EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
(dated as of December ___, 2002)
between
GREENFIELD COMMERCIAL CREDIT, L.L.C.
(as Lender)
and
DIVERSIFIED CORPORATE RESOURCES, INC.
(as Borrower)
TABLE OF CONTENTS
1. DEFINITIONS............................................................ 1
2. REVOLVING CREDIT LOAN.................................................. 4
3. COLLATERAL............................................................. 5
4. GUARANTIES............................................................. 6
5. CHARGES AND INSURANCE.................................................. 8
6. EXAMINATION OF RECORDS; REPORTING...................................... 8
7. OTHER LIENS............................................................ 9
8. GENERAL WARRANTIES AND REPRESENTATIONS................................. 9
9. CONDITIONS TO OBLIGATIONS OF LENDER.................................... 12
10. AFFIRMATIVE COVENANTS.................................................. 14
11. NEGATIVE COVENANTS..................................................... 16
12. TERMINATION............................................................ 17
13. DEFAULT................................................................ 17
14. YOUR RIGHTS AND REMEDIES............................................... 17
15. WAIVER; AMENDMENTS; SUCCESSORS AND ASSIGNS............................. 18
16. BANKRUPTCY PROVISIONS.................................................. 18
17. MISCELLANEOUS.......................................................... 19
18. WAIVER OF JURY TRIAL................................................... 21
19. NO ORAL AGREEMENTS..................................................... 21
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LOAN AND SECURITY AGREEMENT
GREENFIELD COMMERCIAL CREDIT, L.L.C. ("LENDER")
Gentlemen:
This Agreement, effective as of the date accepted by you, sets forth the
terms and conditions upon which you will make loans and advances and extend
other financial accommodations to Borrower for the benefit of Borrower and the
other Credit Parties signing this Agreement as Guarantors, collectively with the
other parties signing this Agreement as Guarantors, referred to herein as "we,"
"us" or "our" and which, if two or more in number, shall be jointly and
severally bound:
1. DEFINITIONS. As used herein:
(A) "Advances" means loans to Borrower for the benefit of
Borrower and the other Credit Parties under this Agreement and the Revolving
Credit Loan Rider, and for which Borrower's obligation to repay is evidenced by
the Revolving Credit Note.
(B) "Affiliate" means, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, 5% or more of the stock having
ordinary voting power in the election of directors of such Person, (b) each
Person that controls, is controlled by or is under common control with such
Person, (c) each of such Person's officers, directors, joint venturers and
partners and (d) in the case of Borrower, the immediate family members, spouses
and lineal descendants of individuals who are Affiliates of Borrower. For the
purposes of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
(C) "Borrower" means Diversified Corporate Resources, Inc., a
Texas corporation, whose chief executive office and principal place of business
is located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
(D) "Collateral" means all of our presently owned and hereafter
acquired or arising:
(i) accounts (whether or not earned by performance),
letter of credit rights, chattel paper, contracts,
contract rights, instruments, documents and
supporting obligations (individually and
collectively referred to as "Receivables");
(ii) general intangibles (including, without limitation,
tax refunds, tax refund claims, trade names,
goodwill, trademarks, copyrights, processes,
patents, patent rights, patent applications,
licenses, inventories, royalties, and/or commission
and permits, choses-in-action) (individually and
collectively referred to as "Intangibles");
(iii) goods, inventory, merchandise and other personal
property, wherever located, to be furnished under
any contract of service or held for sale or lease,
all raw materials, work in process, finished goods
and materials and supplies of any kind, nature or
description which are or might be
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used or consumed in our business or used in
connection with the manufacture, packing, shipping,
advertising, selling or finishing of such goods,
merchandise and other personal property including
without limitation such goods which give rise to any
Receivables and which goods have been returned to or
repossessed or stopped in transit by us
("Inventory");
(iv) tangible goods (other than Inventory), equipment and
fixtures including without limitation office
machines, tools, dies, furniture, and vehicles
together with all accessions, parts and
appurtenances thereto appertaining or attached or
kept or used or intended for use in connection
therewith, and all substitutions, renewals,
improvements and replacements of and additions
thereto (sometimes hereinafter individually and
collectively referred to as "Equipment");
(v) property now or at any time hereafter in your
possession (including monies, deposit accounts,
claims and credit balances);
(vi) all interests in any lease of real property or
personal property, whether as a lessor or lessee,
including all options to purchase any leased
property, and all leasehold improvements; and
(vii) books, blueprints, drawings and records related to
any of the foregoing as described in subsection (i)
through (v) above;
and all proceeds (including proceeds of any insurance policies) and products of
and accessions to all the foregoing described property in which we may have any
right, title or interest.
(E) "Credit Parties" means Borrower, Datatek Group Corporation,
Information Systems Consulting Corp., Management Alliance Corporation,
[Mountain, Ltd.], Texcel Services, Inc. and each additional party which becomes
a Credit Party after the date hereof.
(F) "Default" shall have the meaning set forth in Paragraph 13
of this Agreement.
(G) "Deposit Account Control Agreement" means a control
agreement with respect to a deposit account in form satisfactory to you.
(H) "Disbursement Account" means ▇▇▇▇▇ Fargo Bank, N.A. Account
No. 495-▇▇▇▇▇▇▇ in the name of Borrower and Preferred Funding Corporation or
such other depository account designated by Borrower for such purpose and which
is at all times subject to a Deposit Account Control Agreement.
(I) "Guarantor" means each of the Credit Parties other than
Borrower and each other Subsidiary of Borrower signing this Agreement.
(J) "Indebtedness" means all of our present and future
obligations, liabilities, debts, claims and indebtedness, contingent, fixed or
otherwise, however evidenced, created, incurred acquired, owing or arising,
whether under written or oral agreement, operation of law, or otherwise, and
includes, without limiting the foregoing (i) Obligations, (ii) obligations and
liabilities of any Person secured by a lien, claim, encumbrance, or security
interest upon property owned by us, even though we have not assumed or become
liable therefor, (iii) obligations and liabilities created or arising under any
lease
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(including capitalized leases) or conditional sales contract or other title
retention agreement with respect to property used or acquired by us, even though
the rights and remedies of the lessor, seller or lender are limited to
repossession, (iv) all unfunded pension fund obligations and liabilities, and
(v) deferred taxes.
(K) "Lien" means any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the UCC or comparable law of any jurisdiction).
(L) "Loan Document(s)" means this Agreement and all documents
and instruments executed and delivered at any time in connection with this
Agreement, including all amendments to any of the foregoing.
(M) "Obligations" means all present and future loans, advances,
debts, liabilities, obligations, covenants, duties and Indebtedness owing by us
to you, whether evidenced by any note, or other instrument or document, whether
arising from an extension of credit, opening of a letter of credit, loan,
guaranty, indemnification or otherwise, whether direct or indirect (including,
without limitation, those acquired by assignment and any participation by you in
our debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorneys'
fees and any other sums chargeable to us hereunder or under any other agreement
with you.
(N) "Obligor" means us or any guarantor of the Obligations,
individually or collectively.
(O) "Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, government, or any agency or political division thereof, or any
other entity.
(P) "Prime Rate" means the rate published from day to day in
the WALL STREET JOURNAL in its "Money Rates" column as the "Prime Rate." Should
such publication not continue to publish the Prime Rate or a substitute rate,
then you will select a comparable announced rate. The Prime Rate will change at
any time the "Prime Rate" changes.
(Q) "Subsidiary" means, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% of more of such stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner.
(R) "Term Sheet" means the document attached to this Agreement
and to each Rider which contains other terms and conditions of this transaction.
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(S) "Texcel Shareholders" means collectively ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and their respective heirs and assigns.
(T) "UCC" means the Uniform Commercial Code as the same may, from time
to time, be enacted and in effect in the State of Michigan; provided, that in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to, your
security interest in any Collateral is governed by the Uniform Commercial Code
as enacted and in effect in a jurisdiction other than the State of Michigan, the
term "Code" shall mean the Uniform Commercial Code as enacted and in effect in
such other jurisdiction solely for purposes of the provisions thereof relating
to such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.
(U) Any accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings customarily given to them in accordance with
generally accepted accounting principles.
(V) All other terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Uniform Commercial Code of
the state set forth in Paragraph 17(B) ("Code") to the extent the same are
defined therein.
2. REVOLVING CREDIT LOAN.
(A) Revolving Credit Loan; Loan Advances. You will establish a
revolving credit loan facility (the "Revolving Credit Loan") and, subject to the
terms of this Agreement, you may, upon our request, but at all times in your
sole discretion, make Advances to us from time to time, pursuant to the
Revolving Credit Loan Rider attached hereto and made a part hereof (the
"Rider"). You may, in your sole discretion and without notice to us, disburse
any or all of the proceeds of any or all of the Advances made by you to such
person or persons as you deem necessary to insure that the security interest in
or lien upon the Collateral shall at all times have the priority represented by
us in this Agreement. You may, in your sole discretion, at any time reduce the
Percentage Advance Rate or the Advance amounts set forth in any Rider. You may,
from time to time, reimburse yourself for any loan, interest due, fees or
expenses, or any third party for any of our Obligations by charging our loan
account with you. You may deduct from the Advances under this Agreement reserves
for accrued interest and such other reserves as you deem proper and necessary.
(B) Requests for Advances; Deposits. We have authorized the individuals
set forth on the Term Sheet to request Advances. You will deposit Advances to
the Disbursement Account. We may advise you of additions to or deletions from
the foregoing authorized individuals or a change in the Disbursement Account by
certified resolution of Borrower.
(C) Revolving Credit Note. Our obligation to repay Advances under the
Revolving Credit Loan shall be evidenced by a Revolving Credit Note (the "Note")
executed by us, in form satisfactory to you executed simultaneously herewith,
the terms of which are incorporated herein by this reference.
