Exhibit 99.1
LOAN AND SECURITY AGREEMENT
DATED AS OF NOVEMBER 26, 1997
among
COMFORCE CORPORATION,
COMFORCE OPERATING, INC.,
as Guarantor,
COMFORCE COLUMBUS, INC.,
as Guarantor,
UNIFORCE SERVICES, INC.,
as Guarantor,
RHOTECH ACQUISITION CORP.,
as Guarantor,
THE DIRECT AND INDIRECT SUBSIDIARIES OF SUCH GUARANTORS NAMED
HEREIN,
as Borrowers and Guarantors,
THE LENDERS NAMED HEREIN,
as Lenders
and
HELLER FINANCIAL, INC.,
as Agent and as Lender
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS.....................................................2
1.1 Certain Defined Terms.....................................2
1.2 Accounting Terms.........................................17
1.3 Other Definitional Provisions............................18
SECTION 2. LOANS AND COLLATERAL...........................................18
2.1 Loans....................................................18
(A) Revolving Loan..................................18
(B) Eligible Accounts...............................19
(C) Borrowing Mechanics.............................21
(D) Notes...........................................22
(E) Evidence of Revolving Loan Obligations..........22
(F) Letters of Credit...............................22
(1) Maximum Amount.........................22
(2) Reimbursement..........................22
(3) Conditions of Issuance.................23
(4) Request for Letters of Credit..........23
(G) Other Letter of Credit Provisions...............23
(1) Obligations Absolute...................23
(2) Nature of Lender's Duties..............24
(3) Liability..............................24
(H) Appointment of Borrower Representative..........25
2.2 Interest.................................................25
(A) Rate of Interest................................25
(B) Interest Periods................................25
(C) Computation and Payment of Interest.............26
(D) Interest Laws...................................26
(E) Conversion or Continuation......................27
2.3 Fees.....................................................28
(A) Unused Line Fee.................................28
(B) Letter of Credit Fees...........................28
(C) Audit Fees......................................28
(D) Other Fees and Expenses.........................28
2.4 Payments and Prepayments.................................28
(A) Manner and Time of Payment......................28
(B) Mandatory Prepayments...........................29
(1) Overadvance............................29
(2) Proceeds of Asset Dispositions.........29
(C) Voluntary Prepayments and Repayments............29
(D) Payments on Business Days.......................30
2.5 Term of this Agreement...................................30
2.6 Statements...............................................30
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2.7 Grant of Security Interest................................30
2.8 Capital Adequacy and Other Adjustments....................31
2.9 Taxes.....................................................31
(A) No Deductions....................................31
(B) Changes in Tax Laws..............................31
(C) Foreign Lenders..................................32
2.10 Required Termination and Prepayment.......................33
2.11 Optional Prepayment/Replacement of Agent or
Lenders in Respect of IncreasedCosts......................33
2.12 Compensation..............................................33
2.13 Booking of LIBOR Loans....................................34
2.14 Assumptions Concerning Funding of LIBOR Loans.............34
2.15 Fanning Cash Pledge Agreement.............................34
SECTION 3. CONDITIONS TO LOANS....................................34
3.1 Conditions to Loans.......................................34
(A) Closing Deliveries...............................34
(B) Security Interests...............................34
(C) Closing Date Availability........................35
(D) Representations and Warranties...................35
(E) Fees.............................................35
(F) No Default.......................................35
(G) Performance of Agreements........................35
(H) No Prohibition...................................35
(I) No Litigation....................................35
(J) Consummation of the Uniforce Acquisition. ......35
(K) Uniforce Acquisition Documents. ................36
3.2 Additional Conditions to Loans to Fund
Permitted Acquisitions....................................36
4.1 Organization, Powers, Capitalization......................36
(A) Organization and Powers..........................36
(B) Capitalization...................................36
4.2 Authorization of Borrowing, No Conflict...................37
4.3 Financial Condition.......................................37
4.4 Indebtedness and Liabilities..............................38
4.5 Account Warranties........................................38
4.6 Names.....................................................38
4.7 Locations; FEIN...........................................38
4.8 Title to Properties; Liens................................38
4.9 Litigation; Adverse Facts.................................38
4.10 Payment of Taxes..........................................39
4.11 Performance of Agreements.................................39
4.12 Employee Benefit Plans....................................39
4.13 Intellectual Property.....................................39
4.14 Broker's Fees.............................................39
4.15 Environmental Compliance..................................39
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4.16 Solvency..................................................39
4.17 Disclosure................................................40
4.18 Insurance.................................................40
4.19 Compliance with Laws......................................40
4.20 Bank Accounts.............................................40
4.21 Subsidiaries..............................................40
4.22 Employee Matters..........................................41
4.23 Governmental Regulation...................................41
4.24 Uniforce Acquisition. ...................................41
4.25 Amendments to Schedules. ................................41
SECTION 5. AFFIRMATIVE COVENANTS...........................................41
5.1 Financial Statements and Other Reports....................41
(A) Monthly Financials...............................42
(B) Quarterly Financials.............................42
(C) Year-End Financials..............................42
(D) Accountants' Certification and Reports...........43
(E) Compliance Certificate...........................43
(F) Borrowing Base Certificates, Registers
and Journals.....................................43
(G) Reconciliation Reports and Listings and Agings...44
(H) Management Report................................44
(I) Government Notices...............................44
(J) Events of Default, etc...........................44
(K) Trade Names......................................44
(L) Locations........................................45
(M) Bank Accounts....................................45
(N) Litigation.......................................45
(O) Projections......................................45
(P) Other Indebtedness Notices.......................45
(Q) Other Information................................45
(R) Opening Balance Sheet............................45
(S) Public Filings...................................45
5.2 Access to Accountants and Management......................46
5.3 Inspection................................................46
5.4 Collateral Records........................................46
5.5 Account Covenants; Verification...........................46
5.6 Collection of Accounts and Payments; Cash Management
Arrangements..............................................46
5.7 Endorsement...............................................47
5.8 Corporate Existence.......................................47
5.9 Payment of Taxes..........................................48
5.10 Maintenance of Properties; Insurance......................48
5.11 Compliance with Laws......................................48
5.12 Further Assurances........................................48
5.13 Collateral Locations......................................49
5.14 Instruments; Chattel Paper................................49
5.15 Account Agreements........................................49
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5.16 Use of Proceeds and Margin Security........................49
SECTION 6. FINANCIAL COVENANTS..............................................49
6.1 Minimum EBITDA.............................................50
6.2 Fixed Charge Coverage......................................51
SECTION 7. NEGATIVE COVENANTS...............................................51
7.1 Indebtedness and Liabilities...............................51
7.2 Guaranties.................................................52
7.3 Transfers, Liens and Related Matters.......................52
(A) Transfers.........................................52
(B) Liens.............................................52
(C) No Negative Pledges...............................52
(D) No Restrictions on Subsidiary Distributions to
any Holding Party or any Borrower.................53
7.4 Investments and Loans......................................53
7.5 Restricted Junior Payments.................................53
7.6 Restriction on Fundamental Changes.........................54
7.7 Transactions with Affiliates...............................56
7.8 Environmental Liabilities..................................56
7.9 Conduct of Business........................................57
7.10 Compliance with ERISA......................................57
7.11 Tax Consolidations.........................................57
7.12 Subsidiaries...............................................57
7.13 Fiscal Year................................................57
7.14 Press Release; Public Offering Materials...................57
7.15 Bank Accounts..............................................57
7.16 Changes Relating to Senior Notes and Senior PIK Notes......57
SECTION 8. DEFAULT, RIGHTS AND REMEDIES.....................................58
8.1 Event of Default...........................................58
(A) Payment...........................................58
(B) Default in Other Agreements.......................58
(C) Breach of Certain Provisions......................58
(D) Breach of Warranty................................58
(E) Other Defaults Under Loan Documents...............58
(F) Change in Control.................................58
(G) Involuntary Bankruptcy; Appointment of
Receiver, etc.....................................59
(H) Voluntary Bankruptcy; Appointment of
Receiver, etc.....................................59
(I) Liens.............................................59
(J) Judgment and Attachments..........................59
(K) Dissolution.......................................59
(L) Solvency..........................................60
(M) Injunction........................................60
(N) Invalidity of Loan Documents......................60
(O) Failure of Security...............................60
(P) Damage, Strike, Casualty..........................60
(Q) Licenses and Permits..............................60
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(R) Forfeiture......................................60
(S) CC or COI Activities. .........................60
(T) Inactive Subsidiaries' Activities. .............61
8.2 Suspension of Commitments................................61
8.3 Acceleration.............................................61
8.4 Remedies.................................................61
8.5 Appointment of Attorney-in-Fact..........................62
8.6 Limitation on Duty of Agent with Respect to Collateral...62
8.7 Application of Proceeds..................................62
8.8 License of Intellectual Property.........................63
8.9 Waivers, Non-Exclusive Remedies..........................63
SECTION 9. ASSIGNMENT AND PARTICIPATION...................................63
9.1 Assignments and Participations in Loans..................63
9.2 Agent....................................................64
(A) Appointment.....................................64
(B) Nature of Duties................................65
(C) Rights, Exculpation, Etc........................65
(D) Reliance........................................66
(E) Indemnification.................................66
(F) Heller Individually.............................66
(G) Successor Agent.................................66
(1) Resignation............................66
(2) Appointment of Successor...............67
(3) Successor Agent........................67
(H) Collateral Matters..............................67
(1) Release of Collateral..................67
(2) Confirmation of Authority; Execution
of Releases...........................67
(3) Absence of Duty........................68
(I) Agency for Perfection...........................68
(J) Exercise of Remedies............................68
9.3 Consents.................................................68
9.4 Set Off and Sharing of Payments..........................69
9.5 Disbursement of Funds....................................69
9.6 Settlements, Payments and Information....................70
(A) Revolving Advances and Payments; Fee Payments...70
(B) Availability of Lender's Pro Rata Share.........70
(C) Return of Payments..............................71
9.7 Dissemination of Information.............................72
9.8 Discretionary Advances...................................72
SECTION 10. MISCELLANEOUS.................................................72
10.1 Expenses and Attorneys' Fees.............................72
10.2 Indemnity................................................73
10.3 Amendments and Waivers...................................73
10.4 Notices..................................................74
10.5 Survival of Warranties and Certain Agreements............75
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10.6 Indulgence Not Waiver.....................................75
10.7 Marshaling; Payments Set Aside............................75
10.8 Entire Agreement..........................................76
10.9 Independence of Covenants.................................76
10.10 Severability..............................................76
10.11 Lenders' Obligations Several; Independent Nature of
Lenders' Rights...........................................76
10.12 Headings..................................................76
10.13 APPLICABLE LAW............................................76
10.14 Successors and Assigns....................................77
10.15 No Fiduciary Relationship; Limitation of Liabilities......77
10.16 CONSENT TO JURISDICTION...................................77
10.17 WAIVER OF JURY TRIAL......................................77
10.18 Construction..............................................78
10.19 Counterparts; Effectiveness...............................78
10.20 No Duty...................................................78
10.21 Confidentiality...........................................78
SECTION 11. GUARANTIES.....................................................79
11.1 Guaranty..................................................79
11.2 Contribution with Respect to Guaranty Obligations.........79
11.3 Obligations Absolute. ...................................80
11.4 WAIVER....................................................80
11.5 Recovery..................................................81
11.6 Liability Cumulative......................................81
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LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is dated as of November 26, 1997, and
entered into among:
COMFORCE CORPORATION, a Delaware corporation ("CC"),
COMFORCE OPERATING, INC., a Delaware corporation ("COI"),
COMFORCE COLUMBUS, INC., a New York corporation ("CCI"),
RHO ACQUISITION COMPANY, a Delaware corporation,
UNIFORCE SERVICES, INC., a New York corporation ("USI"),
(each a "Holding Party" and, collectively, "Holding Parties");
BRENTWOOD SERVICE GROUP, INC., a New York corporation ("Brentwood"),
COMFORCE INFORMATION TECHNOLOGIES, INC., a Delaware corporation,
COMFORCE IT ACQUISITION CORP., a Delaware corporation,
COMFORCE TECHNICAL SERVICES, INC., a Delaware corporation,
COMFORCE TELECOM, INC., a Delaware corporation,
COMPUTER CONSULTANTS FUNDING & SUPPORT, INC., a New York corporation,
FORCE FIVE, INC., a Texas corporation,
LABFORCE OF AMERICA, INC., a New York corporation,
PROFESSIONAL STAFFING FUNDING & SUPPORT, INC., a New York corporation,
PROJECT STAFFING SUPPORT TEAM, INC., an Arizona corporation,
PRO N.E., INC., a New York corporation,
PRO UNLIMITED, INC., a New York corporation,
RHO COMPANY INCORPORATED, a Washington corporation,
TEMPORARY HELP INDUSTRY SERVICING COMPANY, INC., a New York corporation
("THISCO"),
UNIFORCE INFORMATION SERVICES OF TEXAS, INC., a New York corporation,
UNIFORCE MIS SERVICES OF GEORGIA, INC., a Georgia corporation,
UNIFORCE PAYROLLING SERVICES, INC., a New York corporation,
UNIFORCE STAFFING SERVICES, INC., a New York corporation,
USSI-NE CORP., a New York corporation,
UTS OF DELAWARE, INC., a Delaware corporation,
(each a "Borrower" and, collectively, "Borrowers");
BRANNON & TULLY, INC., a Georgia corporation,
E.O. OPERATIONS CORP., a New York corporation,
E.O. SERVICING CO., INC., a New York corporation,
MONTARE INTERNATIONAL, INC., a Texas corporation,
STAFFING INDUSTRY FUNDING & SUPPORT, INC., a New York corporation,
SUMTEC CORPORATION, a Delaware corporation,
TEMPFUNDS INTERNATIONAL, INC., a New York corporation,
THISCO OF CANADA, INC., a New York corporation,
UNIFORCE INFORMATION SERVICES, INC., a New York corporation,
UNIFORCE MEDICAL OFFICE SUPPORT, INC., a New York corporation,
USI INC. OF CALIFORNIA, a California corporation,
corporation,
1
UTS CORP. OF MINNESOTA, a Minnesota corporation,
(each an "Inactive Subsidiary" and, collectively, "Inactive Subsidiaries");
The financial institution(s) listed on the signature pages hereof and their
respective successors and assigns (each a "Lender" and, collectively,
"Lenders"); and
HELLER FINANCIAL, INC., a Delaware corporation (in its individual capacity,
"Heller"), with offices at 500 West Monroe, Chicago, Illinois 60661, for itself
as a Lender and as Agent.
WHEREAS, all capitalized terms used herein are defined in Section 1 of this
Agreement;
WHEREAS, Holding Parties and Borrowers desire that Lenders extend a credit
facility to Borrowers to refinance certain indebtedness of Holding Parties and
Borrowers, to provide working capital financing and to provide funds for
Permitted Acquisitions (other than the Uniforce Acquisition) and other general
corporate purposes; and
WHEREAS, Borrowers desire to secure their obligations under the Loan
Documents by granting to Agent, for the benefit of Lenders, a security interest
in and lien upon certain of their property; and
WHEREAS, Holding Parties (other than CC), all Borrowers and all Inactive
Subsidiaries (each referred to herein individually as a "Corporate Guarantor"
and collectively as "Corporate Guarantors") are willing to guaranty all of the
obligations of Borrowers to Agent and Lenders under the Loan Documents and to
grant to Agent, for benefit of Lenders, a security interest in and lien upon
certain property of the Corporate Guarantors to secure such guaranties;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Holding Parties, Borrowers, the
Corporate Guarantors, Agent and Lenders agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement shall
have the following meanings:
"Account Agreements" means all agreements pursuant to which Purchased
Accounts are purchased or Service Fee Accounts are generated.
"Accounts" means all "accounts" (as defined in the UCC), accounts
receivable, contract rights and general intangibles relating thereto, notes,
drafts and other forms of obligations owed to or owned by any Borrower arising
or resulting from the sale of goods or the rendering of services.
2
"Account Seller" means, in the case of any Purchased Account, the Person
from whom such Purchased Account was purchased and, in the case of any Service
Fee Account, means the independent supplemental staffing firm which provided the
services creating such Service Fee Account.
"Acquisition Costs" means the price, cost and expenses payable in
connection with a Permitted Acquisition (including all transaction costs and all
Indebtedness, liabilities and contingent obligations incurred or assumed in
connection therewith).
"Adjustment Date" means, beginning on March 1, 1999, the first day of each
March, June, September or December next succeeding the date on which Agent
received the financial statements required to be delivered pursuant to
subsection 5.1(B) for the most recently completed Fiscal Quarter, together with
the Compliance Certificate and the Applicable Margin Report required to be
delivered pursuant to subsection 5.1(E) with such financial statement; provided
that if CC shall on or prior to September 30, 1998 consummate an offering for
cash of its common stock, or options, warrants or rights with respect to its
common stock, and shall concurrently apply the cash proceeds of such transaction
(less discounts and expenses related thereto) to the reduction of outstanding
Indebtedness of CC, COI or any Borrower, then the first Adjustment Date shall be
the first to occur of the first day of June, September or December of 1998
immediately following the later of (i) May 31, 1998 or (ii) the date of
consummation of such offering, provided that the Agent shall have received
financial statements for the Fiscal Quarter in which such consummation occurred
that are required to be delivered pursuant to subsection 5.1(B), together with
the Compliance Certificate and Applicable Margin Report required to be delivered
pursuant to subsection 5.1(E) with such financial statements; and, provided
further, that if the occurrence of the first Adjustment Date pursuant to the
terms of the preceding proviso would result in a higher Applicable Base Rate
Margin or Applicable LIBOR Margin than was in effect immediately prior thereto,
then, notwithstanding the definitions thereof set forth below, the Applicable
Base Rate Margin or Applicable LIBOR Margin shall remain in effect (it being
understood and agreed that, in the event of the applicability of the preceding
proviso, the first Adjustment Date on which the Applicable Base Rate Margin or
the Applicable LIBOR Margin may be increased, is March 1, 1999).
"Affected Lender" has the meaning assigned to such term in subsection 2.11.
"Affiliate" means any Person (other than Agent or Lender): (a) directly or
indirectly controlling, controlled by, or under common control with, any Loan
Party; (b) directly or indirectly owning or holding five percent (5%) or more of
any equity interest in any Holding Party or any Borrower; (c) five percent (5%)
or more of whose stock or other equity interest having ordinary voting power for
the election of directors or the power to direct or cause the direction of
management, is directly or indirectly owned or held by any Holding Party or any
Borrower; or (d) which has a senior executive officer who is also a senior
executive officer of any Holding Party or any Borrower. For purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities or other equity interest, or by contract or otherwise.
3
"Agent" means Heller in its capacity as agent for Lenders under the Loan
Documents and any successor in such capacity appointed pursuant to subsection
9.2.
"Agent's Account" means ABA No. 0710-0001-3, Account No. 52-98695 at First
National Bank of Chicago, One First National Plaza, Chicago, IL 60670,
Reference: Heller Business Credit for the benefit of Comforce.
"Agreement" means this Loan and Security Agreement as it may be amended,
restated, supplemented or otherwise modified from time to time.
"Allocable Amount" has the meaning assigned to such term in subsection
11.2(B).
"Applicable Base Rate Margin" means, at any date, the applicable percentage
set forth below opposite the Level of Leverage Ratio as of such date:
Level of Leverage Ratio Applicable Base Rate Margin
----------------------- ---------------------------
Level I: Leverage Ratio is equal to or less -.25%
than 4.00 to 1
Level II: Leverage Ratio is greater than 4.00 to
1 but less than or equal to 4.50 to 1 .00%
Level III: Leverage Ratio is greater than 4.50
to 1 but less than or equal to 5.50 to 1 .25%
Level IV: Leverage Ratio is greater than 5.50 to .50%
1 but less than or equal to 6.00 to 1
Level V: Leverage Ratio is greater than 6.00 to .75%
1
; provided that (a) the Applicable Base Rate Margin shall be that set forth
above opposite Level IV from the Closing Date until the first Adjustment Date
occurring after the Closing Date, (b) the Applicable Base Rate Margin determined
for any Adjustment Date shall remain in effect until a subsequent Adjustment
Date for which the Leverage Ratio falls within a different Level, and (c) if the
financial statements, the related Compliance Certificate and the Applicable
Margin Report for any fiscal period are not delivered by the date due pursuant
to subsections 5.1(B), 5.1(C) and 5.1(E), the Applicable Base Rate Margin shall
be that set forth above opposite Level V until the next subsequent Adjustment
Date.
"Applicable LIBOR Margin" means, at any date, the applicable percentage set
forth below opposite the Level of Leverage Ratio as of such date:
4
Level of Leverage Ratio Applicable LIBOR Margin
----------------------- -----------------------
Level I: Leverage Ratio is equal to or less 1.50%
than 4.00 to 1
Level II: Leverage Ratio is greater than 4.00 to 1
but less than or equal to 4.50 to 1 1.75%
Level III: Leverage Ratio is greater than 4.50 to 1
but less than or equal to 5.50 to 1 2.00%
Level IV: Leverage Ratio is greater than 5.50 to 1 2.25%
but less than or equal to 6.00 to 1
Level V: Leverage Ratio is greater than 6.00 to 1 2.50%
; provided that (a) the Applicable LIBOR Margin shall be that set forth above
opposite Level IV from the Closing Date until the first Adjustment Date
occurring after the Closing Date, (b) the Applicable LIBOR Margin determined for
any Adjustment Date shall remain in effect until a subsequent Adjustment Date
for which the Leverage Ratio falls within a different Level, and (c) if the
financial statements, the related Compliance Certificate and Applicable Margin
Report for any fiscal period are not delivered by the date due pursuant to
subsections 5.1(B), 5.1(C) and 5.1(E), the Applicable LIBOR Margin shall be that
set forth above opposite Level V until the next subsequent Adjustment Date.
"Applicable Margin Report" has the meaning assigned to such term in
subsection 5.1(E).
"Asset Disposition" means the disposition, whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise, of any or all of
the assets of any Holding Party, any Borrower or any of their respective
Subsidiaries.
"Assignment and Assumption Agreement" means an agreement among Agent, a
Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans, the Commitments and other
interests under this Agreement and the other Loan Documents substantially in the
form of Exhibit A.
"Availability Trigger Event" shall be deemed to have occurred on each day,
if any, after the Closing Date on which the Unused Availability shall have been
less than $12,500,000 for the five consecutive days immediately preceding such
day.
"Bank Letter of Credit" means each letter of credit issued by a bank
acceptable to and approved by Agent for the account of any Borrower and
supported by a Risk Participation Agreement.
"Base Rate" means a variable rate of interest per annum equal to the higher
of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
5
Loan rate or its equivalent, or (b) the Federal Funds Effective Rate plus
one-half of one percent (.50%). The statistical release generally sets forth a
Bank Prime Loan rate for each Business Day. In the event the Board of Governors
of the Federal Reserve System ceases to publish a Bank Prime Loan rate or its
equivalent, the term "Base Rate" shall mean a variable rate of interest per
annum equal to the highest of the "prime rate", "reference rate", "base rate",
or other similar rate announced from time to time by any of Bankers Trust
Company, The Chase Manhattan Bank, or their successors (with the understanding
that any such rate may merely be a reference rate and may not necessarily
represent the lowest or best rate actually charged to any customer by any such
bank).
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate.
"Blocked Accounts" has the meaning assigned to that term in subsection 5.6
"Blocked Account Agreements" has the meaning assigned to such term in
subsection 5.6.
"Borrower" and "Borrowers" have the meanings assigned to such terms in the
preamble to this Agreement.
"Borrowing Base" has the meaning assigned to such term in subsection
2.1(A)(2).
"Borrowing Base Certificate" means a certificate and assignment schedule
duly executed by an officer of Borrower Representative appropriately completed
and in substantially the form of Exhibit B.
"Borrower Representative" has the meaning assigned to such term in
subsection 2.1(H).
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the States of Illinois or Pennsylvania or
is a day on which banking institutions located in either such state are closed,
or for the purposes of LIBOR Loans only, a day on which commercial banks are
open for dealings in Dollar deposits in the London, England (U.K.) market.
"Capital Expenditures" means all expenditures (including deposits) for, or
contracts for expenditures (excluding contracts for expenditures under or with
respect to Capital Leases, but including cash down payments for assets acquired
under Capital Leases) with respect to any fixed assets or improvements, or for
replacements, substitutions or additions thereto, which have a useful life of
more than one year, including the direct or indirect acquisition of such assets
by way of increased product or service charges, offset items or otherwise.
"Capital Lease" means any lease of any property (whether real, personal or
mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
"Cash Equivalents" means: (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full
6
faith and credit of the United States, in each case maturing within six (6)
months from the date of acquisition thereof; (b) commercial paper maturing no
more than six (6) months from the date issued and, at the time of acquisition,
having a rating of at least A-1 from Standard & Poor's Corporation or at least
P-1 from Moody's Investors Service, Inc.; (c) certificates of deposit or
bankers' acceptances maturing within six (6) months from the date of issuance
thereof issued by, or overnight reverse repurchase agreements from, any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia having combined capital and surplus of
not less than $250,000,000 and not subject to setoff rights in favor of such
bank; and (d) compensating balances with and deposits in banks to the extent
required to maintain payroll accounts with such banks.
"Closing Date" means November 26, 1997.
"Collateral" has the meaning assigned to that term in subsection 2.7.
"Collecting Banks" has the meaning assigned to that term in subsection 5.6.
"Commitment" or "Commitments" means the commitment or commitments of
Lenders to make Loans as set forth in subsection 2.1(A) and to provide Lender
Letters of Credit as set forth in subsection 2.1(F).
"Compliance Certificate" means a certificate duly executed by the chief
executive officer or chief financial officer of Holding Parties and Borrowers
appropriately completed and in substantially the form of Exhibit C.
"Corporate Guarantor" and "Corporate Guarantors" have the meanings assigned
to such terms in the preamble to this Agreement.
"Corporate Overhead" means payments made in cash by CC or COI in connection
with the supervision and management of the businesses and operations of
Borrowers including, without limitation, in respect of compensation for
executive officers and other employees of CC and/or COI who participate in such
supervision and management, and financial, accounting, legal, computer service,
insurance and other similar payments made in cash relating thereto, in all such
cases being reasonable in amount.
"Default" means a condition, act or event that, after notice or lapse of
time or both, would constitute an Event of Default if that condition or event
were not cured or removed within any applicable grace or cure period.
"Defaulted Amount" means, with respect to any Lender at any time, any
amount required to be paid by such Lender to Agent or any other Lender hereunder
or under any other Loan Document at or prior to such time which has not been so
paid as of such time, including, without limitation, any amount required to be
paid by such Lender to (a) the issuer of a Lender Letter of Credit to purchase
any participation in such Lender Letter of Credit, and (b) Agent to reimburse
Agent for the amount of any Loan made by Agent for the account of such Lender.
