EXHIBIT 10.3
TERM LOAN CREDIT AGREEMENT
DATED AS OF SEPTEMBER 30, 2004
AMONG
COMSYS SERVICES LLC,
VENTURI TECHNOLOGY PARTNERS, LLC,
COMSYS IT PARTNERS, INC.,
as Borrowers,
PFI CORP.,
COMSYS INFORMATION TECHNOLOGY SERVICES, INC.,
COMSYS HOLDING, INC.,
as Guarantors,
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL,
A DIVISION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇ BUSINESS FINANCIAL SERVICES INC.,
as Administrative Agent,
HERITAGE BANK, SSB, A TEXAS-CHARTERED SAVINGS BANK,
as Collateral Agent
AND
THE LENDERS FROM TIME TO TIME PARTY HERETO
ARTICLE I DEFINITIONS......................................................................... 3
Section 1.1 Certain Defined Terms............................................................... 3
Section 1.2 Accounting Terms and Determinations................................................. 20
Section 1.3 Other Definitional Provisions....................................................... 20
ARTICLE II SECOND LIEN TERM LOANS.............................................................. 21
Section 2.1 Second Lien Term Loan............................................................... 21
Section 2.2 [Intentionally Omitted]............................................................. 24
Section 2.3 Interest, Interest Calculations and Certain Fees.................................... 24
Section 2.4 Second Lien Term Notes.............................................................. 27
Section 2.5 Intentionally Omitted............................................................... 28
Section 2.6 General Provisions Regarding Payment; Loan Account.................................. 28
Section 2.7 Maximum Interest.................................................................... 28
Section 2.8 Taxes............................................................................... 29
Section 2.9 Appointment of the Funds Administrator.............................................. 30
ARTICLE III REPRESENTATION AND WARRANTIES....................................................... 31
Section 3.1 Existence and Power................................................................. 31
Section 3.2 Organization and Governmental Authorization; No Contravention....................... 31
Section 3.3 Binding Effect...................................................................... 32
Section 3.4 Capitalization...................................................................... 32
Section 3.5 Financial Information............................................................... 32
Section 3.6 Litigation.......................................................................... 34
Section 3.7 Ownership of Property............................................................... 34
Section 3.8 No Default.......................................................................... 34
Section 3.9 Labor Matters....................................................................... 34
Section 3.10 Regulated Entities.................................................................. 35
Section 3.11 Margin Regulations.................................................................. 35
Section 3.12 Compliance With Laws................................................................ 35
Section 3.13 Taxes............................................................................... 35
Section 3.14 Compliance with ERISA............................................................... 36
Section 3.15 Brokers............................................................................. 36
Section 3.16 Related Transactions................................................................ 36
Section 3.17 Employment, Equityholders and Subscription Agreements............................... 37
Section 3.18 Compliance with Environmental Requirements; No Hazardous Materials.................. 37
Section 3.19 Intellectual Property............................................................... 38
Section 3.20 Real Property Interests............................................................. 38
Section 3.21 Solvency............................................................................ 38
Section 3.22 Full Disclosure..................................................................... 39
Section 3.23 Representations and Warranties Incorporated from Other Operative Documents.......... 39
ARTICLE IV AFFIRMATIVE COVENANTS............................................................... 39
Section 4.1 Financial Statements and Other Reports.............................................. 39
Section 4.2 Payment and Performance of Obligations.............................................. 43
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Section 4.3 Conduct of Business and Maintenance of Existence.................................... 43
Section 4.4 Maintenance of Property; Insurance.................................................. 43
Section 4.5 Compliance with Laws................................................................ 44
Section 4.6 Inspection of Property, Books and Records........................................... 44
Section 4.7 Use of Proceeds..................................................................... 45
Section 4.8 Lenders' Meetings................................................................... 45
Section 4.9 COMSYS Limited...................................................................... 45
Section 4.10 Real Estate......................................................................... 46
Section 4.11 Intentionally Omitted............................................................... 46
Section 4.12 Further Assurances.................................................................. 46
ARTICLE V NEGATIVE COVENANTS.................................................................. 47
Section 5.1 Debt................................................................................ 47
Section 5.2 Liens............................................................................... 48
Section 5.3 Contingent Obligations.............................................................. 49
Section 5.4 Restricted Distributions............................................................ 50
Section 5.5 Restrictive Agreements.............................................................. 51
Section 5.6 Payments and Modifications of First Lien Debt....................................... 51
Section 5.7 Consolidations, Mergers and Sales of Assets......................................... 51
Section 5.8 Purchase of Assets, Investments..................................................... 52
Section 5.9 Transactions with Affiliates........................................................ 53
Section 5.10 Modification of Organizational Documents............................................ 53
Section 5.11 Fiscal Year......................................................................... 54
Section 5.12 Conduct of Business................................................................. 54
Section 5.13 [Intentionally Omitted]............................................................. 54
Section 5.14 Lease Payments...................................................................... 54
Section 5.15 Bank Accounts....................................................................... 54
ARTICLE VI ACCOUNTS REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS...................... 54
Section 6.1 Accounts and Account Collections.................................................... 55
Section 6.2 Deposit Accounts.................................................................... 56
ARTICLE VII FINANCIAL COVENANTS................................................................. 57
Section 7.1 Minimum EBITDA...................................................................... 57
Section 7.2 Fixed Charge Coverage Ratio......................................................... 57
Section 7.3 Total Debt to EBITDA Ratio.......................................................... 57
Section 7.4 Minimum Revolving Loan Borrowing Availability....................................... 58
ARTICLE VIII CONDITIONS.......................................................................... 59
Section 8.1 Conditions to Closing............................................................... 59
ARTICLE IX EVENTS OF DEFAULT................................................................... 60
Section 9.1 Events of Default................................................................... 60
Section 9.2 Acceleration........................................................................ 63
Section 9.3 [Intentionally omitted]............................................................. 64
Section 9.4 Default Rate of Interest and Suspension of LIBOR Rate Options....................... 64
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Section 9.5 Setoff Rights....................................................................... 64
Section 9.6 Application of Proceeds............................................................. 64
ARTICLE X EXPENSES, INDEMNITY, TAXES AND RIGHT TO PERFORM..................................... 65
Section 10.1 Expenses............................................................................ 65
Section 10.2 Indemnity........................................................................... 65
Section 10.3 Taxes............................................................................... 66
Section 10.4 Right to Perform.................................................................... 66
ARTICLE XI AGENTS.............................................................................. 67
Section 11.1 Appointment and Authorization....................................................... 67
Section 11.2 Agents and Affiliates............................................................... 67
Section 11.3 Action by Agents.................................................................... 67
Section 11.4 Consultation with Experts........................................................... 67
Section 11.5 Liability of Agents................................................................. 68
Section 11.6 Indemnification..................................................................... 68
Section 11.7 Right to Request and Act on Instructions............................................ 68
Section 11.8 Credit Decision..................................................................... 69
Section 11.9 Collateral Matters.................................................................. 69
Section 11.10 Agency for Perfection............................................................... 69
Section 11.11 Notice of Default................................................................... 70
Section 11.12 Successor Agents.................................................................... 70
Section 11.13 Payment............................................................................. 70
ARTICLE XII MISCELLANEOUS....................................................................... 71
Section 12.1 Survival............................................................................ 71
Section 12.2 No Waivers.......................................................................... 71
Section 12.3 Notices............................................................................. 72
Section 12.4 Severability........................................................................ 72
Section 12.5 Amendments and Waivers.............................................................. 72
Section 12.6 Assignments; Participations......................................................... 73
Section 12.7 Headings............................................................................ 74
Section 12.8 Confidentiality..................................................................... 74
Section 12.9 GOVERNING LAW; SUBMISSION TO JURISDICTION........................................... 75
Section 12.10 WAIVER OF JURY TRIAL................................................................ 75
Section 12.11 Publication; Advertisement.......................................................... 76
Section 12.12 Counterparts; Integration........................................................... 76
Section 12.13 Second Lien Intercreditor Agreement................................................. 76
To the extent any provision of this Agreement conflicts with the Second Lien
Intercreditor Agreement, the Second Lien Intercreditor Agreement shall
govern and control. Without limiting the generality of the foregoing,
until the Discharge of all First Lien Debt, (a) any assignment or
transfer of Collateral required to be made hereunder to Collateral Agent
shall be to the First Lien Agent, (b) any request or consent of
Collateral Agent required or made hereunder shall be deemed to be
required or made by the First Lien Agent, (c) any delivery of any
Collateral to Collateral Agent required hereunder shall
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be to the First Lien Agent, (d) any right of the Collateral Agent to
require a Credit Party to cause the Collateral Agent to obtain exclusive
Control of any Investment Property (as such term is defined in the UCC)
shall be vested in the First Lien Agent, and (e) any right of the
Collateral Agent to assert any claims on behalf of a Credit Party shall
be vested in the First Lien
Agent............................................................................... 76
ARTICLE XIII LIABILITY OF THE BORROWERS.......................................................... 76
Section 13.1 Joint and Several Liability......................................................... 76
Section 13.2 Waivers by the Borrowers............................................................ 77
Section 13.3 Benefit............................................................................. 77
Section 13.4 Waiver of Subrogation, Etc.......................................................... 77
Section 13.5 Election of Remedies................................................................ 78
Section 13.6 Limitation.......................................................................... 78
Section 13.7 Contribution with Respect to Obligations............................................ 79
Section 13.8 Liability Cumulative................................................................ 79
ANNEX AND EXHIBITS
ANNEXES
Annex A - Second Lien Term Loan Commitment Percentages
Annex B - Closing Checklist
Annex C - Existing Debt
EXHIBITS
Exhibit A - Assignment Agreement
Exhibit B - Excess Cash Flow Certificate
Exhibit C - Compliance Certificate
Exhibit D - Notice of Borrowing
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The liens and security interests securing the indebtedness and other obligations
incurred or arising under or evidenced by this instrument and the rights and
obligations evidenced hereby with respect to such liens are subordinate in the
manner and to the extent set forth in that certain Intercreditor and Lien
Subordination Agreement (as the same may be amended or otherwise modified from
time to time pursuant to the terms thereof, the "INTERCREDITOR AGREEMENT") dated
as of September 30, 2004 among COMSYS Services, LLC, a Delaware limited
liability company, Venturi Technology Partners, LLC, a North Carolina limited
liability company, COMSYS Information Technology Services, Inc., a Delaware
corporation, COMSYS IT Partners, Inc., a Delaware corporation, PFI Corp., a
Delaware corporation, COMSYS Holding, Inc., a Delaware corporation (collectively
as the "COMPANIES"), Heritage Bank, SSB, a Texas-chartered savings bank, acting
in acting in its capacity as collateral agent (in such capacity, together its
successors and assigns, are referred to herein as the "SECOND LIEN COLLATERAL
AGENT"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital, a division of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial
Services Inc.,acting in its capacity as administrative agent (in such capacity,
together its successors and assigns, are referred to herein as the "SECOND LIEN
AGENT"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital, a division of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Business
Financial Services Inc. ("FIRST LIEN AGENT"), to the liens and security
interests securing indebtedness (including interest) owed by the Companies
pursuant to that certain Credit Agreement dated as of September 30, 2004 among
the Companies, First Lien Agent and the lenders from time to time party thereto,
and certain guarantees of the indebtedness evidenced thereby, as such Credit
Agreement and such guarantees have been and hereafter may be amended, restated,
supplemented or otherwise modified from time to time as permitted under the
Intercreditor Agreement and to the liens and security interests securing
indebtedness refinancing the indebtedness under such agreements as permitted by
the Intercreditor Agreement; and each holder of this instrument, by its
acceptance hereof, irrevocably agrees to be bound by the provisions of the
Intercreditor Agreement.
TERM LOAN CREDIT AGREEMENT
TERM LOAN CREDIT AGREEMENT dated as of September 30, 2004 among COMSYS
SERVICES LLC, a Delaware limited liability company ("COMSYS SERVICES"), VENTURI
TECHNOLOGY PARTNERS, LLC, a North Carolina limited liability company ("VTP"),
COMSYS INFORMATION TECHNOLOGY SERVICES, INC., a Delaware corporation ("COMSYS
IT"; COMSYS Services, VTP and COMSYS IT are referred to herein each individually
as a "BORROWER" and collectively as the "BORROWERS"), COMSYS IT PARTNERS, INC.,
a Delaware corporation ("HOLDINGS"), PFI CORP., a Delaware corporation ("PFI
HOLDINGS"), COMSYS HOLDING, INC., a Delaware corporation ("COMSYS HOLDINGS"),
COMSYS Services, acting in its capacity as borrowing agent and funds
administrator for the Borrowers (in such capacity, the "FUNDS ADMINISTRATOR"),
the financial institutions from time to time parties hereto, each as a Lender,
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL, A DIVISION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇ BUSINESS FINANCIAL SERVICES
INC., as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT"),
and HERITAGE BANK, SSB, A TEXAS-CHARTERED SAVINGS BANK, as Collateral Agent (as
defined herein).
RECITALS:
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of
July 19, 2004 (the "MERGER AGREEMENT") among Holdings, VTP, Inc., a Delaware
corporation ("MERGER CO."), VTP, COMSYS Holdings, COMSYS IT and the shareholders
of Holdings party thereto, Merger Co. has merged with and into COMSYS Holdings,
with COMSYS Holdings as the surviving entity (the "MERGER");
WHEREAS, the Borrowers desire that Lenders make certain term loans to the
Borrowers to (i) provide in part funds necessary in connection with the Venturi
Staffing Sale, (ii) provide in part funds necessary to refinance existing
indebtedness of the Borrowers and their Affiliates and (iii) pay fees and
expenses related to this Agreement and the other Operative Documents; and
WHEREAS, each Borrower desires to secure all of its Obligations under the
Financing Documents by granting to the Collateral Agent, for the benefit of the
Agents and Lenders, a security interest in and lien upon substantially all of
its personal and real property, including without limitation all of the
outstanding capital stock or other equity securities, as applicable, of each
Domestic Subsidiary and, to the extent provided herein, each Foreign Subsidiary;
and
WHEREAS, Holdings, as the direct owner of all of the issued and
outstanding capital stock of PFI Holdings and COMSYS Holdings, and the indirect
owner of all of the issued and outstanding capital stock or membership
interests, as the case may be, in each Borrower, is willing to guarantee all of
the Obligations of the Borrowers to Lenders under the Financing Documents, and
to grant to the Collateral Agent, for the benefit of Agents and Lenders, a
security interest in and lien upon substantially all of its personal and real
property, including, without limitation, all of the outstanding capital stock or
other equity securities, as applicable, of each Domestic Subsidiary (including,
without limitation, all of the outstanding capital stock of COMSYS Holdings and
PFI Holdings) and, to the extent provided herein, each Foreign Subsidiary; and
WHEREAS, COMSYS Holdings, as the direct owner of all of the issued and
outstanding membership interests of COMSYS IT, is willing to guarantee all of
the Obligations of the Borrowers to Lenders under the Financing Documents, and
to grant to the Collateral Agent, for the benefit of Agents and Lenders, a
security interest in and lien upon substantially all of its personal and real
property, including, without limitation, all of the outstanding capital stock or
other equity securities, as applicable, of each Domestic Subsidiary (including,
without limitation, all of the capital stock of COMSYS IT) and, to the extent
provided herein, each Foreign Subsidiary;
WHEREAS, PFI Holdings, as the direct owner of all of the issued and
outstanding membership interests of VTP, is willing to guarantee all of the
Obligations of the Borrowers to Lenders under the Financing Documents, and to
grant to the Collateral Agent, for the benefit of Agents and Lenders, a first
priority security interest in and lien upon substantially all of its personal
and real property, including, without limitation, all of the outstanding capital
stock or other equity securities, as applicable, of each Domestic Subsidiary
(including, without limitation, all of the outstanding membership interests of
VTP) and, to the extent provided herein, each Foreign Subsidiary;
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WHEREAS, each other Domestic Subsidiary of Holdings, other than the
Borrowers, is willing to guaranty all of the Obligations of the Borrowers to
Lenders under the Financing Documents, and to grant to the Collateral Agent, for
the benefit of Agents and Lenders, a first priority security interest in and
lien upon substantially all of its personal and real property to the extent
provided for herein;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Borrowers, Holdings, COMSYS
Holdings, PFI Holdings, Lenders, Collateral Agent and Administrative Agent agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.1 CERTAIN DEFINED TERMS.
The following terms have the following meanings:
"ACCOUNT DEBTOR" means "account debtor," as defined in Article 9 of the
UCC.
"ACCOUNTS" means "accounts" (as defined in Article 9 of the UCC) of the
Borrowers, including without limitation any and all rights to payment for the
sale or lease of goods or rendition of services, whether or not they have been
earned by performance.
"ADJUSTED EBITDA" has the meaning as defined pursuant to the terms of the
Compliance Certificate.
"AFFILIATE" means with respect to any Person (i) any Person that directly
or indirectly controls such Person, (ii) any Person which is controlled by or is
under common control with such controlling Person and (iii) in the case of an
individual, the parents, children, siblings and spouse of such individual. As
used in this definition, the term "control" of a Person means the possession,
directly or indirectly, of the power to vote ten percent (10%) or more of any
class of voting securities of such Person or to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"AGENTS" means the Administrative Agent and the Collateral Agent.
"AGREEMENT" means this Term Loan Credit Agreement, as the same may be
amended, supplemented, restated or otherwise modified from time to time.
"APPROVED FUND" means any (i) investment company, trust, securitization
vehicle or conduit that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business or (ii) any Person (other than a natural
person) which temporarily warehouses loans for any Lender or any entity
described in the preceding clause (i) and that, with respect to each of the
preceding clauses (i) and (ii), is administered or managed by (a) a Lender, (b)
an Affiliate of a Lender or (c) a Person (other than a natural person) or an
Affiliate of a Person (other than a natural person) that administers or manages
a Lender.
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"ASSET DISPOSITION" means any sale, lease, exclusive and irrevocable
license granted other than in the ordinary course of business or other
consensual disposition by any Credit Party of any asset, but excluding
dispositions of Cash Equivalents.
"ASSIGNEE" has the meaning set forth in Exhibit A to this Agreement.
"ASSIGNMENT AGREEMENT" means an agreement substantially in the form of
Exhibit A hereto.
"AVAILABLE CASH" means unrestricted cash on hand of the Borrowers and
their Subsidiaries as of the date of measurement held in Deposit Accounts in
which First Lien Agent has been granted a perfected first priority security
interest pursuant to a Deposit Account Control Agreement.
"BORROWERS" has the meaning set forth in the Preamble to this Agreement.
"BORROWING BASE CERTIFICATE" means "Borrowing Base Certificate", as
defined in the First Lien Credit Agreement.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which either the New York Stock Exchange is closed, or on which commercial banks
in Chicago are authorized by law to close and, in the case of a Business Day
which relates to a LIBOR Loan, a day on which dealings are carried on in the
London interbank eurodollar market.
"CAPITAL EXPENDITURES" has the meaning provided in the Compliance
Certificate.
"CAPITAL LEASE" of any Person means any lease of any property by such
Person as lessee which would, in accordance with GAAP, be required to be
accounted for as a capital lease on the balance sheet of such Person.
"CASH EQUIVALENTS" means any Investment in (i) direct obligations of the
United States or any agency thereof, or obligations guaranteed by the United
States or any agency thereof, (ii) commercial paper rated at least A-1 by
Standard & Poor's Ratings Service and P-1 by ▇▇▇▇▇'▇ Investors Services, Inc.,
(iii) demand deposits and time deposits with, including certificates of deposit
issued by, any office located in the United States of any bank or trust company
which is organized under the laws of the United States or any State thereof and
has capital, surplus and undivided profits aggregating at least $500,000,000 and
which issues (or the parent of which issues) certificates of deposit or
commercial paper with a rating described in clause (ii) above, (iv) repurchase
agreements with respect to securities described in clause (i) above entered into
with an office of a bank or trust company meeting the criteria specified in
clause (iii) above, provided in each case that such Investment matures within
one (1) year from the date of acquisition thereof by any Credit Party, or (v)
any money market or mutual fund which invests only in the foregoing types of
investments and the liquidity of which is reasonably satisfactory to
Administrative Agent.
"CLOSING CHECKLIST" means Annex B to this Agreement.
"CLOSING DATE" means the date of this Agreement.
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"CODE" means the Internal Revenue Code of 1986.
"COLLATERAL" means all property, now existing or hereafter acquired,
mortgaged or pledged to, or purported to be subjected to a Lien in favor of,
Collateral Agent, for the benefit of Agents and Lenders, pursuant to the
Security Documents.
"COLLATERAL AGENT" means Heritage Bank, SSB, a Texas-chartered savings
bank, in its capacity as collateral agent for the Administrative Agent and the
Lenders hereunder, as such capacity is established and subject to the provisions
of Article XI, and its successors in such capacity.
"COMPLIANCE CERTIFICATE" means a certificate, duly executed by a
Responsible Officer of Holdings, appropriately completed and substantially in
the form of Exhibit C hereto.
"COMSYS CREDIT PARTIES" means COMSYS Holdings, COMSYS IT and COMSYS
Services.
"COMSYS HOLDINGS" has the meaning set forth in the Recitals to this
Agreement.
"COMSYS IT" has the meaning set forth in the Preamble to this Agreement.
"COMSYS LIMITED" means COMSYS VMS Limited, a company formed under the laws
of England and Wales.
"COMSYS SERVICES" has the meaning set forth in the Preamble to this
Agreement.
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or other Person
the accounts of which would be consolidated with those of Holdings in its
consolidated financial statements if such statements were prepared as of such
date.
"CONTINGENT OBLIGATIONS" means, with respect to any Person, any direct or
indirect liability of such Person: (i) with respect to any debt, lease, dividend
or other obligation of another Person if the purpose or intent of such Person
incurring such liability, or the effect thereof, is to provide assurance to the
obligee of such liability that such liability will be paid or discharged, or
that any agreement relating thereto will be complied with, or that any holder of
such liability will be protected, in whole or in part, against loss with respect
thereto; (ii) with respect to any letter of credit issued for the account of
such Person or as to which such Person is otherwise liable for the reimbursement
of any drawing; (iii) under any foreign exchange contract, currency swap
agreement, interest rate swap agreement or other similar agreement or
arrangement designed to alter the risks of such Person arising from fluctuations
in currency values or interest rates; (iv) to make take-or-pay or similar
payments if required regardless of nonperformance by any other party or parties
to an agreement; or (v) for any obligation of another Person pursuant to any
agreement to purchase or otherwise acquire any obligation or any property
constituting security therefor, to provide funds for the payment or discharge of
such obligation or to preserve the solvency, financial condition or level of
income of another Person. The amount of any Contingent Obligation shall be equal
to the amount of the obligation so guaranteed or otherwise supported or, if not
a fixed determinable amount, the maximum amount so guaranteed or otherwise
supported.
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"CONTROLLED GROUP" means all members of a group of corporations and all
members of a group of trades or businesses (whether or not incorporated) under
common control which, together with the Credit Parties, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.
"CREDIT PARTY" means Holdings, COMSYS Holdings, PFI Holdings, each
Borrower and each of their respective Subsidiaries.
"DEBT" of a Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising and payable in the ordinary
course of business, (iv) all Capital Leases of such Person, (v) all
non-contingent obligations of such Person to reimburse any bank or other Person
in respect of amounts paid under a letter of credit or similar instrument, (vi)
all equity securities of such Person subject to repurchase or redemption on a
date which is prior to the Maturity Date at the option of the holder thereof,
other than repurchases and redemptions (a) as a result of a change of control
with respect to such Person or a sale of all or substantially all of the assets
of such Person or (b) as a result of a "Fundamental Change" or a "Change in
Ownership" (in each case, as defined in the Holdings Certificate of
Designations), (vii) all obligations secured by a Lien on any asset of such
Person, whether or not such obligation is otherwise an obligation of such
Person, (viii) "earnouts" and similar payment obligations (provided, that, for
purposes of determining compliance by the Credit Parties with the respective
financial covenants set forth in Article VII, the amount at any time of any
"earnout" or similar payment obligation shall be determined in accordance with
GAAP) (and, in any event, shall not exceed the amount, if any, thereof which is
actually earned but remains unpaid at such time) and (ix) all Debt of others
Guaranteed by such Person.
"DEFAULT" means any condition or event which with the giving of notice or
lapse of time or both would, unless cured or waived, become an Event of Default.
"DEFAULTED LENDER" means, so long as such failure shall remain in
existence and uncured, any Lender which shall have failed to make any Second
Lien Term Loan or other credit accommodation, disbursement or reimbursement
required pursuant to the terms of any Financing Documents.
"DEPOSIT ACCOUNT" means a "deposit account" (as defined in Article 9 of
the UCC) of any Credit Party.
"DEPOSIT ACCOUNT CONTROL AGREEMENT" means an agreement, in form and
substance reasonably satisfactory to Collateral Agent, among the Collateral
Agent, any Credit Party or any Subsidiary of any Credit Party maintaining a
Deposit Account at any bank, and such bank, which agreement provides that (x)
such bank shall comply with instructions originated by Collateral Agent
directing disposition of the funds in such Deposit Account without further
consent by any Borrower or such Credit Party (as applicable), and (y) such bank
shall agree that it shall have no Lien on, or right of setoff against, such
Deposit Account or the contents thereof, other than in respect of commercially
reasonable fees and other items reasonably and expressly consented to
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by Collateral Agent, and containing such other terms and conditions as
Collateral Agent may reasonably require.
"DISCHARGE OF ALL FIRST LIEN DEBT" has the meaning ascribed to it in the
Second Lien Intercreditor Agreement.
"DOMESTIC SUBSIDIARY" means, with respect to any Person, a Subsidiary of
such Person, which Subsidiary is incorporated or otherwise organized under the
laws of a State of the United States of America.
"DOMESTIC WHOLLY-OWNED SUBSIDIARY" means any Domestic Subsidiary in which
(other than directors' qualifying shares required by law) one hundred percent
(100%) of equity securities, at the time as of which any determination is being
made, is owned, beneficially and of record, by any Borrower, or by one or more
of the other Domestic Wholly-Owned Subsidiaries, or both.
"EBITDA" has the meaning as defined pursuant to the terms of the
Compliance Certificate.
