EXHIBIT 10.19
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AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
OUTSOURCE INTERNATIONAL, INC.
THE BANKS
FROM TIME TO TIME PARTIES HERETO
AND
BANK OF BOSTON CONNECTICUT,
AS AGENT
REVOLVING CREDIT FACILITY
DATED AS OF FEBRUARY 21, 1997
AND
AMENDED AND RESTATED AS OF MARCH 18, 1997
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TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS..........................................................................1
1.1 Defined Terms..................................................................1
1.2 Other Definitional Provisions.................................................18
1.3 Change in Accounting Principles...............................................18
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS.....................................................18
2.1 Revolving Credit Commitments..................................................18
2.1A. Swingline Loans...............................................................19
2.2 Designation of Interest Rates; Eurodollar Interest Periods....................21
2.3 Interest Rates and Payment Dates..............................................22
2.4 Procedure for Borrowing.......................................................23
2.5 Conversion and Continuation Options...........................................23
2.6 Minimum Amounts and Maximum Number of Tranches................................24
2.7 Revolving Credit Notes........................................................24
2.8 Fees..........................................................................24
2.9 Termination or Reduction of Revolving Credit Commitments......................25
2.10 Optional Prepayments..........................................................26
2.11 Computation of Interest and Fees..............................................26
2.12 Inability to Determine Interest Rate..........................................26
2.13 Pro Rata Treatment and Payments...............................................27
2.14 Illegality....................................................................28
2.15 Requirements of Law...........................................................28
2.16 Taxes.........................................................................29
2.17 Indemnity.....................................................................31
SECTION 3. LETTERS OF CREDIT...................................................................31
3.1 L/C Commitment................................................................31
3.2 Procedure for Issuance of Letters of Credit...................................32
3.3 Fees, Commissions and Other Charges...........................................32
3.4 Reimbursement Obligation of the Borrower......................................33
3.5 L/C Draws and Reimbursements..................................................33
3.6 Obligations Absolute..........................................................34
3.7 Letter of Credit Payments.....................................................35
3.8 Application...................................................................35
SECTION 4. REPRESENTATIONS AND WARRANTIES......................................................35
4.1 Financial Condition...........................................................35
4.2 No Change.....................................................................36
4.3 Corporate Existence; Compliance with Law......................................37
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4.4 Corporate Power, Authorization; Enforceable Obligations.......................37
4.5 No Legal Bar..................................................................37
4.6 No Material Litigation........................................................38
4.7 No Default....................................................................38
4.8 Ownership of Property; Liens..................................................38
4.9 Intellectual Property.........................................................38
4.10 No Burdensome Restrictions....................................................38
4.11 Taxes.........................................................................38
4.12 Federal Regulations...........................................................39
4.13 ERISA.........................................................................39
4.14 Investment Company Act; Other Regulations.....................................39
4.15 Subsidiaries..................................................................40
4.16 Purpose of Loans..............................................................40
4.17 Environmental Matters.........................................................40
4.18 Security Documents............................................................41
4.19 Designated Senior Debt........................................................42
4.20 Solvency......................................................................42
4.21 Certain Stockholders..........................................................42
SECTION 5. CONDITIONS PRECEDENT................................................................42
5.1 Amendment Effective Date......................................................42
5.2 Conditions to Each Extension of Credit........................................43
SECTION 6. AFFIRMATIVE COVENANTS...............................................................44
6.1 Financial Statements..........................................................44
6.2 Certificates; Other Information...............................................45
6.3 Payment of Obligations........................................................46
6.4 Conduct of Business and Maintenance of Existence..............................46
6.5 Maintenance of Property; Insurance............................................46
6.6 Inspection of Property; Books and Records; Discussions........................47
6.7 Notices.......................................................................47
6.8 Environmental Laws............................................................48
6.9 Use of Proceeds...............................................................49
6.10 Further Assurances............................................................49
SECTION 7. NEGATIVE COVENANTS..................................................................49
7.1 Financial Condition Covenants.................................................49
7.2 Limitation on Indebtedness....................................................50
7.3 Limitation on Liens...........................................................51
7.4 Limitation on Guarantee Obligations...........................................52
7.5 Limitations on Fundamental Changes............................................52
7.6 Limitation on Sale of Assets..................................................53
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7.7 Limitation on Restricted Payments.............................................53
7.8 Limitation on Investments, Loans and Advances.................................53
7.9 Limitation on Optional Payments and Modifications of Debt Instruments.........55
7.10 Transactions with Affiliates..................................................55
7.11 Sale and Leaseback............................................................55
7.12 Corporate Documents; Name/Location of Assets..................................55
7.13 Fiscal Year...................................................................56
7.14 Limitation on Negative Pledge Clauses.........................................56
7.15 No Limit on Upstream Payments by Subsidiaries.................................56
7.16 AASI and Voting Trust Agreement...............................................56
SECTION 8. EVENTS OF DEFAULT...................................................................56
SECTION 9. THE AGENT...........................................................................60
9.1 Appointment...................................................................60
9.2 Delegation of Duties..........................................................60
9.3 Exculpatory Provisions........................................................60
9.4 Reliance by Agent.............................................................61
9.5 Notice of Default.............................................................61
9.6 Non-Reliance on Agent and Other Banks.........................................61
9.7 Indemnification...............................................................62
9.8 Agent in Its Individual Capacity..............................................62
9.9 Successor Agent...............................................................62
SECTION 10. MISCELLANEOUS......................................................................63
10.1 Amendments and Waivers........................................................63
10.2 Notices.......................................................................63
10.3 No Waiver; Cumulative Remedies................................................64
10.4 Survival of Representations and Warranties....................................65
10.5 Payment of Expenses and Taxes.................................................65
10.6 Successors and Assigns; Participations; Purchasing Banks......................66
10.7 Adjustments; Set-off..........................................................69
10.8 Counterparts..................................................................69
10.9 Severability..................................................................69
10.10 Integration...................................................................70
10.11 Governing Law.................................................................70
10.12 Submission To Jurisdiction; Waivers...........................................70
10.13 Acknowledgments...............................................................70
10.14 WAIVERS OF JURY TRIAL; COMMERCIAL TRANSACTIONS................................72
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SCHEDULES
Schedule A Commitments; Addresses
Schedule 4.1(b) Long-Term Commitments
Schedule 4.1(c) Recent Dispositions
Schedule 4.2 Changes/Recent Distributions
Schedule 4.6 Litigation
Schedule 4.11 Tax Returns
Schedule 4.13 ERISA Matters
Schedule 4.15 Subsidiaries
Schedule 4.17 Environmental Matters
Schedule 4.18 UCC Filing Locations
Schedule 4.21 Relationships of Certain Stockholders to the Borrower
Schedule 7.2 Indebtedness Outstanding After the Execution Date
Schedule 7.3 Liens
Schedule 7.8 Management Loans and Advances
EXHIBITS
EXHIBIT A-1 Form of Borrowing Notice
EXHIBIT A-2 Form of Revolving Credit Note
EXHIBIT A-3 Form of Swingline Note
EXHIBIT B Form of Subsidiary Guarantee
EXHIBIT C Form of OI Pledge Agreement
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Opinion of Counsel to the Borrower and its
Subsidiaries
EXHIBIT F Form of OI Security Agreement
EXHIBIT G Form of Subsidiary Security Agreement
EXHIBIT H Form of Trademark Security Agreement
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CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of February 21, 1997,
amended and restated as of March 18, 1997, by and among OUTSOURCE INTERNATIONAL,
INC., a Florida corporation ("the Borrower" or "OI"), the banks and other
financial institutions listed on SCHEDULE A to this Agreement (collectively,
together with any banks or financial institutions from time to time parties to
this Agreement, the "Banks") and BANK OF BOSTON CONNECTICUT, a bank organized
under the laws of the State of Connecticut , as agent for the Banks hereunder
(in such capacity, the "Agent").
The Borrower, Bank of Boston Connecticut (the "Existing Bank") and the
Agent are party to the Credit Agreement dated as of February 21, 1997 (as in
effect immediately prior to the Amendment Effective Date defined below, the
"Existing Credit Agreement").
The Borrower has requested that the Existing Bank and the Agent, and
the Banks and the Agent are willing to, amend and restate the Existing Credit
Agreement to provide, among other things, for the addition of two banks as
parties to this Agreement and to provide for Swingline Loans (as defined below),
on the terms and conditions hereof.
Accordingly, the parties hereto agree to amend and restate the Existing
Credit Agreement so that, as amended and restated, it provides in its entirety
as herein provided.
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS: As used in this Agreement, the following terms shall
have the following meanings:
"AASI": the Agreement among Shareholders and Investors, dated as of
February 21, 1997, among the Borrower, certain shareholders of the Borrower,
Triumph/Bachow, the trustees of the Voting Trust Agreement (as defined herein)
and an escrow agent, as amended, supplemented or otherwise modified from time to
time with the prior written consent of the Banks.
"ACQUISITION LINE": as defined in Section 2.1.
"AFFILIATE": of a Person (the "Primary Person"), (a) any other Person
(other than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, the Primary Person or (b) any
Person who is a director or officer (i) of the Primary Person, (ii) of any
Subsidiary of the Primary Person or (iii) of any Person described in clause (a)
above. For purposes of this definition, control of a Person shall mean the
power, directly or indirectly, (i) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"AGGREGATE OUTSTANDING EXTENSIONS OF CREDIT": as to any Bank at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Credit Loans made by such Bank then outstanding and (b) the product of
such Bank's Commitment Percentage times the L/C Obligations then outstanding.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"ALTERNATE BASE RATE": the higher of (i) the rate of interest per annum
publicly announced from time to time by the Agent as its "base rate" in effect
at its principal office (the Alternate Base Rate not being intended to be the
best or lowest rate of interest charged by the Agent in connection with
extensions of credit to debtors) or (ii) the Federal Funds Effective Rate plus
1/2 of 1% per annum (rounded upwards, if necessary, to the next 1/100 of 1%).
Any change in the Alternate Base Rate shall be effective as of the opening of
business on the effective day of such change in the Alternate Base Rate.
"ALTERNATE BASE RATE LOANS": Loans for which the applicable rate of
interest is based upon the Alternate Base Rate.
"AMENDMENT EFFECTIVE DATE": the date on which all of the conditions set
forth in Section 5.1 shall have been satisfied or waived by the Banks and the
Agent.
"APPLICABLE MARGIN": at any time, for Alternate Base Rate Loans or
Eurodollar Loans, and for the Working Capital Line, Acquisition Line or CSF
Line, as the case may be, a rate per annum equal to the rate set forth below
opposite the applicable ratio of Consolidated Indebtedness to Consolidated
EBITDA for the period of four (4) consecutive fiscal quarters ending on the FQED
immediately preceding such time:
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RATIO OF
CONSOLIDATED
INDEBTEDNESS TO APPLICABLE MARGIN APPLICABLE MARGIN
CONSOLIDATED FOR ALTERNATE FOR
LEVEL EBITDA BASE RATE LOANS EURODOLLAR LOANS
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WORKING CSF LINE/ WORKING CSF LINE/
CAPITAL ACQUISITION CAPITAL ACQUISITION
LINE LINE LINE LINE
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I Less than 1.50 to
1.00 0.00% 0.00% 1.25% 1.50%
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II 1.50-2.49 to 1.00 0.00% 0.25% 1.50% 1.75%
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III 2.50-3.49 to 1.00 0.25% 0.50% 1.75% 2.00%
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IV 3.50-3.99 to 1.00 0.50% 0.75% 2.00% 2.25%
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V 4.00-4.49 to 1.00 1.25% 1.50% 2.75% 3.00%
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VI Greater than 4.50 1.50% 1.75% 3.00% 3.25%
to 1.00
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PROVIDED, HOWEVER, that notwithstanding the foregoing, during the six (6) month
period following the Closing Date, the Applicable Margin shall not be less than
that set at Level V, irrespective of the Borrower's actual Consolidated
Indebtedness to Consolidated EBITDA Ratio.
"APPLICATION": an application in such form as the Issuing Bank may
specify from time to time, requesting the Issuing Bank to issue a Letter of
Credit.
"ASSIGNMENT AND ACCEPTANCE": an Assignment and Acceptance,
substantially in the form of Exhibit D.
"AVAILABLE REVOLVING CREDIT COMMITMENT": as to any Bank at any time, an
amount equal to the excess, if any, of (a) the amount of such Bank's Revolving
Credit Commitment over (b) such Bank's Aggregate Outstanding Extensions of
Credit.
"BORROWING DATE": any Business Day specified in a notice pursuant to
subsection 2.4 as a date on which the Borrower requests the Banks to make Loans
hereunder.
"BUSINESS DAY": a day other than Saturday, Sunday or other day on which
commercial banks in Hartford, Connecticut are authorized or required by law to
close and, in the case of Eurodollar Loans, also a day on which commercial banks
are open for international business (including dealings
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in Dollar deposits) in London or such other eurodollar interbank market as may
be selected by the Agent in its sole discretion acting in good faith.
"CAPITAL EXPENDITURES": any payment made directly or indirectly for the
purpose of acquiring, constructing or improving fixed assets, real property or
equipment which in accordance with GAAP would be added as a net debit (after
giving effect to any credits) to the fixed asset account of the Person making
such expenditure, including, without limitation, amounts paid or payable under
any conditional sale or other title retention agreement.
"CAPITAL LEASE": any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, (b) certificates of deposit and Eurodollar time
deposits with maturities of six (6) months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six (6) months and overnight
bank deposits, in each case, with any Bank or with any domestic commercial bank
having capital and surplus in excess of $100,000,000, (c) repurchase obligations
with a term of not more than seven (7) days for underlying securities of the
types described in clauses (a) and (b) entered into with any financial
institution meeting the qualifications specified in clause (b) above, and (d)
commercial paper issued by any Bank or the parent corporation of any Bank and
commercial paper of any other issuer rated at least A-1 or the equivalent
thereof by Standard & Poor's Corporation or at least P-1 or the equivalent
thereof by ▇▇▇▇▇'▇ Investors Service, Inc. and in each case maturing within six
(6) months after the date of acquisition.
"CASH COLLATERAL ACCOUNT": as defined in Section 8.
"CHANGE OF CONTROL": except as contemplated by the AASI, the Voting
Trust Agreement or the Securities Purchase Agreement, the occurrence of any of
the following events: (i) any "person" or "group" (as such terms are used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, and
the rules promulgated thereunder) is or becomes the beneficial owner, directly
or indirectly, of more than 50% of the total voting power of the Voting Stock of
the Borrower; (ii) during any period of two (2) consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Borrower (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the Borrower
was approved by the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for director was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Borrower then in
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office; (iii) the direct or indirect, sale, lease, exchange or other transfer of
all or substantially all of the assets of the Borrower to any "person" or
"group" (as such terms are used in Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended, and the rules promulgated thereunder);
provided that the foregoing shall not include the granting of Liens permitted by
this Agreement; or (iv) the Borrower consolidates with or merges into another
corporation or any Person consolidates with or merges into the Borrower, in
either event pursuant to a transaction in which either (A) the outstanding
Voting Stock of the Borrower is changed into or exchanged for cash, securities
or other property (other than any such transaction where the outstanding Voting
Stock of the Borrower is changed into or exchanged for Voting Stock of the
surviving corporation) or (B) the holders of a majority of the voting power of
the Voting Stock of the Borrower immediately prior to such transaction own,
directly or indirectly, less than a majority of voting power of the Voting Stock
of the surviving corporation immediately after such transaction.
"CLOSING DATE": February 21, 1997.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": the collective reference to the Collateral, as such term
is defined in each of the OI Security Agreement, the OI Pledge Agreement, the
Subsidiary Security Agreement and the Trademark Security Agreement.
"COMMITMENT PERCENTAGE": as to any Bank at any time, the percentage set
forth opposite such Bank's name on SCHEDULE A of this Agreement with respect to
such Bank.
"COMMITMENT PERIOD": the period from and including the date hereof to
but not including the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"COMMITMENTS": the collective reference to the Revolving Credit
Commitments and the L/C Commitments.
"COMMONLY CONTROLLED ENTITY": an entity, whether incorporated or not,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414 of the Code.
"CONSOLIDATED CURRENT ASSETS": the amount of the current assets of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"CONSOLIDATED CURRENT LIABILITIES": the amount of the current
liabilities of the Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; PROVIDED, HOWEVER, there shall be excluded
therefrom the amount of any principal obligation due on Indebtedness of the
Borrower or its Subsidiaries after the Termination Date.
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"CONSOLIDATED EBIT": for any period, Consolidated Net Income for such
period, plus the aggregate amounts deducted in determining such Consolidated Net
Income in respect of (a) income taxes and (b) Consolidated Interest Expense.
"CONSOLIDATED EBIT TO CONSOLIDATED INTEREST EXPENSE RATIO": at the end
of any FQED, the ratio of (A) Consolidated EBIT for the immediately preceding
four (4) fiscal quarters (ending on such date) to (B) Consolidated Interest
Expense for the immediately preceding four (4) fiscal quarters (ending on such
date).
"CONSOLIDATED EBITDA": for any period, Consolidated Net Income for such
period plus the aggregate amounts deducted in determining such Consolidated Net
Income in respect of (a) income taxes, (b) Consolidated Interest Expense, (c)
depreciation expense and (d) the expense associated with amortization of
intangible and other assets.
"CONSOLIDATED INDEBTEDNESS": at any particular date, with respect to
the Borrower and its Subsidiaries, all liabilities less trade accounts payable
and accrued liabilities, determined on a consolidated basis in accordance with
GAAP, except that, irrespective of its treatment under GAAP, all Subordinated
Indebtedness of the Borrower to Triumph shall be deemed to be a liability in its
face amount; e.g. $25,000,000 with respect to the Senior Subordinated Notes
issued on the Closing Date.
"CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED EBITDA RATIO": at the end of
any FQED, the ratio of (A) Consolidated Indebtedness on such date to (B)
Consolidated EBITDA for the immediately preceding four (4) fiscal quarters
(ending on such date). For purposes of testing the financial condition covenants
in subsections 7.1(a) and 7.1(b) only (i.e. not for other financial covenants or
pricing), the Borrower may add Consolidated EBITDA of any acquired entity for
such four fiscal quarters plus any verifiable non-recurring expenses.
"CONSOLIDATED INTEREST EXPENSE" for any period, the interest expense,
including the interest portion of rental payments under Capital Leases but
excluding non-cash interest, for the Borrower and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME": for any period, the net income (or loss) of
the Borrower and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP; PROVIDED that there shall be excluded from the
calculation thereof (i) distributions and compensation not exceeding $2,200,000
in the aggregate paid by OutSource International, Inc. and its Affiliates to
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ with respect to the
year ended December 31, 1996, (ii) expenses not exceeding $2,000,000 in the
aggregate associated with the investigation of inappropriate payments to a
customer made by an employee of an Affiliate of the Borrower out of its Chicago
location and with the Borrower's discontinued initial public offering, and (iii)
any non-operating gains or losses (including without limitation, extraordinary
or unusual gains or losses, gains or losses from discontinuance of operations,
gains or losses arising from the
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sale or disposition by the Borrower or any Subsidiary of any asset, or the
issuance of any debt or equity securities, and other non-recurring gains or
losses).
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CSF": Capital Staffing Fund, Inc., a Florida corporation.
"CSF LINE": as defined in Section 2.1.
"CURRENT RATIO": at the end of any FQED, the ratio of Consolidated
Current Assets to Consolidated Current Liabilities.
"DATE HEREOF": February 21, 1997.
"DEFAULT": any of the events specified in Section 8, regardless of
whether any requirement for the giving of notice, the lapse of time, or both, or
any other conditions, has been satisfied.
"DOLLARS" AND "$": dollars in lawful currency of the United States of
America.
"ENVIRONMENTAL LAWS": any and all Federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees or
requirements of any Governmental Authority regulating, relating to or imposing
liability or standards of conduct concerning environmental protection matters,
including without limitation, Hazardous Materials, as now or may at any time
hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EURODOLLAR BASE RATE": with respect to each day during each Eurodollar
Interest Period, the rate per annum equal to the rate at which the Agent is
offered Dollar deposits at or about 10:00 A.M., Eastern time, two (2) Business
Days prior to the beginning of such Eurodollar Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Eurodollar Interest Period for the number of
days comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Eurodollar Interest Period.
"EURODOLLAR INTEREST PERIOD": any one (1), two (2) or three(3) month
period selected by the Borrower in respect to any Eurodollar Loan pursuant to
subsections 2.2, 2.4 or 2.5 of this Agreement.
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"EURODOLLAR LOANS": Loans for which the applicable rate of interest is
based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Eurodollar
Interest Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
------------------------------
1.00 - Eurodollar Reserve Requirements
"EURODOLLAR RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding maintained by a member
bank of such System.
"EVENT OF DEFAULT": any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"EXISTING BANK": as defined in the recitals.
"EXISTING CREDIT AGREEMENT": as defined in the recitals.
"EXISTING LOANS": the loans outstanding under the Existing Credit
Agreement on the Amendment Effective Date.
"FEDERAL FUNDS EFFECTIVE RATE": at any time shall mean a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal Funds transactions with members of the Federal Reserve System arranged
by Federal Funds Brokers, 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, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three (3) Federal Funds brokers of recognized
standing selected by the Agent.
"FQED": the end date of any fiscal quarter in any fiscal year of the
Borrower.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
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"GOVERNMENTAL AUTHORITY": 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.
"GUARANTEE OBLIGATION": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing Person or (b) another Person (including,
without limitation, any bank under any letter of credit), to induce the creation
of which obligation the guaranteeing person has issued a reimbursement, counter
indemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether contingent or not, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (A) for the purchase
or payment of any such primary obligation or (B) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligations of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner of any
such primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that
the term "Guarantee Obligation" shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (x) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (y) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"HAZARDOUS MATERIALS": any hazardous materials, hazardous wastes,
hazardous constituents, hazardous or toxic substances, petroleum products
(including crude oil or any fraction thereof), defined or regulated as such in
or under any Environmental Law.
"INDEBTEDNESS": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under Capital Leases, (c) all
obligations of such person in respect of acceptances issued or created for the
account of such Person, (d) all liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (e) the face amount of any outstanding letters
of credit issued for the account of such Person, (f) obligations in respect of
interest rate hedge agreements entered
- 9 -
into in the ordinary course of business, and (g) all Guarantee Obligations of
such Person in respect of obligations referred to in clauses (a) through (f)
above.