7
"Defaulting Lender" means, at any time, any Lender that, at such time, owes
a Defaulted Amount.
"Default Rate" has the meaning assigned to that term in subsection 2.2.
"EBITDA" means, for any period, without duplication, the total of the
following for Holding Parties, Borrowers and their respective Subsidiaries on a
consolidated basis, each calculated for such period: (1) net income determined
in accordance with GAAP; plus, to the extent included in the calculation of net
income, (2) the sum of (a) income and franchise taxes paid or accrued; (b)
Interest Expenses, net of interest income (but excluding service revenues and
fees relating to the financing of the accounts receivable of third-party,
non-affiliated entities engaged in the provision of temporary personnel
services), paid or accrued; (c) interest paid in kind; (d) amortization and
depreciation and (e) other non-cash charges (excluding accruals for cash
expenses made in the ordinary course of business); less, to the extent included
in the calculation of net income, (3) the sum of (a) the income of any Person
(other than wholly-owned Subsidiaries of Holding Parties) in which Holding
Parties or Borrowers or a wholly owned Subsidiary of a Holding Party or a
Borrower has an ownership interest except to the extent such income is received
by a Holding Party or a Borrower or such wholly-owned Subsidiary in a cash
distribution during such period; (b) gains or losses from sales or other
dispositions of assets (other than Inventory in the normal course of business);
and (c) extraordinary or non-recurring gains, but not net of extraordinary or
non-recurring "cash" losses.
"Eligible Accounts" has the meaning assigned to that term in subsection
2.1(B).
"Employee Benefit Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is maintained for employees of any Loan Party
or any ERISA Affiliate or (b) has at any time within the preceding six (6) years
been maintained for the employees of any Loan Party or any current or former
ERISA Affiliate.
"Environmental Claims" means claims, liabilities, investigations,
litigation, administrative proceedings, judgments or orders relating to
Hazardous Materials.
"Environmental Laws" means any present or future federal, state or local
law, rule, regulation or order relating to pollution, waste, disposal or the
protection of human health or safety, plant life or animal life, natural
resources or the environment.
"Equipment" means all "equipment" (as defined in the UCC), including,
without limitation, all furniture, furnishings, fixtures, machinery, motor
vehicles, trucks, trailers, vessels, aircraft and rolling stock and all parts
thereof and all additions and accessions thereto and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party, means any Person who is a
member of a group which is under common control with any Loan Party, who
together with any Loan Party is treated as a single employer within the meaning
of Section 414(b) and (c) of the IRC.
8
"Event of Default" means each of the events set forth in subsection 8.1.
"Fanning Cash Pledge Agreement" means that certain cash collateral pledge
agreement between John Fanning and Agent, dated of even date herewith.
"Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Federal Reserve Bank of New York or,
if such rate is not published for any Business Day, the average of the
quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.
"Fee Letter" means that certain letter agreement between COI and Agent,
dated of even date herewith relating to fees.
"Fiscal Quarter" has the meaning assigned to such term in the definition of
Fiscal Year.
"Fiscal Year" means each twelve month period ending on the last day of
December in each year (with quarterly accounting periods ending on or about
March 31, June 30, September 30 and December 31 of each Fiscal Year (each a
"Fiscal Quarter").
"Fixed Charge Coverage" means, for any period, Operating Cash Flow divided
by Fixed Charges.
"Fixed Charges" means, for any period, and each calculated for such period
(without duplication), (a) Interest Expenses paid or accrued by Holding Parties,
Borrowers and their respective Subsidiaries; plus (b) scheduled payments of
principal with respect to all Indebtedness of Holding Parties, Borrowers and
their respective Subsidiaries; plus (c) any provision for (to the extent it is
greater than zero) income or franchise taxes included in the determination of
net income, excluding any provision for deferred taxes; plus (d) payment of
deferred taxes accrued in any prior period; plus (e) Restricted Junior Payments
made during such period (to the extent not added to net income for the purposes
of calculating EBITDA for such period).
"Funded Debt" means Indebtedness which matures more than one year from the
date of its creation or matures within one year from such date but is renewable
or extendible, at the option of the debtor, to a date more than one year from
such date or arises under a revolving credit or similar agreement which
obligates the lender or lenders to extend credit during a period of more than
one year from such date including, without limitation, all amounts of Funded
Debt required to be paid or prepaid within one year from the date of
determination.
"Funding Date" means the date of each funding of a Loan or issuance of a
Lender Letter of Credit.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public
9
Accountants and statements and pronouncements of the Financial Accounting
Standards Board that are applicable to the circumstances as of the date of
determination.
"Guarantor Payment" has the meaning assigned to such term in subsection
11.2(A).
"Hazardous Material" means all or any of the following: (a) substances that
are defined or listed in, or otherwise classified pursuant to, any Environmental
Laws or regulations as "hazardous substances", "hazardous materials", "hazardous
wastes", "toxic substances" or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, or toxicity; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or electrical equipment which contains
any oil or dielectric fluid containing polychlorinated biphenyls.
"Inactive Subsidiary" and "Inactive Subsidiaries" have the meanings
assigned to such terms in the preamble to this Agreement.
"Indebtedness", as applied to any Person, means without duplication: (a)
all indebtedness for borrowed money; (b) obligations under leases which in
accordance with GAAP constitute Capital Leases; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more than six months from the date the obligation is incurred or is evidenced by
a note or similar written instrument; (e) all indebtedness secured by any Lien
on any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is non
recourse to the credit of that Person; (f) obligations in respect of letters of
credit; and (g) any advances under any factoring arrangement.
"Intangible Assets" means all intangible assets (determined in conformity
with GAAP) including, without limitation, goodwill, Intellectual Property,
licenses, organizational costs, deferred amounts, covenants not to compete,
unearned income and restricted funds.
"Intellectual Property" means all present and future designs, patents,
patent rights and applications therefor, trademarks and registrations or
applications therefor, trade names, inventions, copyrights and all applications
and registrations therefor, software or computer programs, license rights, trade
secrets, methods, processes, know-how, drawings, specifications, descriptions,
and all memoranda, notes and records with respect to any research and
development, whether now owned or hereafter acquired, all goodwill associated
with any of the foregoing, and proceeds of all of the foregoing, including,
without limitation, proceeds of insurance policies thereon.
"Intellectual Property Assignment" means the intellectual property
assignment to be executed and delivered by each Loan Party, in a form reasonably
acceptable to Agent, as such
10
agreement may hereafter be amended, restated, supplemented or otherwise modified
from time to time.
"Intercompany Indebtedness" means, with respect to any Holding Party, any
Borrower or any of their respective Subsidiaries, all assets and liabilities
howsoever arising, which are due to such Person from, or which are due from such
Person to, or which may otherwise arise from any transactions by such Person
with a Holding Party, a Borrower or a Subsidiary.
"Interest Expenses" means, without duplication, for any period, the
following, for Holding Parties, Borrowers and their respective Subsidiaries each
calculated for such period: interest expenses deducted in the determination of
net income (excluding (i) the amortization of fees and costs with respect to the
transactions contemplated by this Agreement, the Senior Notes Indenture and the
Senior PIK Notes which have been capitalized as transaction costs in accordance
with the provisions of subsection 1.2; and (ii) interest paid in kind).
"Interest Period" has the meaning assigned to such term in subsection
2.2(B).
"Interest Rate" has the meaning assigned to such term in subsection 2.2(A).
"Inventory" means all "inventory" (as defined in the UCC), including,
without limitation, finished goods, raw materials, work in process and other
materials and supplies used or consumed in a Person's business, and goods which
are returned or repossessed.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and all rules and regulations promulgated
thereunder.
"Lender" or "Lenders" has the meaning assigned to such term in the preamble
to this Agreement.
"Lender Letter of Credit" has the meaning assigned to such term in
subsection 2.1(F).
"Letter of Credit Liability" means, all reimbursement and other liabilities
of Borrowers with respect to each Lender Letter of Credit, whether contingent or
otherwise, including: (a) the amount available to be drawn or which may become
available to be drawn; (b) all amounts which have been paid or made available by
any Lender issuing a Lender Letter of Credit or any bank issuing a Bank Letter
of Credit to the extent not reimbursed; and (c) all unpaid interest, fees and
expenses related thereto.
"Letter of Credit Reserve" means, at any time, an amount equal to (a) the
aggregate amount of Letter of Credit Liability with respect to all Lender
Letters of Credit outstanding at such time plus, without duplication, (b) the
aggregate amount theretofore paid by Agent or any Lender under Lender Letters of
Credit and not debited to the Loan Account pursuant to subsection 2.1(F)(2) or
otherwise reimbursed by Borrowers.
11
"Leverage Ratio" means, for any Adjustment Date or other date of
determination, the ratio of (a) Funded Debt on the last day of the Fiscal
Quarter most recently ended for which financial statements have been delivered
(or were required to be delivered) pursuant to subsection 5.1(B) or 5.1(C) to
(b) EBITDA for the four Fiscal Quarters most recently ended for which financial
statements have been delivered (or were required to be delivered) pursuant to
subsection 5.1(B) or 5.1(C); provided, however, that, for purposes of this
definition: (i) "Funded Debt" shall exclude the Senior PIK Notes until such date
as any interest shall for the first time be paid in cash thereon; and (ii) for
any such period of four Fiscal Quarters ending prior to December 31, 1998, the
EBITDA of USI and its Subsidiaries for the portion of such period that preceded
the Closing Date shall be included in the calculation of EBITDA for such period.
"Liabilities" shall have the meaning given that term in accordance with
GAAP and shall include Indebtedness.
"LIBOR" means, for each Interest Period, a rate of interest equal to:
(a) the rate of interest determined by Agent at which deposits in Dollars
for the relevant Interest Period are offered based on information presented on
the Reuters Screen LIBOR Page as of 11:00 A.M. (London time) on the day which is
two (2) Business Days prior to the first day of such Interest Period; provided
that if at least two such offered rates appear on the Reuters Screen LIBOR Page
in respect of such Interest Period, the arithmetic mean of all such rates (as
determined by Agent) will be the rate used; provided further that if Reuters
ceases to provide LIBOR quotations, such rate shall be the average rate of
interest determined by Agent at which deposits in Dollars are offered for the
relevant Interest Period by Bankers Trust Company, The Chase Manhattan Bank, or
its successors to prime banks in the London interbank market as of 11:00 A.M.
(London time) on the applicable interest rate determination date, divided by
(b) a number equal to 1.0 minus the aggregate (but without duplication) of
the rates (expressed as a decimal fraction) of reserve requirements in effect on
the day which is two (2) Business Days prior to the beginning of such Interest
Period (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) which are required to be maintained by a member bank of the Federal
Reserve System:
(such rate to be adjusted to the nearest one sixteenth of one percent (1/16 of
1%) or, if there is not a nearest one sixteenth of one percent (1/16 of 1%), to
the next higher one sixteenth of one percent (1/16 of 1%).
"LIBOR Loans" means at any time that portion of the Loans bearing interest
at rates determined by reference to LIBOR.
12
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" or "Loans" means an advance or advances under the Revolving Loan
Commitment.
"Loan Documents" means this Agreement, the Notes, the Intellectual Property
Assignment, the Pledge Agreement, the Fanning Cash Pledge Agreement, and all
other instruments, documents and agreements executed by or on behalf of any Loan
Party and delivered concurrently herewith or at any time hereafter to or for
Agent or any Lender in connection with the Loans, any Lender Letter of Credit,
and other transactions contemplated by this Agreement, all as amended, restated,
supplemented or modified from time to time.
"Loan Party" means each of Holding Parties, Borrowers, their respective
Subsidiaries, Corporate Guarantors, and any other Person (other than Agent or
any Lender) which is or becomes a party to any Loan Document (collectively,
referred to as the "Loan Parties").
"Loan Year" means each period of twelve (12) consecutive months commencing
on the Closing Date and on each anniversary thereof.
"Material Adverse Effect" means a material adverse effect upon (a) the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of any Loan Party on an individual basis or taken as a whole or (b)
the ability of any Loan Party to perform its obligations under any Loan Document
to which it is a party or of Agent or any Lender to enforce or collect any of
the Obligations.
"Maximum Revolving Loan Amount" has the meaning assigned to that term in
subsection 2.1(A)(1).
"Net Worth" means, as of any date, the sum of the capital stock and
additional paid-in capital plus retained earnings (or minus accumulated deficit)
calculated in conformity with GAAP.
"Notes" means the Revolving Notes.
"Notice of Borrowing" has the meaning assigned to such term in subsection
2.1(C).
"Obligations" means all obligations, liabilities and indebtedness of every
nature of each Loan Party from time to time owed to Agent or to any Lender under
the Loan Documents including the principal amount of all debts, claims and
indebtedness (whether incurred before or after the Termination Date), accrued
and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable including, without limitation, all
interest, fees, cost and expenses accrued or incurred after the filing of any
petition under any bankruptcy or insolvency law.
13
"Operating Cash Flow" means, for any period, (a) EBITDA less (b) Capital
Expenditures and less (c) the aggregate amount of contingent and "earnout"
payments for which any Loan Party is obligated as of the Closing Date and, in
addition, in respect of any Permitted Acquisition, that are paid in cash during
such period; provided that any such payments referred to in this clause (c) made
after the Closing Date and prior to October 1, 1998 shall be deemed made in the
Fiscal Quarter ending December 31, 1998.
"Permitted Acquisition" has the meaning assigned to such term in subsection
7.6(B).
"Permitted Encumbrances" means the following types of Liens: (a) Liens
(other than Liens relating to Environmental Claims or ERISA) for taxes,
assessments or other governmental charges: (x) not yet due and payable; or (y)
due and payable that are being contested in good faith by appropriate
proceedings, provided that, in the case of Liens under this clause (y), a
reserve against the Borrowing Base shall have been established in the amount of
the claims for any such taxes, assessments or other governmental charges; (b)
statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and
other similar liens imposed by law, which are incurred in the ordinary course of
business for sums not more than thirty (30) days delinquent; (c) Liens (other
than any Lien imposed by ERISA) incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other types of social security, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money); (d) easements, rights-of-way, restrictions,
and other similar charges or encumbrances not interfering in any material
respect with the ordinary conduct of the business of any Loan Party or any of
its Subsidiaries; (e) Liens for purchase money obligations, provided that (i)
the Indebtedness secured by any such Lien is permitted under subsection 7.1 and
(ii) such Lien encumbers only the asset so purchased; (f) Liens in favor of
Agent, on behalf of Lenders; and (g) Liens set forth on Schedule 1.1(B).
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"Pledge Agreement" means each stock pledge agreement executed and delivered
by each Loan Party (other than CC) that has a Subsidiary in favor of Agent, on
behalf of Lenders, in form and substance satisfactory to Agent.
"Pro Forma" means the unaudited consolidated and consolidating balance
sheet of CC, COI and USI as of the Closing Date after giving effect to the
transactions contemplated by this Agreement. The Pro Forma is annexed hereto as
Schedule 1.1(B).
"Pro Rata Share" means (a) with respect to matters relating to a particular
Commitment of a Lender, the percentage obtained by dividing (i) such Commitment
of that Lender by (ii) all such Commitments of all Lenders and (b) with respect
to all other matters, the percentage obtained by dividing (i) the Total Loan
Commitment of a Lender by (ii) the Total Loan Commitments of all
14
Lenders, in either case as such percentage may be adjusted by assignments
permitted pursuant to subsection 9.1; provided, however, if any Commitment is
terminated pursuant to the terms hereof, then "Pro Rata Share" means the
percentage obtained by dividing (x) the aggregate amount of such Lender's
outstanding Loans related to such Commitment by (y) the aggregate amount of all
outstanding Loans related to such Commitment.
"Projections" means the Holding Parties' and the Borrowers' forecasted: (a)
consolidated balance sheets; (b) consolidated and consolidating profit and loss
statements; (c) consolidated cash flow statements; (d) capitalization
statements; and (e) consolidated and consolidating schedule of Indebtedness, all
prepared on a division by division and Subsidiary by Subsidiary basis and
otherwise consistent with such Holding Party's and such Borrower's financial
statements, together with appropriate supporting details and a statement of
underlying assumptions.
"Purchased Accounts" means those Accounts of Persons engaged in the
business of providing temporary employment personnel to clients, which Accounts
have been purchased by Borrowers from such Persons in the ordinary course of
Borrowers' business.
"Reconciliation Report" means a report duly executed by the chief executive
officer or chief financial officer of Borrower Representative appropriately
completed and in substantially the form of Exhibit 1.1(C).
"Requisite Lenders" means Lenders holding or being responsible for
fifty-one percent (51%) or more of the sum of (a) outstanding Loans, (b)
outstanding Letter of Credit Liability and (c) unutilized Commitments; provided,
that at any time during which there are only two (2) Lenders, "Requisite
Lenders" shall mean both Lenders; provided, however, that solely for purposes of
subsection 10.3(A), with respect to any amendment, modification, termination or
waiver of any provision of subsection 7.6(B) or (C) or any consent to any
departure by any Loan Party therefrom to be signed by "Requisite Lenders", this
definition of Requisite Lenders shall be deemed modified to the extent that such
51% shall increase to sixty-six and two-thirds percent (66.66%).
"Restricted Junior Payment" means: (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of a Holding
Party, a Borrower or any of its Subsidiaries now or hereafter outstanding,
except a dividend payable solely with shares of the class of stock on which such
dividend is declared; (b) any payment or prepayment of principal of, premium, if
any, or interest on, or any redemption, conversion, exchange, retirement,
defeasance, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any Indebtedness subordinated in right of payment
to the Obligations or any shares of any class of stock of a Holding Party, a
Borrower or any of its Subsidiaries now or hereafter outstanding, or the
issuance of a notice of an intention to do any of the foregoing; (c) any payment
made to retire, or to obtain the surrender of, any outstanding warrants, options
or other rights to acquire shares of any class of stock of a Holding Party, a
Borrower or any of its Subsidiaries now or hereafter outstanding; and (d) any
payment by a Holding Party, a Borrower or any of its Subsidiaries of any
management fees, consulting fees or similar fees to any Affiliate, whether
pursuant to a management agreement or otherwise.
15
"Revolving Advance" means each advance made by Lender(s) pursuant to
subsection 2.1(A).
"Revolving Loan" means the outstanding balance of all Revolving Advances
and any amounts added to the principal balance of the Revolving Loan pursuant to
this Agreement.
"Revolving Loan Commitment" means (a) as to any Lender, the commitment of
such Lender to make Revolving Advances pursuant to subsection 2.1(A), and to
purchase participations in Lender Letters of Credit pursuant to subsection
2.1(F) in the aggregate amount set forth on the signature page of this Agreement
(or any amendment to this Agreement) opposite such Lender's signature or in the
most recent Assignment and Assumption Agreement, if any, executed by such Lender
and (b) as to all Lenders, the aggregate commitment of all Lenders to make
Revolving Advances and to purchase participations in Lender Letters of Credit.
"Revolving Note" means each promissory note of Borrowers in a form
reasonably acceptable to Agent, issued pursuant to subsection 2.1(D).
"Risk Participation Agreement" has the meaning assigned to that term in
subsection 2.1(F).
"Senior Debentures Indenture" means the Indenture dated as of November 26,
1997, by and between CC and The Bank of New York, as Trustee, executed and
delivered by the parties thereto in connection with the issuance of the Senior
PIK Notes.
"Senior Notes" means COI's 12% Senior Notes due 2007 in the aggregate
principal amount of $110,000,000 issued under and pursuant to the Senior Notes
Indenture.
"Senior Notes Indenture" means the Indenture dated as of November 26, 1997,
by and between COI and Wilmington Trust Company, as Trustee, executed and
delivered by the parties thereto in connection with the issuance of the Senior
Notes.
"Senior PIK Notes" means CC's 15% Senior Secured PIK Notes due 2009 in the
aggregate principal amount of $20,000,000 issued under and pursuant to the
Senior Debentures Indenture.
"Service Fee Accounts" means those Accounts of Borrowers arising under
service agreements entered into by Borrowers with independent supplemental
staffing firms in the ordinary course of business.
"Settlement Date" has the meanings assigned to that term in subsection
9.6(A)(2).
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%) of
the total voting power of shares of stock (or equivalent ownership or
controlling interest) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other subsidiaries of that Person or a combination thereof.
16
"Target" means, with respect to any Permitted Acquisition, any Person whose
assets and business are being acquired pursuant to such Permitted Acquisition.
"Termination Date" means November 26, 2002.
"Total Loan Commitment" means as to any Lender the aggregate commitments of
such Lender with respect to its Revolving Loan Commitment.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of New York, as amended from time to time, and any successor statute.
"Uniforce Acquisition" means the transactions contemplated by the Uniforce
Acquisition Documents.
"Uniforce Acquisition Agreement" means the Agreement and Plan of Merger
dated as of August 13, 1997, by and among CC, CCI, and USI.
"Uniforce Acquisition Documents" means, collectively, the Uniforce
Acquisition Agreement and all documents, instruments and agreements delivered in
connection therewith.
"Unused Availability" means, as of any date, the amount (if any) by which
the Maximum Revolving Loan Amount exceeds the Revolving Loan.
1.2 Accounting Terms. For purposes of this Agreement, all accounting terms
not otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial statements and other information furnished to
Agent or any Lender pursuant to subsection 5.1 shall be prepared in accordance
with GAAP (as in effect at the time of such preparation) on a consistent basis.
In the event any "Accounting Changes" (as defined below) shall occur and such
changes affect financial covenants, standards or terms in this Agreement, then
Holding Parties, Borrowers and Lenders agree to enter into negotiations in order
to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
financial condition of Holding Parties, Borrowers and their respective
Subsidiaries shall be the same after such Accounting Changes as if such
Accounting Changes had not been made, and until such time as such an amendment
shall have been executed and delivered by Holding Parties, Borrowers and the
other Loan Parties and Requisite Lenders, (A) all financial covenants, standards
and terms in this Agreement shall be calculated and/or construed as if such
Accounting Changes had not been made, and (B) Holding Parties and Borrowers
shall prepare footnotes to each Compliance Certificate and the financial
statements required to be delivered hereunder that show the differences between
the financial statements delivered (which reflect such Accounting Changes) and
the basis for calculating financial covenant compliance (without reflecting such
Accounting Changes). "Accounting Changes" means: (a) changes in accounting
principles required by GAAP and implemented by Holding Parties, Borrowers and
their respective Subsidiaries; (b) changes in accounting principles recommended
by Holding Parties' or Borrowers' certified public accountants; and (c) changes
in carrying value of any Holding Parties', any Borrowers' or any of their
respective Subsidiaries' assets, liabilities or equity accounts resulting from
(i) the application of purchase
17
accounting principles (A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the
Uniforce Acquisition or any other Permitted Acquisitions or (ii) any other
adjustments in excess of $350,000 in the aggregate that, in each case, were
applicable to, but not included in, the Pro Forma. All such adjustments
resulting from expenditures made subsequent to the Closing Date (including, but
not limited to, capitalization of costs and expenses or payment of pre-Closing
Date liabilities) shall be treated as expenses in the period the expenditures
are made and deducted as part of the calculation of EBITDA in such period.
1.3 Other Definitional Provisions. References to "Sections", "subsections",
"Exhibits" and "Schedules" shall be to Sections, subsections, Exhibits and
Schedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference. In this Agreement, words importing any gender include the other
genders; the words "including," "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to agreements and other
contractual instruments shall be deemed to include subsequent amendments,
assignments, and other modifications thereto, but only to the extent such
amendments, assignments and other modifications are not prohibited by the terms
of this Agreement or any other Loan Document; references to Persons include
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
SECTION 2. LOANS AND COLLATERAL
2.1 Loans.
(A) Revolving Loan. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Holding Parties,
Borrowers and the other Loan Parties set forth herein and in the other Loan
Documents, each Lender, severally, agrees to lend to Borrowers from time to time
its Pro Rata Share of each Revolving Advance. The aggregate amount of all
Revolving Loan Commitments shall not exceed at any time $75,000,000 to all
Borrowers less any reductions pursuant to subsection 2.4(B). Notwithstanding the
foregoing, the portion of the Revolving Loan attributable to any Borrower at any
time plus the Letter of Credit Liability of such Borrower at such time, but only
in respect of any Letter of Credit issued on behalf of such Borrower (together
with the aggregate amount theretofore paid by Agent or any Lender in respect of
any Letter of Credit issued on behalf of such Borrower and not debited to the
Loan Account or otherwise reimbursed by such Borrower) shall not exceed that
portion of the Borrowing Base attributable to such Borrower. Amounts borrowed
under this subsection 2.1(A) may be repaid and reborrowed at any time prior to
the earlier of (i) the termination of the Revolving Loan Commitment pursuant to
subsection 8.3 or (ii) the Termination Date. Except as otherwise provided
herein, no Lender shall have any obligation to make an advance under this
subsection 2.1(A) to the extent such advance would cause the Revolving Loan
(after giving effect to any immediate application of the proceeds thereof) to
exceed the Maximum Revolving Loan Amount.
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(1) "Maximum Revolving Loan Amount" means, as of any date of
determination, the lesser of (a) the Revolving Loan Commitment(s) of all
Lenders minus the Letter of Credit Reserve and (b) the Borrowing Base minus
the Letter of Credit Reserve.
(2) "Borrowing Base" means, as of any date of determination, an amount
equal to eighty-five (85%) of Eligible Accounts less such reserves as Agent
in its reasonable discretion may elect to establish.
(B) Eligible Accounts.