"ELIGIBLE ASSIGNEE" means (i) a Lender, (ii) an Affiliate of a Lender,
(iii) an Approved Fund, and (iv) any other Person (other than a natural person)
approved by (a) Administrative Agent and (b) unless an Event of Default has
occurred and is continuing, the Funds Administrator (each such approval not to
be unreasonably withheld or delayed, and shall be deemed provided unless
expressly withheld by the Funds Administrator within five (5) Business Days of
request therefor); provided that notwithstanding the foregoing, "Eligible
Assignee" shall not include a Borrower or any Affiliates or Subsidiaries of any
Borrower.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, injunctions, permits, licenses, agreements and
governmental restrictions, whether now or hereafter in effect, relating to the
environment or the effect of the environment on human health or to emissions,
discharges or releases of Hazardous Materials into the environment, including
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials or the clean-up or other
remediation thereof.
"EQUIPMENT" means, collectively, "equipment" and "fixtures" (as each term
is defined in Article 9 of the UCC) of the Credit Parties and their respective
Subsidiaries.
"EQUITY DOCUMENTS" means the Holdings Certificate of Designations and the
Holdings Charter.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA PLAN" means any "employee benefit plan," as such term is defined in
Section 3(3) of ERISA (other than a Multiemployer Pension Plan), which any
Credit Party maintains, sponsors or contributes to, or, which is subject to
Section 412 of the Code or Title IV of ERISA, to which any Credit Party or any
member of the Controlled Group may have any liability,
7
including any liability by reason of having been a substantial employer within
the meaning of Section 4063 of ERISA at any time during the preceding five (5)
years, or by reason of being deemed to be a contributing sponsor under Section
4069 of ERISA.
"EVENT OF DEFAULT" has the meaning set forth in Section 9.1.
"EXCESS CASH FLOW" has the meaning provided in the Excess Cash Flow
Certificate.
"EXCESS CASH FLOW CERTIFICATE" means a certificate, duly executed by a
Responsible Officer of Holdings, appropriately completed and substantially in
the form of Exhibit B hereto.
"EXISTING DEBT" means all Debt set forth in Annex C attached hereto to be
repaid in full in cash on the Closing Date.
"FEDERAL FUNDS RATE" means, for any day, the rate of interest per annum
(rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (i) if such day is
not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day and (ii) if no such rate is
so published on such next preceding Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to Administrative Agent on such day on
such transactions as reasonably determined by Administrative Agent.
"FEE LETTER" means that certain letter agreement dated as of the Closing
Date between the Borrowers and the Collateral Agent.
"FINANCING DOCUMENTS" means this Agreement, the Second Lien Term Notes,
the Security Documents, the Information Certificate, the Fee Letter, the Second
Lien Intercreditor Agreement, any fee letter between an Agent and any Borrower
relating to the transactions contemplated hereby and all other documents,
instruments and agreements contemplated herein or thereby and executed
concurrently by a Credit Party with or in favor of an Agent or the Lenders in
connection herewith or at any time and from time to time hereafter, as any or
all of the same may be amended, supplemented, restated or otherwise modified
from time to time.
"FIRST LIEN AGENT" means ▇▇▇▇▇▇▇ ▇▇▇▇▇, together with its successors and
assigns, solely in its capacity as agent for the First Lien Lender Parties under
the First Lien Debt Documents.
"FIRST LIEN CREDIT AGREEMENT" means that certain Credit Agreement of even
date herewith, by and among the First Lien Agent, the First Lien Lenders, and
the Credit Parties, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms of the Second
Lien Intercreditor Agreement.
"FIRST LIEN DEBT" has the meaning set forth in the Second Lien
Intercreditor Agreement.
"FIRST LIEN DEBT DOCUMENTS" means the First Lien Credit Agreement,
including the exhibits and schedules thereto, and all agreements, documents and
instruments executed and
8
delivered pursuant thereto or in connection therewith, in each case, as amended,
restated, supplemented or otherwise modified in accordance with the terms of the
Second Lien Intercreditor Agreement and this Agreement.
"FIRST LIEN LENDER PARTIES" means the First Lien Agent and the First Lien
Lenders.
"FIRST LIEN LENDERS" means each "Lender" under and as defined in the First
Lien Credit Agreement and any other lender thereunder, together with their
respective successors and assigns.
"FIRST LIEN LOANS" means "Loans", as such term is defined in the First
Lien Credit Agreement.
"FIRST LIEN REVOLVING LOANS OUTSTANDING" means the "Revolving Loans
Outstanding", as defined in the First Lien Credit Agreement.
"FIRST LIEN TERM LOAN" means the "Term Loan", as defined in the First Lien
Credit Agreement
"FISCAL YEAR" means a fiscal year of Holdings and its Subsidiaries ending
on the last Sunday prior to, or the first Sunday immediately after, December 31
of each calendar year.
"FIXED CHARGE COVERAGE RATIO" has the meaning provided in the Compliance
Certificate.
"FOREIGN SUBSIDIARY" means, with respect to any Person, a Subsidiary of
such Person, which Subsidiary is not a Domestic Subsidiary of such Person.
"FUNDS ADMINISTRATOR" has the meaning set forth in the Preamble to this
Agreement.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"GUARANTEE" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided that the term
"Guarantee" shall not include endorsements for collection or deposit in
9
the ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"HAZARDOUS MATERIALS" means (i) any "hazardous substance" as defined in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, (ii) asbestos, (iii) polychlorinated biphenyls, (iv) petroleum, its
derivatives, by-products and other hydrocarbons, and (v) any other toxic,
radioactive, caustic or otherwise hazardous substance regulated under law.
"HAZARDOUS MATERIALS CONTAMINATION" means contamination (whether now
existing or hereafter occurring) of the improvements, buildings, facilities,
personality, soil, groundwater, air or other elements on or of the relevant
property by Hazardous Materials, or any derivatives thereof, or on or of any
other property as a result of Hazardous Materials, or any derivatives thereof,
generated on, emanating from or disposed of in connection with the relevant
property.
"HOLDINGS" has the meaning set forth in the Recitals to this Agreement.
"HOLDINGS CERTIFICATE OF DESIGNATIONS" means that certain Certificate of
Designation of Preferences and Rights of Series A-1 Preferred Stock of Venturi
Partners, Inc. filed with and certified by the Secretary of State of Delaware on
September 30, 2004.
"HOLDINGS CHARTER" means that certain Amended and Restated Certificate of
Incorporation of Venturi Partners, Inc., as in effect on the Closing Date.
"HOLDINGS LOANS" means intercompany loans made by a Borrower to Holdings,
PFI Holdings and/or COMSYS Holdings to the extent that, at the time such loan is
made, a Restricted Distribution from a Borrower to Holdings, PFI Holdings and/or
COMSYS Holdings, as the case may be, would be permitted pursuant to Section 5.4
and provided that (i) the proceeds of such loans are used for the purposes set
forth in Section 5.4, (ii) such loans are evidenced by promissory notes, the
sole originally executed copy of which shall be pledged to the Collateral Agent,
for the benefit of the Agents and the Lenders, as security for the Obligations
and (iii) such Holdings Loans shall be treated as a Restricted Distribution for
purposes of this Agreement, including determining compliance with Section 5.4
and Section 7.2.
"INDEMNITEES" has the meaning set forth in Section 10.2.
"INFORMATION CERTIFICATE" means that certain Information Certificate of
even date herewith executed by each Credit Party and delivered to Administrative
Agent.
"INTELLECTUAL PROPERTY" means, with respect to any Person, all patents,
trademarks, trade names, copyrights, technology, know-how and processes, and all
applications therefor, used in or necessary for the conduct of business by such
Person.
"INTEREST PERIOD" means, as to any LIBOR Loan, (i) during the Primary
Syndication Period, the period commencing on the date such Second Lien Term Loan
is continued as, or converted into, a LIBOR Loan and ending on the date two (2)
weeks thereafter and (ii) thereafter, the period commencing on the date such
Second Lien Term Loan is continued as, or converted into, a LIBOR Loan and
ending on the date one (1), two (2), three (3) or six (6)
10
months thereafter, or, if available to all Lenders, ending on the date nine (9)
or twelve (12) months thereafter, as selected by the Funds Administrator
pursuant to Section 2.3(f); provided, that: (a) if any Interest Period would
otherwise end on a day that is not a Business Day, such Interest Period shall be
extended to the following Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day; (b) any Interest
Period that begins on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period shall end on the last
Business Day of the calendar month at the end of such Interest Period; and (c)
the Funds Administrator may not select any Interest Period for a Second Lien
Term Loan if, after giving effect to such selection, the aggregate principal
amount of such Second Lien Term Loan having Interest Periods ending after any
date on which an installment of such Second Lien Term Loan is scheduled to be
repaid would exceed the aggregate principal amount of such Second Lien Term Loan
scheduled to be outstanding after giving effect to such repayment.
"INVENTORY" means "inventory" (as defined in Article 9 of the UCC) of the
Credit Parties.
"INVESTMENT" means any investment in any Person, whether by means of
acquiring or holding securities, capital contribution, loan, time deposit,
advance, Guarantee or otherwise.
"LENDER" means (i) each financial institution party hereto, (ii) each
other Eligible Assignee that becomes a holder of a Second Lien Term Note
pursuant to Section 12.6, and (iii) subject to Section 12.6(a)(ii), the
respective successors of all of the foregoing, and "Lenders" means all of the
foregoing.
"LIBOR" means, with respect to any LIBOR Loan for any Interest Period, a
rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) equal
to (i) the rate of interest which is identified and normally published by
Bloomberg Professional Service Page BBAM 1 as the offered rate for loans in U.S.
dollars for the applicable Interest Period under the caption British Bankers
Association LIBOR Rates as of 11:00 a.m. (London time), on the second full
Business Day next preceding the first day of such Interest Period (unless such
date is not a Business Day, in which event the next succeeding Business Day will
be used); divided by (ii) the difference of one minus the daily average during
such Interest Period of the aggregate maximum reserve requirement (expressed as
a decimal) then imposed under Regulation D of the Board of Governors of the
Federal Reserve System (or any successor thereto) for "Eurocurrency Liabilities"
(as defined therein). If Bloomberg Professional Service no longer reports the
LIBOR or Administrative Agent determines in good faith that the rate so reported
no longer accurately reflects the rate available to Administrative Agent in the
London Interbank Market or if such index no longer exists or if Page BBAM 1 no
longer exists or accurately reflects the rate available to Administrative Agent
in the London Interbank Market, Administrative Agent may select a reasonable
replacement index or replacement page, as the case may be.
"LIBOR LOANS" means any Second Lien Term Loans which accrue interest by
reference to the LIBOR, in accordance with the terms of this Agreement.
"LIBOR MARGIN" means 7.50% per annum.
11
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement and the
other Financing Documents, a Credit Party shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"MAJOR CASUALTY PROCEEDS" means (i) the aggregate insurance proceeds
consisting of cash, checks or other cash equivalent financial instruments
(including Cash Equivalents) received in connection with one or more related
events under any Property Insurance Policy or (ii) any award or other
compensation consisting of cash, checks or other cash equivalent financial
instruments (including Cash Equivalents) with respect to any condemnation of
property (or any transfer or disposition of property in lieu of condemnation),
in each case, net of all fees, costs and expenses incurred in connection with
obtaining such proceeds, awards or other compensation.
"MARGIN STOCK" has the meaning assigned thereto in Regulation U of the
Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means, with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (i) the financial
condition, operations, business or properties of the Credit Parties taken as a
whole, (ii) the rights and remedies of Agents or Lenders under any Financing
Document, or the ability of any Credit Party to perform any of its material
obligations under any Financing Document to which it is a party, (iii) the
legality, validity or enforceability of any Financing Document, or (iv) the
existence, perfection or priority of any security interest granted in any
Financing Document or the value of any material Collateral.
"MATURITY DATE" means April 30, 2010.
"MAXIMUM LAWFUL RATE" has the meaning set forth in Section 2.7(b).
"MERGER" has the meaning set forth in the Recitals to this Agreement.
"MERGER AGREEMENT" has the meaning set forth in the Recitals to this
Agreement.
"MERGER DOCUMENTS" means the Merger Agreement, the Certificate of Merger
certified by the Secretary of State of the State of Delaware and all documents,
agreements and instruments executed in connection therewith.
"▇▇▇▇▇▇▇ ▇▇▇▇▇" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital, a division of ▇▇▇▇▇▇▇ ▇▇▇▇▇
Business Financial Services Inc., and its successors.
12
"MULTIEMPLOYER PENSION PLAN" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which any Credit Party or any member of the
Controlled Group may have any liability.
"NET BORROWING AVAILABILITY" means "Net Borrowing Availability", as
defined in the First Lien Credit Agreement.
"NET CASH PROCEEDS" means, with respect to any transaction or event, an
amount equal to the cash proceeds received by the Credit Party from or in
respect of such transaction or event (including proceeds of any non-cash
proceeds of such transaction), less (i) any out-of-pocket expenses incurred by
such Person in connection therewith and (ii) in the case of an Asset
Disposition, (a) the amount of any Debt secured by a Lien on the related asset
and discharged from the proceeds of such Asset Disposition, (b) any taxes paid
or payable by such Person in respect of such Asset Disposition and (c) any
reserves for purchase price adjustments and reserves against retained
liabilities required to be maintained in accordance with the documentation
governing such Asset Disposition and/or in accordance with GAAP.
"NOTICE OF BORROWING" means a written notice of a Responsible Officer of
the Funds Administrator, appropriately completed and substantially in the form
of Exhibit D hereto.
"OBLIGATIONS" means all obligations, liabilities and indebtedness
(monetary (including post-petition interest, whether or not allowed) or
otherwise) of each Credit Party under this Agreement or any other Financing
Document, in each case howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, now or hereafter existing, or due or to
become due.
"OPERATIVE DOCUMENTS" means the Financing Documents, the Merger Documents,
the Venturi Staffing Purchase Agreement, the Equity Documents and the First Lien
Debt Documents.
"ORGANIZATIONAL DOCUMENTS" means, with respect to any Person other than a
natural person, the documents by which such Person was organized (such as a
certificate of incorporation, certificate of limited partnership or articles of
organization, and including, without limitation, any certificates of designation
for preferred stock or other forms of preferred equity) and which relate to the
internal governance of such Person (such as by-laws, a partnership agreement or
an operating, limited liability or members agreement).
"PARTICIPANT" has the meaning set forth in Section 12.6(b).
"PAYMENT ACCOUNT" means the account specified in Section G of the
Information Certificate into which all payments by or on behalf of the Borrowers
to Administrative Agent under the Financing Documents shall be made, or such
other account as Administrative Agent shall from time to time specify by notice
to the Funds Administrator.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to any or all of its functions under ERISA.
13
"PENSION PLAN" means any ERISA Plan that is subject to Section 412 of the
Code or Title IV of ERISA.
"PERMITTED ACQUISITION" means an acquisition by a Borrower of a Target
consummated at any time after June 30, 2005, which satisfies all of the
following conditions:
(1) The Administrative Agent shall receive not less than fifteen (15)
Business Days' prior written notice of such acquisition, which notice shall
include a reasonably detailed description of the proposed terms of such
acquisition and identify the anticipated closing date thereof;
(2) such acquisition shall be structured as (i) an asset acquisition by
a Borrower or a Domestic Wholly-Owned Subsidiary of a Borrower, (ii) a merger of
the applicable Target with and into a Borrower or a Domestic Wholly-Owned
Subsidiary of a Borrower, with such Borrower or such Subsidiary, as the case may
be, as the surviving corporation in such merger, (iii) a merger of a
Wholly-Owned Subsidiary of a Borrower with and into the applicable Target with
the applicable Target as the surviving corporation in such merger and as a
Domestic Wholly-Owned Subsidiary of a Borrower, or (iv) a purchase of one
hundred percent (100%) of the Stock of the applicable Target, which is a
domestic entity, by a Borrower or a Domestic Wholly-Owned Subsidiary of a
Borrower;
(3) The Administrative Agent shall receive, not less than ten (10)
Business Days' prior to the consummation of such acquisition, a due diligence
package, reasonably satisfactory to it, which package shall include, without
limitation, the following with regard to the acquisition of any Target:
(a) pro forma financial projections for the Borrowers and their
respective Subsidiaries for the current and next two Fiscal Years;
(b) in the event Accounts of the applicable Target will be
included in the Borrowing Base, a field exam with respect to such Target
(to the extent provided to the First Lien Agent);
(c) historical financial statements of the applicable Target for
the three (3) fiscal years prior to such acquisition (or, if such Target
has not been in existence for three (3) years, for each year such Target
has existed or if such historical financial statements do not exist, then
such historical financial statements as are available);
(d) a general description of the applicable Target's business;
(e) pending material litigation involving the applicable Target;
(f) description of the proposed method of financing the
acquisition, including sources and uses;
(g) locations of all personal and real property of the applicable
Target, including the location of its chief executive office;
14
(h) a description of, and if requested by the Administrative
Agent, copies of all material agreements binding upon the applicable
Target or any of its real property;
(i) any other material due diligence information with respect to
such acquisition reasonably required by the Administrative Agent; and
(j) if obtained in connection with the acquisition, Phase I
Environmental Reports and related information regarding any property
owned, leased or otherwise used by the applicable Target;
(k) a financial due diligence report from a big four or other
nationally recognized accounting firm reasonably acceptable to the
Administrative Agent with respect to any Target whose Relative
Contribution, as of the closing date of such acquisition, would equal or
exceed 20%. "Relative Contribution" means, with respect to any Target, an
amount (expressed as a percentage) equal to: (x) Pro Forma EBITDA of such
Target, divided by (y) Adjusted EBITDA of the Borrowers and their
Subsidiaries plus Pro Forma EBITDA of such Target;
(4) the Administrative Agent shall receive evidence reasonably
satisfactory to it that the applicable Target has had a positive Pro Forma
EBITDA for the immediately preceding four fiscal quarters;
(5) evidence that (a) the applicable Target has in place, with
financially sound and reputable insurers, public liability and property damage
insurance with respect to its business and properties against loss or damage of
the kinds customarily carried or maintained by Persons of established reputation
engaged in similar businesses and in commercially reasonable amounts and (b)
pursuant to endorsements and/or assignments in form and substance reasonably
satisfactory to the Administrative Agent, (i) the Collateral Agent has been
named as lender's loss payee, for its benefit and the benefit of the Lenders, in
the case of casualty insurance, and (ii) the Collateral Agent and each of the
Lenders have been named as additional insureds in the case of all liability
insurance;
(6) the Collateral Agent, for the benefit of the Agents and Lenders, (a)
is granted a first priority perfected Lien (subject only to Permitted Liens) on
all real and personal property being acquired pursuant to such acquisition (and,
in the case of an acquisition involving the purchase of any applicable Target's
capital stock, all of such capital stock shall be pledged to the Collateral
Agent for the benefit of the Agents and Lenders, and such Target shall guarantee
the Obligations and grant to the Collateral Agent, for the benefit of the Agents
and Lenders, a first priority perfected Lien (subject only to Permitted Liens)
on such Person's assets) and (b) will be provided such other documents and
instruments as the Collateral Agent shall reasonably request, subject to the
Second Lien Intercreditor Agreement, to perfect or maintain the perfection of
its Lien on all real and personal property of the applicable Target, as the case
may be (including, without limitation, in the event any Target maintains
Collateral at any leased locations or in any warehouse facility, the Borrowers
shall use commercially reasonable efforts to obtain any landlord agreements
and/or bailee waivers in form and substance reasonably acceptable to the
Collateral Agent);
15
(7) after giving effect to such acquisition and the incurrence of any
Second Lien Term Loans, other Debt or Contingent Obligations in connection
therewith, (a) no Default or Event of Default shall exist, (b) the Credit
Parties shall be in compliance on a pro forma basis with the covenants set forth
in Article VII recomputed for the most recently ended quarter of the Credit
Parties for which information is available regarding the business being
acquired, and (c) the Credit Parties shall demonstrate to the Administrative
Agent projected pro forma compliance with the covenants set forth in Article
VII, for the twelve (12) month period immediately following the consummation of
the proposed acquisition based on the combined operating results of the
applicable Target and of the Credit Parties and their Subsidiaries for the
twelve (12) month period ending on the last day of the month for which financial
statements for the applicable Target and for the Credit Parties are available;
(8) all material consents necessary for such acquisition (including such
consents as the Administrative Agent deems reasonably necessary) have been
acquired and such acquisition shall have been approved by the applicable
Target's board of directors or similar governing body;
(9) the applicable Target must be engaged in substantially the same type
of business as is currently conducted by the Borrowers;
(10) the Credit Parties' computation of Pro Forma EBITDA shall comply
with this Agreement;
(11) subject to clause (6) above, as soon as practicable after the
closing of such acquisition, and in any event within ten (10) Business Days
after such closing, the Borrowers shall deliver copies of all documents executed
in connection with such acquisition to the Administrative Agent; and
(12) (a) with respect to acquisitions financed with the proceeds of First
Lien Loans and/or with the proceeds of the issuance of stock of Holdings, the
total consideration paid or payable (including without limitation, any deferred
payment) for (i) any individual acquisition or group of related acquisitions
shall not exceed $10,000,000 and (ii) all acquisitions consummated during the
term of this Agreement shall not exceed $20,000,000 in the aggregate for all
such acquisitions and (b) with respect to acquisitions in which the sole
consideration for the consummation thereof is the issuance or exchange of common
stock of Holdings for the assets or stock of the Target, as the case may be, the
total consideration exchanged for (i) any individual acquisition or group of
related acquisitions shall not exceed $5,000,000 and (ii) all acquisitions
consummated during the term of this Agreement shall not exceed $15,000,000.
An acquisition of a Target that does not otherwise satisfy all of the
requirements in clauses (1) through (12) above shall constitute a "Permitted
Acquisition" if consented to by the Required Lenders. In the event that prior to
the consummation of such acquisition, the Borrowers obtain knowledge of any
material change to any of the documents or information previously provided
pursuant to clauses (3)(a) through (c), (3)(k), (4), (7) and (10) above, the
Borrowers shall promptly notify the Administrative Agent of such change.
16
"PERMITTED CONTEST" means a contest maintained in good faith by
appropriate proceedings promptly instituted and diligently conducted and with
respect to which such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made; provided that
compliance with the obligation that is the subject of such contest is
effectively stayed during such challenge.
"PERMITTED LIENS" means Liens permitted pursuant to Section 5.2.
"PERSON" means any natural person, corporation, limited liability company,
professional association, limited partnership, general partnership, joint stock
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, and
any government or agency or political subdivision thereof.
"PFI HOLDINGS" has the meaning set forth in the Recitals to this
Agreement.
"PRIMARY SYNDICATION PERIOD" means a period commencing on the Closing Date
and ending on the date the Administrative Agent notifies the Funds Administrator
that it has completed the Primary Syndication of the Second Lien Term Loans
(which notice shall be delivered promptly after such Primary Syndication), which
date shall in no event be later than ninety (90) days following the Closing
Date.
"PRIME RATE" means a variable per annum rate, as of any date of
determination, equal to the greater of (i) the Federal Funds Rate plus one-half
of one percent (0.50%) per annum and (ii) the rate from time to time published
in the "Money Rates" section of The Wall Street Journal as being the "Prime
Rate" (or, if more than one rate is published as the Prime Rate, then the
highest of such rates). The Prime Rate will change as of the date of publication
in The Wall Street Journal of a Prime Rate that is different from that published
on the preceding Business Day. In the event that The Wall Street Journal shall,
for any reason, fail or cease to publish the Prime Rate, Administrative Agent
shall choose a reasonably comparable index or source to use as the basis for the
Prime Rate.
"PRIME RATE LOANS" means Second Lien Term Loans which accrue interest by
reference to the Prime Rate, in accordance with the terms of this Agreement.
"PRIME RATE MARGIN" means 6.50% per annum.
"PRO FORMA EBITDA" means (i) EBITDA attributable to each Permitted
Acquisition (with such pro forma adjustments as are reasonably acceptable to
Administrative Agent based upon data presented to Administrative Agent to its
reasonable satisfaction) consummated during the one (1) year period preceding
the date of determination calculated solely for a number of months immediately
preceding the consummation of the applicable Permitted Acquisition, which number
equals twelve (12) minus the number of months following the consummation of the
applicable Permitted Acquisition for which financial statements of Holdings and
its Subsidiaries have been delivered to Administrative Agent pursuant to Section
4.1, and (ii) for purposes of determining compliance with the definition of
"Permitted Acquisition," EBITDA of the Target of any proposed Permitted
Acquisition (adjusted with such pro forma adjustments as are reasonably
acceptable to Administrative Agent based upon data presented to Administrative
17
Agent to its reasonable satisfaction) calculated for the twelve (12) months
immediately preceding the consummation of the proposed Permitted Acquisition.
"PROPERTY INSURANCE POLICY" means any insurance policy maintained by any
Credit Party covering losses with respect to tangible real or personal property
or improvements or losses from business interruption.
"REAL PROPERTY" means real property of the Credit Parties or any of their
respective Subsidiaries, together with all buildings, structures and other
improvements thereon, and all licenses, easements and appurtenances related
thereto.
"REQUIRED LENDERS" means at any time Lenders holding fifty-one percent
(51%) or more of the aggregate outstanding principal balance of the Second Lien
Term Loans.
"RESPONSIBLE OFFICER" means any of the Chief Executive Officer, Chief
Financial Officer, Vice President of Finance or General Counsel of a Credit
Party.
"RESTRICTED ACCOUNT" means each bank account of the Credit Parties labeled
as a "Restricted Account" on the Bank Account Schedule of the Information
Certificate, as in effect on the Closing Date.
"RESTRICTED DISTRIBUTION" means as to any Person (i) any dividend or other
distribution on any equity interest in such Person (except those payable solely
in its equity interests of the same class) or (ii) any payment on account of (a)
the purchase, redemption, retirement, defeasance, surrender or acquisition of
any equity interests in such Person or any claim respecting the purchase or sale
of any equity interest in such Person or (b) any option, warrant or other right
to acquire any equity interests in such Person.
"RESTRUCTURING" means the integration and transition of the businesses of
the Venturi Credit Parties with the COMSYS Credit Parties, which such
Restructuring shall begin following the consummation of the Merger on the
Closing Date.
"RESTRUCTURING RESERVE" means a reserve against the Borrowing Base (as
such term is defined in the First Lien Credit Agreement) established for the
payment of the costs, expenses and liabilities associated with the Restructuring
relating to items described in the Restructuring Reserve Certificate, in an
original aggregate amount of $22,900,000, as reduced from time to time on a
dollar for dollar basis upon delivery to the First Lien Agent of a Restructuring
Reserve Certificate setting forth any payments in cash by the Credit Parties of
such costs, expenses and liabilities during such period.
"RESTRUCTURING RESERVE CERTIFICATE" means "Restructuring Reserve
Certificate", as defined in the First Lien Credit Agreement.