"INITIAL PERMITTED ACQUISITION": the acquisition by the Borrower or any
Subsidiary of all or a portion of the assets of any or all of the following
entities having an aggregate purchase price for all such acquisitions not
exceeding $25,000,000 and consummated within the following time periods: (A) on
or before sixty (60) days after the Closing Date: Labor World of Atlanta, Apex
in Andover, Stand-by in Colorado Springs and Staff Management in New Jersey and
(B) on or before ninety (90) days after the Closing Date, Stand-by in Denver,
Labor Force of Phoenix and Labor World of South Florida.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTEREST PAYMENT DATE": (a) as to any Alternate Base Rate Loan, the
last day of each month to occur while such Loan is outstanding, (b) as to any
Eurodollar Loan having a Eurodollar Interest Period of one (1) month, the last
day of such Eurodollar Interest Period, (c) as to any Eurodollar Loan having a
Eurodollar Interest Period longer than one (1) month, each day which is one (1)
month, after the first day of such Eurodollar Interest Period and the last day
of such Eurodollar Interest Period and (d) as to any Swingline Loan, the
Swingline Maturity Date.
"ISSUING BANK": Bank of Boston Connecticut, in its capacity as issuer
of any Letter of Credit.
"LABOR WORLD": a trademark of OutSource Franchising, Inc. registered
with the United States Patent and Trademark Office and used by OutSource
Franchising, Inc. and its franchisees in marketing temporary industrial
personnel.
"L/C COMMITMENT": the lesser of (a) $10,000,000, minus the sum of (i)
the aggregate then undrawn and unexpired amount of the then outstanding letters
of credit issued by The First National Bank of Boston for the account of the
Borrower or any Subsidiary and (ii) the aggregate amount of unreimbursed
drawings under such letters of credit and (b) the Revolving Credit Commitment
then in effect.
"L/C FEE": as defined in subsection 3.3(a).
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to subsection 3.5.
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"L/C PARTICIPANTS": the collective reference to all the Banks other
than the Issuing Bank.
"LETTER OF CREDIT RATe": for each Letter of Credit, at any time, a rate
per annum equal to the rate set forth below opposite the applicable ratio of
Consolidated Indebtedness to Consolidated EBITDA:
-------------------------------------------------------------------------
CONSOLIDATED INDEBTEDNESS TO LETTER OF
LEVEL CONSOLIDATED EBITDA RATIO CREDIT RATE
-------------------------------------------------------------------------
I Less than 1.50 to 1.00 1.00%
-------------------------------------------------------------------------
II 1.50-2.49 to 1.00 1.00%
-------------------------------------------------------------------------
III 2.50-3.49 to 1.00 1.25%
-------------------------------------------------------------------------
IV 3.50-3.99 to 1.00 1.25%
-------------------------------------------------------------------------
V 4.00-4.49 to 1.00 1.75%
-------------------------------------------------------------------------
VI Greater than 4.50 to 1.00 1.75%
-------------------------------------------------------------------------
PROVIDED, HOWEVER, that notwithstanding the foregoing, during the six (6) month
period following the Closing Date, the Letter of Credit Rate shall not be less
than that set forth in Level V above irrespective of the actual Consolidated
Indebtedness to Consolidated EBITDA Ratio.
"LETTERS OF CREDIT": as defined in subsection 3.1(a).
"LIEN": any mortgage, pledge, hypothecation, assignment, security
interest, deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any Capital Lease having substantially
the same economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).
"LOAN": any loan made by any Bank pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Notes, the Applications, the OI
Pledge Agreement, the OI Security Agreement, the Subsidiary Guarantee, the
Subsidiary Security Agreement, the Trademark Security Agreement and the
Subordination Agreements, together with any and all other instruments, documents
and agreements executed and delivered by the Borrower or the Subsidiaries from
time to time in connection with the indebtedness evidenced by this Agreement and
the Notes, as the same may hereafter be amended, restated or modified, from time
to time.
- 11 -
"MARKET CLEARING LETTER": the letter referred to in Section 5.1(u).
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the
Borrower or any Subsidiary to perform its obligations under the Loan Documents
to which it is a party or (c) the validity or enforceability of this Agreement,
the Notes or any of the other Loan Documents or the rights or remedies of the
Agent or the Banks hereunder or thereunder.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NOTES": the collective reference to the Revolving Credit Notes and the
Swingline Note.
"OBLIGATIONS": means all Indebtedness, obligations and liabilities of
the Borrower and its Subsidiaries, to the Agent and the Banks under this
Agreement, the Revolving Credit Notes, the Swingline Note or any other Loan
Document.
"OI PLEDGE AGREEMENT": the OI Pledge Agreement, substantially in the
form of Exhibit C, made by the Borrower in favor of the Agent for the benefit of
the Agent and the ratable benefit of the Banks, as the same may be amended,
supplemented or otherwise modified from time to time.
"OI SECURITY AGREEMENT": the OI Security Agreement, substantially in
the form of Exhibit F, to be executed and delivered by the Borrower to the Agent
for the benefit of the Agent and the ratable benefit of the Banks, as the same
may be amended, supplemented or otherwise modified from time to time.
"OUTSOURCE FRANCHISING, INC.": a Florida corporation and a wholly-owned
Subsidiary of the Borrower.
"OPERATING CASH FLOW": for any period, an amount equal to (i)
Consolidated EBITDA for such period, minus (ii) income taxes paid in cash by the
Borrower on a consolidated basis during such period, minus (iii) all dividends,
distributions and other payments by the Borrower to its shareholders during such
period (excluding payments in respect of Indebtedness to such shareholders to
the extent permitted hereunder), minus (iv) Capital Expenditures paid out of
cash flow during such period.
"OPERATING CASH FLOW RATIO": at the end of any FQED, the ratio of (A)
Operating Cash Flow for the immediately preceding four (4) fiscal quarters
(ending on such date) to (B) Total Debt Service for the immediately preceding
four (4) fiscal quarters (ending on such date).
"PARTICIPANTS": as defined in subsection 10.6(b).
- 12 -
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower 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.
"PLEDGE AGREEMENT-DEPOSIT ACCOUNT": the Pledge and Security
Agreement-Deposit Account, dated as of the Amendment Effective Date, made by the
Borrower in favor of the Agent for the benefit of the Agent and the ratable
benefit of the Banks, as the same may be amended, supplemented or otherwise
modified from time to time.
"PURCHASING BANKS": as defined in subsection 10.6(c).
"REGISTER": as defined in subsection 10.6(d).
"REGULATION U": Regulation U of the Board of Governors of the Federal
Reserve System.
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to reimburse
the Issuing Bank pursuant to subsection 3.4 for amounts drawn under Letters of
Credit.
"REIMBURSING BANK": as defined in subsection 2.13(a).
"REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived in accordance with subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. ss. 2615.
"REQUIRED BANKS": at any time, Banks having Commitment Percentages
representing at least 66 2/3% of the aggregate Commitments, or if the
Commitments are terminated, Banks representing at least 66 2/3% of the aggregate
principal amount of all loans outstanding.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organization or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
- 13 -
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer or the president or
other executive officer of the Borrower or, with respect to financing matters,
the chief financial officer or other executive officer of the Borrower.
"REVOLVING CREDIT COMMITMENT": as to any Bank, the obligation of such
Bank to make Revolving Credit Loans to the Borrower hereunder in an aggregate
principal amount at any one time outstanding not to exceed the amount set forth
opposite such Bank's name on SCHEDULE A under the caption, "Commitment Amount".
"REVOLVING CREDIT LOANS": any loans, advances or other disbursements by
Agent, or any or all of the Banks to or for the account of the Borrower under
the Revolving Credit Commitments (including without limitation, amounts paid in
respect of any draft under any Letter of Credit) or in respect of any amounts
due and not paid by the Borrower in accordance with subsection 10.5.
"REVOLVING CREDIT NOTE": as defined in subsection 2.7.
"SALE/LEASEBACK TRANSACTION": as defined in subsection 7.11.
"SECURITIES PURCHASE AGREEMENT": the Securities Purchase Agreement
between the Borrower and Triumph/Bachow, pursuant to which the Borrower issued
its Senior Subordinated Notes -- as such Securities Purchase Agreement may, with
the prior written consent of the Agent and the Banks, be amended, supplemented
or otherwise modified from time to time.
"SECURITY DOCUMENTS": the OI Security Agreement, OI Pledge Agreement,
Subsidiary Security Agreement, the Trademark Security Agreement and the Pledge
Agreement-Deposit Account.
"SENIOR CONSOLIDATED INDEBTEDNESS": at any particular date, with
respect to the Borrower and its Subsidiaries, Consolidated Indebtedness less the
face amount of all Subordinated Indebtedness.
"SENIOR CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED EBITDA RATIO": at the
end of any FQED, the ratio of (A) Senior Consolidated Indebtedness on such date
to (B) Consolidated EBITDA for the immediately preceding four (4) fiscal
quarters (ending of such date).
"SENIOR SUBORDINATED NOTES": the $25,000,000 Senior Subordinated Notes
due February 20, 2002 issued pursuant to the Securities Purchase Agreement -- as
such Notes may, with the prior written consent of the Banks, be amended,
modified, supplemented, renewed or extended from time to time.
- 14 -
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"SOLVENT": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"SUBORDINATED INDEBTEDNESS": means Indebtedness under the Securities
Purchase Agreement, the Senior Subordinated Notes, Indebtedness of the Borrower
or its Subsidiaries identified as subordinated on Schedule 7.2, and other
unsecured Indebtedness which does not permit any payment or prepayment of the
principal amount thereof prior to the payment in full of the Obligations and
contains in the instrument evidencing such Indebtedness or in the agreement
under which it is issued (which agreement shall be binding on all holders of
such Indebtedness) subordination provisions acceptable to the Agent and the
Banks in their sole discretion, which unsecured Indebtedness must be approved in
writing by the Agent and the Banks prior to incurring such Indebtedness.
"SUBORDINATION AGREEMENTS": the subordination agreements and notes
executed and delivered to the Borrower or any Subsidiary prior to or on the
Closing Date by the holders of the Subordinated Indebtedness identified on
Schedule 7.2.
"SUBSEQUENT PERMITTED ACQUISITION": the acquisition by the Borrower or
any Subsidiary of the assets of any Person (other than an Initial Permitted
Acquisition) PROVIDED that (i) such Person conducts the same general type of
business as currently conducted by the Borrower and its Subsidiaries, (ii) such
Person conducts all of its business in the United States of America, (iii) none
of the shareholders of the Borrower or its Affiliates have or will have any
direct or indirect beneficial ownership of any stock or other interest in the
acquired company, (iv) the purchase price for any single acquisition does not
exceed $750,000, and (v) after giving effect to such transaction, no Default or
Event of Default would exist.
- 15 -
"SUBSEQUENTLY ACQUIRED SUBSIDIARY": any Subsidiary acquired by the
Borrower or any Subsidiary pursuant to subsection 7.8(g).
"SUBSIDIARY": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership, limited liability company or other entity are at the
time owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTEE": the Guarantee, substantially in the form of
Exhibit B, made by each Subsidiary in favor of the Agent for the benefit of the
Agent and the ratable benefit of the Banks, as the same may be amended,
supplemented or otherwise modified from time to time.
"SUBSIDIARY SECURITY AGREEMENT": a Subsidiary Security Agreement,
substantially in the form of Exhibit G, to be executed and delivered by each
Subsidiary to the Agent for the benefit of the Agent and the ratable benefit of
the Banks, as the same may be amended, supplemented or otherwise modified from
time to time.
"SUCCESSOR AGENT": any Bank or any bank, depository or financial
institution, trust company, bank and trust company having capital and surplus in
excess of $100,000,000 and acceptable to the remaining Bank or Banks and to the
Borrower, the Borrower's consent not to be unreasonably withheld or delayed.
"SWINGLINE BANK": Bank of Boston Connecticut acting in such capacity
under subsection 2.1A, or any successor in such capacity.
"SWINGLINE COMMITMENT": the obligation of the Swingline Bank to make
Swingline Loans in an aggregate amount not to exceed at any one time outstanding
the lesser of (i) $3,000,000 and (ii) the aggregate amount of the Commitments.
"SWINGLINE LOANS": the loans provided for by subsection 2.1A.
"SWINGLINE MATURITY DATE": as defined in subsection 2.1A.
"SWINGLINE NOTE": the promissory note provided for by subsection 2.1A
and any promissory note delivered in substitution or exchange therefor, in each
case as the same shall be modified and supplemented and in effect from time to
time.
- 16 -
"SWINGLINE RATE": for any day, a rate per annum equal to the rate for
Alternate Base Rate Loans plus the Applicable Margin for the Working Capital
Line. A change in the Swingline Rate shall take effect at the time of each
change in the Alternate Base Rate or the Applicable Margin for the Working
Capital Line, as the case may be.
"TERMINATION DATE": February 21, 2001.
"TOTAL DEBT SERVICE": at any particular date, the sum of (i)
Consolidated Indebtedness, including the principal portion of Capital Leases,
scheduled and permitted to be paid during the applicable period (reduced by
increases during such period in Subordinated Indebtedness in an amount not
exceeding, and incurred to replace, such scheduled payments and excluding (A) a
one time payment of $1,325,000 made by the Borrower in connection with the
Borrower's purchase of the Borrower's headquarters building and (B) not
exceeding in any year $1,500,000 principal amount of Subordinated Indebtedness
incurred by the Borrower or any Subsidiary to finance Subsequent Permitted
Acquisitions PROVIDED that such Subordinated Indebtedness matures at least one
(1) year after the date of its incurrence and bears interest not exceeding ten
percent (10%) per annum), plus (ii) Consolidated Interest Expense, it being
understood that principal payments with respect to any Indebtedness that has
been refinanced shall be determined on and after the refinancing on the basis of
the payment schedule in such refinancing.
"TRADEMARK SECURITY AGREEMENT": the Trademark Security Agreement,
substantially in the form of Exhibit H, executed and delivered by the Borrower
and OutSource Franchising, Inc. in favor of the Agent for the benefit of the
Agent and the ratable benefit of the Banks, as the same may be amended,
supplemented or otherwise modified from time to time.
"TRANCHE": the collective reference to Eurodollar Loans having
Eurodollar Interest Periods which begin on the same date and end on the same
later date (whether such Loans shall originally have been made on the same day
or not).
"TRANSFEREE": as defined in subsection 10.6(f).
"TRIUMPH/BACHOW": Triumph-Connecticut Limited Partnership and Bachow
Investment Partners III, L.P. or an entity controlled by them which is a party
to the Securities Purchase Agreement.
"TYPE": as to any Loan, its nature as an Alternate Base Rate Loan or a
Eurodollar Loan.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.
- 17 -
"VOTING STOCK": with respect to a corporation, all classes of Capital
Stock then outstanding of such corporation normally entitled to vote in
elections of directors.
"VOTING TRUST AGREEMENT": the Voting Trust Agreement, dated as of
February 21, 1997, among the Borrower, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
as trustees, and certain shareholders of the Borrower, as the same may, with the
prior written consent of the Banks, be amended, supplemented or otherwise
modified from time to time.
"WORKING CAPITAL LINE": as defined in Section 2.1.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
SCHEDULE and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
1.3 CHANGE IN ACCOUNTING PRINCIPLES. Except as otherwise provided
herein, any changes in GAAP which are hereafter made and adopted by the Borrower
with the agreement of its independent certified public accountants shall not
affect the method of calculation of any of the financial covenants, standards or
terms found in subsection 1.1 or Section 7.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 REVOLVING CREDIT COMMITMENTS. Subject to the terms and conditions
hereof, and provided that no Default or Event of Default shall have occurred and
be continuing, each Bank severally agrees to make Revolving Credit Loans to the
Borrower from time to time on or after the Amendment Effective Date and
continuing throughout the Commitment Period in an aggregate principal amount at
any one time outstanding not to exceed the amount of such Bank's Available
Revolving Credit Commitment; PROVIDED, HOWEVER, that (i) the aggregate
borrowings hereunder at
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any one time (giving effect to all Revolving Credit Loans, Swingline Loans and
Letters of Credit outstanding at such time) to the Borrower shall not exceed
$45,000,000; (ii) the aggregate amount of all borrowings available to the
Borrower for working capital and general corporate purposes of the Borrower and
its Subsidiaries (other than CSF) and to finance the cost of Initial Permitted
Acquisitions shall not exceed $40,000,000 (the "Working Capital Line"); (iii)
the aggregate amount of all borrowings available to the Borrower to finance the
cost of Subsequent Permitted Acquisitions shall not exceed $10,000,000, shall
not be used for working capital and shall not be reborrowed (the "Acquisition
Line"); and (iv) the aggregate amount of all borrowings available to the
Borrower to be advanced to CSF shall not exceed $5,000,000 (the "CSF Line").
From and after the Amendment Effective Date and continuing throughout the
Commitment Period, the Borrower may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans or Swingline Loans, in whole or
in part, and reborrowing (except for the Acquisition Line) in accordance with
the terms and conditions hereof.
2.1A. SWINGLINE LOANS.
(a) Subject to the terms and conditions hereinafter set forth, upon
notice by the Borrower made to the Swingline Bank in accordance with paragraph
(b) of this subsection 2.1A , the Swingline Bank agrees to make Swingline Loans
to the Borrower on any Business Day during the Commitment Period in an aggregate
principal amount not to exceed the Swingline Commitment. Unless the Borrower has
entered into an arrangement with the Swingline Bank for automated borrowings as
described in subsection 2.1A(b) below, each Swingline Loan shall be in the
minimum amount of $250,000 or a multiple of $100,000 in excess thereof.
Notwithstanding any other provisions of this Agreement and in addition to the
limit set forth above, at no time shall the aggregate principal amount of all
outstanding Swingline Loans exceed the total Commitments of the Banks then in
effect MINUS the Aggregate Outstanding Extensions of Credit. Each Swingline Loan
shall mature on the earlier of (i) the date on which a Default or Event of
Default has occurred or (ii) the first Wednesday after the Borrowing Date
thereof (the "Swingline Maturity Date"). Subject to the terms of this Agreement,
the Borrower may borrow, repay and reborrow up to the amount of the Swingline
Commitment, except that the Borrower shall not use the proceeds of a Swingline
Loan to repay any other Swingline Loan.
(b) When the Borrower desires the Swingline Bank to make a Swingline
Loan (except in the case of automated borrowings as described below), it shall
send to the Agent (which shall promptly notify the Swingline Bank) a Swingline
Loan request, which shall set forth the principal amount of the proposed
Swingline Loan and the proposed Borrowing Date. Each such Loan request must be
received by the Swingline Bank not later than 12:00 p.m. (Eastern time) on the
date of the proposed borrowing. Each Swingline Loan request shall be irrevocable
and binding on the Borrower and shall obligate the Borrower to borrow the
Swingline Loan on the Borrowing Date thereof. Upon satisfaction of the
applicable conditions set forth in this Agreement, on the proposed Borrowing
Date the Swingline Bank shall make the Swingline Loan available to the Agent, at
an account designated by the Agent, in Dollars and immediately available funds,
for the account of the
- 19 -
Borrower. The amount so received by the Agent, shall, subject to the terms and
conditions of this Agreement, be made available by the Agent to the Borrower by
depositing the same, in immediately available funds, in an account of the
Borrower designated by the Borrower by 5:00 p.m. (Eastern time) on the proposed
Borrowing Date by crediting the amount of the Swingline Loan to the Borrower's
account maintained with the Agent; PROVIDED that the Swingline Bank shall not
advance any Swingline Loans after it has received notice from the Borrower, the
Agent or any Bank that a Default or Event of Default has occurred and is
continuing. No new Swingline Loan shall be made until such Default or Event of
Default has been cured or waived in accordance with the provisions of this
Agreement.
It is understood that the Borrower and the Swingline Bank may
administer Swingline Loans on an automated basis pursuant to which Swingline
Loans will be made (up to the Swingline Commitment) or repaid automatically on a
daily basis in an amount equal to the net of the Borrower's receipts and
disbursements at the Swingline Bank. If such an automated system is used, the
provisions dealing with notice and minimum borrowing amount set forth in
subsection 2.1A(b) above shall not be applicable.
(c) The Borrower shall repay each outstanding Swingline Loan on or
prior to the Swingline Loan Maturity Date. Upon notice by 11:00 a.m. (Eastern
time) on any Business Day by the Swingline Bank to the Agent, which notice is
hereby authorized by the Borrower, the Borrower shall be deemed irrevocably to
have requested, and each of the Banks hereby agrees to make, a Revolving Credit
Loan to the Borrower by 2:00 p.m. (Eastern time) on such Business Day, in an
amount equal to such Bank's Commitment Percentage of the aggregate amount of the
outstanding Swingline Loans. Such Revolving Credit Loan shall bear interest at
the Alternate Base Rate plus the Applicable Margin for the Working Capital Line.
The proceeds thereof shall be applied by the Agent directly to repay the
Swingline Bank for such outstanding Swingline Loans. In the event that it is
impracticable for such Revolving Credit Loan to be made for any reason on the
date otherwise required above, then each Bank hereby agrees that it shall
forthwith purchase (as of the date such Revolving Credit Loan would have been
made, but adjusted for any payments received from the Borrower on or after such
date and prior to such purchase) from the Swingline Bank, and the Swingline Bank
shall sell to each Bank, such participations in the Swingline Loans (including
all accrued and unpaid interest thereon) outstanding as shall be necessary to
cause the Banks to share in such Swingline Loans PRO RATA based on their
respective Commitment Percentages by making available to the Swingline Bank an
amount equal to such Bank's participation in the Swingline Loans; PROVIDED that
all interest payable on the Swingline Loans shall be for the account of the
Swingline Bank as a funding and administrative fee until the date as of which
the respective participation is purchased. The obligation of each Bank to make
such Revolving Credit Loan, or as the case may be to purchase such participation
in a Swingline Loan, upon notice as set forth above, is absolute, unconditional
and irrevocable under any and all circumstances whatsoever and shall not be
subject to set-off, counterclaim or defense to payment that such Bank may have
or may have had against the Borrower, the Agent, the Swingline Bank or any other
Bank and, without limiting any of the foregoing, shall be unconditional
notwithstanding (i) that the amount of such
- 20 -
Loan may not comply with the applicable minimum set forth in subsection 2.1
hereof, (ii) the failure of the Borrower to meet the conditions set forth in
Section 5 hereof, (iii) the occurrence or continuance of a Default or an Event
of Default hereunder, (iv) the date of such Revolving Credit Loan or
participation or (v) the financial condition of the Borrower or any Subsidiary;
PROVIDED, HOWEVER, a Bank shall not be obligated to make any such Revolving
Credit Loan (or to purchase such participation) if before the making of such
Swingline Loan, such Bank had notified the Swingline Bank that a Default or
Event of Default had occurred and was continuing and that such Bank would not
refinance such Swingline Loan.