"Eligible Accounts" means, as at any date of determination, the aggregate
of all Accounts that Agent, in its reasonable judgment, deems to be eligible for
borrowing purposes (provided, that Agent shall give Borrower Representative
reasonably prompt notice following any determination by Agent to exclude any
Accounts from Eligible Accounts based on criteria other than those set forth
below, which notice shall include, subject to confidentiality constraints as
determined by Agent in its sole discretion, the basis for such determination by
Agent). Without limiting the generality of the foregoing, unless otherwise
agreed by Agent, the following Accounts are not Eligible Accounts:
(1) Accounts which, at the date of issuance of the respective invoice
therefor, were payable more than forty-five (45) days after the date of
issuance of such invoice;
(2) Accounts which (x), in the case of Accounts other than Accounts
owing by those customers identified on Schedule 2.1(B), remain unpaid for
more than ninety (90) days after the date of issuance of the original
invoice, and (y) in the case of Accounts identified on Schedule 2.1(B),
remain unpaid for more than one hundred twenty (120) days after the date of
issuance of the original invoice; it being understood that Agent may, in
its sole discretion, add account debtors requested by either Borrower
Representative to, or delete account debtors from, Schedule 2.1(B);
(3) Accounts which are otherwise eligible with respect to which the
account debtor is owed a credit by any Borrower, but only to the extent of
such credit;
(4) Accounts due from a customer whose principal place of business is
located outside the United States of America or Canada unless such Account
is backed by a letter of credit, in form and substance acceptable to Agent
and issued or confirmed by a bank that is organized under the laws of the
United States of America or a State thereof, that is acceptable to Agent;
provided that such letter of credit has been delivered to Agent as
additional collateral;
(5) Accounts due from a customer which Agent has notified Borrower
Representative does not have a satisfactory credit standing;
(6) Accounts in excess of an aggregate face amount of $500,000 with
respect to which the customer is the United States of America, any state or
any municipality, or any
19
department, agency or instrumentality thereof unless the applicable
Borrower has, with respect to such Accounts, complied with the Federal
Assignment of Claims Act (31 U.S.C. Section 3727) or any applicable statute
or municipal ordinance of similar purpose and effect;
(7) Accounts with respect to which the customer is an Affiliate of any
Borrower or a director, officer, agent, stockholder or employee of any
Borrower or any of its Affiliates;
(8) Accounts due from a customer if (x) in the case of any account
debtor other than those account debtors identified on Schedule 2.1(B), more
than fifty percent (50%) of the aggregate amount of Accounts of such
customer owing to any Borrower or in the aggregate to all Borrowers have at
the time remained unpaid for more than ninety (90) days after the date of
issuance of the original invoice date; and (y) in the case of those account
debtors identified on Schedule 2.1(B), more than twenty-five percent (25%)
of the aggregate amount of the Accounts of such account debtor owing to any
Borrower or in the aggregate to all Borrowers have at the time remained
unpaid for more than one hundred twenty (120) days after the date of the
issuance of the original invoice.
(9) Accounts with respect to which there is any unresolved dispute
with the respective customer (but only to the extent of such dispute);
(10) Accounts evidenced by an "instrument" or "chattel paper" (as
defined in the UCC) not in the possession of Agent, on behalf of Lenders;
(11) Accounts with respect to which Agent, on behalf of Lenders, does
not have a valid, first priority and fully perfected security interest;
(12) Accounts subject to any Lien except those in favor of Agent, on
behalf of Lenders;
(13) Accounts with respect to which any Holding Party or any Borrower
has received notice that the customer is the subject of any bankruptcy or
other insolvency proceeding;
(14) Accounts due from a customer to the extent that such Accounts
exceed in the aggregate an amount equal to fifteen percent (15%) of the
aggregate of all Accounts at said date;
(15) Accounts with respect to which the customer's obligation to pay
is conditional or subject to a repurchase obligation or right to return or
with respect to which the goods or services giving rise to such Account
have not been delivered (or performed, as applicable) and accepted by such
account debtor, including progress billings, bill and hold sales,
guarantied sales, sale or return transactions, sales on approval or
consignment sales;
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(16) From and after the date which is thirty (30) days after the
Closing Date, any Account with respect to which the customer is located in
New Jersey or Minnesota, or any other state denying creditors access to its
courts in the absence of a Notice of Business Activities Report or other
similar filing, unless the Borrower holding such Account has either
qualified as a foreign corporation authorized to transact business in such
state or has filed a Notice of Business Activities Report or similar filing
with the applicable state agency for the then current year;
(17) Accounts with respect to which the customer is a creditor of any
Borrower; provided, however, that any such Account shall only be ineligible
as to that portion of such Account which is less than or equal to the
amount owed by Borrowers to such Person;
(18) Purchased Accounts and Service Fee Accounts in which a first
priority perfected security interest has not been obtained (and
continuously maintained) by any Borrower to evidence and perfect its
ownership of such Accounts;
(19) Purchased Accounts and Service Fee Accounts with respect to which
any portion thereof has been charged back to the applicable Account Seller;
and
(20) Purchased Accounts and Service Fee Accounts with respect to which
Agent has not received copies of lien search results indicating the
applicable Borrower as having a first priority perfected ownership interest
in each such Account, subject to no Liens except those in favor of Agent,
on behalf of Lenders.
(C) Borrowing Mechanics. (1) LIBOR Loans made on any Funding Date shall be
in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in
excess of such amount. (2) On any day when any Borrower desires an advance under
this subsection 2.1, Borrower Representative shall give Agent telephonic notice
of the proposed borrowing by 11:00 a.m. Central time on the Funding Date of a
Base Rate Loan and three (3) Business Days in advance of the Funding Date of a
LIBOR Loan, which notice shall also specify the proposed Funding Date (which
shall be a Business Day), whether such Loans shall consist of Base Rate Loans or
LIBOR Loans, and for LIBOR Loans the Interest Period applicable thereto, and the
name(s) of Borrower(s) on whose behalf such Loans are being requested. Any such
telephonic notice shall be confirmed in writing on the same day by delivery by
one or both of the Borrower Representatives of a Notice of Borrowing in the form
of Exhibit E annexed hereto. Neither Agent nor Lender shall incur any liability
to any Borrower for acting upon any telephonic notice Agent believes in good
faith to have been given by a duly authorized officer or other Person authorized
to convey such notice on behalf of a Borrower or for otherwise acting in good
faith under this subsection 2.1(C). Neither Agent nor Lender will make any
advance pursuant to any telephonic notice unless Agent has also received the
most recent Borrowing Base Certificate and all other documents required under
subsection 5.1 by 11:00 a.m. Central time. Each Revolving Advance shall be
deposited by wire transfer in immediately available funds in such account as
Borrower Representative may from time to time designate to Agent in writing. The
becoming due of any amount required to be paid under this Agreement or any of
the other Loan Documents as principal, accrued interest and fees shall be deemed
irrevocably to be a request by Borrowers or Borrower Representative for a Base
Rate
21
Revolving Loan on the due date of, and in the amount required to pay, such
principal, accrued interest and fees, and the proceeds of each such Revolving
Advance if made by Agent or any Lender shall be disbursed by Agent or such
Lender by way of direct payment of the relevant obligation.
(D) Notes. Borrowers shall jointly and severally execute and deliver to
each Lender with appropriate insertions a Revolving Note to evidence such
Lender's Revolving Loan Commitment. In the event of an assignment under
subsection 9.1, Borrowers shall, upon surrender of the assigning Lender's Note,
issue new Notes to reflect the interest held by the assigning Lender and its
assignee.
(E) Evidence of Revolving Loan Obligations. Each Revolving Advance shall be
evidenced by this Agreement, the Revolving Note, and notations made from time to
time by Agent in its books and records, including computer records. Agent shall
record in its books and records, including computer records, the principal
amount of the Revolving Loan owing to each Lender from time to time. Agent's
books and records shall constitute presumptive evidence, absent manifest error,
of the accuracy of the information contained therein. Failure by Agent to make
any such notation or record shall not affect the obligations of Borrowers to
Lenders with respect to the Revolving Loans.
(F) Letters of Credit. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Holding
Parties, Borrowers and the other Loan Parties, the Revolving Loan Commitments
may, in addition to Revolving Advances, be utilized, upon the request of
Borrower Representative, for (i) the issuance of letters of credit by Agent; or
with Agent's consent any Lender, or (ii) the issuance by Agent of risk
participations (a "Risk Participation Agreement") to banks to induce such banks
to issue letters of credit for the account of any Borrower (each of (i) and (ii)
above a "Lender Letter of Credit"). Each Lender shall be deemed to have
purchased a participation in each Lender Letter of Credit issued on behalf of
any Borrower in an amount equal to its Pro Rata Share thereof. In no event shall
any Lender Letter of Credit be issued to the extent that the issuance of such
Lender Letter of Credit would cause the sum of the Letter of Credit Reserve
(after giving effect to such issuance) plus the Revolving Loan to exceed the
lesser of (x) the Borrowing Base and (y) the Revolving Loan Commitment.
Notwithstanding the foregoing, in no event shall any Lender Letter of Credit be
issued on behalf of any Borrower to the extent that the issuance of such Lender
Letter of Credit would cause the sum of the Revolving Loan outstanding to such
Borrower plus the Letter of Credit Liability of such Borrower (together with the
aggregate amount theretofore paid by Agent or any Lender in respect of any
Letter of Credit issued on behalf of such Borrower and not debited to the Loan
Account or otherwise reimbursed by such Borrower) to exceed that portion of the
Borrowing Base attributable to such Borrower.
(1) Maximum Amount. The aggregate amount of Letter of Credit Liability
with respect to all Lender Letters of Credit outstanding at any time shall
not exceed $10,000,000.
(2) Reimbursement. Borrowers shall be irrevocably and unconditionally
obligated forthwith without presentment, demand, protest or other
formalities of any kind, to
22
reimburse Agent or the issuer for any amounts paid with respect to a Lender
Letter of Credit including all fees, costs and expenses paid to any bank
that issues a Bank Letter of Credit. Borrowers hereby authorize and direct
Agent, at Agent's option, to debit each Borrower's account (by increasing
the principal balance of the Revolving Loan) in the amount of any payment
made with respect to any Lender Letter of Credit issued for the account of
such Borrower. All amounts paid with respect to any Lender Letter of Credit
that are not immediately repaid by Borrowers with the proceeds of a
Revolving Advance or otherwise shall bear interest at the Default Rate
applicable to Base Rate Revolving Loans. In the event that Borrowers shall
fail to reimburse Agent on the date of any payment under a Lender Letter of
Credit in an amount equal to the amount of such payment, Agent shall
promptly notify each Lender of the unreimbursed amount of such payment
together with accrued interest thereon and each Lender, on the next
Business Day, shall deliver to Agent an amount equal to its respective
participation in same day funds. The obligation of each Lender to deliver
to Agent an amount equal to its respective participation pursuant to the
foregoing sentence shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in
Section 3. In the event any Lender fails to make available to Agent the
amount of such Lender's participation in such Lender Letter of Credit,
Agent shall be entitled to recover such amount on demand from such Lender
together with interest at the Base Rate.
(3) Conditions of Issuance. In addition to all other terms and
conditions set forth in this Agreement, the issuance of any Lender Letter
of Credit shall be subject to the satisfaction of all conditions applicable
to Revolving Advances, and the conditions that the letter of credit be in
such form, be for such amount, contain such terms and support such
transactions as are reasonably satisfactory to Agent. The expiration date
of each Lender Letter of Credit shall be on a date which is at least thirty
(30) days prior to the Termination Date.
(4) Request for Letters of Credit. Borrower Representative shall give
Agent at least three (3) Business Days prior notice specifying the date a
Lender Letter of Credit is to be issued, identifying the beneficiary and
describing the nature of the transactions proposed to be supported thereby.
The notice shall be accompanied by the form of the letter of credit being
requested.
(G) Other Letter of Credit Provisions.
(1) Obligations Absolute. The obligation of Borrowers to reimburse
Agent or any Lender for payments made under, and other amounts payable in
connection with, any Lender Letter of Credit shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including the following circumstances:
(a) any lack of validity or enforceability of any Lender Letter
of Credit, Bank Letter of Credit or any other agreement;
(b) the existence of any claim, set-off, defense or other right
which any Borrower, any of its Affiliates, Agent or any Lender, on the
one hand, may at any time have
23
against any beneficiary or transferee of any Lender Letter of Credit
or Bank Letter of Credit (or any Persons for whom any such transferee
may be acting), Agent, any Lender or any other Person, on the other
hand, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any
underlying transaction between any Borrower or any of its Affiliates
and the beneficiary of the letter of credit);
(c) any draft, demand, certificate or any other document
presented under any Lender Letter of Credit or Bank Letter of Credit
is alleged to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(d) payment under any Lender Letter of Credit or Bank Letter of
Credit against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such letter of
credit; provided that, in the case of any payment by Agent or a Lender
under any Lender Letter of Credit, Agent or such Lender has not acted
with gross negli gence or willful misconduct (as determined by a court
of competent jurisdiction) in determining that the demand for payment
under such Lender Letter of Credit complies on its face with any
applicable requirements for a demand for payment under such Lender
Letter of Credit;
(e) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(f) the fact that a Default or an Event of Default shall have
occurred and be continuing.
(2) Nature of Lender's Duties. As between Agent and Lenders, on the
one hand, and Borrowers, on the other hand, Borrowers assume all risks of
the acts and omissions of, or misuse of any Lender Letter of Credit by the
beneficiary thereof. In furtherance and not in limitation of the foregoing,
neither Agent nor any Lender shall be responsible: (a) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document by any party in connection with the application for and issuance
of any Lender Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (b) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Lender Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole
or in part, which may prove to be invalid or ineffective for any reason;
(c) for failure of the beneficiary of any Lender Letter of Credit to comply
fully with conditions required in order to demand payment thereunder;
provided that, in the case of any payment by Agent or any Lender under any
Lender Letter of Credit, Agent or Lender has not acted with gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction) in determining that the demand for payment under such Lender
Letter of Credit complies on its face with any applicable requirements for
a demand for payment thereunder; (d) for errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher; (e) for
errors in interpretation of technical terms; (f) for any loss or delay in
the transmission or otherwise of any document required in order to make a
payment under any Lender Letter of Credit; (g) for the credit of the
proceeds of any drawing under any Lender Letter of Credit; and (h) for any
consequences arising from causes beyond the control of Agent or any Lender
as the case may be. None of the
24
above shall affect, impair, or prevent the vesting of any of Agent's or any
Lender's rights or powers hereunder.
(3) Liability. In furtherance and extension of and not in limitation
of, the specific provisions herein above set forth, any action taken or
omitted by Agent or any Lender under or in connection with any Lender
Letter of Credit, if taken or omitted in good faith, shall not put Agent or
any Lender under any resulting liability to any Borrower.
(H) Appointment of Borrower Representative. Each Borrower hereby designates
each of COI and USI, each acting singly or together with the other as its
representative and agent (each a "Borrower Representative") for the purposes of
initiating borrowing requests, requesting Lender Letters of Credit, selecting
interest rate options and giving and receiving notices and consents hereunder or
under any of the other Loan Documents. Agent and each Lender may regard any
notice or other communication pursuant to any Loan Document from either Borrower
Representative as a notice or communication from Borrowers. Each Borrower hereby
covenants and agrees that each representation and warranty, covenant, agreement
and undertaking made in its name or on its behalf by either Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as if the same had been made directly by such Borrower.
2.2 Interest.
(A) Rate of Interest. The Loans and all other Obligations shall bear
interest from the date such Loans are made or such other Obligations become due
to the date paid at a rate per annum equal to (i) in the case of Base Rate Loans
and other Obligations for which no other interest rate is specified, the Base
Rate plus the Applicable Base Rate Margin, and (ii) in the case of LIBOR Loans,
LIBOR plus the Applicable LIBOR Margin (the "Interest Rate"). The applicable
basis for determining the rate of interest shall be selected by Borrower
Representative initially at the time a Notice of Borrowing is given pursuant to
subsection 2.1(C). The basis for determining the interest rate with respect to
any Loan or a portion of any Loan may be changed from time to time pursuant to
subsection 2.2(E). If on any day a Loan or a portion of any Loan is outstanding
with respect to which notice has not been delivered to Agent in accordance with
the terms of this Agreement specifying the basis for determining the rate of
interest, then for that day that Loan or portion thereof shall bear interest
determined by reference to the Base Rate.
After the occurrence and during the continuance of an Event of Default (i)
the Loans and all other Obligations shall, at the option of Requisite Lenders,
bear interest at a rate per annum equal to two percent (2%) plus the applicable
Interest Rate (the "Default Rate"), (ii) each LIBOR Loan shall automatically
convert to a Base Rate Loan at the end of any applicable Interest Period and
(iii) no Loans may be converted to LIBOR Loans.
(B) Interest Periods. In connection with each LIBOR Loan, Borrower
Representative shall elect an interest period (each an "Interest Period") to be
applicable to such Loan, which Interest Period shall be either a one, two, three
or six month period; provided that:
25
(1) the initial Interest Period for any LIBOR Loan shall commence on
the Funding Date of such Loan;
(2) in the case of successive Interest Periods, each successive
Interest Period shall commence on the day on which the immediately
preceding Interest Period expires;
(3) if an Interest Period expiration date is not a Business Day, such
Interest Period shall expire on the next succeeding Business Day; provided
that if any Interest Period expiration date is not a Business Day but is a
day of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the immediately preceding Business
Day;
(4) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to part (5) below, end on the last Business Day of a calendar
month;
(5) no Interest Period shall extend beyond the Termination Date;
(6) no Interest Period may extend beyond a scheduled principal payment
date unless the sum of (a) the aggregate principal amount of Loans that are
Base Rate Loans or that have Interest Periods expiring on or before such
date and (b) the available, unused Revolving Loan Commitment or Borrowing
Base equals or exceeds the principal amount required to be paid on the
Loans on such date; and
(7) there shall be no more than five (5) Interest Periods relating to
LIBOR Loans outstanding at any time.
(C) Computation and Payment of Interest. Interest on the Loans and all
other Obligations shall be computed on the daily principal balance on the basis
of a 360 day year for the actual number of days elapsed in the period during
which it accrues. In computing interest on any Loan, the date of funding of the
Loan or the first day of an Interest Period applicable to such Loan or, with
respect to a Base Rate Loan being converted from a LIBOR Loan, the date of
conversion of such LIBOR Loan to such Base Rate Loan, shall be included; and the
date of payment of such Loan or the expiration date of an Interest Period
applicable to such Loan, or with respect to a Base Rate Loan being converted to
a LIBOR Loan, the date of conversion of such Base Rate Loan to such LIBOR Loan,
shall be excluded; provided that if a Loan is repaid on the same day on which it
is made, one day's interest shall be paid on that Loan. Interest on Base Rate
Loans and all other Obligations other than LIBOR Loans shall be payable to Agent
for benefit of Lenders monthly in arrears on the first day of each month, on the
date of any prepayment of Loans, and at maturity, whether by acceleration or
otherwise. Interest on LIBOR Loans shall be payable to Agent for benefit of
Lenders on the last day of the applicable Interest Period for such Loan, on the
date of any prepayment of the Loans, and at maturity, whether by acceleration or
otherwise. In addition, for each LIBOR Loan having an Interest Period longer
than three (3) months, interest accrued on such Loan shall also be payable on
the last day of each three (3) month interval during such Interest Period.
26
(D) Interest Laws. Notwithstanding any provision to the contrary contained
in this Agreement or any other Loan Document, Borrowers shall not be required to
pay, and neither Agent nor any Lender shall be permitted to collect, any amount
of interest in excess of the maximum amount of interest permitted by applicable
law ("Excess Interest"). If any Excess Interest is provided for or determined by
a court of competent jurisdiction to have been provided for in this Agreement or
in any other Loan Document, then in such event: (1) the provisions of this
subsection shall govern and control; (2) neither any Borrower nor any other Loan
Party shall be obligated to pay any Excess Interest; (3) any Excess Interest
that Agent or any Lender may have received hereunder shall be, at such Lender's
option, (a) applied as a credit against the outstanding principal balance of the
Obligations or accrued and unpaid interest (not to exceed the maximum amount
permitted by law), (b) refunded to the payor thereof, or (c) any combination of
the foregoing; (4) the interest rate(s) provided for herein shall be
automatically reduced to the maximum lawful rate allowed from time to time under
applicable law (the "Maximum Rate"), and this Agreement and the other Loan
Documents shall be deemed to have been and shall be, reformed and modified to
reflect such reduction; and (5) neither any Borrower nor any other Loan Party
shall have any action against Agent or any Lender for any damages arising out of
the payment or collection of any Excess Interest. Notwithstanding the foregoing,
if for any period of time interest on any Obligations is calculated at the
Maximum Rate rather than the applicable rate under this Agreement, and
thereafter such applicable rate becomes less than the Maximum Rate, the rate of
interest payable on such Obligations shall remain at the Maximum Rate until each
Lender shall have received the amount of interest which such Lender would have
received during such period on such Obligations had the rate of interest not
been limited to the Maximum Rate during such period.
(E) Conversion or Continuation. Subject to the provisions of subsection
2.2(A) Borrower Representative shall have the option to (1) convert at any time
all or any part of outstanding Loans equal to $500,000 and integral multiples of
$100,000 in excess of that amount from Base Rate Loans to LIBOR Loans or (2)
upon the expiration of any Interest Period applicable to a LIBOR Loan, to (a)
continue all or any portion of such LIBOR Loan equal to $500,000 and integral
multiplies of $100,000 in excess of that amount as a LIBOR Loan or (b) convert
all or any portion of such LIBOR Loan to a Base Rate Loan. The succeeding
Interest Period(s) of such continued or converted Loan commence on the last day
of the Interest Period of the Loan to be continued or converted; provided that
no outstanding Loan may be continued as, or be converted into, a LIBOR Loan,
when any Event of Default or Default has occurred and is continuing.
Borrower Representative shall deliver a notice of conversion/continuation
to Agent no later than noon (New York time) at least three (3) Business Days in
advance of the proposed conversion/continuation date ("Notice of
Conversion/Continuation"). A Notice of Conversion/Continuation shall certify:
(1) the proposed conversion/continuation date (which shall be a Business Day);
(2) the amount of the Loan to be converted/continued; (3) the nature of the
proposed conversion/continuation; (4) in the case of conversion to, or a
continuation of, a LIBOR Loan, the requested Interest Period; and (5) that no
Default or Event of Default has occurred and is continuing or would result from
the proposed conversion/continuation.
In lieu of delivering the Notice of Conversion/Continuation, Borrower
Representative may give Agent telephonic notice by the required time of any
proposed conversion/continuation
27
under this subsection 2.2(E); provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Conversion/Continuation to Agent
on or before the proposed conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to Borrowers in
acting upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to act on behalf of Borrower or for otherwise acting in good faith under this
subsection 2.2(E) and upon conversion/continuation by Lenders in accordance with
this Agreement pursuant to any telephonic notice, Borrower Representative shall
have effected such conversion or continuation, as the case may be, hereunder.
2.3 Fees.
(A) Unused Line Fee. Borrowers shall pay to Agent, for the benefit of
Lenders, a fee in an amount equal to the Revolving Loan Commitment less the sum
of the average daily balance of the Revolving Loan plus the average daily face
amount of the Lender Letter of Credit Reserve during the preceding month
multiplied by three eighths of one percent (.375%) percent per annum, such fee
to be calculated on the basis of a 360 day year for the actual number of days
elapsed and to be payable monthly in arrears on the first day of the first month
following the Closing Date and the first day of each month thereafter.
(B) Letter of Credit Fees. Borrowers shall pay to Agent for the account of
Lenders, a fee with respect to the Lender Letters of Credit in the amount of (i)
for the account of Lenders the average daily amount of Letter of Credit
Liability outstanding during such month multiplied by one and one-half percent
(1.50%) per annum. Such fees will be calculated on the basis of a 360 day year
for the actual number of days elapsed and will be payable monthly in arrears on
the first day of each month. Borrowers shall also reimburse Agent for any and
all fees and expenses, if any, paid by Agent or any Lender to the issuer of any
Bank Letter of Credit.
(C) Audit Fees. Borrowers agree to pay to Agent for its own account an
audit fee for each inspection equal to $750.00 per auditor per day or any
portion thereof, together with all out-of-pocket expenses, and Borrowers agree
to reimburse Agent for all fees, costs and expenses paid by Agent to third party
auditors.
(D) Other Fees and Expenses. Borrowers shall pay to Agent, for its own
account, all charges for returned items and all other bank charges incurred by
Agent, as well as Agent's standard wire transfer charges for each wire transfer
made under this Agreement.
(E) Fee Letter. COI shall pay or cause to be paid to Agent for Agent's own
account all payments due under and pursuant to the Fee Letter.
2.4 Payments and Prepayments.
(A) Manner and Time of Payment. In its sole discretion, Agent may charge
interest and other amounts payable hereunder to the Revolving Loan, all as set
forth on Agent's
28
books and records. If Agent elects to bill Borrowers for any amount due
hereunder, such amount shall be immediately due and payable with interest
thereon as provided herein. All payments made by Borrowers with respect to the
Obligations shall be made without deduction, defense, setoff or counterclaim.
All payments to Agent hereunder shall, unless otherwise directed by Agent, be
made to Agent's Account or in accordance with subsection 5.6. Proceeds remitted
to Agent's Account shall be credited to the Obligations on the Business Day such
proceeds were received; provided, however, that, for the purpose of calculating
interest on the Obligations, such proceeds shall be deemed received on the first
Business Day thereafter, unless such proceeds were remitted by transfer of
immediately available funds, in which case, for the purpose of calculating
interest on the Obligations, such proceeds shall be deemed received on the
Business Day received.
(B) Mandatory Prepayments.
(1) Overadvance. At any time that the Revolving Loan exceeds the
Maximum Revolving Loan Amount, Borrowers shall, immediately repay the
Revolving Loan to the extent necessary to reduce the principal balance to
an amount equal to or less than the Maximum Revolving Loan Amount. At any
time that the sum of the Revolving Credit Loan outstanding to any Borrower
plus the Letter of Credit Liability of such Borrower at such time, but only
in respect of any Letter of Credit issued on behalf of such Borrower
(together with the aggregate amount theretofore paid by Agent or any Lender
in respect of any Lender Letter of Credit issued on behalf of such Borrower
and not debited to the Loan Account or otherwise reimbursed by such
Borrower) exceeds that portion of the Borrowing Base attributable to such
Borrower, then such Borrower shall immediately repay the Revolving Loan to
eliminate such excess.
(2) Proceeds of Asset Dispositions. At such time that the sum of all
proceeds of all Asset Dispositions received by Borrowers and their
respective Subsidiaries exceeds $10,000,000, then any proceeds received
above such amount ("Excess Proceeds") shall be subject to this subsection
2.4(B)(2). The Borrowers shall, immediately upon receipt of such Excess
Proceeds, prepay the Obligations in an amount equal to such Excess
Proceeds, and the Revolving Loan Commitment shall thereupon be deemed
permanently reduced by the amount of such Excess Proceeds; provided,
however, that, if Borrowers reasonably expect such Excess Proceeds to be
reinvested within 270 days after receipt thereof to repair or replace such
assets with like assets, then, immediately upon receipt of such Excess
Proceeds, Borrower shall deliver to Agent a written notice to such effect
and shall deliver such Excess Proceeds to Agent, and Agent, upon receipt
thereof, shall apply the amount thereof to the Revolving Loans and
concurrently establish a reserve against the Maximum Revolving Loan Amount
in such amount. The amount of such reserve shall, provided that under all
other terms and conditions of this Agreement Borrowers are then entitled to
obtain a Revolving Loan in such amount, be available to be borrowed by
Borrowers solely to finance the purchase or investment in such like assets
within such 270 day period. If Borrowers fail to obtain a Revolving Loan in
the amount of all or any portion of such reserve within such 270 day period
for such purpose, then the balance of such reserve shall be eliminated at
the end of such period and the Revolving Loan Commitment shall thereupon be
deemed permanently reduced by such amount.