"SECOND LIEN INTERCREDITOR AGREEMENT" means that certain Intercreditor
Agreement of even date herewith, by and among the First Lien Agent, the
Administrative Agent, the Collateral Agent, the Lenders, the Credit Parties and
their Subsidiaries, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
18
"SECOND LIEN TERM LOAN" has the meaning set forth in Section 2.1.
"SECOND LIEN TERM LOAN COMMITMENT PERCENTAGE" means, as to any Lender, the
percentage set forth opposite such Lender's name on Annex A under the column
"Second Lien Term Loan Commitment Percentage," or, if different, in the most
recent Assignment Agreement to which such Lender is a party.
"SECOND LIEN TERM NOTE" has the meaning set forth in Section 2.4.
"SECURITY DOCUMENTS" means any agreement, document or instrument executed
concurrently herewith or at any time hereafter pursuant to which one or more
Credit Parties or any other Person either (i) Guarantees payment or performance
of all or any portion of the Obligations and/or (ii) provides, as security for
all or any portion of the Obligations, a Lien on any of its assets in favor of
Collateral Agent for the benefit of the Agents and Lenders, as any or all of the
same may be amended, supplemented, restated or otherwise modified from time to
time.
"STATED RATE" has the meaning set forth in Section 2.7(b).
"SUBSIDIARY" means, with respect to any Person, any corporation, limited
liability company, limited partnership or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions (without
regard to the occurrence of any contingency) are at the time directly or
indirectly owned by such Person. Unless otherwise specified, the term Subsidiary
shall refer to a Subsidiary of the Borrowers.
"SWAP CONTRACT" means any "swap agreement," as defined in Section 101 of
the Bankruptcy Code, that is intended to provide protection against fluctuations
in interest or currency exchange rates.
"TARGET" means any Person or material group of assets (excluding a product
line, formula or recipe) acquired or proposed to be acquired pursuant to a
Permitted Acquisition.
"TAXES" has the meaning set forth in Section 2.8.
"TOTAL DEBT" has the meaning provided in the Compliance Certificate.
"TOTAL DEBT TO ADJUSTED EBITDA RATIO" has the meaning provided in the
Compliance Certificate.
"TRANSACTION" means all of the factual elements relevant to the expected
Tax treatment of any investment, entity, plan or arrangement contemplated
pursuant to this Agreement, and includes any series of steps carried out as part
of a plan.
"UCC" means the Uniform Commercial Code of the State of Illinois or of any
other state the laws of which are required to be applied in connection with the
perfection of security interests in any Collateral.
19
"VENTURI CREDIT PARTIES" means Holdings, PFI Holdings and VTP.
"VENTURI STAFFING" means Venturi Staffing Partners, Inc., a Delaware
corporation.
"VENTURI STAFFING PURCHASE AGREEMENT" means that certain Stock Purchase
Agreement dated as of July 19, 2004, by and among Holdings, PFI Holdings, as the
seller, and Compass CS Inc., as the buyer, and all agreements, documents and
instruments executed in connection therewith.
"VENTURI STAFFING SALE" means the sale by PFI Holdings on the Closing Date
of all of the issued and outstanding equity securities of Venturi Staffing to
CBS Personnel Holdings, Inc., formerly known as Compass CS Inc., in accordance
with the terms and provisions of the Venturi Staffing Purchase Agreement.
"VTP" has the meaning set forth in the Preamble to this Agreement.
"WHOLLY-OWNED SUBSIDIARY" means any Subsidiary in which (other than
directors' qualifying shares required by law) one hundred percent (100%) of
equity securities, at the time as of which any determination is being made, is
owned, beneficially and of record, by a Borrower, or by one or more of the other
Wholly-Owned Subsidiaries, or both.
Section 1.2 ACCOUNTING TERMS AND DETERMINATIONS.
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder (including without
limitation determinations made pursuant to the exhibits hereto) shall be made,
and all financial statements required to be delivered hereunder shall be
prepared on a consolidated basis in accordance with GAAP applied on a basis
consistent (except for changes concurred with by the Borrowers' independent
public accountants) with the most recent audited consolidated financial
statements of Holdings and its Consolidated Subsidiaries delivered to
Administrative Agent and each of the Lenders; provided that if (a) the Borrowers
shall object to determining compliance with the provisions of this Agreement on
such basis by written notice delivered to Administrative Agent and the Lenders
at the time of delivery of required financial statements due to any change in
GAAP or the rules promulgated with respect thereto or (b) Administrative Agent
or the Required Lenders shall so object in writing by written notice delivered
to the Funds Administrator within sixty (60) days after delivery of such
financial statements, then such calculations shall be made on a basis consistent
with the most recent financial statements delivered by the Borrowers to the
Lenders as to which no such objection shall have been made. All amounts used for
purposes of financial calculations required to be made herein shall be without
duplication.
Section 1.3 OTHER DEFINITIONAL PROVISIONS.
References in this Agreement to "Articles," "Sections," "Annexes" or
"Exhibits" shall be to Articles, Sections, Annexes or Exhibits of or to this
Agreement unless otherwise specifically provided. Any term defined herein may be
used in the singular or plural. "Include," "includes" and "including" shall be
deemed to be followed by "without limitation." Except as otherwise specified
herein, references to any Person include the successors and assigns of such
Person. References "from" or "through" any date mean, unless otherwise
specified, "from and including"
20
or "through and including," respectively. References to any statute or act shall
include all related current regulations and all amendments and any successor
statutes, acts and regulations.
ARTICLE II
SECOND LIEN TERM LOANS
Section 2.1 SECOND LIEN TERM LOAN.
(a) Second Lien Term Loan Amounts. On the terms and subject to the
conditions set forth herein, the Lenders hereby agree to make to the Borrowers
on the Closing Date a term loan in an original principal amount equal to
$70,000,000 (the "SECOND LIEN TERM LOAN"). Each Lender's obligation to fund the
Second Lien Term Loan shall be limited to such Lender's Second Lien Term Loan
Commitment Percentage of the Second Lien Term Loan, and no Lender shall have any
obligation to fund any portion of the Second Lien Term Loan required to be
funded by any other Lender, but not so funded. The obligation of each Lender to
make the Second Lien Term Loan shall expire concurrently with the making of the
Second Lien Term Loan on the Closing Date. The Borrowers shall not have any
right to reborrow any portion of the Second Lien Term Loan which is repaid or
prepaid from time to time.
(b) Scheduled Repayments. The Borrowers shall repay the Second Lien Term
Loan in full on the Maturity Date.
(c) Mandatory Prepayments. There shall become due and payable and the
Borrowers shall prepay the Second Lien Term Loan in the following amounts and at
the following times:
(i) commencing with the Fiscal Year following the Fiscal Year in
which the First Lien Term Loan has been paid in full in cash (but, in any event,
no earlier than the Fiscal Year ending December 31, 2005), and for so long as
any portion of the Second Lien Term Loan remains outstanding, on the
ninety-fifth (95th) day following the last day of each Fiscal Year, an amount
equal to twenty five percent (25%) of Excess Cash Flow, provided, that (i) until
the Discharge of all First Lien Debt, such prepayment shall only be required to
be made if the Net Borrowing Availability plus Available Cash, immediately
before and immediately after giving effect thereto, is greater than or equal to
$20,000,000 (as such Net Borrowing Availability is determined by reference to
the most recent Borrowing Base Certificate delivered pursuant to this Agreement)
and (ii) at such time as the Total Debt to Adjusted EBITDA Ratio calculated as
of the last day of any Fiscal Year is less than 2.00 to 1.00 for such Fiscal
Year, then no prepayment shall be required pursuant to this Section 2.1(c)(i)
with respect to such Fiscal Year (in each such case, Total Debt to Adjusted
EBITDA Ratio shall be determined by reference to the respective Compliance
Certificate absent demonstrable error);
(ii) on the date on which any Credit Party other than a Foreign
Subsidiary (or Collateral Agent as loss payee or assignee thereof) receives any
payment which constitutes Major Casualty Proceeds, an amount equal to the amount
of such payment (except to the extent such Major Casualty Proceeds are required
to be used to prepay or cash collateralize, as the case may be, the First Lien
Loans pursuant to Section 2.1(e) of the First Lien Credit Agreement); provided,
that such Credit Party, at its election, may either reinvest such payment within
one hundred twenty (120) days after the date of receipt of such Major Casualty
Proceeds or enter into
21
a binding commitment to reinvest such payment within said one hundred twenty
(120) days (provided such Credit Party subsequently consummates such
reinvestment within one hundred eighty (180) days following the receipt of such
Major Casualty Proceeds), in productive assets then used or usable in the
business of such Credit Party, any Borrower or any Domestic Wholly-Owned
Subsidiary of any Borrower; provided further, that the aggregate amount which
may be reinvested by the Credit Parties pursuant to the preceding proviso may
not exceed $1,000,000 in any Fiscal Year. If the applicable Credit Party does
not intend to reinvest such payment, or if the time period set forth in this
sentence expires without such Credit Party having reinvested such payment, the
Borrowers shall prepay the Second Lien Term Loans in an amount equal to such
payment;
(iii) (A) promptly upon receipt by any Credit Party of the proceeds
from the issuance and sale of any Debt securities or equity securities (other
than (1) proceeds of Debt securities expressly permitted pursuant to Section
5.1, (2) proceeds of the issuance of equity securities by Holdings received on
or before the Closing Date, (3) proceeds from the issuance of equity securities
to employees or members of the management of any Credit Party, (4) proceeds of
the issuance of equity securities to Holdings or any Subsidiary and (5) proceeds
from the issuance of equity securities for the purpose described in clause (B)
of this Section 2.1(c)(iii)), an amount equal to one hundred percent (100%) of
the Net Cash Proceeds of any such issuance and sale (except to the extent such
Net Cash Proceeds are required to be used to prepay or cash collateralize, as
the case may be, the First Lien Loans pursuant to Section 2.1(e) of the First
Lien Credit Agreement) and (B) in the event the Credit Parties issue and sell
equity securities in connection with the financing of any Permitted Acquisition
or the repurchase of any "Series A-1 Preferred Stock" (as such term is defined
in the Holdings Certificate of Designations), an amount equal to fifty percent
(50%) of the Net Cash Proceeds of any such issuance and sale (except, in each
case, to the extent such Net Cash Proceeds are required to be used to prepay or
cash collateralize, as the case may be, the First Lien Loans pursuant to Section
2.1(e) of the First Lien Credit Agreement); and
(iv) promptly upon receipt by any Credit Party (other than a
Foreign Subsidiary) of the proceeds of any Asset Disposition (other than the
Venturi Staffing Sale), an amount equal to one hundred percent (100%) of the Net
Cash Proceeds of such Asset Disposition (except to the extent the proceeds of
such Asset Disposition are required to be used to prepay or cash collateralize,
as the case may be, the First Lien Loans pursuant to Section 2.1(e) of the First
Lien Credit Agreement); provided, that no prepayment shall be required pursuant
to this Section 2.1(c)(iv) unless and until the aggregate Net Cash Proceeds
received during any Fiscal Year (commencing after the Closing Date) from Asset
Dispositions exceeds $1,000,000 (in which case all Net Cash Proceeds in excess
of such amount shall be used to make prepayments pursuant to this Section
2.1(c)(iv)), and provided, that the recipient of such Net Cash Proceeds may
reinvest such Net Cash Proceeds, within one hundred twenty (120) days after the
date of receipt of such Net Cash Proceeds or enter into a binding commitment to
reinvest such payment within said one hundred twenty (120) days (provided such
Credit Party subsequently consummates such reinvestment within one hundred
eighty (180) days following the receipt of such Net Cash Proceeds), in
replacement assets of a kind then used or usable in the business of such Credit
Party, any Borrower or any Domestic Wholly-Owned Subsidiary of any Borrower. If
the applicable Credit Party does not intend to so reinvest such Net Cash
Proceeds, or if the period set forth in the immediately preceding sentence
expires without such Credit Party having
22
reinvested such Net Cash Proceeds, Borrowers shall prepay the Second Lien Term
Loans in an amount equal to such Net Cash Proceeds.
(d) Optional Prepayments. Subject to the provisions of Section 2.1(e),
the Borrowers may from time to time, on at least one (1) Business Day's prior
written notice to the Administrative Agent specifying the date and amount of
such prepayment, prepay the Second Lien Term Loan in whole or in part. No
payment pursuant to this Section 2.1(d) shall (except as reflected in any
determination of Excess Cash Flow), reduce the amount of any payment required by
Section 2.1(c).
(e) All Prepayments. Any prepayment of a LIBOR Loan on a day other than
the last day of an Interest Period therefor shall include interest on the
principal amount being repaid and shall be subject to Section 2.3(f)(iv). All
prepayments of a Second Lien Term Loan shall be applied first to that portion of
such Second Lien Term Loan comprised of Prime Rate Loans and then to that
portion of such Second Lien Term Loan comprised of LIBOR Loans, in direct order
of Interest Period maturities. Notwithstanding anything to the contrary
contained in this Section 2.1, each holder of a Second Lien Term Note may elect
not to have such Lender's Second Lien Term Loan Commitment Percentage of the
Second Lien Term Loan prepaid in the case of a mandatory prepayment pursuant to
Section 2.1(c) by notice to Administrative Agent received one (1) Business Day
prior to the date of such prepayment. The amount of any such prepayment which
would have been applied to the Second Lien Term Loan but for such elections
shall be retained by the Borrowers.
(f) The Funds Administrator, on behalf of the Borrowers, shall give
prior written notice to Administrative Agent at least one (1) Business day prior
to each mandatory prepayment pursuant to Section 2.1(c) and each voluntary
prepayment pursuant to Section 2.1(d) and Administrative Agent shall promptly
notify each Lender of such notice.
(g) Notwithstanding the foregoing or anything to the contrary set forth
herein, if all or any portion of the principal amount of the Second Lien Term
Loan is paid before the first (1st) anniversary of the Closing Date, whether
voluntarily or involuntarily, by acceleration or otherwise (other than any
prepayment to the extent required under subsection 2.1(c)(i)), then, on the date
such prepayment is made, the Borrowers shall pay to the Administrative Agent,
for the ratable benefit of the Lenders, a prepayment premium equal to an amount
determined by multiplying the percentage set forth below corresponding to the
date on which the prepayment is, or is required to be, made by the amount of
principal so prepaid or required to be prepaid:
Period of Prepayment Percentage
-------------------- ----------
Closing Date through and including the first anniversary of the 2.0%
Closing Date
After the first anniversary of the Closing Date through the third 1.0%
anniversary of the Closing Date
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Section 2.2 [INTENTIONALLY OMITTED].
Section 2.3 INTEREST, INTEREST CALCULATIONS AND CERTAIN FEES.
(a) Interest. From and following the Closing Date, depending upon the
Borrowers' election from time to time, subject to the terms hereof, to have
portions of the Second Lien Term Loans accrue interest determined by reference
to the Prime Rate or the LIBOR, the Second Lien Term Loans and the other
Obligations shall bear interest at the applicable rates set forth below:
(i) If a Prime Rate Loan, or any other Obligation other than a
LIBOR Loan, then at the sum of the Prime Rate plus the Prime Rate Margin, but in
no event in excess of the Maximum Lawful Rate.
(ii) If a LIBOR Loan, then at the sum of the LIBOR plus the LIBOR
Margin, but in no event in excess of the Maximum Lawful Rate.
(b) Collateral Monitoring Fee. Borrowers shall pay Collateral Agent a
fully earned and non-refundable collateral monitoring fee in the amount of
$25,000 per year, such fee to be paid in arrears, in quarterly installments on
the last day of each fiscal quarter.
(c) Intentionally Omitted.
(d) Intentionally Omitted.
(e) Computation of Interest and Related Fees. All interest and fees
under each Financing Document shall be calculated on the basis of a 360-day year
for the actual number of days elapsed. The date of funding of a Prime Rate Loan
and the first day of an Interest Period with respect to a LIBOR Loan shall be
included in the calculation of interest. The date of payment of a Prime Rate
Loan and the last day of an Interest Period with respect to a LIBOR Loan shall
be excluded from the calculation of interest. If a Second Lien Term Loan is
repaid on the same day that it is made, one (1) day's interest shall be charged.
Interest on all Prime Rate Loans is payable in arrears on the first day of each
month and on the maturity of such Second Lien Term Loans, whether by
acceleration or otherwise. Interest on LIBOR Loans shall be payable on the last
day of the applicable Interest Period, unless the Interest Period is greater
than three (3) months, in which case interest will be payable on the last day of
each three (3) month interval. In addition, interest on LIBOR Loans is due on
the maturity of such Second Lien Term Loans, whether by acceleration or
otherwise.
(f) LIBOR Provisions.
(i) LIBOR Election. All Second Lien Term Loans made on the Closing
Date shall be Prime Rate Loans and shall remain so until three (3) Business Days
after the Closing Date. Thereafter, the Funds Administrator may request that
outstanding portions of the Second Lien Term Loan be converted to LIBOR Loans
and that all or any portion of a LIBOR Loan be continued as a LIBOR Loan upon
expiration of the applicable Interest Period. Any such request will be made by
submitting a Notice of Borrowing to Administrative Agent. Once given, and except
as provided in clause (ii) below, a Notice of Borrowing shall be irrevocable and
the Borrowers shall be bound thereby. Upon the expiration of an Interest Period,
in the absence of a
24
new Notice of Borrowing submitted to Administrative Agent not less than three
(3) Business Days prior to the end of such Interest Period, the LIBOR Loan then
maturing shall be automatically converted to a Prime Rate Loan. There may be no
more than eight (8) LIBOR Loans outstanding at any one time. Second Lien Term
Loans which are not requested as LIBOR Loans in accordance with this Section
2.3(f)(i) shall be Prime Rate Loans. Administrative Agent will notify Lenders,
by telephonic or facsimile notice, of each Notice of Borrowing received by
Administrative Agent not less than two (2) Business Days prior to the first day
of the Interest Period of the LIBOR Loan requested thereby.
(ii) Inability to Determine LIBOR. In the event, prior to
commencement of any Interest Period relating to a LIBOR Loan, Administrative
Agent shall determine or be notified in writing by Required Lenders that
adequate and reasonable methods do not exist for ascertaining LIBOR,
Administrative Agent shall promptly provide notice of such determination to the
Funds Administrator and Lenders (which shall be conclusive and binding on the
Borrowers and Lenders). In such event (1) any request for a LIBOR Loan or for a
conversion to or continuation of a LIBOR Loan shall be automatically withdrawn
and shall be deemed a request for a Prime Rate Loan, (2) each LIBOR Loan will
automatically, on the last day of the then current Interest Period relating
thereto, become a Prime Rate Loan and (3) the obligations of Lenders to make
LIBOR Loans shall be suspended until Administrative Agent or Required Lenders
determine that the circumstances giving rise to such suspension no longer exist,
in which event Administrative Agent shall so notify the Funds Administrator and
Lenders.
(iii) Illegality. Notwithstanding any other provisions hereof, if
any law, rule, regulation, treaty or directive or interpretation or application
thereof shall make it unlawful for any Lender to make, fund or maintain LIBOR
Loans, such Lender shall promptly give notice of such circumstances to
Administrative Agent, the Funds Administrator and the other Lenders. In such an
event, (1) the commitment of such Lender to convert Prime Rate Loans to LIBOR
Loans shall be immediately suspended and (2) such Lender's outstanding LIBOR
Loans shall be converted automatically to Prime Rate Loans on the last day of
the Interest Period thereof or at such earlier time as may be required by law.
(iv) LIBOR Breakage Fee. Upon (i) any default by the Borrowers in
making any conversion into or continuation of any LIBOR Loan following the Funds
Administrator's delivery to Administrative Agent of any applicable Notice of
Borrowing or (ii) any payment of a LIBOR Loan on any day that is not the last
day of the Interest Period applicable thereto (regardless of the source of such
prepayment and whether voluntary, by acceleration or otherwise), the Borrowers
shall pay Administrative Agent, for the benefit of all Lenders that funded or
were prepared to fund any such LIBOR Loan, an amount equal to the amount of any
losses, expenses and liabilities (including, without limitation, any loss
(including interest paid) in connection with the re-employment of such funds)
that any Lender may sustain as a result of such default or such payment. For
purposes of calculating amounts payable to a Lender under this paragraph, each
Lender shall be deemed to have actually funded its relevant LIBOR Loan through
the purchase of a deposit bearing interest at LIBOR in an amount equal to the
amount of that LIBOR Loan and having a maturity and repricing characteristics
comparable to the relevant Interest Period; provided, however, that each Lender
may fund each of its LIBOR Loans in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
this subsection.
25
(v) Increased Costs. If, after the Closing Date, the adoption of,
or any change in, any applicable law, rule or regulation, or any change in the
interpretation or administration of any applicable law, rule or regulation by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency: (i) shall impose, modify or deem
applicable any reserve (including any reserve imposed by the Board of Governors
of the Federal Reserve System, or any successor thereto, but excluding any
reserve included in the determination of the LIBOR pursuant to the provisions of
this Agreement), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by any Lender; or (ii)
shall impose on any Lender any other condition affecting its LIBOR Loans, its
Second Lien Term Notes or its obligation to make LIBOR Loans; and the result of
anything described in clauses (i) above and (ii) is to increase the cost to (or
to impose a cost on) such Lender of making or maintaining any LIBOR Loan, or to
reduce the amount of any sum received or receivable by such Lender under this
Agreement or under its Second Lien Term Notes with respect thereto, then upon
demand by such Lender (which demand shall be accompanied by a statement setting
forth the basis for such demand and a calculation of the amount thereof in
reasonable detail, a copy of which shall be furnished to Administrative Agent),
the Borrowers shall pay directly to such Lender such additional amount as will
compensate such Lender for such increased cost or such reduction, so long as
such amounts have accrued on or after the day which is one hundred eighty (180)
days prior to the date on which such Lender first made demand therefor.
(vi) Capital Adequacy. If any Lender shall reasonably determine
that any change in, or the adoption or phase-in of, any applicable law, rule or
regulation regarding capital adequacy, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or the
compliance by any Lender or any Person controlling such Lender with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's or such controlling
Person's capital as a consequence of such Lender's obligations hereunder to a
level below that which such Lender or such controlling Person could have
achieved but for such change, adoption, phase-in or compliance (taking into
consideration such Lender's or such controlling Person's policies with respect
to capital adequacy) by an amount deemed by such Lender or such controlling
Person to be material, then from time to time, upon demand by such Lender (which
demand shall be accompanied by a statement setting forth the basis for such
demand and a calculation of the amount thereof in reasonable detail, a copy of
which shall be furnished to Administrative Agent), the Borrowers shall pay to
such Lender such additional amount as will compensate such Lender or such
controlling Person for such reduction, so long as such amounts have accrued on
or after the day which is one hundred eighty (180) days prior to the date on
which such Lender first made demand therefor. Notwithstanding any other
provision of this Section 2.3(f)(vi) to the contrary, a Lender shall not demand
any payment referred to in this subsection if it shall not be the general policy
or practice of such Lender to demand similar compensation in similar
circumstances with respect to similarly situated borrowers under comparable
provisions of like credit agreements.
(vii) Replacement of Lenders. Within thirty (30) days after: (i)
receipt by the Funds Administrator of written notice and demand from any Lender
(an "AFFECTED LENDER") for
26
payment of additional amounts as provided in Sections 2.3(f)(v), 2.3(f)(vi) and
2.8, which demand shall not have been revoked; (ii) any default by a Lender in
its obligation to make Second Lien Term Loans hereunder, provided such default
shall not have been cured; or (iii) any failure by any Lender to consent to a
requested amendment, waiver or modification to any Financing Document to which
Required Lenders have already consented but the consent of each Lender, or each
Lender affected thereby, is required with respect thereto, the Borrowers may, at
their option, notify the Administrative Agent and such Affected Lender (or
defaulting or non-consenting Lender, as the case may be) of the Borrowers'
intention to obtain, at Borrowers' expense, a replacement Lender ("REPLACEMENT
LENDER") for such Lender, which Replacement Lender shall be reasonably
satisfactory to the Administrative Agent. In the event the Borrowers obtain a
Replacement Lender within ninety (90) days following notice of their intention
to do so, the Affected Lender (or defaulting or non-consenting Lender, as the
case may be) shall sell and assign its Second Lien Term Loans to such
Replacement Lender; provided, the Borrowers have reimbursed such Lender for all
increased costs for which it is entitled to reimbursement under this Agreement
through the date of such sale and assignment. In the event that a replaced
Lender does not execute an Assignment Agreement pursuant to Section 12.6 within
five (5) Business Days after receipt by such replaced Lender of notice of
replacement pursuant to this Section 2.3(f)(vii) and presentation to such
replaced Lender of an Assignment Agreement evidencing an assignment pursuant to
this Section 2.3(f)(viii), the Borrowers shall be entitled (but not obligated)
to execute such an Assignment Agreement on behalf of such replaced Lender, and
any such Assignment Agreement so executed by the Borrowers, the replacement
Lender and, to the extent required pursuant to Section 12.6, the Administrative
Agent, shall be effective for purposes of this Section 2.3(f)(vii) and Section
12.6. Upon any such assignment and payment, such replaced Lender shall no longer
constitute a "Lender" for purposes hereof; provided, any rights of such replaced
Lender to indemnification hereunder shall survive as to such replaced Lender.
(viii) Mitigation of Claims. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.3(f)(v),
2.3(f)(vi) or 2.8, with respect to such Lender, it will, if requested by the
Borrowers, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Second Lien Term Loans
affected by such event with the object of avoiding the consequences of such
event; provided, that such designation is made on terms that, in the sole
judgment of such Lender, cause such Lender and its lending officer(s) to suffer
no economic, legal or regulatory disadvantage, and provided, further, that
nothing in this Section shall affect or postpone any of the obligations of the
Borrowers or the rights of any Lender pursuant to Sections 2.3(f)(v), 2.3(f)(vi)
or 2.8.
Section 2.4 SECOND LIEN TERM NOTES.
The portion of the Second Lien Term Loan made by each Lender shall be
evidenced by a promissory note executed by each Borrower (a "SECOND LIEN TERM
NOTE").
27
Section 2.5 INTENTIONALLY OMITTED.
Section 2.6 GENERAL PROVISIONS REGARDING PAYMENT; LOAN ACCOUNT.
(a) All payments to be made by the Borrowers under any Financing
Document, including payments of principal and interest on the Second Lien Term
Notes, and all fees, expenses, indemnities and reimbursements, shall be made
without set-off or counterclaim, in lawful money of the United States of America
and in immediately available funds. 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. The Borrowers shall make all payments in immediately available funds
to the Payment Account before noon (Chicago time) on the date when due.