(d) The obligation of the Borrower to repay the Swingline Loans made
pursuant to this Agreement and to pay interest thereon as set forth in this
Agreement shall be evidenced by a promissory note of the Borrower with
appropriate insertions substantially in the form of Exhibit A-3 (the "Swingline
Note"), payable to the order of the Swingline Bank. The Borrower irrevocably
authorizes the Swingline Bank to make or cause to be made, at or about the time
of the Borrowing Date of any Swingline Loan or at the time of receipt of any
payment of principal on the Swingline Note, an appropriate notation on the books
of the Swingline Bank reflecting the making of such Swingline Loan or (as the
case may be) the receipt of such payment. The outstanding amount of the
Swingline Loans set forth on such books shall be PRIMA FACIE evidence of the
principal amount thereof owing and unpaid to the Swingline Bank, but the failure
to record, or any error in so recording, any such amount on such books shall not
limit or otherwise affect the actual amount of the obligations of the Borrower
hereunder or under the Swingline Note to make payments of principal of or
interest on the Swingline Note when due.
2.2 DESIGNATION OF INTEREST RATES; EURODOLLAR INTEREST PERIODS.
(a) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof, as the
Borrower may determine and notify to the Agent in accordance with subsections
2.4 and 2.5. In the event the Borrower fails to designate the Type of all or any
portion of a Loan (whether initially or upon expiration of a Eurodollar Interest
Period), the per annum rate of interest applicable thereto shall be or become
the rate of interest applicable to Alternate Base Rate Loans.
(b) The Borrower may not select a Eurodollar Interest Period pursuant
to subsections 2.2(a), 2.5 or otherwise, if (i) an Event of Default has occurred
and is continuing, or (ii) such Eurodollar Interest Period would expire on a day
after the Termination Date. If any Eurodollar Interest Period would otherwise
end on a day that is not a Business Day, such Eurodollar Interest Period shall
be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Eurodollar Interest Period into another
calendar month in which event such Eurodollar Interest Period shall end on the
immediately preceding Business Day. If any Eurodollar Interest Period begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Eurodollar Interest Period), such Eurodollar Interest Period shall end on the
last Business Day of a calendar month.
- 21 -
2.3 INTEREST RATES AND PAYMENT DATES.
(a) Each Eurodollar Loan shall bear interest, during the applicable
Eurodollar Interest Period, at a rate per annum equal to the applicable
Eurodollar Rate plus the Applicable Margin. The Applicable Margin for each
Eurodollar Loan shall be determined based upon the calculations submitted to the
Banks pursuant to subsection 6.1(b) and shall be effective as of the first day
of the fiscal quarter next following the date such calculations are submitted to
the Banks. Any change in such Applicable Margin as a consequence of the Bank's
review of the aforesaid calculation after the effective date of such Applicable
Margin shall be retroactively applied to the first day such Applicable Margin
became effective. In the event the Applicable Margin for a Eurodollar Loan can
not be determined at any time because the Borrower's financial statements for
the immediately preceding fiscal quarter are not available at such time, the
Applicable Margin for each Eurodollar Loan shall be presumed to be the same as
the Applicable Margin for such Eurodollar Loans as of the last FQED for which
the Borrower's financial statements were available.
(b) Each Alternate Base Rate Loan shall bear interest for so long as it
is outstanding and unpaid at a rate per annum equal to the Alternate Base Rate
plus the Applicable Margin.
(c) Each Swingline Loan shall bear interest for so long as it is
outstanding and unpaid at a rate per annum equal to the Swingline Rate.
(d) If all or a portion of the principal amount of any Loan or any
interest payable thereon shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum (the "Default Rate") which is equal to the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus two percent (2%) from the date of such non-payment until such
amount is paid in full (after, as well as before, judgment).
(e) Interest shall be payable in arrears on each Interest Payment Date
and be identified for each Type of Loan; PROVIDED, THAT interest accruing at the
Default Rate pursuant to subsection 2.3(d) shall be payable on receipt of
written demand. In the event the rate of interest applicable to any Eurodollar
Loan decreases as a consequence of a decrease in the Applicable Margin with
respect thereto, the Borrower shall be entitled to apply the difference between
the amount of interest paid and the amount of interest due (after giving effect
to such reduction) as a credit against the next installment of interest due
hereunder. In the event the rate of interest applicable to any Eurodollar Loan
increases as a consequence of an increase in the Applicable Margin with respect
thereto, the Borrower shall pay the difference between the amount of interest
paid and the amount of interest due (after giving effect to such increase) on
the next Interest Payment Date.
(f) In the event the total amount of any payment of principal or
interest or amounts due in respect of any Reimbursement Obligation or of any fee
required to be paid under this Agreement is not received by the Agent or the
Issuing Bank, as the case may be, within ten (10) days following
- 22 -
the due date of such payment, the Borrower shall, in addition to and together
with such payment, pay to the Agent or the Issuing Bank, as the case may be, a
late charge equal to five percent (5%) of the total amount of such payment or
amount due; PROVIDED, such late charge shall not be payable in respect of any
overdue payment in the event the Borrower was entitled to an advance in the
amount of such payment under the provisions of subsection 2.1 at the time such
payment became due, the Borrower duly requested such advance in compliance with
the requirements of this Agreement, and the Banks failed to provide such advance
without cause. The Borrower authorizes the Agent to debit any of the accounts of
the Borrower or its Subsidiaries at or assigned to the Agent on or after the due
date of any such payment and a late charge shall not be payable to the extent
the balances in such accounts are sufficient on the due date to meet such
payment.
2.4 PROCEDURE FOR BORROWING. The Borrower may borrow under the
Revolving Credit Commitments on or after the Amendment Effective Date during the
Commitment Period on any Business Day by giving the Agent irrevocable notice in
the form of Exhibit A-1 (which notice must be received by the Agent prior to (x)
12:00 p.m., Eastern time, at least three (3) Business Days prior to the
requested Borrowing Date, if all or any part of the requested Revolving Credit
Loans are to be initially Eurodollar Loans, or (y) 12:00 p.m., Eastern time, on
the requested Borrowing Date, otherwise), specifying (i) the amount to be
borrowed, (ii) the requested Borrowing Date, (iii) the Type of the requested
borrowing, (iv) if the borrowing is to be entirely or partly of Eurodollar
Loans, the amounts and Eurodollar Interest Periods thereof and (v) the purpose
of such borrowing: e.g. whether the proceeds are to be used for working capital,
to make an Initial Permitted Acquisition or a Subsequent Permitted Acquisition,
to make advances to CSF, etc. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to (A) in the case of Alternate Base
Rate Loans, $250,000 or a whole multiple of $100,000 in excess thereof (or, if
the then Available Revolving Credit Commitments are less than $250,000, such
lesser amount) or (B) in the case of Eurodollar Loans, $250,000 or a whole
multiple of $100,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Agent shall promptly notify each Bank thereof. Each Bank will make
the amount of its pro rata share (based on its Commitment Percentage) of each
borrowing available to the Agent for the account of the Borrower at the office
of the Agent specified in subsection 10.2 prior to 2:00 p.m., Eastern time, on
the Borrowing Date requested by the Borrower in funds immediately available to
the Agent. Such borrowing will then be made available to the Borrower by the
Agent crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Agent by the Banks and in like
funds as received by the Agent.
2.5 CONVERSION AND CONTINUATION OPTIONS.
(a) The Borrower may elect from time to time to convert Eurodollar
Loans to Alternate Base Rate Loans by giving the Agent at least two (2) Business
Days' prior irrevocable notice of such election; PROVIDED that any such
conversion of Eurodollar Loans may only be made as of the last day of a
Eurodollar Interest Period with respect thereto. The Borrower may elect from
time to time to convert Alternate Base Rate Loans to Eurodollar Loans by giving
the Agent at least three (3)
- 23 -
Business Days' prior irrevocable notice of such election, which notice shall
specify the length of the initial Eurodollar Interest Period or Eurodollar
Interest Periods therefor. Upon receipt of any such notice the Agent shall
promptly notify each Bank thereof. All or any part of outstanding Eurodollar
Loans and Alternate Base Rate Loans may be converted as provided herein,
provided that no Loan may be converted into a Eurodollar Loan when any Event of
Default has occurred and is continuing or the Agent has or the Required Banks
have determined pursuant to subsection 2.12 that such a conversion is not
appropriate.
(b) The Borrower may elect to continue all or any portion of any
Eurodollar Loan upon the expiration of the designated Eurodollar Interest Period
in respect of such Eurodollar Loan by giving the Agent at least three (3)
Business Days' prior irrevocable notice of such election; PROVIDED that no
Eurodollar Loan may be continued as such when any Event of Default has occurred
and is continuing or the Agent has or the Required Banks have determined
pursuant to subsection 2.12 that such a continuation as a Eurodollar Loan is not
appropriate. The Borrower shall specify in the aforesaid notice the amount to be
continued as a Eurodollar Loan and the Eurodollar Interest Period with respect
thereto in accordance with subsection 2.2.
2.6 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES. All borrowings,
conversions and continuations of Loans hereunder and all selections of
Eurodollar Interest Periods hereunder shall be in such amounts and be made
pursuant to such elections so that, after giving effect thereto, the aggregate
principal amount of the Eurodollar Loans comprising each Tranche shall be equal
to $250,000 or a whole multiple of $100,000 in excess thereof and so that there
shall not be more than seven (7) Tranches at any one time outstanding.
2.7 REVOLVING CREDIT NOTES. The Revolving Credit Loans made by each
Bank shall be evidenced by a promissory note of the Borrower, substantially in
the form of Exhibit A-2 with appropriate insertions as to payee, date and
principal amount (a "Revolving Credit Note"), payable to the order of such Bank
and in a principal amount equal to the amount of the initial Revolving Credit
Commitment of such Bank. Each Bank is hereby authorized to record the date, Type
and amount of each Revolving Credit Loan made by such Bank, each continuation
thereof, each conversion of all or a portion thereof to another Type, the date
and amount of each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans, the length of each Eurodollar Interest Period and
Eurodollar Rate with respect thereof, on the SCHEDULE annexed to and
constituting a part of its Revolving Credit Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded.
Each Revolving Credit Note shall (x) be dated the Closing Date, (y) be stated to
mature on the Termination Date and (z) provide for the payment of interest in
accordance with subsection 2.3.
2.8 FEES.
(a) The Borrower agrees to pay to the Banks a commitment fee on the
unborrowed portion of the Commitment, as in effect from time to time, for each
day from the Closing Date
- 24 -
through the Termination Date, at the percentage rate per annum set forth below
opposite the Consolidated Indebtedness to Consolidated EBITDA Ratio applicable
from time to time:
-------------------------------------------------------------------------
CONSOLIDATED INDEBTEDNESS COMMITMENT FEE
LEVEL TO CONSOLIDATED EBITDA RATIO (PERCENTAGE %)
-------------------------------------------------------------------------
I Less than 1.50 to 1.00 .250%
-------------------------------------------------------------------------
II 1.50- 2.49 to 1.00 .250%
-------------------------------------------------------------------------
III 2.50-3.49 to 1.00 .375%
-------------------------------------------------------------------------
IV 3.50- 3.99 to 1.00 .375%
-------------------------------------------------------------------------
V 4.00- 4.49 to 1.00 .500%
-------------------------------------------------------------------------
VI Greater than 4.50 to 1.00 .500%
-------------------------------------------------------------------------
Such commitment fee shall be computed on the basis of a 360-day year
for the actual number of days elapsed, shall be payable in arrears on the last
day of each quarter during the term of this Agreement, commencing March 31,
1997, and on the Termination Date, and shall be fully earned when due and
non-refundable when paid, PROVIDED that notwithstanding the foregoing, during
the six (6) month period following the Closing Date, the commitment fee will not
be less than that set forth at Level V above irrespective of the Borrower's
actual Consolidated Indebtedness to Consolidated EBITDA Ratio.
(b) On the Closing Date and semiannually thereafter, the Borrower shall
pay to the Agent agency fees in the amounts set forth in a letter agreement
between the Agent and the Borrower (taking into account that such fees will be
paid semiannually rather than annually as provided for in such letter). These
agency fees are fully earned as of the date when due, are solely for the account
of Agent and are non-refundable.
(c) On the Closing Date, the Borrower shall pay to the Agent a
non-refundable closing fee in the amount set forth in a letter agreement between
the Agent and the Borrower.
2.9 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. The
Borrower shall have the right, upon not less than three (3) Business Days'
notice to the Agent, to terminate the Commitments or, from time to time, to
reduce the amount of the Revolving Credit Commitments PROVIDED that no such
termination or reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Revolving Credit Loans made on the effective date
thereof, the aggregate principal amount of the Revolving Credit Loans and
Swingline Loans then outstanding, when added to such Bank's Commitment
Percentage of the L/C Obligations, would exceed the Revolving Credit Commitments
then in effect and PROVIDED FURTHER that, if the termination or reduction occurs
prior to the second anniversary of the Closing Date, the Borrower shall pay
concurrently to the Banks ratably a premium, based on the amount of the
reduction of the Commitment, equal to three percent
- 25 -
(3%) if the termination or reduction occurs before the first anniversary and two
percent (2%) if it occurs before the second anniversary. Any such reduction
shall be in an amount not less than $1,000,000 or integral multiples of $250,000
in excess thereof, and shall reduce permanently the Revolving Credit Commitments
then in effect.
2.10 OPTIONAL PREPAYMENTS. The Borrower may at any time and from time
to time, prepay the Revolving Credit Loans, in whole or in part, subject to
payment of any premium required by Section 2.9, upon at least three (3) Business
Days' irrevocable notice, in the case of prepayment of any Revolving Credit
Loans which are Eurodollar Loans, or upon irrevocable notice (which notice must
be received by 1:00 P.M., Eastern time, on or before the proposed date of
prepayment), in the case of prepayments of any Revolving Credit Loans which are
Alternate Base Rate Loans, to the Agent, specifying the date and amount of
prepayment and whether the prepayment is of Eurodollar Loans, Alternate Base
Rate Loans or a combination thereof, and, in each case if a combination thereof,
the amount allocable to each; PROVIDED that, if a Eurodollar Loan is prepaid
other than at the end of the Eurodollar Interest Period applicable thereto, the
Borrower shall also pay any amounts required to be paid pursuant to subsection
2.17. Upon receipt of any such notice the Agent shall promptly give notice
thereof to each Bank. If any such notice is given by the Borrower, the amount
specified in such notice shall be due and payable on the date specified therein.
Partial prepayments of the Revolving Credit Loans shall be in an aggregate
principal amount of $250,000 or a whole $100,000 multiple in excess thereof.
2.11 COMPUTATION OF INTEREST AND FEES. Interest on the Loans, Letter of
Credit commissions and commitment fees shall be calculated on the basis of a
360-day year for the actual days elapsed. The Agent shall as soon as practicable
notify the Borrower and the Banks of each determination of a Eurodollar Rate.
Any change in the interest rate on a Loan resulting from a change in the
Alternate Base Rate or the Eurodollar Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Agent shall as soon as practicable notify the Borrower and the
Banks of the effective date and the amount of each such change in interest rate.
Each determination of an interest rate by the Agent pursuant to any provision of
this Agreement shall be conclusive and binding on the Borrower and the Banks in
the absence of manifest error.
2.12 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day of
any Eurodollar Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Eurodollar Interest Period, or
(b) the Agent shall have received notice from the Required Banks that
the Eurodollar Rate determined or to be determined for such Eurodollar Interest
Period will not adequately and fairly reflect the cost to such Banks (as
conclusively certified by such Banks) of making or maintaining their affected
Loans during such Eurodollar Interest Period,
- 26 -
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Banks as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Eurodollar
Interest Period shall be made as Alternate Base Rate Loans, (y) any Loans that
were to have been converted on the first day of such Eurodollar Interest Period
to Eurodollar Loans shall be converted to or continued as Alternate Base Rate
Loans, and (z) any outstanding Eurodollar Loans shall be converted, on the first
day of such Eurodollar Interest Period, to Alternate Base Rate Loans. Until such
notice has been withdrawn by the Agent, no further Eurodollar Loans shall be
made or continued as such, nor shall the Borrower have the right to convert
Loans to Eurodollar Loans.
2.13 PRO RATA TREATMENT AND PAYMENTS.
(a) Unless the Agent shall have been notified in writing by any Bank
prior to a Borrowing Date that such Bank will not make the amount that would
constitute its Commitment Percentage of the borrowing on such date available to
the Agent, the Agent may assume that such Bank (a "Reimbursing Bank") has made
such amount available to the Agent on such Borrowing Date, and the Agent or any
Bank may (but shall not be obligated), in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such amount is made
available to the Agent on a date after such Borrowing Date, the Reimbursing Bank
shall pay to the Agent on demand an amount equal to the product of (i) the daily
average Federal Funds Effective Rate during such period as quoted by the Agent,
times (ii) the amount of such Reimbursing Bank's Commitment Percentage of such
borrowing, times (iii) a fraction the numerator of which is the number of days
that elapse from and including such Borrowing Date to the date on which such
Reimbursing Bank's Commitment Percentage of such borrowing shall have become
immediately available to the Agent and the denominator of which is 365. A
certificate of the Agent submitted to any Reimbursing Bank with respect to any
amounts owing under this subsection shall be conclusive in the absence of
manifest error. If a Reimbursing Bank's Commitment Percentage of such borrowing
is not in fact made available to the Agent by such Reimbursing Bank within three
(3) Business Days of such Borrowing Date, the Agent shall be entitled to recover
such amount, with interest thereon at the rate per annum applicable to Alternate
Base Rate Loans hereunder, on demand, from such Reimbursing Bank or the Borrower
in such order and manner as Agent may determine in its discretion.
(b) Each borrowing of Revolving Credit Loans by the Borrower from the
Banks hereunder shall be made by the Banks pro rata in accordance with the
respective Commitment Percentage of such Banks. Each payment by the Borrower on
account of the principal of and interest on the Revolving Credit Loans, and any
reduction of the Commitments of the Banks shall be payable to the Banks pro rata
in accordance with the respective Commitment Percentages of the Banks; PROVIDED
that in the event the Agent or any Bank pursuant to subsection 2.13(a) makes
available to the Borrower a Reimbursing Bank's Commitment Percentage of a
requested borrowing, the Agent or such Bank providing such funding shall be
entitled to receive all payments that would otherwise be payable to such
Reimbursing Bank until such time as the Agent or such Bank, as the
- 27 -
case may be, shall have received an amount equal to the amount so funded on
behalf of such Reimbursing Bank, together with interest thereon as provided in
subsection 2.13(a). All payments (including prepayments) to be made by the
Borrower hereunder and under the Notes, whether on account of principal,
interest, fees or otherwise, shall be made without set off or counterclaim and
shall be made prior to 1:00 p.m., Eastern time, on the due date thereof to the
Agent, for the account of the Banks, at the Agent's office specified in
subsection 10.2, in Dollars and in immediately available funds. The Agent shall
distribute such payments to the Banks promptly upon receipt in like funds as
received. If such payment is not made available by the Agent to any Bank within
three (3) Business Days of the Agent's receipt of payment from the Borrower,
such Bank shall be entitled to recover such amount from the Agent with interest
thereon at a rate per annum equal to the Alternate Base Rate. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day, and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
2.14 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Bank hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Alternate Base Rate Loans to Eurodollar Loans shall forthwith be
canceled and (b) such Bank's Loans then outstanding as Eurodollar Loans, if any,
shall be converted automatically to Alternate Base Rate Loans on the respective
last days of the then current Eurodollar Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Eurodollar Interest Period with respect thereto, the Borrower shall pay
to such Bank such amounts, if any, as may be required pursuant to subsection
2.17.
2.15 REQUIREMENTS OF LAW.
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Bank with any
request or directive (whether having the force of law or not) from any central
bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Bank to any tax of any kind whatsoever
with respect to this Agreement, any Note or any Eurodollar Loan made by
it, or change the basis of taxation of payments to such Bank in respect
thereof (except for Non-Excluded Taxes covered by subsection 2.16 and
changes in the rate of tax on the overall net income of such Bank);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
- 28 -
acquisition of funds by, any office of such Bank which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
an amount which such Bank deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Bank, upon its demand, any additional amounts necessary to
compensate such Bank for such increased cost or reduced amount receivable. If
any Bank becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify the Borrower through the Agent, of the
event by reason of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to this subsection submitted by such Bank,
through the Agent, to the Borrower shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
(b) If any Bank shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Bank or any
corporation controlling such Bank with any request or directive regarding
capital adequacy (whether having the force of law or not) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect or
reducing the rate of return on such Bank's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Bank
or such corporation could have achieved but for such change or compliance
(taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, after submission by such Bank to the Borrower (with a
copy to the Agent) of a written request therefore, the Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank for
such reduction.
2.16 TAXES.
(a) All payments made by the Borrower under this Agreement and the
Notes shall be made free and clear of, and without deduction or withholding for
or on account of any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on the Agent or any Bank as a result of a present or former
connection between the Agent or such Bank and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Agent or such Bank having executed, delivered or performed its obligations
or received a payment under, or enforced, this Agreement or the Notes). If any
such non-excluded
- 29 -
taxes, levies, imposts, duties, charges, fees deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Agent or any Bank hereunder or under the Notes, the amounts so payable to
the Agent or such Bank shall be increased to the extent necessary to yield to
the Agent or such Bank (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement and the Notes, PROVIDED, HOWEVER, that the Borrower shall not be
required to increase any such amounts payable to any Bank that is not organized
under the laws of the United States of America or a state thereof if such Bank
fails to comply with the requirements of paragraph (b) of this subsection.
Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as
possible thereafter the Borrower shall send to the Agent for its own account or
for the account of such Bank, as the case may be, a certified copy of an
original official receipt received by the Borrower showing payment thereof. If
the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and the
Banks for any incremental taxes, interest or penalties that may become payable
by the Agent or any Bank as a result of any such failure. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.
(b) Each Bank that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent (A) two (2) duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be, and (B) an
Internal Revenue Service Form W-8 or W-9, or successor applicable form,
as the case may be;
(ii) deliver to the Borrower and the Agent two (2) further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Agent.
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank so advises the Borrower and the Agent.