(C) Voluntary Prepayments and Repayments. Borrowers may, at any time upon
not less than three (3) Business Days' prior notice to Agent, terminate the
Revolving Loan
29
Commitment and thereupon shall pay in full all of the Obligations and shall
cause Agent and each Lender to be released from all liability under any Lender
Letters of Credit or, at Agent's option, Borrowers will deposit cash collateral
with Agent in an amount equal to 105% of the Letter of Credit Liability that
will remain outstanding after prepayment or repayment, all under and pursuant to
such instruments and documents in form and substance satisfactory to Agent.
(D) Payments on Business Days. Whenever any payment to be made hereunder
shall be stated to be due on a day that is not a Business Day, the payment may
be made on the next succeeding Business Day and such extension of time shall be
included in the computation of the amount of interest or fees due hereunder.
2.5 Term of this Agreement. The Commitments shall (unless earlier
terminated pursuant to this Agreement) terminate upon the earlier of (i) the
occurrence of an event specified in subsection 8.3 or (ii) the Termination Date.
Upon termination in accordance with subsection 8.3 or on the Termination Date,
all Obligations shall become immediately due and payable without notice or
demand. Notwithstanding any termination, until all Obligations have been fully
paid and satisfied, Agent, on behalf of Lenders, shall be entitled to retain
security interests in and liens upon all Collateral (all of which shall be
released at Borrowers' expense upon termination of this Agreement and the
Commitments and the payment and satisfaction in full of all Obligations), and
even after payment of all Obligations hereunder, Holding Parties' and Borrowers'
obligation to indemnify Agent and each Lender in accordance with the terms
hereof shall continue.
2.6 Statements. Agent shall render a monthly statement of account to
Borrower Representative within twenty (20) days after the end of each month.
Such statement of account shall constitute an account stated unless Borrower
Representative makes written objection thereto within thirty (30) days from the
date such statement is mailed to Borrower Representative. Borrowers promise to
pay all of their Obligations as such amounts become due or are declared due
pursuant to the terms of this Agreement.
2.7 Grant of Security Interest. To secure the payment and performance of
the Obligations, including all renewals, extensions, restructurings and
refinancings of any or all of the Obligations, each Loan Party (other than CC)
hereby grants to Agent, on behalf of Lenders, a continuing security interest,
lien and mortgage in and to all right, title and interest of such Loan Party in
the following property of such Loan Party, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all being
collectively referred to as the "Collateral"): (A) Accounts, and all guaranties
and security therefor, and all goods and rights represented thereby or arising
therefrom including the rights of stoppage in transit, replevin and reclamation;
(B) Inventory; (C) general intangibles (as defined in the UCC), including the
Account Agreements; (D) documents (as defined in the UCC) or other receipts
covering, evidencing or representing goods; (E) instruments (as defined in the
UCC); (F) chattel paper (as defined in the UCC); (G) Equipment; (H) Intellectual
Property; (I) all deposit accounts of each Loan Party maintained with any bank
or financial institution; (J) all cash and other monies and property of such
Borrower and such Holding Party in the possession or under the control of Agent,
any Lender or any participant; (K) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of the
property described
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above or are otherwise necessary or helpful in the collection thereof or
realization thereon; and (L) proceeds of all or any of the property described
above, including, without limitation, the proceeds of any insurance policies
covering any of the above described property.
2.8 Capital Adequacy and Other Adjustments. In the event Agent or any
Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by Agent or such Lender or any corporation controlling Agent or
such Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) from any central
bank or governmental agency or body having jurisdiction does or shall have the
effect of increasing the amount of capital, reserves or other funds required to
be maintained by Agent or such Lender or any corporation controlling Agent or
such Lender and thereby reducing the rate of return on Agent's or such Lender's
or such corporation's capital as a consequence of its obligations hereunder,
then Borrowers shall from time to time within fifteen (15) days after notice and
demand from such Lender (with a copy to Agent) or Agent (together with the
certificate referred to in the next sentence) pay to Agent or such Lender
additional amounts sufficient to compensate Agent or such Lender for such
reduction. A certificate as to the amount of such cost and showing the basis of
the computation thereof submitted by Agent or any Lender to Borrower
Representative shall, absent manifest error, be final, conclusive and binding
for all purposes.
2.9 Taxes.
(A) No Deductions. Any and all payments or reimbursements made hereunder or
under the Notes shall be made free and clear of and without deduction for any
and all taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto; excluding, however, the following: taxes
imposed on the net income of any Lender or Agent by the jurisdiction under the
laws of which Agent or such Lender is organized or doing business or any
political subdivision thereof and taxes imposed on its net income by the
jurisdiction of Agent's or such Lender's applicable lending office or any
political subdivision thereof (all such taxes, levies, imposts, deductions,
charges or withholdings and all liabilities with respect thereto excluding such
taxes imposed on net income, herein "Tax Liabilities"). If any Loan Party shall
be required by law to deduct any such Tax Liabilities from or in respect of any
sum payable hereunder to Agent or any Lender, then the sum payable hereunder
shall be increased as may be necessary so that, after making all required
deductions, Agent or such Lender receives an amount equal to the sum it would
have received had no such deductions been made.
(B) Changes in Tax Laws. In the event that, subsequent to the Closing Date,
(i) any changes in any existing law, regulation, treaty or directive or in the
interpretation or application thereof, (ii) any new law, regulation, treaty or
directive enacted or any interpretation or application thereof, or (iii)
compliance by Lender with any request or directive (whether or not having the
force of law) from any governmental authority, agency or instrumentality:
31
(1) does or shall subject Agent or any Lender to any tax of any kind
whatsoever with respect to this Agreement, the other Loan Documents or any
Loans made or Lender Letters of Credit issued hereunder, or change the
basis of taxation of payments to Agent or such Lender of principal, fees,
interest or any other amount payable hereunder (except for net income
taxes, or franchise taxes imposed in lieu of net income taxes, imposed
generally by federal, state or local taxing authorities with respect to
interest or commitment or other fees payable hereunder or changes in the
rate of tax on the overall net income of Agent or such Lender); or
(2) does or shall impose on Agent or any Lender any other condition or
increased cost in connection with the transactions contemplated hereby or
participations herein; and the result of any of the foregoing is to
increase the cost to Agent or such Lender of issuing any Lender Letter of
Credit or making or continuing any Loan hereunder, as the case may be, or
to reduce any amount receivable hereunder,
then, in any such case, Loan Parties shall promptly pay to Agent or such Lender,
upon its demand, any additional amounts necessary to compensate Agent or such
Lender, on an after-tax basis, for such additional cost or reduced amount
receivable, as determined by Agent or such Lender with respect to this Agreement
or the other Loan Documents. If Agent or any Lender becomes entitled to claim
any additional amounts pursuant to this subsection 2.9(B)(2), it shall promptly
notify Borrower Representative of the event by reason of which Agent or such
Lender has become so entitled. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Agent or any Lender to
Borrower Representative shall, absent manifest error, be final, conclusive and
binding for all purposes.
(C) Foreign Lenders. Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Agreement or under the Notes are exempt from United States
withholding tax or are subject to United States withholding tax at a reduced
rate under an applicable statute or tax treaty shall provide to Borrower
Representative and Agent (i) a properly completed and executed Internal Revenue
Service Form 4224 or Form 1001 or other applicable form, certificate or document
prescribed by the Internal Revenue Service of the United States certifying as to
such Foreign Lender's entitlement to such exemption or reduced rate of
withholding with respect to payments to be made to such Foreign Lender under
this Agreement and under the Notes (a "Certificate of Exemption"), or (ii) a
letter from any such Foreign Lender stating that it is not entitled to any such
exemption or reduced rate of withholding (a "Letter of Non-Exemption"). Prior to
becoming a Lender under this Agreement and within fifteen (15) days after a
reasonable written request of Borrower Representative or Agent from time to time
thereafter, each Foreign Lender that becomes a Lender under this Agreement shall
provide a Certificate of Exemption or a Letter of Non-Exemption to Borrower
Representative and Agent.
If a Foreign Lender is entitled to an exemption with respect to payments to
be made to such Foreign Lender under this Agreement (or to a reduced rate of
withholding) and does not provide a Certificate of Exemption to Borrower
Representative and Agent within the time periods set forth in the preceding
paragraph, Borrowers shall withhold taxes from payments to such Foreign Lender
at the applicable statutory rates and Borrowers shall not be required to pay any
additional
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amounts as a result of such withholding; provided, however, that all such
withholding shall cease upon delivery by such Foreign Lender of a Certificate of
Exemption to Borrower Representative and Agent.
2.10 Required Termination and Prepayment. If on any date any Lender shall
have reasonably determined (which determination shall be final and conclusive
and binding upon all parties) that the making or continuation of its LIBOR Loans
has become unlawful or impossible by compliance by Lender in good faith with any
law, governmental rule, regulation or order (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful), then, and
in any such event, that Lender shall promptly give notice (by telephone
confirmed in writing) to Borrower Representative and Agent of that
determination. Subject to prior withdrawal of a Notice of Borrowing or a Notice
of Conversion/Continuation or prepayment of LIBOR Loans as contemplated by
subsection 2.11, the obligation of Lender to make or maintain its LIBOR Loans
during any such period shall be terminated at the earlier of the termination of
the Interest Period then in effect or when required by law and Borrowers shall
no later than the termination of the Interest Period in effect at the time any
such determination pursuant to this subsection 2.10 is made or, earlier when
required by law, repay or prepay LIBOR Loans together with all interest accrued
thereon or convert LIBOR Loans to Base Rate Loans.
2.11 Optional Prepayment/Replacement of Agent or Lenders in Respect of
Increased Costs. Within fifteen (15) days after receipt by Borrower
Representative from Agent or any Lender (an "Affected Lender") of (1) written
notice and demand for payment pursuant to subsection 2.8 or subsection 2.9 or
(2) written notice of the inability to make or continue LIBOR Loans pursuant to
subsection 2.10, Borrowers may, at its option, notify Agent and such Affected
Lender of its intention to do one of the following:
(A) Borrowers may obtain, at Borrowers' expense, a replacement Lender
("Replacement Lender") for such Affected Lender, which Replacement Lender
shall be reasonably satisfactory to Agent. In the event Borrowers obtain a
Replacement Lender within ninety (90) days following notice of its
intention to do so, the Affected Lender shall sell and assign its Loans and
Commitments to such Replacement Lender, provided that Borrowers have
reimbursed such Affected Lender for its increased costs for which it is
entitled to reimbursement under this Agreement through the date of such
sale and assignment; or
(B) Borrowers may prepay in full all outstanding Obligations owed to
such Affected Lender and terminate such Affected Lender's Commitments.
Borrowers shall, within ninety (90) days following notice of their
intention to do so, prepay in full all outstanding Obligations owed to such
Affected Lender (including such Affected Lender's increased costs for which
it is entitled to reimbursement under this Agreement through the date of
such prepayment) and terminate such Affected Lender's Commitments.
2.12 Compensation. Borrowers shall compensate Lender, upon written request
by Lender (which request shall set forth in reasonable detail the basis for
requesting such amounts and which shall, absent manifest error, be conclusive
and binding upon all parties hereto), for all reasonable losses, expenses and
liabilities including, without limitation, any loss sustained by Lender in
33
connection with the re-employment of such funds: (i) if for any reason (other
than a default by Lender) a borrowing of any LIBOR Loan does not occur on a date
specified therefor in a Notice of Borrowing, a Notice of Conversion/Continuation
or a telephonic request for borrowing or Conversion/Continuation; (ii) if any
prepayment of any of its LIBOR Loans occurs on a date that is not the last day
of an Interest Period applicable to that Loan; (iii) if any prepayment of any of
its LIBOR Loans is not made on any date specified in a notice of prepayment
given by Borrower Representative; or (iv) as a consequence of any other default
by Borrowers to repay their LIBOR Loans when required by the terms of this
Agreement; provided that during the period while any such amounts have not been
paid, Lender shall reserve an equal amount from amounts otherwise available to
be borrowed under the Revolving Loan.
2.13 Booking of LIBOR Loans. Each Lender may make, carry or transfer LIBOR
Loans at, to, or for the account of, any of its branch offices or the office of
an affiliate of Lender.
2.14 Assumptions Concerning Funding of LIBOR Loans. Calculation of all
amounts payable to Lender under subsection 2.12 shall be made as though each
Lender had actually funded its relevant LIBOR Loan through the purchase of a
LIBOR deposit bearing interest at LIBOR in an amount equal to the amount of that
LIBOR Loan and having maturity comparable to the relevant Interest Period and
through the transfer of such LIBOR deposit from an offshore office to a domestic
office in the United States of America; provided, however, that each Lender may
fund each of its LIBOR Loans in any manner it sees fit and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
subsection 2.12.
2.15 Fanning Cash Pledge Agreement. In accordance with the Fanning Cash
Pledge Agreement: (i) $2,500,000 of the $5,000,000 pledged thereunder shall be
released if the amount of the Unused Availability shall be not less than
$15,000,000 for fifteen (15) consecutive Business Days; and (ii) the remaining
$2,500,000 pledged thereunder shall be released, and the Fanning Cash Pledge
Agreement shall be terminated, if, subsequent to the date on which the release
under clause (i) shall have occurred, the amount of the Unused Availability
shall be not less than $17,500,000 for fifteen (15) consecutive Business Days;
provided that no such release or termination shall occur unless the Cash
Dominion Arrangement (as defined in Section 5.6) is then in effect.
SECTION 3. CONDITIONS TO LOANS
3.1 Conditions to Loans. The obligations of Agent and each Lender to make
Loans and the obligation of Agent or any Lender to issue Lender Letters of
Credit on the Closing Date and on each Funding Date are subject to satisfaction
of all of the conditions set forth below.
(A) Closing Deliveries. Agent shall have received, in form and
substance satisfactory to Agent and Lenders, all documents, instruments and
information identified on Schedule 3.1(A) and all other agreements, notes,
certificates, orders, authorizations, financing statements, mortgages and
other documents which Agent may at any time reasonably request.
34
(B) Security Interests. Agent and Lenders shall have received
satisfactory evidence that all security interests and liens granted to
Agent for the benefit of Lenders pursuant to this Agreement or the other
Loan Documents have been duly perfected and constitute first priority liens
on the Collateral, subject only to Permitted Encumbrances.
(C) Closing Date Availability. After giving effect to the consummation
of the transactions contemplated hereunder on the Closing Date and the
payment by Borrowers of all costs, fees and expenses relating thereto, the
Maximum Revolving Loan Amount on the Closing Date shall exceed the
Revolving Loan plus the Letter of Credit Reserve by at least $12,000,000.
(D) Representations and Warranties. The representations and warranties
contained herein and in the Loan Documents shall be true, correct and
complete in all material respects on and as of that Funding Date to the
same extent as though made on and as of that date, except for any
representation or warranty limited by its terms to a specific date and
taking into account any amendments to the Schedules or Exhibits as a result
of any disclosures made by Holding Parties and Borrowers to Agent after the
Closing Date and approved by Agent.
(E) Fees. With respect to Loans or Lender Letters of Credit to be made
or issued on the Closing Date, Borrowers shall have paid the fees payable
on the Closing Date referred to in subsection 2.3.
(F) No Default. No event shall have occurred and be continuing or
would result from the consummation of the requested borrowing or notice
requesting issuance of a Lender Letter of Credit that would constitute an
Event of Default or a Default.
(G) Performance of Agreements. Each Loan Party shall have performed in
all material respects all agreements and satisfied all conditions which any
Loan Document provides shall be performed by it on or before that Funding
Date.
(H) No Prohibition. No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or restrain
Agent or any Lender from making any Loans or issuing any Lender Letters of
Credit.
(I) No Litigation. There shall not be pending or, to the knowledge of
Holding Parties or Borrowers, threatened, any action, charge, claim,
demand, suit, proceeding, petition, governmental investigation or
arbitration by, against or affecting any Loan Party or any of its
Subsidiaries or any property of any Loan Party or any of its Subsidiaries
that has not been disclosed to Agent by Borrowers in writing, and there
shall have occurred no development in any such action, charge, claim,
demand, suit, proceeding, petition, governmental investigation or
arbitration that, in the opinion of Agent, would reasonably be expected to
have a Material Adverse Effect.
(J) Consummation of the Uniforce Acquisition. Either: (x) the Uniforce
Acquisition (i) shall be concurrently consummated on the Closing Date
pursuant to the terms and conditions of the Uniforce Acquisition Documents
(and none of the terms and conditions of the Uniforce Acquisition Documents
shall have been waived or modified except with the prior written
35
consent of Agent and Lenders) and (ii) shall be consummated in compliance
with all applicable laws and with all necessary consents and approvals; or
(y) Agent and Lenders shall be satisfied in their sole and absolute
discretion that the tender offer by CCI for shares of USI referred to and
provided for in the Uniforce Acquisition Documents shall have been
consummated, that CCI shall have concurrently obtained control of USI and
each of USI's Subsidiaries and that the final consummation of the Uniforce
Acquisition shall occur not later than ten (10) Business Days thereafter;
provided, that if, as a result of the consummation of such tender offer,
COI shall hold ninety percent (90%) or more of the outstanding shares of
USI, then CCI shall cause the Uniforce Acquisition to be consummated not
later than three (3) Business Days after the Closing Date through the use
of a so-called "short-form merger" under applicable law of the State of New
York. Agent shall in any event be satisfied that there are no state or
federal takeover laws and no super-majority charter provisions applicable
to the Uniforce Acquisition, or that any conditions to avoiding such
restrictions have been satisfied and that all conditions precedent to
closing under the Uniforce Acquisition Agreement and the other Uniforce
Acquisition Documents have been met.
(K) Uniforce Acquisition Documents. Agent shall have received
certified copies of the Uniforce Acquisition Agreement and the other
Uniforce Acquisition Documents, each of which shall be satisfactory to
Agent and Lenders and in full force and effect.
3.2 Additional Conditions to Loans to Fund Permitted Acquisitions. The
obligations of Agent and each Lender to make Loans to fund Permitted
Acquisitions are subject to satisfaction of all of the conditions set forth in
subsection 7.6, in addition to those conditions set forth in subsection 3.1.
SECTION 4. THE HOLDING PARTIES' AND BORROWERS'
REPRESENTATIONS AND WARRANTIES
To induce Agent and each Lender to enter into this Agreement, and to make
Loans and to issue Lender Letters of Credit, each Loan Party represents and
warrants to Agent and each Lender that the following statements are and will be
true, correct and complete:
4.1 Organization, Powers, Capitalization.
(A) Organization and Powers. Each of the Loan Parties is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and qualified to do business in all states
where such qualification is required except where failure to be so
qualified could not be reasonably expected to have a Material Adverse
Effect. Each of the Loan Parties has all requisite corporate power and
authority to own and operate its properties, to carry on its business as
now conducted and proposed to be conducted and to enter into each Loan
Document.
(B) Capitalization. Except as set forth on Schedule 4.1(B), all issued
and outstanding shares of capital stock of each of the Loan Parties are
duly authorized and validly issued, fully paid, nonassessable, and are free
and clear of all Liens other than those in favor of Agent for
36
the benefit of Lenders, and all such shares were issued in compliance with
all applicable state and federal laws concerning the issuance of
securities. The capital stock of each of the Loan Parties is owned by the
stockholders and in the amounts set forth on Schedule 4.1(B) (in the case
of CC with shares held by the public being specified in the aggregate). To
the best knowledge of Holding Parties, each Person or group having
beneficial ownership of more than five percent (5%) of the capital stock of
any of the Holding Parties is identified on Schedule 4.1(B) (the terms
"group" and "beneficial ownership", as used herein, having the meanings
given in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, and Rule 13d-3 promulgated thereunder). No shares of the capital
stock of any Loan Party, other than those described above, are issued and
outstanding. Except as set forth on Schedule 4.1(B), there are no
preemptive or other outstanding rights, options, warrants, conversion
rights or similar agreements or understandings for the purchase or
acquisition from any Loan Party, of any shares of capital stock or other
securities of any such entity.
4.2 Authorization of Borrowing, No Conflict. Each Borrower, each Holding
Party and each of the other Loan Parties has the corporate power and authority
to incur the Obligations and to grant security interests in the Collateral. On
the Closing Date, the execution, delivery and performance of the Loan Documents
by each Loan Party signatory thereto will have been duly authorized by all
necessary corporate and shareholder action. The execution, delivery and
performance by each Loan Party of each Loan Document to which it is a party and
the consummation of the transactions contemplated by this Agreement and the
other Loan Documents by each Loan Party do not contravene and will not be in
contravention of any applicable law, the corporate charter or bylaws of any Loan
Party or any agreement or order by which any Loan Party or any Loan Party's
property is bound. This Agreement is, and the other Loan Documents, including
the Notes when executed and delivered will be, the legally valid and binding
obligations of the applicable Loan Parties respectively, each enforceable
against the Loan Parties, as applicable, in accordance with their respective
terms.
4.3 Financial Condition. All financial statements concerning Holding
Parties, Borrowers and their respective Subsidiaries which have been or will
hereafter be furnished by Holding Parties, Borrowers and their respective
Subsidiaries to Agent or any Lender pursuant to this Agreement have been or will
be prepared in accordance with GAAP consistently applied throughout the periods
involved (except as disclosed therein) and do or will present fairly the
financial condition of the corporations covered thereby as at the dates thereof
and the results of their operations for the periods then ended. The Pro Forma
was prepared by Holding Parties and Borrowers based on the unaudited
consolidated balance sheet of Holding Parties, Borrowers and their respective
Subsidiaries dated September 30, 1997 and, during the period from such date
through the Closing Date, there has been no material change in the business,
operations or financial condition of Holding Parties, Borrowers and their
respective Subsidiaries which would be required to be reflected on the
consolidated financial statements of Holding Parties, Borrowers and their
respective Subsidiaries on the Closing Date in accordance with GAAP. The
Projections delivered and to be delivered have been and will be prepared by
Holding Parties and Borrowers in light of the past operations of the business of
Holding Parties, Borrowers and their respective Subsidiaries, and such
Projections represent and will represent the good faith estimate of Holding
Parties and Borrowers and their respective senior management concerning the most
probable course of its business as of the date such Projections are prepared and
delivered.
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4.4 Indebtedness and Liabilities. As of the Closing Date, no Loan Party has
(a) any Indebtedness except as reflected on Schedule 4.4 and the Pro Forma or
(b) any Liabilities other than as reflected on the Pro Forma or as incurred in
the ordinary course of business following the date of the Pro Forma.
4.5 Account Warranties. As to each existing Account: (a) at the time of its
creation, such Account was a valid, bona fide account, representing an
undisputed indebtedness incurred by the named account debtor for goods actually
sold and delivered or for services completely rendered; (b) except to the extent
of Accounts not exceeding $100,000 outstanding at any time in the aggregate
(which $100,000 amount shall be deducted by Agent as a reserve from the
Borrowing Base), to the best of each of their knowledge, there are no setoffs,
offsets or counterclaims, genuine or otherwise, against such Account; (c) such
Account does not represent a sale to an Affiliate or a consignment, sale or
return or a bill and hold transaction; (d) no agreement exists permitting any
deduction or discount (other than the discount stated on the invoice); (e) the
Loan Party that holds such Account is the lawful owner of the Account and has
the right to assign the same to Agent, for the benefit of Lenders; (f) such
Account is free of all security interests, liens and encumbrances other than
those in favor of Agent, on behalf of Lenders; and (g) such Account is due and
payable in accordance with its terms.
4.6 Names. Schedule 4.6 sets forth all names, trade names, fictitious names
and business names under which any Loan Party currently conducts business or has
at any time during the past five years conducted business.
4.7 Locations; FEIN. Schedule 4.7 sets forth the location of each Loan
Party's principal place of business, chief executive office, the location of
each Loan Party's books and records, the location of all other offices of such
Loan Party and all Collateral locations, and such locations are such Loan
Party's sole locations for its business and the Collateral. Each Loan Party's
federal employer identification number is also set forth on Schedule 4.7.
4.8 Title to Properties; Liens. Each Loan Party and each of its
Subsidiaries has good, sufficient and legal title, subject to Permitted
Encumbrances, to all its respective material properties and assets. Except for
Permitted Encumbrances, all such properties and assets are free and clear of
Liens. To the best knowledge of any Holding Party or any Borrower after due
inquiry, there are no actual, threatened or alleged defaults with respect to any
leases of real property under which any Holding Party, any Borrower or any of
their respective Subsidiaries is lessee or lessor which would have a Material
Adverse Effect.
4.9 Litigation; Adverse Facts. Except as set forth on Schedule 4.9, there
are no judgments outstanding against any Loan Party or affecting any property of
any Loan Party nor is there any action, charge, claim, demand, suit, proceeding,
petition, governmental investigation or arbitration now pending or, to the best
knowledge of any Holding Party or any Borrower after due inquiry, threatened
against or affecting any Loan Party or any property of any Loan Party which
could reasonably be expected to result in any Material Adverse Effect. No Loan
Party has received any opinion or memorandum or legal advice from legal counsel
to the effect that it is exposed to any liability which could reasonably be
expected to result in any Material Adverse Effect.
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4.10 Payment of Taxes. All material tax returns and reports of any Loan
Party and each of its Subsidiaries required to be filed by any of them have been
timely filed, and all taxes, assessments, fees and other governmental charges
upon such Persons and upon their respective properties, assets, income and
franchises which are shown on such returns as due and payable have been paid
when due and payable or are being contested in good faith by appropriate
proceedings and appropriate reserves therefor have been established in
accordance with GAAP. Except as set forth on Schedule 4.10, as. As of the
Closing Date, none of the United States income tax returns of any Loan Party or
any of its Subsidiaries are under audit. No tax liens have been filed and no
claims (except as otherwise permitted by Section 5.9) are being asserted with
respect to any such taxes. The charges, accruals and reserves on the books of
any Loan Party and each of its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with GAAP.
4.11 Performance of Agreements. None of the Loan Parties and none of their
respective Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
contractual obligation of any such Person, and no condition exists that, with
the giving of notice or the lapse of time or both, would constitute such a
default.
4.12 Employee Benefit Plans. Each Loan Party, each of its Subsidiaries and
each ERISA Affiliate is in compliance in all material respects with all
applicable provisions of ERISA, the IRC and all other applicable laws and the
regulations and interpretations thereof with respect to all Employee Benefit
Plans. No material liability has been incurred by any Loan Party, any of its
Subsidiaries or any ERISA Affiliate which remains unsatisfied for any funding
obligation, taxes or penalties with respect to any Employee Benefit Plan.
4.13 Intellectual Property. Each Loan Party and each of its Subsidiaries
owns, is licensed to use or otherwise has the right to use, all Intellectual
Property used in or necessary for the conduct of its business as currently
conducted, and all such Intellectual Property is identified on Schedule 4.13.
4.14 Broker's Fees. No broker's or finder's fee or commission will be
payable with respect to any of the transactions contemplated hereby.