(b) Administrative Agent shall maintain a loan account (the "LOAN
ACCOUNT") on its books to record Second Lien Term Loans and all payments made on
the Second Lien Term Loans by the Borrowers. All entries in the Loan Account
shall be made in accordance with Administrative Agent's customary accounting
practices as in effect from time to time. The balance in the Loan Account, as
recorded on Administrative Agent's most recent printout or other written
statement, shall be conclusive and binding evidence of the amounts due and owing
to Administrative Agent by the Borrowers absent clear and convincing evidence to
the contrary; provided that any failure to so record or any error in so
recording shall not limit or otherwise affect the Borrowers' duty to pay all
amounts owing hereunder or under any other Financing Document. Unless the Funds
Administrator notifies Administrative Agent in writing of any objection to any
such printout or statement (specifically describing the basis for such
objection) within thirty (30) days after the date of receipt thereof, it shall
be deemed final, binding and conclusive upon the Borrowers in all respects as to
all matters reflected therein.
Section 2.7 MAXIMUM INTEREST.
(a) In no event shall the interest contracted for, charged or received
with respect to the Second Lien Term Notes or any other obligations of the
Borrowers under any Financing Document exceed the maximum amount permitted under
the laws of the State of Illinois or of any other applicable jurisdiction.
(b) Notwithstanding anything to the contrary herein or elsewhere, if at
any time the rate of interest payable hereunder or under any Second Lien Term
Note or other Financing Document (the "STATED RATE") would exceed the highest
rate of interest permitted under any applicable law to be charged (the "MAXIMUM
LAWFUL RATE"), then for so long as the Maximum Lawful Rate would be so exceeded,
the rate of interest payable shall be equal to the Maximum Lawful Rate;
provided, that if at any time thereafter the Stated Rate is less than the
Maximum Lawful Rate, the Borrowers shall, to the extent permitted by law,
continue to pay interest at the Maximum Lawful Rate until such time as the total
interest received is equal to the total interest which would have received had
the Stated Rate been (but for the operation of this provision) the interest rate
payable. Thereafter, the interest rate payable shall be the Stated Rate unless
and until the Stated Rate again would exceed the Maximum Lawful Rate, in which
event this provision shall again apply.
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(c) In no event shall the total interest received by any Lender exceed
the amount which it could lawfully have received had the interest been
calculated for the actual term hereof at the Maximum Lawful Rate. If,
notwithstanding the prior sentence, any Lender has received interest hereunder
or under any other Financing Document in excess of the Maximum Lawful Rate, such
excess amount shall be applied to the reduction of the principal balance of the
Second Lien Term Loans or to other amounts (other than interest) payable
hereunder or thereunder, and if no such principal or other amounts are then
outstanding, such excess or part thereof remaining shall be paid to the
Borrowers.
(d) In computing interest payable with reference to the Maximum Lawful
Rate applicable to any Lender, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made.
Section 2.8 TAXES.
(a) All payments of principal and interest on the Second Lien Term Loans
and all other amounts payable hereunder shall be made free and clear of and
without deduction for any present or future income, stamp, documentary, property
or franchise taxes and other taxes, fees, duties, levies, withholdings or other
charges of any nature whatsoever imposed by any taxing authority, excluding
taxes imposed on or measured by an Agent's or any Lender's receipts, capital or
income by the jurisdiction under which such Agent or such Lender is organized or
conducts business (all non-excluded items being called "TAXES"). If any
withholding or deduction from any payment to be made by the Borrowers hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then the Borrowers will: (a) pay directly to the relevant authority
the full amount required to be so withheld or deducted; (b) promptly forward to
the applicable Agent an official receipt or other documentation reasonably
satisfactory to such Agent evidencing such payment to such authority; and (c)
pay to the Administrative Agent for the account of Agents and Lenders such
additional amount or amounts as is necessary to ensure that the net amount
actually received by each Agent and each Lender will equal the full amount each
Agent and such Lender would have received had no such withholding or deduction
been required. If any Taxes are directly asserted against an Agent or any Lender
with respect to any payment received by such Agent or such Lender hereunder,
such Agent or such Lender may pay such Taxes and the Borrowers will promptly pay
such additional amounts (including any penalty, interest or expense) as is
necessary in order that the net amount received by such Person after the payment
of such Taxes (including any Taxes on such additional amount) shall equal the
amount such Person would have received had such Taxes not been asserted so long
as such amounts have accrued on or after the day which is one hundred eighty
(180) days prior to the date on which such Agent or such Lender first made
demand therefor.
(b) If the Borrowers fail to pay any Taxes when due to the appropriate
taxing authority or fails to remit to Administrative Agent, for the account of
Agents and the respective Lenders, the required receipts or other required
documentary evidence, the Borrowers shall indemnify the applicable Agent and
Lenders for any incremental Taxes, interest or penalties that may become payable
by such Agent or any Lender as a result of any such failure.
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(c) Each Lender that (i) is organized under the laws of a jurisdiction
other than the United States of America and (ii)(A) is a party hereto on the
Closing Date or (B) becomes an assignee of an interest under this Agreement
under Section 12.6(a) after the Closing Date (unless such Lender was already a
Lender hereunder immediately prior to such assignment) shall execute and deliver
to the Funds Administrator and Administrative Agent one or more (as the Funds
Administrator or Administrative Agent may reasonably request) Forms W-8ECI,
W-8BEN, W-8IMY (as applicable) or other applicable form, certificate or document
prescribed by the United States Internal Revenue Service certifying as to such
Lender's entitlement to exemption from withholding or deduction of Taxes. The
Borrowers shall not be required to pay additional amounts to any Lender pursuant
to this Section 2.8 to the extent that the obligation to pay such additional
amounts would not have arisen but for the failure of such Lender to comply with
this paragraph.
Section 2.9 APPOINTMENT OF THE FUNDS ADMINISTRATOR.
(a) The Borrowers maintain an integrated cash management system
reflecting their interdependence on one another and the mutual benefits shared
among them as a result of their respective operations. In order to efficiently
fund and operate their respective businesses and minimize the number of
borrowings which they will make under this Agreement and thereby reduce the
administrative costs and record keeping required in connection therewith,
including the necessity to enter into and maintain separately identified and
monitored borrowing facilities, the Borrowers have requested, and the Agents and
the Lenders have agreed that, subject to Article XIII, all Second Lien Term
Loans will be advanced to and for the account of the Borrowers on a joint and
several basis pursuant to the instructions set forth in Section G of the
Information Certificate. Each Borrower hereby acknowledges that it will be
receiving a direct benefit from the Second Lien Term Loan made pursuant to this
Agreement.
(b) Each Borrower hereby designates, appoints, authorizes and empowers
the Funds Administrator as its agent to act as specified in this Agreement and
each of the other Financing Documents and the Funds Administrator hereby
acknowledges such designation, authorization and empowerment, and accepts such
appointment. Each Borrower hereby irrevocably authorizes and directs the Funds
Administrator to take such action on its behalf under the provisions of this
Agreement and the other Financing Documents, and any other instruments,
documents and agreements referred to herein or therein, and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Funds Administrator by the respective terms and
provisions hereof and thereof, and such other powers as are reasonably
incidental thereto, including, without limitation, to take the following actions
for and on such Borrower's behalf (it being agreed that each Borrower retains
the right to act for itself):
(i) to submit on behalf of each Borrower Notices of Borrowing to
the Administrative Agent in accordance with the provisions of this Agreement;
(ii) to receive on behalf of each Borrower the proceeds of the
Second Lien Term Loans in accordance with the provisions of this Agreement, such
proceeds to be disbursed to or for the account of the applicable Borrower as
soon as practicable after its receipt thereof; and
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(iii) to submit on behalf of each Borrower all certificates, notices
and other communications given or required to be given hereunder.
The Funds Administrator is further authorized and directed by each Borrower to
take all such actions on behalf of such Borrower necessary to exercise the
specific powers granted in clauses (i) through (iii) above and to perform such
other duties hereunder and under the other Financing Documents, and deliver such
documents as delegated to or required of the Funds Administrator by the terms
hereof or thereof.
(c) The administration by the Agents and the Lenders of the credit
facility under this Agreement as a co-borrowing facility with a funds
administrator in the manner set forth herein is solely as an accommodation to
the Borrowers and at their request and no Agent nor any Lender shall incur any
liability to any Borrower as a result thereof. The Administrative Agent shall be
entitled to rely upon, and shall be fully protected in relying upon, any Notice
of Borrowing or similar notice believed by the Administrative Agent in good
faith to be genuine. The Administrative Agent may assume that each Person
executing and delivering any notice in accordance herewith was duly authorized.
ARTICLE III
REPRESENTATION AND WARRANTIES
To induce Agents and Lenders to enter into this Agreement and to make the
Second Lien Term Loans and other credit accommodations contemplated hereby, each
Credit Party that is a party hereto hereby represents and warrants to Agents and
each Lender that:
Section 3.1 EXISTENCE AND POWER.
Each Credit Party is an entity as specified on the Information
Certificate, duly organized, validly existing and in good standing (or, with
respect to any Subsidiary that is a Foreign Subsidiary, licensed and authorized
to conduct its business and otherwise in the applicable foreign jurisdiction's
equivalent to good standing) under the laws of the jurisdiction specified on the
Information Certificate, has an organizational identification number (if any) as
specified on the Information Certificate, and has all powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except where the failure to have such powers,
licenses, authorizations, consents and approvals could not reasonably be
expected to have a Material Adverse Effect. Each Credit Party is qualified to do
business as a foreign entity in each jurisdiction in which it is required to be
so qualified (or, with respect to any Subsidiary that is a Foreign Subsidiary,
authorized to conduct its business and otherwise in the applicable foreign
jurisdiction's equivalent to good standing), which jurisdictions as of the
Closing Date are specified on the Information Certificate, except where the
failure to be so qualified could not reasonably be expected to have a Material
Adverse Effect.
Section 3.2 ORGANIZATION AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION.
The execution, delivery and performance by each Credit Party of the
Operative Documents to which it is a party are within its powers, have been duly
authorized by all necessary action pursuant to its Organizational Documents,
require no further action by or in
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respect of, or filing with, any governmental body, agency or official (other
than (a) routine corporate, tax, ERISA, intellectual property, environmental
filings and other filings from time to time necessary in connection with the
conduct of such Credit Party's business in the ordinary course, and (b)
recordings and filings in connection with the Liens granted to the Collateral
Agent under the Financing Documents) and do not violate, conflict with or cause
a breach or a default under any provision of applicable law or regulation or of
the Organizational Documents of any Credit Party or of any agreement, judgment,
injunction, order, decree or other instrument binding upon it, except for such
failures to file, violations, conflicts, breaches or defaults as could not
reasonably be expected to have a Material Adverse Effect. The Merger has been
consummated and has become effective in accordance with the terms of the Merger
Documents and applicable law.
Section 3.3 BINDING EFFECT.
Each of the Operative Documents to which any Credit Party is a party
constitutes a valid and binding agreement or instrument of such Credit Party,
enforceable against such Credit Party in accordance with its respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws relating to the enforcement of creditors' rights generally
and by general equitable principles.
Section 3.4 CAPITALIZATION.
The authorized equity securities of each of the Credit Parties as of the
Closing Date is as set forth on the Information Certificate. All issued and
outstanding equity securities of each of the Credit Parties are duly authorized
and validly issued, fully paid, nonassessable, and, solely with respect to the
equity securities of COMSYS Holdings, PFI Holdings, each Borrower and each of
their respective Subsidiaries, free and clear of all Liens other than those in
favor of Collateral Agent for the benefit of Agents and Lenders, and Liens
permitted pursuant to Section 5.2(d) and 5.2(h), and all such equity securities
of each Credit Party were issued in compliance with all applicable state,
federal and foreign laws concerning the issuance of securities. The identity of
the holders of the equity securities of each of the Credit Parties and the
percentage of their fully-diluted ownership of the equity securities of each of
the Credit Parties as of the Closing Date is set forth on the Information
Certificate. Holdings owns all of the issued and outstanding equity securities
of PFI Holdings and COMSYS Holdings. COMSYS Holdings owns all of the issued and
outstanding equity securities of COMSYS IT. COMSYS IT owns all of the issued and
outstanding equity securities of COMSYS Services and COMSYS Limited. PFI
Holdings owns all of the issued and outstanding equity securities of VTP. No
shares of the capital stock or other equity securities of any Credit Party,
other than those described above, are issued and outstanding. Except as set
forth on the Information Certificate, as of the Closing Date there are no
preemptive or other outstanding rights, options, warrants, conversion rights or
similar agreements or understandings for the purchase or acquisition from any
Credit Party of any equity securities of any such entity.
Section 3.5 FINANCIAL INFORMATION.
(a) (i) The consolidated balance sheet of Holdings and its Consolidated
Subsidiaries as of December 31, 2003 and the related consolidated statements of
operations, stockholders'
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equity (or comparable calculation, if such Person is not a corporation) and cash
flows for the fiscal year then ended, reported on by PriceWaterhouseCoopers,
copies of which have been delivered to Administrative Agent, fairly present, in
all material respects, in conformity with GAAP, the consolidated financial
position of Holdings and its Consolidated Subsidiaries as of such date and their
consolidated results of operations, changes in stockholders' equity (or
comparable calculation) and cash flows for such period and (ii) the consolidated
balance sheet of COMSYS Holdings and its Consolidated Subsidiaries as of
December 31, 2003 and the related consolidated statements of operations,
stockholders' equity (or comparable calculation, if such Person is not a
corporation) and cash flows for the fiscal year then ended, reported on by Ernst
& Young, LLP, copies of which have been delivered to Administrative Agent,
fairly present, in all material respects, in conformity with GAAP, the
consolidated financial position of COMSYS Holdings and its Consolidated
Subsidiaries as of such date and their consolidated results of operations,
changes in stockholders' equity (or comparable calculation) and cash flows for
such period.
(b) (i) The unaudited consolidated balance sheet of Holdings and its
Consolidated Subsidiaries as OF August 31, 2004 and the related unaudited
consolidated statements of operations and cash flows for the eight (8) months
then ended, copies of which have been delivered to Administrative Agent, fairly
present, in all material respects, in conformity with GAAP applied on a basis
consistent with the financial statements referred to in Section 3.5(a), the
consolidated financial position of Holdings and its Consolidated Subsidiaries as
of such date and their consolidated results of operations and cash flows for the
eight (8) months then ended (subject to normal year-end adjustments and the
absence of footnote disclosures) and (ii) the unaudited consolidated balance
sheet of COMSYS Holdings and its Consolidated Subsidiaries as of August 31, 2004
and the related unaudited consolidated statements of operations and cash flows
for the eight (8) months then ended, copies of which have been delivered to
Administrative Agent, fairly present, in all material respects, in conformity
with GAAP applied on a basis consistent with the financial statements referred
to in Section 3.5(a), the consolidated financial position of COMSYS Holdings and
its Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for the eight (8) months then ended (subject to normal
year-end adjustments and the absence of footnote disclosures).
(c) The pro forma balance sheet of Holdings and its Consolidated
Subsidiaries as of the Closing DATE, a copy of which has been delivered to
Administrative Agent, fairly presents, in all material respects, in conformity
with GAAP applied on a basis consistent with the financial statements referred
to in Section 3.5(a), the consolidated financial position of Holdings and its
Consolidated Subsidiaries as of such date, adjusted to give effect (as if such
events had occurred on such date) to (i) the transactions contemplated by the
Operative Documents (including, without limitation, the Merger), (ii) the making
of the Second Lien Term Loans, (iii) the application of the proceeds therefrom
as contemplated by the Operative Documents and (iv) the payment of all legal,
accounting and other fees related thereto to the extent known at the time of the
preparation of such balance sheet. As of the date of such balance sheet and the
date hereof, no Credit Party had or has any material liabilities, contingent or
otherwise, including liabilities for taxes, long-term leases or forward or
long-term commitments, which are not properly reflected on such balance sheet in
conformity with GAAP.
(d) [Intentionally omitted.]
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(e) (i) Since December 28, 2003, there has been no material adverse
change in the business, operations, properties or condition (financial or
otherwise) of Holdings and its Consolidated Subsidiaries taken as a whole and
(ii) since December 31, 2003, there has been no material adverse change in the
business, operations, properties or condition (financial or otherwise) of COMSYS
Holdings and its Consolidated Subsidiaries taken as a whole.
(f) Except as contemplated and permitted by this Agreement, and other
than administrative and other ministerial activities related to (i) its
investment in COMSYS Holdings and PFI Holdings, (ii) the maintenance of its
corporate existence, and (iii) the performance of its obligations under the
Operative Documents to which it is a party and any other agreement to which it
is a party, to the extent not otherwise prohibited by this Agreement, Holdings
has no significant assets or liabilities (other than the capital stock of COMSYS
Holdings and PFI Holdings).
Section 3.6 LITIGATION.
There is no action, suit or proceeding pending against, or to any Credit
Party's knowledge threatened against or affecting, any Credit Party or, to any
Credit Party's knowledge (without any inquiry), any party to any Operative
Document other than a Credit Party, before any court or arbitrator or any
governmental body or agency in which a decision could reasonably be expected to
be determined adversely to such Credit Party and have a Material Adverse Effect
or which in any manner draws into question the validity of any of the Operative
Documents.
Section 3.7 OWNERSHIP OF PROPERTY.
Each Credit Party is the lawful owner of, has good title to and is in
lawful possession of, or has valid leasehold interests in, all material
properties and other assets (real or personal, tangible, intangible or mixed)
purported to be owned or leased (as the case may be) by such Person on the pro
forma balance sheet referred to in Section 3.5(c), except as disposed of in the
ordinary course of business.
Section 3.8 NO DEFAULT.
No Default or Event of Default has occurred and is continuing and no
Credit Party is in breach or default under or with respect to any contract,
agreement, lease or other instrument to which it is a party or by which its
property is bound or affected, which breach or default could reasonably be
expected to have a Material Adverse Effect.
Section 3.9 LABOR MATTERS.
As of the Closing Date, there are no strikes or other labor disputes
pending or, to any Credit Party's knowledge, threatened against any Credit
Party. Hours worked and payments made to the employees of the Credit Parties in
the United States have not been in violation of the Fair Labor Standards Act or
any other applicable law dealing with such matters in any material respect. All
payments due from the Credit Parties, or for which any claim may be made against
any of them, on account of wages and employee and retiree health and welfare
insurance and other benefits have been paid or accrued as a liability on their
books, as the case may be. The consummation of the transactions contemplated by
the Financing Documents and the other
34
Operative Documents will not give rise to a right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which it is a party or by which it is bound.
Section 3.10 REGULATED ENTITIES.
No Credit Party is an "investment company" or a company "controlled" by an
"investment company" or a "subsidiary" of an "investment company," all within
the meaning of the Investment Company Act of 1940. No Credit Party is a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company," within
the meaning of the Public Utility Holding Company Act of 1935.
Section 3.11 MARGIN REGULATIONS.
None of the proceeds from the Second Lien Term Loans have been or will be
used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock, for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any Margin Stock or for any other
purpose which might cause any of the Second Lien Term Loans to be considered a
"purpose credit" within the meaning of Regulation T, U or X of the Federal
Reserve Board.
Section 3.12 COMPLIANCE WITH LAWS.
Each Credit Party and each of its Subsidiaries is in compliance with the
requirements of all applicable laws, ordinances, rules, regulations and requests
of governmental authorities, except for such noncompliance as could not
reasonably be expected to have a Material Adverse Effect.
Section 3.13 TAXES.
Except to the extent subject to a Permitted Contest, all Federal, state
and local tax returns, reports and statements required to be filed by or on
behalf of each Credit Party have been filed with the appropriate governmental
agencies in all jurisdictions in which such returns, reports and statements are
required to be filed, and all material Taxes (including real property Taxes) and
other material charges shown to be due and payable in respect thereof have been
timely paid prior to the date on which any fine, penalty, interest, late charge
or loss may be added thereto for nonpayment thereof. Except to the extent
subject to a Permitted Contest, all material state and local sales and use Taxes
required to be paid by each Credit Party have been paid. Except to the extent
subject to a Permitted Contest, all Federal and state returns have been filed by
each Credit Party for all periods for which returns were due with respect to
employee income tax withholding, social security and unemployment taxes, and the
amounts shown thereon to be due and payable have been paid in full or adequate
provisions therefor have been made. All payroll, employee income and other
employment related Taxes required to be paid by each Credit Party have been
paid.
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Section 3.14 COMPLIANCE WITH ERISA.
(a) Each ERISA Plan (and the related trusts and funding agreements)
complies in form and in operation with, has been administered in compliance
with, and the terms of each ERISA Plan satisfy, the applicable requirements of
ERISA and the Code in all material respects. Each ERISA Plan which is intended
to be qualified under Section 401(a) of the Code is so qualified, and the United
States Internal Revenue Service has issued a favorable determination letter with
respect to each such ERISA Plan which may be relied on currently. No Credit
Party has incurred liability for any material excise tax under Sections 4971
through 5000 of the Code.
(b) During the thirty-six (36) month period prior to the Closing Date,
(i) no steps have been taken to terminate any Pension Plan under Section 4041(c)
or 4042 of ERISA and (ii) no contribution failure has occurred with respect to
any Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA. No condition exists or event or transaction has occurred with respect to
any Pension Plan which could result in the incurrence by any Credit Party of any
liability, fine or penalty which could reasonably be expected to result in a
Material Adverse Effect. No Credit Party has incurred liability to the PBGC
(other than for current premiums) with respect to any employee Pension Plan in
an amount which could reasonably be expected to result in a Material Adverse
Effect. All contributions (if any) have been made on a timely basis to any
Multiemployer Pension Plan that are required to be made by any Credit Party or
any other member of the Controlled Group under the terms of the plan or of any
collective bargaining agreement or by applicable Law; no Credit Party nor any
member of the Controlled Group has withdrawn or partially withdrawn from any
Multiemployer Pension Plan which could reasonably be expected to result in a
Material Adverse Effect, incurred any withdrawal liability with respect to any
such plan or received notice of any claim or demand for withdrawal liability or
partial withdrawal liability from any such plan which could reasonably be
expected to result in a Material Adverse Effect, and no condition has occurred
which, if continued, could reasonably be expected to result in a withdrawal or
partial withdrawal from any such plan, and no Credit Party nor any member of the
Controlled Group has received any notice that any Multiemployer Pension Plan is
in reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of any excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent which could reasonably be expected to result in a
Material Adverse Effect.
Section 3.15 BROKERS.
Except as set forth in the Information Certificate, no broker, finder or
other intermediary has brought about the obtaining, making or closing of the
transactions contemplated by the Operative Documents, and no Credit Party has or
will have any obligation to any Person in respect of any finder's or brokerage
fees in connection herewith or therewith.
Section 3.16 RELATED TRANSACTIONS.
The Merger has been consummated pursuant to the provisions of the Merger
Documents, true and complete copies of which have been delivered to
Administrative Agent, and in compliance with all applicable provisions of law.
The transactions contemplated by the Equity
36
Documents and the First Lien Debt Documents to be consummated on or prior to the
date hereof have been so consummated (including without limitation the
disbursement and transfer of all funds in connection therewith) in all material
respects pursuant to the provisions of the applicable Operative Documents, true
and complete copies of which have been delivered to Administrative Agent, and in
compliance with all applicable provisions of law. The Venturi Staffing Sale has
been consummated pursuant to the provisions of the Venturi Staffing Purchase
Agreement, true and complete copies of which have been delivered to
Administrative Agent, and in compliance with all applicable provisions of law.
Section 3.17 EMPLOYMENT, EQUITYHOLDERS AND SUBSCRIPTION AGREEMENTS.
Except for the Operative Documents and the other agreements set forth in
the Information Certificate, as of the Closing Date there are no (i) employment
agreements covering the management of any Credit Party, (ii) collective
bargaining agreements or other labor agreements covering any employees of any
Credit Party, (iii) agreements for managerial, consulting or similar services to
be provided to any Credit Party pursuant to which such Credit Party has a
contractual obligation to make payments in excess of $200,000 or (iv) agreements
regarding any Credit Party, its assets or operations or any investment therein
to which any of its equityholders is a party or by which it is bound.
Section 3.18 COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS; NO HAZARDOUS
MATERIALS.
(a) No Hazardous Materials are located on any properties now or
previously owned, leased or operated by any Credit Party or have been released
into the environment, or deposited, discharged, placed or disposed of at, on,
under or near any of such properties in a manner that would require the taking
of any action under any Environmental Law and which could reasonably be expected
to have a Material Adverse Effect. No portion of any such property is being
used, or has been used at any previous time, for the disposal, storage,
treatment, processing or other handling of Hazardous Materials in violation of
any Environmental Law, which could reasonably be expected to have a Material
Adverse Effect, nor is any such property affected by any Hazardous Materials
Contamination which, in the case of any of the foregoing, would reasonably be
expected to have a Material Adverse Effect.
(b) No underground storage tanks are located on any properties now or
previously owned, leased or operated by any Credit Party, or were located on any
such property and subsequently removed or filled, which would reasonably be
expect to have a Material Adverse Effect.
(c) No notice, notification, demand, request for information, complaint,
citation, summons, investigation, administrative order, consent order and
agreement, litigation or settlement with respect to Hazardous Materials or
Hazardous Materials Contamination is in existence or, to any Borrower's
knowledge, proposed, threatened or anticipated with respect to or in connection
with the operation of any properties now or previously owned, leased or operated
by any Credit Party, which, in the case of any of the foregoing, would
reasonably be expected to have a Material Adverse Effect. All such properties
and their existing and prior uses, and any disposal of Hazardous Materials from
any thereof, comply and at all times have complied with all
37
Environmental Laws except for any non-compliance that would not reasonably be
expected to have a Material Adverse Effect. There is no condition on any of such
properties which is in violation of any Environmental Laws and no Credit Party
has received any communication from or on behalf of any governmental authority
that any such condition exists which would reasonably be expected to have a
Material Adverse Effect.
(d) There has been no material environmental investigation, study,
audit, test, review or other analysis conducted of which any Credit Party has
knowledge in relation to the current or prior business of such Credit Party or
any property or facility now or previously owned, leased or operated by any
Credit Party which has not been delivered to Administrative Agent.
(e) For purposes of this Section 3.18, each Credit Party shall be deemed
to include any business or business entity (including a corporation) which is,
in whole or in part, a predecessor of such Credit Party and for which such
Credit Party would have liability under Environmental Law.