Such Bank shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Bank or a Participant
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pursuant to subsection 10.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Bank
from which the related participation shall have been purchased.
2.17 INDEMNITY. The Borrower agrees to indemnify each Bank and to hold
each Bank harmless from any loss or expense which such Bank may sustain or incur
as a consequence of (a) failure by the Borrower to borrow, convert into or
continue Eurodollar Loans after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (b) failure by the
Borrower to make any prepayment after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an
Eurodollar Interest Period with respect thereto. Such indemnification may
include, without limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds obtained to fund or
maintain a Eurodollar Loan during any Eurodollar Interest Period, which any Bank
may incur as a consequence of such failure to borrow, convert or continue, as
the case may be. A certificate by Agent as to the amount of such loss, expense
or increased costs shall, when submitted to the Borrower, be conclusive, in the
absence of manifest error, unless the Borrower shall have provided the Agent
with written notice of the Borrower's objection to all or any portion of such
certificate not later than ten (10) days after the date on which such
certificate is submitted to the Borrower. Any such Eurodollar Loan shall not be
deemed paid or satisfied until all such additional amounts are paid. Agent
agrees to provide the Borrower with such information as the Borrower may
reasonably request with respect to the calculation of any such losses or
expenses. The covenant contained in this subsection 2.17 shall survive the
termination of this Agreement and the payment of the Notes and all other amounts
payable hereunder.
SECTION 3. LETTERS OF CREDIT
3.1 L/C COMMITMENT.
(a) Subject to the terms and conditions hereof, the Issuing Bank, in
reliance on the agreements of the other Banks set forth in subsection 3.5(a),
agrees to issue irrevocable standby letters of credit for the account of the
Borrower on any Business Day on or after the Amendment Effective Date until the
date which is five (5) Business Days prior to the end of the Commitment Period
in such form as may be approved from time to time by the Issuing Bank (all such
letters of credit outstanding on the date hereof and all letters of credit to be
issued hereunder, together with all extensions, renewals and replacements
thereof, are herein collectively referred to as the "Letters of Credit");
PROVIDED that the Issuing Bank shall have no obligation to issue any Letter of
Credit if at the time of such issuance a Default exists or an Event of Default
has occurred and is continuing or if, after giving effect to such issuance, (i)
the L/C Obligations would exceed the L/C Commitment or (ii) the Available
Revolving Credit Commitment would be less than zero. Each Letter of Credit shall
(i) be denominated in Dollars, (ii) expire no later than the Termination Date
and (iii) expire
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no later than a date one (1) year after its issuance, PROVIDED that any Letter
of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (ii) above).
(b) Each Letter of Credit shall be subject to the Uniform Customs and,
to the extent not inconsistent therewith, the laws of the State of the Issuing
Bank's principal place of business.
(c) The Issuing Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. The Borrower may from
time to time request that the Issuing Bank issue a Letter of Credit by
delivering to the Issuing Bank at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Bank, and
such other certificates, documents and other papers and information as the
Issuing Bank may request. Upon receipt of any Application, the Issuing Bank will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Bank be required to issue any Letter
of Credit earlier than three (3) Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereof) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Bank and the Borrower. The Issuing Bank shall furnish a copy of such Letter of
Credit to the Borrower and the other Banks promptly following the issuance
thereof.
3.3 FEES, COMMISSIONS AND OTHER CHARGES.
(a) The Borrower shall pay to the Agent a letter of credit facility fee
(the "L/C Fee"), at the end of each quarter after issuance of a Letter of
Credit, in an amount equal to the product of (i) the face amount of such Letter
of Credit, times (ii) the applicable Letter of Credit Rate, times (iii) the term
of such Letter of Credit, expressed as a fraction equal to the number of days of
such term divided by three hundred sixty (360). In addition, as long as any
letter of credit issued by The First National Bank of Boston (the "FNBB Letters
of Credit") for the account of the Borrower or any Subsidiary is outstanding,
the Borrower shall pay to the Issuing Bank an additional fee, based on the face
amount of all such letters of credit, equal to the difference between the Letter
of Credit Rate that would have applied had such letters of credit been issued
hereunder and the letter of credit fee payable on the FNBB Letters of Credit.
The applicable Letter of Credit Rate shall be determined based upon the
calculations submitted to the Banks pursuant to subsection 6.1(b) and shall be
effective as of the first day of the fiscal quarter next following the date such
calculations are submitted to the Banks. Any change in the applicable Letter of
Credit Rate as a consequence of the Banks' review of the aforesaid calculation
after the effective date of such Letter of Credit Rate shall be retroactively
applied to the first day such Letter of Credit Rate became effective. In the
event
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that the Letter of Credit Rate can not be determined at any time because the
Borrower's financial statements for the immediately preceding fiscal quarter are
not available at such time, the Letter of Credit Rate shall be presumed to be
the same as the Letter of Credit Rate as of the last FQED for which the
Borrower's financial statements were available. Any change in the L/C Fee as a
consequence of a change in the Letter of Credit Rate shall be effective as of
the date of such change in the Letter of Credit Rate. Any increase or reduction
in the L/C Fee as a consequence of an increase or reduction in the Letter of
Credit Rate, as the case may be, shall be added to or deducted from the next L/C
Fee, as the case may be. In the event any Letter of Credit is terminated or the
available credit thereunder is permanently reduced prior to the stated expiry
date thereof, the Borrower shall be entitled to a rebate of that portion of the
L/C Fee paid with respect to such Letter of Credit which is allocable pro rata
to the portion of the Letter of Credit that has been terminated or reduced, as
the case may be, as determined by the Issuing Bank. Of each L/C Fee payable
under this subsection 3.3, twenty-five basis points shall be paid directly to
and for the account of the Issuing Bank and the remainder shall be shared
ratably among the Banks in accordance with their respective Commitment
Percentages.
(b) The Agent shall, promptly following its receipt thereof, distribute
to the Issuing Bank and the L/C Participants all fees and commissions received
by the Agent for their respective accounts pursuant to this subsection.
3.4 REIMBURSEMENT OBLIGATION OF THE BORROWER. The Borrower agrees to
reimburse the Issuing Bank on each date on which the Issuing Bank notifies the
Borrower in writing of the date and amount of a draft presented under any Letter
of Credit and paid by the Issuing Bank for the amount of (a) such draft so paid
and (b) any taxes (other than income taxes), fees, charges or other costs or
expenses incurred by the Issuing Bank in connection with such payment. Each such
payment shall be made to the Issuing Bank at its address for notices specified
herein in Dollars and in immediately available funds. Interest shall be payable
on any and all amounts remaining unpaid by the Borrower under this subsection
from the date such amounts become payable (whether at stated maturity, by
acceleration or otherwise) until payment in full at the rate which would be
payable on any outstanding Loans which were then overdue under subsection 2.3.
Each drawing under any Letter of Credit shall constitute a request by the
Borrower to the Agent for the borrowing pursuant to subsection 2.1 of Revolving
Credit Loans in the amount of such drawing and any reimbursement made by an L/C
Participant pursuant to subsection 3.5 shall constitute a Revolving Credit Loan
pursuant to subsection 2.3.
3.5 L/C DRAWS AND REIMBURSEMENTS.
(a) Each L/C Participant unconditionally and irrevocably agrees with
the Issuing Bank that, if a draft is paid under any Letter of Credit for which
the Issuing Bank is not reimbursed in full by the Borrower in accordance with
the terms of this Agreement, such L/C Participant shall pay to the Issuing Bank
upon demand at the Issuing Bank's address for notices specified herein an amount
equal to such L/C Participant's Commitment Percentage of the amount of such
draft, or any part
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thereof, which is not so reimbursed through participation or otherwise. In
furtherance of the foregoing, the Issuing Bank irrevocably agrees to grant and
hereby grants to each L/C Participant, and, to induce the Issuing Bank to issue
Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept
and purchase and hereby accepts and purchases from the Issuing Bank, on the
terms and conditions hereinafter stated, for such L/C Participant's own account
and risk an undivided interest equal to such L/C Participant's Commitment
Percentage in the Issuing Bank's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by the Issuing Bank
thereunder.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Bank pursuant to subsection 3.5(a) in respect of any unreimbursed
portion of any payment made by the Issuing Bank under any Letter of Credit is
paid to the Issuing Bank within three (3) Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Bank on demand an
amount equal to the product of (1) such amount, times (2) the daily average
Federal Funds Effective Rate, as quoted by the Issuing Bank, during the period
from and including the date such payment is required to the date on which such
payment is immediately available to the Issuing Bank, times (3) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 365. If any such amount required to be paid by any L/C
Participant pursuant to subsection 3.5(a) is not in fact made available to the
Issuing Bank by such L/C Participant within three (3) Business Days after the
date such payment is due, the Issuing Bank shall be entitled to recover from
such L/C Participant, on demand, such amount with interest thereon calculated
from such due date at the rate per annum equal to the Alternate Base Rate. A
certificate of the Issuing Bank submitted to any L/C Participant with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Bank has made payment under
any Letter of Credit and has received from any L/C Participant its share of such
payment in accordance with subsection 3.5(a), the Issuing Bank receives any
payment related to such Letter of Credit (whether directly from the Borrower or
otherwise, including proceeds of collateral applied thereto by the Issuing
Bank), or any payment of interest on account thereof, the Issuing Bank will
distribute to such L/C Participant its share thereof; PROVIDED, HOWEVER, that in
the event that any such payment received by the Issuing Bank shall be required
to be returned by the Issuing Bank, such L/C Participant shall return to the
Issuing Bank the portion thereof previously distributed by the Issuing Bank to
it.
3.6 OBLIGATIONS ABSOLUTE. The Borrower's obligations under this Section
3 shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Bank or any beneficiary of a
Letter of Credit. The Borrower also agrees with the Issuing Bank that, subject
to its responsibilities under the Uniform Customs, the Issuing Bank shall not be
responsible for, and the Borrower's Reimbursement Obligations under Subsection
3.4 shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even
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though such documents shall in fact prove to be invalid, fraudulent or forged,
or any dispute between or among the Borrower and any beneficiary of any Letter
of Credit or any other party to which such Letter of Credit may be transferred
or any claims whatsoever of the Borrower against any beneficiary of such Letter
of Credit or any such transferee. The Issuing Bank shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by the Issuing Bank's gross
negligence or willful misconduct. The Borrower agrees that any action taken or
omitted by the Issuing Bank under or in connection with any Letter of Credit or
the related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in the
Uniform Commercial Code of the State of Connecticut, shall be binding on the
Borrower and shall not result in any liability of the Issuing Bank to the
Borrower.
3.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Bank shall promptly notify the
Borrower and the Banks of the date and amount thereof. The responsibility of the
Issuing Bank to the Borrower in connection with any draft presented for payment
under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
3.8 APPLICATION. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make the Loans
and issue or participate in the Letters of Credit the Borrower hereby represents
and warrants to the Agent and each Bank that:
4.1 FINANCIAL CONDITION.
(a) The combined balance sheet of the Borrower and its Affiliates as at
December 31, 1995 and December 31, 1994 and the related combined statements of
income and retained earnings and of cash flows for the fiscal years ended on
such dates, reported on by Deloitte & Touche LLP, copies of which have
heretofore been furnished to each Bank, are complete and correct and present
fairly the consolidated financial condition of The Borrower and its Affiliates
as at such dates, and the results of their operations and their cash flows for
the fiscal years then ended. The unaudited combined balance sheet of the
Borrower and its Affiliates as at November 30, 1996 and the related unaudited
statement of income and retained earnings for the eleven-month period ended on
such date, certified by a Responsible Officer, copies of which have heretofore
been furnished to each
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Bank, are complete and correct and present fairly the financial condition of the
Borrower and its Affiliates as at such date, and the results of their operations
for the eleven-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein).
(b) Except as set forth on SCHEDULE 4.1(b), neither the Borrower nor
any of its combined Affiliates had, at the date of the most recent balance sheet
referred to in subsection 4.1(a), any material Guarantee Obligation, contingent
liability or liability for taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
financial statements referred to in subsection 4.1(a) or in the notes thereto.
(c) Except as set forth on SCHEDULE 4.1(c), during the period from
December 31, 1995 to and including the date hereof there has been no sale,
transfer or other disposition by the Borrower or any of its combined Affiliates
of any material part of its business or property and no purchase or other
acquisition of any business or property (including any capital stock of any
other Person) material in relation to the financial condition of the Borrower
and its combined Affiliates at December 31, 1995.
(d) The unaudited PRO FORMA consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at November 30, 1996 and the related
consolidated statements of income and retained earnings for the eleven-month
period ended on such date (the "PRO FORMA FINANCIAL STATEMENTS"), copies of
which have heretofore been furnished to the Banks, has been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the reorganization of the Borrower and its Subsidiaries into a holding company
structure, (ii) the Loans to be made and the Subordinated Indebtedness to be
issued on the Closing Date and the use of proceeds thereof and (iii) the payment
of fees and expenses in connection with the foregoing. The Pro Forma Financial
Statements have been prepared based on the best information available to the
Borrower as of the date of delivery thereof, and present fairly on a PRO FORMA
basis the estimated financial position of the Borrower and its consolidated
Subsidiaries as at the Closing Date, assuming that the events specified in the
preceding sentence had actually occurred at such date.
(e) All of the books and records of the Borrower and its Subsidiaries
are located at the Borrower's headquarters at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ except certain information with respect to certain
accounts of OutSource International of America, Inc., as successor by merger to
OutSource International, Inc., an Illinois corporation, are maintained for a
period not exceeding one (1) day in the ordinary course of its business in Elk
Grove Village, Illinois.
4.2 NO CHANGE. Since December 31, 1995, (a) except as set forth on
SCHEDULE 4.2, there has been no development or event nor, to the best of our
knowledge, any prospective
- 36 -
development or event which has had or could have a Material Adverse Effect and
(b) except as set forth on SCHEDULE 4.2 or as permitted by this Agreement, no
dividends or other distributions have been declared, paid or made upon the
Capital Stock of the Borrower or any of its combined Affiliates nor has any of
the Capital Stock of the Borrower been redeemed, retired, purchased or otherwise
acquired for value by the Borrower or any of its combined Affiliates.
4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Borrower and each
Subsidiary (a) is duly organized as a "C corporation", as defined in Section
1361(a)(2) the Code, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged in each
jurisdiction where the failure to have such power, authority or right would have
a Material Adverse Effect, (c) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except where the failure so to qualify could not have a Material Adverse Effect
and (d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not, in the aggregate, have a Material
Adverse Effect.
4.4 CORPORATE POWER, AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
Borrower and each Subsidiary has the corporate power and authority, and the
legal right, to make, deliver and perform this Agreement, the Notes, each
Application and the other Loan Documents to which it is a party, to borrow
hereunder and to grant the Liens pursuant to the Security Documents to which it
is a party and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and the Notes, the
grant of the Liens pursuant to the Security Documents to which it is a party and
the execution, delivery and performance of this Agreement, the Notes, each
Application and each other Loan Document to which it is a party. No consent or
authorization of, filing with or other action by or in respect of, any
Governmental Authority or any other Person is required in connection with the
borrowings hereunder, the grant of the Liens pursuant to the Security Documents
or the execution, delivery, performance, validity or enforceability of this
Agreement, the Notes, each Application or any other Loan Document. This
Agreement and each other Loan Document to which the Borrower or a Subsidiary is
a party (except the Notes) has been, and each Note will be, duly executed and
delivered on behalf of the Borrower. This Agreement and each other Loan Document
to which the Borrower or a Subsidiary is a party (except the Notes) constitutes,
and each Note when executed and delivered will constitute, a legal, valid and
binding obligation of the Borrower or such Subsidiary, as the case may be,
enforceable against such Borrower or such Subsidiary in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 NO LEGAL BAR. The execution, delivery and performance of this
Agreement, the Notes, each Application and each other Loan Document, the grant
of the Liens pursuant to the
- 37 -
Security Documents, the borrowings hereunder and the use of the proceeds thereof
will not violate any Requirement of Law or Contractual Obligation of the
Borrower or of any Subsidiary and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation.
4.6 NO MATERIAL LITIGATION. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or against any of its or their respective properties or revenues (a)
with respect to this Agreement, the Notes, any Application or any other Loan
Document or any of the transactions contemplated hereby or thereby or (b) which
could have a Material Adverse Effect, except with respect to matters described
on SCHEDULE 4.6.
4.7 NO DEFAULT. Neither the Borrower nor any Subsidiary is in default
under or with respect to any of its Contractual Obligations or Capital Stock in
any respect which could have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
4.8 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and each
Subsidiary has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to all its other
property except for any defect in title thereto or leasehold interest therein
which could not in the aggregate have a Material Adverse Effect, and none of the
property owned or leased by the Borrower or any Subsidiary is subject to any
Lien except as permitted by subsection 7.3 or which could not in the aggregate
have a Material Adverse Effect.
4.9 INTELLECTUAL PROPERTY. The Borrower and each Subsidiary owns, or is
licensed to use, all trademarks, trade names, copyrights, technology, know-how
and processes necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not have a Material
Adverse Effect (the "Intellectual Property"). No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does the Borrower know of any valid basis for any such claim which
could or might have a Material Adverse Effect. To the best of the Borrower's
knowledge, the use of such Intellectual Property by the Borrower and each
Subsidiary does not infringe on the rights of any Person, except for such claims
and infringements that, in the aggregate, could not have a Material Adverse
Effect.
4.10 NO BURDENSOME RESTRICTIONS. The Borrower nor any Subsidiary is a
party to any Contractual Obligation or Requirement of Law, compliance with the
terms of which could have a Material Adverse Effect.
4.11 TAXES. Each of the Borrower and its Subsidiaries has filed or
caused to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed (the "Tax Returns") and has paid all taxes shown to be due
and payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
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property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be) where the failure
to so file such Tax Returns or to pay such taxes could or might have a Material
Adverse Effect; no tax Lien has been filed, and, to the knowledge of the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge. SCHEDULE 4.11 sets forth a complete and correct list of all audits
concerning any Tax Return that are being conducted by any Governmental Authority
or are otherwise in progress on the Closing Date.
4.12 FEDERAL REGULATIONS. No part of the proceeds of any Loans will be
used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect or for any purpose which violates the provisions of the Regulations of
such Board of Governors. If requested by any Bank or the Agent, the Borrower
will furnish to the Agent and each Bank a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said Regulation
U.
4.13 ERISA. Neither the Borrower nor any Commonly Controlled Entity
participates currently or has during the five-year period prior to the date on
which this representation is made participated in or is required currently or
has during the five-year period ending on the date on which this representation
is made been required to contribute to or otherwise participate in any plan,
program or arrangement subject to Title IV of ERISA. Except as set forth in
SCHEDULE 4.13, each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code. The present value of all accrued
benefits under each Single Employer Plan maintained by the Borrower or any
Commonly Controlled Entity (based on those assumptions used to fund the Plans)
did not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits. Neither the Borrower nor any Commonly
Controlled Entity participates currently or has during the five-year period
prior to the date on which this representation is made participated in or is
required currently or has during the five-year period ending on the date on
which this representation is made been required to contribute to or otherwise
participate in any Multiemployer Plan. Neither the Borrower nor any Commonly
Controlled Entity participates currently or has during the five-year period
prior to the date on which this representation is made participated in or is
required currently or has during the five-year period ending on the date on
which this representation is made been required to contribute to or otherwise
participate in any welfare benefit plans (as defined in Section 3(1) of ERISA)
that provide post-retirement benefits to their current or former employees.
4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. Neither the Borrower
nor any Subsidiary is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended (the "1940 Act"). Neither
- 39 -
the Borrower nor any Subsidiary is subject to regulation under the 1940 Act or
any Federal or State statute or regulation which limits its ability to incur
Indebtedness.
4.15 SUBSIDIARIES. All the Subsidiaries of the Borrower are listed on
SCHEDULE 4.15. Neither Labor World, Inc. nor Labor World USA, Inc., which are
not Subsidiaries but are corporations whose shares are owned by certain
shareholders of the Borrower, has assets exceeding $10,000 or has or will have
any business activity of any kind.
4.16 PURPOSE OF LOANS. The Borrower shall use the Loans in the
following manner: (i) the Borrower shall use the Working Capital Line for the
working capital needs and for the general corporate purposes of itself and its
Subsidiaries (other than CSF), including for the Initial Permitted Acquisitions;
(ii) the Borrower shall use the Acquisition Line to make Subsequent Permitted
Acquisitions; (iii) the Borrower shall use the CSF Line to make advances to CSF
to fund the working capital needs of Labor World franchisees and (iv) the
Borrower shall use the proceeds of Swingline Loans for the working capital needs
of the Borrower and its Subsidiaries (other than CSF).
4.17 ENVIRONMENTAL MATTERS. To the best knowledge of any Responsible
Officer of the Borrower, each of the representations and warranties set forth in
paragraphs (a) through (e) of this subsection is true and correct with respect
to each parcel of real property heretofore or now owned or operated by the
Borrower or any Subsidiary (the "Properties"), except as set forth on SCHEDULE
4.17 and except to the extent that the facts and circumstances giving rise to
any such failure to be so true and correct could not have a Material Adverse
Effect:
(a) The Properties do not contain, and have not previously contained,
in, on, or under, including, without limitation, the soil and groundwater
thereunder, any Hazardous Materials.
(b) The Properties and all operations and facilities at the Properties
are in compliance with all Environmental Laws, and there is no Hazardous
Materials contamination or violation of any Environmental Law which could
interfere with the continued operation of any of the Properties or impair the
fair saleable value of any thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received any
complaint, notice of violation, alleged violation, investigation or advisory
action or of potential liability or of potential responsibility regarding
environmental protection matters or permit compliance with regard to the
Properties, nor is the Borrower aware that any Governmental Authority is
contemplating delivering to the Borrower or any of its Subsidiaries any such
notice.
(d) Hazardous Materials have not been generated, treated, stored,
disposed of, at, on or under any of the Properties, nor have any Hazardous
Materials been transferred from the Properties to any other location.
- 40 -
(e) There are no governmental, administrative or judicial proceedings
pending or contemplated under any Environmental Laws to which the Borrower or
any of its Subsidiaries is or will be named as a party with respect to the
Properties, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to any of the
Properties.
4.18 SECURITY DOCUMENTS.
(a) The provisions of the OI Pledge Agreement are effective to create
in favor of the Agent for the ratable benefit of the Banks a legal, valid and
enforceable security interest in all right, title and interest of the pledgor in
the Collateral as described therein. The OI Pledge Agreement constitutes a fully
perfected first lien on, and security interest in, all right, title and interest
of the pledgor in the Collateral described therein.
