing at the Post-Default Rate and, to the extent
permitted by applicable law, interest on overdue amounts
(including overdue interest), shall be payable upon demand.
SECTION 3.4.6. Rate Determinations. All
determinations by the Agent of the rate of interest applicable
to any Loan shall be conclusive in the absence of manifest
error.
SECTION 3.4.7. Limitation on Types of Loans.
Anything herein to the contrary notwithstanding, if on or
prior to the determination of any Eurodollar Rate for any
Interest Period:
(a) the Agent determines in good faith, which
determination shall be conclusive, that quotations of interest
rates for the relevant deposits referred to in the definition
of "Eurodollar Rate" are not being provided in the relevant
amounts or for the relevant maturities for purposes of
determining rates of interest for Eurodollar Loans as provided
herein; or
(b) the Required Lenders determine in good faith,
which determination shall be conclusive, and notify the Agent
that the relevant rates of interest referred to in the
definition of "Eurodollar Rate" upon the basis of which the
rate of interest for Eurodollar Loans for such Interest Period
is to be determined are not likely to cover adequately the
cost to such Lenders of making or maintaining Eurodollar Loans
for such Interest Period;
then the Agent shall give the Borrower and each Lender prompt
notice thereof, and so long as such condition remains in
effect, the Lenders shall be under no obligation to make
additional Eurodollar Loans, to continue Eurodollar Loans or
to convert Base Rate Loans into Eurodollar Loans, and the
Borrower shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Loans,
either prepay such Loans or such Loans shall be converted into
Base Rate Loans in accordance with Section 3.4.9 hereof.
SECTION 3.4.8. Illegality
(a) Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any
Lender or its Applicable Lending Office to honor its
obligation to make or maintain Eurodollar Loans hereunder,
then such Lender shall promptly notify the Borrower thereof
(with a copy to the Agent) and such Lender's obligation to
make or continue, or to convert Base Rate Loans into,
Eurodollar Loans shall be suspended until such time as such
Lender may again make and maintain Eurodollar Loans (in which
case the provisions of Section 3.4.9 hereof shall be
applicable).
(b) Notwithstanding any other provision contained
in this Agreement, the Agent shall not be obligated to issue
or jointly apply for any Letter of Credit, nor shall any
Lender be obligated to purchase its participation in any
Letter of Credit hereunder, if the issuance of or joint
application for such Letter of Credit or purchase of such
participation shall have become unlawful or prohibited by
compliance by Agent or such Lender in good faith with any law,
governmental rule, guideline, request, order, injunction,
judgment or decree (whether or not having the force of law);
provided that in the case of the obligation of a Lender to
purchase such participation, such Lender shall have notified
the Agent to such effect at least three (3) Business Days'
prior to the issuance thereof by the Agent, which notice shall
relieve the Agent of its obligation to issue such Letter of
Credit pursuant to Sections 2.1.4 and 2.1.5 hereof.
SECTION 3.4.9. Treatment of Affected Loans. If the
obligation of any Lender to make Eurodollar Loans or continue,
or to convert Base Rate Loans into, Eurodollar Loans shall be
suspended pursuant to Sections 3.4.7 or 3.4.8 hereof, such
Lender's Eurodollar Loans shall be automatically converted
into Base Rate Loans on the last day(s) of the then current
Interest Period(s) for Eurodollar Loans (or, in the case of a
conversion required by Sections 3.4.7 or 3.4.8 hereof, on such
earlier date as such Lender may specify to the Borrower with a
copy to the Agent) and, unless and until such Lender gives
notice as provided below that the circumstances specified in
Sections 3.4.7 or 3.4.8 hereof which gave rise to such
conversion no longer exist:
(a) to the extent that such Lender's Eurodollar
Loans have been so converted, all payments and prepayments of
principal which would otherwise be applied to such Lender's
Eurodollar Loans shall be applied instead to its Base Rate
Loans; and
(b) all Loans which would otherwise be made or
continued by such Lender as Eurodollar Loans shall be made or
continued instead as Base Rate Loans and all Base Rate Loans
of such Lender which would otherwise be converted into
Eurodollar Loans shall remain as Base Rate Loans.
Promptly after the circumstances specified in Sections 3.4.7
or 3.4.8 which gave rise to the conversion of such Lender's
Eurodollar Loans pursuant to this Section 3.4.9 no longer
exist, such Lender shall give the Agent and the Borrower
notice thereof, and the Borrower may thereafter request
conversion of such Loans to Eurodollar Loans, subject to the
subsequent application of Section 3.4.7 or 3.4.8.
SECTION 3.4.10. Compensation. The Borrower
shall pay to the Agent for the account of each Lender, upon
the request of such Lender through the Agent, such amount or
amounts as shall be sufficient (in the reasonable opinion of
such Lender) to compensate it for any loss, cost or expense
which such Lender determines is attributable to:
(a) any payment, prepayment or conversion of a
Eurodollar Loan made by such Lender for any reason (including,
without limitation, the acceleration of the Loans pursuant to
Article 7 hereof) on a date other than the last day of the
Interest Period for such Loan; or
(b) any failure by the Borrower for any reason
(including, without limitation, the failure of any of the
conditions precedent specified in Article 4 hereof to be
satisfied) to borrow a Eurodollar Loan from such Lender on the
date for such borrowing specified in the Borrowing Request
given pursuant to Section 3.1 hereof.
SECTION 3.5. Taxes
(a) Any and all payments by the Borrower hereunder
or under the Notes or any other Loan Document shall be made,
in accordance with this Section 3.5, free and clear of and
without deduction for any and all present or future Taxes. If
the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note
to any Lender or the Agent, (i) the sum payable shall be
increased as may be necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 3.5), such Lender
or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii)
the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or intangibles
taxes or any other excise or property taxes, transfer taxes,
charges or similar levies which arise from any payment made
hereunder or under the Notes or from the execution, delivery
or registration of, or otherwise with respect to this
Agreement, the Notes, or any other Loan Document.
(c) The Borrower will indemnify each Lender and the
Agent for the full amount of the taxes, charges and levies
described in clauses (a) and (b) of this Section 3.5
(including, without limitation, any such taxes, charges and
levies imposed by any jurisdiction on amounts payable under
this Section 3.5) paid by such Lender or the Agent (as the
case may be) and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto,
whether or not such taxes, charges and levies were correctly
or legally asserted. Payment under this clause (c) shall be
made within 30 days from the date such Lender or the Agent (as
the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of
Taxes, the Borrower will furnish to the Agent, at its address
referred to in Section 9.2, the original or a certified copy
of any receipt received by the Borrower evidencing payment
thereof.
(e) On or prior to the Closing Date and on or prior
to the first Business Day of each calendar year thereafter,
each Foreign Lender shall provide the Agent and the Borrower
with two properly executed original Forms 4224 and 1001 (or
any successor form) prescribed by the Internal Revenue Service
or other documents satisfactory to the Borrower and the Agent,
and properly executed Internal Revenue Service Forms W-8 or W-
9, as the case may be, certifying (i) as to such Foreign
Lenders's status for purposes of determining exemption from
United States withholding taxes with respect to all payments
to be made to such Foreign Lender hereunder and under the
Notes or (ii) that all payments to be made to such Foreign
Lender hereunder and under the Notes are subject to such taxes
at a rate reduced to zero by an applicable tax treaty. Each
Foreign Lender agrees to provide the Agent and the Borrower
with new forms prescribed by the Internal Revenue Service upon
the expiration or obsolescence of any previously delivered
form, or after the occurrence of any event requiring a change
in the most recent forms delivered by it to the Agent and the
Borrower.
(f) In the event that the Agent or any Lender
receives a refund or credit that, in the sole determination of
the Agent or such Lender, is attributable to any taxes paid on
its behalf by the Borrower in accordance with this Section
3.5, the Agent or such Lenders, as the case may be, shall pay
an amount equal to such refund or credit to the Borrower.
(g) Without prejudice to the survival of any other
agreement hereunder, the agreements and obligations contained
in this Section 3.5 shall survive the payment in full of
principal and interest hereunder and under the Notes.
SECTION 3.6. Payments, Interest Rate
Computations, Other Computations, etc. All payments by the
Borrower pursuant to this Agreement, the Notes or any other
Loan Document, (a) in respect of principal or interest on the
Term Notes, shall be made by the Borrower to the Agent for the
account of the Lenders, pro rata according to their respective
unpaid principal amounts of the Term Notes, and, (b) in
respect of principal or interest on the Revolving Notes, shall
be made by the Borrower to the Agent for the account of the
Lenders, pro rata according to their respective unpaid
principal amounts of the Revolving Notes. The payment of the
commitment fee referred to in Section 2.3 (a) shall be made by
the Borrower to the Agent for the account of the Lenders
entitled thereto pro rata according to their respective
Revolving Percentages. The payment of the Letter of Credit
Fee referred to in Section 2.3(b) shall be made by the
Borrower to the Agent for the account of the Lenders entitled
thereto pro rata according to their respective Letter of
Credit. All other amounts payable to the Agent or any Lender
under this Agreement or any other Loan Document (except under
Section 2.3) shall be paid to the Agent for the account of the
Person entitled thereto. All such payments required to be
made to the Agent shall be made, without setoff, deduction or
counterclaim, not later than 2:00 p.m., New York City time, on
the date due, in immediately available funds, to such account
as the Agent shall specify from time to time by notice to the
Borrower. Funds received after that time shall be deemed to
have been received by the Agent on the next following Business
Day. The Agent shall promptly remit in the type of funds
received to each Lender notified to the Agent its share, if
any, of such payments received by the Agent for the account of
such Lender or holder. All interest and fees shall be
computed on the basis of the actual number of days (including
the first day but excluding the last day) occurring during the
period for which such interest or fee is payable over a year
comprised of 360 days (365 days in the case of interest
computed on the basis of the ING Alternate Base Rate).
Whenever any payment to be made shall otherwise be due on a
day which is not a Business Day, such payment shall be made on
the immediately preceding Business Day
SECTION 3.7. Proration of Payments. If any
Lender shall obtain any payment or other recovery (whether
voluntary, involuntary, by application of setoff or otherwise)
on account of principal of or interest on any Loan or other
Obligations in excess of such Lender's or holder's pro rata
share of payments then or therewith obtained thereon by all
Lenders, such Lender which has received in excess of its pro
rata share shall purchase from the other Lenders such
participations in such Notes or other Obligations held by them
as shall be necessary to cause such purchaser to share the
excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such
purchasing holder, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but
without interest. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to
this Section 3.7 may, to the fullest extent permitted by law,
exercise all its rights of payment (including pursuant to
Section 3.8) with respect to such participation as fully as if
such Lender were the direct creditor of the Borrower in the
amount of such participation. 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 3.7 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 3.7 to share in the benefits of any
recovery on such secured claim.
SECTION 3.8. Setoff. In addition to, and not
in limitation of, any rights of any Lender under applicable
law, each Lender shall, upon the occurrence and during the
continuance of any Event of Default, have the right to
appropriate and apply to the payment of the Obligations owing
to it (whether or not then due), and (as security for such
Obligations) the Borrower hereby grants to each Lender, a
continuing security interest in, any and all balances,
credits, deposits, accounts or moneys of the Borrower then or
thereafter maintained with such Lender; provided, however,
that any such appropriation and application shall be subject
to the provisions of Section 3.7.
SECTION 3.9. Use of Proceeds.
(a) The Borrower shall use the proceeds of the Term
Loans and the Revolving Loans (i) to pay costs and expenses
arising in connection with the transactions contemplated
hereby which are set forth in Item 1 ("Transaction Costs") of
the Disclosure Schedule (subject to the Agent's approval of
such costs and expenses), (ii) to refinance existing
Indebtedness to the Lenders, (iii) to pay the Earnout and
Earnout - ASA or for Approved Acquisition Expenditures, and
(iv) to make Acquisitions of Temporary Staffing Businesses
approved in writing by the Lenders in their sole discretion.
(b) The Borrower shall use the proceeds of the
Revolving Loans made after the Closing Date for the on-going
working capital needs of the Borrower and its Subsidiaries.
(c) No part of the proceeds of any Loans shall be
used for any purpose which violates Regulations G, T, U or X
of the F.R.S. Board.
SECTION 3.10. Letter of Credit Obligations Absolute.
The obligation of the Borrower to reimburse the Agent for
drawings made under Letters of Credit issued for the account
of the Borrower or any Eligible Subsidiary, whether or not
issued for the joint account of the Agent, and the Lenders'
obligation to honor their participations purchased therein
shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under
all circumstances, including without limitation, the following
circumstances:
(a) Any lack of validity or enforceability of any
Letter of Credit;
(b) The existence of any claim, set-off, defense or
other right which the Borrower or any Subsidiary or Affiliate
of the Borrower may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons or
entities for whom any such beneficiary or transferee may be
acting), any Lender or any other Person, whether in connection
with this Agreement, the transactions contemplated herein or
any unrelated transaction (including without limitation any
underlying transaction between the Borrower or any of its
Subsidiaries and Affiliates and the beneficiary for which such
Letter of Credit was procured); provided that nothing in this
Section shall affect the right of the Borrower to seek relief
against any beneficiary, transferee, Lender or any other
Person in any action or proceeding or to bring a counterclaim
in any suit involving such Persons;
(c) Any draft, demand, certificate or any other
document presented under any Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement
therein being untrue or inaccurate in any respect;
(d) Payment by the Agent under any Letter of Credit
against presentation of a demand, draft or certificate or
other document which does not comply with the terms of such
Letter of Credit;
(e) Any other circumstance or happening whatsoever
which is similar to any of the foregoing; or
(f) The fact that a Default or an Event of Default
shall have occurred and be continuing.
Nothing in this Section 3.10 shall prevent an action against
the Agent for its gross negligence or willful misconduct in
honoring drafts under the Letters of Credit.
ARTICLE 4.
CONDITIONS TO LOANS
SECTION 4.1. Initial Loans and Letters of
Credit. The obligations of the Lenders to fund the Term Loans
and the Revolving Loans and issue or jointly apply for Letters
of Credit on or after the Closing Date shall be subject to the
prior or concurrent satisfaction of each of the conditions
precedent set forth in this Section 4.1.
SECTION 4.1.1. Resolutions, etc. The Agent shall
have received:
(a) a certificate, dated the Closing Date, of the
Secretary of the Borrower and each Eligible Subsidiary as of
the Closing Date as to:
(i) resolutions of its Board of Directors, then in
full force and effect authorizing the execution, delivery and
performance of the Loan Documents to which such Loan Party is
a party and the related transactions contemplated thereby, and
(ii) the incumbency and signatures of those of its
officers authorized to act with respect to the Loan Documents
to which it is party, upon which certificate each Lender may
conclusively rely until it shall have received further
certificates of the Secretary of such Loan Party canceling or
amending such prior certificates;
(b) a so-called "good standing" certificate with
respect to the Borrower as of the Closing Date from the
appropriate Governmental Authority of the State of its
incorporation;
(c) evidence of qualification of the Borrower as of
the Closing Date to do business in each other jurisdiction in
which the failure to so qualify could result in a Material
Adverse Change; and
(d) such other documents (certified if requested)
as the Agent or the Required Lenders may reasonably request,
with respect to this Agreement, the Notes, any other Loan
Document, the transactions contemplated hereby and thereby, or
any Organic Document, Contractual Obligation or Regulatory
Approval.
SECTION 4.1.2. Notes. The Agent shall have received
for the account of each Lender, such Lender's Term Notes and
Revolving Note, in each case duly executed and delivered
pursuant to Section 3.2.
SECTION 4.1.3. Subsidiary Guaranty. The Agent shall
have received for the account of each Lender the Subsidiary
Guaranty, duly executed and delivered by each Subsidiary of
the Borrower.