4.15 Environmental Compliance. Each Loan Party has been and is currently in
compliance with all applicable Environmental Laws, including obtaining and
maintaining in effect all permits, licenses or other authorizations required by
applicable Environmental Laws. There are no claims, liabilities, investigations,
litigation, administrative proceedings, whether pending or threatened, or
judgments or orders relating to any Hazardous Materials asserted or, to the best
knowledge of each Loan Party, threatened against any Loan Party or relating to
any real property currently or formerly owned, leased or operated by any Loan
Party.
4.16 Solvency. After giving effect to the transactions contemplated by the
Loan Documents, and as of, from and after the date of this Agreement, each Loan
Party (after taking into consideration all rights of contribution and indemnity
such Loan Party has against the other Loan Party): (a) owns and will own assets
the fair salable value of which are (i) greater than the total
39
amount of its liabilities (including contingent liabilities) and (ii) greater
than the amount that will be required to pay the probable liabilities of such
Loan Party as they mature; (b) has capital that is not unreasonably small in
relation to its business as presently conducted or any contemplated or
undertaken transaction; and (c) does not intend to incur and does not believe
that it will incur debts beyond its ability to pay such debts as they become
due. There is no material fact known to any Holding Party or any Borrower that
has or could have a Material Adverse Effect and that has not been fully
disclosed herein or in such other documents, certificates and statements
furnished to Agent or Lenders for use in connection with the transactions
contemplated hereby.
4.17 Disclosure. No representation or warranty of any Loan Party or any of
its Subsidiaries contained in this Agreement, the financial statements, the
other Loan Documents, or any other document, certificate or written statement
furnished to Agent or any Lender by or on behalf of any such Person for use in
connection with the Loan Documents contains any untrue statement of a material
fact or omitted, omits or will omit to state a material fact necessary in order
to make the statements contained herein or therein not misleading in light of
the circumstances in which the same were made. The Projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by such Persons to be reasonable at the time
made, it being recognized by Agent and Lenders that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the projected
results. There is no material fact known to any Loan Party that has had or will
have a Material Adverse Effect and that has not been disclosed herein or in such
other documents, certificates and statements furnished to Agent or any Lender
for use in connection with the transactions contemplated hereby.
4.18 Insurance. Each Loan Party and each of its Subsidiaries maintains
adequate insurance policies for public liability, workers compensation, employee
benefit liability, fidelity liability, directors' and officers' liability,
errors and omissions, property damage for its business and properties, product
liability, and business interruption in amounts customarily carried or
maintained by corporations of established reputation engaged in similar
businesses. Such policies are in full force and effect. No notice of
cancellation has been received with respect to such policies and such Loan Party
and each of its Subsidiaries is in compliance with all conditions contained in
such policies.
4.19 Compliance with Laws. Neither any Loan Party nor any of its
Subsidiaries is in violation of any law, ordinance, rule, regulation, order,
policy, guideline or other requirement of any domestic or foreign government or
any instrumentality or agency thereof, having jurisdiction over the conduct of
its business or the ownership of its properties, including, without limitation,
any violation relating to any use, release, storage, transport or disposal of
any Hazardous Material, which violation would subject such Loan Party or any of
its Subsidiaries, or any of its respective officers to criminal liability or
have a Material Adverse Effect and no such violation has been alleged.
4.20 Bank Accounts. Schedule 4.20 sets forth the account numbers and
locations of all bank accounts of each Loan Party.
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4.21 Subsidiaries. Neither any Holding Party nor any Borrower has any
Subsidiaries other than as set forth on Schedule 4.1(B).
4.22 Employee Matters. Except as set forth on Schedule 4.22, (a) no Loan
Party nor any of such Loan Party's employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Loan Party and (c) there are no strikes,
slowdowns, work stoppages or controversies pending or, to the best knowledge of
any Loan Party after due inquiry, threatened between any Loan Party and its
respective employees, other than employee grievances arising in the ordinary
course of business which could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. Except as set forth
on Schedule 4.22, no Loan Party nor any of its Subsidiaries is subject to an
employment contract.
4.23 Governmental Regulation. None of the Loan Parties is, or after giving
effect to any loan will be, subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act or the Investment Company Act
of 1940 or to any federal or state statute or regulation limiting its ability to
incur indebtedness for borrowed money.
4.24 Uniforce Acquisition. The Uniforce Acquisition Documents have been
duly executed and delivered and are in full force and effect. The
representations and warranties contained in the Uniforce Acquisition Documents
are true and correct in all respects on the date hereof and will be true and
correct in all respects on the Closing Date, as if made on such date, and Agent
and Lenders shall be entitled to rely upon such representations and warranties
with the same force and effect as if they were incorporated in this Agreement
and made to Agent and each Lender directly as of the date hereof and the Closing
Date. The Uniforce Acquisition shall have been consummated in accordance with
and pursuant to the terms and conditions of the Uniforce Acquisition Documents
(without any waiver or amendment of any term or condition therein not consented
to by Agent and Lenders) and in compliance with all applicable laws and all
necessary approvals.
4.25 Amendments to Schedules. The Loan Parties may, at any time and from
time to time and subject to subsection 5.13, amend any one or more of the
Schedules referred in this Section 4 and any representation or warranty
contained herein which refers to any such Schedule shall from and after the date
of any such amendment refer to such Schedule as so amended; provided, however,
that in no event may the Loan Parties amend any such Schedule if such amendment
would reflect or evidence a Default or Event of Default.
SECTION 5. AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees that, so long as any of the
Commitments hereunder shall be in effect and until payment in full of all
Obligations and termination of all Lender Letters of Credit, unless Requisite
Lenders shall otherwise give their prior written consent, each Loan Party shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 5 applicable to such Person or Persons.
41
5.1 Financial Statements and Other Reports. The Holding Parties and
Borrowers will maintain, and cause each of their respective Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. Borrowers will deliver to Agent and each Lender (unless
specified to be delivered solely to Agent) the financial statements and other
reports described below.
(A) Monthly Financials. As soon as available, and in any event within
forty-five (45) days after the end of each month, Borrowers will deliver
(1) the consolidated balance sheet of Holding Parties, Borrowers and their
respective Subsidiaries as at the end of such month and the related
consolidated and consolidating statement of income and consolidated
statement of cash flow for such month and for the period from the beginning
of the then current Fiscal Year to the end of such month, and (2) a
schedule of the outstanding Indebtedness for borrowed money of each Loan
Party and its Subsidiaries describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued
and unpaid interest with respect to each such debt issue or loan.
(B) Quarterly Financials. (i) As soon as available, and in any event
within one (1) Business Day after CC files its quarterly report on Form
10-Q with the Securities and Exchange Commission for each of its first
three Fiscal Quarters in each Fiscal Year, Borrowers will deliver, or will
cause to be delivered, to Agent, such report; and (ii) in respect of the
fourth Fiscal Quarter in each Fiscal Year, as soon as available, and in any
event within forty-five (45) days after the end of such Fiscal Quarter,
Borrowers will deliver to the Agent financial statements that are
equivalent in format to the financial statements that would have been
included in a quarterly report on Form 10- Q made by CC for such Fiscal
Quarter.
(C) Year-End Financials. As soon as available, and in any event not
later than one hundred five (105) days after the end of each Fiscal Year
or, if earlier, the date on which CC files its annual report on Form 10-K
with the Securities and Exchange Commission in respect of such Fiscal Year,
Borrowers will deliver: (1) the consolidated balance sheet of Holding
Parties, Borrowers and their respective Subsidiaries as at the end of such
year and the related consolidated statements of income, stockholders'
equity and cash flow for such Fiscal Year; (2) a schedule of the
outstanding Indebtedness of Holding Parties, Borrowers and their respective
Subsidiaries describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid
interest with respect to each such debt issue or loan; (3) a report with
respect to the financial statements from a firm of independent certified
public accountants selected by Holding Parties and Borrowers and acceptable
to Agent, which report shall be unqualified as to going concern and scope
of audit of Holding Parties, Borrowers and their respective Subsidiaries
and shall state that (a) such consolidated financial statements present
fairly the consolidated financial position of Holding Parties, Borrowers
and their respective Subsidiaries as at the dates indicated and the results
of their operations and cash flow for the periods indicated in conformity
with GAAP and (b) that the examination by such accountants in connection
with such consolidated financial statements has been made in accordance
with generally accepted auditing standards; and (4) copies of the
consolidating financial statements of Holding Parties, Borrowers and their
respective Subsidiaries, including (a) consolidating balance sheets of
Holding Parties, Borrower and their
42
respective Subsidiaries as at the end of such Fiscal Year showing
intercompany eliminations and (b) related consolidating statements of
earnings of Holding Parties, Borrowers and their respective Subsidiaries
showing intercompany eliminations.
(D) Accountants' Certification and Reports. Together with each
delivery of consolidated financial statements of Holding Parties, Borrowers
and their respective Subsidiaries pursuant to subsection 5.1(C), Borrowers
will deliver (1) a written statement by their independent certified public
accountants (a) stating that the examination has included a review of the
terms of this Agreement as same relate to accounting matters and (b)
stating whether, in connection with the examination, any condition or event
that constitutes a Default or an Event of Default has come to their
attention and, if such a condition or event has come to their attention,
specifying the nature and period of existence thereof and (2) a copy of a
letter addressed to such accountants from CC informing such accountants
that a primary intent of Holding Parties and Borrowers was to have the
professional services such accountants provided to Holding Parties and
Borrowers in preparing their audit report and the letter referred to in
this subsection 5.1(D) benefit or influence Agent and Lenders, and
identifying Agent and Lenders as parties that Holding Parties and Borrowers
have indicated intend to rely on such professional services provided to
Holding Parties and Borrowers by such accountants. Promptly upon receipt
thereof, Holding Parties and Borrowers will deliver copies of all
significant reports submitted to Holding Parties and Borrowers by
independent public accountants in connection with each annual, interim or
special audit of the financial statements of Holding Parties, Borrowers and
their respective Subsidiaries made by such accountants, including the
comment letter submitted by such accountants to management in connection
with their annual audit.
(E) Compliance Certificate. Together with the delivery of each set of
financial statements referenced in subparts (A), (B) and (C) of this
subsection 5.1, Borrowers will deliver a Compliance Certificate, together
with (i) copies of the calculations and work-up employed to determine
Holding Parties' and Borrowers' compliance or noncompliance with the
financial covenants set forth in Section 6 and subsection 7.1 and (ii) a
report showing in reasonable detail the calculation of the Applicable Base
Rate Margin and the Applicable LIBOR Margin as at the effective date of
such financial statements (the "Applicable Margin Report").
(F) Borrowing Base Certificates, Registers and Journals. On each
Business Day from and after the Closing Date and through the later of
December 31, 1997 or the date on which the Cash Dominion Arrangement (as
defined in Section 5.6 hereof) becomes effective, and, thereafter, once
during each week, on the specific day in each week specified from time to
time by the Agent (or on each Business Day if requested by Agent following
the occurrence of a Default or when Unused Availability is less than
$5,000,000) Borrowers shall deliver to Agent: a Borrowing Base Certificate
updated to reflect the most recent sales and collections of each Borrower
through the immediately preceding week (or, if requested by Agent on a
daily basis pursuant hereto, on the immediately preceding Business Day) and
an assignment schedule of all Accounts created or acquired by each Borrower
during such week or, if applicable, on such day, together with a summary
aging of all such Accounts. Within ten (10) Business Days after the end of
each month, Borrowers shall deliver to Agent (a) an invoice register or
sales journal describing all sales of each
43
Borrower for such month, in form and substance reasonably satisfactory to
Agent, and, if Agent so requests, copies of invoices evidencing such sales
and proofs of delivery relating thereto, (b) a cash receipts journal for
such month, (c) a schedule of each customer which is owed a credit or other
amount in excess of $25,000 (which amount shall be deducted by Agent as a
reserve from the Borrowing Base) by any Borrower and listing each such
amount and (d) a schedule of all charge-backs relating to any Purchased
Account or Service Fee Account and listing each such amount.
(G) Reconciliation Reports and Listings and Agings. Within fifteen
(15) Business Days after the last day of each month and from time to time
upon the request of Agent, Borrowers will deliver to Agent: (i) an aged
trial balance of all then existing Accounts of each Borrower; (2) an aged
trial balance of all then existing accounts payable; and (3) from and after
the delivery by Agent to the Collecting Banks of the direction referred to
in Section 5.6, a Reconciliation Report as at the last day of such period.
All such reports shall be in form and substance reasonably satisfactory to
Agent.
(H) Management Report. Together with each delivery of financial
statements of Holding Parties, Borrowers and their respective Subsidiaries
pursuant to subdivisions (A) (on a quarterly basis only), and (B) of this
subsection 5.1, Borrowers will deliver a copy of the complete management's
discussions and analysis of financial condition and results of operations
included in CC's Form 10-K or Form 10-Q, as applicable, filed with the
Securities and Exchange Commission for the period covered by such financial
statements. The information above shall be presented in reasonable detail
and shall be certified by the chief financial officer of CC and each
Borrower to the effect that such information fairly presents the results of
operations and financial condition of CC and its Subsidiaries as at the
dates and for the periods indicated.
(I) Government Notices. Loan Parties will deliver to Agent promptly
after receipt copies of all notices, requests, subpoenas, inquiries or
other writings received from any governmental agency concerning any
Employee Benefit Plan, the violation or alleged violation of any
Environmental Laws, the storage, use or disposal of any Hazardous Material,
the violation or alleged violation of the Fair Labor Standards Act or a
Loan Party's payment or non-payment of any taxes including any tax audit.
(J) Events of Default, etc. Promptly upon (but in any event within
five (5) Business Days after) any officer of any Loan Party obtaining
knowledge of any of the following events or conditions, such Loan Party
shall deliver a certificate of such Loan Party's chief executive officer
specifying the nature and period of existence of such condition or event
and what action such Loan Party has taken, is taking and proposes to take
with respect thereto: (1) any condition or event that constitutes an Event
of Default or Default; (2) any notice of default that any Person has given
to any Loan Party or any of its Subsidiaries or any other action taken with
respect to a claimed default; or (3) any Material Adverse Effect.
(K) Trade Names. Borrowers will give Agent at least ten (10) days
advance written notice of any change of name or of any new trade name or
fictitious business name by any Loan Party or any of its Subsidiaries. Each
Loan Party's use of any trade name or fictitious business name will be in
compliance with all laws regarding the use of such names.
44
(L) Locations. Borrowers will give Agent at least thirty (30) days
advance written notice of any change in any Loan Party's principal place of
business or any change in the location of its books and records or the
Collateral or of any new location for its books and records or the
Collateral.
(M) Bank Accounts. Loan Parties will give Agent prompt notice of any
new bank accounts any Loan Party intends to establish prior to its opening
same.
(N) Litigation. Promptly upon (but in any event within five (5)
Business Days after) any officer or any Loan Party obtaining knowledge of
(1) the institution of any action, suit, proceeding, governmental
investigation or arbitration against or affecting any Loan Party or any
property of any Loan Party not previously disclosed by a Loan Party to
Agent or (2) any material development in any action, suit, proceeding,
governmental investigation or arbitration at any time pending against or
affecting any Loan Party or any property of any Loan Party which could
reasonably be expected to have a Material Adverse Effect, Loan Parties will
promptly give notice thereof to Agent and provide such other information as
may be reasonably available to them to enable Agent and its counsel to
evaluate such matter.
(O) Projections. As soon as available and in any event no later than
the end of each Fiscal Year of a Holding Party, or Borrower or any other
Loan Party, Borrowers will deliver preliminary Projections of Holding
Parties, Borrowers and their respective Subsidiaries for the forthcoming
three Fiscal Years, year by year, and for the forthcoming Fiscal Year,
month by month, and shall deliver the final Projections for such periods as
soon as available and in any event no later than January 31 in the first of
such three Fiscal Years.
(P) Other Indebtedness Notices. Borrowers shall promptly deliver
copies of all notices given or received by (but in any event with five (5)
Business Days after receipt from) any Loan Party and any of its
Subsidiaries with respect to noncompliance with any term or condition
related to any Indebtedness in excess of $250,000 either individually or in
the aggregate, and shall promptly notify Lenders and Agent of any potential
or actual event of default with respect to any such Indebtedness.
(Q) Other Information. With reasonable promptness, Borrowers will
deliver such other information and data with respect to any Loan Party, any
Subsidiary of any Loan Party or the Collateral as Agent or any Lender may
reasonably request from time to time.
(R) Opening Balance Sheet. As soon as available and in any event
within ninety (90) days after the Closing Date, Borrowers will deliver a
consolidated and consolidating Closing Date balance sheet, certified by the
chief financial officer of CC and each Borrower as fairly presenting the
consolidated and consolidating financial condition of CC and its
Subsidiaries in accordance with GAAP, subject to year-end audit
adjustments.
(S) Public Filings. Within one (1) Business Day after the filing or
release thereof, Borrowers will deliver a copy of each registration
statement (and amendment and supplement thereto), report, press release,
prospectus, proxy statement or other filing or disclosure
45
made with any securities commission, exchange or association or under the
Securities Act of 1933, the Securities Exchange Act of 1934, any related
laws or regulations or any comparable state acts, laws or regulations.
5.2 Access to Accountants and Management. The Loan Parties authorize Agent
and Lenders to discuss the financial condition and financial statements of any
Loan Party and its Subsidiaries with such Loan Party's independent public
accountants upon reasonable notice to Borrower Representative of its intention
to do so, and authorizes such accountants to respond to all of Agent's and
Lenders' inquiries. Each Lender may, with the consent of Agent, which will not
be unreasonably denied, confer with any Loan Party's management directly
regarding such Loan Party's business, operations and financial condition.
5.3 Inspection. The Loan Parties shall permit Agent and any authorized
representatives designated by Agent to visit and inspect any of the properties
of any Loan Party or any of its Subsidiaries, including their financial and
accounting records, and in conjunction with such inspection, to make copies and
take extracts therefrom, and to discuss their affairs, finances and business
with their officers and independent public accountants, at such reasonable times
during normal business hours and as often as may be reasonably requested. Each
Lender may, with the consent of Agent, which consent will not be unreasonably
denied, accompany Agent on any such visit or inspection.
5.4 Collateral Records. The Loan Parties shall keep full and accurate books
and records relating to the Collateral and shall mark such books and records to
indicate Agent's security interests in the Collateral, for the benefit of
Lenders.
5.5 Account Covenants; Verification. Borrowers shall, at their own expense:
(a) cause all invoices evidencing Accounts and all copies thereof to bear a
notice that such invoices are payable to the lockboxes established in accordance
with subsection 5.6 and (b) use their best efforts to assure prompt payment of
all amounts due or to become due under the Accounts. Discounts, credits or
allowances will be issued, granted or allowed by any Borrower to customers and
returns will be accepted solely in accordance with the ordinary course of such
Borrower's business and consistent with past practices, provided that, upon
written notice to such effect given by Agent at any time during the existence of
any Event of Default, such practice shall cease. Borrowers will immediately
notify Agent in the event that a customer alleges any dispute or claim with
respect to an Account if the amount in dispute is, or the claim involves an
amount, in excess of $50,000 or of any other circumstances known to any Borrower
that may impair the validity or collectibility of such an amount in respect of
any Account. Agent shall have the right, at any time or times hereafter, to
verify the validity, amount or any other matter relating to an Account, by mail,
telephone or in person. After the occurrence of a Default or an Event of
Default, Borrowers shall not, without the prior consent of Agent, adjust, settle
or compromise the amount or payment of any Account, or release wholly or partly
any customer or obligor thereof, or allow any credit or discount thereon.
5.6 Collection of Accounts and Payments; Cash Management Arrangements. (a)
Within forty-five (45) days after the Closing Date, Borrowers shall establish
lockboxes and blocked accounts (collectively, "Blocked Accounts") in Borrowers'
names or, by separate agreement with
46
Agent, in Agent's name, with such banks ("Collecting Banks") as are acceptable
to Agent (subject to irrevocable instructions acceptable to Agent as hereinafter
set forth and contained in agreements in form and substance acceptable to Agent
among the applicable Borrowers and Collecting Banks and Agent ("Blocked Account
Agreement")) to which all account debtors shall directly remit all payments on
Accounts and in which Borrowers will immediately deposit all payments
constituting proceeds of Collateral in the identical form in which such payment
was made, whether by cash or check. The Collecting Banks shall acknowledge and
agree, in a manner satisfactory to Agent, that all payments made to the Blocked
Accounts are the sole and exclusive property of Agent, for the benefit of
Lenders, and that the Collecting Banks have no right of setoff against the
Blocked Accounts and that all such payments received will, upon written
direction from Agent to the Collecting Banks, be promptly transferred to Agent's
Account. Borrowers hereby agree that all payments received by Agent, whether by
cash, check, wire transfer or any other instrument, made to such Blocked
Accounts or otherwise received by Agent and whether on the Accounts or as
proceeds of other Collateral or otherwise will be the sole and exclusive
property of Agent, for the benefit of Lenders. Borrowers shall irrevocably
instruct each Collecting Bank, upon notice from Agent, immediately to transfer
all payments or deposits to the Blocked Accounts into Agent's Account. Borrowers
and any of their Affiliates, employees, agents or other Persons acting for or in
concert with any Borrower, shall, acting as trustee for Agent, receive, as the
sole and exclusive property of Agent, any monies, checks, notes, drafts or any
other payments relating to and/or proceeds of Accounts or other Collateral which
come into the possession or under the control of any Borrower or any of such
Borrower's Affiliates, employees, agents or other Persons acting for or in
concert with any Borrower, and immediately upon receipt thereof, Borrowers or
such Persons shall remit the same or cause the same to be remitted, in kind, to
the Blocked Accounts or, upon written direction from Agent, to Agent at its
address set forth in subsection 10.4 below.
(b) Within forty-five (45) days after the Closing Date, Borrowers shall, in
addition to the matters referred to in (a) above, establish a cash management
arrangement pursuant to such instruments and documents and with such bank or
banks as shall be satisfactory to Agent. The arrangements referred to in (a)
above and the cash management arrangement referred to in this clause (b) are
herein referred to collectively as the "Cash Dominion Arrangement."
5.7 Endorsement. Each Borrower hereby constitutes and appoints Agent and
all Persons designated by Agent for that purpose as such Borrower's true and
lawful attorney-in-fact, with power to endorse such Borrower's name to any of
the items of payment or proceeds described in subsection 5.6 above and all
proceeds of Collateral that come into Agent's possession or under Agent's
control. Both the appointment of Agent as such Borrower's attorney and Agent's
rights and powers are coupled with an interest and are irrevocable until payment
in full and complete performance of all of the Obligations.
5.8 Corporate Existence. Except as permitted pursuant to subsection 7.6,
each Loan Party will, and will cause each of their respective Subsidiaries to,
at all times preserve and keep in full force and effect its corporate existence
and all rights and franchises material to its business. Each Holding Party and
each Borrower will promptly notify Agent of any change in its or their
respective Subsidiaries' ownership or corporate structure.
47
5.9 Payment of Taxes. Each Loan Party will, and will cause each other Loan
Party and each of their respective Subsidiaries to, pay all taxes, assessments
and other governmental charges imposed upon it or any of its properties or
assets or with respect to any of its franchises, business, income or property
before any penalty accrues thereon; provided, however, that no such tax need be
paid if such Loan Party or one of its Subsidiaries is contesting same in good
faith by appropriate proceedings promptly instituted and diligently conducted
and if such Loan Party or such Subsidiary has established appropriate reserves
as shall be required in conformity with GAAP.
5.10 Maintenance of Properties; Insurance. Each Loan Party will maintain or
cause to be maintained in good repair, working order and condition all material
properties used in the business of any Loan Party and its Subsidiaries and will
make or cause to be made all appropriate repairs, renewals and replacements
thereof. Each Loan Party will maintain or cause to be maintained, with
financially sound and reputable insurers, public liability insurance, workers
compensation, employee benefit liability insurance, fidelity insurance, errors
and omissions insurance, directors' and officers' liability insurance, and
property damage insurance with respect to each Loan Party's business and
properties and the business and properties of its Subsidiaries against loss or
damage of the kinds customarily carried or maintained by corporations of
established reputation engaged in similar businesses and in amounts acceptable
to Agent in its reasonable credit judgement. Each Loan Party shall cause Agent,
for the benefit of Lenders, to be named as loss payee on all insurance policies
relating to any Collateral and as additional insured under all liability
policies, in each case pursuant to appropriate endorsements in form and
substance satisfactory to Agent and shall collaterally assign to Agent, for the
benefit of Lenders, as security for the payment of the Obligations all business
inter ruption insurance of the Loan Parties. Loan Parties shall apply any
proceeds received from any policies of insurance relating to any Collateral to
the Obligations as set forth in subsection 2.4(B). Each Loan Party will, and
will cause each other Loan Party and each of their respective Subsidiaries to,
deliver to Agent, within ten (10) Business Days prior to the expiration or
termination of any such insurance policy, a certificate of renewal or
replacement of such insurance policy, as issued by the applicable insurance
company or its duly authorized agent.
5.11 Compliance with Laws. Each Loan Party will, and will cause each other
Loan Party and each of their respective Subsidiaries to, comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority as now in effect and which may be imposed in the future
in all jurisdictions in which such Holding Party, Borrower, other Loan Party or
Subsidiary is now doing business or may hereafter be doing business, other than
those laws the noncompliance with which would not have a Material Adverse
Effect.
5.12 Further Assurances. Each Loan Party shall, and shall cause each other
Loan Party and each of their respective Subsidiaries to, from time to time,
execute such guaranties, financing or continuation statements, documents,
security agreements, reports and other documents or deliver to Agent such
instruments, certificates of title or other documents as Agent at any time may
reasonably request to evidence, perfect or otherwise implement the guaranties
and security for repayment of the Obligations provided for in the Loan
Documents. At Agent's request, each Loan Party shall cause any newly created or
acquired Subsidiary of a Borrower or a Loan Party promptly to become a Borrower
and/or Corporate Guarantor hereunder and to grant to Agent, on behalf of
48
Lenders, security interests in the real, personal and mixed property of such
Subsidiary to secure the Obligations.
5.13 Collateral Locations. Each Loan Party will keep the Collateral at the
locations specified on Schedule 4.7. With respect to any new location (which in
any event shall be within the continental United States), each Loan Party will
execute such documents and take such actions as Agent deems necessary to perfect
and protect the security interests of Agent, on behalf of Lenders, in the
Collateral prior to the transfer or removal of any Collateral to such new
location.
5.14 Instruments; Chattel Paper. Except to the extent Indebtedness
evidenced thereby does not exceed $50,000 outstanding at any time in the
aggregate, Loan Parties will deliver and pledge to Agent all notes and
instruments (as defined in the UCC) duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to Agent. The Loan Parties will mark conspicuously all chattel
paper with a legend, in form and substance satisfactory to Agent, indicating
that such chattel paper is subject to the security interest of Agent, for the
benefit of itself and Lenders. Without limiting the generality of the foregoing,
Loan Parties will mark conspicuously all Account Agreements with the legend
referred to in the preceding sentence.