(b) The provisions of the OI Security Agreement are effective to create
in favor of the Agent for the ratable benefit of the Banks a legal, valid and
enforceable security interest in all right, title and interest of the Borrower
in the Collateral as described therein. Except where failure to file would not
have a material effect on Agent's ability to realize effectively on the
Collateral, as a whole, OI Security Agreement constitutes a fully perfected
first lien on, and security interest in, all right, title and interest of the
Borrower in the Collateral described therein, and no Uniform Commercial Code
financing statements have been filed by any other Person with respect to such
Collateral other than as may be filed in connection with this Agreement and
except as described on SCHEDULE 4.18 hereto.
(c) The provisions of the Subsidiary Security Agreement are effective
to create in favor of the Agent for the ratable benefit of the Banks a legal,
valid and enforceable security interest in all right, title and interest of such
Subsidiary in the Collateral as described therein. Except where failure to file
would not have a material effect on the Agent's ability to effectively realize
on the Collateral, as a whole, the Subsidiary Security Agreement constitutes a
fully perfected first lien on, and security interest in, all right, title and
interest of such Subsidiary in the Collateral described therein, and no Uniform
Commercial Code financing statements have been filed by any other Person with
respect to such Collateral other than as may be filed in connection with this
Agreement and except as described on SCHEDULE 4.18 hereto.
(d) The provisions of the Trademark Security Agreement are effective to
create in favor of the Agent for the ratable benefit of the Banks a legal, valid
and enforceable security interest in all right, title and interest of the
Borrower and its Subsidiaries in the Collateral as described therein. Except
where failure to file would not have a material effect on the Agent's ability to
effectively realize on the Collateral, as a whole, the Trademark Security
Agreement constitutes a fully perfected first lien on, and security interest in,
all right, title and interest of such Subsidiary in the Collateral described
therein, and no Uniform Commercial Code financing statements or filings with the
United States Patent and Trademark Office have been filed by any other Person
with respect to such
- 41 -
Collateral other than as may be filed in connection with this Agreement and
except as described on SCHEDULE 4.18 hereto.
4.19 DESIGNATED SENIOR DEBT. The extensions of credit under this
Agreement, the Notes and each Application will be, and are hereby designated as,
Designated Senior Debt under and as defined in the Securities Purchase
Agreement.
4.20 SOLVENCY. The Borrower and each Subsidiary is, and after giving
effect to the incurrence of all Indebtedness, including Subordinated
Indebtedness, and obligations being incurred in connection herewith will be and
will continue to be, Solvent.
4.21 CERTAIN STOCKHOLDERS. None of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ is a beneficial owner, directly or indirectly,
including without limitation through a family member or trust, of any Voting
Stock of the Borrower or its Subsidiaries except such Voting Stock as is subject
to the provisions of the Voting Trust Agreement. As of the Closing Date, none of
said individuals or any of his family members has any direct or indirect
affiliation with or business relationship with the Borrower or its Subsidiaries
except as is described in detail on SCHEDULE 4.21.
SECTION 5. CONDITIONS PRECEDENT
5.1 AMENDMENT EFFECTIVE DATE. The effectiveness of the amendment and
restatement of the Existing Credit Agreement provided for hereby is subject to
the receipt by the Agent of the following documents, each of which shall be
satisfactory to the Agent and each Bank in form and substance:
(a) REVOLVING CREDIT NOTES. The Revolving Credit Notes, duly completed
and executed in exchange (in the case of the Existing Bank) for the promissory
note issued under the Existing Credit Agreement.
(b) SWINGLINE NOTE. The Swingline Note, duly completed and executed.
(c) SATISFACTION OF EXISTING LOANS. Evidence that the Existing Bank has
been paid all principal of and interest on the Existing Loans and all commitment
fees, and all other amounts owing, under the Existing Credit Agreement accrued
to the Amendment Effective Date.
(d) PLEDGE AGREEMENT. The Agent shall have received a pledge agreement,
in form and substance satisfactory to the Agent and each Bank, relating to the
deposit account of the Borrower maintained with the Agent.
- 42 -
(e) LEGAL OPINION. The Agent and each Bank shall have received the
executed legal opinion of Holland & Knight, counsel to the Borrower and its
Subsidiaries, covering such matters incident to the transactions contemplated by
this Agreement as the Agent may reasonably request.
(f) OTHER DOCUMENTS. Such other documents as the Agent or any Bank or
special counsel to the Agent may reasonably request.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each Bank
to make any extension of credit requested to be made by it on any date is
subject to the satisfaction on such borrowing date of the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Borrower and each Subsidiary in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as of such
date as if made on and as of such date; PROVIDED that, with respect to
extensions of credit made after the Closing Date, Guarantee Obligations incurred
after the Closing Date and in accordance with the terms of this Agreement shall
not be deemed a breach of the representation and warranty set forth in
subsection 4.1(b) to the extent that such Guarantee Obligations are not
described in the financial statements described in subsection 4.1(a).
(b) NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the extension of credit
requested to be made on such date.
(c) ADDITIONAL DOCUMENTS. The Agent shall have received each additional
document, instrument, legal opinion or item of information reasonably requested
by it, including, without limitation, a copy of any debt instrument, security
agreement or other material contract to which the Borrower or any Subsidiary may
be a party.
(d) ADDITIONAL MATTERS. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be satisfactory in form and substance to the Agent, and the Agent shall have
received such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it shall
reasonably request.
Each borrowing by and Letter of Credit issued on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such Loan or Letter of Credit that the conditions contained in this
subsection 5.2 have been satisfied.
5.3 CONDITIONS TO EACH EXTENSION OF CREDIT FOR AN INITIAL PERMITTED
ACQUISITION. The agreement of each Bank to make any extension of credit to
enable the Borrower to make an Initial Permitted Acquisition is subject to
receipt by the Agent, and satisfaction by the Agent and the Banks with the
contents, of (i) the financial statements of the Person whose assets are being
acquired covering the most recent three (3) fiscal years of said Person and the
unaudited financial statements
- 43 -
for such Person covering the most recent available interim period and (ii) a
certificate of a Responsible Officer of the Borrower certifying as to the
identity of the shareholders or owners of the selling Person and certifying that
none of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ is or has
been a beneficial owner, directly or indirectly, including without limitation
through a family member or trust, of the selling Person.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Note or any Letter of Credit remains outstanding and unpaid or any
other amount is owing to any Bank or the Agent hereunder, the Borrower shall and
(except in the case of delivery of financial information, reports and notices)
shall cause each of its Subsidiaries to:
6.1 FINANCIAL STATEMENTS. Furnish to each Bank:
(a) as soon as available, but in any event within ninety (90) days
after the end of each fiscal year of the Borrower, a copy of the consolidated
and consolidating balance sheets of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related consolidated and
consolidating statements of income and retained earnings and of cash flows for
such year, setting forth in each case in comparative form the figures for the
previous year, and, with respect to the consolidated financial statements,
reported on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit by Deloitte & Touche LLP or
other independent certified public accountants of nationally recognized standing
not unacceptable to the Required Banks;
(b) as soon as available, but in any event not later than forty-five
(45) days after the end of each of the first three (3) fiscal quarters of each
fiscal year of the Borrower, the unaudited consolidated and consolidating
balance sheets of the Borrower and its consolidated Subsidiaries as at the end
of such quarter, (i) the related unaudited consolidated and consolidating
statements of income and retained earnings of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through the end
of such quarter, and the related unaudited consolidated and consolidating
statements of cash flows of the Borrower and its consolidated Subsidiaries for
the portion of the fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects when
considered in relation to the consolidated and consolidating financial
statements of the Borrower and its consolidated Subsidiaries(subject to normal
year-end audit adjustments) and (ii) a statement setting forth the aggregate
amount of Capital Expenditures made by the Borrower and its consolidated
Subsidiaries during such fiscal period (which aggregate amount shall separately
specify the total amount of Capital Expenditures consisting of cash and the
total amount of Capital Expenditures consisting of Capital Leases and other
non-cash financings), in each case, certified by a Responsible Officer as being
fairly stated in all material respects when, in the case of the financial
statements delivered pursuant to clause (i) above, considered in relation
- 44 -
to the consolidated and consolidating financial statements of the Borrower and
its consolidated Subsidiaries(subject to normal year-end audit adjustments);
and
(c) as soon as available, but in any event not later than thirty (30)
days after the last day of each month of each fiscal year of the Borrower, the
unaudited consolidated and consolidating balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such fiscal period and the related
unaudited consolidated and consolidating statements of income and retained
earnings of the Borrower and its consolidated Subsidiaries for such fiscal
period and the portion of the fiscal year of the Borrower through the end of
such fiscal period, setting forth in each case in comparative form the figures
for the previous year;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 CERTIFICATES; OTHER INFORMATION. Furnish to each Bank:
(a) concurrently with the delivery of the financial statements referred
to in subsection 6.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;
(b) concurrently with the delivery of each of the financial statements
referred to in subsections 6.1(a) and 6.1(b), a certificate of a Responsible
Officer (which certificate shall set forth, in detail, all interim and
preparatory figures and calculations used in determining the Borrower's
satisfaction of its covenants and agreements contained in subsection 7.1)
stating that, to the best of such Officer's knowledge, each of the Borrower and
its Subsidiaries during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in this
Agreement, the Notes and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate;
(c) if delivered, as soon thereafter as practicable but in no event
later than fifteen (15) days after receipt, a copy of the letter, if any,
addressed to the Borrower, of the certified public accountants who prepared the
financial statements referred to in subsection 6.1(a) for such fiscal year and
otherwise referred to as a "management letter";
(d) as soon as available, but in any event within thirty (30) days
after the end of each fiscal year of the Borrower a copy of (i) the projections
by the Borrower of the operating budget and cash flow budget of the Borrower and
its Subsidiaries for the succeeding three (3) fiscal years and (ii) the
projected consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at
- 45 -
the last day of each of such three (3) succeeding fiscal years. Such projections
and projected balance sheet to be accompanied by a certificate of a Responsible
Officer to the effect that such projections and projected balance sheet have
been prepared on the basis of sound financial planning practice and that such
Officer has no reason to believe they are incorrect or misleading in any
material respect;
(e) within five (5) days after the same are sent, copies of all
financial statements and reports which the Borrower sends to its stockholders,
including Triumph, and within five (5) days after the same are filed, copies of
all applications, financial statements and reports which the Borrower may make
to, or file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority;
(f) promptly following the release by the Borrower or any of its
Subsidiaries to the press of any material statement or other written
communication, a copy thereof; and
(g) promptly, such additional financial and other information as any
Bank may from time to time reasonably request.
6.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, including without limitation all payroll and
other tax obligations, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books of the
Borrower or its Subsidiaries, as the case may be or except where the failure to
pay, discharge or otherwise satisfy could not have a Material Adverse Effect.
6.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to subsection 7.5 and comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, have a Material Adverse Effect.
6.5 MAINTENANCE OF PROPERTY; INSURANCE.
(a) Keep all property useful and necessary in its business in good
working order and condition except where the failure to do so could not have a
Material Adverse Effect; and
(b) maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks (but including in any event public liability and business interruption) as
are usually insured against in the same general area by
- 46 -
companies engaged in the same or a similar business and furnish to each Bank
upon written request, full information as to the insurance carried.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Bank, upon reasonable notice to the Borrower, to visit
and inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
desired and to discuss the business, operations, properties and financial and
other condition of the Borrower and its Subsidiaries with officers and employees
of the Borrower and its Subsidiaries and with its independent certified public
accountants.
6.7 NOTICES. Promptly give notice to the Agent and each Bank of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries, or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Authority; which in either case, if
not cured or if adversely determined, as the case may be, would have a Material
Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $250,000 or more and not covered by
insurance or in which injunctive or similar relief is sought which individually
or in the aggregate could or might have a Material Adverse Effect; PROVIDED that
the Borrower shall not be required to give notice of any such litigation or
proceeding if the Borrower has reasonably determined, after consultation with
counsel, that the possibility is remote that such litigation or proceeding will
result in a judgment of $250,000 or more or in injunctive or similar relief
against the Borrower or its Subsidiaries;
(d) the following events, as soon as possible and in any event within
thirty (30) days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to any
Plan, or any withdrawal from, or the termination, Reorganization or Insolvency
of any Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or the Borrower or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan;
(e) as soon as the Borrower knows or has reason to know that it or any
Subsidiary has become liable for remediation and/or environmental compliance
expenses and/or fines, penalties or other charges which, in the aggregate, are
in excess of $250,000 at any one time outstanding (net
- 47 -
of all reimbursements in respect of such amounts from any state trust funds
which have been or are reasonably expected to be made to the Borrower or its
Subsidiaries and have been recognized as a receivable or may properly be set off
as a credit against such liabilities in accordance with GAAP); and
(f) a material adverse change in the business, operations, property,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
6.8 ENVIRONMENTAL LAWS.
(a) Comply with, and insure compliance by all tenants and subtenants,
if any, with, all Environmental Laws and obtain and comply with and maintain,
and ensure that all tenants and subtenants obtain and comply with and maintain,
any and all licenses, approvals, registrations or permits required by
Environmental Laws, except to the extent that failure to do so could not have a
Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities respecting Environmental Laws, except to the extent
that the same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not have a Material Adverse Effect;
(c) Defend, indemnify and hold harmless the Agent and the Banks, and
their respective employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of or noncompliance with
any Environmental Laws by the Borrower or any of its Subsidiaries, or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorneys' and consultants' fees,
investigation and laboratory fees, court costs and litigation expenses, except
to the extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor.
(d) Prepare and deliver to the Agent and to each other Bank, at least
as frequently as once each fiscal quarter after any accrual (as described below)
exists, a report setting forth a summary, as of the end of such fiscal quarter,
of (i) the gross amount of all sums accrued in respect of any remediation
required by applicable Environmental Laws, (ii) all reimbursements in respect of
such amounts from any state trust funds which have been or are reasonably
expected to be made to the Borrower or its Subsidiaries and have been recognized
as a receivable or may properly be set off
- 48 -
as a credit against the cost of such remediation under GAAP and (iii) the net
amount of all sums accrued in respect of such remediation costs.
6.9 USE OF PROCEEDS. Use the proceeds of the Loans only for the
purposes described in Section 4.16.
6.10 FURTHER ASSURANCES. Execute and deliver such additional financing
statements, continuations of financing statements and other documents as Agent
shall reasonably request to perfect and maintain perfected the Agent's security
interest in the Collateral.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Note or any Letter of Credit remains outstanding and unpaid or any
other amount is owing to any Bank or the Agent hereunder, the Borrower shall
not, and (except with respect to subsection 7.1) shall not permit any of its
Subsidiaries to, directly or indirectly:
7.1 FINANCIAL CONDITION COVENANTS.
(a) MAXIMUM CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED EBITDA. Permit as
of the end of any FQED of the Borrower, during each of the periods set forth
below, the Consolidated Indebtedness to Consolidated EBITDA Ratio to be greater
than the amount set forth below opposite such period:
----------------------------------------------------------------------------
CONSOLIDATED INDEBTEDNESS TO
PERIOD CONSOLIDATED EBITDA RATIO
----------------------------------------------------------------------------
During 1997 4.75 to 1.00, except as of June 30, 1997
and September 30, 1997, 5.00 to 1.00
----------------------------------------------------------------------------
During 1998 4.00 to 1.00
----------------------------------------------------------------------------
During 1999 and after 3.50 to 1.00
----------------------------------------------------------------------------
(b) MAXIMUM SENIOR CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED EBITDA.
Permit as of the end of any FQED of the Borrower, during each of the periods set
forth below, the Senior Consolidated Indebtedness to Consolidated EBITDA Ratio
to be greater than the amount set forth below opposite such period:
- 49 -
----------------------------------------------------------------------------
CONSOLIDATED SENIOR INDEBTEDNESS TO
PERIOD CONSOLIDATED EBITDA RATIO
----------------------------------------------------------------------------
During 1997 3.50 to 1.00
----------------------------------------------------------------------------
During 1998 2.50 to 1.00
----------------------------------------------------------------------------
During 1999 and after 2.25 to 1.00
----------------------------------------------------------------------------
(c) MINIMUM CONSOLIDATED EBIT TO CONSOLIDATED INTEREST EXPENSE RATIO.
Permit as of the end of any FQED of the Borrower, the Consolidated EBIT to
Consolidated Interest Expense Ratio to be less than 2.00 to 1.00.
(d) MINIMUM OPERATING CASH FLOW RATIO. Permit as of the end of any FQED
of the Borrower, the Operating Cash Flow Ratio to be less than 1.35 to 1.00 as
of the fiscal quarters ended September 30, 1997 and March 31, 1998 and 1.50 to
1.00 as of the end of all other fiscal quarters.
(e) MINIMUM CURRENT RATIO. Permit as of the end of any FQED of the
Borrower, the Current Ratio to be less than 1.50 to 1.00.
NOTE: For testing the above financial covenants as of the end of each of the
first three fiscal quarters after the Closing Date, the results of OutSource
International, Inc. and its Affiliates for the second, third and fourth quarters
of 1996 shall be included as necessary to produce a rolling four quarter test
period.
7.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness in respect of the Loans, the Notes and the Letters of
Credit and other obligations of the Borrower and its Subsidiaries under the Loan
Documents;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary;
(c) Indebtedness outstanding on the Closing Date and listed on Schedule
7.2 and any refinancings, refundings, renewals or extensions thereof (without
any increase in principal amount thereof);
(d) Subordinated Indebtedness of the Borrower and its Subsidiaries;
(e) Indebtedness secured by Liens permitted by Section 7.3(h) and under
Capital Leases incurred in an aggregate principal amount not exceeding (i)
$4,000,000 in each of 1997 and 1998,
- 50 -
$4,750,000 in 1999 and $5,500,000 in each year thereafter or (ii) $20,000,000
during the term of this Agreement; and
(f) Other unsecured (except as described in Section 7.3(h))
Indebtedness of the Borrower and its Subsidiaries not exceeding $250,000 in the
aggregate outstanding at any time.
7.3 LIMITATION ON LIENS. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings; PROVIDED that adequate reserves with respect
thereto are maintained on the books of the Borrower or its Subsidiaries, as the
case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are not
overdue for a period of more than sixty (60) days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance arrangements;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or such Subsidiary;
and
(f) Liens in existence on the Closing Date listed on SCHEDULE 7.2,
securing Indebtedness permitted by subsection 7.2(c); PROVIDED that no such Lien
is expanded to cover any additional property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased;
(g) Liens created under the Security Documents;
(h) Liens securing Indebtedness of the Borrower or any Subsidiary
permitted by subsection 7.2(e); PROVIDED that (i) such Liens shall be created
promptly upon the acquisition, improvement or completion of the construction of
such fixed or capital asset (and in any event no later than the earlier of (A)
twelve (12) months from the date of which the construction of such fixed or
capital asset is completed, and (B) twenty-four (24) months from the date on
which the real estate
- 51 -
on which such fixed or capital asset is located, was purchased by the Borrower,
(ii) such Liens do not at any time encumber any property other than the property
financed by the such Indebtedness, (iii) the amount of Indebtedness secured by
thereby is not increased, and (iv) the principal amount of Indebtedness secured
by any such Lien shall at no time exceed 100% of the purchase price of such
property;
(i) a first mortgage Lien on the headquarters of the Borrower at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ securing Indebtedness of the
Borrower incurred to purchase such headquarters pursuant to the exercise of its
option under the lease of such headquarters, and
(j) any interest or title of a lessor under any lease entered into by
the Borrower or any Subsidiary in the ordinary course of its business and
covering only the assets so leased.
7.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) the Subsidiary Guarantee;
(b) Guarantee Obligations not exceeding $2,000,000 in the aggregate
with respect to the mortgage of the Borrower's old headquarters at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇; and
(c) Guarantee Obligations arising as a result of guarantees by the
Borrower of any Indebtedness of a consolidated Subsidiary that would appear as a
liability on a consolidated balance sheet of the Borrower and its consolidated
Subsidiaries.
7.5 LIMITATIONS ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned Subsidiaries
of the Borrower (provided that the wholly-owned Subsidiary or Subsidiaries shall
be the continuing or surviving corporation and shall be a member of the
Borrower's consolidated group for financial reporting and tax purposes); and
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
the Borrower or any other wholly-owned Subsidiary of the Borrower.
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7.6 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, business or assets (including,
without limitation, receivables and leasehold interests), whether now owned or
hereafter acquired, except as permitted by subsection 7.5.
7.7 LIMITATION ON RESTRICTED PAYMENTS. (i) Declare or pay any dividend
or make any distribution in respect of the Borrower's or any Subsidiary's
Capital Stock (except (A) dividends or distributions payable solely in the
Borrower's or a Subsidiary's Capital Stock, (B) options, warrants or other
rights to purchase the Capital Stock of the Borrower or a Subsidiary, (C) stock
dividends or distributions payable from a Subsidiary to the Borrower so long as
any such stock dividend is pledged by the Borrower pursuant to the Pledge
Agreement to which the Borrower is a party, and (D) non-stock dividends or
distributions payable solely to the Borrower which has executed and delivered to
the Agent a Subsidiary Guarantee), or (ii) purchase, redeem or otherwise acquire
or retire for value, or set apart assets for a sinking or other analogous fund
for the benefit of, any Capital Stock of the Borrower or any Subsidiary, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower or any Subsidiary (collectively, a "Restricted Payment") except that as
long as no Default exists or would result therefrom, the Borrower may (A)
declare and pay dividends on its Capital Stock (x) after February 21, 1999 if
the Consolidated Indebtedness to Consolidated EBITDA Ratio at the time of
declaration and payment is less than 3.50 to 1.00 or (y) after the Borrower has
received aggregate net proceeds of not less that $45,000,000 as a result of its
issuance of its Capital Stock in one or more public offerings and (B) repurchase
warrants issued pursuant to the Securities Purchase Agreement in accordance with
the terms thereof but only if such repurchase is paid for with Put Notes (as
defined in said Agreement) which notes are subordinated pursuant to the
Securities Purchase Agreement.