SECTION 4.1.4. No Contest, etc. No litigation,
arbitration, governmental investigation, injunction,
proceeding or inquiry shall be pending or, to the knowledge of
the Borrower, threatened which:
(a) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as
a result of, the transactions contemplated by or in connection
with the Acquisition Agreement, this Agreement or any Loan
Document; or
(b) would, in the opinion of the Agent, be
materially adverse to any of the parties hereto with respect
to the transactions contemplated hereby;
No litigation set forth in Item 3 (Litigation) of the
Disclosure Schedule, in the reasonable opinion of the Agent,
could result in a Material Adverse Change or give rise to any
liability on the part of the Agent or any Lender in connection
with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.
SECTION 4.1.5. Certificate as to Completed
Conditions, Warranties, No Default, etc. The Agent shall have
received a certificate, dated the Closing Date, of the chief
executive officer of the Borrower, to the effect that:
(a) all conditions precedent set forth in this
Section 4.1 have been satisfied;
(b) all representations and warranties set forth in
Article 5 are true and correct in all material respects;
(c) all representations and warranties set forth in
the Loan Documents are true and correct in all material
respects;
(d) no Default or Event of Default has occurred and
is continuing; and
(e) there has been no change in any Organic
Document of Borrower or any Eligible Subsidiary since the
Prior Closing Date (or each Eligible Subsidiary has delivered
to the Agent a Secretary's Certificate signed by the chief
executive officer of such Subsidiary to similar effect as to
such Subsidiary).
SECTION 4.1.6. Opinions of Counsel. The Agent shall
have received opinion letters, dated the Closing Date and
addressed to the Agent and all Lenders, from ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
or other counsel to the Borrower and its Subsidiaries, in form
and substance satisfactory to the Agent, and covering such
matters as the Agent may request. Additionally, the Agent
shall have received opinion letters, dated the Closing Date
and addressed to the Agent and all Lenders from local counsel,
in form and substance satisfactory to the Agent and covering
such matters as the Agent may request.
SECTION 4.1.7. Closing Fees, Expenses, etc. The
Agent shall have received the facility fee, which was due and
payable pursuant to the terms of the Facility Fee Letter, and
all costs and expenses which have been invoiced and are
payable upon the initial Borrowing pursuant to Section 9.3.
SECTION 4.1.8. Security Documents and Perfection.
The Agent shall have received:
(a) The Security Agreement, duly executed by an
Authorized Officer of the Borrower and each Eligible
Subsidiary of the Borrower;
(b) The Borrower Trademark Assignment duly executed
by an Authorized Officer of the Borrower, and the Subsidiary
Trademark Assignment duly executed by an Authorized Officer of
each Subsidiary of the Borrower owning U.S. patents or
trademarks;
(c) Evidence of the execution and delivery of all
filings of the Financing Statements with respect to the
Security Agreement and other Security Documents; searches or
other evidence as to the absence of any perfected security
interests or Liens (except those previously disclosed to and
consented to by the Lenders); and evidence that all other
actions (including all actions necessary such that the
Trademark Assignment are acceptable for filing in the United
States Patent and Trademark Office and the payment of all
documentary, intangibles, filing and recording taxes and fees)
with respect to the Liens created by the Security Documents
have been taken as are necessary or appropriate to perfect
such Liens;
(d) The Borrower Pledge Agreement, duly executed by
an Authorized Officer of the Borrower, and the Subsidiary
Pledge Agreement, duly executed by an Authorized Officer of
each Subsidiary.
(e) All (i) stock certificates and undated stock
powers duly executed in blank relating thereto with respect to
the pledged securities under the Borrower Pledge Agreement or
the Subsidiary Pledge Agreement, which pledged securities
shall consist of the Incepta Shares, all outstanding Stock of
all other Subsidiaries of the Borrower incorporated in the
United States, sixty-six percent (66%) of all other
Subsidiaries of the Borrower incorporated in countries other
than the United States, and all stock of the Borrower pledged
to the Borrower by its employees, officers and directors, and
(ii) all promissory notes, including, without limitation, the
▇▇▇▇▇▇▇▇▇ Note, and other instruments owned by Borrower or
other Subsidiaries duly endorsed in blank pledged under the
Borrower Pledge Agreement or the Subsidiary Pledge Agreement.
(f) A collateral assignment to the Agent, for its
benefit and the ratable benefit of the Lenders, of the
Borrower's rights under all acquisition agreements and all
other documents executed or delivered by any seller of a
Temporary Staffing Business to Borrower or an Affiliate
pursuant to such acquisition agreements, duly consented to by
such Sellers, which assignment shall be in form and substance
satisfactory to the Agent; and
(g) An assignment to the Agent, for its benefit and
the ratable benefit of the Lenders, of the insurance policies
described in Section 4.1.12 (with respect to which the insurer
shall have executed and delivered to the Agent a written
consent), which assignment shall be in form and substance
satisfactory to the Agent.
SECTION 4.1.9. Employment Agreements; Compensation.
The Agent shall have received, certified by the Borrower,
copies of all employment agreements to which the Borrower or
any of its Subsidiaries is a party and the Agent shall be
satisfied in all respects with the levels of compensation
(including, without limitation, fees, wages, salaries,
bonuses, deferred payment arrangements, stock options,
incentive plans and pension or employee benefit contributions)
paid to key members of management.
SECTION 4.1.10 Pension and Welfare Liabilities. The
Agent shall have received (i) the most recent actuarial
valuation report for each Single Employer Plan, if any, and a
copy of Schedule B to the Annual Report on Form 5500 of the
Internal Revenue Service for each such Single Employer Plan
most recently filed with the Internal Revenue Service, and
(ii) a report prepared by the Borrower in form and substance
satisfactory to the Agent detailing any liabilities of the
Borrower and each of its Subsidiaries, and of each Commonly
Controlled Entity of the Borrower for post-retirement benefits
under Plans which are welfare benefit plans.
SECTION 4.1.11. Insurance. The Agent shall have
received evidence satisfactory to it that the insurance
maintained by the Borrower and its Subsidiaries is issued by
an insurance company with a Best's rating of "A" or better and
a financial size category of not less than XII, is in amounts
satisfactory to the Agent and, in the case of insurance
maintained by the Borrower and its Subsidiaries, under
policies naming the Agent as loss payee (in the case of
casualty insurance policies) and as additional insured (in the
case of liability policies), and otherwise complying with the
requirements of this Agreement and the Security Documents.
SECTION 4.1.12. Key Man Insurance. The Borrower
shall have purchased "key-man" life insurance policies in the
total amount of not less than $7,960,700 on the lives of [▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ List and ▇▇▇▇▇
▇▇▇▇▇].
SECTION 4.1.13. Financial Information, etc. The
Agent shall have received the historical financial statements
referred to in Section 5.4, and the Projections.
SECTION 4.1.14. Solvency, etc. As of the
Closing Date the assets of the Borrower and each Eligible
Subsidiary shall be at least $100,000 greater than the
liabilities of the Borrower and each Eligible Subsidiary
(including all liabilities and obligations of the Borrower and
each Eligible Subsidiary, fixed or contingent, direct or
indirect, disputed or undisputed, and whether or not required
to be reflected on a balance sheet prepared in accordance with
GAAP, except to the extent noted thereon); and the Agent shall
have received a certificate of the chief operating officer of
the Borrower and each Eligible Subsidiary dated the Closing
Date, stating that, after giving effect to the consummation of
the transactions contemplated by this Agreement to occur on
the Closing Date, the Borrower and each Eligible Subsidiary is
Solvent.
SECTION 4.1.15. [INTENTIONALLY LEFT BLANK
SECTION 4.1.16. [INTENTIONALLY LEFT BLANK
SECTION 4.1.17. [INTENTIONALLY LEFT BLANK
SECTION 4.1.18. Review of the Borrower's
Operations. The Agent or its representatives shall have
completed their review of the Borrower's management
information systems, accounting, financial reporting and cash
management systems as well as the legal structure of each Loan
Party and the nature of each Loan Party's asset composition
and contingent liabilities, and the Agent shall be satisfied
in all respects with the results of such review.
SECTION 4.1.19. Material Contracts. The Agent
shall have received a certificate from an Authorized Officer
of the Borrower and each Eligible Subsidiary to the effect
that attached thereto are true and correct copies of each of
the items listed on Item 5 ("Material Contracts") of the
Disclosure Schedule, other than those delivered to the Agent
as of the Original Closing Date and the Acquisition Agreement
- ASS, the Acquisition Agreement - ASA, and the documents
related to the Vogue acquisition, and the Agent shall be
satisfied in all respects with terms of such items.
SECTION 4.1.20. Letter to Accountants. The
Agent shall have received satisfactory evidence that the
Borrower has delivered a letter to its independent public
accountants authorizing such public accountants to discuss the
Borrower's and each other Loan Party's financial matters with
the Agent and each Lender or any of their respective
representatives whether or not a representative of the
Borrower is present.
SECTION 4.1.21. Other Documents, Certificates,
Etc. The Agent shall have received such other documents,
certificates, opinions of counsel or other materials as it
reasonably requests from any Loan Party.
SECTION 4.2. All Loans and Letters of Credit.
The obligations of the Lenders to fund the Revolving Loans and
issue or jointly apply for Letters of Credit after the Closing
Date shall be subject to the prior or concurrent satisfaction
of each of the conditions precedent set forth in this Section
4.2.
SECTION 4.2.1. Compliance with Warranties, No
Default, etc. The representations and warranties set forth in
Article 5 shall have been true and correct in all material
respects as of the date initially made. In addition, both
before and after giving effect to the making of any such Loan:
(a) such representations and warranties shall be
true and correct in all material respects with the same effect
as if then made (except to the extent expressly made as of a
specified date, in which case such representations and
warranties shall be true as of such specified date);
(b) all representations and warranties set forth in
the Security Documents shall be true and correct in all
material respects with the same effect as if then made (except
to the extent expressly made as of a specified date, in which
case such representations and warranties shall be true as of
such specified date);
(c) no material adverse development shall have
occurred in any litigation, arbitration or governmental
investigation, proceeding or inquiry disclosed pursuant to
Section 5.7 which renders such litigation, arbitration or
governmental investigation or inquiry or proceeding, in the
reasonable opinion of the Required Lenders, likely to be
adversely determined and, if adversely determined, could
result in a Material Adverse Change;
(d) no Default or Event of Default shall have
occurred and be continuing; and
(e) the aggregate of all Revolving Loans
outstanding plus the aggregate face amounts of all outstanding
Letters of Credit does not exceed the Borrowing Base.
SECTION 4.2.3. Satisfactory Legal Form. All
documents executed or submitted by or on behalf of the
Borrower or any Subsidiary shall be reasonably satisfactory in
form and substance to the Agent and its counsel, the Agent and
its counsel shall have received all information, and such
counterpart originals or such certified or other copies of
such Instruments, as the Agent or its counsel may request.
All legal matters incident to the transactions contemplated by
this Agreement shall be satisfactory to counsel to the Agent.
SECTION 4.2.4. Margin Regulations. The making of
such Loan and the use of the proceeds thereof shall not
violate Regulations G, T, U and X of the F.R.S. Board.
SECTION 4.2.5. Adverse Change. In the reasonable
judgment of the Required Lenders, no Material Adverse Change
shall have occurred since the Original Closing Date.
SECTION 4.2.6. Change in Law. On the date of such
Loan, no change shall have occurred in applicable law, or in
applicable regulations thereunder or in interpretations
thereof by any court or Governmental Authority which, in the
opinion of any Lender, would make it illegal for such Lender
to make the Loan required to be made on such date.
ARTICLE 5
WARRANTIES, ETC.
In order to induce the Lenders and the Agent to
enter into this Agreement, to engage in the transactions
contemplated herein and in the other Loan Documents and to
make the Loans and issue or jointly apply for or participate
in the Letters of Credit, the Borrower represents and warrants
to the Agent and each Lender as set forth in this Article 5.
SECTION 5.1. Organization, Power, Authority,
etc. Each of the Borrower and its Subsidiaries (i) is a
corporation validly organized and existing and in good
standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction
where the failure to so qualify could result in a Material
Adverse Change, and (iii) has full power and authority, and,
except as set forth in Item 6 ("Governmental Licenses") of the
Disclosure Schedule, holds all governmental licenses, permits,
registrations and other Regulatory Approvals required under
all Requirements of Law, to own and hold under lease its
property and to conduct its business as conducted prior to the
Closing Date and as contemplated to be conducted subsequent to
the Closing Date. The Borrower has full power and authority
to enter into and perform its Obligations under this
Agreement, the Notes and each other Loan Document executed or
to be executed by it and to obtain Loans hereunder.
SECTION 5.2. Due Authorization. The
execution and delivery by each Loan Party of each Loan
Document executed or to be executed by it, and the incurrence
and performance by such Loan Party of the Obligations have
been duly authorized by all necessary corporate action, do not
require any Regulatory Approval (except those Regulatory
Approvals already obtained), do not and will not conflict
with, result in any violation of, or constitute any default
under, any provision of any Organic Document or Contractual
Obligation of such Loan Party or any law or governmental
regulation or court decree or order, and will not result in or
require the creation or imposition of any such Lien on such
Loan Party's properties pursuant to the provisions of any
Contractual Obligation of such Loan Party.
SECTION 5.3. Validity, etc. Each of this
Agreement, the Notes and the other Loan Documents constitutes,
the legal, valid and binding obligation of the each Loan Party
executing and delivering such Loan Document, enforceable in
accordance with its terms subject to the effect of any
applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally, and the effect of
general principles of equity (regardless of whether considered
in a proceeding in equity or at law).
SECTION 5.4. Financial Information; Solvency
(a) Except as disclosed in Item 7 ("Exceptions to
GAAP") of the Disclosure Schedule, all balance sheets, all
statements of operations, stockholders' equity and cash flows,
and all other financial information of the Borrower and its
Subsidiaries which have been furnished by or on behalf of the
Borrower and its Subsidiaries to the Agent and the Lenders for
the purposes of or in connection with this Agreement or any
transaction contemplated hereby, including:
(i) the consolidated audited balance sheets of the
Borrower as of December 31, 1994, December 31, 1995, and
December 31, 1996, and the related consolidated
statements of income and cash flows for each of the three
(3) fiscal years of the Borrower ending December 31,
1994, December 31, 1995 and December 31, 1996, together
with the opinion thereon of ▇▇▇▇▇▇▇▇▇ and Associates,
P.C. for Fiscal Years 1994 and 1995 and of Ernst & Young,
L.L.P. for Fiscal Year 1996 and the unaudited
consolidated financial statements for the Borrower as of
June 30, 1997;
(ii) the consolidated audit balance sheets of ASS as
of December 31, 1995 and December 31, 1996, and the
related consolidated statements of income and cash flows
for each of the two (2) fiscal years of ASS ending
December 31, 1995 and December 31, 1996 together with the
opinion thereon of Ernst & Young, L.L.P.
(iii) the consolidated reviewed balance sheets
of ▇▇▇▇▇ ▇▇▇▇▇ as of December 31, 1994 and December 31,
1995, and the related consolidated statements of income
and cash flows for each of the two (2) fiscal years of
▇▇▇▇▇ ▇▇▇▇▇ ending December 31, 1994 and December 31,
1995, together with the opinion thereon of ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & Redezky, C.P.A., P.C.;
(iv) the consolidated financial statements for
Administrative Sales Associates Temps, Inc. and
Administrative Sales Associates, Inc. for December 31,
1995 and December 31, 1996;
(v) the Projections;
have been prepared in accordance with GAAP consistently
applied (except to the extent items in the Projections are
based upon estimates) throughout the periods involved and
present fairly in all material respects the matters reflected
therein subject, in the case of unaudited statements, to
changes resulting from normal year-end audit adjustments and
except as to the absence of footnotes. As of the Closing
Date, the Borrower nor any of its respective Subsidiaries has
material contingent liabilities or material liabilities for
taxes, long-term leases or unusual forward or long-term
commitments which are not reflected in the financial
statements described in clauses (i), (ii), (iii) and (iv).