Section 3.19 INTELLECTUAL PROPERTY.
Each Credit Party owns, is licensed to use or otherwise has the right to
use, all Intellectual Property that is material to the condition (financial or
other), business or operations of such Credit Party, and all such Intellectual
Property existing as of the Closing Date and registered with the U.S.
government, any foreign government or any agency or department thereof is set
forth on the Information Certificate. All material Intellectual Property of each
Credit Party is fully protected and/or duly and properly registered, filed or
issued in the appropriate office and jurisdictions for such registrations,
filings or issuances. To each Credit Parties' knowledge, each Credit Party
conducts its business without infringement or claim of infringement of any
Intellectual Property rights of others and there is no infringement or claim of
infringement by others of any Intellectual Property rights of any Credit Party,
which infringement or claim of infringement could reasonably be expected to have
a Material Adverse Effect.
Section 3.20 REAL PROPERTY INTERESTS.
Except for the ownership, leasehold or other interests set forth in the
Information Certificate, no Credit Party has, as of the Closing Date, any
ownership, leasehold or other interest in real property.
Section 3.21 SOLVENCY.
The Credit Parties taken as a whole, after giving effect to their rights
of contribution: (a) own and will own assets the fair saleable value of which
are (i) greater than the total amount of their liabilities (including contingent
liabilities) and (ii) greater than the amount that will be required to pay the
probable liabilities of their then existing debts as they become absolute and
matured considering all financing alternatives and potential asset sales
reasonably available to them; (b) have capital that is not unreasonably small in
relation to their business as presently conducted or after giving effect to any
contemplated transaction; and (c) do not intend to incur and do not believe that
they will incur debts beyond their ability to pay such debts as they become due.
38
Section 3.22 FULL DISCLOSURE.
None of the information (financial or otherwise) furnished by or on behalf
of any Credit Party to any Agent or any Lender in connection with the
consummation of the transactions contemplated by the Operative Documents,
including without limitation the information set forth in the Information
Certificate, contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements contained herein or therein not
misleading in the light of the circumstances under which such statements were
made. All financial projections delivered to Administrative Agent and the
Lenders have been prepared on the basis of the assumptions stated therein. Such
projections represent the Credit Parties' best estimate of the Credit Parties'
future financial performance and such assumptions are believed by the Credit
Parties to be fair in light of current business conditions; provided that the
Credit Parties can give no assurance that such projections will be attained.
Section 3.23 REPRESENTATIONS AND WARRANTIES INCORPORATED FROM OTHER
OPERATIVE DOCUMENTS.
As of the Closing Date, each of the representations and warranties made in
the Operative Documents by each of the Credit Parties thereto and, to the Credit
Parties' knowledge, each of the representations and warranties made in the
Operative Documents by each party other than a Credit Party, is true and correct
in all material respects, and such representations and warranties are hereby
incorporated herein by reference with the same effect as though set forth in
their entirety herein, as qualified therein, except to the extent that such
representation or warranty relates to a specific date, in which case such
representation and warranty shall be true as of such earlier date.
ARTICLE IV
AFFIRMATIVE COVENANTS
Each Credit Party that is a party hereto agrees that, so long as any
Obligation remains outstanding:
Section 4.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
The Credit Parties will maintain a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in accordance with GAAP and to provide the information
required to be delivered to the Lenders hereunder, and will deliver to
Administrative Agent, and, in the case of the deliveries required by paragraphs
(a) through (f) and (l) through (s), with adequate copies for each Lender:
(a) as soon as practicable and in any event within thirty (30) days
after the end of each fiscal month (including the last month of Holdings' Fiscal
Year), a consolidated balance sheet of Holdings and its Consolidated
Subsidiaries as at the end of such month and the related consolidated statements
of operations and cash flows for such month, and for the portion of the Fiscal
Year ended at the end of such month setting forth in each case in comparative
form the figures for the corresponding periods of the previous Fiscal Year and
the figures for such month and for such portion of the Fiscal Year ended at the
end of such month set forth in the annual
39
operating and capital expenditure budgets and cash flow forecast delivered
pursuant to Section 4.1(l), all in reasonable detail and certified by a
Responsible Officer of Holdings as fairly presenting in all material respects
the financial condition and results of operations of Holdings and its
Consolidated Subsidiaries and as having been prepared in accordance with GAAP
applied on a basis consistent with the audited financial statements of Holdings,
subject to changes resulting from audit and normal year-end adjustments and the
absence of footnote disclosures;
(b) as soon as available and in any event within ninety (90) days after
the end of each Fiscal Year, a consolidated balance sheet of Holdings and its
Consolidated Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of operations, stockholders' equity (or the comparable
item, if Holdings is not a corporation) and cash flows for such Fiscal Year,
setting forth in each case in comparative form the figures for the previous
Fiscal Year and the figures for such Fiscal Year set forth in the annual
operating and capital expenditure budgets and cash flow forecast delivered
pursuant to Section 4.1(l), certified (solely with respect to such consolidated
statements) without qualification by Ernst & Young, LLP or any other independent
public accountants reasonably acceptable to Administrative Agent of nationally
recognized standing;
(c) together with each delivery of financial statements pursuant to
Sections 4.1(a) and 4.1(b), a Compliance Certificate and together with each
delivery of financial statements pursuant to Section 4.1(b), an Excess Cash Flow
Certificate;
(d) together with each delivery of financial statements pursuant to
Section 4.1(b) above, a written statement by the independent public accountants
giving the report thereon stating that their audit examination has included a
review of the terms of this Agreement as it relates to accounting matters;
(e) promptly upon receipt thereof, copies of all reports submitted to
any Credit Party by independent public accountants in connection with each
annual, interim or special audit of the financial statements of any Credit Party
made by such accountants, including the comment letter submitted by such
accountants to management in connection with their annual audit;
(f) promptly upon their becoming available, copies of (i) all financial
statements, reports, notices and proxy statements sent or made available
generally by any Credit Party to its security holders, (ii) all regular and
periodic reports and all registration statements and prospectuses filed by any
Credit Party with any securities exchange or with the Securities and Exchange
Commission or any successor, and (iii) all press releases and other statements
made available generally by any Credit Party concerning material developments in
the business of any Credit Party;
(g) promptly upon any officer of any Credit Party obtaining knowledge
(i) of the existence of any Event of Default or Default, or becoming aware that
the holder of any Debt of any Credit Party has given any notice or taken any
other action with respect to a claimed default thereunder, (ii) of any change in
any Credit Party's certified accountant or any resignation, or decision not to
stand for re-election, by any member of any Credit Party's board of directors
(or comparable body), (iii) that any Person has given any notice to any Credit
Party or taken any other action with respect to a claimed default under any
material agreement or instrument (other
40
than the Financing Documents) to which any Credit Party is a party or by which
any of its assets is bound or (iv) of the institution of any litigation or
arbitration involving an alleged liability of any Credit Party equal to or
greater than $2,000,000 or any adverse determination in any litigation or
arbitration involving a potential liability of any Credit Party equal to or
greater than $2,000,000, a certificate of a Responsible Officer of the Funds
Administrator, on behalf of the Borrowers specifying the nature and period of
existence of any such condition or event, or specifying the notice given or
action taken by such holder or Person and the nature of such claimed default
(including any Event of Default or Default), event or condition, and what action
the applicable Credit Party has taken, is taking or proposes to take with
respect thereto;
(h) promptly upon any officer of any Credit Party obtaining knowledge of
(i) the institution of any steps by any member of the Controlled Group or any
other Person to terminate any Pension Plan under Section 4041(c) or 4042 of
ERISA, (ii) the failure of any member of the Controlled Group to make a required
contribution on a timely basis to any ERISA Plan or to any Multiemployer Pension
Plan in an amount that is material, (iii) the taking of any action with respect
to a Pension Plan which could result in the requirement that any Credit Party or
any Subsidiary of any Credit Party furnish a bond or other security to the PBGC
or such Pension Plan, (iv) the occurrence of a reportable event under Section
4043 of ERISA (for which a reporting requirement is not waived) with respect to
any Pension Plan, (v) the occurrence of any event with respect to any Pension
Plan or Multiemployer Pension Plan which could result in the incurrence by any
member of the Controlled Group of any material liability, fine or penalty
(including any claim or demand for withdrawal liability or partial withdrawal
from any Multiemployer Pension Plan), (vi) any material increase in the
contingent liability of any Credit Party or any Subsidiary of any Credit Party
with respect to any post-retirement welfare plan benefit or (vii) the receipt by
any Credit Party of any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of an excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent, a certificate of a Responsible Officer of the Funds
Administrator, on behalf of the Borrowers, specifying the nature and period of
existence of any such condition or event, or specifying the notice given or
action taken by such holder or Person, and what action the applicable Credit
Party has taken, is taking or proposed to take with respect thereto;
(i) promptly upon any officer of any Credit Party obtaining knowledge of
any complaint, order, citation, notice or other written communication from any
Person delivered to any Credit Party with respect to, or if any officer of any
Credit Party becomes aware of the following, except as would not reasonably be
expected to have a Material Adverse Effect: (x) the existence or alleged
existence of a violation of any Environmental Law or the incurrence of any
liability, obligation, loss, damage, cost, expense, fine, penalty or sanction or
the requirement to commence any remedial action resulting from or in connection
with any air emission, water discharge, noise emission, Hazardous Material or
any other environmental, health or safety matter at, upon, under or within any
of the properties now or previously owned, leased or operated by any Credit
Party, or due to the operations or activities of any Credit Party or any other
Person on or in connection with any such property or any part thereof or (y) any
release on any of such properties of Hazardous Materials in a quantity that is
reportable under any applicable Environmental Law, a certificate of a
Responsible Officer of the Funds Administrator,
41
on behalf of the Borrowers, specifying the nature and period of existence of any
such condition or event, or specifying the notice given or action taken by such
holder or Person, and what action the applicable Credit Party has taken, is
taking or proposes to take with respect thereto;
(j) promptly upon any officer of any Credit Party obtaining knowledge
that any Credit Party has either (x) registered or applied to register any
Intellectual Property with the U.S. government, any foreign government or any
agency or department thereof, or (y) acquired any interest in real property
(including leasehold interests in real property), a certificate of a Responsible
Officer of the Funds Administrator, on behalf of the Borrowers, describing such
Intellectual Property and/or such real property in such detail as Administrative
Agent shall reasonably require;
(k) copies of any reports or notices related to any material taxes and
any other material reports or notices received by any Credit Party from, or
filed by any Credit Party with, any Federal, state or local governmental agency
or body;
(l) within thirty (30) days after the conclusion of each Fiscal Year,
the Credit Parties' annual operating plans, operating and capital expenditure
budgets, and financial forecasts, including cash flow projections covering
proposed fundings, repayments, additional advances, investments and other cash
receipts and disbursements, each presented on a monthly basis for the then
current Fiscal Year and annually for the two (2) subsequent Fiscal Years, all of
which shall be in a format reasonably consistent with projections, budgets and
forecasts theretofore provided to the Lenders, and promptly following the
preparation thereof, updates to any of the foregoing from time to time prepared
by management of the Credit Parties;
(m) until the Discharge of all First Lien Debt, simultaneously with the
delivery thereof to the First Lien Agent, copies of each Borrowing Base
Certificate delivered to the First Lien Agent pursuant to the terms of the First
Lien Credit Agreement;
(n) [intentionally omitted];
(o) [intentionally omitted];
(p) [intentionally omitted];
(q) [intentionally omitted];
(r) [intentionally omitted];
(s) with reasonable promptness, such other information and data with
respect to any Credit Party as from time to time may be reasonably requested by
Administrative Agent or any Lender;
(t) [intentionally omitted]; and
(u) without limiting or being limited by any other provision of any
Financing Document, the Credit Parties shall retain and use Ceridian Corporation
and its Affiliates or any other third-party reasonably acceptable to
Administrative Agent to process, manage and pay the
42
payroll taxes of the Credit Parties and shall, upon the request of
Administrative Agent, cause to be delivered to Administrative Agent within ten
(10) calendar days of such request, a report of such payroll taxes of the Credit
Parties for the immediately preceding calendar month and evidence of payment
thereof.
Section 4.2 PAYMENT AND PERFORMANCE OF OBLIGATIONS.
(i) Each Credit Party will pay and discharge, and cause each of its
Subsidiaries to pay and discharge, at or before maturity, all of their
respective obligations and liabilities, including tax liabilities, except (x)
where the same may be the subject of a Permitted Contest and (y) for such
obligations and/or liabilities the nonpayment or nondischarge of which could not
reasonably be expected to have a Material Adverse Effect, (ii) Each Credit Party
will pay, and will cause each of its Subsidiaries to pay, all payroll and other
employment related taxes as and when due and payable, (iii) Each Credit Party
will maintain, and cause each of its Subsidiaries of such Credit Party to
maintain, in accordance with GAAP, appropriate reserves for the accrual of all
of their respective obligations and liabilities and (iv) No Credit Party will
breach nor will any Credit Party permit any Subsidiary of such Credit Party to
breach, or permit to exist any default under, the terms of any lease,
commitment, contract, instrument or obligation to which it is a party, or by
which its properties or assets are bound, except for such breaches or defaults
which could not reasonably be expected to have a Material Adverse Effect.
Section 4.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
Each Borrower will continue, and will cause each Subsidiary to continue,
to engage in business of the same general type as they now conduct and will
preserve, renew and keep in full force and effect, and, except as permitted
pursuant to Section 5.7, will cause each Subsidiary to preserve, renew and keep
in full force and effect their respective existence and their respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business.
Section 4.4 MAINTENANCE OF PROPERTY; INSURANCE.
(a) Each Credit Party will keep, and will cause each of its Subsidiaries
to keep, all property useful and necessary in any material respect in its
business in good working order and condition, ordinary wear and tear excepted.
(b) Each Credit Party will maintain, and will cause each of its
Subsidiaries to maintain, (i) physical damage insurance on all real and personal
property on an all risks basis (including the perils of flood and quake),
covering the repair and replacement cost of all such property and consequential
loss coverage for business interruption and public liability insurance
(including products/completed operations liability coverage) in each case of the
kinds customarily carried or maintained by Persons of established reputation
engaged in similar businesses and in amounts reasonably acceptable to
Administrative Agent and (ii) such other insurance coverage in such amounts and
with respect to such risks as Administrative Agent may reasonably request. All
such insurance shall be provided by insurers having an A.M. Best policyholders
rating reasonably acceptable to Administrative Agent.
(c) On or prior to the Closing Date, the Credit Parties will cause
Collateral Agent to be named as an additional insured, assignee and loss payee,
as applicable, on each insurance
43
policy required to be maintained pursuant to this Section 4.4 pursuant to
endorsements in form and content reasonably acceptable to Collateral Agent. The
Credit Parties will deliver to the Agents (i) on the Closing Date, a certificate
from the Credit Parties' insurance broker dated as of a date within thirty (30)
day of the Closing Date showing the amount of coverage as of such date, and that
such policies will include effective waivers (whether under the terms of any
such policy or otherwise) by the insurer of all rights of subrogation against
all loss payees and additional insureds, and that if all or any part of such
policy is canceled, terminated or expires, the insurer will forthwith give
notice thereof to each additional insured and loss payee and that no
cancellation, reduction in amount or material change in coverage thereof shall
be effective until at least thirty (30) days after receipt by each additional
insured and loss payee of written notice thereof (or, in the case of non-payment
of premiums, at least ten (10) days after receipt by each additional insured and
loss payee of written notice thereof), (ii) on an annual basis, and upon the
request of any Lender through Administrative Agent from time to time, full
information as to the insurance carried, (iii) within five (5) days of receipt
of notice from any insurer, a copy of any notice of cancellation, nonrenewal or
material change in coverage from that existing on the date of this Agreement and
(iv) forthwith, notice of any cancellation or nonrenewal of coverage by the
Credit Parties.
(d) In the event the Credit Parties fail to provide the Agents with
evidence of the insurance coverage required by this Agreement, the Collateral
Agent may purchase insurance at the Credit Parties' expense to protect
Collateral Agent's interests in the Collateral. This insurance may, but need
not, protect the Credit Parties' interests. The coverage purchased by Collateral
Agent may not pay any claim made by the Credit Parties or any claim that is made
against the Credit Parties in connection with the Collateral. The Credit Parties
may later cancel any insurance purchased by Collateral Agent, but only after
providing the Agents with evidence that the Credit Parties have obtained
insurance as required by this Agreement. If the Collateral Agent purchases
insurance for the Collateral, the Credit Parties will be responsible for the
costs of that insurance, including interest and other charges imposed by the
Collateral Agent in connection with the placement of the insurance, until the
effective date of the cancellation or expiration of the insurance. The costs of
the insurance may be added to the Obligations. The costs of the insurance may be
more than the cost of insurance the Credit Parties are able to obtain on their
own.
Section 4.5 COMPLIANCE WITH LAWS.
The Credit Parties will comply, and cause each of their respective
Subsidiaries to comply, with the requirements of all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including Environmental Laws and ERISA and the rules and regulations
thereunder), except for such noncompliance which could not reasonably be
expected to have a Material Adverse Effect.
Section 4.6 INSPECTION OF PROPERTY, BOOKS AND RECORDS.
The Credit Parties will keep, and will cause each of their respective
Subsidiaries to keep, proper books of record and account in accordance with GAAP
in which full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities; and will permit, and
will cause each of their respective Subsidiaries to permit, at the sole cost of
such
44
Credit Party or any applicable Subsidiary of such Credit Party, representatives
of the Collateral Agent and of any Lender (but at such Lender's expense unless
such visit or inspection is made concurrently with the Collateral Agent) to
visit and inspect any of their respective properties, to examine and make
abstracts or copies from any of their respective books and records, to conduct a
collateral audit and analysis of their respective Inventory and Accounts and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants as often as may
reasonably be desired; provided that so long as no Default or Event of Default
has occurred and is continuing, the Credit Parties shall only be required to pay
for two (2) such inspections or visits per year. In the absence of an Event of
Default, the Collateral Agent or any Lender exercising any rights pursuant to
this Section 4.6 shall give the Funds Administrator commercially reasonable
prior written notice of such exercise. No notice shall be required during the
existence and continuance of any Event of Default.
Section 4.7 USE OF PROCEEDS.
The Borrowers will use the proceeds of the Second Lien Term Loan solely
for (i) payment of amounts due under the Merger Agreement, if any, (ii)
transaction fees incurred in connection with the Operative Documents, (iii)
payment of funds necessary in connection with the Venturi Staffing Sale in an
amount not to exceed $2,500,000 in the aggregate and (iv) the repayment on the
Closing Date of Existing Debt (including, without limitation, certain guaranteed
obligations) of the Credit Parties.
Section 4.8 LENDERS' MEETINGS.
Within forty-five (45) days after the end of each Fiscal Year (or more
frequently upon the request of the Administrative Agent upon the occurrence and
during the continuance of an Event of Default), the Credit Parties will conduct
a meeting of the Administrative Agent, the Collateral Agent and the Lenders
(and, prior to the Discharge of all First Lien Debt, the First Lien Lender
Parties) to discuss such Fiscal Year's results and the financial condition of
the Credit Parties and their respective Subsidiaries at which shall be present a
Responsible Officer and such officers of the Credit Parties as may be reasonably
requested to attend by the Administrative Agent or any Lender, such request or
requests to be made within a reasonable time prior to the scheduled date of such
meeting. Such meetings shall be held at a time and place convenient to the
Lenders and to the Credit Parties.
Section 4.9 COMSYS LIMITED.
The Credit Parties shall deliver, or cause to be delivered, to the First
Lien Agent within five (5) days following the Closing Date, a stock certificate
representing sixty-five percent (65%) of the issued and outstanding equity
interests of COMSYS Limited, irrevocable proxies and stock transfer powers
executed in blank and any other documents or instruments reasonably requested by
the First Lien Agent in accordance therewith.
45
Section 4.10 REAL ESTATE.
The Credit Parties shall use reasonable efforts to deliver, or caused to
be delivered, to First Lien Agent, as contractual representative for the
Collateral Agent pursuant to the Second Lien Intercreditor Agreement (i) within
thirty (30) days following the Closing Date, a collateral access agreement in
form and substance reasonably acceptable to First Lien Agent with respect to the
leased real property located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ and (ii) within one hundred twenty (120) days following the Closing
Date, a collateral access agreement in form and substance reasonably acceptable
to First Lien Agent with respect to the leased real property located at (a)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (ii) Five Lakepoint Plaza, Second
Floor, 2709 Water Ridge Parkway, Charlotte, North Carolina and (iii) ▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
Section 4.11 INTENTIONALLY OMITTED.
Section 4.12 FURTHER ASSURANCES.
Each Credit Party will, and will cause each Subsidiary to, at its own cost
and expense, cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may from time to
time be necessary or as an Agent or the Required Lenders may from time to time
reasonably request in order to carry out the intent and purposes of the
Financing Documents and the transactions contemplated thereby, including all
such actions to establish, preserve, protect and perfect a second priority Lien
(subject only to Permitted Liens) in favor of Collateral Agent for the benefit
of the Agents and Lenders on the Collateral (including Collateral acquired after
the date hereof), subject to exceptions permitted by the Financing Documents,
including on any and all assets of each Credit Party, whether now owned or
hereafter acquired. Without limiting the generality of the foregoing and except
as otherwise approved in writing by Required Lenders, (i) each Credit Party
(other than the Borrowers) and each of its Subsidiaries (other than the
Borrowers) shall guaranty the Obligations and cause each such Subsidiary (other
than the Borrowers) to grant to Collateral Agent, for the benefit of Agents and
Lenders, a security interest in all of such Subsidiary's property to secure such
guaranty, (ii) each Credit Party (other than the Borrowers) shall pledge the
stock or other equity interests of each of their respective Subsidiaries to
Collateral Agent, for the benefit of Agents and Lenders, to secure such Credit
Party's guaranty, and (iii) each Borrower shall pledge the stock or other equity
interest of each of its Subsidiaries to Collateral Agent, for the benefit of
Agents and Lenders, to secure the Obligations; provided, that, anything
contained in this Section 4.12 to the contrary notwithstanding, no direct or
indirect Foreign Subsidiary of Holdings shall be required to deliver any such
guaranty or grant a security interest in any of its property to secure any such
guaranty, and neither Holdings nor any of its direct or indirect Subsidiaries
will be required to pledge more than sixty-five percent (65%) of the equity
interests of any Foreign Subsidiary, in any such case, to the extent but only
for so long as such guaranty or granting, or a pledge of more such equity
interests, would result in material and adverse tax consequences to Holdings
under Section 956 of the Code, as determined by Holdings in its reasonable
business judgment, provided that Holdings has delivered to Collateral Agent and
the Required Lenders evidence reasonably satisfactory to the Collateral Agent
and the Required Lenders of such determination.
46
ARTICLE V
NEGATIVE COVENANTS
Each Credit Party that is a party hereto agrees that, so long as any
Obligation remains outstanding:
Section 5.1 DEBT.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, create, incur, assume, guarantee or otherwise become or
remain directly or indirectly liable with respect to, any Debt except for:
(a) Debt and all other Obligations under the Financing Documents;
(b) Debt outstanding on the date of this Agreement as set forth in the
Information Certificate (other than Debt permitted pursuant to clause (d) of
this Section 5.1) to the extent set forth therein;
(c) Debt of the Borrowers incurred or assumed for the purpose of
financing all or any part of the cost of acquiring any fixed asset (including
through Capital Leases) and related costs and refinancings thereof, in an
aggregate principal amount at any time outstanding not greater than $1,500,000;
(d) intercompany Debt arising from loans made by a Borrower to (i) any
other Borrower or any Domestic Wholly-Owned Subsidiary of any Borrower and (ii)
its Foreign Subsidiaries which are Wholly-Owned Subsidiaries in an aggregate
amount under this clause (ii) not to exceed $500,000 at any time outstanding;
provided, however, in each case, such Debt shall be evidenced by promissory
notes having terms reasonably satisfactory to Collateral Agent, the sole
originally executed counterparts of which shall be pledged to the Collateral
Agent and delivered to the First Lien Agent as contractual representative for
the Collateral Agent pursuant to the Second Lien Intercreditor Agreement (or,
following the Discharge of all First Lien Debt, the Collateral Agent), as
security for the Obligations;
(e) unsecured Debt of any Borrower not to exceed $1,000,000 in the
aggregate at any time outstanding which is subordinated to the Obligations in a
manner reasonably satisfactory to Administrative Agent;
(f) net obligations to a counterparty under any Swap Contract permitted
pursuant to the First Lien Credit Agreement;
(g) Debt consisting of Contingent Obligations to the extent permitted
pursuant to Section 5.3;
(h) the First Lien Debt and refinancings and replacements thereof, to
the extent permitted pursuant to the terms of the Second Lien Intercreditor
Agreement; and
(i) Debt arising from Holdings Loans.
47
Section 5.2 LIENS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, create, assume or suffer to exist any Lien on any asset
now owned or hereafter acquired by it, except:
(a) Liens created by the Security Documents;
(b) Liens existing on the date of this Agreement as set forth in the
Information Certificate;
(c) any Lien on any asset of any Borrower, as the case may be (including
additions and accessions to and proceeds of any such asset), securing Debt
permitted under Section 5.1(c) incurred or assumed for the purpose of financing
or refinancing all or any part of the cost of acquiring such asset, provided
that such Lien attaches to such asset concurrently with or within ninety (90)
days after the acquisition thereof;
(d) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or the subject of a Permitted
Contest;
(e) Liens on assets of any Credit Party arising in the ordinary course of
business (i) in favor of carriers, warehousemen, mechanics, landlords and
materialmen, and other similar Liens imposed by law or, with respect to
warehousemen and/or landlords, by contract and (ii) in connection with worker's
compensation, unemployment compensation and other types of social security
(excluding Liens arising under ERISA) or in connection with surety bonds, bids,
performance bonds and similar obligations) for sums not overdue or the subject
of a Permitted Contest and not involving any deposits or advances or borrowed
money or the deferred purchase price of property or services and, in each case,
for which it maintains adequate reserves;
(f) attachments, appeal bonds, judgments and other similar Liens on assets
of the Credit Parties, for sums not exceeding $1,000,000 in the aggregate
arising in connection with court proceedings; provided that the execution or
other enforcement of such Liens is effectively stayed and the claims secured
thereby are the subject of a Permitted Contest;
(g) banker's Liens and rights of set-off of financial institutions arising
in connection with items deposited in accounts maintained at such financial
institutions and subsequently unpaid and unpaid fees and expenses that are
charged to a Credit Party by such financial institutions in the ordinary course
of business of the maintenance and operation of such accounts;
(h) a Lien in favor of the First Lien Agent for the benefit of the First
Lien Lender Parties under the First Lien Debt Documents, to the extent securing
permitted First Lien Debt;
(i) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any material
respect with the ordinary conduct of the business of the Credit Parties; and
48
(j) prior to the replacement of all outstanding letters of credit issued
prior to the Closing Date by CIT Group/Business Credit, Inc., Liens on cash
collateral maintained in an account at JPMorgan Chase Bank, for the benefit of
CIT Group/Business Credit, Inc.