(D) Interest and Other Charges. We shall pay you interest on the daily
outstanding balance of the Note at the rates as set forth in the applicable
Rider. In addition, we shall also pay you on the first day of each month, with
respect to the prior calendar month or portion thereof 1/12 of two percent
(2.0%) of the amount of the loans not utilized as of the last business day of
the prior month. In no event whatsoever shall the interest rate and other
charges charged hereunder exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in the final determination, deem
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applicable hereto. In the event that a court determines that you have received
interest or other charges hereunder in excess of the highest rate applicable
hereto, you shall promptly, in your sole discretion, either apply such amount to
the Obligations or refund such amount to us and the provisions herein shall be
deemed amended to provide for such permissible rate.
(E) Term. The Term of this Agreement and of Loans shall be on demand,
but if demand is not made, then no later than December ___, 2003.
(F) Monthly Accounting. You will provide us, monthly, with an
accounting of Advances, charges and payments made pursuant to this Agreement.
Such accounting shall be deemed correct, accurate and binding upon us and an
account stated (except for reverses and reapplications of payments made as
provided in Paragraph 17(G) hereof, and corrections or errors discovered by
you), unless we notify you in writing to the contrary within thirty (30) days
after each accounting is rendered.
(G) Early Termination Fee. We shall have the right at any time or from
time to time upon three (3) business days' written notice to you to prepay the
Revolving Credit Loan in full and terminate the Revolving Credit Loan ("Early
Termination") provided that in such event, we shall pay, in addition, an early
termination fee equal to three percent (3.0%) of the Maximum Loan Amount if the
Early Termination occurs during the first six (6) months after the date hereof
and one percent (1.0%) of the Maximum Loan Amount if the Early Termination
occurs during the next six (6) month period and prior to the last day of the
Term.
3. COLLATERAL.
(A) Grant of Security Interest. As security for the Obligations, we
hereby grant you a continuing security interest in the Collateral. We
acknowledge that nothing contained in this Agreement or in any Rider shall be
(i) construed as your agreement to resort or look to a particular type of
Collateral as security for any loan to us, or limit in any way your right to
resort to any or all of the Collateral as security for any of the Obligations,
or (ii) deemed to limit or reduce any security interest in or lien upon any
portion of the Collateral for the Obligations.
(B) Perfection and Protection of Security Interest. We shall, at our
expense, perform all steps requested by you at any time to perfect, maintain,
protect, and enforce your security interest in the Collateral, including,
without limitation, executing and filing financing, continuation statements and
amendments thereof, and searches to confirm the priority of your security
interests, in form and substance satisfactory to you, placing notations on our
books of account to disclose your security interest therein, and taking such
other steps as are deemed necessary by you to maintain your control of and
security interest in the Collateral, and delivering to you all letters of credit
on which we are named beneficiary. You may file, without our signature, one or
more financing statements disclosing your security interest under this
Agreement. We agree that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement. If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of our agents or processors, we shall
notify such person of your security interest in such Collateral and, upon your
request, instruct them to hold all such Collateral for your account subject to
your instructions. From time to time, we shall, upon your request, execute and
deliver confirmatory written instruments pledging to you the Collateral, but our
failure to do so shall not affect or limit your security interest or other
rights in and to the Collateral. Until all Obligations have been fully
satisfied, your security interest in the Collateral shall continue in full force
and effect.
(C) Attorney-in-Fact. We hereby appoint you and any designee of yours
as our attorney-in-fact and authorize you or such designee, at our sole expense,
to exercise at any times in your
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or such designee's discretion all or any of the following powers, which powers
of attorney, being coupled with an interest, shall be irrevocable until all
Obligations have been paid in full: (a) receive, take, endorse, assign, deliver,
accept and deposit, in your name or our name, any and all cash, checks,
commercial paper, drafts, remittances and other instruments and documents
relating to the Collateral or the proceeds thereof, (b) transmit to account
debtors, other obligors or any bailees notice of your interest in the Collateral
or request from account debtors or such other obligors or bailees at any time,
in our name or your name or any designee, information concerning the Collateral
and any amounts owing with respect thereto, (c) notify account debtors or other
obligors to make payment directly to you, or notify bailees as to the
disposition of Collateral, (d) take or bring, in your name or our name, all
steps, actions, suits or proceedings deemed by you necessary or desirable to
effect collection of or other realization upon the accounts and other
Collateral, (e) after a Default, change the address for delivery of mail to us
and to receive and open mail addressed to us, (f) after a Default, extend the
time of payment of, compromise or settle for cash, creditor, return of
merchandise, and upon any terms or conditions, any and all accounts or other
Collateral which includes a monetary obligation and discharge or release the
account debtor or other obligor, without affecting any of the Obligations, and
(g) file against us in your favor financing statements or amendments thereto
with respect to the Collateral.
4. GUARANTIES. As an inducement to you to enter into the transactions
contemplated by this Agreement, each Guarantor agrees with you as follows:
(A) Guarantee of Obligations.
(i) Each Guarantor hereby (x) guarantees, as a principal obligor
and not as surety only, to you the prompt payment of the principal of and any
and all accrued and unpaid interest (including interest which otherwise may
cease to accrue by operation of any insolvency law, rule, regulation or
interpretation thereof) on the Advances and all other Obligations, including the
Note, of Borrower to you under this Agreement when due, whether by scheduled
maturity, acceleration or otherwise, all in accordance with the terms of this
Agreement and the Note, including, without limitation, default interest,
indemnification payments and all reasonable costs and expenses incurred by you
in connection with enforcing the Obligations of Borrower hereunder, including
without limitation the reasonable fees and disbursements of counsel, (y)
guarantees the prompt and punctual performance and observance of each and every
term, covenant or agreement contained in this Agreement and the Note to be
performed or observed on the part of Borrower and (z) agrees to make prompt
payment, on demand, of any and all reasonable costs and expenses incurred by you
in connection with enforcing the obligations of the Guarantors hereunder,
including, without limitation, the reasonable fees and disbursements of counsel
(all of the foregoing being collectively referred to as the "Guaranteed
Obligations.")
(ii) If for any reason any duty, agreement or obligation of
Borrower contained in this Agreement shall not be performed or observed by
Borrower as provided therein, or if any amount payable under or in connection
with this Agreement shall not be paid in full when the same becomes due and
payable, each Guarantor undertakes to perform or cause to be performed promptly
each of such duties, agreements and obligations and to pay forthwith each such
amount to you regardless of any defense or setoff or counterclaim which Borrower
may have or assert, and regardless of any other condition or contingency.
(B) Nature of Guaranty. The obligations of each Guarantor hereunder
constitute an absolute and unconditional and irrevocable guaranty of payment and
not a guaranty of collection and are wholly independent of and in addition to
your other rights and remedies and are not contingent upon the pursuit by you of
any such rights and remedies, such pursuit being hereby waived by each
Guarantor.
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(C) Waivers and Other Agreements. Each Guarantor hereby
unconditionally (i) waives any requirement that you, upon the occurrence of a
Default first make demand upon, or seek to enforce remedies against, Borrower or
any other Guarantor before demanding payment under or seeking to enforce the
obligations of any Guarantor hereunder, (ii) covenants that the obligations of
the Guarantors hereunder will not be discharged except by complete performance
of all obligations of Borrower contained in this Agreement and the Note, (iii)
agrees that the obligations of the Guarantors hereunder shall remain in full
force and effect without regard to, and shall not be affected or impaired,
without limitation, by any invalidity, irregularity or unenforceability in whole
or in part of this Agreement, the Note or any other Loan Document or any
limitation on the liability of Borrower thereunder, or any limitation on the
method or terms of payment thereunder which may or hereafter be caused or
imposed in any manner whatsoever (including, without limitation, usury laws),
(iv) waives diligence, presentment and protest with respect to, and any notice
of default or dishonor in the payment of any amount at any time payable by
Borrower under or in connection with this Agreement or the Note, and further
waives any requirement of notice of acceptance of, or other formality relating
to, the obligations of the Guarantors hereunder and (v) agrees that the
Guaranteed Obligations shall include any amounts paid by Borrower to you which
may be required to be returned to Borrower or any Guarantor or to any
representative, trustee, custodian or receiver for Borrower or any such
Guarantor.
(D) Obligations Absolute. The obligations, covenants, agreements and
duties of the Guarantors under this Agreement shall not be released, affected or
impaired by any of the following whether or not undertaken with notice to or
consent of any Guarantor: (i) an assignment or transfer, in whole or in part, of
the Advances made to Borrower or of this Agreement or any Note although made
without notice to or consent of the Guarantors, or (ii) any waiver by you or by
any other person, of the performance or observance by Borrower of any of the
agreements, covenants, terms or conditions contained in this Agreement, any Note
or any Loan Document, or (iii) any indulgence in or the extension of the time
for payment by Borrower of any amounts payable under or in connection with this
Agreement or any Note, or of the time for performance by Borrower of any other
obligations under or arising out of this Agreement or any Note, or the extension
or renewal thereof, or (iv) the modification, amendment or waiver (whether
material or otherwise) of any duty, agreement or obligation of Borrower set
forth in the Loan Documents (the modification, amendment or waiver from time to
time of the Loan Documents being expressly authorized without further notice to
or consent of any Guarantors), or (v) the voluntary or involuntary liquidation,
sale or other disposition of all or substantially all of the assets of Borrower
or any receivership, insolvency, bankruptcy, reorganization, or other similar
proceedings, affecting Borrower or any of its assets, or (vi) the merger or
consolidation of Borrower or any Guarantor with any other person, or (vii) the
release or discharge, by operation of law, of Borrower or any Guarantor from the
performance or observance of any agreement, covenant, term or condition
contained in the Loan Documents, or (viii) any other cause whether similar or
dissimilar to the foregoing which would release, affect or impair the
obligations, covenants, agreements or duties of the Guarantors hereunder.