5.15 Account Agreements. Borrower Representative will deliver to Agent a
copy of each Account Agreement, or material amendment to any Account Agreement,
entered into after the Closing Date, each certified as being a complete,
accurate and correct copy thereof by Borrower Representative's chief financial
officer, together with, in the case of any Account Agreement entered into after
the Closing Date, copies of lien search results indicating the applicable Loan
Party as having a first priority perfected ownership interest in each applicable
Account, subject to no Liens except those in favor of Agent on behalf of
Lenders.
5.16 Use of Proceeds and Margin Security. Borrowers shall use the proceeds
of all Loans for proper business purposes (as described in the recitals to this
Agreement) consistent with all applicable laws, statutes, rules and regulations.
No portion of the proceeds of any Loan shall be used by any Borrower or any
other Loan Party for the purpose of purchasing or carrying margin stock within
the meaning of Regulation G or Regulation U, or in any manner that might cause
the borrowing, the application of such proceeds, or the transactions
contemplated hereby or by the other Loan Documents to violate Regulation T or
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Securities Exchange Act of 1934 or the rules
and regulations thereunder.
SECTION 6. FINANCIAL COVENANTS
Each Holding Party and each Borrower covenants and agrees that so long as
any of the Commitments remain in effect and until payment in full of all
Obligations and termination of all Lender Letters of Credit, unless Borrowers
have received the prior written consent of Requisite
49
Lenders, each Holding Party and each Borrower shall comply with, and shall cause
each of their respective Subsidiaries to comply with, all covenants in this
Section 6.
6.1 Minimum EBITDA. The Holding Parties, Borrowers and their respective
Subsidiaries shall maintain EBITDA in at least the amount set forth below
opposite each period specified if an Availability Trigger Event shall have
occurred during the last two calendar months of such period or after the end of
such period and up to and including the date of delivery to Agent of the
financial statements required to be delivered in respect of the Fiscal Quarter
or Fiscal Year ending on the last day of such period, under Section 5.1(B) or
(C), as the case may be:
Period Minimum EBITDA
------ --------------
Fiscal Quarter Ending
March 31, 1998 $ 4,800,000
Two Fiscal Quarters Ending
June 30, 1998 10,200,000
Three Fiscal Quarters Ending
September 30, 1998 16,400,000
Four Fiscal Quarters Ending:
December 31, 1998 22,800,000
March 31, 1999 23,800,000
June 30, 1999 25,200,000
September 30, 1999 26,500,000
December 31, 1999 27,900,000
March 31, 2000 29,200,000
June 30, 2000 30,900,000
September 30, 2000 32,600,000
December 31, 2000 34,400,000
March 31, 2001 36,000,000
June 30, 2001 38,000,000
50
September 30, 2001 40,200,000
December 31, 2001 42,500,000
March 31, 2002 44,200,000
June 30, 2002 46,300,000
September 30, 2002 48,600,000
December 31, 2002 50,900,000
6.2 Fixed Charge Coverage. The Holding Parties and Borrowers shall not
permit their Fixed Charge Coverage to be less than 1.0 to 1.0 for the Fiscal
Quarter ending March 31, 1998, for the two Fiscal Quarters ending June 30, 1998,
for the three Fiscal Quarters ending September 30, 1998, or for any of the four
Fiscal Quarters ending December 31, 1998 or on the last day of each Fiscal
Quarter thereafter.
SECTION 7. NEGATIVE COVENANTS
Each Loan Party covenants and agrees that so long as any of the Commitments
remain in effect and until payment in full of all Obligations and termination of
all Lender Letters of Credit, unless such Loan Party has received the prior
written consent of Requisite Lenders, each Loan Party shall not, and shall not
permit any of their respective Subsidiaries to:
7.1 Indebtedness and Liabilities. Directly or indirectly create, incur,
assume, guaranty, or otherwise become or remain directly or indirectly liable,
on a fixed or contingent basis, with respect to any Indebtedness except: (a) the
Obligations; (b) Intercompany Indebtedness (i) among Borrowers and (ii) provided
that no Default or Event of Default shall have occurred and be continuing at the
time of the incurrence thereof or would result therefrom, Indebtedness owing by
a Holding Party to a Borrower and incurred by a Holding Party to permit such
Holding Party to make payments in cash then due under and pursuant to the Senior
Notes and the Senior PIK Notes, pay expenses incurred in the ordinary course of
business and to make Restricted Junior Payments permitted under subsection 7.5;
provided that, in each case, such Indebtedness shall be unsecured and
subordinated in right of payment to the Obligations (and by its execution and
delivery hereof, each Holding Party and each Borrower agrees that any such
Indebtedness shall be so unsecured and subordinated) and shall not be evidenced
by any note or other instrument, unless the same is pledged to Agent and Lenders
pursuant to subsection 5.14; (c) Indebtedness (excluding Capital Leases) not to
exceed $250,000 in the aggregate at any time outstanding secured by purchase
money Liens; (d) Indebtedness under Capital Leases not to exceed $2,500,000
outstanding at any time in the aggregate; (e) Indebtedness existing on the
Closing Date and identified on Schedule 4.4; (f) Indebtedness incurred by any
Borrower in connection with Permitted Acquisitions permitted under subsection
7.6(B); provided that (1) such Indebtedness (A) shall be unsecured and
subordinated in right of payment to the Obligations, (B) shall not exceed
$5,000,000 outstanding at any time in the
51
aggregate with respect to any individual Permitted Acquisition and (C) shall be
on terms and conditions acceptable to Agent and (2) all such Indebtedness
incurred by Borrowers shall not exceed $20,000,000 outstanding in the aggregate
at any time; (g) Indebtedness under the Senior Notes; and (h) Indebtedness under
the Senior PIK Notes. Except for Indebtedness permitted in the preceding
sentence, Holding Parties and Borrowers will not, and will not permit any of
their Subsidiaries to, incur any Liabilities except for trade payables and
normal accruals in the ordinary course of business not yet due and payable or
with respect to which any Borrower or any of its Subsidiaries is contesting in
good faith the amount or validity thereof by appropriate proceedings and then
only to the extent such Borrower or any of its Subsidiaries has established
adequate reserves therefor, if appropriate under GAAP.
7.2 Guaranties. Except for the guaranties of the Obligations provided
hereunder and under the other Loan Document and except for (a) endorsements of
instruments or items of payment for collection in the ordinary course of
business and (b) the agreements of THISCO and Brentwood in their respective
Account Agreements to fund the payroll of Account Sellers in respect of Service
Fee Accounts consistent with current practices at the Closing Date, guaranty,
endorse, or otherwise in any way become or be responsible for any obligations of
any other Person, whether directly or indirectly by agreement to purchase the
indebtedness of any other Person or through the purchase of goods, supplies or
services, or maintenance of working capital or other balance sheet covenants or
conditions, or by way of stock purchase, capital contribution, advance or loan
for the purpose of paying or discharging any indebtedness or obligation of such
other Person or otherwise.
7.3 Transfers, Liens and Related Matters.
(A) Transfers. Sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to any of the Collateral or the
assets of such Person, except that Borrowers and their Subsidiaries may (i) sell
inventory in the ordinary course of business; and (ii) make Asset Dispositions
if all of the following conditions are met: (1) the market value of assets sold
or otherwise disposed of in any single transaction or series of related
transactions does not exceed $125,000 and the aggregate market value of assets
sold or otherwise disposed of in any Fiscal Year does not exceed $500,000; (2)
the consideration received is at least equal to the fair market value of such
assets, as determined in good faith by such Borrower's or Subsidiary's board of
directors; (3) the sole consideration received is cash; (4) the net proceeds of
such Asset Disposition are applied as required by subsection 2.4(B); (5) after
giving effect to the sale or other disposition of the assets included within the
Asset Disposition and the repayment of the Obligations with the proceeds
thereof, Holding Parties and Borrowers are in compliance on a pro forma basis
with the covenants set forth in Section 6 recomputed for the most recently ended
month for which information is available and are in compliance with all other
terms and conditions contained in this Agreement; and (6) no Default or Event of
Default shall then exist or result from such sale or other disposition.
(B) Liens. Except for Permitted Encumbrances, directly or indirectly
create, incur, assume or permit to exist any Lien on or with respect to any of
the Collateral or the assets of such Person or any proceeds, income or profits
therefrom.
52
(C) No Negative Pledges. Enter into or assume any agreement (other than the
Loan Documents) prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
(D) No Restrictions on Subsidiary Distributions to any Holding Party or any
Borrower. Except as provided herein, directly or indirectly create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any Borrower or any Subsidiary of any
Borrower to: (1) pay dividends or make any other distribution on any of such
Subsidiary's capital stock owned by a Borrower or any Subsidiary of such
Borrower; (2) subject to subordination provisions, pay any indebtedness owed to
any Holding Party, any Borrower or any other Subsidiary of such Holding Party or
such Borrower; (3) make loans or advances to any Holding Party, any Borrower or
any other Subsidiary of such Holding Party or such Borrower; or (4) transfer any
of its property or assets to any Holding Party, any Borrower or any other
Subsidiary of such Holding Party or such Borrower.
7.4 Investments and Loans. Make or permit to exist investments in or loans
to any other Person, except: (a) Cash Equivalents; (b) loans and advances to
employees for moving, entertainment, travel and other similar expenses in the
ordinary course of business in an aggregate outstanding amount not in excess of
$250,000 at any time; (c) Intercompany Indebtedness permitted under subsection
7.1; (d) Permitted Acquisitions permitted under subsection 7.6(B); (e) advances
made in the ordinary course of business consistent with current practices at the
Closing Date by THISCO and Brentwood to independent supplemental staffing firms
to induce such firms to enter into Account Agreements; provided, that such
advances are secured by a first priority perfected security interest in the
Accounts under such Account Agreements in favor of THISCO or Brentwood, as the
case may be, subject to no Liens other than Permitted Encumbrances; and (f) in
addition to advances made pursuant to clause (e) above, advances not to exceed
$500,000 outstanding at any time in the aggregate made by Borrowers in the
ordinary course of business consistent with current practices at the Closing
Date to Persons engaged in the business of providing temporary employment
personnel to clients to induce such Persons to enter into, or remain party to,
Account Agreements or Licensing Agreements.
7.5 Restricted Junior Payments. Directly or indirectly declare, order, pay,
make or set apart any sum for any Restricted Junior Payment, except that, so
long as no Default or Event of Default shall have occurred and be continuing or
would result therefrom (other than in the case of Restricted Junior Payments
made pursuant to clauses (iv) and (vi) below, which may be made whether or not a
Default or Event of Default shall have occurred and is continuing or would
result therefrom), a Borrower or any Subsidiary of a Borrower or COI may make
Restricted Junior Payments with respect to its common stock to the extent
necessary (i) to permit Borrowers to pay the Obligations; (ii) to permit COI to
make scheduled payments (but not prepayments) of interest in cash then due under
and pursuant to the Senior Notes; (iii) to permit CC to make scheduled payments
(but not prepayments) of interest in cash then due under and pursuant to the
Senior PIK Notes; (iv) to permit CC to make payments in cash directly related to
compliance by it with laws and regulations applicable to it by virtue of its
status as a publicly-held corporation; (v) to permit CC and/or COI to make
optional prepayments or purchases of the Senior Notes and/or Senior PIK Notes,
and related payments of interest and reasonable fees, costs and expenses related
thereto, but solely
53
directly out of the proceeds of the concurrent consummation of an issuance by CC
for cash of its common stock, or options, warrants or rights with respect to its
common stock; (vi) to permit CC and COI to make payments in cash in respect of
Corporate Overhead; (vii) to permit CC to pay dividends in respect of (but not
to effect any redemption or purchase of) its outstanding shares of Series F
preferred stock, in an amount not in excess of $25,000 in any Fiscal Year; and
(viii) to permit any Borrower to pay expenses incurred in the ordinary course of
business.
7.6 Restriction on Fundamental Changes.
(A)(i) Enter into any transaction of merger or consolidation; (ii)
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution); (iii) convey, sell, lease, sublease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or any substantial part
of its business or assets, or the capital stock of any of its Subsidiaries,
whether now owned or hereafter acquired; provided, however, that (1) any
Borrower may merge or consolidate with, or convey, sell or transfer all or
substantially all of its assets to, any other Borrower; (2) any Inactive
Subsidiary may be liquidated, wound-up or dissolved into any other Subsidiary of
a Holding Party or a Borrower; and (3) the Uniforce Acquisition shall be
consummated in accordance with and subject to the terms and conditions of the
Uniforce Acquisition Documents on the Closing Date or within ten (10) Business
Days thereafter in accordance with the condition set forth in Section 3.1(J)
(or, if applicable, within three (3) Business Days thereafter in accordance with
the proviso set forth therein).
(B) Acquire by purchase or otherwise, all or any substantial part of the
business or assets of, or stock or other evidence of beneficial ownership of,
any Person; provided, however, that so long as: (i) no Default or Event of
Default has occurred and is continuing before and after giving effect thereto;
(ii) the Fanning Cash Pledge Agreement has been terminated and the amount
pledged thereunder released in full; and (iii) the Cash Dominion Arrangement (as
defined in Section 5.6) is in effect, any Borrower (or any Holding Party, so
long as contemporaneously therewith, all assets so acquired are transferred to
one or more Borrowers), may acquire all or substantially all of the assets of
any Person (in each case, a "Permitted Acquisition"); provided that each
Permitted Acquisition shall be subject to the satisfaction of the condition
precedent that the Unused Availability shall be not less than $15,000,000
without giving effect to the proposed Permitted Acquisition for the ninety (90)
day period preceding the consummation thereof (but not less than $12,500,000 at
any time during such period) and to the satisfaction of each of the following
additional conditions precedent:
(1) Agent shall receive not less than fifteen (15) Business Days'
prior written notice of such proposed Permitted Acquisition, which notice
shall include a reasonably detailed description of such proposed Permitted
Acquisition;
(2) such Permitted Acquisition shall only be of those assets of a
Target which are located solely in the United States and comprising a
business, or those assets of a business, of the type engaged in by
Borrowers as of the Closing Date, including, without limitation, the
temporary personal services business, the consulting placement business and
the
54
staffing services business, and which business would not subject Agent or
any Lender to regulatory or third party approvals in connection with the
exercise of its rights and remedies under this Agreement or any other Loan
Documents;
(3) such Permitted Acquisition shall be consensual and shall have been
approved by the Target's board of directors;
(4) the business and assets of the Target acquired in such Permitted
Acquisition shall be acquired free and clear of all Liens (other than
Permitted Encumbrances);
(5) no Indebtedness, contingent obligations or other liabilities shall
be incurred or assumed in connection with such Permitted Acquisition,
except (x) Loan advances, (y) ordinary course trade payables, accrued
expenses and Indebtedness of Target assumed in connection therewith to the
extent permitted to be incurred by Borrowers pursuant to subsection 7.1 and
(z) Indebtedness incurred in connection therewith to the extent permitted
to be incurred by Borrowers pursuant to subsection 7.1;
(6) on or prior to the date thereof, Agent will be granted a first and
prior perfected security interest (subject to Permitted Encumbrances) in
all assets being acquired pursuant to such Permitted Acquisition, and
Holdings and Borrowers shall have executed such documents and taken such
actions as may be required by Agent in connection therewith;
(7) Borrowers shall have delivered to Agent, in form and substance
satisfactory to Agent:
(i) pro forma balance sheets of Holding Parties, Borrowers and
their respective Subsidiaries (the "Acquisition Pro Forma") on a
consolidated basis, based on financial data as of a recent date, which
shall be complete and shall accurately and fairly represent the
assets, liabilities, financial condition and results of operations of
Holding Parties, Borrowers and their respective Subsidiaries in
accordance with GAAP consistently applied, but taking into account
such Permitted Acquisition and the funding of all Loans in connection
therewith, and the Acquisition Projections (as hereinafter defined)
shall reflect that Unused Availability for the 90-day period following
the consummation of such Permitted Acquisition will exceed $15,000,000
on a pro forma basis (giving effect to such Permitted Acquisition and
the Eligible Accounts [to the extent the Accounts to be acquired have
been audited by Agent to confirm their status as Eligible Accounts]
that would be acquired in connection therewith, and all Loans funded
in connection therewith as if made on the first day of such period);
(ii) updated versions of the most recently delivered projections
covering the one (1) year period commencing on the date of such
Permitted Acquisition and otherwise prepared in accordance with
subsections 4.3 and 4.17 (the "Acquisition Projections") and based
upon historical financial data of a recent date satisfactory to Agent,
taking into account such Permitted Acquisition; provided, that
Acquisition Projections for any Permitted Acquisition for which the
total consideration therefor does not exceed $500,000 may be limited
to projected revenues and EBITDA for such one year period; and
55
(iii) a certificate of the chief financial officer of each
Holding Party and each Borrower to the effect that: (I) each Borrower
(after taking into consideration all rights of contribution and
indemnity such Borrower has against each Holding Party and each other
Subsidiary of Holding Parties) will be solvent (as represented by
Borrowers in subsection 4.17) upon the consummation of the transaction
contemplated by the Permitted Acquisition; (II) the Acquisition Pro
Forma fairly presents the financial condition of Holding Party and
Borrowers (on a consolidated basis) as of the date hereof after giving
effect to the transactions contemplated by such Permitted Acquisition;
(III) the Acquisition Projections are good faith estimates, based on
assumptions believed at the date of such certificate in good faith to
be reasonable, of the future financial performance of Holding Parties
and Borrowers subsequent to the date thereof based upon the historical
performance and the projected future financial performance of Holding
Parties and Borrowers; and (IV) Holding Parties and Borrowers have
completed their due diligence investigation with respect to the Target
and such Permitted Acquisition, which investigation was conducted in a
manner similar to that which would have been conducted by a prudent
purchaser of a comparable business and the results of which
investigation were acceptable to Holding Parties and Borrowers;
(8) on or prior to the date of such Permitted Acquisition, Agent shall
have received, in form and substance satisfactory to Agent, all collateral
and security documents, opinions, certificates, lien search results and
other documents reasonably requested by Agent to evidence compliance with
the foregoing provisions of this subsection 7.6(B); and
(9) the total Acquisition Costs payable in connection with such
Permitted Acquisition plus the sum of all Acquisition Costs paid in
connection with previous Permitted Acquisitions shall not exceed
$60,000,000.
(C) Should Borrower Representative request Agent's consent to an
acquisition which would not otherwise qualify as a Permitted Acquisition, Agent
agrees to use its best efforts to communicate its response to Borrower
Representative in a reasonably prompt manner, it being understood that Agent
shall have no obligation to consent to any such acquisition and no failure or
delay on the part of Agent in the delivery of such response shall be construed
to be a consent to such acquisition.
7.7 Transactions with Affiliates. Directly or indirectly, enter into or
permit to exist any transaction (including the purchase, sale or exchange of
property or the rendering of any service) with any Affiliate or with any
officer, director or employee of any Loan Party, except for transactions in the
ordinary course of and pursuant to the reasonable requirements of Borrowers'
business and upon fair and reasonable terms which, except for transactions which
are expressly permitted pursuant to the terms of this Agreement, are fully
disclosed to Agent and Lenders and which are no less favorable to Borrowers than
they would obtain in comparable arm's length transactions with unaffiliated
Persons provided that the foregoing shall not prohibit the execution, delivery
and performance of the letter agreement dated the Closing Date between COI and
John Fanning relating to the Fanning Cash Pledge Agreement.
7.8 Environmental Liabilities. (a) Violate any applicable Environmental
Law; (b) dispose of any Hazardous Materials (except in accordance with
applicable law) into or onto or from, any real
56
property owned, leased or operated by any Loan Party; or (c) permit any Lien
imposed pursuant to any Environmental Law to be imposed or to remain on any real
property owned, leased or operated by any Loan Party, if any such event or
circumstance could reasonably be expected to have a Material Adverse Effect.
7.9 Conduct of Business. From and after the Closing Date, engage in any
business other than businesses of the type engaged in by Borrowers or any
Subsidiary on the Closing Date. The Holding Parties shall not engage in any type
of business activity other than ownership of their respective Subsidiaries'
capital stock and activities incidental to the maintenance of its corporate
existence.
7.10 Compliance with ERISA. Establish any new Employee Benefit Plan or
amend any existing Employee Benefit Plan if the liability or increased liability
resulting from such establishment or amendment is material. Neither any Loan
Party nor any of its Subsidiaries shall fail to establish, maintain and operate
each Employee Benefit Plan in compliance in all material respects with the
provisions of ERISA, the IRC and all other applicable laws and the regulations
and interpretations thereof.
7.11 Tax Consolidations. File or consent to the filing of any consolidated
income tax return with any Person other than Holding Parties, Borrowers or any
of their respective Subsidiaries; provided that in the event any Borrower files
a return with a Corporate Guarantor, such Borrower's contribution with respect
to taxes as a result of the filing of such consolidated return shall not be
greater, nor the receipt of tax benefits less, than they would have been had
such Borrower not filed a consolidated return with such Corporate Guarantor.
7.12 Subsidiaries. Except to the extent permitted by subsection 7.6(B),
establish, create or acquire any new Subsidiaries.
7.13 Fiscal Year. Change its Fiscal Year.
7.14 Press Release; Public Offering Materials. Disclose the name of Agent
or any Lender in any press release or in any prospectus, proxy statement or
other materials filed with any governmental entity relating to a public offering
of the capital stock of any Loan Party except as may be required by law.
7.15 Bank Accounts. Establish any new bank accounts, or amend or terminate
any Blocked Account or lockbox agreement, without Agent's prior written consent;
provided, that Borrowers may establish additional bank accounts so long as in
each case (a) Borrower Representative provides Agent with at least ten (10)
Business Days' prior written notice thereof and (b) each such bank account which
is a depository account is subject to an effective Blocked Account Agreement
prior to the establishment thereof.
7.16 Changes Relating to Senior Notes and Senior PIK Notes. Change or
amend, or agree to change or amend, any of the terms of the Senior Notes, the
Senior PIK Notes, the Senior Notes
57
Indenture, the Senior Debentures Indenture, or any related documents, if the
effect of such change or amendment is or would be to: (a) increase the interest
rate on the Indebtedness covered thereby; (b) change the dates upon which
payments of principal or interest are due on such Indebtedness; (c) modify or
add any event of default or add any covenant of the obligor of such
Indebtedness; (d) change the payment provisions of such Indebtedness; or (e)
change or amend any other term thereof if such change or amendment would
materially increase the obligations of COI or CC or confer additional material
rights on the holder of such Indebtedness in a manner adverse to the interests
of any Holding Party, any Borrower, any of their respective Subsidiaries, Agent
or any Lender.
SECTION 8. DEFAULT, RIGHTS AND REMEDIES
8.1 Event of Default. "Event of Default" shall mean the occurrence or
existence of any one or more of the following:
(A) Payment. Failure to make payment of any of the Obligations when
due and in the case of interest, such failure shall not be cured within
five (5) days of the applicable due date; or
(B) Default in Other Agreements. (A) (1) Failure of any Loan Party to
pay when due any principal or interest on any Indebtedness (other than the
Obligations) or (2) breach or default of any Loan Party with respect to any
Indebtedness (other than the Obligations); if such failure to pay, breach
or default entitles the holder to cause such Indebtedness having an
individual principal amount in excess of $250,000 or having an aggregate
principal amount in excess of $500,000 to become or be declared due prior
to its stated maturity; or (B) default under the Senior Notes Indenture or
Senior Debentures Indenture, including any breach of any covenant
thereunder regardless of whether such covenant is more restrictive than, or
conflicts with, or covers the same or similar matters as the covenants set
forth in this Agreement or any other Loan Documents; or
(C) Breach of Certain Provisions. Failure of any Loan Party to perform
or comply with any term or condition contained in subsections 5.1 (A), (B)
and (C), 5.3, 5.5 or 5.6 or contained in Section 6 or Section 7; or
(D) Breach of Warranty. Any representation, warranty, certification or
other statement made by any Loan Party in any Loan Document or in any
statement or certificate at any time given by such Person in writing
pursuant or in connection with any Loan Document is false in any material
respect on the date made; or
(E) Other Defaults Under Loan Documents. Any Loan Party defaults in
the performance of or compliance with any term contained in this Agreement
or the other Loan Documents and such default is not remedied or waived
within ten (10) days after receipt by Borrower Representative of notice
from Agent, or Requisite Lenders of such default (other than occurrences
described in other provisions of this subsection 8.1 for which a different
grace or cure period is specified or which constitute immediate Events of
Default); or
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(F) Change in Control. (1) CC ceases to beneficially own and control,
directly or indirectly, at least one hundred percent (100%) of the issued
and outstanding shares of each class of capital stock of COI entitled
(without regard to the occurrence of any contingency) to vote for the
election of a majority of the members of COI's board of directors; or (2)
COI ceases to beneficially own and control, directly or indirectly, at
least one hundred percent (100%) of the issued and outstanding shares of
each class of capital stock of each Borrower entitled (without regard to
the occurrence of any contingency) to vote for the election of a majority
of the members of such Borrower's board of directors.