(b) After giving effect to the consummation of the
transactions contemplated by this Agreement and the other Loan
Documents to occur on the Closing Date (including the
Acquisition and the Loan and the initial Revolving Loans), the
Borrower and each Subsidiary is Solvent.
SECTION 5.5. Material Adverse Change. Since
December 31, 1995, there has been no material adverse change
in the condition (financial or otherwise), operations,
performance, business, properties or prospects of the Borrower
and its Subsidiaries taken as a whole, or in any industry in
which the Borrower or any of its Subsidiaries is engaged in
any material respect.
SECTION 5.6. Absence of Default. Neither the
Borrower nor any Subsidiary is in default in the payment of
(or in the performance of any material obligation applicable
to) any Indebtedness, or is in material default under any
regulation of any Governmental Agency or court decree or
order, or is in default under any Requirements of Law which
default could result in a Material Adverse Change.
SECTION 5.7. Litigation, Legislation, etc.
Except as disclosed in Item 3 (Litigation) of the Disclosure
Schedule, there is no pending or, to the knowledge of the
Borrower, threatened litigation, arbitration or governmental
investigation, proceeding or inquiry which, if adversely
determined, could result in a Material Adverse Change; and
none of the proceedings set forth in such Item 3 seeks to
amend, modify or enjoin the transactions contemplated hereby
or is likely to be adversely determined. To the knowledge of
the Borrower, there is no legislation, governmental regulation
or judicial decision that could result in a Material Adverse
Change.
SECTION 5.8. Regulations G, T, U and X.
Neither the Borrower nor any Subsidiary is engaged
principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or
carrying Margin Stock (as defined in F.R.S. Board Regulation G
or U) and, no assets of the Borrower or any Subsidiary consist
of Margin Stock. The Loans hereunder will not be used for a
purpose which violates, or would be inconsistent with, F.R.S.
Board Regulation G, T, U or X.
SECTION 5.9. Government Regulation. Neither
the Borrower nor any Subsidiary is an "investment company"
within the meaning of the Investment Holding Company Act of
1940, as amended, or a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or subject to regulation
under the Federal Power Act, the Interstate Commerce Act or
any other federal or state law limiting its ability to incur
Indebtedness or to execute, deliver or perform the Loan
Documents to which it is party.
SECTION 5.10. Taxes. Each of the Borrower and its
present or past Subsidiaries has filed all tax returns and
reports required by law to have been filed by it and has paid
all taxes and Charges thereby shown to be owing, except any
such taxes or Charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on
its books.
SECTION 5.11. Pension and Welfare Plans. (a)
Except as disclosed in Item 8 (Benefit Plans) of the
Disclosure Schedule, neither the Borrower nor any Subsidiary
or Commonly Controlled Entity has assumed any material
liability under any employee benefit plan, fund, program,
arrangement, agreement or commitment maintained by or on
behalf of or contributed to by or on behalf of any entity or
trade or business which, together with any of such
corporations, is treated as a single employer under Sections
414(b), (c), (m) or (o) of the IRC. Neither the Borrower nor
any Subsidiary or Commonly Controlled Entity shall be subject
(directly or indirectly) to any material liability, tax or
penalty whatsoever to any person whomsoever with respect to
any employee benefit plan, fund, program, arrangement,
agreement or commitment described in the immediately preceding
sentence.
(b) No Reportable Event which could result in a
Material Adverse Change has occurred during the six-year
period prior to the date on which this representation is made
or deemed made with respect to any Single Employer Plan. The
Borrower, each Commonly Controlled Entity, each Subsidiary,
each Plan, and each trust maintained pursuant to any such Plan
have complied in all material respects with the applicable
provisions of ERISA, the IRC, and any other applicable laws.
Except as disclosed in Item 8 (Benefit Plans) of the
Disclosure Schedule, the present value of all "benefit
liabilities" (within the meaning of Section 4001(a)(16) of
ERISA) under each Single Employer Plan maintained by the
Borrower, any Subsidiary or any Commonly Controlled Entity
(based on those assumptions that would be used in a
termination of each such Plan) did not, as of the last annual
valuation date for which an actuarial valuation report has
been done, exceed the value of the assets of such Plan as of
such date. Except as disclosed in such Item 8, neither the
Borrower nor any Commonly Controlled Entity or Subsidiary has
incurred any liability to the PBGC or to any other Person
under Section 4062, 4063 or Section 4064 of ERISA on account
of the termination of, or its withdrawal from, a Single
Employer Plan, and no Lien has been imposed on the assets of
the Borrower or any Commonly Controlled Entity or Subsidiary
under Section 4068 of ERISA. To the knowledge of the Borrower
and any Commonly Controlled Entities and Subsidiaries, there
does not exist any event or condition which would permit the
institution of proceedings to terminate any Single Employer
Plan pursuant to Section 4042 of ERISA. Except as disclosed
in Item 8 of the Disclosure Schedule, no "accumulated funding
deficiency" (as defined in Section 302 of ERISA or Section 412
of IRC), whether or not waived, exists with respect to any
Pension Plan. The Borrower and each Commonly Controlled
Entity and Subsidiary have timely made in full each quarterly
installment payment to any Pension Plan required under Section
302(e) of ERISA or Section 412(m) of the IRC and have also
made full and timely payment of any other costs or expenses
related to such a Plan. The Borrower and all Commonly
Controlled Entities and Subsidiaries have made full and timely
payment of all contributions to Multiemployer Plans required
under ERISA, the IRC or applicable collective bargaining
agreements. Neither the Borrower nor any Commonly Controlled
Entity or Subsidiary has had a complete or partial withdrawal
from any Multiemployer Pension Plan and the liability to which
the Borrower or any Commonly Controlled Entity or Subsidiary
would become subject under ERISA if the Borrower or any such
Commonly Controlled Entity or Subsidiary were to withdraw
completely from all Multiemployer Pension Plans as of the
valuation date most closely preceding the date hereof is not
in excess of $100,000. No such Multiemployer Pension Plan has
been terminated or is in Plan Reorganization or ERISA
Insolvent, nor, to the knowledge of the Borrower and any
Commonly Controlled Entities and Subsidiaries, is any such
Multiemployer Pension Plan likely to be terminated or to
become in Plan Reorganization or ERISA Insolvent. To the
knowledge of the Borrower and any Commonly Controlled Entities
and Subsidiaries, no "accumulated funding deficiency" (as
defined in Section 302 of ERISA or Section 412 of the IRC),
whether or not waived, exists with respect to any
Multiemployer Plan. The present value (determined using
assumptions which are reasonable in respect of the benefits
provided and the employees participating) of the aggregate
liability of the Borrower and each Subsidiary and Commonly
Controlled Entity for post-retirement benefits to be provided
to their current and former employees under Plans which are
welfare benefit plans (as defined in Section 3(1) of ERISA) is
not in excess of $100,000. No written notice of liability has
been received with respect to the Borrower, any of its
Subsidiaries, or any Plan for any "prohibited transaction"
(within the meaning of Section 4975 of the IRC or Section 406
of ERISA), nor has any such prohibited transaction resulting
in material liability to the Borrower or any of its
Subsidiaries occurred. Neither the Borrower nor any
Subsidiary or Commonly Controlled Entity will, as a result of
consummating the transactions contemplated by this Agreement
(pursuant to the provisions of the Agreement, by operation of
law or otherwise) (i) have incurred or become liable for any
tax assessed by the Internal Revenue Service for any alleged
violations of Section 4975 of the IRC or any civil penalty
imposed by the Department of Labor for any alleged violations
of Section 406 of ERISA, (ii) have caused or permitted to
occur any "prohibited transaction" within the meaning of such
Section 4975 of the IRC or Section 406 of ERISA with respect
to any Plan for which no exemption is available or (iii) have
incurred any liability to the PBGC (other than ordinary and
usual PBGC premium liability) or any liability for complete or
partial withdrawal to any Multiemployer Plan. Neither the
Borrower nor any Subsidiary is subject (directly or
indirectly) to, and no facts exist which could subject the
Borrower or any Subsidiary (directly or indirectly) to, any
other liability, penalty, tax or lien whatsoever, which could
result in a Material Adverse Change and which is directly or
indirectly related to any Plan, including, but not limited to,
liability for any damages or penalties arising under Title I
or Title IV of ERISA, liability for any tax or penalty
resulting from a loss of deduction under Section 404 or 419 of
the IRC, any tax or penalty under chapter 43 of the IRC, or
any taxes or penalties under any other applicable law, but
excluding any liability to make contributions or pay premiums
to or under an ongoing Plan before the last due date on which
such contributions or premiums could be paid or made without
penalty or to pay benefits when due in accordance with Plan
terms.
SECTION 5.12. Labor Controversies. Except as
disclosed in Item 9 (Labor Controversies) of the Disclosure
Schedule, there are no labor controversies pending or, to the
best knowledge of the Borrower, threatened, relating to the
Borrower or any Subsidiary. There is (i) no unfair labor
practice complaint pending against the Borrower, or any of its
Subsidiaries or, to the best knowledge of the Borrower,
threatened against any of them, before the National Labor
Relations Board, and no arbitration proceeding arising out of
or under any collective bargaining agreement or the Borrower's
internal grievance procedures is so pending against the
Borrower or any of its Subsidiaries or, to the best knowledge
of the Borrower, threatened against any of them, (ii) no
strike, labor dispute, slowdown or stoppage is pending against
the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower, threatened against the Borrower or
any of its Subsidiaries and (iii) no union representation
question existing with respect to the employees of the
Borrower or any of its Subsidiaries. Each of the Borrower and
its Subsidiaries is in compliance in all material respects
with all collective bargaining agreements to which it is
subject.
SECTION 5.13. Ownership of Properties; Collateral.
Each of the Borrower and its Subsidiaries owns good title to
all of its material personal properties and assets of any
nature whatsoever, free and clear of all Liens except as
permitted pursuant to Section 6.2.3.
(a) The provisions of the Security Agreement are
effective to create in favor of the Agent for the benefit of
the Agent and the Lenders, a legal, valid and enforceable
security interest in all right, title and interest of the Loan
Parties in the Collateral described therein, and, upon the
filing of the Financing Statements and any required filing in
the United States Patent and Trademark Office pursuant to
Section 4.1.8, the Security Documents will create a fully
perfected first Lien on, and the security interest in, all
right, title and interest of the Loan Parties in all of the
Collateral described therein, to the extent that a security
interest therein can be perfected by such a filing, subject to
no other Liens other than Liens permitted by Section 6.2.3.
SECTION 5.14. Intellectual Property. Each of the
Borrower and its Subsidiaries owns or licenses all such
Intellectual Property, and has obtained assignments of all
licenses and other rights, as the Borrower considers necessary
for or as are otherwise material to the conduct of the
business of the Borrower and its Subsidiaries as now conducted
without, individually or in the aggregate, any infringement
upon rights of other Persons which could result in a Material
Adverse Change. All Intellectual Property owned or licensed
from third Persons described in this Section 5.14 is set forth
in Item 10 (Intellectual Property) of the Disclosure Schedule.
SECTION 5.15. Accuracy of Information. All factual
information heretofore or contemporaneously furnished by or on
behalf of the Borrower in writing to the Agent or any Lender
for purposes of or in connection with this Agreement or any
transaction contemplated hereby is true and accurate in every
material respect on the date as of which such information is
dated or certified and as of the date of execution and
delivery of this Agreement by the Agent or such Lender and
such information is not incomplete by omitting to state any
material fact necessary to make such information not
misleading. Neither this Agreement nor any document or
statement furnished to the Agent or any of the Lenders by or
on behalf of the Borrower contains any untrue statement of a
material fact or omits to state any material fact necessary in
order to make the statements contained herein or therein not
materially misleading. The Agent and the Lenders recognize
that the Projections are not to be viewed as facts and that
actual results during the period or periods covered by the
Projections may differ from the projected or forecasted
results.
SECTION 5.16. Insurance. All policies of insurance
in effect of any kind or nature owned by or issued to the
Borrower and its Subsidiaries, including policies of life,
fire, theft, product liability, public liability, property
damage, other casualty, employee fidelity, workers'
compensation, property and liability insurance, (a) are listed
in Item 11 (Insurance) of the Disclosure Schedule as of the
Closing Date, (b) are, together with all policies of employee
health and welfare and title insurance, in full force and
effect, (c) comply in all respects with the applicable
requirements set forth herein and in the Security Documents
and (d) are of a nature and provide such coverage as is
customarily carried by companies engaged in similar businesses
and owning similar properties in the same general areas in
which the Borrower and its Subsidiaries operate. Neither the
Borrower nor any of its Subsidiaries provides any of its
insurance through self-insurance except as disclosed in Item
11 of the Disclosure Schedule.
SECTION 5.17. Certain Indebtedness. Item 12
(Existing Indebtedness) of the Disclosure Schedule sets forth
all Indebtedness of the Borrower and its Subsidiaries as of
the Closing Date that is not to be refinanced on the Original
Closing Date, and which (a) is for borrowed money, or (b) is
not incurred in the ordinary course of the business of the
Borrower or any Subsidiary in a manner and to the extent
consistent with past practice, or (c) is material to the
financial condition, operations, businesses, properties or
prospects of the Borrower or any Subsidiary.
SECTION 5.18. Environmental Matters. Except as
disclosed in Item 13 (Environmental Matters) of the Disclosure
Schedule, the Borrower and each of its Subsidiaries are in
compliance in all material respects with all applicable
Environmental Laws, and to the best of the Borrower's
knowledge, there are no conditions or circumstances associated
with the currently or previously owned, operated, used or
leased properties or current or past operations of the
Borrower or any Subsidiary which may give rise to
Environmental Liabilities and Costs which could result in a
Material Adverse Change or which may give rise to any
Environmental Lien.
SECTION 5.19. No Burdensome Agreements. Neither
the Borrower nor any Subsidiary is a party to or has assumed
any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or other
corporate restriction that could result in a Material Adverse
Change.
SECTION 5.20. Consents. Except as disclosed in
Item 14 (Consents) of the Disclosure Schedule, the Borrower
and its Subsidiaries have all material permits and
governmental consents and Regulatory Approvals necessary under
Requirements of Law or, in the reasonable business judgment of
the Borrower, deemed advisable under Requirements of Law, in
connection with the transactions contemplated hereby
(including the Acquisition and the Loans) and the ongoing
business and operations of the Borrower and its Subsidiaries.
SECTION 5.21. Contracts. Set forth in Item 5
(Material Contracts) of the Disclosure Schedule is an accurate
and complete list of all material Contractual Obligations of
the Borrower and its Subsidiaries as of the Closing Date.
Each such material Contractual Obligation is in full force and
effect in accordance with the terms thereof. There are no
material defaults by the Borrower or any Subsidiary or, to the
Borrower's knowledge after due inquiry, any other default in
existence under any such material Contractual Obligations, in
each case that could result in a Material Adverse Change.
SECTION 5.22. Employment Agreements. Set forth in
Item 15 (Employment Contracts) of the Disclosure Schedule is a
complete and accurate list of each employment agreement to
which the Borrower or any Subsidiary is a party, or by which
it is bound.
SECTION 5.23. Condition of Property. All of the
assets and properties owned by, leased to or used by the
Borrower and its Subsidiaries material to the conduct of their
business are in adequate operating condition and repair,
ordinary wear and tear excepted, and are free and clear of
known defects except for defects which do not substantially
interfere with the use thereof in the conduct of normal
operations.
SECTION 5.24. Subsidiaries. Item 16 of the
Disclosure Schedule sets forth all Subsidiaries of the
Borrower as of the Closing Date.