7.8 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in (each, an "Investment"), any
Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) loans and advances to employees of the Borrower or its Subsidiaries
in the ordinary course of business in an aggregate amount for the Borrower and
its Subsidiaries not to exceed $250,000 in the aggregate or $100,000 for any one
employee, at any one time outstanding (including the principal amount of the
loans listed on SCHEDULE 7.8);
(d) Investments by the Borrower in its Subsidiaries and investments by
a Subsidiary in the Borrower and in other Subsidiaries; PROVIDED that any
Subsidiary making an investment or
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receiving the proceeds thereof is a member of the Borrower consolidated group
for financial reporting and tax purposes;
(e) Investments of amounts held in depositary accounts (other than
accounts assigned to the Agent) in financial institutions geographically
proximate to the location of the Borrower's or a Subsidiary's operations;
PROVIDED, that such amounts do not exceed $20,000 at any single institution or
$150,000 in the aggregate;
(f) Loans by CSF to Labor World franchisees; PROVIDED that with respect
to all such loans after the Closing Date such franchisees shall have issued a
negotiable promissory note to CSF evidencing each loan which note has been
endorsed and delivered to the Agent for the ratable benefit of the Banks;
(g) Investments by the Borrower or any Subsidiary in any Person not a
Subsidiary on the Closing Date; PROVIDED that (i) any such Investment (whether
made in one transaction or a series of transactions) does not exceed $10,000,000
(inclusive of commissions, fees and other transaction costs, but not including
any portion of the Investments with respect to which the consideration is the
Capital Stock of the Borrower), (ii) all such Investments made after the Closing
Date do not exceed $10,000,000 in the aggregate (inclusive of commissions, fees
and other transaction costs, but not including any portion of the Investments
with respect to which the consideration is the Capital Stock of the Borrower),
(iii) any such acquired Person that is a Subsequently Acquired Subsidiary
executes and delivers to the Agent, with a counterpart for each Bank, a
supplement to the Subsidiary Guarantee, satisfactory in form and substance to
the Agent, whereby such Subsequently Acquired Subsidiary guarantees the
Obligations (as defined in the Subsidiary Guarantee subject to the Maximum
Guaranteed Amount, as defined therein, with respect to such Subsequently
Acquired Subsidiary) and agrees to be bound by the terms and conditions of the
Subsidiary Guarantee, (iv) the Capital Stock of any such acquired Person is
pledged and delivered by the holder thereof pursuant to a supplement to the OI
Pledge Agreement to which such holder is a party, duly authorized, executed and
delivered by such holder and otherwise in form and substance satisfactory to the
Agent, (v) any such acquired Person executes a Subsidiary Security Agreement, in
form and substance satisfactory to the Agent, (vi) in connection with the
matters contemplated by the foregoing clauses (iii), (iv) and (v) the Person
executing such supplement contemporaneously therewith causes to be delivered an
opinion of counsel to such Person so executing such supplement and such pledgor,
addressed to the Agent and the Banks and covering such matters as the Agent may
request and (vii) the prior written consent of the Banks has been obtained.
Notwithstanding the foregoing, the Borrower or any Subsidiary shall not make any
Investment in any Person which exceeds one percent (1%) of the voting power
represented by the Capital Stock then outstanding of such Person if the Board of
Directors or other governing body of such Person has disapproved or recommended
against any such Investment or refused to negotiate or terminated negotiations
with the Borrower or such Subsidiary or which is not a Permitted Acquisition.
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7.9 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT
INSTRUMENTS. (a) Make any optional payment or prepayment on or redemption of any
Indebtedness other than Indebtedness under this Agreement, including without
limitation the Senior Subordinated Notes and other Subordinated Indebtedness (it
being understood that regularly scheduled payments of certain Indebtedness set
forth on SCHEDULE 7.2 may be made so long as no Default or Event of Default
exists); (b) amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms of the Senior Subordinated Notes, the
Securities Purchase Agreement, the Subordinated Agreements or the other
Subordinated Indebtedness, including, without limitation, any amendment to the
subordination provisions thereof; (c) amend, modify or change, or consent or
agree to any amendment, modification or change to, any of the terms relating to
the payment or prepayment of principal of or interest on any Indebtedness (other
than Indebtedness pursuant to this Agreement or the Senior Subordinated Notes),
other than, with respect to the Indebtedness described in the foregoing clauses
(b) and (c), any such amendment, modification or change the primary effect of
which would extend the maturity or reduce the amount of any payment of principal
thereof or the primary effect of which would reduce the rate or extend the date
for payment of interest thereon; or (d) designate any Indebtedness (other than
Indebtedness hereunder) as "Designated Senior Debt" for purposes of the
Securities Purchase Agreement.
7.10 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transaction is
not otherwise prohibited under this Agreement, is in the ordinary course of the
Borrower's or such Subsidiary's business (including in connection with the
Borrower's on-going franchise program) and is upon fair and reasonable terms no
less favorable to the Borrower or such Subsidiary, as the case may be, than it
would obtain in a comparable arm's length transaction with a Person not an
Affiliate.
7.11 SALE AND LEASEBACK. Enter into any arrangement with any Person
providing for the leasing by the Borrower or any Subsidiary of real or personal
property which has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Subsidiary (a "Sale/Leaseback Transaction")
unless the proceeds received therefrom are applied to reduce the Commitment.
7.12 CORPORATE DOCUMENTS; NAME/LOCATION OF ASSETS. (a) Amend its
Certificate of Incorporation (except to increase the number of authorized shares
of common stock) or (b) do any of the following, unless, in each case, it shall
provide the Agent with at least thirty (30) days prior written notice of such
action: (i) change its corporate name; (ii) change the location of its
equipment; (iii) change the location of the office where it maintains its
records pertaining to its accounts; (iv) change the location of its existing
places of business or open any new places of business; or (v) change the
location of its chief executive office; PROVIDED, HOWEVER, that anything herein
to the contrary notwithstanding no notice need be provided pursuant to this
subsection so long as either (i) the Borrower or a Subsidiary, as the case may
be, executes and delivers to the
- 55 -
Agent a Uniform Commercial Code financing statement appropriate for filing to
perfect the Agent's security interest in the Collateral in its new location, or
(ii) the Agent has previously filed a Uniform Commercial Code financing
statement which perfects the Agent's security interest in the Collateral in its
new location. As used herein, "equipment" and "accounts" have the respective
meanings ascribed to them in Title 42a of the Connecticut General Statutes.
7.13 FISCAL YEAR. Permit the fiscal year of the Borrower to end on a
day other than on December 31 of each calendar year.
7.14 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into any agreement,
other than (i) as permitted by this Agreement and (ii) any purchase money or
other mortgages, the Securities Purchase Agreement or Capital Leases (in which
cases, any prohibition or limitation shall only be effective against the assets
financed thereby), with any Person other than the Banks pursuant hereto which
prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.
7.15 NO LIMIT ON UPSTREAM PAYMENTS BY SUBSIDIARIES. Permit any of its
Subsidiaries to enter into or agree, or otherwise become subject, to any
agreement, contract or other arrangements with any Person pursuant to the terms
of which (a) such Subsidiary is or would be prohibited from declaring or paying
any cash dividends, or distributions or making any other payment to the
Borrower, or (b) such dividends, distributions or other payments are, or would
be limited or restricted on an annual or cumulative basis or otherwise. The
Borrower shall cause its Subsidiaries, to the extent permitted by applicable
law, to make such distributions of funds, including dividends, as may be
necessary to meet in a timely manner all of the Borrower's obligations under
this Agreement.
7.16 AASI AND VOTING TRUST AGREEMENT. Terminate, modify, amend,
supplement, or deviate from the terms of, or agree to terminate, modify, amend,
or deviate from the terms of , the AASI or the Voting Trust Agreement.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Note or any
Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or the Borrower shall fail to pay any interest on any Note or any
Reimbursement Obligation, or any other amount payable hereunder, within five (5)
days after any such interest or other amount becomes due in accordance with the
terms thereof or hereof; or
- 56 -
(b) Any representation or warranty made or deemed made by the Borrower
or any Subsidiary in any Loan Document to which the Borrower or such Subsidiary
is a party or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this Agreement
or any other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) The Borrower shall default in the observance or performance of any
agreement contained in subsections 6.3, 6.4, 6.5, 6.6, 6.7, or 6.9 or Section 7
of this Agreement or in the Market Clearing Letter; or
(d) The Borrower shall default in the observance or performance of any
other agreement contained in this Agreement (other than as provided in
paragraphs (a) through (c) of this subsection), and such default shall continue
unremedied for a period of thirty (30) days after the earlier of (i) a
Responsible Officer of the Borrower becomes aware of such default or (ii) notice
of such default to the Borrower by Agent or any Bank; or
(e) Any Subsidiary shall default in the observance or performance of
any agreement contained in any Loan Document to which it is a party, and such
default shall continue unremedied for a period of thirty (30) days after the
earlier of (i) a Responsible Officer of any such Subsidiary becomes aware of
such default or (ii) notice of such default to such Subsidiary by Agent or any
Bank; or
(f) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the Notes)
which has an aggregate principal amount in excess of 100,000, individually or in
the aggregate, or in the payment of any Guarantee Obligation under which the
maximum liability of the Borrower or such Subsidiary exceeds $500,000,
individually or in the aggregate, beyond the period of grace (not to exceed
thirty (30) days), if any, provided in the instrument or agreement under which
such Indebtedness or Guarantee Obligation was created; or (ii) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or such Guarantee Obligation to become payable; or
(g) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief' of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other
- 57 -
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any of its Subsidiaries shall
make a general assignment for the benefit of its creditors; or (ii) there shall
be commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
sixty (60) days; or (iii) there shall be commenced against the Borrower or any
of its Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the
Borrower or any of its Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i),(ii), or (iii) above, or (v) the Borrower or any of its
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(h) (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 302 of ERISA),
whether waived or not, shall exist with respect to any 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 Banks, likely to result in the termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or
in the reasonable opinion of the Required Banks is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist, with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could subject the Borrower or any of its Subsidiaries to
any tax, penalty or other liabilities in the aggregate material in relation to
the business, operations, property or financial or other condition of the
Borrower and its Subsidiaries taken as a whole; or
(i) One or more judgments or decrees shall be entered against the
Borrower any of its Subsidiaries involving in the aggregate a liability (to the
extent not paid or covered by insurance) of $250,000 or more and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within sixty (60) days from the entry thereof; or
(j) If at any time the Borrower or all or any of its Subsidiaries shall
become liable for remediation and/or environmental compliance expenses and/or
fines, penalties or other charges which, in the aggregate, are in excess of
$250,000 at any one time outstanding (net of all reimbursements in respect of
such amounts from any state trust funds which have been or are
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reasonably expected to be made to the Borrower or its Subsidiaries and have been
recognized as a receivable or may properly be set off as a credit against such
liabilities under GAAP); or
(k) A Change of Control shall have occurred; or
(l) The Subsidiary Guarantee or any other Guarantee Obligation in
respect of the Borrower's Indebtedness hereunder shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect, or any Person having a Guarantee Obligation in respect of
the Borrower's Indebtedness hereunder, including without limitation each
Subsidiary (or any Person acting on behalf of any such Person) shall deny or
disaffirm such Guarantee Obligation; or
(m) ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ becomes
the beneficial owner, directly or indirectly, including through a family member
or trust, of any Voting Stock of the Borrower or its Subsidiaries except for the
limited purpose of making transfers in accordance with the terms of the AASI.
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C Obligations,
regardless of whether the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and the Notes
shall immediately become due and payable, and (B) if such event is any other
Event of Default, either or both of the following actions may be taken: (i) with
the consent of the Required Banks, the Agent may, or upon the request of the
Required Banks, the Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Banks, the
Agent may, or upon the request of the Required Banks, the Agent shall, by notice
of default to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement (including, without
limitation, all amounts of L/C Obligations, regardless of whether the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) and the Notes to be due and payable forthwith,
whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which presentment
for honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrower shall at such time deposit in a cash
collateral account to be opened by the Agent (the "Cash Collateral Account") an
amount equal to the aggregate then undrawn and unexpired amount of such Letters
of Credit. The Borrower hereby grants to the Agent, for the benefit of the
Issuing Bank and the L/C Participants, a security interest in the Cash
Collateral Account and all amounts from time to time on deposit therein to
secure all obligations of the Borrower in respect of such Letters of Credit
under this Agreement and the other Loan Documents. The Borrower shall execute
and deliver to
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the Agent, for the account of the Issuing Bank and the L/C Participants, such
further documents and instruments as the Agent may request to evidence the
creation and perfection of such security interest in the Cash Collateral
Account. Amounts held in the Cash Collateral Account shall be applied by the
Agent to the payment of drafts drawn under such Letters of Credit, and the
unused portion thereof after all such Letters of Credit shall have expired or
been fully drawn upon, if any, shall be applied to repay other obligations of
the Borrower hereunder and under the Notes. After all such Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement Obligations shall
have been satisfied and all other obligations of the Borrower hereunder and
under the Notes shall have been paid in full, the balance, if any, in the Cash
Collateral Account shall be returned to the Borrower.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 9. THE AGENT
9.1 APPOINTMENT. Each Bank hereby irrevocably designates and appoints
Bank of Boston Connecticut as the Agent of such Bank under this Agreement and
the other Loan Documents, to take such action on its behalf under the provisions
of this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto.
9.2 DELEGATION OF DUTIES. The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
9.3 EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Loan Document (except
for its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by the Borrower or any officer thereof
contained in this Agreement or any other Loan Document or any certificate,
report, statement or other document referred to or provided for in, or received
by the Agent under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or the Notes or any other Loan Document or for
any failure of the Borrower to perform its obligations hereunder or thereunder.
The Agent shall not be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements contained
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in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of the Borrower.
9.4 RELIANCE BY AGENT. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
or it shall first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
Notes and the other Loan Documents in accordance with a request of the Required
Banks, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks and all future holders of the Notes.
9.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Bank or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Banks. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks; PROVIDED that unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Banks.
9.6 NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and credit worthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Bank also represents that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this
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Agreement and the other Loan Documents, and to make such investigation as it
deems necessary to inform itself, and keep itself informed, as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Banks by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
9.7 INDEMNIFICATION. The Banks agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to the
respective amounts of their original Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; PROVIDED that no Bank shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Notes and all
other amounts payable hereunder.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its Affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with the Borrower as though the Agent were not the Agent hereunder and under the
other Loan Documents. With respect to its Loans made or renewed by it and any
Note issued to it and with respect to any Letter of Credit issued or
participated in by it, the Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Bank and may exercise the
same as though it were not the Agent, and the terms "Bank" and "Banks" shall
include the Agent in its individual capacity.
9.9 SUCCESSOR AGENT. The Agent may resign as Agent upon ten (10) days'
notice to the Banks. If the Agent shall resign as Agent under this Agreement and
the other Loan Documents, then the Required Banks shall appoint a Successor
Agent, whereupon such Successor Agent shall succeed to the rights, powers and
duties of the Agent, and the term "Agent" shall mean such Successor Agent
effective upon its appointment, and the former Agent's rights, powers and duties
as Agent shall be terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement or any holders
of the Notes. After any retiring Agent's resignation as Agent, the provisions of
this subsection shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents.
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SECTION 10. MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any Note, any
other Loan Document nor any terms hereof or thereof may be amended, supplemented
or modified except in accordance with the provisions of this subsection. With
the written consent of the Agent and the Required Banks, the Agent and the
Borrower may, from time to time, enter into written amendments, supplements or
modifications hereto and to the Notes and the other Loan Documents for the
purpose of adding any provisions to this Agreement, the Notes or the other Loan
Documents or changing in any manner the rights of the Banks or of the Borrower
hereunder or thereunder or waiving, on such terms and conditions as the Agent
may specify in such instrument, any of the requirements of this Agreement, the
Notes or the other Loan Documents or any Default or Event of Default and its
consequences; PROVIDED, HOWEVER, that no such waiver and no such amendment,
supplement or modification shall (a) reduce the amount or extend the maturity of
any Note or any installment thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any fee payable to any Bank hereunder, or
change the amount of any Bank's Commitment, in each case without the consent of
the Bank affected thereby, or (b) amend, modify or waive any provision of this
subsection or reduce the percentage specified in the definition of Required
Banks, or consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement and the other Loan Documents or
release any Guarantee or any of the Collateral, in each case without the written
consent of the Agent and all the Banks, or (c) amend, modify or waive any
provision of Section 9 without the written consent of the then Agent. Any such
waiver and any such amendment, supplement or modification shall apply equally to
each of the Banks and shall be binding upon the Borrower, the Banks, the Agent
and all future holders of the Notes. In the case of any waiver, the Borrower,
the Banks and the Agent shall be restored to their former position and rights
hereunder and under the outstanding Notes and any other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
10.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy, telegraph or telex), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or three
(3) days after being deposited in the mail, postage prepaid, or, in the case of
telecopy notice, when confirmed received, or, in the case of telegraphic notice,
when delivered to the telegraph company, or, in the case of telex notice, when
sent, answer back received, addressed as follows in the case of the Borrower and
the Agent, and as set forth in SCHEDULE A in the case of the other parties
hereto, or to such other address as may be hereafter notified by the respective
parties hereto and any future holders of the Notes:
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The Borrower: OutSource International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Holland & Knight
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
The Agent: Bank of Boston Connecticut
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Day, ▇▇▇▇▇ & ▇▇▇▇▇▇
CityPlace I
Hartford, Connecticut 06103-3499
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Agent or the Banks
pursuant to subsections 2.1A, 2.4, 2.5, 2.9 or 2.13 shall not be effective until
received.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
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10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes.
10.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees, on demand, (a)
to pay or reimburse the Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement, the Notes and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the fees and disbursements of counsel to
the Agent, (b) to pay or reimburse each Bank and the Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes, the other Loan Documents and any such
other documents, including, without limitation, fees and disbursements of
counsel to the Agent and to the several Banks, (c) to pay, indemnify, and hold
each Bank and the Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the Notes, the other Loan Documents and any such other documents, (d)
to pay, indemnify and hold each Bank harmless from any and all fees, costs and
expenses incurred by any such Bank after the occurrence and throughout the
continuance of an Event of Default in connection with any inspection or
examination pursuant to subsection 6.6, and (e) to pay, indemnify, and hold each
Bank and the Agent (and their respective directors, officers, employees and
agents) harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement, the
Notes, the other Loan Documents and any such other documents (all the foregoing,
collectively, the "indemnified liabilities"); PROVIDED that the Borrower shall
have no obligation hereunder to the Agent or any Bank with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of the Agent or any such Bank (or any of their respective directors,
officers, employees or agents), (ii) legal proceedings commenced against the
Agent or any such Bank by any security holder or creditor thereof arising out of
and based upon rights afforded any such security holder or creditor solely in
its capacity as such, or (iii) legal proceedings commenced against the Agent or
any such Bank by any other Bank or by any Transferee. As long as no Default or
Event of Default exists, the Agent agrees to give the Borrower periodic reports
of the costs and expenses subject to payment or reimbursement under this
subsection. The agreement in this subsection shall survive repayment of the
Notes and all other amounts payable hereunder.
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10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING BANKS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Banks, the Agent, all future holders of the Notes and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Bank.
(b) Without the consent of the Borrower, any Bank may, in the ordinary
course of its commercial banking business and in accordance with applicable law,
at any time sell to one or more banks or other entities (other than any entity
which, to the knowledge of such Bank, is a competitor of the Borrower or an
Affiliate of such a competitor ("Participants")) participating interests in any
Loan owing to such Bank, any Note held by such Bank, any Commitment of such Bank
or any other interest of such Bank hereunder and under the other Loan Documents.
In the event of any such sale by a Bank of participating interests to a
Participant, such Bank's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank 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 Bank in connection with such Bank'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 set-off 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 Bank under this Agreement
or any Note; PROVIDED that such Participant shall only be entitled to such right
of set-off if it shall have agreed in the agreement pursuant to which it shall
have acquired its participating interest to share with the Banks the proceeds
thereof as provided in subsection 10.7. The Borrower also agrees that each
Participant shall be entitled to the benefits of subsections 2.14, 2.15, 2.16
and 10.5 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 such subsections than the transferor
Bank would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Bank to such Participant had no
such transfer occurred.
(c) Any Bank may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to any Bank or
any affiliate thereof and, with the consent of the Agent and (so long as no
Event of Default has occurred and is continuing) the Borrower if a Purchasing
Bank (as hereinafter defined) is not then a Bank party to this Agreement (which
shall not be unreasonably withheld), to one (1) or more additional banks or
financial institutions ("Purchasing Banks") all or any part of its rights and
obligations under this Agreement and the Notes in the minimum principal amount
of $5,000,000 and integral multiples of $1,000,000 in excess thereof, pursuant
to an Assignment and Acceptance executed by such Purchasing Bank, such
transferor Bank (and, in the case of a Purchasing Bank that is not then a Bank
or an affiliate
- 66 -
thereof, by the Borrower and the Agent) and delivered to the Agent for its
acceptance and recording in the Register. Upon such execution, delivery,
acceptance and recording, from and after the effective date of such Assignment
and Acceptance, (x) the Purchasing Bank thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder with a Commitment as set forth therein, and (y)
the transferor Bank thereunder shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of a transferor Bank's rights and obligations under this Agreement, such
transferor Bank shall cease to be a party hereto). Such Assignment and
Acceptance shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Bank and the
resulting adjustment of the appropriate Commitment Percentages arising from the
purchase by such Purchasing Bank of all or a portion of the rights and
obligations of such transferor Bank under this Agreement and the Notes. On or
prior to the effective date of such Assignment and Acceptance, the Borrower
shall execute and deliver to the Agent in exchange for the Revolving Credit Note
a new Revolving Credit Note to the order of such Purchasing Bank in an amount
equal to the Commitment assumed by it pursuant to such Assignment and Acceptance
and, if the transferor Bank has retained a Commitment hereunder, new Notes to
the order of the transferor Bank in an amount equal to the Commitment retained
by it hereunder. Such new Notes shall be dated the Closing Date, and shall
otherwise be in the form of the Notes replaced thereby. The Notes surrendered by
the transferor Bank shall be returned by the Agent to the Borrower marked
"canceled".
(d) The Agent shall maintain at its address referred to in subsection
10.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Banks and
the Commitment of, and principal amount of the Loans owing to, each Bank 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 Banks may treat each Person
whose name is recorded in the Register as the owner of the Loan recorded therein
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Bank at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by a
transferor Bank and Purchasing Bank (and, in the case of a Purchasing Bank that
is not then a Bank or an affiliate thereof, by the Borrower and the Agent)
together with, if such Purchasing Bank is not then a Bank hereunder, payment by
the transferor Bank and/or the Purchasing Bank of a registration and processing
fee of $2,500, the Agent shall (i) promptly accept such Assignment and
Acceptance, and (ii) on the effective date of such Assignment and Acceptance,
record the information contained therein in the Register and give notice of such
acceptance and recordation to the Banks and the Borrower.