(E) No Investigation. Each Guarantor hereby waives unconditionally any
obligation which, in the absence of such provision, you might otherwise have to
investigate or to assure that there has been compliance with the law of any
jurisdiction with respect to the Guaranteed Obligations recognizing that, to
save both time and expense, each Guarantor has requested that you not undertake
such investigation. Each Guarantor hereby expressly confirms that the
obligations of such Guarantor hereunder shall remain in full force and effect
without regard to compliance or noncompliance with any such law and irrespective
of any investigation or your knowledge of any such law.
(F) Indemnity. As a separate, additional and continuing obligation,
each Guarantor unconditionally and irrevocably undertakes and agrees with you
that, should the Guaranteed Obligations not be recoverable from the Guarantors
under Paragraph 4(A) for any reason whatsoever (including, without limitation,
by reason of any provision of this Agreement, the Note or any other Loan
Document
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being or becoming void, unenforceable, or otherwise invalid under any applicable
law) then, notwithstanding any knowledge thereof by you at any time, each
Guarantor as sole, original and independent obligor, upon demand by you, will
make payment to you of the Guaranteed Obligations by way of a full indemnity in
such currency and otherwise in such manner as is provided in this Agreement and
the Note.
(G) Subordination, Subrogation, Etc. Each Guarantor agrees that any
present or future Indebtedness of (i) Borrower to any Guarantor, or (ii) any
Guarantor to any other Guarantor, shall be fully subordinate and junior in right
and priority of payment to the Obligations. Each Guarantor waives any right of
subrogation to your rights against Borrower or any other person obligated for
payment of the Guaranteed Obligations and any right of reimbursement or
indemnity whatsoever arising or accruing out of any payment which any Guarantor
may make pursuant to this Agreement and the Note, and any right of recourse to
security for the debts and obligations of Borrower, unless and until the entire
principal balance of and interest on the Guaranteed Obligations shall have been
paid in full.
(H) Waiver. To the extent that it lawfully may, each Guarantor agrees
that it will not at any time insist upon or plead, or in any manner whatsoever
claim or take any benefit or advantage of any applicable present or future stay,
extension or moratorium law, which may affect observance or performance of the
provisions of the Loan Documents; nor will it claim, take or insist upon any
benefit or advantage of any present of future law providing for the evaluation
or appraisal of any security for its obligations hereunder or those of Borrower
under this Agreement and under the Note prior to any sale or sales thereof which
may be made under or by virtue of any instrument governing the same; nor will
it, after any such sale or sales claim or exercise any right, under any
applicable law, to redeem any portion of such security so sold.
5. CHARGES AND INSURANCE.
(A) You may, in your discretion, at any time discharge any lien or
encumbrance or bond the same, pay any insurance, maintain guards, pay any
service bureau, or obtain any record and charge the cost thereof to our loan
account.
(B) At your request, we shall insure the Collateral in your name
against loss or damage by fire, theft, burglary, pilferage, loss in transit and
such other hazards as you shall specify in amounts, under policies and by
insurers acceptable to you. Each policy shall include a provision for thirty
(30) days prior written notice to you of any cancellation or substantial
modification and shall show you as mortgagee/secured party loss payee and
additional insured in a manner acceptable to you. We shall execute and deliver
to you simultaneously herewith and at any other time hereafter such assignments
of policies of insurance, including business interruption insurance, as you
shall require. All premiums shall be paid by us and the policies shall be
delivered to you. If we fail to do so, you may (but shall not be required to)
procure such insurance at our expense.
6. EXAMINATION OF RECORDS; REPORTING.
(A) You may at all reasonable times have access to, examine, audit,
make extracts from and inspect our records, files, books of account and the
Collateral. We will deliver to you any instrument necessary for you to obtain
records from any service bureau maintaining records for us. All instruments and
certificates prepared by us showing the value of any of the Collateral shall be
accompanied, upon request, by copies of related purchase orders and invoices.
You may, at any time after default, remove from our premises our books and
records or require us to deliver them to you and you may, without expense to
you, use such of our personnel, supplies and premises as may be reasonably
necessary for maintaining or enforcing your security interest.
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(B) We shall furnish you, upon request, information and statements
showing our business affairs, financial condition and the results of our
operations. We will provide you with (i) copies of sales invoices, customer
statements and credit memos issued, remittance advices and reports and copies of
deposit slips, daily, (ii) copies of shipping and delivery documents, upon
request, (iii) within twenty (20) days after the end of each Interim Financial
Statement Period set forth on the Term Sheet, our internally prepared
consolidated and consolidating income statements and balance sheets together
with accounts receivable and accounts payable agings prepared on a basis
consistent with such statements prepared in prior months and in accordance with
generally accepted accounting principles, and within ninety (90) days after the
end of each of our fiscal years, our consolidated and consolidating financial
statements prepared by our independent, certified public accountants acceptable
to you prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior year-end statements (said interim and
year-end financial statements hereinafter referred to as "Financials") (the
scope of the CPA's engagement is set forth on the Term Sheet), (iv) copies of
all of our tax returns when filed and (v) certificates relating to the foregoing
as you may request.
7. OTHER LIENS. We represent and warrant that all Collateral is and will
continue to be owned by us free and clear of all liens, claims and encumbrances
whatsoever, whether prior or subordinate to the liens we have granted you and
that we will not, without your prior written approval, which may be withheld in
your sole discretion, sell, encumber or dispose of or permit the sale,
encumbrance or disposal of any Collateral, except for sales of Inventory in the
ordinary course of business.
8. GENERAL WARRANTIES AND REPRESENTATIONS. We warrant and represent that:
(A) We are each duly organized and existing in good standing under the
laws of the Incorporation State set forth on the Term Sheet, are qualified to do
business and are in good standing in all states in which qualification and good
standing are necessary in order for us to conduct our business and own our
property and have all requisite power and authority to conduct our business, to
own our property and to execute, deliver and perform all of our Obligations;
(B) We have not, during the preceding five (5) years, been known by or
used any other Assumed Names or Trade Names other than as set forth on the Term
Sheet;
(C) The execution, delivery and performance by us of this Agreement will
not constitute a violation of any applicable law or of our Articles or
Certificate of Incorporation, By-Laws or equivalent or any agreement, or
document to which we are a party or bound;
(D) We possess adequate assets, licenses, patents, patent applications,
copyrights, trademarks, trademark applications, and tradenames for the conduct
of our business;
(E) We have capital sufficient to conduct our business, are solvent and
able to pay our debts as they mature and own property having a fair value
greater than the amount required to pay our debts;
(F) Except as set forth on the Term Sheet, we have no pending or
threatened litigation, actions or proceedings which would materially and
adversely affect our business assets, operations or condition, financial or
otherwise, or the Collateral;
(G) We have good, indefeasible, and merchantable title to the
Collateral, and there is no lien or encumbrance thereon other than the security
interest granted to you;
9
(H) We are not a party to any contract, or subject to any charge,
corporate restriction, judgment, decree or order materially and adversely
affecting our business, assets, operations or condition, financial or otherwise,
and are not subject to any labor dispute; and, no labor contract is scheduled to
expire during the term of this Agreement, except as heretofore disclosed to you
in writing;
(I) We are not in violation of any applicable statute, regulation or
ordinance, in any respect materially and adversely affecting the Collateral or
our business, assets, operations or condition, financial or otherwise;
(J) We are not in default with respect to any note, indenture, loan
agreement, mortgage, lease, deed or other agreement to which we are a party or
bound, except as set forth on Schedule 8(J);
(K) The financial statements delivered to you fairly present our
financial condition and results of operations and those of such other Persons
described therein as of the date thereof; and there has been no material and
adverse change in such financial condition or operations since the date of the
statements;
(L) We have received no notice that we are not in full compliance with
any of the requirements of the Employee Retirement Income Security Act of 1974,
as amended, ("ERISA") and its regulations and, to the best of our knowledge,
there exists no event described in Section 4043 of ERISA, excluding subsections
4043(b)(2) and 4043(b)(3) thereof, with respect to us;
(M) We have filed all tax returns and other reports we are required by
law to file and have paid all taxes and similar charges that are due and
payable;
(N) Our Chief Executive Office, Principal Place of Business and the
Location of Collateral Records are at the locations set forth on the Term Sheet;
(O) We have not received any notice alleging and are not aware of any
facts indicating noncompliance with any State or Federal law governing the use,
generation, storage or release of any hazardous waste or substance;
(P) We have no Subsidiaries or Affiliates other than as set forth on the
Term Sheet. To the extent any Subsidiary or Affiliate is shown on the Term
Sheet, neither the assets nor chief executive office of such Subsidiary or
Affiliate is located at any place other than one or more of our locations
specified in Paragraph 8(N) hereof;
(Q) We own all properties on which Collateral is located other than the
Leased Properties set forth on the Term Sheet;
(R) All Collateral which is tangible personal property is kept only at
the Collateral Locations set forth on the Term Sheet;
(S) Each Person becoming a Subsidiary of Borrower or any Guarantor after
the date hereof is and will be duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation and is and will be duly
qualified to do business in each additional jurisdiction where such
qualification is or may be necessary under applicable law. Each Subsidiary of
Borrower and each Guarantor has and will have all requisite power to own or
lease the properties used in its business and to carry on its business as now
being conducted and as proposed to be conducted. All outstanding ownership
interests of each Subsidiary of Borrower and each Guarantor have been and will
be validly
10
issued and are and will be fully paid and nonassessable and are and will be
owned, beneficially and of record, by Borrower or such Guarantor, or another
Subsidiary of Borrower or such Guarantor, free and clear of any Liens;
(T) Borrower and Guarantors will use the proceeds of the Loan for their