SECTION 5.25. Trade Relations. There exists no
actual or, to the best of Borrower's knowledge, threatened
termination, cancellation or limitation of, or any
modification or change in, the business relationship of the
Borrower with any material customer or group of customers of
the Borrower.
ARTICLE 6.
COVENANTS
SECTION 6.1. Affirmative Covenants. The
Borrower agrees with each Lender that until all Obligations
(other than Obligations that expressly survive the termination
of this Agreement pursuant to Section 9.5) have been paid and
performed in full and the Commitments have terminated, the
Borrower will perform the Obligations set forth in this
Section 6.1.
SECTION 6.1.1. Financial Information, etc. The
Borrower will furnish, or will cause to be furnished, to each
Lender and to the Agent copies of its financial statements,
reports and information:
(a) (i) promptly when available and in any event
within ninety (90) days after the close of each Fiscal
Year, a consolidated and consolidating balance sheet at
the close of such Fiscal Year, and related consolidated
and consolidating statements of operations, retained
earnings, and cash flows for such Fiscal Year, of the
Borrower and its Subsidiaries (with comparable
information at the close of and for the prior Fiscal
Year), certified (in the case of consolidated statements)
without qualification by Ernst & Young, LLC or other
independent public accountants satisfactory to the Agent,
together with a report containing a description of
projected business prospects (including capital
expenditures) and management's discussion and analysis of
the financial condition and results of operation of the
Borrower and its Subsidiaries;
(ii) promptly when available and in any event within
ninety (90) days after the close of each Fiscal Year, a
letter report of such independent public accountants at
the close of such Fiscal Year to the effect that it has
reviewed the provisions of this Agreement and the most
recent Compliance Certificate being furnished pursuant to
clause (a)(iii) of this Section 6.1.1 and that, in the
course of performing its duties it did not become aware
of any Default or Event of Default or any miscalculation
in such Compliance Certificate relating to the financial
tests set forth in Section 6.2.4 or relating to the
calculation of Excess Cash Flow, except as such may be
disclosed in such statement; and
(iii) promptly when available and in any event
within ninety (90) days after the close of each Fiscal
Year, a Compliance Certificate calculated as of the
computation date at the close of such Fiscal Year; and
(b) promptly when available and in any event within
forty-five (45) days after the close of each calendar month of
each Fiscal Year consolidated and consolidating balance sheets
at the close of such month, and consolidated and consolidating
statements of operations, retained earnings, and cash flows
for such month and for the period commencing at the close of
the previous Fiscal Year and ending with the close of such
month, of the Borrower and Subsidiaries (with comparable
information at the close of and for the corresponding month of
the prior Fiscal Year and for the corresponding portion of
such prior Fiscal Year), certified by the principal accounting
or chief financial Authorized Officer of the Borrower,
together with a description of projected business prospects
(including capital expenditures) and a brief report containing
management's discussion and analysis of the financial
condition and results of operations of the Borrower and its
Subsidiaries (including a discussion and analysis of any
changes compared to prior results);
(c) within forty-five (45) days after the close of
each Fiscal Quarter, a Compliance Certificate calculated as of
the close of such Fiscal Quarter;
(d) promptly upon receipt thereof, copies of all
detailed financial and management reports submitted to the
Borrower by its independent public accountants in connection
with each annual or interim audit made by such independent
public accountants of the books of the Borrower or any
Subsidiary;
(e) within thirty (30) days prior to the end of
each Fiscal Year of the Borrower, (i) a business plan of the
Borrower and its Subsidiaries, in form, scope and detail
satisfactory to the Agent, and (ii) consolidated and
consolidating operating budgets for the twelve (12) months
following the end of such Fiscal Year, prepared on a quarterly
basis, and for each Fiscal Year thereafter through the 2002
Fiscal Year, prepared on an annual basis, which budgets shall
include estimated capital expenditures and other costs to be
incurred by the Borrower and its Subsidiaries, on a
consolidated and consolidating basis, during the applicable
Fiscal Year, in each case, with accompanying detail, together
with a report containing management's discussion and analysis
of the projected financial condition and results of operations
of the Borrower and its Subsidiaries;
(f) promptly after approved by the Borrower's Board
of Directors, any updates or revisions to any business plan
described in clause (e) of this Section 6.1.1;
(g) promptly upon the sending or filing thereof,
copies of all reports that the Borrower sends to its security
holders generally, and copies of all reports and registration
statements that the Borrower or any of its Subsidiaries files
with the Securities and Exchange Commission or any national
securities exchange;
(h) such other information with respect to the
financial condition, business, property, assets, revenues and
operations of the Borrower and any Subsidiary as the Agent or
the Required Lenders may from time to time reasonably request;
and
(i) on or before the fifteenth day of each month, a
completed Borrowing Base Certificate accurate as of the close
of business of the preceding month.
SECTION 6.1.2. Maintenance of Corporate Existence,
etc. Except as permitted by Section 6.2.10, the Borrower will
cause to be done at all times all things necessary to maintain
and preserve the corporate existence of the Borrower and each
Subsidiary.
SECTION 6.1.3. Foreign Qualification. The Borrower
will, and will cause each Subsidiary to, cause to be done at
all times all things necessary to be duly qualified to do
business and be in good standing as a foreign corporation in
each jurisdiction where the failure to so qualify could result
in a Material Adverse Change.
SECTION 6.1.4. Payment of Taxes, etc. The Borrower
will, and will cause each Subsidiary to, pay and discharge, as
the same become due and payable, (a) all Charges against it or
on any of its property, as well as claims of any kind which,
if unpaid, might become a Lien upon any one of its properties,
and (b) all lawful claims for labor, materials, supplies,
services or otherwise before any thereof become a default;
provided, however, that the foregoing shall not require the
Borrower or any Subsidiary to pay or discharge any such Charge
or claim so long as it shall be diligently contesting the
validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves in
accordance with GAAP.
SECTION 6.1.5. Insurance. In addition to any
insurance required to be maintained pursuant to any other Loan
Document, the Borrower will, and (with respect to the
insurance described in clauses (a) and (b) below) will cause
each Subsidiary to, maintain or cause to be maintained:
(a) insurance with respect to its properties and
business against such casualties, contingencies and
liabilities (including, without limitation, business
interruption insurance) and of such types and in such amounts
as are customary in the industries in which the Borrower and
Subsidiaries are engaged, and will furnish to the Agent annual
certification from the respective insurers (or their
authorized agents) of the extent of all insurance maintained
by the Borrower and its Subsidiaries in accordance with this
Section 6.1.5; and
(b) the "key-man" life insurance policies referred
to in Section 4.1.12, which policies shall at all times have a
minimum face value of not less than [$7,960,700] in the
aggregate.
Each such policy shall be issued by an insurance company with
a Best's rating of "A" or better and a financial size category
of not less than XII shall be in effect on the Closing Date.
The premiums for each such policy shall be paid as such
premiums shall come due. All policies of casualty insurance
shall contain an endorsement, in the form submitted to the
Borrower by the Agent, showing loss payable to the Agent, for
its benefit and the ratable benefit of the Lenders, as their
interests may appear. All policies of liability insurance,
including, without limitation, all primary and umbrella
liability policies (including errors and omissions), shall
name the Agent, for its benefit and the ratable benefit of the
Lenders, as additional insured. All such insurance policies
shall provide, or shall be properly endorsed to provide, that
the insurer shall give the Agent not less than 10 days prior
written notice of any cancellation or non-renewal of any such
policy. The Borrower shall retain all the incidents of
ownership of the insurance maintained pursuant to this Section
6.1.5, but shall not borrow upon or otherwise impair its right
to receive the proceeds of such insurance. So long as no
Event of Default has occurred and is continuing, the Borrower
and its Subsidiaries shall have the right to use the proceeds
of casualty insurance to repair or replace damaged or
destroyed property, shall have the right to use the proceeds
of business interruption insurance for its ongoing business
needs and shall have the right to use the proceeds of
liability insurance to pay covered claims.
SECTION 6.1.6. Notice of Default, Litigation, etc.
Upon a Responsible Officer learning thereof, the Borrower will
give prompt written notice (with a description in reasonable
detail) to the Agent of:
(a) the occurrence of any Default;
(b) the occurrence of any litigation, arbitration
or governmental investigation or proceeding not previously
disclosed in writing by the Borrower to the Lenders which has
been instituted or, to the knowledge of the Borrower, is
threatened against, the Borrower or any Subsidiary or to which
any of its properties, assets or revenues is subject which, if
adversely determined, could result in a Material Adverse
Change;
(c) any material development which shall occur in
any litigation, arbitration or governmental investigation or
proceeding previously disclosed by the Borrower to the Lenders
pursuant to Section 5.7 which renders such litigation,
arbitration or governmental investigation likely to be
adversely determined and, if adversely determined, could
result in a Material Adverse Change;
(d) the occurrence of any other circumstance which
could result in a Material Adverse Change;
(e) the occurrence of any Loss; and
(f) (i) the occurrence or expected occurrence of
any Reportable Event with respect to any Single Employer Plan,
or any withdrawal from, or the termination, Plan
Reorganization or ERISA Insolvency of any Multiemployer
Pension Plan, the institution of proceedings or the taking of
any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or Subsidiary or any Multiemployer Pension
Plan with respect to the withdrawal from, or the termination,
Plan Reorganization or ERISA Insolvency of, any Single
Employer Plan or Multiemployer Pension Plan, or the receipt of
notice by the Borrower or any Commonly Controlled Entity or
Subsidiary that the institution of any such proceedings or the
taking of any such action is under consideration or
anticipated, the institution of any proceedings or other
action by the Internal Revenue Service or the Department of
Labor with respect to the minimum funding requirements of any
Pension Plan, or the receipt of notice by the Borrower or any
Commonly Controlled Entity or Subsidiary that the institution
of any such proceedings or the taking of any such action is
under consideration or anticipated, the occurrence or
expected occurrence of any event which could result in the
incurrence of unpredictable contingent event benefits under
Section 302 of ERISA or Section 412 of the IRC with respect to
any Pension Plan, any event or condition which could increase
the liability of the Borrower or any Commonly Controlled
Entity or Subsidiary with respect to post-retirement welfare
benefits under any Plan, or the occurrence of any other event
or condition with respect to any Plan which could subject the
Borrower or any Subsidiary (directly or indirectly) to any
tax, penalty or liability under Title I or Title IV of ERISA,
Section 404 or 419 and Chapter 43 of the IRC, or any other
applicable laws, and in each case in clauses (i) through (vi)
above, such event or condition, together with all other events
or conditions, if any, could subject the Borrower or any
Subsidiary (directly or indirectly) to any tax, fine, penalty,
or other liabilities in amounts which in the aggregate could
result in a Material Adverse Change. The Borrower will
deliver to each of the Lenders a true and complete copy of
each annual report (Form 5500) of each Plan (other than a
Multi-Employer Plan) required to be filed with the Internal
Revenue Service, promptly after the filing thereof ; and
(g) the condemnation or threat of condemnation with
respect to any property used or necessary in the conduct of
the businesses of the Borrower or any of its Subsidiaries.
SECTION 6.1.7. Books and Records. The Borrower
will, and will cause each Subsidiary to, keep books and
records reflecting all of its business affairs and
transactions in accordance with GAAP and, subject to any
government security limitations, permit the Agent and each
Lender or any of their respective representatives, during
normal business hours, to visit all of its offices, to discuss
its financial matters with its officers and independent public
accountants and to examine (and, at the expense of the
Borrower, photocopy extracts from) any of its books or other
corporate records. The Borrower shall pay any fees of its
independent public accountants incurred in connection with the
Agent's or any Lender's exercise of its rights pursuant to
this Section 6.1.7; provided that unless an Event of Default
shall have occurred and be continuing, the Borrower shall be
required to pay any such fees only in respect of the Agent's
exercise of its rights pursuant to this Section 6.1.7 for one
occasion during each Fiscal Year.
SECTION 6.1.8. Maintenance of Properties, Etc. The
Borrower will maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve, all of its properties
(real and personal and including all intangible assets),
except obsolete properties, which are used or necessary in the
conduct of its business in good working order and condition,
ordinary wear and tear excepted.
SECTION 6.1.9. Maintenance of Licenses and Permits.
The Borrower will maintain and preserve, and will cause each
of its Subsidiaries to maintain and preserve, all Intellectual
Property, rights, permits, licenses, Regulatory Approvals and
privileges issued under or arising under any Requirements of
Law to the extent material to the conduct of the business of
the Borrower or any of its Subsidiaries.
SECTION 6.1.10. Employee Plans. The Borrower
will at all times comply in all material respects with the
provisions of ERISA and the IRC which are applicable to any of
the Plans, and cause each of its Subsidiaries so to do.
SECTION 6.1.11. Environmental Management. The
Borrower will, and will cause each Subsidiary to, adopt and
maintain prudent solid and hazardous waste management and
disposal practices, including at a minimum such practices as
are required or dictated from time to time by current and
future Environmental Laws and Environmental Permits.
SECTION 6.1.12. Compliance with Laws. The
Borrower will, and will cause each Subsidiary to, comply with
all applicable Requirements of Law; provided, however, that
this Section 6.1.12 shall not apply to any circumstance of
noncompliance that together with all other noncompliance could
not result in a Material Adverse Change.
SECTION 6.1.13. Interest Rate Protection. By
January 31, 1998, the Borrower shall obtain and thereafter
maintain in full force and effect, from ING or an Eligible
Lending Institution, one or more Interest Rate Contracts,
protecting the Borrower against increases in the Eurodollar
Rate for an aggregate notional amount equal to 50% of the
aggregate principal amount of the Term Loans for a term of
three (3) years. ING shall make available to the Borrower
various proposals for Interest Rate Contracts. Should the
Borrower obtain any proposal for Interest Rate Contracts from
a source other than ING, the Borrower agrees that ING shall
have a right to provide such Interest Rate Contracts on the
same terms as those set forth in such proposal. The Borrower
will collaterally assign such Interest Rate Contracts to the
Agent, for its benefit and the ratable benefit of the Lenders,
pursuant to documentation acceptable to the Agent.
SECTION 6.1.14. Real Estate. If the Borrower or
any Subsidiary shall acquire a fee or leasehold interest in
real estate which the Agent reasonably designates as material
to the Borrower or such Subsidiary at any time prior to the
date on which all Commitments have terminated and all
Obligations under this Agreement have been paid in full, the
Borrower or such Subsidiary will execute a Mortgage subject
only to the Liens described in clauses (c) and (g) of Section
6.2.3, in form and substance satisfactory to the Agent, in
favor of the Agent, for its benefit and the ratable benefit of
the Lenders, and shall use its reasonable efforts to deliver
to the Agent such title insurance policies, surveys and
landlords' estoppel agreements with respect thereto as the
Agent shall reasonably request.
SECTION 6.1.15. Underwriting Offering and
Private Placements. The Borrower shall use its best efforts
to allow ING or one of its Affiliates to manage and serve as
underwriter, co-underwriter, placement agent, co-placement
agent or in a similar capacity, in assisting the Borrower in
any public offering of equity securities or debt securities.
In addition, ING shall have the right to act, at ING's option,
as lead placement agent for any proposed private debt offering
of the Borrower if ING's proposal for any such debt offering
is no less favorable, in the reasonable business judgment of
the Borrower, than the other proposal presented to the
Borrower.
SECTION 6.2. Negative Covenants. The
Borrower agrees with each Lender that until all Commitments
have terminated and all Obligations (other than Obligations
that expressly survive the termination of this Agreement
pursuant to Section 9.5) have been paid and performed in full,
the Borrower will perform the Obligations set forth in this
Section 6.2.
SECTION 6.2.1. Business Activities. The Borrower
will not, and will not permit any Subsidiary to, engage in any
business activity, except those in the fields in which the
Borrower and its Subsidiaries are engaged on the Closing Date
and such activities as may be incidental or related thereto
and Borrower and its Subsidiaries will make no acquisitions of
stock, assets or additional businesses which engage in any
business other than a Temporary Staffing Business.