Section 5.3 CONTINGENT OBLIGATIONS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, create, assume, incur or suffer to exist any Contingent
Obligations, except for:
(a) Contingent Obligations arising under the Financing Documents;
(b) Contingent Obligations resulting from endorsements for collection or
deposit in the ordinary course of business;
(c) Contingent Obligations outstanding on the date of this Agreement as
set forth in the Information Certificate, to the extent set forth therein;
(d) Contingent Obligations incurred in the ordinary course of business
with respect to surety and appeal bonds, performance bonds and other similar
obligations not to exceed $1,000,000 in the aggregate at any time outstanding;
(e) Contingent Obligations arising under indemnity agreements with title
insurers to cause such title insurers to issue to First Lien Agent and
Collateral Agent mortgagee title insurance policies;
(f) so long as there exists no Event of Default both immediately before
and immediately after giving effect to any such transaction, Contingent
Obligations existing or arising under any Swap Contract, provided that such
obligations are unsecured and are (or were) entered into by a Credit Party in
the ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Person and not for purposes of speculation;
(g) Contingent Obligations arising with respect to customary
indemnification obligations in favor of purchasers in connection with
dispositions permitted under Section 5.8;
(h) Contingent Obligations representing guarantees by a Credit Party of
another Credit Party's Debt or other obligations, so long as (i) such Debt or
other obligations are permitted to exist pursuant to the terms of this Agreement
and (ii) if such Debt or other obligations are subordinated to the Obligations,
such guaranty shall be subordinated to the Obligations on the same terms as such
Debt or other obligations are subordinated to the Obligations;
(i) Prior to the replacement of all outstanding letters of credit issued
prior to the Closing Date by CIT Group/Business Credit, Inc., Contingent
Obligations arising under such letters of credit;
(j) Contingent Obligations arising under the Venturi Staffing Purchase
Agreement, as in effect on the date hereof, including without limitation, the
transition services and guarantees of
49
leases contemplated therein in an amount not to exceed $5,500,000 in the
aggregate at any time outstanding; and
(k) Contingent Obligations arising under the First Lien Debt Documents.
Section 5.4 RESTRICTED DISTRIBUTIONS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Distribution or accept any Restricted Distribution; provided that the
foregoing shall not restrict or prohibit Subsidiaries of any Borrower from
making dividends or distributions to such Borrower (and the acceptance by such
Borrower of such dividend and distribution) and shall not restrict or prohibit:
(a) dividends or distributions by COMSYS IT to COMSYS Holdings and by VTP
to PFI Holdings, which are immediately further distributed by COMSYS Holdings or
PFI Corp., as applicable, to Holdings, and which are immediately used by
Holdings to pay taxes payable by Holdings;
(b) a dividend or distribution by VTP to PFI Holdings, which is
immediately further distributed by PFI Holdings to Holdings on the Closing Date
to repay existing Debt of Holdings to the extent permitted by and as specified
in Section 4.7;
(c) dividends or distributions by COMSYS IT to COMSYS Holdings and by VTP
to PFI Holdings, which are immediately further distributed by COMSYS Holdings or
PFI Corp., as applicable, to Holdings, and which are immediately used by
Holdings to pay reasonable director fees payable by Holdings, so long as before
and after giving effect to any such dividend or distribution no Event of Default
shall have occurred and be continuing;
(d) dividends or distributions by COMSYS IT to COMSYS Holdings and by VTP
to PFI Holdings, which are immediately further distributed by COMSYS Holdings or
PFI Corp., as applicable, to Holdings, and immediately used by Holdings to pay
administrative expenses, including without limitation reimbursements of
directors for actual out-of-pocket expenses incurred in connection with
attending board of director meetings and attorney fees, so long as (A) before
and after giving effect to any such dividends or distributions no Event of
Default shall have occurred and be continuing and (B) such payments do not
exceed $200,000 in the aggregate in any Fiscal Year;
(e) dividends or distributions by COMSYS IT to COMSYS Holdings and by VTP
to PFI Holdings, which are immediately further distributed by COMSYS Holdings or
PFI Corp., as applicable, to Holdings, and which are immediately used by
Holdings to pay, in the ordinary course of business, liabilities of Holdings in
respect of (i) lease obligations, (ii) license obligations, (iii) insurance
premiums, (iv) the Restructuring Reserve, (v) the transactions contemplated by
the Venturi Staffing Purchase Agreement, (vi) other obligations of Holdings
incurred prior to the Closing Date and (vii) other liabilities customarily
incurred by public holding companies similarly situated, so long as (x) with
respect to obligations arising under leases and licenses, such leases and
licenses were entered into by Holdings prior to the Closing Date or constitute
renewals or extensions thereof (provided that such renewals or extensions are on
substantially the same terms and conditions as such leases and licenses in
effect on the
50
Closing Date) and (ii) all such payments (other than payments in respect of the
Restructuring Reserve and the transactions contemplated by the Venturi Staffing
Purchase Agreement) do not exceed $5,000,000 in the aggregate in any Fiscal
Year; and
(f) in the event any Lender elects to waive such holder's pro rata share
of any mandatory prepayment in accordance with the terms and provisions set
forth in Section 2.1(e), dividends or distributions by COMSYS IT to COMSYS
Holdings and by VTP to PFI Holdings, which are immediately further distributed
by COMSYS Holdings or PFI Corp., as applicable, to Holdings, and which are
immediately used by Holdings to redeem "Series A-1 Preferred Stock" (as defined
in the Holdings Certificate of Designations) in an amount not exceeding such
waived mandatory prepayment.
Section 5.5 RESTRICTIVE AGREEMENTS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly (i) enter into or assume any agreement (other than the
Financing Documents, the First Lien Debt Documents and documents governing
Permitted Liens) prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired or (ii) create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind (except (A) as provided by the First Lien
Credit Agreement, (B) by reason of customary provisions restricting assignments,
subletting or other transfers contained in leases, licenses and joint venture
agreements entered into in the ordinary course of business, provided that, in
each case, any such restriction contained therein relates only to the asset or
assets subject to such agreement and (C) as provided in other agreements
governing Permitted Liens) on the ability of any Subsidiary to: (1) pay or make
Restricted Distributions to any Credit Party; (2) pay any Debt owed to any
Credit Party; (3) make loans or advances to any Credit Party; or (4) transfer
any of its property or assets to any Credit Party.
Section 5.6 PAYMENTS AND MODIFICATIONS OF FIRST LIEN DEBT.
The Credit Parties will not, and will not permit their Subsidiaries to,
directly or indirectly amend, alter, waive or modify the First Lien Debt
Documents, except to the extent permitted pursuant to the Second Lien
Intercreditor Agreement.
Section 5.7 CONSOLIDATIONS, MERGERS AND SALES OF ASSETS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly:
(a) consolidate or merge with or into any other Person (except, upon not
less than five (5) Business Days' prior written notice to Administrative Agent,
(i) any Subsidiary of any Borrower may merge with, or dissolve or liquidate into
any Borrower, provided that such Borrower shall be the continuing or surviving
entity, (ii) PFI Holdings and COMSYS Holdings may merge, and each may merge with
any Borrower, provided that such Borrower shall be the continuing or surviving
entity, (iii) PFI Holdings and COMSYS Holdings may merge with and into Holdings
and (iv) any Borrower may merge with any other Borrower, provided that, in the
case of clauses (i) through (iv) above, such Credit Party shall comply with the
provisions set forth in Section 4.12); or
51
(b) sell, lease, license or otherwise transfer, directly or indirectly,
any of its or their assets, other than:
(i) the granting of licenses of intellectual property (as licensor)
in the ordinary course of business;
(ii) dispositions of cash and Cash Equivalents; and
(iii) dispositions of Equipment for cash and fair value that the
board of directors (or comparable body) of such Credit Party determines in good
faith is no longer used or useful in the business of such Credit Party and its
Subsidiaries if all of the following conditions are met: (1) the market value of
assets sold or otherwise disposed of in any single transaction or series of
related transactions does not exceed $500,000 and the aggregate market value of
assets sold or otherwise disposed of in any Fiscal Year of the Credit Parties
does not exceed $1,000,000 in the aggregate; (2) the Net Cash Proceeds of such
Asset Disposition are applied as required by Section 2.1(c)(iv); (3) after
giving effect to the Asset Disposition and the repayment of Debt with the
proceeds thereof, the Credit Parties are in compliance on a pro forma basis with
the covenants set forth in Article VII recomputed for the most recently ended
quarter for which information is available and are in compliance with all other
terms and conditions of this Agreement; and (4) no Default or Event of Default
then exists or would result from such Asset Disposition. The Collateral Agent
will, upon the written request of the Borrowers, release its Lien and security
interest in any Collateral that is sold or transferred in a transaction
permitted by this Section 5.7 (other than with respect to a transaction from one
Credit Party to another), provided that the First Lien Agent concurrently
releases its Lien and security interest in such Collateral. To facilitate any
such release the Collateral Agent will, at the expense of the Borrowers, execute
and deliver release documentation as reasonably requested by the Borrowers.
Section 5.8 PURCHASE OF ASSETS, INVESTMENTS.
Such Credit Party will not, and will not permit any of its Subsidiaries
to, directly or indirectly acquire any assets other than, solely with respect to
the Borrowers and their respective Subsidiaries, (i) in the ordinary course of
business or (ii) as otherwise set forth in this Section 5.8. Such Credit Party
will not, and will not permit any Subsidiary to, directly or indirectly make,
acquire or own any Investment in any Person other than:
(a) Investments set forth on the Information Certificate, to the extent
set forth therein (other than (i) Investments in Subsidiaries permitted pursuant
to clause (c) and (j) of this Section 5.8);
(b) Cash Equivalents;
(c) Investments in Borrowers and Domestic Wholly-Owned Subsidiaries of the
Borrowers, so long as (i) all of the outstanding capital stock or other equity
interests of any such Subsidiary or Borrower, as the case may be, has been
pledged to the Collateral Agent and (ii) with respect to investments in
Subsidiaries that are not Borrowers, any such Subsidiary has Guaranteed the
Obligations and secured such Guarantee by granting in favor of the Collateral
Agent, for its benefit and the benefit of the Administrative Agent and Lenders,
a Lien on all or substantially all of the assets;
52
(d) intercompany loans to Foreign Subsidiaries to the extent permitted
pursuant to Section 5.1(d);
(e) bank deposits established in accordance with Section 5.15;
(f) Investments in securities of Account Debtors received pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or insolvency
of such Account Debtors;
(g) Investments in the form of Holdings Loans;
(h) other Investments not described above in an aggregate amount not to
exceed $1,000,000 at any one time outstanding;
(i) Permitted Acquisitions, including the establishment and capitalization
of wholly-owned Subsidiaries in connection therewith; and
(j) Investments of Holdings (to the extent owned by Holdings on the
Closing Date) in the capital stock or other equity securities of (i)
Econometrix, Inc., a California corporation, (ii) AutoHire Development, Inc. and
(iii) VTP-CA, Inc., a North Carolina corporation, provided, in each case, all of
the outstanding capital stock or other equity interests of any such Person owned
by Holdings has been pledged to the Collateral Agent.
Without limiting the generality of the foregoing, such Credit Party will not,
and will not permit any Subsidiary to, (i) acquire or create any Subsidiary
(other than in connection with a Permitted Acquisition) or (ii) engage in any
joint venture or partnership with any other Person.
Section 5.9 TRANSACTIONS WITH AFFILIATES.
Except (i) as otherwise disclosed in the Information Certificate, (ii) as
permitted pursuant to the terms of this Agreement, (iii) for transactions
between or among the Borrowers, and their Domestic Wholly-Owned Subsidiaries in
the ordinary course of business, (iv) transactions contemplated by the Venturi
Staffing Purchase Agreement and (v) for transactions that are disclosed to
Administrative Agent in writing in advance of being entered into and which
contain terms that are no less favorable to such Credit Party or any Subsidiary,
as the case may be, than those which might be obtained from a third party not an
Affiliate of any Credit Party, such Credit Party will not, and will not permit
any Subsidiary to, directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Credit Parties.
Section 5.10 MODIFICATION OF ORGANIZATIONAL DOCUMENTS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly amend or otherwise modify any Organizational Documents of
such Person in any material respect in a manner that would be adverse to the
rights and remedies of Agents and Lenders or adversely impair the ability of
such Credit Party to perform its obligations under the Financing Documents.
53
Section 5.11 FISCAL YEAR.
Such Credit Party will not, and will not permit any Subsidiary to, change
its Fiscal Year.
Section 5.12 CONDUCT OF BUSINESS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, engage in any line of business other than those
businesses engaged in on the Closing Date and businesses reasonably related
thereto.
Section 5.13 [INTENTIONALLY OMITTED].
Section 5.14 LEASE PAYMENTS.
Such Credit Party will not, and will not permit any Subsidiary to,
directly or indirectly, incur or assume (whether pursuant to a Guarantee or
otherwise) any liability for rental payments under a lease (other than, with
respect to the Credit Parties, leases for real property) with a lease term of
one (1) year or more if, after giving effect thereto, the aggregate amount of
minimum lease payments that Holdings and its Consolidated Subsidiaries have so
incurred or assumed will exceed, on a consolidated basis, $1,000,000 for any
calendar year under all such leases (excluding, with respect to the Credit
Parties, Capital Leases and leases for real property).
Section 5.15 BANK ACCOUNTS.
Without limiting the provisions of Section 6.1, such Credit Party will
not, and will not permit any Subsidiary to, directly or indirectly, establish
any new bank account without prior written notice to the Collateral Agent and
unless (i) such account is subject to an agreement among the applicable Credit
Parties, the applicable bank and the First Lien Agent acting as contractual
representative for the Collateral Agent for perfection purposes pursuant to
Section 5.15 and 6.1(d) of the First Lien Credit Agreement and the Second Lien
Intercreditor Agreement or (ii) the Collateral Agent, such Credit Party and the
bank at which the account is to be opened enter into a control agreement
regarding such bank account pursuant to which such bank acknowledges the
security interest of the Collateral Agent in such bank account, agrees to comply
with instructions originated by the Collateral Agent directing disposition of
the funds in the bank account without further consent from any Credit Party, and
agrees to subordinate and limit any security interest the bank may have in the
bank account on terms reasonably satisfactory to the Collateral Agent.
ARTICLE VI
ACCOUNTS REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
To induce Agents and Lenders to enter into this Agreement and to make the
Second Lien Term Loans and other credit accommodations contemplated hereby, each
Credit Party hereby represents and warrants to Agents and each Lender, and
further agrees with Agents and each Lender, that:
54
Section 6.1 ACCOUNTS AND ACCOUNT COLLECTIONS.
(a) Such Credit Party shall notify the Collateral Agent promptly of: (i)
any material delay in the performance by such Credit Party or any of its
Subsidiaries of any of their material obligations to any Account Debtor or the
assertion of any material claims, offsets, defenses or counterclaims by any
Account Debtor, or any material disputes with Account Debtors, or any
settlement, adjustment or compromise thereof, (ii) all material adverse
information known to any Credit Party relating to the financial condition of any
Account Debtor and (iii) any event or circumstance which, to any Credit Party's
knowledge, would result in any Account no longer constituting an Eligible
Account (as such term is defined in the First Lien Credit Agreement). Each
Credit Party hereby agrees not to grant to any Account Debtor, and to cause each
of its Subsidiaries not to grant to any Account Debtor, any material credit,
discount, allowance or extension, or to enter into any agreement for any of the
foregoing, without Collateral Agent's consent, except in the ordinary course of
business in accordance with past practices. So long as no Event of Default has
occurred and is continuing, any such Credit Party may settle, adjust or
compromise, and may permit each of its Subsidiaries to settle, adjust or
compromise, any claim, offset, counterclaim or dispute with any Account Debtor.
At any time that an Event of Default has occurred and is continuing, the
Collateral Agent shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with Account
Debtors of any Credit Party or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice
delivered to the First Lien Agent or schedule thereof delivered to the First
Lien Agent shall be true and complete in all material respects, (ii) no payments
shall be made thereon except payments immediately delivered to the First Lien
Agent, as contractual representative for the Collateral Agent pursuant to the
Second Lien Intercreditor Agreement (or, following the Discharge of all First
Lien Debt, to the Collateral Agent), pursuant to the terms of the First Lien
Debt Documents or this Agreement, as applicable, or any applicable Security
Document (to the extent so required), (iii) there shall be no setoffs,
deductions, contras, defenses, counterclaims or disputes existing or asserted
with respect thereto except as reported to the Agents in accordance with the
terms of this Agreement, and (iv) none of the transactions giving rise thereto
will violate any applicable laws or regulations, all documentation relating
thereto will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms.
(c) subject to the terms of the Second Lien Intercreditor Agreement, the
Collateral Agent shall have the right at any time or times, upon prior notice to
the Funds Administrator so long as no Default or Event of Default has occurred
and is continuing, in Collateral Agent's name or in the name of a nominee of
Collateral Agent, to verify the validity, amount or any other matter relating to
any Account or other Collateral, by mail, telephone, e-mail, facsimile
transmission or otherwise; provided, that so long as no Default or Event of
Default has occurred and is continuing, Collateral Agent shall afford the Funds
Administrator the opportunity to participate in any such discussions with
Account Debtors. To facilitate the exercise of the right described in the
immediately preceding sentence, each Credit Party hereby agrees to provide the
Collateral Agent upon request the name and address of each Account Debtor of any
Credit Party or any of such Credit Party's Subsidiaries.
55
Section 6.2 DEPOSIT ACCOUNTS.
(a) Until the Discharge of all First Lien Debt, each Credit Party shall
comply in all respects with Section 6.1(d), 6.1(e), 6.1(f) and 6.1(g) of the
First Lien Credit Agreement. Contemporaneously with the Discharge of all First
Lien Debt, each Credit Party (other than Foreign Subsidiaries) shall further
execute and deliver, and shall cause each of its Subsidiaries to execute and
deliver, such Deposit Account Control Agreements as Collateral Agent may
reasonably require. Without limiting the provisions of Section 5.15, no Credit
Party shall establish, and no Credit Party (other than a Foreign Subsidiary)
shall cause or permit any of its Subsidiaries to establish, any Deposit Accounts
not existing as of the Closing Date, unless such Credit Party or its
Subsidiaries (as applicable) have complied in full with the provisions of this
Section 6.2 with respect to such Deposit Accounts. The foregoing and anything
contained in any Financing Document to the contrary notwithstanding, the Credit
Parties shall not be required to deliver any such Deposit Account Control
Agreements in respect of (i) any "Payroll Account" or "Payroll Tax Account" (in
each case, as defined on the Bank Account Schedule to the Information
Certificate) each maintained at Wachovia Bank, National Association; provided,
that, the Credit Parties shall not, and shall not cause or permit any of their
respective Subsidiaries to, deposit or maintain funds in such account other than
funds deposited therein in the ordinary course of business for purposes of
funding current payroll liabilities, (ii) the "Benefit Accounts" (as defined on
the Bank Account Schedule to the Information Certificate) and the "Pre-Tax
Parking Account" (as defined on the Bank Account Schedule to the Information
Certificate) maintained at Wachovia Bank, National Association ; provided, that,
in each case, the Credit Parties shall not, and shall not cause or permit any of
their respective Subsidiaries to, deposit or maintain funds in such accounts
other than funds deposited therein at the direction of such Credit Party's
employees to be held therein for the benefit of the employees of such Credit
Party and the Credit Parties will at no time deposit any of their own assets
into such accounts and (iii) any other Restricted Account; provided, that the
Credit Parties shall not, and shall not cause or permit any of their respective
Subsidiaries to, deposit or maintain funds in such Restricted Accounts other
than funds deposited therein in the ordinary course of business for funding
current liabilities. At no time shall any Credit Party or any of its
Subsidiaries deposit, or permit or direct any Account Debtor or any other Person
(other than the First Lien Agent or an Agent) to deposit, funds directly into
any account maintained by any Credit Party other than the "Depository Accounts,"
and/or the "Lockboxes" maintained at Bank of America, N.A. and Wachovia Bank
National Association (in each case, as defined in the Information Certificate),
provided that VTP may continue to accept checks (to the extent such arrangements
have been established prior to the Closing Date) from sub-tenants under real
property leases so long as (i) the aggregate amount of all checks received by
VTP does not exceed $500,000 in the aggregate per month and (ii) such checks are
promptly deposited by VTP into the Depository Account maintained at Bank of
America, N.A.. Each Credit Party agrees to reimburse the Agents on demand for
any amounts owed or paid to any bank party to a Deposit Account Control
Agreement arising out of such Agent's payments to or indemnification of such
bank or Person.
56
ARTICLE VII
FINANCIAL COVENANTS
Each Credit Party that is a party hereto agrees that, so long as any
Obligation remains outstanding:
Section 7.1 MINIMUM EBITDA.
The Credit Parties will not permit EBITDA for the four (4) fiscal quarter
period (or such shorter period commencing on October 1, 2004) ending on the last
day of any fiscal quarter ending closest to the date set forth below to be less
than the amount set forth below for such date:
Date Amount
------------------------------------- ------------
December 31, 2004 $ 8,835,000
March 31, 2005 $ 17,005,000
June 30, 2005 $ 26,125,000
September 30, 2005 $ 36,385,000
December 31, 2005 $ 36,385,000
March 31, 2006 $ 37,573,000
June 30, 2006 $ 38,760,000
September 30, 2006 $ 39,900,000
December 31, 2006 $ 41,135,000
March 31, 2007 $ 42,133,000
June 30, 2007 $ 43,130,000
September 30, 2007 $ 44,175,000
December 31, 2007 and the last day of
each calendar quarter thereafter $ 45,125,000
Section 7.2 FIXED CHARGE COVERAGE RATIO.
The Credit Parties will not permit the Fixed Charge Coverage Ratio for the
four (4) fiscal quarter period (or such shorter period commencing on October 1,
2004) ending on the last day of any fiscal quarter to be less than 1.19 to 1.00.
Section 7.3 TOTAL DEBT TO EBITDA RATIO.
The Credit Parties will not permit the ratio of (i) Total Debt as of the
last day of the fiscal quarter ending closest to the date set forth below to
(ii) Adjusted EBITDA for the four (4) fiscal quarter period ending on such last
day to exceed the ratio set forth below opposite such date:
57
Date Maximum Ratio
------------------------------------- -------------
December 31, 2004 4.62 to 1.00
March 31, 2005 4.62 to 1.00
June 30, 2005 4.62 to 1.00
September 30, 2005 4.31 to 1.00
December 31, 2005 4.20 to 1.00
March 31, 2006 3.94 to 1.00
June 30, 2006 3.68 to 1.00
September 30, 2006 3.41 to 1.00
December 31, 2006 3.15 to 1.00
March 31, 2007 2.99 to 1.00
June 30, 2007 2.76 to 1.00
September 30, 2007 2.57 to 1.00
December 31, 2007 2.36 to 1.00
March 31, 2008 2.31 to 1.00
June 30, 2008 2.26 to 1.00
September 30, 2008 2.21 to 1.00
December 31, 2008 and the last day of
each calendar quarter thereafter 2.10 to 1.00
Section 7.4 MINIMUM REVOLVING LOAN BORROWING AVAILABILITY.
Until the Discharge of all First Lien Debt, the Credit Parties will not at
any time permit Net Borrowing Availability to be less than $4,975,000. For
purposes of this Section 7.4, Net Borrowing Availability as of any date of
calculation shall be calculated by reference to the Borrowing Base Certificate
most recently delivered to the First Lien Agent in accordance with the terms of
the First Lien Credit Agreement, with such adjustments as are appropriate to
accurately reflect outstanding First Lien Loan amounts and other credit exposure
as of such date of calculation. In the event the Borrowers shall at any time
fail to deliver to the First Lien Agent a Borrowing Base Certificate within the
time period required under the First Lien Credit Agreement, the First Lien Agent
shall calculate Net Borrowing Availability by reference to the most recently
delivered Borrowing Base Certificate, with such adjustments to the values of
Eligible Billed Accounts and Eligible Unbilled Accounts (as such terms are
defined in the First Lien Credit Agreement) as First Lien Agent deems
appropriate in the exercise of its reasonable credit judgment.
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ARTICLE VIII
CONDITIONS
Section 8.1 CONDITIONS TO CLOSING.