(f) The Borrower authorizes each Bank to disclose to any Participant or
Purchasing Bank (each, a "Transferee") and any prospective Transferee any and
all financial information in such
- 67 -
Bank's possession concerning the Borrower and its Affiliates which has been
delivered to such Bank by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Bank by or on behalf of the
Borrower in connection with such Bank's credit evaluation of the Borrower and
its affiliates prior to becoming a party to this Agreement; PROVIDED that prior
to receiving such information, such Transferee shall agree to hold in confidence
all confidential material or proprietary information obtained by such Transferee
with respect to the Borrower's business operations that is plainly marked by the
provider of such material or information as confidential or proprietary except
(a) to the extent that the production of such information is required pursuant
to any statute, ordinance, regulation, rule or order or any subpoena or any
governmental authority or by reason of any bank regulation in connection with
any bank examination, (b) to the extent already publicly disclosed and (c) that
any Bank shall not be prohibited from disclosing any such information to any of
their agents, attorneys, accountants, consultants, participants, assignees, or
prospective participants, who are aware of such Bank's covenant in this
subsection and who have agreed with such Bank, for the benefit of the Borrower,
to comply with such covenant. The Borrower acknowledges that Bank of Boston
Connecticut intends to make assignments of its interests hereunder, and agrees
to cooperate with the reasonable requests of Bank of Boston Connecticut for the
purpose of providing relevant financial information to prospective Transferees,
including making officers and employees of the Borrower available to discuss
such financial information with prospective Transferees during normal business
hours.
(g) If, pursuant to this subsection, any interest in this Agreement or
any Note is transferred to any Transferee which is organized under the laws of
any jurisdiction other than the United States or any state thereof, the
transferor Bank shall cause such Transferee, concurrently with the effectiveness
of such transfer, (i) to represent to the transferor Bank (for the benefit of
the transferor Bank, 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 Bank with respect to any payments to be made to such Transferee
in respect of the Loans, (ii) to furnish to the transferor Bank (and, in the
case of any Purchasing Bank registered in the Register, the Agent and the
Borrower) either (A) United States Internal Revenue Service Form 4224 or United
States Internal Revenue Service Form 1001 or (B) United States Internal Revenue
Service Form W-8 or W-9, as applicable (wherein such Transferee claims
entitlement to complete exemption from United States federal withholding tax on
all interest payments hereunder), and (iii) to agree (for the benefit of the
transferor Bank, the Agent and the Borrower) to provide the transferor Bank
(and, in the case of any Purchasing Bank registered in the Register, the Agent
and the Borrower) a new Form 4224 or Form 1001 or Form W-8 or W-9, as
applicable, upon the expiration or obsolescence of any previously delivered form
and comparable statements in accordance with applicable United States laws and
regulations and amendments duly executed and completed by such Transferee, and
to comply from time to time with all applicable United States laws and
regulations with regard to such withholding tax exemption.
(h) Nothing herein shall prohibit any Bank from pledging or assigning
any Note to any Federal Reserve Bank in accordance with applicable law.
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10.7 ADJUSTMENTS; SET-OFF.
(a) Subject to the provisions of subsection 2.13(b), if any Bank (a
"benefitted Bank") shall at any time receive any payment of all or part of its
Loans or the Reimbursement Obligations owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
subsection 8(g), or otherwise), in a greater proportion than any such payment to
or collateral received by any other Bank, if any, in respect of Loans or
Reimbursement Obligations owing to it, or interest thereon, then such benefitted
Bank shall purchase for cash from the other Bank such portion of such other
Bank's Loans or the Reimbursement Obligations owing to it, or shall provide such
other Bank with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Bank to share the excess payment or
benefits of such collateral or proceeds ratably with each of the other Banks;
PROVIDED, HOWEVER, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Bank, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each Bank so purchasing
a portion of another Bank's Loan or the Reimbursement Obligations owing to it
may exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Bank were the direct
holder of such portion.
(b) In addition to any rights and remedies of the Banks provided by
law, each Bank shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder or under the Notes (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Bank to or for the credit or the
account of the Borrower. Each Bank agrees promptly to notify the Borrower and
the Agent after any such set-off and application made by such Bank; provided
that the failure to give such notice shall not affect the validity of such
set-off and application.
10.8 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Agent.
10.9 SEVERABILITY. Any provision of this Agreement 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 hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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10.10 INTEGRATION. This Agreement represents the agreement of the
Borrower, the Agent and the Banks with respect to the subject matter hereof,
and, other than the fee letter and commitment letter, each dated February 5,
1997, between the Borrower and the Agent, there are no promises, undertakings,
representations or warranties by the Agent or any Bank relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
10.11 GOVERNING LAW. This Agreement and the Notes and the rights and
obligations of the parties under this Agreement and the Notes shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
Connecticut.
10.12 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
Connecticut, the courts of the United States of America for the District of
Connecticut, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in subsection 10.2 or at such other address of which the Agent
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to ▇▇▇
in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this subsection any special, exemplary, punitive or consequential damages.
10.13 ACKNOWLEDGMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, the Notes and the other Loan Documents;
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(b) neither the Agent nor any Bank has any fiduciary relationship to
the Borrower, and the relationship between Agent and Banks, on one hand, and the
Borrower, on the other hand, is solely that of debtor and creditor;
(c) no joint venture exists among the Banks or among the Borrower and
the Banks; and
(d) each reference in the other Loan Documents to the Credit Agreement
shall mean the Existing Credit Agreement as amended and restated hereby, and as
the same shall be further amended, modified, supplemented or restated from time
to time, and each reference therein to "Bank" shall include the Swingline Bank
and to "Loan" shall include the Swingline Loans.
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10.14 WAIVERS OF JURY TRIAL; COMMERCIAL TRANSACTIONS. (A) THE BORROWER,
THE AGENT AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR
ANY OTHER LOAN DOCUMENTS AND FOR ANY COUNTERCLAIM THEREIN.
(B) THE BORROWER ACKNOWLEDGES THAT THE LOANS EVIDENCED HEREBY ARE
COMMERCIAL TRANSACTIONS WITHIN THE MEANING OF CHAPTER 903A OF THE CONNECTICUT
GENERAL STATUTES.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first written above.
OUTSOURCE INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
BANK OF BOSTON CONNECTICUT,
As a Bank and as the Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
COMERICA BANK
By: /s/ ▇▇▇▇▇ KUZIEKMKO
-------------------------------
Name: ▇▇▇▇▇ Kuziekmo
Title: First Vice President
- 72 -
LASALLE NATIONAL BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
- 73 -
SCHEDULE A
COMMITMENTS; ADDRESSES
COMMITMENT
BANK $ AMOUNT
-----------------------------------------------------------------------------
Bank of Boston Connecticut $17,000,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ Corporate Banking
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Comerica Bank $14,000,000
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
LaSalle National Bank $14,000,000
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
------------
TOTALS: $45,000,000
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.1 (b)
LONG TERM COMMITMENTS
Guarantees - See Schedule 7.2
Long term leases - See Schedule 7.2. In addition, the Company has entered into
approximately 55 operating leases for Labor World dispatch centers at various
locations throughout the United States - these leases are generally 2 to 3
years in length, but in no case have longer than a five year term.
The warrants issued to Triumph/Bachow, as well as the warrants placed in escrow,
should they be eventually issued to Triumph/Bachow, all contain a contingent put
obligation, whereby OutSource would be required to purchase the warrants for the
"publicly traded" fair value of those warrants should OutSource not cause an
Initial Public Offering to happen by February 2001. This put right expires
February 2003. OutSource may satisfy the put obligation by the issuance of a 3
year subordinated obligation payable in equal quarterly installments with the
first payment due 6 months from the issuance of the put note and payments due
every six months thereafter - interest would be payable quarterly at the rate of
13% per annum.
The company has committed to employment terms in connection with past
acquisitions as follows:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - CST - potential of $75,000 per year through 1997 and
participation in the ISO plan, with no stated minimum employment term.
The company offers the following employee benefit plans which may include some
future obligation:
Annual and Quarterly Incentive Bonus Plans 401 (k) plan and employee
contribution match
The following acquisitions contain contingent "earnout" provisions which could
allow additional payments based on achieving certain levels of gross margins,
sales or net income:
All-Temps, Inc. - 2.1875% of gross margin of the Southern California Industrial
Division operations through 1999, with a minimum annual amount payable of
$40,000 and an aggregate three year (1997-1999) minimum of $150,000.
CST, Inc. - 3.5 times the excess of Boston Industrial net income (as defined)
over $484,000 for the twelve month period ended May 31,1997 and 1.5 times the
excess of net income (as defined) over $484,000 for the twelve month period
ended May 31,1998, the sum of both items not to exceed $380,000.
Komco, Inc. - 1% of Phoenix sales until September, 1997.
Payments to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ for the purchase of the
Hammond, Indiana Labor World office - See Schedule 4.21
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Inc. - 1% of Chattanooga sales through September 1998,
with minimum payment of $10,000 and maximum payment of $30,000.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.1 (c)
RECENT DISPOSITIONS
Certain acquisitions consummated in 1996 and 1997 as follows: PayRay/TriTemps,
CST, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Komco, Demark, and ▇▇▇▇▇▇▇ Enterprises.
Capitalized 15 year lease for new headquarters in Deerfield Beach, FL
Lease/purchase of approximately $1.2 million in furniture and equipment related
to above facility.
Lease/purchase of approximately $2 million in software (Masterpack, ▇▇▇▇▇▇▇,
Unidata) and related hardware.
OutSource International, Inc.
Credit -Agreement
Schedule 4.2
Recent Distributions/No Change
{a) Writeoff in 1996 of approximately $1.8 million related to aborted IPO,
investigation of certain matters by ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and settlement of
lawsuit by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
(b) Distributions of equity since December 31, 1995 made as follows:
1) 87.5% of All-Temps earnout payments through October 1, 1996, in the
amount of $168,372 was classified as a shareholder distribution in 1996.
2) $377,687 of payments made for shareholder tax obligations was initially
classified as a shareholder distribution but then reclassified as
shareholder salary and advances in [December 1996.
3) During the week prior to the closing of this transaction, the
distribution of all equity in the subsidiaries of the Borrower was
declared and related notes were given to the shareholders, which will be
satisfied by payments to be made shortly after the closing of this
transaction. This distribution is calculated on a tax basis, which may be
greater than the book basis.
4) Immediately prior to the closing of this transaction, the Borrower
reacquired 517,584 shares of its common stock for a gross sales price of
$7,617,160.
EXHIBIT 4.6
OUTSOURCE INTERNATIONAL
LITIGATION 1990 TO 1997
2.19.97
YEAR CURRENT
INITIATED PLAINTIFF DESCRIPTION RESOLUTION STATUS
1997 ▇▇▇▇ ▇▇▇▇▇ ADA & Wrongful Open In Progress;
Discharge Expect to be
dismissed.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ Fair Emp. Law Open In progress;
Expect to be
dismissed
1996 ▇▇▇▇ ▇▇▇▇▇▇ EEOC - Title VII Open EEOC ruled "no
cause"; Plaintiff has
90 day right to ▇▇▇.
1996 ▇▇▇ ▇▇▇▇▇▇▇▇ EEOC - Title VII Settled Settled
1996 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Wrongful Discharge Settled Settled
1995 ▇▇▇▇▇▇▇ ▇▇▇▇▇ EEOC - Title VII Open Plaintiff failed to show
for arbitration hearing;
should be dismissed.
1995 ▇▇▇▇▇▇▇▇ ▇▇▇▇ EEOC - Title VII Open In Progress; we
expect it to be
dismissed.
1995 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ EEOC - Title VII Open EEOC ruled "no
cause"; Plaintiff has
90 day right to ▇▇▇.
1993 None
1992 None
1991 None
1990 None
SCHEDULE" 4.6 (Continued)
LIABILITY CLAIMS
ILLINOIS
ANTICIPATED CLAIM COST
CLAIMANT DOL CARRIER/LABOR WORLD
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ 4/14/92 $ 1,500.00/ $
Carrier: Credit General Coverage: Employer's Liability
THE EMPLOYEE RECEIVED SECOND DEGREE ▇▇▇▇▇ TO HIS RIGHT HAND AND FOREARM FROM A
HOT GLUE MACHINE WHILE WORKING AT RHOPAC INC.
Status: We will maintain our lien of $82,611.00 should a settlement be reached.
A trial date has not been set.
Action: Keep legal costs to a minimum while monitoring the third party claim.
▇▇▇▇ ▇▇▇▇▇▇▇▇ 8/4/92 $ 5,000.00/ $
Carrier: National Union Fire Coverage: General Liability
▇▇ ▇▇▇▇▇▇▇▇, A REGULAR EMPLOYEE OF CHICAGO CARDBOARD WAS WORKING ON A PRESS
WHEN HIS LEG WAS AMPUTATED.
Status: Depositions of Dynment, Chicago Cardboard, employees were taken,
however, the employee's attorney no longer wishes to take the depositions of
Labor World employees at this time.
Action: Our defense attorney will pursue a dismissal upon completion of
discovery.
1
ANTICIPATED CLAIM COST
CLAIMANT DOL CARRIER/LABOR WORLD
-------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 6/14/91 % 5,000.00/ $
Carrier: Home Insurance Co. Coverage: Genera1 Liability
THIS EMPLOYEE WAS WORKING AT OLMARC AND HAD HIS HAND INSIDE A MIXING MACHINE
WHEN ANOTHER TEMPORARY EMPLOYEE TURNED THE MACHINE ON.
Status: The employee settled his third party suit with the machine
manufacturer for $20,000.00. We have requested $6,000.00 of that to satisfy
our workers compensation lien.
The trial of 9/6/96 resulted in the employee's Motion to file a Second
Complaint against Olmarc and the Motion to file a Reconsideration on the
Dismissals to be set for hearing on 1/15/97.
Action: Determine amount of lien recovery and obtain results of the
hearing on 1/15/97.
ANTICIPATED CLAIM COST
CLAIMANT DOL CARRIER/LABOR WORLD
-------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ 2/21/91 $50,000.00/ $
Carrier: Home Insurance Co. Coverage: General Liability
AN EMPLOYEE OF A SUBCONTRACTOR WORKING ON THE PREMISES OF LEEDMARK (A LABOR
WORLD CUSTOMER) ALLEGES AN UNKNOWN INDIVIDUAL DROPPED A METAL SHELF ON HER HAND,
CAUSING AN AMPUTATION OF HER FINGER.
STATUS: The employee's deposition was obtained revealing that she was assigned a
helper by Leedmark when she arrived to the job site. She trained this individual
and the two worked together for approximately three hours before the incident
took place. None can identify the individual who worked with ▇▇. ▇▇▇▇▇ thus, we
should be able to obtain a dismissal from this suit.
Action plan: Continue attempts to secure a dismissal from this claim.
2
FLORIDA
ANTICIPATED CLAIM COST
CLAIMANT DOL CARRIER/LABOR WORLD
-------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ 5/26/94 $ 2,500.00/ $
Carrier: Redland Insurance Co. Coverage: General Liability
THIS PERSON HAS NAMED OUR CORPORATE COMPANY IN A SUIT FOR INJURIES HE
SUSTAINED WHILE WORKING AT A JOB SITE IN POMPANO BEACH FLORIDA. HE ALLEGES
THAT A TEMPORARY EMPLOYEE OF LABOR WORLD, AT THE SAME JOB SITE, CAUSE HIS
INJURIES.
Status: The Labor World franchise that is believed to be the proper defendant
in this claim has been added to the complaint.
The deposition of the franchise owner is to be scheduled and once obtained,
verifying that his company is the one involved in this incident, the
corporate Labor World will be dismissed.
ACTION PLAN: Obtain franchise owners deposition date and pursue dismissal.
3
MASTER LIABILITY POLICY
FRANCHISE
CINCINNATI
ANTICIPATED CLAIM COST
CLAIMANT DOL CARRIER / LABOR WORLD
-------------------------------------------------------------------------------
CARGHILL 8/16/93 & 1/23/94 $ 2,500.00/ $ 874.72
Maryland Casualty
CARRIERS: Redland Insurance Co. COVERAGES: General Liability
A CLIENT, CARGHILL, ALLEGES THAT BRANCH MANAGER, ▇▇▇▇▇ ▇▇▇▇▇▇▇, LABOR WORLD OF
CINCINNATI, OUTSOURCE, LABOR WORLD USA & EMPLOYERS UNLIMITED BREACHED THE
SERVICING AGREEMENT BY FAILING TO PROVIDE LONGSHOREMANS COVERAGE FOR EMPLOYEE,
▇▇▇▇▇ ▇▇▇▇▇▇.
STATUS: The defense counsel is collecting supporting evidence to pursue a
dismissal for OutSource and Labor World USA who were wrongly named as defendants
in this suit.
ACTION PLAN: Determine what additional information is needed for a dismissal to
be granted.
4
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.11
TAX RETURNS
There is currently an Internal Revenue Service audit in progress of OutSource
International, Inc. (Illinois corporation). The audit, which commenced
approximately November 1996, was initially for the 1994 tax year although the
agent has indicated that certain aspects of other tax years may be examined. We
have not received any notice of proposed adjustments as a result of this
examination to date.
To the best of Company's knowledge the Company knows of nothing to indicate that
this represents anything other than a routine audit.
Another Internal Revenue Service agent contacted the company in February 1997 to
start an audit of Synadyne II, Inc. for 1994 and/or 1995. Although the agent
wanted to start immediately, she was persuaded to wait until late April 1997 due
to the major financing and other activity the company is currently engaged in.
To the best of Company's knowledge the Company knows of nothing to indicate that
this represents anything other than a routine audit.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.13
ERISA MATTERS
Pursuant to the terms of the Labor World Profit Sharing and Retirement Plan and
Trust ("LW Plan"), highly compensated employees are not eligible to participate
in the LW Plan. However, as a result of administrative errors, some highly
compensated employees have been permitted to make elective salary deferral
contributions. The Company is reviewing all records and compiling information
regarding this operational defect in order to make the appropriate correction.
The Company intends to seek IRS approval regarding the proposed correction under
the Voluntary Closing Agreement Program ("VCAP"). There will be a penalty,
payable by the Company, associated with a correction under the VCAP.
SCHEDULE 4.15
SUBSIDIARIES
NAME STATE OF INCORPORATION TAX STATUS
---- ---------------------- ----------
OutSource International of America, Inc. Florida C Corporation
OutSource Franchising, Inc. Florida C Corporation
Capital Staffing Fund, Inc. Florida C Corporation
Emp}oyees Insurance Services, Inc. Florida C Corporation
Synadyne I, Inc. Florida C Corporation
Synadyne II, Inc. Florida C Corporation
Synadyne III, Inc. Florida C Corporation
Synadyne IV, Inc. Florida C Corporation
Synadyne V, Inc. Florida C Corporation
OutSource International,Inc (1) Illnois S Corporation
Note (1) To be merged into OutSource International of America, Inc. on the
closing date.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.18
UCC FILING LOCATIONS
None.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.17
ENVIRONMENTAL MATTERS
None.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.21
RELATIONSHIP OF CERTAIN STOCKHOLDERS TO THE BORROWER
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ - attorney - routine collection work in Illinois at hourly rate
established subject to OutSource's routine bid process.
Group health insurance provided to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ for monthly reimbursement to OutSource of actual costs of approximately
$1,610 per month.
Month to month leasing of records storage space in warehouse owned by SMSB, a
partnership owned by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇, in the approximate amount of $2,055 per month.
Leasing of Boca condominium, Chicago dispatch facility, and Waukegan dispatch
facility from SMSB, a partnership owned by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇, in the approximate amount of $11,694 per month
pending the purchase of those assets for approximately $810,000.
Payments to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ for the purchase of the
Hammond, Indiana Labor World office - 50% of normal sales commission for year
ended June 10,1997 and 25% of normal sales commission for year ended June
10,1998, based on business in place at that office at time of acquisition.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇ have ownership interest in the
following entities that have Labor World and Office Ours franchise agreements
with OutSource Franchising, Inc. The Labor World franchise agreements are on the
same terms as Labor World Franchise agreements with other unrelated third
parties. The Office Ours franchise agreement with ▇▇▇ ▇▇▇▇▇▇▇ is the only such
Office Ours franchise agreement in existence at this time.
DIVISION FRANCHISEE AND RELATED PARTY STOCKHOLDERS 1996 ROYALTIES LOCATION
Labor World LM Investors, Inc. - ▇▇▇▇ ▇▇▇▇▇▇▇▇ $183,857 Aurora, IL
- ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Labor World LM Investors, Inc. - ▇▇▇▇ ▇▇▇▇▇▇▇▇ 110,228 Joliet, IL
- ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Labor World Temp Aid, Inc. - ▇▇▇▇ ▇▇▇▇▇▇▇▇ 148,757 Elkhart, IN
- Louis J Moreili
Labor World Temp Aid, Inc. - ▇▇▇▇ ▇▇▇▇▇▇▇▇ 103,857 Grand Rapids, MI
- ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Off'ce Ours All Staff Temps, Inc. - ▇▇▇ ▇▇▇▇▇▇▇ 17,908 Schaumburg, IL
---------
$564,607
=========
The Company currently leases from ▇▇▇ ▇▇▇▇▇▇▇ certain dispatch and office
facilities used by its Labor World division in the Chicago region, under the
following terms:
LOCATION CURRENT EXPIRATION OF LEASE
MONTHLY RENT
Elgin, Illinois - dispatch facility $1,050 September 30, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ - offices 1,050 September 30, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - dispatch facility 850 September 30, 2003
--------
$3,050
========
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, wife of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, is a co-trustee together with
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Irrevocable Trust which owns 89,003
voting shares of the Borrower.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 7.2
INDEBTEDNESS Page 1 of 4
OUTSTANDING
LENDER PRINCIPAL REPAYMENT TERMS
AT CLOSING
SUBORDINATED INDEBTEDNESS:
CAPITAL STAFFING FUND
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $500,000 Principal due February 2001, interest
paid monthly at 21% per annum
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 125,000 Principal due February 2001, interest
paid monthly at 21% per annum
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 50,000 Principal due February 2001, interest
paid monthly at 21% per annum
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 100,000 Principal due February 2001, interest
paid monthly at 21% per annum
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 125,000 Principal due February 2001, interest
paid monthly at 21% per annum
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 100,000 Principal due February 2001, interest
paid monthly at 21% per annum
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 200,000 Principal due February 2001, interest
paid monthly at 21% per annum
SHAREHOLDERS:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ trust 407,000 Principal due in five quarterly installments
Starting February 1999, interest
paid quarterly at 10% per annum
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ trust 408,000 Principal due in five quarterly installments
Starting February 1999, interest
paid quarterly at 10% per annum
▇▇▇▇ ▇▇▇▇▇▇▇▇ 605,000 Principal due in five quarterly installments
Starting February 1999, interest
paid quarterly at 10% per annum
▇▇▇▇ ▇▇▇▇▇▇▇ 325,000 Principal and interest at 10% per annum paid in
twelve (12) equal quarterly installments starting
May 1999. Accrued interest for first two years
paid May 1999.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 7.2
INDEBTEDNESS Page 2 of 4
OUTSTANDING
LENDER PRINCIPAL REPAYMENT TERMS
AT CLOSING
ACQUISITIONS:
WAD, Inc.