SECTION 6.2.2. Indebtedness. The Borrower will not,
and will not permit any Subsidiary to, create, incur, assume
or suffer to exist or otherwise become or be liable in respect
of any Indebtedness other than:
(a) Indebtedness in respect of the Loans and other
Obligations;
(b) Indebtedness in respect of the Interest Rate
Contracts required pursuant to Section 6.1.13 to the extent
such do not constitute Obligations;
(c) obligations that constitute Indebtedness solely
by virtue of being secured by Liens permitted under Section
6.2.3;
(d) Indebtedness in respect of liabilities
resulting from (i) endorsements of negotiable instruments in
the ordinary course of business; and (ii) surety bonds and
other bonds issued for the Borrower's account in the ordinary
course of business;
(e) Indebtedness of the Borrower and its
Subsidiaries existing on the Closing Date and set forth in
Item 12 (Existing Indebtedness) of the Disclosure Schedule.
(f) Indebtedness of any Subsidiary owing to the
Borrower, provided that such Indebtedness is evidenced by a
demand promissory note that is pledged to the Agent, for its
benefit and the benefit of the Lenders, as security for the
Obligations pursuant to the Pledge Agreement;
(g) Capitalized Lease Liabilities provided that (i)
the aggregate amount thereof which in accordance with GAAP is
attributable to principal, together with the aggregate
outstanding principal amount of all Purchase Money
Indebtedness of the Borrower and its Subsidiaries, does not
exceed $850,000 at any one time outstanding, (ii) payments
under each capitalized lease giving rise to such Capitalized
Lease Liabilities shall be made in equal periodic
installments, (iii) the original term of each capitalized
lease giving rise to such Capitalized Lease Liabilities shall
not be less than the useful life of the item of property for
which such Capitalized Lease Liabilities are incurred and (iv)
the Consolidated Capital Expenditures financed by such
Capitalized Lease Liabilities are not prohibited under Section
6.2.5;
(h) Purchase Money Indebtedness provided that (i)
the amount of such Indebtedness, together with the amount of
any outstanding Capitalized Lease Liabilities of the Borrower
and its Subsidiaries that in accordance with GAAP are
attributable to principal, does not exceed $850,000 at any one
time outstanding, (ii) such Indebtedness provides for the
payment of principal in equal periodic installments, (iii)
each issue of such Purchase Money Indebtedness shall have an
original maturity date that is not earlier than the useful
life of the item of property for which such Purchase Money
Indebtedness is incurred, and (iv) the Consolidated Capital
Expenditures financed by such Purchase Money Indebtedness are
not prohibited under Section 6.2.5; and
(i) extensions, refinancings, replacements and
renewals of any of the foregoing Indebtedness described in
clauses (e) and (h) of this Section 6.2.2, provided that the
principal amount thereof is not increased, such extension,
refinancing, replacement or renewal does not impose more
burdensome terms upon the Borrower or its Subsidiaries, as the
case may be, than the Indebtedness being extended, refinanced,
replaced or renewed.
SECTION 6.2.3. Liens. The Borrower will not, and
will not permit any Subsidiary to, create, incur, assume or
suffer to exist any Lien upon any of its property, revenues or
assets, whether now owned or hereafter acquired, except:
(a) Liens in favor of the Agent or the Lenders
granted pursuant to any Loan Document;
(b) Liens identified in Item 17 ("Permitted Liens")
of the Disclosure Schedule;
(c) Liens for taxes, assessments or other
governmental charges or levies not at the time delinquent or
thereafter payable with penalty or being contested in good
faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on
its books;
(d) Liens of carriers, warehousemen, mechanics, and
materialmen incurred in the ordinary course of business for
sums not overdue or being contested in good faith by
appropriate proceedings (which proceedings have the effect of
preventing the forfeiture or sale of the asset subject to such
Lien) and for which adequate reserves shall have been set
aside on its books;
(e) Liens (other than Liens arising under ERISA or
Section 412(n) of the Code) incurred in the ordinary course of
business in connection with workmen's compensation,
unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of
business or to secure obligations on surety or appeal bonds;
(f) judgment Liens with respect to judgments to the
extent such judgments do not constitute an Event of Default
described in Section 7.1.9;
(g) easements (including, without limitation,
reciprocal easement agreements and utility agreements), rights-
of-way, covenants, consents, reservations, encroachments,
variations and other restrictions, charges or encumbrances
(whether or not recorded) affecting the use of property, which
do not materially detract from the value of such property or
impair the use thereof;
(h) Liens upon any furniture and equipment acquired
by the Borrower or any of its Subsidiaries after the Closing
Date to secure Indebtedness permitted under clause (h) of
Section 6.2.2 or arising by virtue of a capital lease
permitted under clause (g) of Section 6.2.2;
(i) Leases and subleases granted to others in the
ordinary course of business not interfering in any material
respect with any business of the Borrower or any of its
Subsidiaries;
(j) Liens which constitute rights of set-off of a
customary nature or bankers' liens with respect to amounts on
deposit, whether arising by operation of law or by contract,
in connection with arrangements entered into with banks in the
ordinary course of business;
(k) Liens consisting of precautionary UCC-1 filings
in respect of operating leases to the extent permitted under
Section 6.2.6; and
(l) extensions, renewals or replacements of any
Lien referred to in clause (b) of this Section 6.2.3, provided
that the principal amount of the obligation secured thereby is
not increased and that any such extension, renewal or
replacement is limited to the property originally encumbered
thereby.
SECTION 6.2.4. Financial Condition. From and after
the Closing Date, the Borrower hereby covenants and agrees as
set forth below:
(a) Fixed Charge Coverage Ratio. The Borrower will
not permit its Fixed Charge Coverage Ratio with respect to the
twelve-month period ending on the last day of any Fiscal
Quarter to be less than the ratio set forth opposite such
Fiscal Quarter:
Fiscal Quarter Ending: Ratio
March, 1997
1.40:1.00
June, 1997
1.30:1.00
September, 1997
1.20:1.00
December, 1997
1.20:1.00
March, 1998
1.20:1.00
June, 1998
1.20:1.00
September, 1998
1.20:1.00
December, 1998
1.20:1.00
March, 1999
1.20:1.00
June, 1999
1.20:1.00
September, 1999
1.20:1.00
December, 1999
1.20:1.00
March, 2000
1.20:1.00
June, 2000
1.20:1.00
September, 2000
1.20:1.00
December, 2000
1.20:1.00
March, 2001
1:15:1:00
June, 2001
1:15:1.00
September, 2001
1:15:1:00
December, 2001
1:15:1.00
▇▇▇▇▇, ▇▇▇▇
1:15:1:00
June, 2002
1:15:1.00
September, 2002
1:15:1.00
December, 2002
1:15:1.00
▇▇▇▇▇, ▇▇▇▇
1:15:1.00
June, 2003
1:15:1.00
September, 2003 and for each Fiscal Quarter thereafter
1:10:1.00
provided, however, for purposes of this clause (a),
Consolidated Capital Expenditures incurred in connection with
the relocation of the offices of ▇▇▇▇▇ ▇▇▇▇▇ during Fiscal
Year 1997 not exceeding $850,000 shall be excluded from the
calculation of the Fixed Charge Coverage Ratio.
(b) Leverage Ratio. The Borrower will not permit
its Leverage Ratio with respect to the twelve-month period
ending on the last day of any Fiscal Quarter to be greater
than the ratio set forth opposite such Fiscal Quarter:
Fiscal Quarter Ending:
Ratio
March, 1997
5.75:1.00
June, 1997
4.20:1.00
September, 1997
4.00:1.00
December, 1997
4.00:1.00
March, 1998
4.00:1.00
June, 1998
4.00:1.00
September, 1998
3.80:1.00
December, 1998
3.60:1.00
March, 1999
3.30:1.00
June, 1999
3.20:1.00
September, 1999
3.00:1.00
December, 1999
2.90:1.00
March, 2000
2.70:1.00
June, 2000
2.50:1.00
September, 2000
2.40:1.00
December, 2000
2.30:1.00
March, 2001 and for each Fiscal Quarter thereafter
2.00:1.00
And provided, further, that the above calculation shall be
made on the basis of annualized EBITDA for each acquisition
permitted hereunder after the Closing Date based upon (i) the
first Fiscal Quarter annualized when only such first Fiscal
Quarter financial information is available on such
acquisition, (ii) the average of the first two Fiscal Quarters
financial information annualized when only such financial
information is available on such acquisition, (iii) the
average of the first three Fiscal Quarters financial
information annualized when only such financial information is
available on such acquisition, and (iv) that the aggregate
outstanding principal amount of indebtedness incurred, if any,
in connection with the acquisitions of E.D.R. Associates,
Inc., Electronic Data Resources L.L.C., and Quality
OutSourcing, Inc. shall not be included in such calculations
for September 30, 1997.
(c) Interest Coverage Ratio. The Borrower will not
permit its Interest Coverage Ratio with respect to the twelve-
month period ending on the last day of any Fiscal Quarter to
be less than the ratio set forth below opposite such Fiscal
Quarter:
Fiscal Quarter Ending: Ratio
March, 1997
3.50:1.00
June, 1997
3.50:1.00
September, 1997
2.75:1.00
December, 1997
2.75:1.00
March, 1998
2.75:1.00
June, 1998
2.75:1.00
September, 1998
2.75:1.00
December, 1998
2.75:1.00
March, 1999
3.00:1.00
June, 1999
3.00:1.00
September, 1999
3.00:1.00
December, 1999
3:00:1.00
▇▇▇▇▇, ▇▇▇▇
3.50:1.00
June, 2000
3.50:1.00
September, 2000
3.50:1.00
December, 2000
3.50:1.00
March, 2001 and for each Fiscal Quarter thereafter 4.00:1.00
(d) Net Worth. The Borrower will not permit its
net worth determined in accordance with GAAP as of the last
day of any Fiscal Quarter to be less than the amount set forth
opposite such Fiscal Quarter:
Fiscal Quarter Ending: ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇
$13,300,000
June, 1997
$3,700,000
September, 1997
$15,750,000
December, 1997
$16,000,000
March, 1998
$16,250,000
June, 1998
$16,750,000
September, 1998
$17,500,000
December, 1998
$18,000,000
March, 1999
$18,500,000
June, 1999
$19,000,000
September, 1999
$19,500,000
December, 1999
$20,000,000
March, 2000
$20,500,000
June, 2000
$21,000,000
September, 2000
$22,000,000
December, 2000 and for each Fiscal Quarter thereafter$2
3,000,000
Provided, however, that the above minimum Net Worth
amounts shall be automatically increased beginning in the
first full quarter after any Approved Acquisition Expenditure
by 82.5% of the Net Income projected in such acquisition in
the information provided to the Lenders in seeking approval of
such acquisition in each of the first four Fiscal Quarters
commencing in the first full Fiscal Quarter after any such
acquisition, by 80% of such projected Net Income for the fifth
through twelfth full Fiscal Quarters thereafter, by 75% of
such projected Net Income for the thirteenth through sixteenth
full Fiscal Quarters thereafter and 70% of such projected Net
Income commencing with the seventeenth full Fiscal Quarter
thereafter.
(e) EBITDA. The Borrower will not permit EBITDA
for the twelve-month period ending on the last day of any
Fiscal Quarter to be less than the amount set forth opposite
such Fiscal Quarter:
Fiscal Quarter Ending: ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇
$3,700,000
June, 1997
$5,100,000
September, 1997
$6,700,000
December, 1997
$7,800,000
March, 1998
$7,900,000
June, 1998
$7,900,000
September, 1998
$8,600,000
December, 1998
$9,000,000
March, 1999
$9,300,000
June, 1999
$9,600,000
September, 1999
$9,900,000
December, 1999
$10,100,000
March, 2000
$10,300,000
June, 2000
$10,600,000
September, 2000
$10,800,000
December, 2000
$11,000,000
March, 2001
$11,200,000
June, 2001
$11,500,000
September, 2001
$11,800,000
December, 2001
$12,000,000
March, 2002
$12,300,000
June, 2002
$12,500,000
September, 2002
$12,700,000
December, 2002
$13,000,000
March, 2003
$13,100,000
June, 2003
$13,300,000
September, 2003 and for each Fiscal Quarter thereafter$
13,500,000
Provided, however, that the above minimum EBITDA amounts
shall be automatically increased beginning in the first full
quarter after any Approved Acquisition Expenditure by 82.5% of
the EBITDA projected in such acquisition in the information
provided to the Lenders in seeking approval of such
acquisition in each of the first four Fiscal Quarters
commencing in the first full Fiscal Quarter after any such
acquisition, by 80% of such projected EBITDA for the fifth
through twelfth full Fiscal Quarters thereafter, by 75% of
such projected EBITDA for the thirteenth through sixteenth
full Fiscal Quarters thereafter and 70% of such projected
EBITDA commencing with the seventeenth full Fiscal Quarter
thereafter.
(f) Current Ratio. The Borrower will not permit
the Current Ratio of the Borrower and its Subsidiaries on the
last day of any Fiscal Quarter to be less than 1.50:1.00.
(g) Indebtedness to Capital Ratio. The Borrower
will not permit the ratio of Indebtedness to Capital on the
last day of any Fiscal Quarter to exceed the amount set forth
opposite such Fiscal Quarter:
Fiscal Quarter Ending:
Ratio
March, 1997
0.70:1.00
June, 1997
0.70:1.00
September, 1997
0.70:1.00
December, 1997
0.70:1.00
March, 1998
0.70:1.00
June, 1998
0.70:1.00
September, 1998
0.69:1.00
December, 1998
0.68:1.00
March, 1999
0.66:1.00
June, 1999
0.65:1.00
September, 1999
0.63:1.00
December, 1999
0.62:1.00
March, 2000
0.60:1.00
June, 2000
0.58:1.00
September, 2000
0.56:1.00
December, 2000
0.54:1.00
March, 2001
0.51:1.00
June, 2001 and for each Fiscal Quarter thereafter 0.50:1.00
And provided that the aggregate principal amount of
indebtedness incurred, if any, in connection with the
acquisitions of E.D.R. Associates, Inc., Electronic Data
Resources L.L.C., and Quality OutSourcing, Inc. shall not be
included in such calculations for September 30, 1997.
SECTION 6.2.5. Capital Expenditures. The Borrower
will not, and will not permit any Subsidiary to make or commit
to make Consolidated Capital Expenditures, except that, during
any Fiscal Year, the Borrower and its Subsidiaries may make
Consolidated Capital Expenditures (including the amount of
Capitalized Lease Liabilities incurred during such Fiscal Year
that in accordance with GAAP is attributable to principal)
which in the aggregate do not exceed the amount set forth
below opposite such Fiscal Year (in the case of the 1996
Fiscal Year, for the period commencing on the Prior Closing
Date and ending on December 31, 1996):
Fiscal Year: Amount
1996
$167,000
1997
$775,000
1998
$450,000
1999
$450,000
2000
$450,000
2001
$450,000
2002
$450,000
2003
$450,000
2004
$450,000
provided further, however, that expenditures from insurance
proceeds received upon the occurrence of a Loss which are made
to replace or repair damaged or destroyed assets will not be
included in the foregoing calculation. Notwithstanding the
foregoing provisions of Section 6.2.5, the Borrower may make
Consolidated Capital Expenditures for the period between
January 1, 1997 and December 31, 1997 in connection with the
relocation of the offices of ▇▇▇▇▇ ▇▇▇▇▇ not exceeding
$850,000;
provided further, however, that permitted Consolidated Capital
Expenditures shall increase by the lesser of (i) the projected
capital expenditures shown in the information submitted to the
Lenders requesting their approval of such acquisition or (ii)
$200,000 for the first year after an Approved Acquisition
Expenditure and $25,000 per year in all subsequent years.