The obligation of each Lender to make the Second Lien Term Loans on the
Closing Date shall be subject to the receipt by Administrative Agent of each
agreement, document and instrument set forth on the Closing Checklist, each in
form and substance reasonably satisfactory to Administrative Agent, and to the
consummation of the following conditions precedent, each to the satisfaction of
Administrative Agent and Lenders in their sole discretion:
(a) evidence of the consummation of the transactions contemplated by the
Operative Documents, including without limitation (i) the receipt by
Administrative Agent of a copy of the file-stamped Certificate of Merger
effectuating the Merger under applicable law and in accordance with the terms of
the Merger Documents, certified as true, correct and complete and recorded by
the Secretary of State of the State of Delaware and (ii) the issuance of the
"Series A-1 Preferred Stock" (as such term is defined in the Holdings
Certificate of Designations), (iii) assurances reasonably satisfactory to the
Agents that all conditions to the funding of the investments contemplated by the
First Lien Debt Documents (including the initial fundings under the First Lien
Credit Agreement but excluding the fundings under this Agreement) have been
satisfied and (iv) receipt by Administrative Agent of evidence of the
consummation of the Venturi Staffing Sale pursuant to the terms of the Venturi
Staffing Purchase Agreement;
(b) the payment of all fees, expenses and other amounts due and payable
under each Financing Document;
(c) the satisfaction of Administrative Agent and Lenders as to the
absence, since December 31, 2003, of any material adverse change in the
business, operations, properties or condition (financial or otherwise) of the
Credit Parties taken as a whole, or any event or condition which could
reasonably be expected to result in such a material adverse change;
(d) [intentionally omitted];
(e) after giving effect to the initial funding of the Second Lien Term
Loans and the consummation of the transactions contemplated by the Operative
Documents, the ratio of (x) Total Debt as of the Closing Date to (y) EBITDA for
the twelve (12) month period ending June 30, 2004 does not exceed 3.90 to 1.00;
(f) receipt by Administrative Agent of evidence of completion to the
satisfaction of the Administrative Agent of such investigations, reviews and
audits with respect to the Credit Parties as the Administrative Agent or any
Lender may deem appropriate, including, without limitation, the field exams
conducted by KPMG;
(g) receipt by Administrative Agent of payoff letters and releases
evidencing (i) the repayment in full and cancellation of that certain demand
intercompany note issued by COMSYS IT to COMSYS Holdings on August 18, 2004 in
the original aggregate principal amount of $62,500,000 and that certain demand
intercompany note issued by COMSYS IT to COMSYS Holdings on August 18, 2004 in
the original aggregate principal amount of $197,000, (ii) the
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repayment in full of the Debt of COMSYS IT owing to Wachovia Investors, Inc.
incurred pursuant to the terms of that certain Amended and Restated Senior
Subordinated Credit Agreement dated as of August 18, 2004 and the termination of
all documents executed in connection therewith, (iii) the repayment in full of
the loan made by Bank of America, N.A. to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ on September 25, 2001
and, in connection therewith, the termination of that certain Limited Guaranty
dated as of September 25, 2001 by COMSYS IT in favor of Bank of America, N.A.
and that certain Reimbursement Agreement dated as of September 25, 2001 by and
among COMSYS IT, COMSYS Holdings, GTCR Fund VI, L.P. and Wachovia Corporation,
(iv) the repayment in full of all Debt owing by COMSYS Services pursuant to that
certain Credit Agreement dated as of August 18, 2004 by and among COMSYS
Services, COMSYS Holdings, COMSYS IT, ▇▇▇▇▇▇▇ ▇▇▇▇▇, as agent, and the lenders
thereunder and (v) the repayment in full of all Debt owing by the Venturi Credit
Parties pursuant to that certain Second Amended and Restated Credit Agreement
dated as of April 14, 2003 by and among the Venturi Credit Parties and The CIT
Group/Business Credit, Inc., as successor in interest to Bank of America, N.A.;
(h) receipt by each Agent of such other documents, instruments and/or
agreements as an Agent may reasonably request;
(i) the fact that, immediately before and after such borrowing, no Default
or Event of Default shall have occurred and be continuing; and
(j) the fact that the representations and warranties of each Credit Party
contained in the Financing Documents shall be true and correct in all material
respects on and as of the date of such borrowing or issuance, except to the
extent that any such representation or warranty (i) relates to a specific date
in which case such representation or warranty shall be true and correct as of
such earlier date and (ii) is qualified by materiality or has Material Adverse
Effect qualifiers, in which case, such representations and warranties shall be
true and correct in all respects on and as of the date of such borrowing or
issuance.
The initial borrowing of the Second Lien Term Loans hereunder shall be deemed to
be a representation and warranty by each Credit Party on the date of such
borrowing or notice as to the facts specified in Sections 8.1(i) and 8.1(j).
ARTICLE IX
EVENTS OF DEFAULT
Section 9.1 EVENTS OF DEFAULT.
For purposes of the Financing Documents, the occurrence of any of the
following conditions and/or events, whether voluntary or involuntary, by
operation of law or otherwise, shall constitute an "Event of Default":
(a) The Borrowers shall fail to pay when due any principal, interest,
premium or fee under any Financing Document or any other amount payable under
any Financing Document;
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(b) Any Borrower or other Credit Party shall fail to observe or perform
any covenant contained in the Fee Letter, Section 4.1, Section 4.4, Section 4.7,
Section 4.10, Article V, Article VI or Article VII;
(c) any Credit Party defaults in the performance of or compliance with any
term contained in this Agreement or in any other Financing Document (other than
occurrences described in other provisions of this Section 9.1 for which a
different grace or cure period is specified or which constitute immediate Events
of Default) and such default is not remedied or waived within fifteen (15) days
after the earlier of (1) receipt by the Funds Administrator of notice from
Administrative Agent or Required Lenders of such default or (2) actual knowledge
of any Borrower or any other Credit Party of such default;
(d) any representation, warranty, certification or statement made by any
Credit Party or any other Person in any Financing Document or in any
certificate, financial statement or other document delivered pursuant to any
Financing Document is incorrect in any respect (or in any material respect if
such representation, warranty, certification or statement is not by its terms
already qualified as to materiality) when made (or deemed made);
(e) (i) failure of any Credit Party to pay when due or within any
applicable grace period any principal, interest or other amount on Debt (other
than the Second Lien Term Loans and the First Lien Debt), or the occurrence of
any breach, default, condition or event with respect to any Debt (other than the
Second Lien Term Loans and the First Lien Debt), if the effect of such failure
or occurrence is to cause or to permit the holder or holders of any such Debt to
cause, Debt or other liabilities having an individual principal amount in excess
of $1,000,000 or having an aggregate principal amount in excess of $1,500,000 to
become or be declared due prior to its stated maturity or (ii) an "Event of
Default" under Section 9.1(a) of the First Lien Credit Agreement if such default
is caused by a failure to pay principal of, or interest or premium, if any, on,
the First Lien Debt in an amount in excess of $250,000;
(f) any Credit Party shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(g) an involuntary case or other proceeding shall be commenced against any
Credit Party seeking liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of sixty (60) days; or an order for relief
shall be entered against any Credit Party under the federal bankruptcy laws as
now or hereafter in effect;
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(h) (1) institution of any steps by any Person to terminate a Pension Plan
if as a result of such termination any Credit Party or any member of the
Controlled Group could be required to make a contribution to such Pension Plan,
or could incur a liability or obligation to such Pension Plan, in excess of
$1,000,000, (2) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA, or (3) there
shall occur any withdrawal or partial withdrawal from a Multiemployer Pension
Plan and the withdrawal liability (without unaccrued interest) to Multiemployer
Pension Plans as a result of such withdrawal (including any outstanding
withdrawal liability that any Credit Party or any member of the Controlled Group
have incurred on the date of such withdrawal) exceeds $1,000,000;
(i) one or more judgments or orders for the payment of money aggregating
in excess of $2,000,000 shall be rendered against any or all Credit Parties and
such judgments or orders shall continue unsatisfied and unstayed for a period of
ten (10) days;
(j) (1) any person or group of persons (within the meaning of the
Securities and Exchange Act of 1934) (other than Wachovia Investors, Inc. and
its Affiliates) shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Act on 1934) of fifty
percent (50%) or more of the issued and outstanding shares of capital stock of
Holdings having the right to vote for the election of the directors of Holdings
under ordinary circumstances, (2) Holdings shall cease to directly own and
control one hundred percent (100%) of each class of the outstanding equity
interests of COMSYS Holdings and PFI Holdings, (3) COMSYS Holdings shall cease
to directly own and control one hundred percent (100%) of each class of the
outstanding equity interests of COMSYS IT, (4) COMSYS IT shall cease to directly
own and control one hundred percent (100%) of the equity interests of COMSYS
Services and COMSYS Limited, (5) PFI Holdings shall cease to directly own and
control one hundred percent (100%) of the equity interests of VTP, (6) each
Borrower shall cease to, directly or indirectly, own and control one hundred
percent (100%) of each class of the outstanding equity interests of each
Subsidiary of such Borrower (except, with respect to clauses (2), (3), (4), (5)
and (6), to the extent permitted in Section 5.7(a)), (7) any "Change in
Ownership," "Fundamental Change," or terms of similar import occurs under the
Holdings Certificate of Designations, or (8) a period of ninety (90) consecutive
days shall have elapsed during which ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall cease to be the
chairman of the board, chief executive officer or president of each Credit Party
for any reason unless prior to the expiration of such time, a replacement
reasonably satisfactory to Administrative Agent shall have been appointed and
employed;
(k) the accountant's report or reports on the audited statements delivered
pursuant to Section 4.1(b) shall include any material qualification (including
with respect to the scope of audit) or exception;
(l) any Lien created by any of the Security Documents shall at any time
fail to constitute a valid and perfected Lien on all of the Collateral purported
to be secured thereby, subject to no prior or equal Lien except Permitted Liens,
or any Credit Party shall so assert in writing;
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(m) any Credit Party shall be prohibited or otherwise materially
restrained from conducting the business theretofore conducted by it by virtue of
any casualty, any labor strike, any determination, ruling, decision, decree or
order of any court or regulatory authority of competent jurisdiction or any
other event and such casualty, labor strike, determination, ruling, decision,
decree, order or other event remains unstayed and in effect for any period of
ten (10) days;
(n) (i) any of the Financing Documents or the First Lien Debt Documents
shall for any reason fail to constitute the valid and binding agreement of any
party thereto (other than, with respect to the First Lien Debt Documents, to the
extent same are paid in full in accordance with the terms of the Financing
Documents), or any such party shall so assert in writing or (ii) any of the
other Operative Documents shall fail to constitute the valid and binding
agreement of any party thereto, or any such party shall so assert in writing,
and the result of any such failures or asserted failures, as the case may be, of
such Operative Document to be a valid and binding agreement could reasonably be
expected to result in a Material Adverse Effect;
(o) (i) any Security Document or other Financing Document to which
Holdings, PFI Holdings or COMSYS Holdings is a party shall for any reason be
partially (including with respect to future advances) or wholly revoked or
invalidated, or otherwise ceases to be in full force and effect; or (ii)
Holdings or any other Credit Party or any Affiliate thereof shall contest in any
manner the validity or enforceability thereof or deny that it has any further
liability or obligation thereunder; or (iii) Holdings shall engage in any
business activity other than (A) as contemplated by this Agreement, (B)
activities customarily engaged in by public holding companies similarly
situated, (C) activities of the type set forth in Section 5.4(e) and (D) the
performance of its obligations under this Agreement, the Financing Documents to
which it is a party, the Operative Documents and any other instruments,
documents or agreements entered into by Holdings, under the Operative Documents
and any other agreement to which Holdings is a party, to the extent not
otherwise prohibited by this Agreement, or (iv) COMSYS Holdings or PFI Holdings
shall engage in any business activity other than (A) as contemplated by this
Agreement, (B) activities incidental to maintenance of their corporate existence
and (C) the performance of their obligations under this Agreement, the Financing
Documents to which it is a party and the Operative Documents, or
(p) COMSYS Limited shall (i) incur, grant or suffer to exist any Liens on
any material portion of its assets, any Debt or any Contingent Obligations
(except as expressly permitted herein), (ii) issue, sell or dispose of any
equity securities other than to COMSYS IT or (iii) consummate any merger or
consolidation with any other Person.
Section 9.2 ACCELERATION.
Upon the occurrence and during the continuance of an Event of Default,
Administrative Agent may, and shall if requested by Required Lenders, by notice
to the Funds Administrator declare the Obligations to be, and the Obligations
shall thereupon become, immediately due and payable without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other notice
of any kind, all of which are hereby waived by the Borrowers and the Borrowers
will pay the same; provided that in the case of any of the Events of Default
specified in Section 9.1(f) or 9.1(g) above, without any notice to the Funds
Administrator or the Borrowers
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or any other act by Administrative Agent or the Lenders, all of the Obligations
shall become immediately due and payable without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other notice of any
kind, all of which are hereby waived by the Borrowers and the Borrowers will pay
the same.
Section 9.3 [INTENTIONALLY OMITTED].
Section 9.4 DEFAULT RATE OF INTEREST AND SUSPENSION OF LIBOR RATE OPTIONS.
At the election of the Administrative Agent or Required Lenders, after the
occurrence of an Event of Default and for so long as it continues, the Second
Lien Term Loans and other Obligations shall bear interest at rates that are two
percent (2.0%) in excess of the rates otherwise payable under this Agreement,
but in no event in excess of the Maximum Lawful Rate. Furthermore, at the
election of Administrative Agent or Required Lenders during any period in which
any Event of Default is continuing (x) as the Interest Periods for LIBOR Loans
then in effect expire, such Second Lien Term Loans shall be converted into Prime
Rate Loans and (y) the LIBOR election will not be available to the Borrowers.
Section 9.5 SETOFF RIGHTS.
During the continuance of any Event of Default, each Lender is hereby
authorized by each Credit Party at any time or from time to time, with
reasonably prompt subsequent notice to the Funds Administrator (any prior or
contemporaneous notice being hereby expressly waived by the Credit Parties) to
set off and to appropriate and to apply any and all (A) balances held by such
Lender at any of its offices for the account of any Credit Party or any of its
Subsidiaries (regardless of whether such balances are then due to such Credit
Party or its Subsidiaries), and (B) other property at any time held or owing by
such Lender to or for the credit or for the account of any Credit Party or any
of its Subsidiaries, against and on account of any of the Obligations; except
that no Lender shall exercise any such right without the prior written consent
of Administrative Agent. Any Lender exercising a right to set off shall purchase
for cash (and the other Lenders shall sell) interests in each of such other
Lender's Second Lien Term Loan Commitment Percentage of the Obligations as would
be necessary to cause all Lenders to share the amount so set off with each other
Lender in accordance with their respective Second Lien Term Loan Commitment
Percentage of the Obligations. Each Credit Party agrees, to the fullest extent
permitted by law, that any Lender may exercise its right to set off with respect
to the Obligations as provided in this Section 9.5.
Section 9.6 APPLICATION OF PROCEEDS.
Notwithstanding anything to the contrary contained in this Agreement, upon
the occurrence and during the continuance of an Event of Default, (a) each
Borrower irrevocably waives the right to direct the application of any and all
payments at any time or times thereafter received by Administrative Agent from
or on behalf of the Borrowers or any guarantor of all or any part of the
Obligations, and, as between the Borrowers on the one hand and Administrative
Agent and Lenders on the other, Administrative Agent shall have the continuing
and exclusive right to apply and to reapply any and all payments received
against the Obligations in such manner as Administrative Agent may deem
advisable notwithstanding any previous application
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by Administrative Agent and (b) the proceeds of any sale of, or other
realization upon, all or any part of the Collateral shall be applied: first, to
all fees, costs, indemnities, liabilities, obligations and expenses incurred by
or owing to the Agents (in their capacities as Collateral Agent and
Administrative Agent, respectively) with respect to this Agreement, the other
Financing Documents or the Collateral; second, to all fees, costs, indemnities,
liabilities, obligations and expenses incurred by or owing to any Lender with
respect to this Agreement, the other Financing Documents or the Collateral;
third, to accrued and unpaid interest on the Obligations (including any interest
which but for the provisions of the Bankruptcy Code, would have accrued on such
amounts); fourth, to the principal amount of the Obligations outstanding; and
fifth, to any other indebtedness or obligations of the Borrowers owing to Agents
or any Lender under the Financing Documents. Any balance remaining shall be
delivered, to the extent applicable, in accordance with the Second Lien
Intercreditor Agreement, to the Borrowers or to whomever may be lawfully
entitled to receive such balance or as a court of competent jurisdiction may
direct.
ARTICLE X
EXPENSES, INDEMNITY, TAXES AND RIGHT TO PERFORM
Section 10.1 EXPENSES.
Each Borrower hereby agrees to promptly pay (i) all costs and expenses of
each Agent and the Lenders (including without limitation the fees, costs and
expenses of counsel to, and independent appraisers and consultants retained by
each Agent and the Lenders) in connection with the examination, review, due
diligence investigation, documentation, negotiation, closing and syndication of
the transactions contemplated by the Financing Documents, in connection with the
performance by each Agent and the Lenders of their respective rights and
remedies under the Financing Documents and in connection with the continued
administration of the Financing Documents including any amendments,
modifications, consents and waivers to and/or under any and all Financing
Documents (provided that, to the extent that the costs and expenses referred to
in this clause (i) consist of fees, costs and expenses of appraisers,
consultants or counsel, the Borrowers shall be obligated to pay all costs and
expenses for only one counsel, appraiser and consultant acting for all Lenders
(other than the Agents)), (ii) without limitation of the preceding clause (i),
all costs and expenses of each Agent in connection with the creation, perfection
and maintenance of Liens pursuant to the Financing Documents, including title
investigations, (iii) without limitation of the preceding clause (i), expenses
of each Agent in connection with protecting, storing, insuring, handling,
maintaining or selling any Collateral and in connection with any workout,
collection, bankruptcy, insolvency and other enforcement proceedings under any
and all of the Financing Documents, and (iv) all costs and expenses incurred by
Lenders in connection with any workout, collection, bankruptcy, insolvency and
other enforcement proceedings under any and all Financing Documents, provided,
that to the extent that the costs and expenses referred to in this clause (iv)
consist of fees, costs and expenses of counsel, the Borrowers shall be obligated
to pay such fees, costs and expenses for only one counsel acting for all Lenders
(other than the Agents).
Section 10.2 INDEMNITY.
Each Credit Party that is a party hereto hereby agrees to indemnify, pay
and hold harmless the Agents and Lenders and the officers, directors, employees
and counsel of the
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Agents and Lenders (collectively called the "INDEMNITEES") from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including the fees and disbursements of counsel for such
Indemnitee) in connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitee shall be designated a party thereto
and including any such proceeding initiated by or on behalf of a Credit Party,
and the reasonable expenses of investigation by engineers, environmental
consultants and similar technical personnel and any commission, fee or
compensation claimed by any broker (other than any broker retained by an Agent
or Lenders) asserting any right to payment for the transactions contemplated
hereby, which may be imposed on, incurred by or asserted against such Indemnitee
as a result of or in connection with the transactions contemplated hereby or by
the other Operative Documents (including (i)(A) as a direct or indirect result
of the presence on or under, or escape, seepage, leakage, spillage, discharge,
emission or release from, any property now or previously owned, leased or
operated by any Credit Party, any Subsidiary of any Credit Party or any other
Person of any Hazardous Materials or any Hazardous Materials Contamination, (B)
arising out of or relating to the offsite disposal of any Hazardous Materials
generated or present on any such property or (C) arising out of or resulting
from the environmental condition of any such property or the applicability of
any governmental requirements relating to Hazardous Materials, whether or not
occasioned wholly or in part by any condition, accident or event caused by any
act or omission of any Credit Party or any Subsidiary of any Credit Party, and
(ii) proposed and actual extensions of credit under this Agreement) and the use
or intended use of the proceeds of the Second Lien Term Loans, except that no
Credit Party shall have any obligation hereunder to an Indemnitee with respect
to any liability resulting from the gross negligence or willful misconduct of
such Indemnitee, as determined by a court of competent jurisdiction. To the
extent that the undertaking set forth in the immediately preceding sentence may
be unenforceable, each Credit Party shall contribute the maximum portion which
it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all such indemnified liabilities incurred by the Indemnitees or
any of them.
Section 10.3 TAXES.
Each Credit Party agrees to pay all governmental assessments, charges or
taxes (except income or other similar taxes imposed on an Agent or Lenders),
including any interest or penalties thereon, at any time payable or ruled to be
payable in respect of the existence, execution or delivery of this Agreement or
the other Financing Documents or the issuance of the Second Lien Term Notes and
to indemnify and hold the Agents and Lenders harmless against liability in
connection with any such assessments, charges or taxes.
Section 10.4 RIGHT TO PERFORM.
If any Credit Party fails to perform any obligation hereunder or under any
other Financing Document, either Agent itself may, but shall not be obligated
to, cause such obligation to be performed at the Borrowers' expense and the
Borrowers agree to reimburse such Agent therefor on demand.
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ARTICLE XI
AGENTS
Section 11.1 APPOINTMENT AND AUTHORIZATION.
Each Lender hereby irrevocably appoints and authorizes each Agent to enter
into each of the Security Documents and the Second Lien Intercreditor Agreement
on its behalf and to take such actions as either Administrative Agent or
Collateral Agent, as applicable, on its behalf and to exercise such powers under
the Financing Documents as are delegated to such Agent by the terms thereof,
together with all such powers as are reasonably incidental thereto. Except as
otherwise expressly provided in Section 12.5 or by the terms of the Financing
Documents, each Agent is authorized and empowered to amend, modify, or waive any
provisions of this Agreement or the other Financing Documents on behalf of
Lenders. The provisions of this Article XI are solely for the benefit of the
Agents and Lenders (except for the consent rights granted for the benefit of the
Borrowers under Section 11.12 to the extent provided for therein) and neither
the Borrowers nor any other Credit Party shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as agent of Lenders and
does not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for the Borrowers or any other Credit
Party. Each Agent may perform any of its duties hereunder, or under the
Financing Documents, by or through its agents or employees. Without limiting the
generality of the foregoing, each Lender (x) acknowledges that it has received a
copy of the Second Lien Intercreditor Agreement, (y) consents to each Agent's
execution of the Second Lien Intercreditor Agreement on behalf of such Lender
and (z) agrees to be bound by the terms and provisions of the Second Lien
Intercreditor Agreement.
Section 11.2 AGENTS AND AFFILIATES.
Each Agent shall have the same rights and powers under the Financing
Documents as any other Lender and may exercise or refrain from exercising the
same as though it were not an Agent, and each Agent and its Affiliates may lend
money to, invest in and generally engage in any kind of business with each
Credit Party or Affiliate of any Credit Party as if it were not an Agent
hereunder.
Section 11.3 ACTION BY AGENTS.
The duties of each Agent shall be mechanical and administrative in nature.
No Agent shall have by reason of this Agreement a fiduciary relationship in
respect of any Lender. Nothing in this Agreement or any of the Financing
Documents, express or implied, is intended to or shall be construed to impose
upon either Agent any obligations in respect of this Agreement or any of the
Financing Documents except as expressly set forth herein or therein.
Section 11.4 CONSULTATION WITH EXPERTS.
Each Agent may consult with legal counsel, independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
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Section 11.5 LIABILITY OF AGENTS.
Neither of the Agents nor any of their respective directors, officers,
agents or employees shall be liable to any Lender for any action taken or not
taken by it in connection with the Financing Documents, except that each Agent
shall be liable to the extent of its own gross negligence or willful misconduct
as determined by a court of competent jurisdiction. Neither of the Agents nor
any of their directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with any Financing Document or any
borrowing hereunder; (ii) the performance or observance of any of the covenants
or agreements specified in any Financing Document; (iii) the satisfaction of any
condition specified in any Financing Document, except receipt of items required
to be delivered to such Agent; (iv) the validity, effectiveness, sufficiency or
genuineness of any Financing Document, any Lien purported to be created or
perfected thereby or any other instrument or writing furnished in connection
therewith; (v) the existence or non-existence of any Default or Event of
Default; or (vi) the financial condition of any Credit Party. No Agent shall
incur any liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex, facsimile or
electronic transmission or similar writing) believed by it to be genuine or to
be signed by the proper party or parties. No Agent shall be liable for any
apportionment or distribution of payments made by it in good faith and if any
such apportionment or distribution is subsequently determined to have been made
in error the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount to
which they are determined to be entitled (and such other Lenders hereby agree to
return to such Lender any such erroneous payments received by them).
Section 11.6 INDEMNIFICATION.
Each Lender shall, in accordance with its Second Lien Term Loan Commitment
Percentage, indemnify each Agent (to the extent not reimbursed by the Credit
Parties) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from such
Agent's gross negligence or willful misconduct as determined by a court of
competent jurisdiction) that such Agent may suffer or incur in connection with
the Financing Documents or any action taken or omitted by such Agent hereunder
or thereunder. If any indemnity furnished to an Agent for any purpose shall, in
the opinion of such Agent, be insufficient or become impaired, such Agent may
call for additional indemnity and cease, or not commence, to do the acts
indemnified against even if so directed by Required Lenders until such
additional indemnity is furnished. The obligations of Lenders under this Section
11.6 shall survive the payment in full of the Obligations and the termination of
this Agreement.
Section 11.7 RIGHT TO REQUEST AND ACT ON INSTRUCTIONS.
Each Agent may at any time request instructions from Lenders with respect
to any actions or approvals which by the terms of this Agreement or of any of
the Financing Documents such Agent is permitted or desires to take or to grant,
and if such instructions are promptly requested, such Agent shall be absolutely
entitled to refrain from taking any action or to withhold any approval and shall
not be under any liability whatsoever to any Person for refraining from any
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action or withholding any approval under any of the Financing Documents until it
shall have received such instructions from Required Lenders or all or such other
portion of the Lenders as shall be prescribed by this Agreement. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against an Agent as a result of such Agent acting or refraining from acting
under this Agreement or any of the other Financing Documents in accordance with
the instructions of Required Lenders and, notwithstanding the instructions of
Required Lenders, no Agent shall have any obligation to take any action if it
believes, in good faith, that such action exposes such Agent to any liability
for which it has not received satisfactory indemnification in accordance with
the provisions of Section 11.6.
Section 11.8 CREDIT DECISION.
Each Lender acknowledges that it has, independently and without reliance
upon either Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon either Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking any
action under the Financing Documents.
Section 11.9 COLLATERAL MATTERS.
Lenders irrevocably authorize the Collateral Agent, at its option and in
its discretion, to release any Lien granted to or held by the Collateral Agent
under any Security Document (i) upon payment in full of all Obligations; or (ii)
constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted under any Financing Document (it being
understood and agreed that the Collateral Agent may conclusively rely without
further inquiry on a certificate of a Responsible Officer as to the sale or
other disposition of property being made in full compliance with the provisions
of the Financing Documents to the extent a release of a Lien granted to or held
by the Collateral Agent under any Security Document is required by the terms of
the Second Lien Intercreditor Agreement). Upon request by the Collateral Agent
at any time, Lenders will confirm in writing the Collateral Agent's authority to
release particular types or items of Collateral pursuant to this Section 11.9.
Section 11.10 AGENCY FOR PERFECTION.
The Collateral Agent and each Lender hereby appoint each other Lender as
agent for the purpose of perfecting the Collateral Agent's security interest in
assets which, in accordance with the Uniform Commercial Code in any applicable
jurisdiction, can be perfected by possession or control. Should any Lender
(other than the Collateral Agent) obtain possession or control of any such
assets, such Lender shall notify the Collateral Agent thereof, and, promptly
upon the Collateral Agent's request therefore, shall deliver such assets to the
Collateral Agent or in accordance with the Collateral Agent's instructions or
transfer control to the Collateral Agent in accordance with the Collateral
Agent's instructions. Each Lender agrees that it will not have any right
individually to enforce or seek to enforce any Security Document or to realize
upon any Collateral for the Second Lien Term Loans unless instructed to do so by
the Collateral Agent, it
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being understood and agreed that such rights and remedies may be exercised only
by the Collateral Agent.
Section 11.11 NOTICE OF DEFAULT.