(Beneficiaries - ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇) 400,000 Principal and interest at 10% per annum paid in eight
(8) equal quarterly installments starting May 1997.
All-Temps, Inc. 158,325 $8,325 due immediately - the balance is payable in
(Beneficiary - ▇▇▇▇▇ ▇▇▇▇▇▇) minimum annual installments of $40,000 in 1997 and
1998, with any remainder due at the end of 1999.
Non interest bearing.
PayRay, Inc. 1,526,290 Principal and interest at 14% per annum
(Beneficiary - ▇▇▇ ▇▇▇▇▇▇▇ and partners) paid over five years in equa1 monthly
installments starting March 1997.
TriTemps, Inc. 1,037,180 Principal and interest at 14% per annum
(Beneficiary - ▇▇▇ ▇▇▇▇▇▇▇ and partners) paid over five years in equal monthly
installments starting March 1997.
CST, Inc 100,123 Principal plus one year interest at 7%
per annum due Deccember 1997.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Inc. 100,566 50% of principal plus six months' interest at
6% per annum due June and December 1997.
Komco, Inc. 9,780 Earn out balance due on demand.
Demark, Inc. 27,996 Earn out balance due on demand.
LaPorte Enterprises, Inc. 400,000 Due in June 1997 with six months'
interest at 10% per annum.
LaPorte Enterprises, Inc. 250,000 18 monthly installments of principal and
interest starting March 1997 at 7% per annum.
(1 ) StaffNet, Inc. 160,000 Four quarterly payments starting June 1997 - non
interest bearing.
(1) Stand-by Personnel - Denver 500,000 Principal plus interest at 6% due April
1998 (one year after transaction date).
(1) Stand-by Personnel - Denver 500,000 50% of principal plus interest at 6% due
July 1998 (15 months after transaction date).
50% of principal plus interest at 6% due
July 1999 (27 months after transaction date).
Subject to earnout - See Schedule 4.1(b)
(1) Stand-by Personnel - Colorado Springs 850,000 50% of principal plus one year interest at
4% per annum due March 1998 and March
1999. Subject to earnout - See Schedule 4.1(b)
(1) Staff Management Services, Inc. 1,650,000 Principal of $925,000 plus interest at
4% per annum due March 1998 and
$725,000 plus interest due March 1999.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 7.2
INDEBTEDNESS Page 3 of 4
OUTSTANDING
LENDER PRINCIPAL REPAYMENT TERMS
AT CLOSING
SUBORDINATED DEBT WITH WARRANTS
Triumph Capital 14,000,000 Interest payable monthly at 11% per annum
for the first two years and 12.5% per annum
Bachow and Associates, Inc. 11,000,000 for the next three years. Principal of
$9.2 million due in FebnJary 20.01 and balance
due in Febnuary 2002.
NOTE: THE WARRANTS ASSOCIATED WITH THE ABOVE DEBT CONTAIN A CONTINGENT PUT OBLIGATION - SEE SCHEDULE 4.1(b)
NON~SUBORDINATED INDEBTEDNESS:
CAPITALIZED LEASES:
(3) Hewlett Packard Leasing 1,527,988 Equal monthly installments over 5 years at 8.2% per annum
interest.
Catalfumo Construction 5,300,000 Base rental payments of $45,854 per month, not including
operating expenses, through December 1999, after which
base rental is $53,393 for thirteen years. Purchase option
and right to convert to 75% financing at 8.2% per annum
with 20 year amortization/10 year maturity expires
December 1999.
Bankers Direct Leasing - Lease #1 539,078 Lease #1 incurred 10/18/96 for furniture and equipment,
base payments of $11,232.22 through October 2001 -
imputed interest rate is 7.2%. Payment period is 60 months.
Bankers Direct Leasing - Lease #2 389,394 Lease #2 is yet to be implemented, but represents furniture
and equipment ordered and shipped by 12/31/96. At
present, the lease finance factor will be consistent with Lease
#1. A one month deposit of $7,828.04 was made in 1996.
Payment period is 60 months upon execution of the lease.
AT&T 4,556 Baltimore - Base payments are $119.78 for sixty months,
ending September 2001.
The lease rate is 19.820%.
AT&T 6,777 Alexandria - Base payments are $354.73 for 36 months,
ending November 1998
The lease rate is 19.265%.
Finova 4,859 Manchester - Base payments of $496.09, rate 16.309%,
ending 8/7/97.
Finova 1,860 Chattanooga - Represents acquisition lease buyout. Base
payment is $265.65. Final payment is due June 1997. No
interest is imputed due to inavailability of asset fair market
value and immateriality.
OUTSOURCE INTERNATIONAL, INC
CREDIT AGREEMENT
SCHEDULE 7.2
INDEBTEDNESS Page 4 of 4
OUTSTANDING
LENDER PRINCIPAL REPAYMENT TERMS
AT CLOSING
MORTGAGES:
(1) Califomia Federal 73,408 Base payments of $863.00 due with final payment on
(Condo - Boca Raton) September 2008. Interest rate is 8.50%. In March 1996,
$228.64 used for impound payment began to be applied
towards payment of loan.
(1) Devon 239,636 Base payment is $1,152.00 plus accrued interest (prime +
(Dispatch center - Chicago, IL) 2%), through April 1999.
(1) ▇▇▇▇▇▇▇ 209,639 Payments $2,001.09 through February 2013. Interest rate is 8.50%.
(Dispatch center -
Waukegan, IL)
OTHER:
TKO Software 86,230 $100,000 due November 1997, which includes imputed interest at 10% per annum.
NBD Bank 6,915 CHN - Base payment $515.55, interest rate of 6.919%, final payment
Feb 1998.
NBD Bank 5,725 CHS - Base payment $538.79, interest rate of 6.995%, final payment
Nov 1997.
NBD Bank 5,759 CHHP - Base payment $495.35, interest rate of 5.90%, final payment
Dec 1997.
Chrysler Credit 9,915 WK - Base payment $425.35, interest rate of 9.930%, final payment Feb 1999.
Chrysler Credit 11,604 MAN - Base payment $345.56, interest rate of 13.033%, final payment June 2000.
GUARANTEES:
(2) Nations Bank 1,112,533 Represents 1st mortgage on ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇.
Payment is $7,466.67 plus accrued interest. Rate is prime + 1%.
Final payment due is approximately $814,000 in May 2000.
(2) ▇▇▇▇▇▇ 637,593 Represents 2nd mortgage on ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇.
Payment is $7,321.10 through August 2000. Payment from Sept.
2000 through August 2005 is $7,258.28. Payment from Sept. 2005
through August 2010 is $7,152.08. Interest rate is 9.531%. Payments
include fees for CDC and CSA, which are approx 5% of monthly
payment.
-----------
Subtotal - term debt 45,788,729
Line of Credit -
Bank of Boston,
as agent 45,000,000 Matures February 2001. Interest payable monthly - variable
----------- rate based on ratio of Funded Indebtedness to EBITDA.
Total - all debt $90,788,729
===========
(1) Note: The debt indicated is not actually outstanding as of closing, but is
expected to be incurred shortly thereafter, at the time the related asset
is purchased.
(2) Note: This debt relates to OutSource's previous headquarters building in
Boca Raton, Florida and represents guarantees by certain OutSource
subsidiaries. The building is currently for sale and once sold, these
guarantees will be released. Also, SMSB partnership, the lessor and owner
of the building has agreed to limit OutSource's liability for rent to 18
months (approximately 30,000 per month) starting in December 1996.
(3) Note: Full amount of authorized borrowings of $S2,151.000 under this
credit facility are expected to be incurred over next twelve months.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 7.3
LIENS
The following lenders have liens on the assets noted:
1) Hewlett Packard Lease Financing:
Masterpack software
Unidata software
▇▇▇▇▇▇▇ software
American Business Communications telephone system
Hewlett Packard computers
2) TKO Financing
OutSmart software
3) Bankers Direct Leasing
Workstations in Deerfield Beach headquarters
Office furniture in Deerfeld Beach headquarters
4) Catalfumo Construction
Deerfield Beach headquarters building
5) Bank of Boston, as agent
All assets, particularly cash and accounts receivable
6) AT&T
Finova
Office equipment
7) NBD Bank
Chrysler Credit
Vans
FOLLOWING LIENS RELATE TO ASSETS ANTICIPATED TO BE PURCHASED SHORTLY AFFER
CLOSING:
8) California Federal
Condominium - Boca Raton, FL
9) Devon
Dispatch center- Chicago, IL
10) ▇▇▇▇▇▇▇
Dispatch center - Waukegan, IL
11) Staff Management, Inc.
Rights to repossess certain intangible assets upon a default in
payment of deferred purchase price
FOLLOWING LIENS RELATE TO ASSETS OWNED BY OTHER ENTITIES BUT GUARANTEED BY
OUTSOURCE SUBSIDIARIES
12) Nations Bank
▇▇▇▇▇▇
Office building - ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇
EXHIBIT A-1
NOTICE OF BORROWING
[Date] 1
Bank of Boston Connecticut, as Agent
for the Banks Party to the Credit
Agreement referred to below,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Ladies and Gentlemen:
OutSource International, Inc. (the "Borrower") refers to the Credit
Agreement, dated as of February , 1997 (the "Credit Agreement"), among OutSource
International, Inc., the Banks parties thereto and Bank of Boston Connecticut,
as Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement. The
undersigned hereby gives you notice pursuant to Section 2.4 of the Credit
Agreement that it requests a borrowing under the Credit Agreement, and in that
connection sets forth below the terms on which such borrowing is requested to be
made:
(A) Date of proposed borrowing
(which is a Business Day)
(B) Principal amount of borrowing 2 $
--------
1The Notice of Borrowing must be received by the Agent (i) in the case
of a proposed Eurodollar Loan, by telecopier or telex not later than 12:00 p.m.
(Eastern time), three Business Days prior to a proposed borrowing and (ii) in
the case of a proposed Alternate Base Rate Loan, by telecopier or telex not
later than 12:00 p.m. (Eastern time), on the day of a proposed borrowing.
2Not less than $250,000 and in whole multiples of $100,000.
-2-
(C) Type of Loan 3
(D-1) Interest Period 4
(D-2) Pricing Level
(I, II, III, IV, V or VI):
(E) Purpose of Loan (check applicable boxes):
1. INITIAL PERMITTED ACQUISITION 5 |_|
If checked, name of selling
Person:
2. WORKING CAPITAL AND GENERAL
CORPORATE PURPOSES of Borrower and its Subsidiaries (OTHER
THAN CSF) |_| If checked, state purpose:
3. CSF LINE 6 |_|
4. SUBSEQUENT PERMITTED ACQUISITION |_|
If checked, name of selling Person
and identity of its shareholders
and owners:
5. LETTER OF CREDIT 7 |_|
--------
3Eurodollar Loan or Alternative Base Rate.
4If a Eurodollar Loan, 1, 2 or 3 months but which shall end not later
than the Termination Date.
5Attach to Notice of Borrowing financial statements required by Section
5.3 of the Credit Agreement.
6If funds being advanced to Labor World franchisee, note must be issued
by franchisee and endorsed to Agent.
7Application for Letter of Credit must accompany Notice of Borrowing.
-3-
(F) Aggregate amount of Loans and Letters of Credit outstanding:
OUTSTANDING
AFTER LOAN
OUTSTANDING ON REQUESTED BY
MAXIMUM THE DATE OF THIS THIS NOTICE IS
PURPOSE AUTHORIZED NOTICE MADE
1. Initial Permitted Acquisition $25,000,000 in $ 8 $
--------------------
aggregate
2. Working Capital and General $40,000,000 less $ $
---------------------
Corporate Purposes of amounts of F(1),
Borrower and Subsidiaries F(4) and F(5)
(other than CSF)
3. CSF Line $ 5,000,000 $ $
---------------------
4. Subsequent Permitted $10,000,000 $ $
---------------------
Acquisition
(MAY NOT BE REBORROWED FOR
SUBSEQUENT PERMITTED
ACQUISITION)
5. Letters of Credit $10,000,000 $ $
----------------------
Sum of (1) through (5) $ $
----------------------
If the box in (E)1 above has been checked, the undersigned hereby
certifies that none of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ is or has been a beneficial owner, directly or indirectly, including
without limitation through a family member or trust, of the selling Person
identified in (E)1.
--------
8)Amount used for Initial Permitted Acquisitions to date.
-4-
If the box in (E)4 above has been checked, the undersigned hereby
certifies that, with respect to the Subsequent Permitted Acquisition identified
in (E)4, all of the requirements of a Subsequent Permitted Acquisition set forth
in the definition thereof in the Credit Agreement have been met.
As required by Section 5 of the Credit Agreement, the undersigned
officer on behalf of the Borrower hereby further certifies that:
(a) the representations and warranties contained in Section 4 of the
Credit Agreement are true and correct in all material respects on and as of the
date hereof (or if such representation or warranty is expressly stated to have
been made as of a specific date, as of the such specific date);
(b) the Borrower has performed and complied with and is in compliance
with all of the terms, covenants and conditions of the Credit Agreement;
(c) there does not exist any Default or Event of Default under the
Credit Agreement; and
(d) each of the other conditions precedent set forth in Section 5 of
the Credit Agreement have been satisfied and complied with.
Very truly yours,
OUTSOURCE INTERNATIONAL, INC.
By
---------------------------------
Title:
EXHIBIT A-2
REVOLVING CREDIT NOTE
Hartford, Connecticut
________ ____, 1997
FOR VALUE RECEIVED, the undersigned, OUTSOURCE INTERNATIONAL, INC. (the
"Company"), promises to pay to the order of (the "Bank"), at the office of Bank
of Boston Connecticut, located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
the principal sum of
MILLION AND NO/100 DOLLARS ( )
or the aggregate unpaid principal amount of all Loans made by the Bank to the
undersigned pursuant to the Credit Agreement, as hereinafter defined, whichever
is less, in lawful money of the United States of America. As used herein,
"Credit Agreement" means the Amended and Restated Credit Agreement, dated as of
February 21, 1997 and amended and restated as of March 18, 1997, as the same may
hereafter be amended, modified, supplemented or restated from time to time,
among the Company, the Banks from time to time parties thereto and Bank of
Boston Connecticut, as Agent. Capitalized terms used herein but not defined
herein shall have the meanings ascribed to them in the Credit Agreement.
The undersigned also promises to pay interest on the unpaid principal
amount of each Loan from time to time outstanding, from the date of such Loan
until the payment in full thereof, at the rates per annum which shall be
determined in accordance with the provisions of the Credit Agreement.
The Bank is authorized to record the date and amount of each Loan made
by the Bank pursuant to the Credit Agreement and the date and amount of each
payment or prepayment of principal hereof on the reverse side hereof, or reflect
such information on the records of the Bank by such other methods as the Bank
may generally employ; PROVIDED, HOWEVER, that the failure to make any such entry
shall in no way detract from the Company's obligations under this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, from the date due until
paid, at a rate per annum which shall be two percent (2%) in excess of the rate
of interest which would otherwise be applicable thereto. All payments of
principal of and interest on this Note shall be made in immediately available
funds. In the event that the total amount of any payment required to be paid
under this Note is not paid within ten (10) days of the date when the same
-1-
becomes due, the Bank may collect and the undersigned agrees to pay a late
charge equal to five percent (5%) of the total amount then due.
This Note is the Revolving Credit Note referred to in the Credit
Agreement. Reference is made to the Credit Agreement for a description of the
right of the undersigned to anticipate payments hereof, the right of the holder
hereof to declare this Note due prior to its stated maturity, and other terms
and conditions upon which this Note is issued.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CONNECTICUT.
Witness: OUTSOURCE INTERNATIONAL, INC.
_________________________ By:___________________________________
Name: Name:
Title:
-2-
EXHIBIT A-3
SWINGLINE NOTE
Hartford, Connecticut
________ ____, 1997
FOR VALUE RECEIVED, the undersigned, OUTSOURCE INTERNATIONAL, INC. (the
"Company"), promises to pay to the order of (the "Bank"), at the office of the
Bank of Boston Connecticut, located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, the principal sum of
MILLION AND NO/100 DOLLARS ( )
or the aggregate unpaid principal amount of all Swingline Loans made by the Bank
to the undersigned pursuant to the Credit Agreement, as hereinafter defined,
whichever is less, in lawful money of the United States of America. As used
herein, "Credit Agreement" means the Amended and Restated Credit Agreement,
dated as of February 21, 1997 and amended and restated as of March 18, 1997, as
the same may hereafter be amended, modified, supplemented or restated from time
to time, among the Company, the Banks from time to time parties thereto and Bank
of Boston Connecticut, as Agent. Capitalized terms used herein but not defined
herein shall have the meanings ascribed to them in the Credit Agreement.
The undersigned also promises to pay interest on the unpaid principal
amount of each Swingline Loan from time to time outstanding, from the date of
such Swingline Loan until the payment in full thereof, at the rates per annum
which shall be determined in accordance with the provisions of the Credit
Agreement.
The Bank is authorized to record the date and amount of each Swingline
Loan made by the Bank pursuant to the Credit Agreement and the date and amount
of each payment or prepayment of principal hereof on the reverse side hereof, or
reflect such information on the records of the Bank by such other methods as the
Bank may generally employ; PROVIDED, HOWEVER, that the failure to make any such
entry shall in no way detract from the Company's obligations under this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, from the date due until
paid, at a rate per annum which shall be two percent (2%) in excess of the rate
of interest which would otherwise be applicable thereto. All payments of
principal of and interest on this Note shall be made in immediately available
funds. In the event that the total amount of any payment required to be paid
under this Note is not paid within ten (10) days of the date when the same
becomes due, the Bank may collect and the undersigned agrees to pay a late
charge equal to five percent (5%) of the total amount then due.
This Note is the Swingline Note referred to in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the right of the
undersigned to anticipate payments hereof,
-1-
the right of the holder hereof to declare this Note due prior to its stated
maturity, and other terms and conditions upon which this Note is issued.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CONNECTICUT.
Witness: OUTSOURCE INTERNATIONAL, INC.
_________________________ By:______________________________
Name: Name:
Title:
-2-
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of February __,
1997 (as may be amended, supplemented, restated or otherwise modified from time
to time, the "Credit Agreement"), among OUTSOURCE INTERNATIONAL, INC., a Florida
corporation (the "Company"), the Banks named therein and BANK OF BOSTON
CONNECTICUT, as agent for the Banks (in such capacity, the "Agent"). Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meaning given to them in the Credit Agreement.
______________________ (the "Assignor") and _____________________ (the
"Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), a ____% interest (the "Assigned Interest") in
and to the Assignor's rights and obligations under the Credit Agreement with
respect to the Assignor's Commitment thereunder in a principal amount as set
forth on Annex 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document or
in connection with the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Loan
Document or any other instrument or document furnished pursuant thereto, or any
collateral security granted in connection therewith, if any, other than that it
has not created any adverse claim upon the interest being assigned by it
hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Company, any of its Subsidiaries or
any other obligor or the performance or the observance by the Company, any of
its Subsidiaries or any other obligor of any of their respective obligations
under the Credit Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches the Note held by
it evidencing the Assignor's Commitment and requests that the Agent exchange
such Note for new Notes payable to the Assignee and the Assignor in amounts
which reflect the assignment being made hereby (and after giving effect to any
other assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement and any amendments thereto, together
with copies of the financial statements delivered pursuant to subsection 6.1
thereof and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees
-1-
that it will, independently and without reliance upon the Assignor, the Agent or
any other Bank, based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement, the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; (d) appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Credit Agreement, the other Loan
Documents or other instrument or document furnished pursuant hereto or thereto
as are delegated to the Agent by the terms thereof, together with such powers as
are incidental thereto; and (e) agrees that it will be bound by the provisions
of the Credit Agreement and will perform all the obligations required, by the
terms of the Credit Agreement, to be performed by it as a Bank, including, if it
is organized under the laws of a jurisdiction outside the United States, its
obligations pursuant to paragraph 2.16(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be
_____________, _____ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance and
recording by the Agent pursuant to subsection 10.6 of the Credit Agreement,
effective as of the Effective Date.
5. From and after the date of receipt of this Assignment and
Acceptance, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignee, whether such amounts have accrued prior to the Effective Date or
accrue subsequent to the Effective Date. The Assignor and the Assignee shall
make all appropriate adjustments in payments by the Agent for periods prior to
the Effective Date or with respect to the making of this assignment directly
between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party
to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and under the
other Loan Documents and shall be bound by the provisions thereof, and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. The Assignee advises the Agent that the address listed on Annex 1 is
its address for notices under the Credit Agreement.
8. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the state of Connecticut.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the _____ day of ________, 199_, by their
respective duly authorized officers on Annex 1 hereto.
-2-
ANNEX 1 TO THE
ASSIGNMENT AND ACCEPTANCE
NAME OF ASSIGNOR:
NAME OF ASSIGNEE:
EFFECTIVE DATE OF ASSIGNMENT:
COMMITMENT COMMITMENT
PERCENTAGE AFTER ASSIGNMENT DOLLAR AMOUNT AFTER ASSIGNMENT
-------------------------------------------------------------------------------
ASSIGNEE
ASSIGNOR
ASSIGNEE: ASSIGNOR:
By:_________________________________ By:_____________________________
Title: Title:
Accepted: Consented To:
BANK OF BOSTON OUTSOURCE INTERNATIONAL, INC.
CONNECTICUT, as
Agent
By:_________________________________ By:_____________________________
Title: Title:
-3-
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 7.8
MANAGEMENT LOANS AND ADVANCES
None.