SECTION 6.2.6. Lease Obligations. The Borrower
will not, and will not permit any Subsidiary to, create or
suffer to exist any obligation for the payment of rent for any
property under any operating lease or agreement to lease
having a term of one year or more, except for (a) leases in
existence on the Original Closing Date and described in Item
18 (Leases) of the Disclosure Schedule, and (b) any lease of
real property entered into by the Borrower or any Subsidiary
after the Original Closing Date in the ordinary course of
business; provided, however, that no such lease shall subject
the Borrower or any Subsidiary to Environmental Liabilities
and Costs and that the aggregate amount of payments due from
the Borrower and its Subsidiaries for all leases referred to
in this Section 6.2.6 less any amounts received by the
Borrower and its Subsidiaries in connection with any sublease
of the property subject to any lease referred to in this
Section 6.2.6 during any Fiscal Year set forth below is less
than the amount set forth below opposite such Fiscal Year:
Fiscal Year:
Amount
1997
$2,100,000
1998
$2,100,000
1999
$2,300,000
2000
$2,400,000
2001
$2,500,000
2002
$2,600,000
2003
$2,700,000
2004
$2,800,000
SECTION 6.2.7. Investments. The Borrower will not,
and will not permit any Subsidiary to, make, incur, assume or
suffer to exist any Investment in any other Person except:
(a) Cash Equivalent Investments;
(b) deposits for utilities, security deposits under
leases and similar prepaid expenses;
(c) accounts receivable arising in the ordinary
course of business;
(d) Investments existing on the Original Closing
Date and disclosed in Item 19 ("Existing Investments") of the
Disclosure Schedule.
(e) Investments made by the Borrower in its
Subsidiaries after the Original Closing Date to the extent
such Investments are evidenced by demand promissory notes in
principal amounts equal to the amount of such Investments,
payable to the Borrower and pledged by the Borrower in favor
of the Agent pursuant to the Borrower Pledge Agreement;
(f) Investments made by the Borrower in its
Subsidiaries after the Original Closing Date to the extent
permitted under subsection (b) of Section 6.2.10;
(g) Investments (including debt obligations)
received in connection with a bankruptcy or Plan
Reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of business,
provided that if such Investments are evidenced by promissory
notes or other instruments, and such instruments are pledged
to the Agent, for its benefit and the benefit of the Lenders;
(h) Investments arising under Interest Rate
Contracts;
(i) Investments consisting of deposit accounts of
the Borrower and its Subsidiaries maintained in the ordinary
course of business;
(j) Investments in substantially all the assets of
Vogue Personnel Services, Inc. other than cash, office leases
and equipment leases, prepayments and deposits, accounts
receivables tax and insurance refunds, term life insurance,
treasury stock, corporate stock certificate books and similar
corporate records and correspondence related to such excluded
assets (the "Vogue Acquisition"); and
(k) Investments consisting of a loan of not more
than $485,000 to ASS which has now been paid in full.
(l) Approved Acquisition Expenditures.
SECTION 6.2.8. Restricted Payments, etc. The
Borrower will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares
of any class of Stock (now or hereafter outstanding) of the
Borrower or on any warrants, options or other rights in
respect of any class of Stock (now or hereafter outstanding)
of the Borrower or apply, or permit any Subsidiary to apply,
any of its funds, property or assets to the purchase,
redemption, sinking fund or other retirement of any shares of
any class of Stock (now or hereafter outstanding), of the
Borrower or any Subsidiary, or make any deposit for any of the
foregoing; provided, however, that the Borrower shall be
permitted to declare and pay the following dividends: (a)
ordinary dividends on the Borrower's Series A Preferred Stock
in an amount not to exceed $56,000 in any single Fiscal Year
or during any consecutive 12 month period and (b) stock
dividends on the Borrower's Series C and Series D Preferred
Stock, provided, however, that Borrower shall be permitted to
use the Net Securities Proceeds in excess of $3,000,000
received by Borrower from the issuance of its Series D
Preferred Stock up to a maximum amount of $400,000 to
repurchase outstanding common stock of the Borrower prior to
June 6, 1998.
SECTION 6.2.9. Take or Pay Contracts;
Sale/Leasebacks
(a) The Borrower will not, and will not permit any
Subsidiary to, enter into or be a party to any arrangement for
the purchase of materials, supplies, other property or
services if such arrangement by its express terms requires
that payment be made by the Borrower or such Subsidiary
regardless of whether or not such materials, supplies, other
properties or services are delivered or furnished to it.
(b) The Borrower will not enter into, or permit any
Subsidiary to enter into, any arrangement with any Person
providing for the leasing by the Borrower or one or more
Subsidiaries of any property or assets, which property or
assets has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person except as permitted
by Section 6.2.2(g).
SECTION 6.2.10. Consolidation, Merger,
Subsidiaries, etc.
(a) The Borrower will not, and will not permit any
Subsidiary to, liquidate or dissolve, consolidate with, or
merge into or with, any Person, or purchase or otherwise
acquire all or substantially all of the assets or stock of
any Person (or of any operating division or unit thereof),
except that any such Subsidiary may liquidate or dissolve
voluntarily into, and may merge with and into, the Borrower or
any other wholly-owned Subsidiary (so long as the Borrower or
such wholly-owned Subsidiary is the surviving corporation) and
Borrower may acquire assets pursuant to the Vogue Acquisition.
(b) The Borrower will not, and will not permit any
Subsidiary to, create any Subsidiary or transfer any assets to
any Subsidiary.
SECTION 6.2.11. Asset Dispositions, etc. The
Borrower will not, and will not permit any Subsidiary to,
sell, transfer, lease or otherwise dispose of, or grant
options, warrants or other rights with respect to, any of its
assets (including accounts receivable and capital stock of
Subsidiaries) to any Person in excess of $20,000 in the
aggregate during any Fiscal Year, unless such disposition is
made in the ordinary course of business and consists of
inventories; or such disposition constitutes a disposition of
obsolete or retired assets no longer used in the business of
the Borrower and its Subsidiaries.
SECTION 6.2.12. Modification of Organic
Documents, etc. The Borrower will not consent to any
amendment, supplement or other modification of any of the
terms or provisions contained in, or applicable to, the
charter or the by-laws of the Borrower.
SECTION 6.2.13. Transactions with Affiliates.
The Borrower will not, and will not permit any Subsidiary to,
enter into, or cause, suffer or permit to exist:
(a) any arrangement or contract with any of its
Affiliates (other than its Subsidiaries) of a nature
customarily entered into by Persons which are Affiliates of
each other (including management or similar contracts or
arrangements relating to the allocation of revenues, expenses
or otherwise) requiring any payments to be made by the
Borrower or any Subsidiaries to any such Affiliate, other than
the transactions provided for in the Loan Documents; and
(b) any other transaction, arrangement or contract
with any of its Affiliates which is on terms which are less
favorable than are obtainable from any Person which is not one
of its Affiliates.
SECTION 6.2.14. Inconsistent Agreements . The
Borrower will not, and will not permit any Subsidiary to,
enter into any material agreement containing any provision
which would be violated or breached in any material respect by
any Loan or by the performance by the Borrower or any
Subsidiary of its obligations hereunder or under any Loan
Document.
SECTION 6.2.15. Change in Accounting Method.
The Borrower will not, and will not permit any Subsidiary to,
make any change in accounting treatment and reporting
practices except as required by GAAP.
SECTION 6.2.16. Change in Fiscal Year End. The
Borrower will not change its Fiscal Year end without the
Required Lenders' prior written consent, which consent will
not be unreasonably withheld but will not be given with
respect to more than one such change during the term of this
Agreement.
SECTION 6.2.17. Compliance with ERISA. The
Borrower will not, and will not permit any Subsidiary to take,
or fail to take, any action with respect to a Plan, including
establishing, amending, or terminating or withdrawing from any
Plan, without first obtaining the Agent's written Approval,
where such action or failure to act could result in any
liabilities under the IRC, ERISA, or any other applicable law
which individually or in the aggregate could result in a
Material Adverse Change.
SECTION 6.2.18. Limitation on Restrictions on
Subsidiary Dividends. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any
such Subsidiary to (a) pay dividends or make other
distributions on its Stock or other interests or
participations in profits owned by the Borrower or any
Subsidiary of the Borrower or pay any Indebtedness owed to the
Borrower or any Subsidiary of the Borrower, (b) make loans or
advances to the Borrower or any Subsidiary of the Borrower or
(c) transfer any of its property or assets to the Borrower or
any Subsidiary of the Borrower, except for such encumbrances
and restrictions existing under or by reason of this Agreement
and the other Loan Documents.
SECTION 6.2.19. Subsidiary Investments. The
Borrower will not, and will not permit any of its
Subsidiaries, to make any Investment in the Whitney Group.
The Borrower will not, and will not permit any of its
Subsidiaries, to make any Investment in Whitney Asia Limited
and Whitney Asia PTE which would cause the aggregate amounts
invested in Whitney Asia Limited and Whitney Asia PTE
subsequent to the Closing Date to exceed $500,000.00.
ARTICLE 7.
EVENTS OF DEFAULT
SECTION 7.1. Events of Default. The term
"Event of Default" shall mean any of the events set forth in
this Section 7.1
SECTION 7.1.1 Non-Payment of Obligations. The
Borrower shall default:
(a) in the payment or prepayment when due of any
principal of any Loan;
(b) in the payment when due of the interest payable
in respect of any Loan, the commitment fee provided for in
Section 2.4 hereof or any other Obligations and such default
shall continue unremedied for a period of five (5) days.
SECTION 7.1.2. Non-Performance of Certain Covenants.
The Borrower shall default in the due performance and
observance of any of its obligations under Section 6.1 and
such default shall continue unremedied for a period of ten
(10) days after notice thereof shall have been given to the
Borrower by the Agent (or if such default is not reasonably
susceptible to cure within 10 days and so long as the Borrower
promptly commences and diligently pursues such cure, such
longer period as is reasonably needed to effect such cure, but
in no event longer than 30 days from the date notice is
given), or shall default in the due performance or observation
of any of its obligations under Section 6.2.
SECTION 7.1.3. Defaults Under Other Loan Documents;
Non-Performance of Other Obligations. Any "Event of Default"
shall occur under the other Loan Documents; or the Borrower or
any Subsidiary shall default in the due performance and
observance of any other obligation, covenant or agreement
contained herein or in any other Loan Document and such
default shall continue unremedied for a period of ten (10)
days after notice thereof shall have been given to the
Borrower by the Agent (or if such default is not reasonably
susceptible to cure within 10 days and so long as the Borrower
promptly commences and diligently pursues such cure, such
longer period as is reasonably needed to effect such cure, but
in no event longer than 30 days from the date notice is
given).
SECTION 7.1.4. Bankruptcy, Insolvency, etc. The
Borrower or any Subsidiary shall:
(a) become insolvent or generally fail to pay, or
admit in writing its inability to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other
custodian for the Borrower or any Subsidiary or any property
of any thereof, or make a general assignment for the benefit
of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a
trustee, receiver, sequestrator or other custodian for the
Borrower or any Subsidiary or for a substantial part of the
property of any thereof, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within
sixty (60) days;
(d) permit or suffer to exist the commencement of
any bankruptcy, Plan Reorganization, debt arrangement or other
case or proceeding under any bankruptcy or insolvency law, or
any dissolution, winding up or liquidation proceeding, in
respect of the Borrower or any Subsidiary, and, if such case
or proceeding is not commenced by the Borrower or such
Subsidiary, such case or proceeding shall be consented to or
acquiesced in by Borrower or such Subsidiary or shall result
in the entry of an order for relief or shall remain for sixty
(60) days undismissed; or
(e) take any corporate action authorizing, or in
furtherance of, any of the foregoing.
SECTION 7.1.5. Breach of Warranty. Any
representation or warranty of the Borrower or any Loan Party
hereunder or in any other Loan Document or in any other
writing furnished by or on behalf of the Borrower to the Agent
or any Lender for the purposes of or in connection with this
Agreement or any such Loan Document is or shall be incorrect
when made in any material respect.
SECTION 7.1.6. Default on Other Indebtedness, etc.
(a) Any Indebtedness of the Borrower or any Subsidiary in an
aggregate principal amount exceeding $100,000 (i) shall be
duly declared to be or shall become due and payable prior to
the stated maturity thereof, or (ii) shall not be paid as and
when the same becomes due and payable including any applicable
grace period; or (b) there shall occur and be continuing any
event under any Instrument relating to any Indebtedness of the
Borrower or any Subsidiary in an aggregate principal amount
exceeding $100,000, the effect of which is to cause such
Indebtedness to become due prior to its stated maturity or to
permit the holder or holders of such Indebtedness, or a
trustee, agent or other representative on behalf of such
holder or holders, to cause such Indebtedness to become due
prior to its stated maturity or to require (or permit the
holder or holders to require) the Borrower or any Subsidiary
to redeem, repurchase or otherwise acquire or retire such
Indebtedness for value.
SECTION 7.1.7. Failure of Valid, Perfected Security
Interest. The security interest or Lien in the Collateral and
all proceeds thereof, securing the Obligations shall cease to
be valid or perfected at any time after the Original Closing
Date (other than as a result of (i) the Agent's failure to
make any required filing to the extent the necessity of such
filing was disclosed to the Agent in an opinion of counsel to
the Borrower or in the Perfection Certificate delivered by the
Loan Parties or (ii) the release of possession of any
Instrument delivered to the Agent or its agent or
representative pursuant to any of the Security Documents).
SECTION 7.1.8. Employee Plans. Any of the following
events shall occur with respect to any Plan: (i) any Person
shall engage in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving
any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA)
not disclosed in Item 8 ("Benefit Plans") of the Disclosure
Schedule, whether or not waived, shall exist with respect to
any Single Employer Plan, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment
of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) a notice of intent to
terminate any Single Employer Plan for purposes of Title IV of
ERISA is issued by the plan administrator thereof without the
prior written consent of the Required Lenders, or the PBGC
shall commence proceedings to terminate any Single Employer
Plan, (v) the Borrower or any Commonly Controlled Entity or
Subsidiary shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the ERISA Insolvency, Plan Reorganization
or termination of, a Multiemployer Plan, (vi) the Borrower or
any Commonly Controlled Entity or Subsidiary shall fail to
make any quarterly installment payment to a Pension Plan
required under Section 302(e) of ERISA or Section 412(m) of
the Code, (vii) the Borrower or any Commonly Controlled Entity
or Subsidiary shall fail to make any contribution to a
Multiemployer Plan which is required under ERISA, the Code or
applicable collective bargaining agreements, or (viii) any
other event or condition shall occur or exist with respect to
a Plan; and in each case in clauses (i) through (viii) above,
such event or condition, together with all other such events
or conditions, if any, could subject the Borrower or any
Subsidiary (directly or indirectly) to any tax, penalty or
other liabilities under Title I or Title IV of ERISA, Section
404 or 419 and Chapter 43 of the IRC or any other applicable
law which in the aggregate could result in a Material Adverse
Change.
SECTION 7.1.9. Judgments. A final judgment which,
with other such outstanding final judgments against the
Borrower or any of its Subsidiaries (in each case to the
extent not covered by insurance), exceeds an aggregate of
$250,000, shall be entered against the Borrower or any of its
Subsidiaries and, within 30 days after entry thereof, such
judgment shall not have been discharged or execution thereof
stayed pending appeal, or, within 30 days after the expiration
of any such stay, such judgment shall not have been discharged
or stayed.
SECTION 7.1.10. Cessation of Business;
Dissolution. The entry of any order of a court enjoining,
restraining or otherwise preventing the Borrower or any
Subsidiary from conducting all or any material part of its
business affairs; or the cessation of business or dissolution
of the Borrower.
SECTION 7.2. Action if Bankruptcy. If any
Event of Default described in subsection (d) of Section 7.1.4
shall occur, the outstanding principal amount of all
outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable and
all Commitments shall automatically be terminated, in either
case without notice, demand or presentment.