No Agent shall be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default except with respect to defaults in the payment
of principal, interest and fees required to be paid to an Agent for the account
of Lenders, unless such Agent shall have received written notice from a Lender
or a Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." Each Agent will
notify each Lender of its receipt of any such notice. Each Agent shall take such
action with respect to such Default or Event of Default as may be requested by
Required Lenders in accordance with the terms hereof. Unless and until an Agent
has received any such request, such 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 or in the best interests
of Lenders.
Section 11.12 SUCCESSOR AGENTS.
Either Agent may resign at any time by giving written notice thereof to
the Lenders and the Funds Administrator. Upon any such resignation, Required
Lenders shall have the right to appoint a successor Agent; provided that, so
long as no Default or Event of Default exists, the Required Lenders shall obtain
the consent of the Funds Administrator (which consent shall not be unreasonably
withheld or delayed) prior to appointing any such successor agent. If no
successor Agent shall have been so appointed by Required Lenders, and shall have
accepted such appointment, within thirty (30) days after the retiring Agent
gives notice of resignation, then the retiring Agent may, on behalf of Lenders,
appoint a successor Agent, which shall be an institution organized or licensed
under the laws of the United States of America or of any State thereof; provided
that, so long as no Default or Event of Default exists, the Required Lenders
shall obtain the consent of the Funds Administrator (which consent shall not be
unreasonably withheld or delayed) prior to appointing any such successor agent.
Upon the acceptance of its appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
Section 11.13 PAYMENT.
(a) Second Lien Term Loan Principal Payments. Payments of principal of the
Second Lien Term Loan will be settled on the date of receipt if received by
Administrative Agent on the first Business Day of a month or on the Business Day
immediately following the date of receipt if received on any day other than the
first Business Day of a month.
(b) Return of Payments.
(i) If Administrative Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Administrative Agent from any Borrower and such related payment
is not received by Administrative Agent,
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then Administrative Agent will be entitled to recover such amount from such
Lender on demand without setoff, counterclaim or deduction of any kind, together
with interest accruing on a daily basis at the Federal Funds Rate.
(ii) If Administrative Agent determines at any time that any amount
received by Administrative Agent under or in connection with this Agreement must
be returned to any Borrower or other Credit Party or paid to any other Person
pursuant to any insolvency law or otherwise, then, notwithstanding any other
term or condition of this Agreement or any other Financing Document,
Administrative Agent will not be required to distribute any portion thereof to
any Lender. In addition, each Lender will repay to Administrative Agent on
demand any portion of such amount that Administrative Agent has distributed to
such Lender, together with interest at such rate, if any, as Administrative
Agent is required to pay to such Credit Party or such other Person, without
setoff, counterclaim or deduction of any kind.
(c) Defaulted Lenders. The failure of any Defaulted Lender to make any
payment required by it hereunder shall not relieve any other Lender of its
obligations to make such payment, but neither any Lender nor either Agent shall
be responsible for the failure of any Defaulted Lender to make any payment
required hereunder. Notwithstanding anything set forth herein to the contrary, a
Defaulted Lender shall not have any voting or consent rights under or with
respect to any Financing Document or constitute a "Lender" (or be included in
the calculation of "Required Lenders" hereunder) for any voting or consent
rights under or with respect to any Financing Document. At the Borrowers'
request, Administrative Agent or a Person reasonably acceptable to
Administrative Agent shall have the right with Administrative Agent's consent
and in Administrative Agent's sole discretion (but shall have no obligation) to
purchase from any Defaulted Lender, and each Defaulted Lender agrees that it
shall, at Administrative Agent's request, sell and assign to Administrative
Agent or such Person, all of the commitment interests of that Defaulted Lender
for an amount equal to the principal balance of all Second Lien Term Loans held
by such Defaulted Lender and all accrued interest and fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.1 SURVIVAL.
All agreements, representations and warranties made herein and in every
other Financing Document shall survive the execution and delivery of this
Agreement and the other Financing Documents and the other Operative Documents
and the execution, sale and delivery of the Second Lien Term Notes. The
indemnities and agreements set forth in Article VI and Article X shall survive
the payment of the Obligations and any termination of this Agreement.
Section 12.2 NO WAIVERS.
No failure or delay by either Agent or any Lender in exercising any right,
power or privilege under any Financing Document shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other
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right, power or privilege. The rights and remedies herein and therein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
Section 12.3 NOTICES.
All notices, requests and other communications to any party hereunder
shall be in writing (including prepaid overnight courier, facsimile
transmission, e-mail transmission or similar writing) and shall be given to such
party at its address, facsimile number or e-mail address set forth on the
signature pages hereof (or, in the case of any such Lender who becomes a Lender
after the date hereof, in an Assignment Agreement or in a notice delivered to
the Funds Administrator, and Administrative Agent by the assignee Lender
forthwith upon such assignment) or at such other address, facsimile number or
e-mail address as such party may hereafter specify for the purpose by notice to
Administrative Agent and the Funds Administrator; provided, that notices,
requests or other communications shall be permitted by e-mail only where
expressly provided in the Financing Documents. Each such notice, request or
other communication shall be effective (i) if given by facsimile or e-mail, when
such notice is transmitted to the facsimile number or e-mail address specified
by this Section or (ii) if given by mail, prepaid overnight courier or any other
means, when received at the applicable address specified by this Section.
Section 12.4 SEVERABILITY.
In case any provision of or obligation under this Agreement or the Second
Lien Term Notes or any other Financing Document shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 12.5 AMENDMENTS AND WAIVERS.
Any provision of this Agreement or the Second Lien Term Notes may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Funds Administrator, each Borrower, each other Credit Party that
is a party hereto and the Required Lenders (and, if (x) any amendment would
increase such Lender's funding obligations in respect of the Second Lien Term
Loan, by such Lender and (y) the rights or duties of either Agent are affected
thereby, by such Agent); provided that no such amendment or waiver shall:
(a) unless signed by all the Lenders: (i) reduce the principal of, rate of
interest on or any fees with respect to the Second Lien Term Loan; (ii) postpone
the date fixed for any payment (other than a payment pursuant to Section 2.1(c))
of principal of the Second Lien Term Loan, or of interest on the Second Lien
Term Loan or any fees hereunder; (iii) change the definition of the term
Required Lenders or the percentage of Lenders which shall be required for
Lenders to take any action hereunder; (iv) amend or waive this Section 12.5 or
the definitions of the terms used in this Section 12.5 insofar as the
definitions affect the substance of this Section 12.5; (v) consent to the
assignment, delegation or other transfer by any Credit Party of any of its
rights and obligations under any Financing Document.
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Section 12.6 ASSIGNMENTS; PARTICIPATIONS.
(a) Assignments.
(i) Any Lender may at any time assign to one or more Eligible
Assignees all or any portion of such Lender's Second Lien Term Loans, together
with all related obligations of such Lender hereunder. Except as Administrative
Agent may otherwise agree, the amount of any such assignment (determined as of
the date of the applicable Assignment Agreement or, if a "Trade Date" is
specified in such Assignment Agreement, as of such Trade Date) shall be in a
minimum aggregate amount equal to $1,000,000 or, if less, the assignor's entire
interests in the outstanding Second Lien Term Loans. The Funds Administrator,
the Borrowers and the Agents shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned to an
Eligible Assignee until Administrative Agent shall have received and accepted an
effective Assignment Agreement executed, delivered and fully completed by the
applicable parties thereto and a processing fee of $3,500.
(ii) From and after the date on which the conditions described in
clause (i) above have been met, (i) such Eligible Assignee shall be deemed
automatically to have become a party hereto and, to the extent of the interests
assigned to such Eligible Assignee pursuant to such Assignment Agreement, shall
have the rights and obligations of a Lender hereunder and (ii) the assigning
Lender, to the extent that rights and obligations hereunder have been assigned
by it pursuant to such Assignment Agreement, shall be released from such rights
(other than its indemnification rights) and obligations (other than those
obligations set forth in Section 11.6 or Section 12.8, respectively), and, in
the case of an assignment of all interests, shall cease to be a "Lender"
hereunder. Each Assignee (x) acknowledges that it has received a copy of the
Second Lien Intercreditor Agreement, (y) consents to the Agents' execution and
delivery of the Second Lien Intercreditor Agreement on behalf of such Assignee
and (z) agrees to be bound by the terms and provisions of the Second Lien
Intercreditor Agreement. Upon the request of the Eligible Assignee (and, as
applicable, the assigning Lender) pursuant to an effective Assignment Agreement,
each Borrower shall execute and deliver to Administrative Agent for delivery to
the Eligible Assignee (and, as applicable, the assigning Lender) Second Lien
Term Notes in the aggregate principal amount of the principal amount of the
Eligible Assignee's Second Lien Term Loan (and, as applicable, Second Lien Term
Notes in the principal amount of the Second Lien Term Loan retained by the
assigning Lender). Upon receipt by the assigning Lender of such Second Lien Term
Note, the assigning Lender shall return to the Funds Administrator any prior
Second Lien Term Note held by it.
(iii) Administrative Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain at its offices located in Chicago,
Illinois a copy of each Assignment Agreement delivered to it and a register for
the recordation of the names and addresses of each Lender and the principal
amount of the Second Lien Term Loans owing to such Lender pursuant to the terms
hereof. The entries in such register shall be conclusive, and the Borrowers, the
Agents and Lenders may treat each Person whose name is recorded therein pursuant
to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. Such register shall be available for
inspection by the Borrowers and any Lender, at any reasonable time upon
reasonable prior notice to Administrative Agent.
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(iv) Notwithstanding the foregoing provisions of this Section
12.6(a) or any other provision of this Agreement, any Lender may at any time
pledge or assign a security interest in all or any portion of its rights under
this Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
(b) Participations.
Any Lender may at any time, without the consent of, or notice to, any
Borrower or any other Credit Party, or to either Agent or any other Lender, sell
to one or more Persons participating interests in its Second Lien Term Loans
(any such Person, a "PARTICIPANT"). In the event of a sale by a Lender of a
participating interest to a Participant, (a) such Lender's obligations hereunder
shall remain unchanged for all purposes, (b) the Borrowers and Agents shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations hereunder and (c) all amounts payable by the
Borrowers shall be determined as if such Lender had not sold such participation
and shall be paid directly to such Lender. Each Participant (x) acknowledges
that it has received a copy of the Second Lien Intercreditor Agreement, (y)
consents to the Agents' execution and delivery of the Second Lien Intercreditor
Agreement on behalf of such Participant and (z) agrees that its participating
interest is subject to the terms and provisions of the Second Lien Intercreditor
Agreement. No Participant shall have any direct or indirect voting rights
hereunder except with respect to any event described in Section 12.5 expressly
requiring the unanimous vote of all Lenders or, as applicable, all affected
Lenders (provided that no Participant shall be permitted to vote with respect to
any event described in Section 12.5(b)). Each Lender agrees to incorporate the
requirements of the preceding sentence into each participation agreement which
such Lender enters into with any Participant. Each Borrower agrees that if
amounts outstanding under this Agreement are due and payable (as a result of
acceleration or otherwise), each Participant shall be deemed to have the right
of set-off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement; provided that such right
of set-off shall be subject to the obligation of each Participant to share with
Lenders, and Lenders agree to share with each Participant, as provided in
Section 9.5.
Section 12.7 HEADINGS.
Headings and captions used in the Financing Documents (including the
Exhibits, Schedules and Annexes hereto and thereto) are included for convenience
of reference only and shall not be given any substantive effect.
Section 12.8 CONFIDENTIALITY.
In handling any confidential information of any Credit Party, each Agent
and each Lender shall exercise the same degree of care that it exercises with
respect to its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement, except that disclosure of such information may be
made (i) subject to a confidentiality obligation similar to the one set forth in
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this Section 12.8, to their respective agents, employees, Subsidiaries,
Affiliates, attorneys, auditors, professional consultants, rating agencies,
insurance industry associations and portfolio management services, (ii) to
prospective transferees or purchasers of any interest in the Second Lien Term
Loans, provided that they have agreed to be bound by the provisions of this
Section 12.8, (iii) as required by law, subpoena, judicial order or similar
order and in connection with any litigation and (iv) as may be required in
connection with the examination, audit or similar investigation of such Person.
Confidential information shall include only such information identified as such
at the time provided to either Agent and shall not include information that
either: (i) is in the public domain, or becomes part of the public domain after
disclosure to such Person through no fault of such Person, or (ii) is disclosed
to such Person by a Person other than a Credit Party, provided neither Agent has
actual knowledge that such Person is prohibited from disclosing such
information. The obligations of each Agent and Lenders under this Section 12.8
shall supersede and replace the obligations of the Agents and Lenders under any
confidentiality agreement in respect of this financing executed and delivered by
the Agents or any Lender prior to the date hereof.
Section 12.9 GOVERNING LAW; SUBMISSION TO JURISDICTION.
THIS AGREEMENT, EACH SECOND LIEN TERM NOTE AND EACH OTHER FINANCING
DOCUMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES. EACH CREDIT PARTY HEREBY CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF ▇▇▇▇, STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO THE ADMINISTRATIVE AGENT'S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER
FINANCING DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH CREDIT PARTY
EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH CREDIT PARTY HEREBY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE UPON SUCH CREDIT PARTY BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET
FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS
AFTER THE SAME HAS BEEN POSTED.
Section 12.10 WAIVER OF JURY TRIAL.
EACH CREDIT PARTY, EACH AGENT AND EACH LENDER EACH HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
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Section 12.11 PUBLICATION; ADVERTISEMENT.
(a) Publication. Except as required by law, subpoena or judicial order, no
Credit Party will directly or indirectly publish, disclose or otherwise use in
any public disclosure, advertising material, promotional material, press release
or interview, any reference to the name, logo or any trademark of ▇▇▇▇▇▇▇ ▇▇▇▇▇
or any of its Affiliates or any reference to this Agreement or the financing
evidenced hereby, in any case without ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ prior written consent.
(b) Advertisement. Each Credit Party hereby authorizes ▇▇▇▇▇▇▇ ▇▇▇▇▇ to
publish the name of such Credit Party and the amount of the financing evidenced
hereby in any "tombstone" or comparable advertisement which ▇▇▇▇▇▇▇ ▇▇▇▇▇ elects
to publish. In addition, each Credit Party agrees that ▇▇▇▇▇▇▇ ▇▇▇▇▇ may provide
lending industry trade organizations with information necessary and customary
for inclusion in league table measurements after the Closing Date. With respect
to any of the foregoing, ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall provide the Funds Administrator
with an opportunity to review and confer with ▇▇▇▇▇▇▇ ▇▇▇▇▇ regarding the
contents of any such tombstone, advertisement or information, as applicable,
prior to its publication or disclosure.
Section 12.12 COUNTERPARTS; INTEGRATION.
This Agreement and the other Financing Documents may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement and the other Financing Documents constitute the entire agreement and
understanding among the parties hereto and supersede any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.
Section 12.13 SECOND LIEN INTERCREDITOR AGREEMENT.
To the extent any provision of this Agreement conflicts with the Second
Lien Intercreditor Agreement, the Second Lien Intercreditor Agreement shall
govern and control. Without limiting the generality of the foregoing, until the
Discharge of all First Lien Debt, (a) any assignment or transfer of Collateral
required to be made hereunder to Collateral Agent shall be to the First Lien
Agent, (b) any request or consent of Collateral Agent required or made hereunder
shall be deemed to be required or made by the First Lien Agent, (c) any delivery
of any Collateral to Collateral Agent required hereunder shall be to the First
Lien Agent, (d) any right of the Collateral Agent to require a Credit Party to
cause the Collateral Agent to obtain exclusive Control of any Investment
Property (as such term is defined in the UCC) shall be vested in the First Lien
Agent, and (e) any right of the Collateral Agent to assert any claims on behalf
of a Credit Party shall be vested in the First Lien Agent.
ARTICLE XIII
LIABILITY OF THE BORROWERS
Section 13.1 JOINT AND SEVERAL LIABILITY.
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Each Borrower hereby agrees that such Borrower is jointly and severally
liable for the full and prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of, all Obligations owed or hereafter
owing to the Agents and the Lenders. Each Borrower agrees that its obligations
under this Article XIII shall not be discharged until indefeasible payment and
performance, in full in cash, of the Obligations has occurred, and that its
obligations under this Agreement shall be absolute and unconditional,
irrespective of, and unaffected by,
(a) the genuineness, validity, regularity, enforceability or any future
amendment of, or change in, this Agreement, any other Financing Document or any
other agreement, document or instrument to which any Borrower or any other
Credit Party is or may become a party;
(b) the existence, value or condition of, or failure by either Agent or
any Lender to perfect its Lien against, any security for the Obligations, or any
action, or the absence of any action, by either Agent or any of the Lenders in
respect thereof (including the release of any such Lien); or
(c) the insolvency of any Credit Party.
Section 13.2 WAIVERS BY THE BORROWERS.
Each Borrower expressly waives all rights it may have now or in the future
under any statute, or at common law, or at law or in equity, or otherwise, to
compel either Agent or the Lenders to marshal assets or to proceed in respect of
the Obligations hereunder against any other Credit Party, any other Person or
against any security for the payment, performance and observance of the
Obligations before proceeding against, or as a condition to proceeding against,
such Borrower. It is agreed among each Borrower, each Agent and the Lenders that
the foregoing waivers are of the essence of the transaction contemplated by this
Agreement and the other Financing Documents and that, but for the provisions of
this Article XIII and such waivers, the Agents and the Lenders would decline to
enter into this Agreement.
Section 13.3 BENEFIT.
Each Borrower agrees that the provisions of this Article XIII are for the
benefit of the Agents and the Lenders and their respective successors,
transferees, endorsees and assigns, and nothing herein contained shall impair,
as between any other Borrower and either Agent or the Lenders, the obligations
of such other Borrower under the Financing Documents.
Section 13.4 WAIVER OF SUBROGATION, ETC.
Notwithstanding anything to the contrary in this Agreement or in any other
Financing Document, and except as set forth in Section 13.7, each Borrower
hereby expressly and irrevocably waives any and all rights at law or in equity
to subrogation, reimbursement, exoneration, contribution, indemnification or set
off and any and all defenses available to a co-obligor. Each Borrower
acknowledges and agrees that this waiver is intended to benefit the Agents and
the Lenders and shall not limit or otherwise affect such Borrower's liability
hereunder or the enforceability of this Article XIII, and that the Agents, the
Lenders and their
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respective successors and assigns are intended third party beneficiaries of the
waivers and agreements set forth in this Section 13.4.
Section 13.5 ELECTION OF REMEDIES.
If either Agent or any Lender may, under applicable law, proceed to
realize its benefits under any of the Financing Documents giving either Agent or
such Lender a Lien upon any Collateral, whether owned by any Borrower, any other
Credit Party or by any other Person, either by judicial foreclosure or by
non-judicial sale or enforcement, such Agent or such Lender may, at its sole
option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Article XIII. If, in the
exercise of any of its rights and remedies, such Agent or such Lender shall
forfeit any of its rights or remedies, including its right to enter a deficiency
judgment against any Borrower, any other Credit Party or any other Person,
whether because of any applicable laws pertaining to "election of remedies" or
the like, each Borrower and each other Credit Party hereby consents to such
action by such Agent or such Lender, as the case may be, and waives any claim
such Borrower or such other Credit Party may have based upon such action, even
if such action by such Agent or such Lender shall result in a full or partial
loss of any rights of subrogation or any other similar rights that such Borrower
might otherwise have had but for such action by such Agent or such Lender. Any
election of remedies that results in the denial or impairment of the right of
either Agent or any Lender to seek a deficiency judgment against any Borrower or
other Credit Party shall not impair any other Borrower's obligation to pay the
full amount of the Obligations. In the event either Agent or any Lender shall
bid at any foreclosure or trustee's sale or at any private sale permitted by law
or the Financing Documents, such Agent or such Lender may bid all or less than
the amount of the Obligations and the amount of such bid need not be paid by
such Agent or such Lender but shall be credited against the Obligations. The
amount of the successful bid at any such sale, whether such Agent, any Lender or
any other Person is the successful bidder, shall be conclusively deemed to be
the fair market value of the Collateral and the difference between such bid
amount and the remaining balance of the Obligations shall be conclusively deemed
to be the amount of the Obligations under this Article XIII, notwithstanding
that any present or future law or court decision or ruling may have the effect
of reducing the amount of any deficiency claim to which either Agent or any
Lender might otherwise be entitled but for such bidding at any such sale.
Section 13.6 LIMITATION.
Notwithstanding any provision in this Article XIII to the contrary, each
Borrower's liability hereunder and under the other Financing Documents or in
respect of the Obligations shall be limited to an amount not to exceed as of any
date of determination the amount that could be claimed by the Agents and the
Lenders from such Borrower without rendering such claim voidable or avoidable
under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable
state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or
similar statute or common law after taking into account, among other things,
such Borrower's right of contribution and indemnification from each other
Borrower under Section 13.7.
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Section 13.7 CONTRIBUTION WITH RESPECT TO OBLIGATIONS.
(a) To the extent that any Borrower shall make a payment in respect of all
or any of the Obligations (a "PAYMENT") that, taking into account all other
Payments then previously or concurrently made by any other Borrower, exceeds the
amount that such Borrower would otherwise have paid if each Borrower had paid
the aggregate Obligations satisfied by such Payment in the same proportion that
such Borrower's "Allocable Amount" (as defined below) (as determined immediately
prior to such Payment) bore to the aggregate Allocable Amounts of each of the
Borrowers as determined immediately prior to the making of such Payment, then,
following indefeasible payment in full in cash of the Obligations, such Borrower
shall be entitled to receive contribution and indemnification payments from, and
be reimbursed by, each other Borrower for the amount of such excess, pro rata
based upon their respective Allocable Amounts in effect immediately prior to
such Payment.
(b) As of any date of determination, the "ALLOCABLE AMOUNT" of any
Borrower shall be equal to the maximum amount of the claim that could then be
recovered from such Borrower without rendering such claim voidable or avoidable
under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable
state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or
similar statute or common law.
(c) This Section 13.7 is intended only to define the relative rights of
Borrowers and nothing set forth in this Section 13.7 is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 13.1. Nothing contained in this Section
13.7 shall limit the liability of any Borrower to pay the Second Lien Term Loans
made to or for the account of any Borrower and accrued interest, fees and
expenses with respect thereto.
(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrowers to which such
contribution and indemnification is owing.
(e) The rights of the contributing and indemnifying Borrowers against
other Credit Parties under this Section 13.7 shall be exercisable upon the full
and indefeasible payment of the Obligations.
Section 13.8 LIABILITY CUMULATIVE.
The liability of Borrowers under this Article XIII is in addition to and
shall be cumulative with all liabilities of each Borrower to the Agents and the
Lenders under this Agreement and the other Financing Documents to which such
Borrower is a party or in respect of any Obligations or obligation of the other
Borrowers, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.
[remainder of page intentionally left blank;
signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWERS AND FUNDS ADMINISTRATOR:
COMSYS SERVICES LLC, a Delaware limited liability
company, as the Funds Administrator and as a Borrower
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President - Corporate Development
COMSYS INFORMATION TECHNOLOGY SERVICES, INC., a
Delaware corporation, as a Borrower
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President - Corporate Development
VENTURI TECHNOLOGY PARTNERS, LLC, a North Carolina
limited liability company, as a Borrower
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President - Corporate Development
Address:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇; (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, P.C.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Second Lien Credit Agreement
OTHER CREDIT PARTIES:
COMSYS IT PARTNERS, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President - Corporate Development
COMSYS HOLDING, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President - Corporate Development
PFI CORP., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President - Corporate Development
Address:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇; (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, P.C.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Second Lien Credit Agreement
ADMINISTRATIVE AGENT:
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL, A DIVISION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇
BUSINESS FINANCIAL SERVICES INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Payment Account Designation:
Bank: LaSalle Bank National Association
ABA #▇▇▇▇▇▇▇▇▇
Account #5800393182
Account Name MLBFS Corporate Finance
Other Ref: COMSYS
Second Lien Credit Agreement
COLLATERAL AGENT:
HERITAGE BANK, SSB, A TEXAS-CHARTERED SAVINGS BANK,
as Collateral Agent
By: /s/ [illegible]
Name: ________________________________
Title: ________________________________
Address:
_______________________________________
_______________________________________
_______________________________________
Second Lien Credit Agreement
LENDER:
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL, A DIVISION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇
BUSINESS FINANCIAL SERVICES INC., as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
ANNEX A
COMMITMENT ANNEX
Second Lien Term Loan Second Lien Term Loan
Lender Commitment Amount Commitment Percentage
-------------------------------------------------- --------------------- ---------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital, a division of ▇▇▇▇▇▇▇ ▇▇▇▇▇
Business Financial Services Inc. $70,000,000 100%
----------- ---
TOTALS $70,000,000 100%
=========== ===
ANNEX B
CLOSING CHECKLIST
ANNEX C
EXISTING DEBT
a. Debt evidenced by that certain Credit Agreement dated as of August 18,
2004 by and among COMSYS Services, as the borrower, COMSYS Holdings, as a
credit party, COMSYS IT, as a credit party, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital, a
division of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial Services Inc., as
administrative agent for the financial institutions from time to time
party thereto, GMAC Commercial Finance LLC, as a lender, and such other
"Lenders" (as defined therein) and all documents, agreement and
instruments executed in connection therewith.
b. Debt evidenced by that certain Amended and Restated Senior Subordinated
Credit Agreement dated as of August 18, 2004, by and among COMSYS
Services, COMSYS IT, COMSYS Holdings, Wachovia Investors, Inc. (successor
to First Union Investors, Inc.), including notes issued pursuant to such
agreement.
c. All obligations of COMSYS IT pursuant to that certain Limited Guaranty
dated as of September 25, 2001 by and between COMSYS IT, as guarantor, and
Bank of America, N.A., pursuant to which COMSYS IT has guaranteed the
payment of certain financing arrangements made by Bank of America, N.A. to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ on September 25, 2001.
d. All obligations of COMSYS IT pursuant to that certain Reimbursement
Agreement dated as of September 25, 2001 by and among GTCR Fund VI, L.P.,
Wachovia Corporation, COMSYS IT and COMSYS Holdings.
e. Debt evidenced by that certain Second Amended and Restated Credit
Agreement dated April 14, 2003 among Holdings, the subsidiaries of
Holdings named therein, The CIT Group/Business Credit, Inc., as the Agent,
and the Lenders named therein (This agreement was assigned to The CIT
Group/Business Credit, Inc. from Bank of America, N.A.).