(G) Involuntary Bankruptcy; Appointment of Receiver, etc. (1) A court
enters a decree or order for relief with respect to any Loan Party in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, which decree or order is not stayed
or other similar relief is not granted under any applicable federal or
state law; or (2) the continuance of any of the following events for sixty
(60) days unless dismissed, bonded or discharged: (a) an involuntary case
is commenced against any Loan Party, under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect; or (b) a decree
or order of a court for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers
over any Loan Party, or over all or a substantial part of their respective
property, is entered; or (c) an interim receiver, trustee or other
custodian is appointed without the consent of any Loan Party, for all or a
substantial part of the property of any Loan Party; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc. (1) An order
for relief is entered with respect to any Loan Party commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consents to the entry of an order for relief in
an involuntary case or to the conversion of an involuntary case to a
voluntary case under any such law or consents to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or (2) any Loan Party makes any
assignment for the benefit of creditors; or (3) the board of directors of
any Loan Party adopts any resolution or otherwise authorizes action to
approve any of the actions referred to in this subsection 8.1(H); or
(I) Liens. Any lien, levy or assessment is filed or recorded with
respect to or otherwise imposed upon all or any part of (i) any assets of
the Loan Parties not constituting Collateral and having a value at any time
in excess of $250,000 in the aggregate or (ii) any Collateral, in any case
by the United States or any department or instrumentality thereof or by any
state, county, municipality or other governmental agency (other than
Permitted Encumbrances) and such lien, levy or assessment is not stayed,
vacated, paid or discharged within thirty (30) days; or
(J) Judgment and Attachments. Any money judgment, writ or warrant of
attachment, or similar process involving (1) an amount in any individual
case in excess of $250,000 or (2) an amount in the aggregate at any time in
excess of $1,000,000 (in either case not adequately covered by insurance as
to which the insurance company has acknowledged coverage) is entered or
filed against any Loan Party or any of its Subsidiaries or any of its
assets and remains undischarged, unvacated, unbonded or unstayed for a
period of thirty (30) days or in any event later than five (5) days prior
to the date of any proposed sale thereunder; or
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(K) Dissolution. Any order, judgment or decree is entered against
Borrower or any Loan Party decreeing the dissolution or split up of such
Loan Party and such order remains undischarged or unstayed for a period in
excess of thirty (30) days; or
(L) Solvency. Any Loan Party ceases to be solvent (as represented by a
Holding Party or a Borrower in subsection 4.17) or any Loan Party admits in
writing its present or prospective inability to pay its debts as they
become due; or
(M) Injunction. Any Loan Party is enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory
agency from conducting all or any material part of its business and such
order continues for more than thirty (30) days, if any such event or
circumstance could reasonably be expected to have a Material Adverse
Effect; or
(N) Invalidity of Loan Documents. Any of the Loan Documents for any
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null
and void, or any Loan Party denies that it has any further liability under
any Loan Documents to which it is party, or gives notice to such effect; or
(O) Failure of Security. Agent, on behalf of Lenders, does not have or
ceases to have a valid and perfected first priority security interest in
the Collateral (subject to Permitted Encumbrances), in each case, for any
reason other than the failure of Agent or any Lender to take any action
within its control; or
(P) Damage, Strike, Casualty. Any material damage to, or loss, theft
or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy,
or other casualty which causes, for more than sixty (60) consecutive days
beyond the coverage period of any applicable business interruption
insurance, the cessation or substantial curtailment of revenue producing
activities at any facility of any Loan Party if any such event or
circumstance could reasonably be expected to have a Material Adverse
Effect; or
(Q) Licenses and Permits. The loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
any Loan Party, if such loss, suspension, revocation or failure to renew
could reasonably be expected to have a Material Adverse Effect; or
(R) Forfeiture. There is filed against any Loan Party, any civil or
criminal action, suit or proceeding under any federal or state racketeering
statute (including, without limitation, the Racketeer Influenced and
Corrupt Organization Act of 1970), which action, suit or proceeding (1) is
not dismissed within one hundred twenty (120) days; and (2) could
reasonably be expected result in the confiscation or forfeiture of any
material portion of the Collateral; or
(S) CC or COI Activities. CC or COI shall engage in any business
activities, other than activities solely related to ownership of the stock
of COI (in the case of CC) and of the stock of Borrowers (in the case of
COI), compliance with the Senior Notes Indenture and the Senior
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Debentures Indenture, Corporate Overhead activities, and activities related
to compliance with laws and regulations applicable to CC as a
publicly-owned corporation; or
(T) Inactive Subsidiaries' Activities. Any Inactive Subsidiary shall
hold any assets, incur any liabilities (other than corporate franchise
taxes and other similar charges incidental to the maintenance of its
corporate existence and intercompany loans incurred in accordance with
subsection 7.1(b)(ii) solely for the purpose of paying such taxes and
charges) or engage in any business activity, unless, within ten (10) days
after the first to occur of any such activity, such entity shall have
executed and delivered to Agent such instruments and documents as shall be
satisfactory in form and substance to Agent and as shall provide for such
entity being a Borrower under this Agreement.
8.2 Suspension of Commitments. Upon the occurrence of any Default or Event
of Default, notwithstanding any grace period or right to cure, Agent may or upon
demand by Requisite Lenders shall, without notice or demand, immediately cease
making additional Loans and the Commitments shall be suspended; provided that,
in the case of a Default, if the subject condition or event is waived or cured
within any applicable grace or cure period, the Commitments shall be reinstated.
8.3 Acceleration. Upon the occurrence of any Event of Default described in
the foregoing subsections 8.1(G) or 8.1(H), all Obligations shall automatically
become immediately due and payable, without presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by any
Loan Party, and the Commitments shall thereupon terminate. Upon the occurrence
and during the continuance of any other Event of Default, Agent may, and upon
demand by Requisite Lenders shall, by written notice to Borrower Representative,
(a) declare all or any portion of the Obligations to be, and the same shall
forthwith become, immediately due and payable and the Commitments shall
thereupon terminate and (b) demand that Borrowers immediately deposit with Agent
an amount equal to one hundred five percent (105%) of the Letter of Credit
Reserve to enable Lender to make payments under the Lender Letters of Credit
when required and such amount shall become immediately due and payable.
8.4 Remedies. If any Event of Default shall have occurred and be
continuing, in addition to and not in limitation of any other rights or remedies
available to Agent and Lenders at law or in equity, Agent may and shall upon the
request of Requisite Lenders exercise in respect of the Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral) and may also (a)
notify any or all obligors on the Accounts to make all payments directly to
Agent; (b) require Loan Parties to, and Loan Parties hereby agree that they
will, at their expense and upon request of Agent forthwith, assemble all or part
of the Collateral as directed by Agent and make it available to Agent at a place
to be designated by Agent which is reasonably convenient to both parties; (c)
withdraw all cash in the Blocked Accounts and apply such monies in payment of
the Obligations in the manner provided in subsection 8.7; (d) without notice or
demand or legal process, enter upon any premises of Loan Parties and take
possession of the Collateral; and (e) without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any of Agent's offices or elsewhere, at such time
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or times, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as Agent may deem commercially reasonable. Loan
Parties agree that, to the extent notice of sale shall be required by law, at
least ten (10) days notice to Borrower Representative of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. At any sale of the Collateral, if permitted
by law, Agent or any Lender may bid (which bid may be, in whole or in part, in
the form of cancellation of indebtedness) for the purchase of the Collateral or
any portion thereof for the account of Agent or such Lender. Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Loan Parties shall remain liable for any deficiency. Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. To the extent permitted by law,
Loan Parties hereby specifically waive all rights of redemption, stay or
appraisal which they have or may have under any law now existing or hereafter
enacted. Agent shall not be required to proceed against any Collateral but may
proceed against Loan Parties directly.
8.5 Appointment of Attorney-in-Fact. Each Loan Party hereby constitute and
appoint Agent as such Loan Party's attorney-in-fact with full authority in the
place and stead of such Loan Party and in the name of such Loan Party, Agent or
otherwise, from time to time in Agent's discretion while an Event of Default is
continuing to take any action and to execute any instrument that Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including:
(a) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral; (b) to adjust, settle or compromise the amount or payment
of any Account, or release wholly or partly any customer or obligor thereunder
or allow any credit or discount thereon; (c) to receive, endorse, and collect
any drafts or other instruments, documents and chattel paper, in connection with
clause (a) above; (d) to file any claims or take any action or institute any
proceedings that Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of Agent and Lenders with
respect to any of the Collateral; and (e) to sign and endorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts,
assignments, verifications and notices in connection with Accounts and other
documents relating to the Collateral. The appointment of Agent as each Loan
Party's attorney and Agent's rights and powers are coupled with an interest and
are irrevocable until payment in full and complete performance of all of the
Obligations.
8.6 Limitation on Duty of Agent with Respect to Collateral. Beyond the safe
custody thereof, Agent and each Lender shall have no duty with respect to any
Collateral in its possession or control (or in the possession or control of any
agent or bailee) or with respect to any income thereon or the preservation of
rights against prior parties or any other rights pertaining thereto. Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which Agent accords its own property. Neither Agent
nor any Lender shall be liable or responsible for any loss or damage to any of
the Collateral, or for any diminution in the value thereof, by reason of the act
or omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by Agent in good faith.
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8.7 Application of Proceeds. Upon the occurrence and during the continuance
of an Event of Default, (a) Loan Parties irrevocably waive the right to direct
the application of any and all payments at any time or times thereafter received
by Agent from or on behalf of any Loan Party, and Loan Parties hereby
irrevocably agree that Agent shall have the continuing exclusive right to apply
and to reapply any and all payments received at any time or times after the
occurrence and during the continuance of an Event of Default against the
Obligations in such manner as Agent may deem advisable notwithstanding any
previous entry by Agent upon any books and records and (b) the proceeds of any
sale of, or other realization upon, all or any part of the Collateral shall be
applied: first, to all fees, costs and expenses incurred by Agent or any Lender
with respect to this Agreement, the other Loan Documents or the Collateral;
second, to all fees due and owing to Agent and Lenders; third, to accrued and
unpaid interest on the Obligations; fourth, to the principal amounts of the
Obligations outstanding; and fifth, to any other indebtedness or obligations of
Loan Parties owing to Agent or any Lender.
8.8 License of Intellectual Property. Each Loan Party hereby assigns,
transfers and conveys to Agent, for the benefit Lenders, effective upon the
occurrence of any Event of Default hereunder, the non-exclusive right and
license to use all Intellectual Property owned or used by such Loan Party
together with any goodwill associated therewith, all to the extent necessary to
enable Agent to realize on the Collateral and any successor or assign to enjoy
the benefits of the Collateral. This right and license shall inure to the
benefit of all successors, assigns and transferees of Agent and its successors,
assigns and transferees, whether by voluntary conveyance, operation of law,
assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise.
Such right and license is granted free of charge, without requirement that any
monetary payment whatsoever be made to any Loan Party by Agent.
8.9 Waivers, Non-Exclusive Remedies. No failure on the part of Agent or any
Lender to exercise, and no delay in exercising and no course of dealing with
respect to, any right under this Agreement or the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise by Agent
or any Lender of any right under this Agreement or any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
right. The rights in this Agreement and the other Loan Documents are cumulative
and are not exclusive of any other remedies provided by law.
SECTION 9. ASSIGNMENT AND PARTICIPATION
9.1 Assignments and Participations in Loans.
(A) Each Lender may assign its rights and delegate its obligations under
this Agreement to another Person; provided, that (a) such Lender shall first
obtain the written consent of Agent and Borrower Representative, which shall not
be unreasonably withheld, (b) the amount of Commitments and Loans of the
assigning Lender being assigned shall in no event be less than the lesser of (i)
$5,000,000 or (ii) the entire amount of the Commitments and Loans of such
assigning Lender and (c)(i) each such assignment shall be of a pro rata portion
of all such assigning Lender's Loans and Commitments hereunder, and (ii) the
parties to such assignment shall execute and deliver
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to Agent for acceptance and recording an Assignment and Assumption Agreement
together with (x) a processing and recording fee of $2,500 payable to Agent and
(y) the Notes originally delivered to the assigning Lender. Upon receipt of all
of the foregoing, Agent shall notify Borrower of such assignment and Borrowers
shall comply with their obligations under the last sentence of subsection
2.1(D). In the case of an assignment authorized under this subsection 9.1, the
assignee shall have, to the extent of such assignment, the same rights, benefits
and obligations as it would if it were a Lender hereunder. The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitment or
assigned portion thereof. The Loan Parties hereby acknowledge and agree that any
assignment will give rise to a direct obligation of Borrower to the assignee and
that the assignee shall be considered to be a "Lender".
(B) Each Lender may sell participations in all or any part of any Loans
made by it to another Person; provided, that any such participation shall be in
a minimum amount of $5,000,000, and provided, further, that all amounts payable
by Borrowers hereunder shall be determined as if that Lender had not sold such
participation and the holder of any such participation shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly effecting (a) any reduction in the principal amount, interest rate or
fees payable with respect to any Loan in which such holder participates; (b) any
extension of the Termination Date or the date fixed for any payment of
principal, interest or fees payable with respect to any Loan in which such
holder participates; and (c) any release of substantially all of the Collateral
(other than in accordance with the terms of this Agreement or the Loan
Documents). The Loan Parties hereby acknowledge and agree that any participation
will give rise to a direct obligation of Borrowers to the participant, and the
participant under each participation shall for purposes of subsections 2.8, 2.9,
2.10, 9.4 and 10.2 be considered to be a "Lender".
(C) Except as otherwise provided in this subsection 9.1 no Lender shall, as
between Borrowers and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of participation in, all or any part of the Loans or other Obligations
owed to such Lender. Each Lender may furnish any information concerning any
Holding Party, any Borrower and any of their respective Subsidiaries in the
possession of that Lender from time to time to assignees and participants
(including prospective assignees and participants) provided that the Persons
obtaining such information agrees to maintain the confidentiality of such
information to the extent required by subsection 10.21.
(D) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Loans owing to
it and the Note held by it in favor of any Federal Reserve Bank in accordance
with Regulation A of the Board of Governors of the Federal Reserve System).
9.2 Agent.
(A) Appointment. Each Lender hereby designates and appoints Heller as its
agent under this Agreement and the Loan Documents, and each Lender hereby
irrevocably authorizes Agent to take such action or to refrain from taking such
action on its behalf under the provisions of
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this Agreement and the Loan Documents and to exercise such powers as are set
forth herein or therein, together with such other powers as are reasonably
incidental thereto. Agent is authorized and empowered to amend, modify, or waive
any provisions of this Agreement or the other Loan Documents on behalf of
Lenders subject to the requirement that certain of Lenders' consent be obtained
in certain instances as provided in subsection 9.3. Agent agrees to act as such
on the express conditions contained in this subsection 9.2. The provisions of
this subsection 9.2 are solely for the benefit of Agent and Lenders and neither
any Holding Party, nor any Borrower nor any other Loan Party shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, Agent shall act solely
as an administrative representative of Lenders and does not assume and shall not
be deemed to have assumed any obligation toward or relationship of agency or
trust with or for Lenders, any Holding Party, any Borrower or any other Loan
Party. Agent may perform any of its duties hereunder, or under the Loan
Documents, by or through its agents or employees.
(B) Nature of Duties. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of Agent shall be mechanical and administrative in
nature. Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender. Each Lender shall make its own
independent investigation of the financial condition and affairs of Borrowers in
connection with the extension of credit hereunder and shall make its own
appraisal of the credit worthiness of Borrowers, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the Closing Date or at any time or times thereafter. If
Agent seeks the consent or approval of any Lenders to the taking or refraining
from taking any action hereunder, then Agent shall send notice thereof to each
Lender. Agent shall promptly notify each Lender any time that the applicable
percentage of Lenders have instructed Agent to act or refrain from acting
pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that Agent shall be obligated on the
terms set forth herein for performance of its express obligations hereunder, and
except that Agent shall be liable with respect to its own gross negligence or
willful misconduct. Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith and if any such apportionment
or distribution is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made, shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such other Lenders hereby agree to return to such
Lender any such erroneous payments received by them). In performing its
functions and duties hereunder, Agent shall exercise the same care which it
would in dealing with loans for its own account, but Agent shall not be
responsible to any Lender for any recitals, statements, representations or
warranties herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, or sufficiency of this Agreement or any of the
Loan Documents or the transactions contemplated thereby, or for the financial
condition of any Loan Party. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any of the Loan Documents or the financial
condition of any Loan Party, or the existence or possible existence of any
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Default or Event of Default. Agent may at any time request instructions from
Lenders with respect to any actions or approvals which by the terms of this
Agreement or of any of the Loan Documents Agent is permitted or required to take
or to grant, and Agent shall be absolutely entitled to refrain from taking any
action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Loan Documents until it shall have received such
instructions from the applicable percentage of Lenders. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against Agent as
a result of Agent acting or refraining from acting under this Agreement or any
of the other Loan Documents in accordance with the instructions of the
applicable percentage of Lenders and notwithstanding the instructions of
Lenders, Agent shall have no obligation to take any action if it, in good faith
believes that such action exposes Agent to any liability.
(D) Reliance. Agent shall be entitled to rely upon any written notices,
statements, certificates, orders or other documents or any telephone message or
other communication (including any writing, telex, telecopy or telegram)
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person, and with respect to all matters pertaining to
this Agreement or any of the Loan Documents and its duties hereunder or
thereunder, upon advice of counsel selected by it. Agent shall be entitled to
rely upon the advice of legal counsel, independent accountants, and other
experts selected by Agent in its sole discretion.
(E) Indemnification. Each Lender, severally, agrees to reimburse and
indemnify Agent for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising out of this
Agreement or any of the Loan Documents or any action taken or omitted by Agent
under this Agreement for any of the Loan Documents, in proportion to each
Lender's Pro Rata Share; provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements resulting
from Agent's gross negligence or willful misconduct. The obligations of Lenders
under this subsection 9.2(E) shall survive the payment in full of the
Obligations and the termination of this Agreement.
(F) Heller Individually. With respect to its Commitments and the Loans made
by it, and the Notes issued to it, Heller shall have and may exercise the same
rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders" or "Requisite Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include Heller in its individual capacity
as a Lender or one of the Requisite Lenders. Heller may lend money to, and
generally engage in any kind of banking, trust or other business with any Loan
Party as if it were not acting as Agent pursuant hereto.
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(G) Successor Agent.
(1) Resignation. Agent may resign from the performance of all its
functions and duties hereunder at any time by giving at least thirty (30)
Business Days' prior written notice to Borrower Representative and Lenders.
Such resignation shall take effect upon the acceptance by a successor Agent
of appointment pursuant to clause (2) below or as otherwise provided below.
(2) Appointment of Successor. Upon any such notice of resignation
pursuant to clause (G)(1) above, Requisite Lenders shall, upon receipt of
Borrower Representative's prior consent, which consent shall not
unreasonably be withheld, appoint a successor Agent. If a successor Agent
shall not have been so appointed within said thirty (30) Business Day
period, the retiring Agent, upon notice to Borrower Representative, shall
then appoint a successor Agent who shall serve as Agent until such time, as
Requisite Lenders, upon receipt of Borrower Representative's prior consent,
which consent shall not be unreasonably withheld, appoint a successor Agent
as provided above.
(3) Successor Agent. Upon the acceptance of any appointment as Agent
under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall
be discharged from its duties and obligations under the Loan Documents.
After any retiring Agent's resignation as Agent under the Loan Documents,
the provisions of this subsection 9.2 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the
Loan Documents.
(H) Collateral Matters.
(1) Release of Collateral. Lenders hereby irrevocably authorize Agent,
at its option and in its discretion, to release any Lien granted to or held
by Agent upon any property covered by this Agreement or the Loan Documents
(i) upon termination of the Commitments and payment and satisfaction of all
Obligations; (ii) constituting property being sold or disposed of if
Borrower Representative certifies to Agent that the sale or disposition is
made in compliance with the provisions of this Agreement or, as applicable,
the other Loan Documents (and Agent may rely in good faith conclusively on
any such certificate, without further inquiry); or (iii) constituting
property leased to any Loan Party under a lease which has expired or been
terminated in a transaction permitted under this Agreement or, as
applicable, the other Loan Documents, or is about to expire and which has
not been, and is not intended by such Loan Party to be, renewed or
extended. In addition during any Fiscal Year (x) Agent may release
Collateral having a value (as determined by Agent in its sole discretion)
of no more than $500,000 in the aggregate and (y) Agent, with the consent
of Requisite Lenders, may release Collateral having a value (as determined
by Agent in its sole discretion) in excess of $500,000 in the aggregate.
(2) Confirmation of Authority; Execution of Releases. Without in any
manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in subsection 9.2(H)(1)),
each Lender agrees to confirm in writing, upon request
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by Agent, the authority to release any property covered by this Agreement
or the Loan Documents conferred upon Agent under subsection 9.2(H)(1). So
long as no Event of Default is then continuing, upon receipt by Agent of
confirmation from the requisite percentage of Lenders, of its authority to
release any particular item or types of property covered by this Agreement
or the Loan Documents, and upon at least five (5) Business Days prior
written request by Borrower Representative, Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to Agent for the
benefit of Lenders herein or pursuant hereto upon such Collateral;
provided, however, that (i) Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
Liens upon (or obligations of any Loan Party, in respect of), all interests
retained by any Loan Party, including, without limitation, the proceeds of
any sale, all of which shall continue to constitute part of the property
covered by this Agreement or the Loan Documents.
(3) Absence of Duty. Agent shall have no obligation whatsoever to any
Lender or any other Person to assure that the property covered by this
Agreement or the Loan Documents exists or is owned by any Loan Party or is
cared for, protected or insured or has been encumbered or that the Liens
granted to Agent on behalf of Lenders herein or pursuant hereto have been
properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all
or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and
powers granted or available to Agent in this subsection 9.2(H) or in any of
the Loan Documents, it being understood and agreed that in respect of the
property covered by this Agreement or the Loan Documents or any act,
omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its discretion, given Agent's own interest in property
covered by this Agreement or the Loan Documents as one of Lenders and that
Agent shall have no duty or liability whatsoever to any of the other
Lenders; provided, that Agent shall exercise the same care which it would
in dealing with loans for its own account.
(I) Agency for Perfection. Each Lender hereby appoints each other Lender as
agent for the purpose of perfecting Lenders' security interest in Collateral
which, in accordance with Article 9 of the Uniform Commercial Code in any
applicable jurisdiction, can be perfected only by possession. Should any Lender
(other than Agent) obtain possession of any such Collateral, such Lender shall
notify Agent thereof, and, promptly upon Agent's request therefor, shall deliver
such Collateral to Agent or in accordance with Agent's instructions.
(J) Exercise of Remedies. Each Lender agrees that it will not have any
right individually to enforce or seek to enforce this Agreement or any Loan
Document or to realize upon any collateral security for the Loans, it being
understood and agreed that such rights and remedies may be exercised only by
Agent.
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9.3 Consents.
(A) In the event Agent requests the consent of a Lender and does not
receive a written denial thereof within ten (10) Business Days after such
Lender's receipt of such request, then such Lender will be deemed to have given
such consent.
(B) In the event Agent requests the consent of a Lender and such consent is
denied, then Heller may, at its option, require such Lender to assign its
interest in the Loans to Heller for a price equal to the then outstanding
principal amount thereof plus accrued and unpaid interest and fees due such
Lender, which interest and fees will be paid when collected from Borrowers. In
the event that Heller elects to require any Lender to assign its interest to
Heller, Heller will so notify such Lender in writing within forty-five (45) days
following such Lender's denial, and such Lender will assign its interest to
Heller no later than five (5) days following receipt of such notice.
9.4 Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby authorized by Loan Parties at any time or from time to
time, with reasonably prompt subsequent notice to Borrower Representative or to
any other Person (any prior or contemporaneous notice being hereby expressly
waived) to set off and to appropriate and to apply any and all (A) balances held
by such Lender or such holder at any of its offices for the account of any Loan
Party (regardless of whether such balances are then due to such Loan Party, and
(B) other property at any time held or owing by such Lender or such holder to or
for the credit or for the account of any Loan Party against and on account of
any of the Obligations which are not paid when due; except that no Lender or any
such holder shall exercise any such right without the prior written consent of
Agent. Any Lender which has exercised its right to set off shall, to the extent
the amount of any such set off exceeds its Pro Rata Share of the Obligations,
purchase for cash (and the other Lenders or holders shall sell) participations
in each such other Lender's or holder's Pro Rata Share of the Obligations as
would be necessary to cause such Lender to share such excess with each other
Lender or holder in accordance with their respective Pro Rata Shares. The
Holding Parties and Borrowers agree, to the fullest extent permitted by law,
that (a) any Lender or holder may exercise its right to set off with respect to
amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such excess to other Lenders and holders, and (b) any Lender
or holder so purchasing a participation in the Loans made or other Obligations
held by other Lenders or holders may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender or holder were a direct holder of Loans and other Obligations
in the amount of such participation.
9.5 Disbursement of Funds. Agent may, on behalf of Lenders, disburse funds
to Borrowers for Loans requested. Each Lender shall reimburse Agent on demand
for all funds disbursed on its behalf by Agent, or if Agent so requests, each
Lender will remit to Agent its Pro Rata Share of any Loan before Agent disburses
same to Borrowers. If Agent elects to require that funds be made available prior
to disbursement to Borrowers, Agent shall advise each Lender by telephone, telex
or telecopy of the amount of such Lender's Pro Rata Share of such requested Loan
no later than (a) two (2) Business Days prior to the Funding Date applicable
thereto for LIBOR Loans and (b) by 1:00 p.m. Central time on the Funding Date
for Base Rate Loans, and each such
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Lender shall pay Agent such Lender's Pro Rata Share of such requested Loan, in
same day funds, by wire transfer to Agent's account not later than 10:00 a.m.
Central time on such Funding Date for LIBOR Loans and 3:00 p.m. Central time for
Base Rate Loans. If any Lender fails to pay the amount of its Pro Rata Share
forthwith upon Agent's demand, Agent shall promptly notify Borrower
Representative, and Borrowers shall immediately repay such amount to Agent. Any
repayment required pursuant to this subsection 9.5 shall be without premium or
penalty. Nothing in this subsection 9.5 or elsewhere in this Agreement or the
other Loan Documents, including without limitation the provisions of subsection
9.6, shall be deemed to require Agent to advance funds on behalf of any Lender
or to relieve any Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that Agent or Borrowers may have against
any Lender as a result of any default by such Lender hereunder.
9.6 Settlements, Payments and Information.
(A) Revolving Advances and Payments; Fee Payments.
(1) The Revolving Loan may fluctuate from day to day through Agent's
disbursement of funds to, and receipt of funds from, Borrowers. In order to
minimize the frequency of transfers of funds between Agent and each Lender
notwithstanding terms to the contrary set forth in Section 2 and subsection
9.5, Revolving Advances and repayments may be settled according to the
procedures described in subsection 9.6(A)(2) and 9.6(A)(3) of this
Agreement. Notwithstanding these procedures, each Lender's obligation to
fund its Pro Rata Share of any advances made by Agent to Borrowers will
commence on the date such advances are made by Agent. Such payments will be
made by such Lender without set-off, counterclaim or reduction of any kind.
(2) Once each week, or more frequently (including daily), if Agent so
elects (each such day being a "Settlement Date"), Agent will advise each
Lender by 1 p.m. Central time by telephone, telex, or telecopy of the
amount of each such Lender's Pro Rata Share of the Revolving Loan. In the
event payments are necessary to adjust the amount of such Lender's share of
the Revolving Loan to such Lender's Pro Rata Share of the Revolving Loan,
the party from which such payment is due will pay the other, in same day
funds, by wire transfer to the other's account not later than 3:00 p.m.
Central time on the Business Day following the Settlement Date.
(3) On the first Business Day of each month ("Interest Settlement
Date"), Agent will advise each Lender by telephone, telefax or telecopy of
the amount of interest and fees charged to and collected from Borrowers for
the proceeding month. Provided that such Lender has made all payments
required to be made by it under this Agreement, Agent will pay to such
Lender, by wire transfer to such Lender's account (as specified by such
Lender on the signature page of this Agreement as amended by such Lender
from time to time after the date hereof pursuant to the notice provisions
contained herein or in the applicable Assignment and Assumption Agreement)
not later than 3 p.m. Central time on the next Business Day following the
Interest Settlement Date such Lender's share of such interest and fees.
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(B) Availability of Lender's Pro Rata Share.