SECTION 7.3. Action if Other Event of
Default. If any Event of Default (other than any Event of
Default described in Section 7.1.4) shall occur for any
reason, whether voluntary or involuntary, and be continuing,
the Agent may, and upon the direction of the Required Lenders,
shall upon notice or demand, declare all or any portion of the
outstanding principal amount of the Loans to be due and
payable, including without limitation, an amount equal to the
maximum amount which would be available at any time to be
drawn under all Letters of Credit then outstanding (whether or
not any beneficiary under any Letter of Credit shall have
presented, or shall be entitled at such time to present, the
drafts or other documents required to draw under such Letter
of Credit), and any or all other Obligations to be due and
payable and all Commitments to be terminated, whereupon the
full unpaid amount of such Loans and any and all other
Obligations which shall be so declared due and payable shall
be and become immediately due and payable and any and all
Commitments which shall be so declared terminated shall be and
become immediately terminated, in each case without further
notice, demand, or presentment, and to the extent any
obligations are paid by the Borrower, they shall constitute a
prepayment under this Agreement. As long as any Letter of
Credit shall remain outstanding, any amounts held as cash
collateral by the Agent with respect to Letters of Credit,
when received by the Agent, shall be deposited in a cash
collateral account as cash collateral for the obligations of
the Borrower under the Letter of Credit of this Agreement in
the event of any drawing under a Letter of Credit, and upon
drawing under any outstanding Letter of Credit in respect of
which the Agent has deposited in the cash collateral account
any amounts described above, the Agent shall pay such amounts
to itself to reimburse itself for the amount of such drawing.
ARTICLE 8.
THE AGENT
SECTION 8.1. Actions. Each Lender and the
holder of each Note authorizes the Agent to act on behalf of
such Lender or holder under this Agreement and any other Loan
Document and, in the absence of other written instructions
from the Required Lenders received from time to time by the
Agent (with respect to which the Agent agrees that it will,
subject to the last two sentences of this Section 8.1, comply,
except as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically delegated
to or required of the Agent by the terms hereof and thereof,
together with such powers as may be reasonably incidental
thereto. Each Lender agrees (which agreement shall survive
any termination of this Agreement) to indemnify the Agent,
pro rata according to such Lender's Percentage, from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of this Agreement,
the Notes, or any other Loan Document, including the
reimbursement of the Agent for all out-of-pocket expenses
(including attorneys' fees) incurred by the Agent hereunder or
in connection herewith or in enforcing the Obligations of the
Borrower under this Agreement or any other Loan Document, in
all cases as to which the Agent is not reimbursed by the
Borrower; 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 determined by a court of competent
jurisdiction in a final proceeding to have resulted solely
from the Agent's gross negligence or wilful misconduct. The
Agent shall not be required to take any action hereunder or
under any other Loan Document, or to prosecute or defend any
suit in respect of this Agreement or any other Loan Document,
unless it is indemnified to its satisfaction by the Lenders
against loss, costs, liability and expense. If any indemnity
in favor of the Agent shall become impaired, it may call for
additional indemnity and cease to do the acts indemnified
against until such additional indemnity is given.
SECTION 8.2. Funding Reliance, etc. Unless
the Agent shall have been notified by telephone, confirmed in
writing, by any Lender by 5:00 p.m., New York City time, on
the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its Percentage of
such Borrowing on the date specified therefor, the Agent may
assume that such Lender has made such amount available to the
Agent and, in reliance upon such assumption, make available to
the Borrower a corresponding amount; provided, however, that
the Agent shall have no obligation to do so. If such amount
is made available by such Lender to the Agent on a date after
the date of such Borrowing, such Lender shall pay to the Agent
on demand interest on such amount at the Federal Funds Rate
for the number of days from and including the date of such
Borrowing to the date on which such amount becomes immediately
available to the Agent, together with such other compensatory
amounts as may be required to be paid by such Lender to the
Agent pursuant to the Rules for Interbank Compensation of the
Council on International Banking or the Clearinghouse
Compensation Committee, as the case may be, as in effect from
time to time. A statement of the Agent submitted to any
Lender with respect to any amounts owing under this Section
8.2 shall be conclusive, in the absence of manifest error. If
such amount is not in fact made available to the Agent by such
Lender within three Business Days after the date of such
Borrowing, the Agent shall be entitled to recover such amount,
with interest thereon at the rate per annum then applicable to
the Loans comprising such Borrowing, within five Business
Days after demand, from the Borrower. Nothing herein shall be
construed to release any Lender from its obligation to make
Loans subject to the terms and conditions set forth in this
Agreement.
SECTION 8.3. Exculpation. Neither the Agent
nor any of its directors, officers, employees or agents shall
be liable to any Lender for any action taken or omitted to be
taken by it under this Agreement, the Notes, or any Loan
Document, or in connection herewith or therewith, except for
its own wilful misconduct or gross negligence. The Agent
shall not be responsible to any Lender for any recitals,
statements, representations or warranties herein or in any
certificate or other document delivered in connection herewith
or for the authorization, execution, effectiveness,
genuineness, validity, enforceability, perfection,
collectibility, or sufficiency of any of the Loan Documents,
the financial condition of the Borrower or any Subsidiary or
the condition or value of any of the Collateral, or be
required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of
any of the Loan Documents, the financial condition of the
Borrower or any Subsidiary or the existence or possible
existence of any Default. The Agent shall be entitled to rely
upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which it
believes to be genuine and to have been presented by a proper
Person.
SECTION 8.4. Successor. The Agent may resign
as such at any time upon at least thirty (30) days' prior
notice to the Borrower and all Lenders, such resignation not
to be effective until a successor Agent is in place. If the
Agent at any time shall resign, the Required Lenders may
appoint another Lender as a successor Agent which shall
thereupon become the Agent hereunder. If no successor Agent
shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the
retiring Agent's giving notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be one of the Lenders or another
financial institution which shall (i) be reasonably acceptable
to the Borrower, (ii) be organized under the laws of the
United States and (iii) have a combined capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, such successor Agent
shall be entitled to receive from the retiring Agent such
documents of transfer and assignment as such successor Agent
may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges, and duties
of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this
Agreement and the other Loan Documents.
SECTION 8.5. Loans by the Agent. The Agent
shall have the same rights and powers with respect to (a) the
Loans made by it or any of its Affiliates and (b) the Notes
held by it or any of its Affiliates, as any Lender and may
exercise the same as if it were not the Agent.
SECTION 8.6. Credit Decisions. Each Lender
acknowledges that it has, independently of the Agent and each
other Lender, and based on such financial information and such
other documents, information and investigations as it has
deemed appropriate, made its own credit decision to extend its
Commitments, to make the Loans. Each Lender also acknowledges
that it will, independently of the Agent and each other
Lender, and based on such other documents, information and
investigations as it shall deem appropriate at any time,
continue to make its own credit decisions as to exercising or
not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan
Document.
SECTION 8.7. Copies, etc. The Agent shall
give prompt notice to each Lender of each notice or request
required or permitted to be given to the Agent by the Borrower
pursuant to the terms of this Agreement. The Agent will
distribute to each Lender each Instrument received for its
account and copies of all other communications received by the
Agent from the Borrower for distribution to the Lenders by the
Agent in accordance with the terms of this Agreement.
Notwithstanding anything herein contained to the contrary, all
notices to and communications with the Borrower under this
Agreement and the other Loan Documents shall be effected by
the Lenders through the Agent.
ARTICLE 9.
MISCELLANEOUS
SECTION 9.1. Waivers, Amendments, etc. (a)
The provisions of this Agreement and of each Loan Document may
from time to time be amended, modified or waived, if such
amendment, modification or waiver is in writing and, (x) in
the case of an amendment or modification, is consented to by
the Borrower and the Required Lenders and (y) in the case of a
waiver of any obligation of the Borrower or compliance with
any prohibition contained in this Agreement or any other Loan
Document, is consented to by the Required Lenders; provided,
however, that no such amendment, modification or waiver:
(i) which would modify any requirement hereunder
that any particular action be taken by all the Lenders or
by the Required Lenders shall be effective unless
consented to by each Lender;
(ii) which would modify this Section 9.1, change the
definition of "Required Lenders," increase the Revolving
Loan Commitment Amount or change any Percentage for any
Lender, reduce any fees payable to the Lenders described
in Article 2 and Article 3, extend the Revolving Loan
Commitment Termination Date, release material amounts of
Collateral, change the interest rates set forth in
Article 3, or subject any Lender to any additional
obligations shall be made without the consent of each
Lender;
(iii) which would extend the due date for, or
reduce the amount of, any payment or prepayment of
principal of or interest on any Loan (or reduce the
principal amount of or rate of interest on any Loan)
shall be made without the consent of the holder of the
Note evidencing such Loan; or
(iv) which would affect adversely the interests,
rights, compensation or obligations of the Agent qua the
Agent shall be made without consent of the Agent.
(b) No failure or delay on the part of the Agent,
any Lender or the holder of any Note in exercising any power
or right under this Agreement or any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or
right. No notice to or demand on the Borrower in any case
shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by the Agent, any
Lender, or the holder of any Note under this Agreement or any
other Loan Document shall, except as may be otherwise stated
in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require
any similar or dissimilar waiver or Regulatory Approval
thereafter to be granted hereunder.
(c) Neither any Lender nor the Agent shall be under
any obligation to marshal any assets in favor of the Borrower
or any other party or against or in payment of any or all of
the Obligations. Recourse for security shall not be required
at any time. To the extent that the Borrower makes a payment
or payments to the Agent or the Lenders, or the Agent or the
Lenders enforce their security interests or exercise their
rights of setoff, and such payment or payments or the proceeds
of such enforcement or setoff or any part thereof are
subsequently for any reason invalidated, set aside or required
to be repaid to a trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the
obligation or part thereof originally intended to be
satisfied, and all Liens, rights and remedies therefor, shall
be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had
not occurred.
SECTION 9.2. Notices. All notices hereunder
shall be in writing or by telecopy and shall be sufficiently
given to the Agent, the Lenders or the Borrower if addressed
or delivered to them at the following addresses:
If to the Agent: ING Capital
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Credit Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ING Capital
Atlanta ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to: King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Driver, Jr., Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any other Lender: At its address set forth beneath its
name on the signature pages hereof
If to the Borrower Headway Corporate Resources, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as any party may designate to any
other party by written notice. All such notices and
communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; when
received, if deposited in the mail, postage prepaid; when
transmission is verified, if telecopied; and on the next
Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
SECTION 9.3. Costs and Expenses. The
Borrower agrees to pay all reasonable out-of-pocket expenses
of the Agent (including reasonable fees and expenses of
counsel to the Agent, or of any consultants or other experts
retained by the Agent) in connection with (i) the negotiation,
preparation, execution, and delivery of this Agreement and
each other Loan Document, including schedules and exhibits,
and any amendments, waivers, consents, supplements,
terminations, releases or other modifications to this
Agreement or any other Loan Document as may from time to time
hereafter be required whether or not the transactions
contemplated hereby are consummated, and (ii) the
consideration of legal questions relevant to this Agreement of
any other Loan Document. The Borrower also agrees to pay and
hold the Agent and the Lenders harmless from any stamp,
documentary, intangibles, transfer or similar taxes or
charges, and all recording or filing fees with respect to the
Loan Documents or any payments to be made thereunder and all
title insurance premiums, surveyors costs and valuation fees,
and to reimburse the Agent and each Lender upon demand for all
reasonable out-of-pocket expenses (including reasonable
attorneys' fees and expenses) incurred by the Agent or such
Lender in enforcing the Obligations of the Borrower or any
Subsidiary under this Agreement or any other Loan Document or
related Document or in connection with any restructuring or
"work-out" of any Obligations.
SECTION 9.4. Indemnification. In
consideration of the execution and delivery of this Agreement
by the Agent and each Lender, the making of the Term Loans,
the extension of the Revolving Loan Commitment and the Letter
of Credit Commitment, the Borrower hereby indemnifies,
exonerates and holds the Agent and each Lender, each of their
respective successors and assigns, each of the respective
officers, directors, employees, attorneys and agents of the
Agent and each Lender and each of their respective successors
and assigns (collectively, the "Lender Parties") free and
harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities (including, but not
limited to, Environmental Liabilities and Costs), damages and
expenses (irrespective of whether such Lender Party is a party
to the action for which indemnification hereunder is sought),
including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by the Lender Parties or
any of them or asserted or awarded against the Lender Parties
or any of them as a result of, or arising out of, or relating
to:
(a) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of
any Loan or Letter of Credit, including, without limitation,
the Acquisition;
(b) the use of any of the proceeds of the Loans or
Letters of Credit by the Borrower for any other purpose;
(c) the making of any claim by any investment
banking firm, broker or third party that it is entitled to
compensation from the Agent or any Lender in connection with
this Agreement (other than investment banking firms and
brokers retained by the Agent or any Lender);
(d) the entering into and performance of this
Agreement and any other Loan Document by any of the Lender
Parties (other than the breach by such Lender Party of this
Agreement or the failure to comply with any applicable law);
(e) any of the Loan Documents or any proposed
acquisition by the Borrower of all or any portion of the stock
or assets of any Person, whether or not the Agent or such
Lender is party thereto;
(f) the existence of any contaminant, in, under, on
or otherwise affecting any property owned, used, operated, or
leased by Borrower or any Subsidiary in the past, present, or
future or any surrounding areas affected by such property,
regardless of whether the existence of the contaminant is
related to the past, present, or future operations of the
Borrower and its Subsidiaries, or their predecessors in
interest or any other Person; any Environmental Liabilities
and Costs related to any property owned, used, operated, or
leased by Borrower or any Subsidiary in the past, present, or
future; any Environmental Liabilities and Costs related to the
past, present, or future operations of the Borrower or any
Subsidiaries; any alleged violations of any Environmental Law
related to any property owned, used, operated, or leased by
Borrower or any Subsidiary in the past, present, or future;
any alleged violations of any Environmental Law related to the
past, present, or future operations of the Borrower or any
Subsidiaries; the performance of any remedial action that is
related to any property owned, used, operated, or leased by
Borrower or any Subsidiaries in the past, present, or future;
the performance of any remedial action that is related to the
past, present, or future operations of the Borrower or any
Subsidiaries; and the imposition of any Lien on any property
affected by this Agreement or any of the other Loan Documents
arising from any Environmental Liabilities or Costs;
(g) the breach in any material respect by Borrower
of any representation or warranty set forth in this Agreement
or any Loan Document;
(h) the failure of Borrower to comply in any
material respect with any term, condition, or covenant set
forth in this Agreement or any Loan Document; or
(i) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not
the Agent or any Lender (or any of their respective officers,
directors, employees or agents) is a party thereto;
except for any such Indemnified Liabilities arising for the
account of a particular Lender Party by reason of the relevant
Lender Party's material breach of any of its obligations under
this Agreement or any other Loan Document or by reason of the
relevant Loans Party's bad faith, gross negligence or wilful
misconduct, in each such case as determined by a final and
nonappealable decision of a court of competent jurisdiction.
If and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible
under applicable law. The foregoing indemnity shall become
effective immediately upon the execution and delivery hereof
and shall remain operative and in full force and effect
notwithstanding the consummation of the transactions
contemplated hereunder, the repayment of any of the Loans made
hereunder, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of any Lender or the Agent.
SECTION 9.5. Survival. The obligations of
the Borrower under Sections 2.4, 3.5, 9.3 and 9.4, and the
obligations of the Lenders under Section 8.1, shall in each
case survive any termination of this Agreement. The
representations and warranties made by the Borrower in this
Agreement, the Notes and in each other Loan Document shall
survive the execution and delivery of this Agreement, the
Notes and each such other Loan Document.