working capital and general corporate purposes and to repay in full at closing
certain Indebtedness. Neither Borrower nor any Guarantor nor any of their
respective Subsidiaries extends or maintains, in the ordinary course of
business, credit for the purpose, whether immediate, incidental, or ultimate, of
buying or carrying margin stock (within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System), and no part of the proceeds of any
Advance will be used for the purpose, whether immediate, incidental, or
ultimate, of buying or carrying any such margin stock or maintaining or
extending credit to others for such purpose. After applying the proceeds of each
Advance, such margin stock will not constitute more than 25% of the value of the
assets (either of Borrower or any Guarantor alone or of Borrower and the
Guarantors and their respective Subsidiaries on a consolidated basis) that are
subject to any provisions of this Agreement or any Loan Document that may cause
the Advances to be deemed secured, directly or indirectly, by margin stock;
(U) No report or other information furnished in writing by or on behalf
of Borrower or any Guarantor to you in connection with the negotiation or
administration of this Agreement contains any material misstatement of fact or,
when considered together with Borrower's filings with the SEC and all other
information so furnished to you, omits to state any material fact or any fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which they were made. Neither this Agreement, the Note nor
any other Loan Document, certificate, or report or statement or other
information furnished to you by or on behalf of Borrower or any Guarantor in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or, when considered together with Borrower's
filings with the SEC and all other information so furnished to you, omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading in light of the circumstances in which they were
made. There is no fact known to Borrower or any Guarantor which materially and
adversely affects, or which in the future may (so far as Borrower or any
Guarantor can now foresee) materially and adversely affect, the business,
properties, operations or condition, financial or otherwise, of Borrower, any
Guarantor or any of their respective Subsidiaries, which has not been set forth
in this Agreement or in the other documents, certificates, statements, reports
and other information furnished in writing, including Borrower's 2001 Form 10-K
filing with the SEC, to you by or on behalf of Borrower or the Guarantors in
connection with the transactions contemplated hereby;
(V) Borrower and the Guarantors are engaged as an integrated group in
the business of providing permanent and temporary personnel placements. The
integrated operation requires financing on such a basis that credit supplied can
be made available from time to time to Borrower and the Guarantors, as required
for the continued successful operation of Borrower and the Guarantors and the
integrated operation as a whole, and Borrower and the Guarantors have requested
that you make credit available to Borrower primarily for the purpose of
financing the integrated operation of Borrower and Guarantors, with each of
Borrower and Guarantors expecting to derive benefit, directly or indirectly,
from the credit extended by you, both in its separate capacity and as a member
of the integrated group, inasmuch as the successful operation and condition of
each of Borrower and the Guarantors is dependent upon the continued successful
performance of the functions of the integrated group as a whole;
(W) Each of Borrower and the Guarantors is solvent, able to pay its
Indebtedness as it matures, and has capital sufficient to carry on its business
and all businesses in which it is about to engage, and the present fair saleable
value of the assets of each of Borrower and each such Guarantor is greater than
the amount of Borrower's or such Guarantor's, as the case may be, Indebtedness.
Borrower
11
and the Guarantors on a consolidated basis are solvent, able to pay their
Indebtedness as it matures, and have capital sufficient to carry on their
business and all businesses in which they are about to engage, and the present
fair saleable value of their assets on a consolidated basis is greater than the
amount of their Indebtedness on a consolidated basis; and
(X) We have no Indebtedness (other than trade payables and accrued
expenses) other than as set forth on the Term Sheet.
(Y) We have no Deposit Accounts other than as set forth on the Term
Sheet.
9. CONDITIONS TO OBLIGATIONS OF LENDER.
(A) Conditions for Closing. Your obligation to close the Loan hereunder
is subject to receipt by you of the following documents, fully executed, and
completion of the following matters, in form and substance satisfactory to you:
(i) Charter Documents. Copies of all charter documents of Borrower
and each Guarantor, certified as true and correct as of the date hereof by a
duly authorized officer of Borrower and each such Guarantor, respectively;
(ii) Certification of Good Standing. Certificates of recent date of
the appropriate authority or official of each state in which we are legally
qualified to do business, each certifying as to our good standing;
(iii) By-Laws and Corporate Authorizations. Copies of the by-laws or
comparable governing document of Borrower and each Guarantor together with all
authorizing resolutions and evidence of other corporate action taken by Borrower
and each Guarantor to authorize the execution, delivery and performance by
Borrower and each Guarantor of this Agreement and each Loan Document to which
each is a party, and the consummation by Borrower and such Guarantor,
respectively, of the transactions contemplated hereby, certified as true and
correct as of the date hereof by a duly authorized officer of Borrower and each
Guarantor, respectively;
(iv) Incumbency Certificates. A certificate of incumbency of
Borrower and each Guarantor containing, and attesting to the genuineness of, the
signatures of those officers authorized to act on behalf of Borrower and such
Guarantor in connection with the Loan Documents to which Borrower or such
Guarantor is a party and the consummation by Borrower and such Guarantor of the
transactions contemplated hereby, certified as true and correct as of the date
hereof by a duly authorized officer of Borrower and each such Guarantor,
respectively;
(v) Note. The Revolving Credit Note duly executed by us;
(vi) Security Documents. This Loan and Security Agreement duly
executed on behalf of Borrower and each Guarantor granting to you, as collateral
security for the Obligations, the Collateral intended to be provided pursuant to
Paragraph 3, together with the following in fully executed form (collectively
referred to herein, together with any other document executed in connection with
this Agreement granting to you a security interest in or lien on any property of
Borrower or any Guarantor, as the "Security Documents"):
(a) Recording, Filing, Etc. Evidence of the recordation,
filing and other action (including payment of any
applicable taxes or fees)
12
in such jurisdictions as you may deem necessary or
appropriate with respect to any security interest,
including the filing of financing statements and similar
documents which you may deem necessary or appropriate to
create, preserve or perfect the liens, security interests
and other rights intended to be granted to you thereunder,
together with Uniform Commercial Code record searches in
such offices as you may request;
(b) Demand Deposit Accounts Control Agreements. A Deposit
Account Control Agreement for each Deposit Account of ours
that you require;
(c) Assignment of Business Interruption Insurance. An
assignment to you of our business interruption insurance;
(d) Validity Guaranty. A Guaranty constituting the unlimited,
unconditional validity guaranty of the Obligations by J.
▇▇▇▇▇▇▇ ▇▇▇▇▇.
(e) UCC Insurance. A policy of insurance insuring the priority
of your security interests in the Collateral as senior to
all other security interests in the Collateral with only
such exceptions as are acceptable to you;
(f) Casualty and Other Insurance. Evidence that the casualty
and other insurance required pursuant to Paragraph 5(B) of
this Agreement is in full force and effect and assignments
of policies of insurance as you shall require;
(vii) Closing Certificate. A Closing Certificate for Borrower and
each Guarantor in form satisfactory to you duly executed by an authorized
officer of Borrower and each Guarantor;
(viii) Guarantor Financial Statement. Receipt and review by you of a
current personal financial statement of J. ▇▇▇▇▇▇▇ ▇▇▇▇▇ which is satisfactory
in all respects to you;
(ix) Legal Opinions. The favorable written opinion of counsel for
Borrower and each Guarantor with respect to such matters as you may reasonably
request;
(x) Consents, Approvals, Etc. Copies of all governmental and
non-governmental consents, approvals, authorizations, declarations,
registrations or filings, if any, required on the part of Borrower or any
Guarantor in connection with the execution, delivery and performance of the Loan
Documents or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of the Loan Documents, certified as true
and correct and in full force and effect as of the date hereof by us by a duly
authorized officer of Borrower, or, if none is required, a certificate of such
officer to that effect;
(xi) Commitment Fee; Expense Deposits. The balance of the
Commitment Fee in the amount of One Hundred Forty Thousand and 00/100 Dollars
($140,000.00) payable as set forth on the Term Sheet. Any unused amount of the
expense deposits paid to you to date shall be credited against amounts due
hereunder. The Commitment Fee has been fully earned;
13
(xii) Payoff Letters and Lien Terminations. A payoff letter
from General Electric Capital Corporation, addressed to you, in form and
substance acceptable to you, together with UCC financing statement terminations
and other documents and instruments necessary or reasonably desired by you to
effect and evidence the release and discharge of all liens and security
interests of in their favor with respect to the Collateral and the transfer of
all rights under our existing lockboxes to you;
(xiii) Subordination Agreements. Subordination agreements
executed by (a) Datatek Corporation, (b) the Texcel Shareholders and [(c) ▇▇▇▇▇▇
▇. and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Hosmers")] (each as "Creditor"), us and you subordinating
all indebtedness owing by us to each Creditor to the Loan and security interests
in support thereof in all respects in form satisfactory to you;
(xiv) Other Matters. Such other documents, and completion of
such other matters, as you may reasonably request.
(B) Further Conditions for Disbursement. Your obligation to make any
Advance (including the first Advance) is further subject to the satisfaction of
the following conditions precedent:
(i) The representations and warranties contained in Paragraph
8 hereof and in any of the Loan Documents shall be true and correct on and as of
the date such Advance is made (both before and after such Advance is made) as if
such representations and warranties were made on and as of such date;
(ii) No Default shall exist or shall have occurred and be
continuing on the date such Advance is made (whether before or after such
Advance is made); and
(iii) In the case of any Advance under the Revolving Credit
Loan, you shall have received, when due, all Reports required pursuant to
Paragraph 6(B) as of the close of business on the last business day of the week
next preceding the date such Advance is made.
We shall be deemed to have made a representation and warranty to you at the time
of the making of, and the continuation or conversion of, each Advance to the
effects set forth in clauses (A) and (B) of this Paragraph 9. For purposes of
this Paragraph 9(B), the representations and warranties contained in Paragraph 8
hereof shall be deemed made with respect to both the financial statements
referred to therein and the most recent financial statements delivered pursuant
to Paragraph 6(B).
10. AFFIRMATIVE COVENANTS. We covenant that, so long as any Obligations
remain outstanding and this Agreement is in effect, we shall:
(A) Pay to you on demand all fees and expenses which you incur in
connection with (i) the forwarding of loan proceeds, (ii) the processing of loan
advances, (iii) the establishment and maintenance of the lock box and of all
other accounts created in connection with the transaction contemplated hereby,
and (iv) examination of the Collateral;
(B) Promptly file all tax returns and other reports which we are
required to file and promptly pay all taxes, assessments and other charges;
(C) Promptly notify you in writing of any litigation affecting us,
whether or not the claim is covered by insurance, and of any suit or
administrative proceeding which may materially and adversely affect the
Collateral or our business, assets, operations or condition, financial or
otherwise;
14
(D) Notify you in writing (i) promptly upon the occurrence of any
event described in Section 4043 of ERISA, other than a termination, partial
termination or merger of a "Plan" (as defined in ERISA) or a transfer of a
Plan's assets, and (ii) prior to any termination, partial termination or merger
of a Plan or a transfer of a Plan's assets;
(E) Give you thirty (30) days prior written notice of our opening or
closing any place of business;
(F) Maintain our corporate existence and our qualification and good
standing in all states necessary to conduct our business and own our property
and maintain adequate assets, licenses, patents, copyrights, trademarks and
tradenames to conduct our business;
(G) Promptly notify you in writing of any labor dispute to which we
are or may become subject and the expiration of any labor contract to which we
are a party or bound;
(H) Promptly notify you in writing of any violation of any law,
statute, regulation or ordinance of any governmental entity, or of any agency
thereof, applicable to us which may materially and adversely affect the
Collateral or our business, assets, operations or condition, financial or
otherwise;
(I) Notify you in writing within five (5) business days of our default
under any note, indenture, loan agreement, mortgage, lease, or other agreement
to which we are a party or bound;
(J) Promptly notify you in writing of any default under any
Indebtedness or indebtedness owing to us;
(K) Promptly notify you in writing of the making of any capital
expenditures materially affecting our business, assets, operations or
conditions, financial or otherwise;
(L) Execute and deliver to you, upon request, such documents and
agreements as you may, from time to time, reasonably request to carry out the
terms and conditions of this Agreement;
(M) Promptly, and in any event within five (5) days of the receipt
thereof, deliver any communication in any way concerning any act or omission on
our part regarding the use, generation, storage or release of a hazardous waste
or substance. We agree to indemnify and hold you harmless from any and all loss,
damage, cost, liability or expense (including reasonable attorney fees) arising
out of our use, generation, storage or release of any hazardous waste or
substance;
(N) Promptly, and in any event within five (5) days of the receipt
thereof, deliver to you a copy of any communication from the Federal Department
of Labor concerning any alleged act or omission on our part in connection with
the payment of minimum and/or overtime wages to an employee;
(O) Promptly, and in any event within five (5) days of the receipt
thereof, deliver to you a copy of any communication concerning any violation of
a state or Federal law which could result in the forfeiture of the Collateral;
and
(P) Maintain the liens and security interests granted to you as first,
prior and only liens upon the Collateral.
(Q) If and when one hundred percent (100%) of the outstanding stock of
Mountain, Ltd. is sold and transferred to the Hosmers (the "Mountain Stock
Sale"), whether prior to or after the date of this Agreement, provide you with
evidence satisfactory to you of such sale and transfer and the
15
satisfaction or cancellation of all Indebtedness of any Credit Party to the
Hosmers and the transfer and assignment of all Mountain Receivables to Borrower.
(R) All deposits of Advances to the Disbursement Account shall be held
and disbursed by the owner of the Disbursement Account, as agent of Borrower,
each disbursement from the Disbursement Account to or for the benefit of any
Guarantor shall constitute a loan from Borrower to such Guarantor and each
payment on the Note from proceeds of Receivables of each Guarantor shall
constitute a payment on such loan by such Guarantor.
(S) Notify you by the tenth (10th) day of each month of the status and
recent developments, promptly provide you with true and accurate copies of each
order entered and promptly notify you of any other significant development, in
the Ditto Litigation (as identified on Schedule 8(F) hereto).
(T) Within sixty (60) days after the date hereof, we shall close all
of our existing depository accounts at Compass Bank.
11. NEGATIVE COVENANTS. Without your prior written consent, we covenant
that, so long as any Obligations remain outstanding and this Agreement is in
effect, we shall not:
(A) Merge or consolidate with or acquire any other Person;
(B) Declare or pay cash dividends upon any of our stock or distribute
any of our property or make (except in the ordinary course of business) any
loans or extensions of credit, or investments in, any Person, or redeem, retire,
purchase or acquire, directly or indirectly any of our stock, or make any
material change in our capital structure or in our business or operations which
might adversely affect the repayment of the Obligations;
(C) Enter into any transaction which materially and adversely affects
the Collateral or our ability to repay the Obligations, including any secondary
liens thereon;
(D) Become liable for the indebtedness of any Person, except by
endorsement of instruments for deposit;
(E) Incur Indebtedness, other than trade payables arising in the
ordinary course of our business, and the Obligations;
(F) Make a sale to any customer on a ▇▇▇▇-and-hold, guaranteed sale
(other than in the ordinary course of our business), sale and return, sale on
approval, consignment, or any other repurchase or return basis;
(G) Remove the Collateral which is tangible personal property from the
Collateral Locations set forth on the Term Sheet unless we give you thirty (30)
days prior written notice and the same is removed to a location within the
continental United States of America;
(H) Use any other corporate or fictitious name;
(I) Prepay any Indebtedness, except the Obligations;
(J) Pay salaries, bonuses or commissions to any principal named on the
Term Sheet in excess of the amounts set forth thereon; or
16
(K) Pay any Indebtedness, other than the Obligations, to any of the
persons named on the Term Sheet unless, but only to the extent, permitted by you
in writing.
12. TERMINATION. Either party shall have the right to terminate this
Agreement at the end of the Term of this Agreement or at any time thereafter by
giving the other party written notice by registered or certified mail not less
than sixty (60) days prior to the effective date of such termination. Upon the
effective date of termination, all Obligations shall become immediately due and
payable.
13. DEFAULT. Any one or more of the following events shall constitute a
default ("Default") under this Agreement: (a) we shall fail to pay when due, or
breach, any Obligations, or (b) any Credit Party shall (i) become insolvent,
(ii) generally not pay its respective debts as they become due, (iii) make an
assignment for the benefit of creditors, (iv) attempt to enter into a
composition of debts, or (v) make any misrepresentation to you or fail to
observe or perform any covenants or conditions in connection with this
Agreement, any Rider or any other instrument related to the Loan hereto, or (c)
there shall be filed by or against any Credit Party a petition in bankruptcy for
liquidation or for reorganization, or a custodian, receiver or agent is
appointed or authorized to take charge of its properties, or any Credit Party
authorizes any such action, or (d) there hereafter occur any material and
adverse change in the business, assets, operations and condition, financial or
otherwise, of any Credit Party, or (e) any Credit Party shall be in default
under any agreement to which it is a party, or (f) any guaranty of the
Obligations shall be terminated or revoked.
EACH CREDIT PARTY ACKNOWLEDGES THAT WHILE THERE ARE EVENTS OF DEFAULT SET
FORTH, THE OBLIGATIONS ARE DUE UPON DEMAND, AND IF DEMAND IS NOT MADE, THEN UPON
EXPIRATION OF THE TERM SET FORTH IN THE TERM SHEET. DEMAND MAY OCCUR WITH OR
WITHOUT THERE BEING AN EVENT OF DEFAULT.
14. YOUR RIGHTS AND REMEDIES.
(A) If a Default occurs under this Agreement, or any Rider or any
other document or instrument executed by the undersigned or any Guarantor, you
may, at your election, without notice of your election and without demand, do
any one or more of the following: (a) declare our Obligations, whether evidenced
by a revolving credit note, a term note or otherwise, to be immediately due and
payable; (b) stop advancing money or extending credit to or for our benefit
under the Agreement or any Rider; (c) exercise any and all of the rights
accruing to a secured party under the Code and any other applicable law; (d)
take possession of the Collateral and keep it on our premises, at no cost to
you, or remove any part of it to such other place(s) as you may desire or we
shall, upon your demand, at our cost, assemble the Collateral and make it
available to you at a place reasonably convenient to you.
(B) You may sell and deliver any Collateral at public or private
sales, for cash, upon credit or otherwise, at such prices and upon such terms as
you deem advisable, at your discretion, and may, if you deem it reasonable,
postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale of such postponed or adjourned sale without giving a new
notice of sale. We agree that you have no obligation to preserve rights to the
Collateral or ▇▇▇▇▇▇▇▇ any Collateral for the benefit of any Person. You are
hereby granted a license or other right to use, without charge, our labels,
patents, copyrights, name, trade secrets, trade names, trademarks and
advertising matter, or any similar property, in completing production,
advertising or selling any Collateral and our rights under all licenses and all
franchise agreements shall inure to your benefit. Any requirement of reasonable
notice shall be met if such notice is mailed postage prepaid to us at our
address set forth below at least five (5) days before sale or other disposition.
The proceeds of sale shall be applied first to all expenses of sale, including
17
attorneys' fees, and second to (in whatever order you elect) all Obligations.
You will return any excess to us and we shall remain liable for any deficiency.
(C) IN THE EVENT OF A DEFAULT HEREUNDER, WE HEREBY WAIVE ALL RIGHTS TO
NOTICE AND HEARING PRIOR TO THE EXERCISE BY YOU OF YOUR RIGHTS TO REPOSSESS THE
COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON SUCH
COLLATERAL WITHOUT NOTICE OR HEARING AND ALL RIGHTS OF SET-OFF AND COUNTERCLAIM
AGAINST YOU.
15. WAIVER; AMENDMENTS; SUCCESSORS AND ASSIGNS. Your failure to exercise
any right, remedy or option under this Agreement or any Rider or other agreement
between you and us or delay by you in exercising the same will not operate as a
waiver. No waiver by you will be effective unless in writing and then only to
the extent stated. No waiver by you shall affect your right to require strict
performance of this Agreement. Your rights and remedies will be cumulative and
not exclusive. This Agreement cannot be changed or terminated orally. All terms,
conditions, promises, covenants, provisions and warranties shall inure to the
benefit of and bind your and our respective representatives, successors and
assigns.
16. BANKRUPTCY PROVISIONS. In consideration of your agreements hereunder
and under the Loan Documents, we agree that, in the event any one or more of us
(as a "Debtor" or "Debtors") files for relief under Title 11 of the United
States Code ("Bankruptcy Code") or is otherwise subject to an order for relief
under the Bankruptcy Code, that as to each Debtor:
(A) Relief From Stay. You shall be entitled to relief from the
automatic stay imposed by Bankruptcy Code Section 362 on or against the exercise
of any and all rights and remedies available to you under this Agreement, the
Loan Documents or applicable law, if Debtor fails to file a Plan of
Reorganization within 180 days or fails to obtain confirmation of a Plan of
Reorganization within 90 days after such filing. We specifically acknowledge
that "cause" exists for such relief within the meaning of Section 362(d) of the
Bankruptcy Code.
(B) Cash Collateral. Any attempt by Debtor to use "Cash Collateral"
(as defined in Section 363 of the Bankruptcy Code) shall be subject to the prior
entry of an order pursuant to Section 363 of the Bankruptcy Code ("Cash
Collateral Order") specifically incorporating the principal terms set forth on
Schedule 16(B) attached hereto and the Debtor shall under no circumstances seek
to use Cash Collateral other than on the terms provided in this Agreement. Any
such Cash Collateral Order shall permit the use of Cash Collateral only until
the earliest to occur of: (i) a Default under any of the provisions of this
Agreement or the Loan Documents (other than a Default occasioned solely by the
bankruptcy of Debtor), (ii) the appointment of a Chapter 11 trustee or examiner
in Debtor's case, (iii) the dismissal of Debtor's case or its conversion to a
case under Chapter 7 of the Bankruptcy Code, or (iv) the entry of an order
modifying or terminating the automatic stay or prohibiting the further use of
cash collateral. Upon the occurrence of any of the events described in (i)
through (iv) of the preceding sentence, Debtor's ability to use Cash Collateral
shall terminate immediately and automatically; such termination shall not,
however, affect or impair the rights, interests or liens granted to you under
this Agreement or the other Loan Documents.
All existing and future revenue and cash shall constitute Cash Collateral,
subject to your ▇▇▇▇▇▇, fully perfected and presently enforceable liens and
security interests, and, to the extent they are used and consumed by Debtor
after filing of the petition or entry of the order for relief, Debtor
specifically agrees that they are collateral for your secured claims under
Section 506 of the Bankruptcy Code in the amount so used.
18
To the extent it is determined that Section 552(a) of the Bankruptcy Code
applies to limit your interest under the Loan Documents and this Agreement you
shall be deemed to have, as adequate protection for the use of Cash Collateral,
a continuing perfected protection for the use of Cash Collateral, a continuing
perfected post-bankruptcy lien and security interest in all Collateral, and all
revenue and cash, whether derived from operations prior to or subsequent to or
the filing of a voluntary of involuntary petition for relief with respect to
Debtor. As further adequate protection for Debtor's use of Cash Collateral,
Debtor shall maintain at all times an adequate and appropriate amount and type
of coverage of insurance, including endorsements issued therewith covering the
Collateral in amounts not less than that required under the Loan Documents. To
the extent that the collateral securing your claims in Debtor's bankruptcy case
is deemed or proves to be insufficient to pay your claims in full, your secured
claims shall be deemed to have been inadequately protected by the provisions of
the Cash Collateral Order, and they shall therefore have administrative expenses
of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code,
which superpriority shall be equal to the priority provided under the provisions
of Section 364(c)(1) of the Bankruptcy Code over all other costs and
administrative expenses incurred in the case of the kind specified in, or
ordered pursuant to, Sections 105, 326, 327, 330, 331, 503(b), 506(c), 507(a),
507(b) or 726 of the Bankruptcy Code and shall at all times be senior to the
rights of Debtor or any successor trustee in the resulting bankruptcy proceeding
or any subsequent proceeding under the Bankruptcy Code.
During the pendency of Debtor's bankruptcy, if it is determined that any of
the rights granted hereunder or by any of the Loan Documents are security
interests or liens, they shall be deemed perfected without the necessity of the
filing of any documents or commencement of proceedings otherwise required under
non-bankruptcy law for the perfection of security interests, with such
perfection being binding upon any subsequently appointed trustee, either in
Chapter 11 or under any other Chapter of the Bankruptcy Code, and upon other
creditors of Debtor who have or may hereafter extend secured or unsecured credit
to Debtor.
(C) Surcharge Waiver. Debtor and/or any other representative of
Debtor's bankruptcy estate waives any right to seek a surcharge of your
collateral under 11 U.S.C. (S) 506(c) or any other provision of applicable law.
(D) Other Waivers. Debtor waives any right to seek an order under 11
U.S.C. (S)(S) 363, 364, 1129 or any other provision of the Bankruptcy Code,
imposing liens or security interests of senior or equal priority with your liens
and security interests in the Collateral or the Cash Collateral.
(E) Other Actions Not Prohibited. Nothing contained in this Paragraph
16 shall be deemed to limit or restrict your rights to seek in the bankruptcy
court any relief that you may deem appropriate in the event of a bankruptcy
commenced by or against Debtor, and in particular, you shall be free to seek the
dismissal or conversion of any case filed by Debtor, the appointment of a
trustee or examiner, and relief from the automatic stay.
17. MISCELLANEOUS.
(A) If any provision of this Agreement shall be prohibited or
invalid, under applicable law, it shall be ineffective only to such extent,
without invalidating the remainder of this Agreement.
(B) This Agreement shall be governed by and interpreted in accordance
with the laws of the state set forth on the Term Sheet.
19
(C) All of our representations and warranties contained in this
Agreement shall survive the execution, delivery and acceptance thereof by the
parties.
(D) No termination of this Agreement or of any guaranty of the
Obligations shall affect or impair the powers, obligations, duties, rights,
warranties, representations or liabilities of the parties hereto and all shall
survive such termination.
(E) Each Obligation may, in your discretion, be evidenced by notes or
other instruments issued or made by us to you. If not so evidenced, such
Obligation shall be evidenced solely by entries upon your books and records.
(F) All Obligations shall constitute one loan secured by the
Collateral. You may, in your sole discretion: (i) exchange, enforce, waive or
release any of the Collateral or (ii) apply Collateral and direct the order or
manner without affecting your right to take any other action with respect to any
other Collateral.
(G) You shall have the continuing and exclusive right to apply or
reverse and re-apply any and all payments to any portion of the Obligations. To
the extent that we make a payment or you receive any payment or proceeds of the
Collateral for our benefit, which are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver or any other party under any bankruptcy law,
common law or equitable cause, then, to such extent, the Obligations or part
thereof intended to be satisfied shall be revived and continue as if such
payment or proceeds had not been received by you.
(H) We shall reimburse you for all expenses incurred or to be
incurred by you in connection with (a) the negotiation, preparation and closing
of this Agreement; (b) amendments and modifications to this Agreement; (c) the
protection, perfection or preservation of your security interest in or lien upon
the Collateral; (d) your inspection or verification of the Collateral; (e) any
court or bankruptcy proceeding relating to the Agreement or any claim or action
by any Person against you which would not have been asserted were it not for
your relationship with us hereunder or otherwise; (f) actions taken with respect
to the Collateral and your security interest or lien therein; and (g) review and
analysis regarding our compliance or failure to comply with the Obligations
and/or the enforcement of any of your rights and remedies with respect to the
Obligations or Collateral. The foregoing expenses shall include, without
limitation: (i) reasonable fees, costs and expenses of your outside and in-house
attorneys and paralegals; (ii) interest on the foregoing at the highest
applicable interest rate provided under any Rider to this Agreement, which shall
be part of the Obligations, payable on demand and secured by the Collateral. In
addition, we shall pay those fees set forth on the Rider at the times specified
therein. In recognition of your right to have all your expenses incurred or to
be incurred in connection with this Agreement and the fees due you secured by
the Collateral, you shall not be required to record any discharge of your lien
or termination of your security interest unless and until we deliver to you a
general release acceptable to you.
(I) We agree to give you written notice of any action or omission by
you or your agents in connection with this Agreement that may be actionable
against you or that may be a defense to payment of the Obligations for any
reasons. We further agree that unless such a notice specifically describing the
action or omission is given by us within thirty (30) days after we have
knowledge or with the exercise of reasonable diligence should have had knowledge
of the occurrence of said action or omission we shall not assert, and we shall
be deemed to have waived, any claim or defense arising therefrom.
(J) If you shall breach your obligation under this Agreement to make
an advance under the terms of this Agreement, notwithstanding our conformance
with the provisions thereof, we
20
agree that our sole remedy on account thereof shall be to recover liquidated
damages on account of such breach, computed as hereinafter provided, in
recognition of the fact that the damages which we might incur are uncertain and
speculative. Liquidated damages to which we shall be entitled shall be equal to
sixty (60) times the interest payable for one day on the loans outstanding as of
the day that you are deemed to have failed to fund. In any event, you shall
never be liable to us for special, indirect and consequential damages, whatever
the nature of your breach hereunder.
(K) We authorize and direct you to disburse, for our account, the
proceeds of loans made by you to us to such Person as any of our officers or
directors shall direct, whether in writing or orally.
(L) Any notice required hereunder shall be in writing, and addressed
to the party to be notified as follows:
If to you: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., President
Greenfield Commercial Credit, L.L.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to us: The Borrower's Address set forth
on the Term Sheet.
or to such other address as each party may designate for itself by like notice.
(M) We represent and warrant to you that, with respect to the
financing transaction herein contemplated, no Person is entitled to any
brokerage fee or other commission and we agree to indemnify and hold you
harmless against any and all such claims.
(N) The paragraph titles contained in this Agreement are without
substantive meaning and are not part of the Agreement.
18. WAIVER OF JURY TRIAL. Our legal counsel has advised us that (i) there
may be a constitutional right to a jury trial in connection with any claim,
dispute or lawsuit arising out of this Agreement or any Rider and (ii) such
constitutional right may be waived. After consultation with our counsel (which
has included our counsel's review of this Agreement), we believe that it is in
our best interest in this commercial transaction to waive such right.
Accordingly, we hereby waive our right to a jury trial, and further agree that
the best forum for hearing any claim, dispute or lawsuit, if any, arising in
connection with this Agreement or any Rider or our relationship with you, shall
be a court of competent jurisdiction sitting without a jury.
19. NO ORAL AGREEMENTS. We acknowledge that this Agreement and each Rider
represents the final agreement between you and us and the terms of such
documents may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements that may have or will be exchanged between you
(including your officers, employees and agents) and us.
[SIGNATURES ON FOLLOWING PAGE]
21
Very truly yours,
CREDIT PARTIES:
DIVERSIFIED CORPORATE RESOURCES, INC.,
a Texas corporation
By:________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
DATATEK GROUP CORPORATION,
a Texas corporation
By:_________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
\
INFORMATION SYSTEMS
CONSULTING CORP.,
a Texas corporation
By:_________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
22
MANAGEMENT ALLIANCE
CORPORATION,
a Texas corporation
By: _________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
TEXCEL SERVICES, INC.,
a Pennsylvania corporation
By:_________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
[MOUNTAIN, LTD.,
a Maine corporation
By:_________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary]
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
23
PREFERRED FUNDING CORPORATION,
a Texas corporation
By:_________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
MAGIC NORTHEAST, INC.,
a Delaware corporation
By:_________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
MANAGEMENT ALLIANCE GROUP
OF INDEPENDENT CONSULTANTS, INC.,
a Texas corporation
By:_________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
24
[MOUNTAIN SERVICES, INC.,
a Delaware corporation
By:_________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary]
ALPINE OVERLAND & WIRELESS COMPANY,
a Canadian corporation
By:_________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
ALPINE OVERLAND & WIRELESS LTD.,
a Maine corporation
By:_________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
25
Accepted at Troy, Michigan
On December ___, 2002
LENDER:
GREENFIELD COMMERCIAL CREDIT, L.L.C.,
a Michigan limited liability company
By: GCC Management, Inc.
Its: Manager
By:_________________________________
Its:
26
SCHEDULE 8(A)
STATES OF INCORPORATION
Name of Corporation State of Incorporation
------------------- ----------------------
Alpine Overland & Wireless Company Nova Scotia, Canada
Alpine Overland & Wireless Ltd. Maine
Datatek Group Corporation Texas
Information Systems Consulting Corp. Texas
MAGIC Northeast, Inc. Delaware
Management Alliance Corporation Texas
Management Alliance Group of Independent Consultants, Inc. Texas
Mountain, Ltd. Maine
Mountain Services, Inc. Delaware
Preferred Funding Corporation Texas
Texcel Services, Inc. Pennsylvania
Schecule 8(A)-1
SCHEDULE 8(B)
ASSUMED NAMES OR TRADE NAMES
Currently in use:
Computer Management Search
Engineering Management Consultants
Engineering Management Personnel Services
Engineering Management Staff Recruiters
Engineering Technical Recruiters
Biopharm
Pharmasearch
MAGIC IT
Corporate Staff Recruiters
Computer Technology Search
Data Staffing Centre
Technical Alliance Business Recruiters
Diversified Engineering Search
Technical Alliance Recruiters
Technical Staff Recruiters
MAGIC
MAGIC Austin
MAGIC Atlanta
MAGIC Raleigh
MAGIC Denver
Others used in the last five years:
Advanced System Consulting
Computer Staff Recruiters
Contract First
Data Alliance Consultants
Data Management and Staff Recruiters
Diversified Engineering Search - West
Engineering Management Consulting
Engineering Systems Search
Financial Search Consultants
H R Search
Technical Alliance Group
Technical Resource Consultants
Technical Sales Search
Technology Systems Group
Train USA
▇▇▇▇▇ Assessment and Performance Systems
Schedule 8(B)-1
SCHEDULE 8(F)
LITIGATION
A. Ditto Litigation.
1. Ditto Properties Company vs. U.S.F.G. L.P. No., Inc., a/k/a DCRI L.P.
No. 2, Inc., J. ▇▇▇▇▇▇▇ ▇▇▇▇▇, USFG, Inc. and U.S.F.G./DHRG L.P.
No.1(herein referred to as the "Initial Action"")
2. Diversified Corporate Resources, Inc. f/k/a Diversified Human Resources
Group, inc. and U.S.F.G./DHRG L.P. No. 2, Inc. (the "DCRI Action")
3. Dallas County, Texas
4. ▇▇▇/▇▇/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
5. Case No. 96-10710
6. In 1996, Ditto Properties Company ("DPC") filed the Initial Action; ▇▇.
▇▇▇▇▇ and the Company were also initially named as garnishees in the
lawsuit with respect to 899,200 shares (the " LP Shares") of common
stock (the "Common Stock") of the Company which were the subject matter
of a series of transactions in 1993 (collectively referred to herein as
the "1993 Transactions") which ultimately resulted in the LP Shares
being conveyed by DPC to DCRI L.P. No. 2, Inc. ("L.P. No. 2").
Subsequent to the initial filing of the litigation by DPC, ▇▇. ▇▇▇▇▇ and
the Company were added as defendants in such proceedings, and F. ▇▇▇▇▇
▇▇▇▇ ("▇▇▇▇") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") intervened as parties to
the Ditto Litigation. Due to recently granted motions for summary
judgment in favor of L.P. No. 2, ▇▇. ▇▇▇▇▇ and the Company, neither ▇▇▇▇
nor ▇▇▇▇▇▇▇ remain as parties to the Ditto litigation.
The DCRI Action and the DCRI Action were ultimately consolidated into
one case. The date pending for the trial is February 3, 2003.
Schedule 8(F)-1
DPC and ▇▇▇▇▇▇ ▇▇▇▇▇ ("Ditto") allege, among other things, that the
Defendants fraudulently induced DPC to sell 899.200 shares (the "Shares")
of Common Stock to L.P. No. 2 and failed to perform under the related
Stock Purchase Agreement dated March 26,1993 (the "Stock Purchase
Agreement"). The claim of DPC and ▇▇▇▇▇▇ ▇▇▇▇▇ is that they are entitled
to recover from the Company, ▇▇. ▇▇▇▇▇, DCRI L.P. No. 2, Inc. and others,
jointly and severally, compensatory damages in the amount of at least
$6.5 million punitive and exemplary damages totaling at least $26.1
million interest on the amount of damages incurred, legal fees and
attorney fees.
In the DCRI Action, the Company claims that DPC and Ditto filed the
Initial Action for the purpose of disrupting the Company's plans in 1996
to effectuate a public offering of the Company's stock. In 1997, the
Company sold some 500,000 shares of its common stock at $10 per share,
instead of the price of some $25 per share as contemplated in 1996.
▇. ▇▇▇▇▇▇▇ litigation.
1. ▇▇▇ ▇▇▇▇▇▇▇ vs. Diversified Corporate Resources, Inc., J. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
2. Dallas County, Texas
3. District Court No. H-160th
4. Case No. 02-10197
5. Amount of Claim -
6. Date Filed - October 29, 2002
7. The primary claim is that ▇▇. ▇▇▇▇▇▇▇ was fraudulently induced to enter
into a severance agreement with the Company in 2001.
8. In essence, ▇▇. ▇▇▇▇▇▇▇ seeks, among other things, that the Company
acquire the 141,000 shares of the Company's common stock owned by ▇▇.
▇▇▇▇▇▇▇, and that the Company cancel his promissory notes payable to the
Company in the amount of some $214,000.00.
Schedule 8(F)-2
C. New Jersey Lease Litigation
1. 1099, L.L.C. vs. Texcel Services, inc. and Diversified Corporate
Resources, inc.
2. Superior Court of New Jersey, Union County
3. Case no. UNN-L-3566-02
4. Claim is for unpaid office rental
5. Amount of claim: the total rental payable under Texcel lease which is
estimated to be $80,000 based upon rental of $2,258.27 per month for five
year lease commencing in September, 2000; no lease rental payments have
been made by Texcel since early in 2002.
6. Date filed - November, 2002
Schedule 8(F)-3
SCHEDULE 8(J)
DEFAULTS
Schedule 8(J)-1
SCHEDULE 8(N)
CHIEF EXECUTIVE OFFICE, PRINCIPAL PLACE OF BUSINESS
AND COLLATERAL LOCATIONS
Chief Executive Office, Principal
Name of Corporation Place of Business and Collateral Location
Schedule 8(N)-1
SCHEDULE 8(P)
SUBSIDIARIES OR AFFILIATES
Subsidiaries
1. Alpine Overland & Wireless Company (Nova Scotia, Canada)
2. Alpine Overland & Wireless Ltd. (Maine)
3. Datatek Group Corporation (Texas)
4. Information Systems Consulting Corp. (Texas)
5. MAGIC Northeast, Inc. (Delaware)
6. Management Alliance Corporation (Texas)
7. Management Alliance Group of Independent Consultants, Inc. (Texas)
8. Mountain, Ltd. (Maine)
9. Preferred Funding Corporation (Texas)
10. Texcel Services, Inc. (Pennsylvania)
11. Mountain Services, Inc. (Delaware)
Schedule 8(P)-1
SCHEDULE 8(Q)
LEASED PROPERTIES
------------------------------------------------------------------------------------------
BUILDING & ADDRESS CITY/ZIP SUITE
------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 16504
------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 1650
------------------
506
------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 203
------------------
220
------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 300,600
------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 1650
------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 130
------------------
230
------------------------------------------------------------------------------------------
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 2800
------------------------------------------------------------------------------------------
3500 PiedmontTwo Securities ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 110
Centre
------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 485
------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 730
------------------------------------------------------------------------------------------
▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ Meeting, PA 19462 ▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------
▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 260
------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ K158
------------------------------------------------------------------------------------------
Schedule 8(Q)-1
SCHEDULE 8(R)
COLLATERAL LOCATIONS
-------------------------------------------------------------------------------------------------------
BUILDING & ADDRESS CITY/ZIP SUITE
-------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 16504
-------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 1650
------------------
506
-------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 203
------------------
220
-------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 300,600
-------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 130
------------------
230*
-------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 110
-------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 485
-------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 730
-------------------------------------------------------------------------------------------------------
▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Pike, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Bldg 15
-------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ K158
-------------------------------------------------------------------------------------------------------
Schedule 8(R)-1
SCHEDULE 8(X)
INDEBTEDNESS
Capital Leases with:
G Finance, formerly Deutsche Financial, formerly Solarcom $126,722
Deferred Payment Obligations to:
Former Texcel, Inc. Shareholders (past due):
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $412,458
▇▇▇▇ ▇▇▇▇ $221,800
▇▇▇▇ ▇▇▇▇▇▇▇ $112,542
Datatek Corporation (50% due January 1, 2003 and 2004) $341,250
Schedule 8(X)-1
SCHEDULE 8(Y)
DEPOSIT ACCOUNTS
▇▇▇▇▇ Fargo Bank
Account Name Account #
Diversified Corporate Resources Inc. /
Preferred Funding Corp. Operating Account 495-0032128
Preferred Funding Corp. Control Disbursements Account 475-▇▇▇▇▇▇▇
Mountain Inc Funding Account 495-0032144
Mountain Inc Payroll Account 416-9273307
Preferred Funding Corp. Medical Claim Account 400-▇▇▇▇▇▇▇
Diversified Corporate Resources Disbursements Account 400-▇▇▇▇▇▇▇
Compass Bank
Account Name Account #
Management Alliance Corporation Operating Account ▇▇▇▇▇▇▇▇▇▇
Diversified Corporate Resources Inc. Operating Account 0071333124
Management Alliance Corporation Lockbox Account 0076461414
Datatek Consulting Group Corp Lockbox Account 0076461481
Information System Consulting Corp Lockbox Account 0076461465
Texcel Services Inc Lockbox Account 0076461457
Mountain LTD Lockbox Account 0076461449
Schedule 8(Y)-1
SCHEDULE 16(B)
CASH COLLATERAL ORDER PRINCIPAL TERMS
In addition to such terms and conditions as Debtor and you shall mutually
agree, the Cash Collateral Order shall contain the following principal terms:
1. An acknowledgment by Debtor that the Obligations constitute the valid
and binding obligation of Debtor and are secured by liens and security interests
granted by Debtor to you in Debtor's tangible and intangible personal property
as described in the Loan Documents; and your security interests and liens in the
Collateral are valid, properly perfected and recorded and are unavoidable and
indefeasible in the pending bankruptcy proceeding; nor are they subject to
avoidance, defeasance, offset, defense or counterclaim of any kind.
2. Debtor may use Cash Collateral only for "necessary operating expenses."
The term "necessary operating expenses" shall be limited to the payment of
current taxes incurred after the petition date, unpaid withholding taxes for the
last pay period before and pay periods after the petition date, wages and
salaries, property insurance, necessary repairs and maintenance, utilities,
purchase of inventory and other ordinary charges necessary for Debtor's
operations. The term "necessary operating expenses" does not include payments to
pay or cure any prepetition obligations of Debtor including any arrearages under
any lease, equipment or a statutory contract obligation, except that such
expenses may be paid with your written consent.
3. All principal, interest, costs and expenses, including reasonable
attorneys' fees heretofore, now or hereafter incurred by you in connection with
the Obligations or in the administration of the bankruptcy proceeding, and all
sums at any time owing by Debtor under the Cash Collateral Order, the Note or
any other notes or other agreements with you, are and shall continue to be
subject to all guaranties (as set forth in the Loan and Security Agreement
between Debtor and you) and are and shall continue to be secured by a
post-petition first and senior security interest in and lien upon all property
of Debtor and property of the estate of whatever kind or nature, acquired by
Debtor or the estate on or after the petition date.
4. You shall continue to receive all reports as provided under the Loan
Documents. You shall continue to have access to Debtor's books and records for
the purpose of conducting audits of the Collateral. All of the provisions of the
Loan Documents shall remain in full force and effect and Debtor shall continue
to provide to you all other documents and information required to be provided to
you under the Loan Documents.
5. Interest will continue to accrue and be paid at the non-default rate or
the default rate of interest, whichever is in effect as of the petition date and
shall continue to accrue under the Note.
6. Until the Obligations are repaid in full, Debtor will not without your
prior written consent engage in any transaction which is not in the ordinary
course of its business, including the dispositions of any assets, engaging in
any new or different business activities, increase its investment in fixed or
capital assets, or create, assume or suffer to exist any lien or security
interest in favor of any person other than you in any of the collateral.
7. Such other reasonable and ordinary terms and conditions as you shall
require subject to approval of the bankruptcy court.
Schedule 16(B)-1
LOAN AND SECURITY AGREEMENT
DATED AS OF DECEMBER ___, 2002
TERM SHEET
Paragraph Provisions Terms
2(A) Loan Amount: $3,500,000.00
2(D) Interest Rate: Eight (8.0) percentage points
over Prime Rate
2(E) Initial Term of Agreement: Earlier of demand or one year
5(B) Business Interruption Insurance $263,500
6(B) Interim Financial Statement Period Monthly
6(B) Scope of CPA Engagement: Audited
8(A) Incorporation State: See Schedule 8(A) attached
8(B) Assumed Names or Trade Names: See Schedule 8(B) attached
8(F) Litigation: See Schedule 8(F) attached
8(N) Chief Executive Office, Principal Place See Schedule 8(N) attached
of Business and Location of Collateral
Records:
8(P) Subsidiaries or Affiliates: See Schedule 8(P) attached
8(Q) Leased Properties: See Schedule 8(Q) attached
8(R) Collateral Locations: See Schedule 8(R) attached
8(X) Indebtedness: See Schedule 8(X) attached
8(Y) Deposit Accounts: See Schedule 8(Y) attached
11(J) Salary Limitation: N/A
11(K) Limitation on Indebtedness: Datatek Corporation, Texcel
Shareholders, [Hosmers]
17(B) Governing Law: Michigan
17(H) Fees:
(i) Commitment Fee: $140,000.00 - $28,000
received on commitment
acceptance; $112,000 payable
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on the date hereof as an
overadvance on the Revolving
Credit Loan to be reduced by
$28,000 as of each of the first
four (4) monthly interest payment
dates;
(ii) Under Utilization Fee: 1/12 of 2% of the amount of the
Maximum Loan Amount not drawn -
payable monthly;
(iii) Loan Processing Fee: $1,000.00, payable monthly;
(iv) Collateral Evaluation Fee: $1,000.00 per day for examination
of collateral - estimated four
times per year -- payable as
incurred.
All monthly fees are payable with
monthly interest payment; and
(v) Fees for Lockbox and Other Accounts: As specified by depository
institution.
17(L) Borrower's Address: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
We understand that this Term Sheet defines certain terms used in the
attached Loan and Security Agreement ("Attachment"). We have read the Attachment
and this Term Sheet and fully understand their relationship. By executing both
documents, we acknowledge the foregoing.
LENDER: BORROWER:
GREENFIELD COMMERCIAL CREDIT, L.L.C., DIVERSIFIED CORPORATE RESOURCES, INC.,
a Michigan limited liability company a Texas corporation
By: GCC Management, Inc.
Its: Manager
By: _____________________________ By: _______________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Its: Chairman and CEO
and
By: _______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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OTHER CREDIT PARTIES:
DATATEK GROUP CORPORATION,
a Texas corporation
By:______________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
INFORMATION SYSTEMS
CONSULTING CORP.,
a Texas corporation
By:______________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
MANAGEMENT ALLIANCE
CORPORATION,
a Texas corporation
By:______________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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TEXCEL SERVICES, INC.,
a Pennsylvania corporation
By:__________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:__________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
[MOUNTAIN, LTD.,
a Maine corporation
By:__________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:__________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary]
PREFERRED FUNDING CORPORATION,
a Texas corporation
By:__________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:__________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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MAGIC NORTHEAST, INC.,
a Delaware corporation
By:______________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
MANAGEMENT ALLIANCE GROUP
OF INDEPENDENT CONSULTANTS, INC.,
a Texas corporation
By:______________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
[MOUNTAIN SERVICES, INC.,
a Delaware corporation
By:______________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary]
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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ALPINE OVERLAND & WIRELESS
COMPANY,
a Canadian corporation
By:______________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
ALPINE OVERLAND & WIRELESS LTD.,
a Maine corporation
By:______________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
and
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Secretary
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