(1) Unless Agent has been notified by a Lender prior to a Funding Date
of such Lender's intention not to fund its Pro Rata Share of the Loan
amount requested by Borrower Representative, Agent may assume that such
Lender will make such amount available to Agent on the Funding Date or the
Business Day following the next Settlement Date, as applicable, and Agent
may (but shall not be so required), in reliance upon such assumption, make
available to Borrowers on such date a corresponding amount.
(2) Nothing contained in this subsection 9.6(B) will be deemed to
relieve a Lender of its obligation to fulfill its Commitments or to
prejudice any rights Agent or Borrowers may have against such Lender as a
result of any default by such Lender under this Agreement, but no Lender
shall be responsible for the failure of any other Lender to make such other
Lender's Pro Rata Share of the Loan to be made by such other Lender on any
Funding Date.
(3) Without limiting the generality of the foregoing, each Lender
shall be obligated to fund its Pro Rata Share of any Revolving Advance made
with respect to any draw on a Lender Letter of Credit.
(4) If and to the extent that there is a Defaulted Amount, and Agent
has made available to Borrowers such amount, the Defaulting Lender shall,
on the Business Day following (i) such Funding Date or (ii) the first
Business Day following the next Settlement Date, as applicable, make such
Defaulted Amount available to Agent, together with interest at the Federal
Funds Effective Rate plus one half of one percent (0.50%) for each day the
Defaulted Amount is outstanding until the date such Lender makes such
amount available to Agent. A notice from Agent submitted to any Lender with
respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is not made available to Agent, Agent shall
promptly notify the applicable Borrowers of such failure to fund (a
"Defaulting Lender Notice"). Any payments received by Agent thereafter
shall be applied first to reduce Agent's overfunding resulting from the
default by such Defaulting Lender, and any Revolving Advances made at the
request of Borrowers thereafter shall first be applied by Agent to reduce
such overfunding, and to the extent any such payments or advances are
insufficient to reduce the entire Defaulted Amount, then Agent may, on or
after the tenth day following its delivery of the Defaulting Lender Notice,
make demand upon Borrowers and Borrowers shall immediately pay such amount
to Agent for Agent's account, together with interest thereon for each day
elapsed since the date of such borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loan made by the other Lenders
on such Funding Date.
(5) Agent shall not transfer to a Defaulting Lender any payment made
by Borrowers to Agent or any amount otherwise received by Agent for
application to the Obligations, nor shall a Defaulting Lender be entitled
to the sharing of any fees or payments hereunder.
(6) For purposes of voting or consenting to matters with respect to
the Loan Documents and determining Pro Rata Shares and the Revolving Loan
Commitment, a
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Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Revolving Loan Commitments shall be deemed to be zero (0).
(C) Return of Payments.
(1) If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received
by Agent from a Loan Party and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount received by Agent
under this Agreement must be returned to Borrowers or paid to any other
person pursuant to any solvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrowers or such other Person, without
set-off, counterclaim or deduction of any kind.
9.7 Dissemination of Information. Agent will provide Lenders with any
information received by Agent from Loan Parties which is required to be provided
to a Lender hereunder; provided, however, that Agent shall not be liable to
Lenders for any failure to do so, except to the extent that such failure is
attributable to Agent's gross negligence or willful misconduct.
9.8 Discretionary Advances. Agent may, in its sole discretion, make
Revolving Advances on behalf of Lenders in an aggregate amount of not more than
$3,000,000 in excess of the limitations set forth in subsection 2.1(A)(1)(b) but
not in excess of the limitations set forth in subsection 2.1 (A)(1)(a) for the
purpose of preserving, protecting, collecting or enforcing the Collateral
(including, without limitation, the preservation of the perfection and priority
of Agent's Lien thereon) and/or rights and remedies of Agent and Lenders under
the Loan Documents or applicable law.
SECTION 10. MISCELLANEOUS
10.1 Expenses and Attorneys' Fees. Whether or not the transactions
contemplated hereby shall be consummated, Loan Parties agree to promptly pay all
fees, costs and expenses incurred by Agent in connection with any matters
contemplated by or arising out of this Agreement or the other Loan Documents
including the following, and all such fees, costs and expenses shall be part of
the Obligations, payable on demand and secured by the Collateral: (a) fees,
costs and expenses (including reasonable attorneys' fees, allocated costs of
internal counsel and fees of environmental consultants, accountants and other
professionals retained by Agent) incurred in connection with the examination,
review, due diligence investigation, documentation and closing of the financing
arrangements evidenced by the Loan Documents; (b) fees, costs and expenses
(including reasonable attorneys' fees, allocated costs of internal counsel and
fees of environmental consultants, accountants and other professionals retained
by Agent) incurred in connection with the review, negotiation,
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preparation, documentation, execution, syndication, and administration of the
Loan Documents, the Loans, and any amendments, waivers, consents, forbearances
and other modifications relating thereto or any subordination or intercreditor
agreements; (c) fees, costs and expenses incurred by Agent in creating,
perfecting and maintaining perfection of Liens in favor of Agent, on behalf of
Lenders; (d) fees, costs and expenses incurred by Agent in connection with
forwarding to Borrowers the proceeds of Loans including Agent's or any Lenders'
standard wire transfer fee; (e) fees, costs, expenses and bank charges,
including bank charges for returned checks, incurred by Agent or any Lender in
establishing, maintaining and handling lock box accounts, blocked accounts or
other accounts for collection of the Collateral; (f) fees, costs, expenses
(including reasonable attorneys' fees and allocated costs of internal counsel)
of Agent or any Lender and costs of settlement incurred in collecting upon or
enforcing rights against the Collateral or incurred in any action to enforce
this Agreement or the other Loan Documents or to collect any payments due from
Borrowers or any other Loan Party under this Agreement or any other Loan
Document or incurred in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement, whether in the nature of a
"workout" or in connection with any insolvency or bankruptcy proceedings or
otherwise.
10.2 Indemnity. In addition to the payment of expenses pursuant to
subsection 10.1, whether or not the transactions contemplated hereby shall be
consummated, each Loan Party jointly and severally agrees to indemnify, pay and
hold Agent and each Lender and any holder of the Notes and the officers,
directors, employees, agents, consultants, auditors, persons engaged by and of
Agent or any Lender and any holder of any of the Notes to evaluate or monitor
the Collateral, affiliates and attorneys of Agent, Lender and such holders
(collectively called the "Indemnitees") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may be imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Agreement or the
other Loan Documents, the consummation of the transactions contemplated by this
Agreement, the statements contained in the commitment letters, if any, delivered
by Agent or any Lender, Agent's and each Lender's agreement to make the Loans
hereunder, the use or intended use of the proceeds of any of the Loans or the
exercise of any right or remedy hereunder or under the other Loan Documents (the
"Indemnified Liabilities"); provided that Loan Parties shall have no obligation
to an Indemnitee hereunder with respect to Indemnified Liabilities arising from
the gross negligence or willful misconduct of that Indemnitee as determined by a
court of competent jurisdiction.
10.3 Amendments and Waivers.
(A) Except as otherwise provided herein, no amendment, modification,
termination or waiver of any provision of this Agreement or any Loan Document,
or consent to any departure by any Loan Party therefrom, shall in any event be
effective unless the same shall be in writing and signed by Requisite Lenders or
Agent, as applicable; provided, that no amendment, modification, termination or
waiver shall, unless in writing and signed by all Lenders, do any of the
following: (i) increase the Commitment of any Lender; (ii) reduce the principal
of, rate of interest
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on or fees payable with respect to any Loan; (iii) extend the scheduled due date
of any installment of principal of the Loans; (iv) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans, or the
percentage of Lenders which shall be required for Lenders or any of them to take
any action hereunder; (v) amend or waive this subsection 10.3 or the definitions
of the terms used in this subsection 10.3 insofar as the definitions affect the
substance of this subsection 10.3; (vi) consent to the assignment or other
transfer by any Loan Party of any of its rights and obligations under any Loan
Document; and (vii) increase the percentages contained in the definition of
Borrowing Base and provided, further, that no amendment, modification,
termination or waiver affecting the rights or duties of Agent under any Loan
Document shall in any event be effective, unless in writing and signed by Agent,
in addition to Lenders required herein above to take such action.
(B) Each amendment, modification, termination or waiver shall be effective
only in the specific instance and for the specific purpose for which it was
given. No amendment, modification, termination or waiver shall be required for
Agent to take additional Collateral pursuant to any Loan Document.
(C) No amendment, modification or waiver of any provision of any Lender
Letter of Credit shall be applicable without the written concurrence of the
issuer of such Lender Letter of Credit. No notice to or demand on any Holding
Party, any Borrower or any other Loan Party in any case shall entitle any
Holding Party, any Borrower or any other Loan Party to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this subsection 10.3
shall be binding upon each Lender, and, if signed by a Loan Party, on such Loan
Party.
(D) In the event Agent waives (1) any Default arising under subsection
8.1(E) as a result of the breach of any of the provisions of Section 5 of this
Agreement (other than any such breach which constitutes an Event of Default) or
(2) any Default constituting a condition to the funding of any Revolving Advance
or issuance of any Lender Letter of Credit, such waiver shall expire on the date
upon which the Default which was the subject of such waiver matures into an
Event of Default pursuant to the terms of this Agreement.
10.4 Notices. Unless otherwise specifically provided herein, all notices
shall be in writing addressed to the respective party as set forth below and may
be personally served, telecopied or sent by overnight courier service or United
States mail and shall be deemed to have been given: (a) if delivered in person,
when delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a Business Day before 4:00 p.m. Central time or, if not, on the
next succeeding Business Day; (c) if delivered by overnight courier, two (2)
days after delivery to such courier properly addressed; or (d) if by U.S. Mail,
four (4) Business Days after depositing in the United States mail, with postage
prepaid and properly addressed.
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If to any Borrower,
Corporate Guarantor
or Holding Party: Comforce Corporation
2001 Marcus Avenue
Lake Success, New York 11042
Attention: Chief Financial Officer
Telecopy No.: (516) 352-1953
With a copy to: DOEPKEN KEEVICAN & WEISS
58th Floor, USX Tower
600 Grant Street
Pittsburgh, Pennsylvania 15219
Attention: David K. Edwards, Esq.
Telecopy No.: (412) 355-2609
If to Agent or to Heller: HELLER FINANCIAL, INC.
500 West Monroe
Chicago, Illinois, 60661
Attn: HBC Portfolio Manager
Telecopy No.: (312) 441-6133
With a copy to: HELLER FINANCIAL, INC.
500 West Monroe
Chicago, Illinois 60661
Attn: Legal Department/HBC
Telecopy No.: (312) 441-6876
If to any Lender: Its address indicated on the signature page hereto, in an
Assignment and Assumption Agreement or in a notice to Agent and Borrower
Representative or to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this subsection 10.4.
10.5 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.
Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of Loan Parties set forth in subsections 10.1 and 10.2 shall
survive the payment of the Loans and the termination of this Agreement.
10.6 Indulgence Not Waiver. No failure or delay on the part of Agent, any
Lender or any holder of any Notes in the exercise of any power, right or
privilege hereunder or under the Notes shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.
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10.7 Marshaling; Payments Set Aside. Neither Agent nor any Lender shall be
under any obligation to marshal any assets in favor of any Loan Party or any
other party or against or in payment of any or all of the Obligations. To the
extent that any Loan Party makes a payment or payments to Agent and/or any
Lender or Agent and/or any Lender enforces its security interests or exercise
its rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such recovery, the
Obliga tions or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
10.8 Entire Agreement. This Agreement, the Notes and the other Loan
Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties hereto.
10.9 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
condition exists.
10.10 Severability. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Agreement or the other
Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
or the other Loan Documents or of such provision or obligation in any other
jurisdiction.
10.11 Lenders' Obligations Several; Independent Nature of Lenders' Rights.
The obligation of each Lender hereunder is several and not joint and neither
Agent nor any Lender shall be responsible for the obligation or commitment of
any other Lender hereunder. In the event that any Lender at any time should fail
to make a Loan as herein provided, Lenders, or any of them, at their sole
option, may make the Loan that was to have been made by Lender so failing to
make such Loan. Nothing contained in any Loan Document and no action taken by
Agent or any Lender pursuant hereto or thereto shall be deemed to constitute
Lenders to be a partnership, an association, a joint venture or any other kind
of entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and, provided Agent fails or refuses to exercise
any remedies against any Holding Party, any Borrower or any other Loan Party
after receiving the direction of the Requisite Lenders, each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement and it
shall not be necessary for any other Lender to be joined as an additional party
in any proceeding for such purpose.
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10.12 Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
10.13 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.14 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns except that no Loan Party may assign its rights or obligations hereunder
without the prior written consent of Lenders.
10.15 No Fiduciary Relationship; Limitation of Liabilities.
(A) No provision in this Agreement or in any of the other Loan Documents
and no course of dealing between the parties shall be deemed to create any
fiduciary duty by Agent or any Lender to any Holding Party, any Borrower or any
other Loan Party.
(B) Neither Agent nor any Lender, nor any affiliate, officer, director,
shareholder, employee, attorney, or agent of Agent or any Lender shall have any
liability with respect to, and Loan Parties hereby waive, release, and agree not
to sue any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by any Loan Party in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of the other Loan Documents. The Loan Parties hereby waive, release, and agree
not to sue Agent or any Lender or any of Agent's or any Lender's affiliates,
officers, directors, employees, attorneys, or agents for punitive damages in
respect of any claim in connection with, arising out of, or in any way related
to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the transactions
contemplated hereby.
10.16 CONSENT TO JURISDICTION. EACH LOAN PARTY HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE BOROUGH OF
MANHATTAN STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH
COURTS. EACH LOAN PARTY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS.
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10.17 WAIVER OF JURY TRIAL. EACH LOAN PARTY, AGENT AND EACH LENDER HEREBY
WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS. EACH LOAN
PARTY, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED
ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. EACH LOAN PARTY, AGENT AND EACH LENDER FURTHER WARRANTS AND
REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.
10.18 Construction. Each Loan Party, Agent and each Lender each acknowledge
that it has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by each Loan Party, Agent and each
Lender.
10.19 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents, or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto. Delivery of an executed counterpart of a signature
page to this Agreement, any amendments, waivers, consents or supplements, or to
any other Loan Document by telecopier shall be as effective as delivery of a
manually executed counterpart thereof.
10.20 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Agent or any Lender shall have
the right to act exclusively in the interest of Agent or such Lender and shall
have no duty of disclosure, duty of loyalty, duty of care, or other duty or
obligation of any type or nature whatsoever to any Holding Party, any Borrower,
any of the other Loan Parties, or any of the Loan Parties' shareholders or any
other Person.
10.21 Confidentiality. Agent and Lenders shall hold all nonpublic
information obtained pursuant to the requirements hereof and identified as such
by any Loan Party in accordance with such Person's customary procedures for
handling confidential information of this nature and in accordance with safe and
sound business practices and in any event may make disclosure to such of its
respective Affiliates, officers, directors, employees, agents and
representatives as need to know such information in connection with the Loans.
If any Lender is otherwise a creditor of a Loan Party, such Lender may use the
information in connection with its other credits. Agent and Lenders may also
make disclosure reasonably required by a bona fide offeree or assignee (or
participation), or as required or requested by any Governmental Authority or
representative thereof, or pursuant to legal process, or to its accountants,
lawyers and other advisors, and shall require any such offeree or assignee (or
participant) to agree (and require any of its offerees, assignees or
participants to
78
agree) to comply with this subsection 10.21. In no event shall Agent or any
Lender be obligated or required to return any materials furnished by a Loan
Party; provided, however, each offeree shall be required to agree that if it
does not become a assignee (or participant) it shall return all materials
furnished to it by any Loan Party in connection herewith.
SECTION 11. GUARANTIES
11.1 Guaranty. Each Corporate Guarantor hereby jointly and severally
absolutely and unconditionally guaranties to Agent and Lenders the full and
prompt payment of all Obligations owed or hereafter owing to Agent and Lenders
by each Borrower. Each Borrower hereby absolutely and unconditionally guarantees
to Agent and Lenders the full and prompt payment of all Obligations owed or
hereafter owing to Agent and each Lender by each other Borrower. Notwithstanding
any provision herein contained to the contrary, each Borrower's liability under
this Section 11 (which liability is in any event in addition to amounts for
which such Borrower is primarily liable under the other Sections of this
Agreement and the other Loan Documents) shall be limited to an amount not to
exceed as of any date of determination the greater of:
(A) the net amount of all Loans advanced to any other Borrower under
this Agreement and then re-loaned or otherwise transferred to such
Borrower; or
(B) the amount which could be claimed by Agent and Lenders from such
Borrower under this Section 11 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under
any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law after taking into account,
among other things, such Borrower's right of contribution and
indemnification from the other Borrowers under subsection 11.2 hereof.
Until all Obligations have been paid in full, this guaranty is and is intended
to be a continuing, unconditional guaranty of payment of the Obligations,
independent of and in addition to any other guaranty, endorsement, collateral or
other agreement now or hereafter held by Agent or any Lender therefor or with
respect thereto, whether or not furnished by Borrowers and/or any Corporate
Guarantor.
11.2 Contribution with Respect to Guaranty Obligations.
(A) To the extent that any Borrower shall make a payment under this Section
11 of all or any of the Obligations for which such Borrower is not primarily
liable (a "Guarantor Payment") which, taking into account all other Guarantor
Payments then previously or concurrently made by the other Borrowers, exceeds
the amount which such Borrower would otherwise have paid if each Borrower had
paid the aggregate Obligations satisfied by such Guarantor Payment in the same
proportion that such Borrower's "Allocable Amount" (as defined below) (in effect
immediately prior to such Guarantor Payment) bore to the aggregate Allocable
Amounts of all Borrowers in effect immediately prior to the making of such
Guarantor Payment, then such Borrower shall be entitled to received contribution
and indemnification payments from, and be reimbursed by, each of the other
79
Borrowers for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Guarantor Payment.
(B) As of any date of determination, the "Allocable Amount" of any Borrower
shall be equal to the maximum amount of the claim which could then be recovered
from such Borrower under this subsection 11 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
(C) This subsection 11.2 is intended only to define the relative rights of
Borrowers and nothing set forth in this subsection 11.2 is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including, without limitation, Section 2 hereof, and nothing
contained in this subsection 11.2 shall limit the liability of any Borrower to
pay the Obligations for which it is primarily liable. Accordingly, the right of
any Borrower to receive any contribution and indemnification payment from, or to
be reimbursed by, any other Borrower under this Section 11 shall be unsecured
and subordinated in right of payment to such other Borrower's indebtedness and
liability in respect of the Obligations.
(D) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of any Borrower to which such
contribution and indemnification is owing.
11.3 Obligations Absolute. The liability of each Corporate Guarantor and
each Borrower to Agent and Lenders under this Section 11 shall not be affected
or impaired by any of the following acts by Agent or any Lender: (i) any
acceptance of collateral security, guarantors, accommodation parties or sureties
for any or all Obligations; (ii) one or more extensions or renewals of any
Obligations (whether or not for longer than the original period) or any
modification of the interest rates, fees, maturities or principal amount of, or
other contractual terms applicable to, any Obligations; (iii) any waiver or
indulgence granted to any Borrower or any other Loan Party, any delay or lack of
diligence in the enforcement of Obligations, or any failure to institute
proceedings, file a claim, give any required notices or otherwise protect any
Obligations; (iv) any full or partial release of, compromise or settlement with,
or agreement not to sue any Borrower or any other Loan Party, or any guarantor
or other person liable in respect of any Obligations; (v) the acceptance of any
instrument in renewal or substitution of any Obligation; (vi) any failure to
obtain collateral security (including rights of setoff) for any Obligations, or
to obtain or maintain the proper or sufficient creation and perfection thereof,
or to establish the priority thereof, or to preserve, protect, insure, care for,
exercise or enforce any collateral security; or any modification, alteration,
substitution, exchange, surrender, cancellation, termination, release or other
change, impairment, limitation, loss or discharge of any collateral security;
(vii) any assignment, pledge or other transfer of any Obligations or any
evidence thereof; or (viii) any manner, order or method of application of any
payments or credits upon Obligations. Each Corporate Guarantor and each Borrower
hereby waives any and all defenses and discharges available to a surety,
guarantor, or accommodation co-obligor, other than payment in full in cash of
the Obligations and termination of the Commitments pursuant thereto.
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11.4 WAIVER. EACH CORPORATE GUARANTOR AND EACH BORROWER HEREBY WAIVES
PRESENTMENT, DEMAND FOR PAYMENT, NOTICE OF DISHONOR OR NONPAYMENT, AND PROTEST
OF ANY INSTRUMENT EVIDENCING LIABILITIES.
11.5 Recovery. If any payment is applied by Agent or any Lender to the
Obligations and is hereafter set aside, recovered, rescinded or required to be
returned for any reason (including, without limitation, the bankruptcy,
insolvency or reorganization of any Borrower or any other obligor), the
Obligations to which such payment was applied shall for the purposes of this
Section 11 be deemed to have continued in existence, notwithstanding such
payment and application and this guaranty shall be enforceable as to such
Obligations as fully as if such payment and application had never been made.
11.6 Liability Cumulative. The liability of the Corporate Guarantors and
Borrowers under this Section 11 is in addition to and shall be cumulative with
all liabilities of each Corporate Guarantor and each Borrower to Agent or any
Lender under this Agreement and the other Loan Documents to which any such
Borrower or Corporate Guarantor is a party or in respect of any Obligations of
the other Borrowers or Corporate Guarantors, without any limitation as to
amount, unless the instrument or agreement evidencing or creating such other
liability specifically provides to the contrary.
[SIGNATURE PAGE FOLLOWS]
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WITNESS the due execution of this Agreement by the respective duly
authorized officers of the undersigned as of the date first written above.
Holding Parties: COMFORCE CORPORATION
COMFORCE OPERATING, INC.
COMFORCE COLUMBUS, INC.
RHO ACQUISITION COMPANY
UNIFORCE SERVICES, INC.
Borrowers: BRENTWOOD SERVICE GROUP, INC.
COMFORCE INFORMATION
TECHNOLOGIES, INC.
COMFORCE IT ACQUISITION CORP.
COMFORCE TECHNICAL SERVICES, INC.
COMFORCE TELECOM, INC.
COMPUTER CONSULTANTS FUNDING
& SUPPORT, INC.
FORCE FIVE, INC.
LABFORCE OF AMERICA, INC.
PROFESSIONAL STAFFING FUNDING &
SUPPORT, INC.
PROJECT STAFFING SUPPORT TEAM,
INC.
PRO N.E., INC.
PRO UNLIMITED, INC.
RHO COMPANY INCORPORATED
TEMPORARY HELP INDUSTRY
SERVICING COMPANY, INC.
UNIFORCE INFORMATION SERVICES OF
TEXAS, INC.
UNIFORCE MIS SERVICES OF GEORGIA,
INC.
UNIFORCE PAYROLLING SERVICES, INC.
UNIFORCE STAFFING SERVICES, INC.
USSI-NE CORP.
UTS OF DELAWARE, INC.
Inactive Subsidiaries: BRANNON & TULLY, INC.
E.O. OPERATIONS CORP.
E.O. SERVICING CO., INC.
MONTARE INTERNATIONAL, INC.
STAFFING INDUSTRY FUNDING &
SUPPORT, INC.
SUMTEC CORPORATION
[Signatures Continued of Following Page]
[Signature page to Loan Agreement]
82
TEMPFUNDS INTERNATIONAL, INC.
THISCO OF CANADA, INC.
UNIFORCE INFORMATION SERVICES,
INC.
UNIFORCE MEDICAL OFFICE SUPPORT,
INC.
USI INC. OF CALIFORNIA
UTS CORP. OF MINNESOTA
For each of the foregoing corporations:
By: /s/ Paul Grillo
------------------------------
Paul J. Grillo, Vice President
HELLER FINANCIAL, INC.
By: /s/ Andrew G. Jakubek
------------------------------
Title: Vice President
Revolving Loan Commitment:
$75,000,000
[Signature page to Loan Agreement]
83
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
I, _______________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY that _______________, personally known to me
to be the _________________ of Heller Financial, Inc., the person who executed
the foregoing instrument, who being by me duly sworn, did depose and say he is
the officer of such corporation described in and which executed the foregoing
instrument; that said instrument is signed on behalf of such corporation by
order of its Board of Directors; and that he acknowledged said instrument to be
the free act and deed of such corporation.
GIVEN under my hand and notarial seal this ____ day of November, 1997.
____________________________________
Notary Public
My commission expires:
____________________________________
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
I, ________________, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that Paul J. Grillo, personally known to me to be a
Vice President of each of COMFORCE Corporation, COMFORCE Operating, Inc.,
COMFORCE Columbus, Inc., RHO Acquisition Company, Uniforce Services, Inc.,
Brentwood Service Group, Inc., COMFORCE Information Technologies, Inc., COMFORCE
IT Acquisition Corp., COMFORCE Technical Services, Inc., COMFORCE Telecom, Inc.,
Computer Consultants Funding & Support, Inc., Force Five, Inc., LabForce of
America, Inc., Professional Staffing Funding & Support, Inc., Project Staffing
Support Team, Inc., PrO N.E., Inc., PrO Unlimited, Inc., RHO Company
Incorporated, Temporary Help Industry Servicing Company, Inc., Uniforce
Information Services of Texas, Inc., Uniforce MIS Services of Georgia, Inc.,
Uniforce Payrolling Services, Inc., Uniforce Staffing Services, Inc., USSI-NE
Corp., UTS of Delaware, Inc., Brannon & Tully, Inc., E.O. Operations Corp., E.O.
Servicing Co., Inc., Montare International, Inc., Staffing Industry Funding &
Support, Inc., SUMTEC Corporation, Tempfunds International, Inc., Thisco of
Canada, Inc., Uniforce Information Services, Inc., Uniforce Medical Office
Support, Inc., USI Inc. of California, and UTS Corp. of Minnesota, the person
who executed the foregoing instrument, who being by me duly sworn, did depose
and say he is a Vice President of each such corporation described in and which
executed the foregoing instrument; that said instrument is signed on behalf of
each such corporation by order of its respective Board of Directors; and that he
acknowledged said instrument to be the free act and deed of each such
corporation.
GIVEN under my hand and notarial seal this ___ day of November, 1997.
____________________________________
Notary Public
My commission expires:
____________________________________
EXHIBITS
A. Assignment and Assumption Agreement
B. Borrowing Base Certificate
C. Compliance Certificate
D. Reconciliation Report
E. Notice of Borrowing
SCHEDULES
1.1(A) Other Liens
1.1(B) Pro Forma
2.1(B) Account Debtors
3.1(A) List of Closing Documents
4.1(B) Capitalization of Loan Parties
4.4 Other Indebtedness
4.6 Trade Names (Present and Past Five Years)
4.7 Location of Principal Place of Business, Books and Records and
Collateral; FEIN
4.9 Litigation
4.10 Audits
4.13 Intellectual Property
4.20 Bank Accounts
4.22 Employee Matters