SECTION 9.6. Severability. Any provision of
this Agreement, the Notes or any other Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, the Notes or such
other Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 9.7. Headings. The various headings
of this Agreement, the Notes and of each other Loan Document
are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement, the Notes or such
other Loan Document or any provisions hereof or thereof.
SECTION 9.8. Counterparts, Effectiveness,
etc. This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one
and the same agreement. This Agreement shall become effective
when counterparts hereof executed on behalf of the Borrower
and each Lender (or notice thereof satisfactory to the Agent)
shall have been received by the Agent and notice thereof shall
have been given by the Agent to the Borrower and each Lender.
SECTION 9.9. Governing Law; Entire Agreement.
THIS AGREEMENT AND THE NOTES SHALL EACH BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK. This Agreement, the Notes and the other
Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and
supersede any prior agreements, written or oral, with respect
thereto.
(b) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL
COURT SITTING IN NEW YORK IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR RELATED DOCUMENT, AND EACH HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL
COURT. THE BORROWER AGREES THAT SUCH JURISDICTION SHALL BE
EXCLUSIVE WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING
BROUGHT BY IT AGAINST THE AGENT OR ANY LENDER. EACH PARTY TO
THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF ANY
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING.
(c) The Borrower hereby irrevocably designates,
appoints and empowers CT Corporation System, whose present
address is ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its
authorized agent to receive, for and on its behalf and its
property, service of process in the State of New York when and
as such legal actions or proceedings may be brought in the
courts of the State of New York or of the United States of
America sitting in New York, and such service of process shall
be deemed complete upon the date of delivery thereof to such
agent whether or not such agent gives notice thereof to the
Borrower, or upon the earliest of any other date permitted by
applicable law. The Borrower shall furnish the consent of CT
Corporation System so to act to the Agent on or prior to the
Closing Date. It is understood that a copy of said process
served on such agent will as soon as practicable be forwarded
to the Borrower, at its address set forth below, but its
failure to receive such copy shall not affect in any way the
service of said process on said agent as the agent of the
Borrower. The Borrower irrevocably consents to the service of
process out of any of the aforementioned courts in any such
action or proceeding by the mailing of the copies thereof by
certified mail, return receipt requested, postage prepaid, to
it at its address set forth herein, such service to become
effective upon the earlier of (i) the date 10 calendar days
after such mailing or (ii) any earlier date permitted by
applicable law. The Borrower agrees that it will at all times
continuously maintain an agent to receive service of process
in the State of New York on behalf of itself and its
properties and in the event that, for any reason, the agent
named above or its successor shall no longer serve as its
agent to receive service of process in the State of New York
on its behalf, it shall promptly appoint a successor so to
serve and shall advise the Agent and the Lenders thereof (and
shall furnish to the Agent the consent of any successor agent
so to act). Nothing in this Section 9.9 shall affect the
right of the Agent or any Lender to bring proceedings against
the Borrower in the courts of any other jurisdiction or to
serve process in any other manner permitted by applicable law.
SECTION 9.10 Successors and Assigns. This
Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and
assigns; provided, however, that the Borrower may not assign
or transfer its rights or obligations hereunder without the
prior written consent of all Lenders; and the rights of sale,
assignment and transfer of the Lenders are subject to Section
9.11.
SECTION 9.11. Sale and Transfers, Participations,
etc.
(a) Any Lender may at any time sell to one or more
Participants participating interests in any Loan owing to
such Lender, any Note held by such Lender, the Term Loan
Commitment or the Revolving Loan Commitment or the Letter of
Credit Commitment of such Lender, or any other interest of
such Lender under this Agreement. In the event of any such
sale by a Lender of participating interests to a Participant,
such Lender's obligations under this Agreement shall remain
unchanged and such Lender shall remain solely responsible for
the performance thereof, such Lender shall remain the holder
of any such Note for all purposes under this Agreement and the
other Loan Documents, and the Borrower and the Agent shall
continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. The Borrower
agrees that if amounts outstanding under this Agreement and
the Notes are due or unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the
right of setoff in respect of its participating interest in
amounts owing under this Agreement and any Note to the same
extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement or any
Note, provided that such right of setoff shall be subject to
the approval of the Required Lenders and to the obligations of
such Participant to share with the Lenders, and the Lenders
agree to share with such Participant, as provided in Section
3.8 as if the Participant were a Lender hereunder and the
Borrower shall have been notified of the name, address and
amount of such Participant's participating interest in the
Loans and the Commitments. The Borrower also agrees that each
Participant shall be entitled to the benefits of (i) Section
9.4 and (ii) Sections 2.4 and 3.7, with respect to its
participation in the Commitments and the Loans outstanding
from time to time; provided, that no Participant shall be
entitled to receive any greater amount pursuant to the
Sections referred to in clauses (i) and (ii) than the
transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such
transferor Lender to such Participant had no such transfer
occurred.
(b) With the consent of the Agent and, if no
Default exists and is continuing, the consent of the Borrower
(which consent shall not be unreasonably withheld or delayed),
any Lender may at any time sell to any Purchasing Lender all
or any part in a minimum amount of $2,500,000, of its rights
and obligations under this Agreement, the Notes and any
Letters of Credit pursuant to a Transfer Supplement, executed
by such Purchasing Lender, such transferor Lender, the Agent
and the Borrower. Upon (i) such execution of such Transfer
Supplement, and (ii) delivery of a fully executed copy thereof
to the Borrower, such Purchasing Lender shall for all purpose
be a Lender party to this Agreement and shall have all the
rights and obligations of a Lender under this Agreement, to
the same extent as if it were an original party hereto, with a
Percentage of the Revolving Loan Commitment Amount, Term Loans
and the Letter of Credit Commitment set forth in such Transfer
Supplement, and no further consent or action by the Borrower,
the Lenders or the Agent shall be required. Such Transfer
Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting
adjustment of Percentages arising from the purchase by such
Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and
the Notes. Upon the consummation of any transfer to a
Purchasing Lender pursuant to this paragraph (b), the
transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that, if required, replacement
Notes are issued to such transferor Lender and new Notes to
the Purchasing Lender in the amount equal to their respective
Commitments and outstanding Loans, as appropriately adjusted
pursuant to such Transfer Supplement.
(c) The Agent shall maintain at its address
referred to herein a copy of each Transfer Supplement
delivered to it and the Register for the recordation of the
names and addresses of the Lenders and the Commitments of, and
principal amount of the Loans owing to, each Lender from time
to time. 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 as the owner of the Loans recorded therein for
all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of a Transfer Supplement
executed by a transferor Lender, the Agent and a Purchasing
Lender together with payment by such Purchasing Lender to the
Agent, for the account of the Agent and not for the account of
the Lenders, of a registration and processing fee of $2,500,
and the Notes subject to such Transfer Supplement, the Agent
shall (i) accept such Transfer Supplement, (ii) record the
information therein in the Register and (iii) give prompt
notice of such acceptance and recordation to the Lenders and
the Borrower.
(e) If, pursuant to this Section 9.11, any interest
in this Agreement or any Note is transferred to any
Participant or Purchasing Lender which is organized under the
laws of any jurisdiction other than the United States or any
State thereof, the transferor Lender shall cause such
Participant or Purchasing Lender, concurrently with the
effectiveness of such transfer, (i) to represent to the
transferor Lender (for the benefit of the transferor Lender,
the Agent and the Borrower) that under applicable law and
treaties no taxes will be required to be withheld by the
Agent, the Borrower or the transferor Lender with respect to
any payments to be made to such Participant or Purchasing
Lender in respect of the Loans or Commitments, (ii) to furnish
to the transferor Lender, the Agent and the Borrower two
properly executed original Internal Revenue Service Forms 4224
or 1001 (or any successor forms) and properly executed
Internal Revenue Service Forms W-8 and W-9, as the case may
be, (wherein such Participant or Purchasing Lender claims
entitlement to complete exemption from the United States
federal withholding tax on all interest payments hereunder and
all fees payable under Section 2.4) and (iii) to agree (for
the benefit of the transferor Lender, the Agent and the
Borrower) to provide the transferor Lender, the Agent and the
Borrower new Internal Revenue Service Forms 4224 or 1001 upon
the expiration or obsolescence of any previously delivered
form or after the occurrence of any event requiring a change
in the most recent forms delivered by it to the Transferor
Lender, the Agent and the Borrower, and comparable statements
in accordance with applicable United States laws and
regulations and amendments duly executed and completed by such
Participant or Purchasing Lender, and to comply from time to
time with all applicable United States laws and regulations
with regard to such withholding tax exemption.
(f) Notwithstanding anything to the contrary set
forth in this Section 9.11, (i) any Lender may sell to any of
its Affiliates all or any part of its rights and obligations
under this Agreement and the Notes (provided that no such
Affiliate shall be entitled to receive any greater amount
pursuant to Sections 2.4 or 3.7 than that which the transferor
Lender would have been entitled to receive in respect of the
amount so assigned by such transferor Lender to such Affiliate
had no such transfer occurred) and, upon the occurrence and
during the continuance of an Event of Default, any Lender may
sell to any Purchasing Lender all or any part of its rights
and obligations under this Agreement and the Notes, in either
case notwithstanding that the Borrower has not or does not
consent to such sale, provided such Lender has obtained the
consent of the Agent and otherwise meets the requirements of
this Section 9.11 and (ii) any Lender may create a security
interest in all or any portion of its rights under this
Agreement (including the Loans owing to it and the notes held
by it) in favor of the Federal Reserve Bank in accordance with
Regulation A of the F.R.S. Board.
SECTION 9.12. Other Transactions. Nothing
contained herein shall preclude the Agent or any other Lender
from engaging in any transaction, in addition to those
contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the
Borrower or such Affiliate is not restricted hereby from
engaging with any other Person.
SECTION 9.13. Confidentiality. The Lenders and the
Agent shall hold all non-public, proprietary or confidential
information (which has been identified as such by the
Borrower) obtained pursuant to the requirements of this
Agreement in accordance with their customary procedures for
handling confidential information of this nature and in
accordance with safe and sound banking practices; however, the
Lenders and the Agent may make disclosure of any such
information to its examiners, Affiliates, outside auditors,
counsel, consultants, appraisers and other professional
advisors in connection with this Agreement or as required by
any proposed syndicate member or any proposed transferee or
participant in connection with the contemplated transfer of
any Note or participation therein or as required or requested
by any Governmental Authority or representative thereof or in
connection with the enforcement hereof or of any Loan Document
or related document or pursuant to legal process; provided,
however, that any such proposed syndicate member or proposed
transferee or participant shall have agreed in writing for the
Borrower's benefit to be bound by the terms of this Section
9.13. In no event shall any Lender or the Agent be obligated
or required to return any materials furnished to it by the
Borrower.
SECTION 9.14. Change in Accounting Principles. If
(a) any changes in accounting principles from those
used in the preparation of the financial statements referred
to in clause (a)(i) of Section 5.4 hereafter occur as a result
of the promulgation of rules, regulations, pronouncements or
opinions by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) result
in a change in the method of calculation of financial
covenants, standards or terms found in this Agreement; or
(b) there is any change in the Borrower's Fiscal
Year with the Required Lenders' prior written consent pursuant
to Section 6.2.16 hereof;
the parties hereto agree to enter into negotiations in order
to amend such financial covenants, standards or terms so as to
equitably reflect such changes with the desired result that
the evaluations of the Borrower's financial condition shall be
the same after such changes as if such changes had not been
made.
SECTION 9.15. Waiver of Jury Trial, Etc. THE
AGENT, THE LENDERS AND THE BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF THE AGENT, SUCH LENDERS, OR THE
BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
AGENT AND SUCH LENDERS ENTERING INTO THIS AGREEMENT.
SECTION 9.16. Limitation of Liability. Neither the
Agent, the Lenders nor any Affiliate thereof shall have any
liability with respect to, and THE BORROWER HEREBY WAIVES,
RELEASES AND AGREES NOT TO ▇▇▇ UPON, ANY CLAIM FOR ANY
SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL
DAMAGES SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING
OUT OF, OR IN ANY WAY RELATED TO THIS AGREEMENT, THE LOAN
DOCUMENTS, THE TRANSACTIONS CONTEMPLATED HEREIN, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH.
SECTION 9.17. Usury Savings Clause.
Notwithstanding anything to the contrary in this Agreement or
any other Loan Document, if at any time any rate of interest
accruing on any Obligation, when aggregated with all amounts
payable by the Borrower or any other Loan Party under any of
the Loan Documents that are deemed or construed to be interest
accrued or accruing on such Obligation under applicable law,
exceeds the highest rate of interest permissible under any law
which a court of competent jurisdiction shall, in a final
determination, deem applicable to such Lender with respect to
such Obligation (each a "Maximum Lawful Rate"), then in such
event and so long as the Maximum Lawful Rate would be so
exceeded, such rate of interest shall be reduced to the
Maximum Lawful Rate; provided that if at any time thereafter
such rate of interest accruing on Obligations held by such
Lender is less than the Maximum Lawful Rate, the Borrower
shall continue to pay interest to such Lender at the Maximum
Lawful Rate until such time as the total interest received by
such Lender in respect of the Obligations held by it is equal
to the total interest which such Lender would have received
had interest on all Obligations held by such Lender (but for
the operation of this Section 9.17) accrued at the rate
otherwise applicable under this Agreement and the other Loan
Documents. Thereafter, interest payable to such Lender in
respect of the Obligations held by it shall accrue at the
applicable rate set forth in this Agreement or other Loan
Documents unless and until such rate again exceeds the Maximum
Lawful Rate, in which event this Section 9.17 shall again
apply. In no event, shall the total interest received by any
Lender pursuant to the terms hereof exceed the amount which
such Lender could lawfully have received had interest been
calculated for the full term of this Agreement at the Maximum
Lawful Rate. In the event that the Maximum Lawful Rate is
calculated pursuant to this Section 9.17, (a) if required by
applicable law, such interest shall be calculated at a daily
rate equal to the Maximum Lawful Rate divided by the number of
days in the year in which such calculation is made, and (b) if
permitted by applicable law, the Borrower and such Lender
shall (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (ii) exclude
voluntary prepayments and the effect thereof, and (iii)
amortize, prorate, allocate and spread in equal or unequal
parts the total amount of interest throughout the entire
contemplated term of the Loans so that interest for the entire
term of the Loans shall not exceed the Maximum Lawful Rate.
In the event that a court of competent jurisdiction,
notwithstanding the provisions of this Section 9.17 shall make
a final determination that any Lender has received interest in
excess of the Maximum Lawful Rate, such Lender shall, to the
extent permitted by applicable law, promptly apply such
excess, first to any interest due and outstanding under this
Agreement and the other Loan Documents, second to any
principal due and payable under this Agreement and the Notes,
third to the remaining principal amount of the Notes and
fourth to other unpaid Obligations held by such Lender, and
thereafter shall refund any excess to the Borrower or as a
court of competent jurisdiction may otherwise order.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers
thereunto duly authorized as of the day and year first above
written.
HEADWAY CORPORATE RESOURCES, INC.
By: /s/
Name:
Title:
Attest: /s/
Name:
Title:
Percentage
35% - Revolving ING (U.S.) CAPITAL
CORPORATION,
35% - Term Loan A, Term as Agent and as Lender
Loan B, and Term Loan C
35.% - Letter of Credit
By: /s/
Name:
Title:
FIRST SOURCE FINANCIAL LLP
BY: FIRST SOURCE FINANCIAL,
INC.,
as its Agent/Manager
Percentage
30% - Revolving
30% - Term Loan A, By: /s/
Term Loan B, and Term Loan C Name:
30% - Letter of Credit Title:
TRANSAMERICA
BUSINESS CREDIT CORPORATION
Percentage
35% - Revolving
35% - Term Loan A, By: /s/
Term Loan B, and Term Loan C Name:
35% - Letter of Credit Title: