EXHIBIT 10.9
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REVOLVING CREDIT AGREEMENT
by and between
WORLDWIDE XCEED GROUP, INC., as Borrower
and
SPHERION CORPORATION, as Lender
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Dated as of November 15, 2000
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$5,000,000.00
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TABLE OF CONTENTS
Page
1. DEFINITIONS........................................................ 1
2. LOANS.............................................................. 1
3. BORROWING REQUESTS................................................. 2
4. CONDITIONS OF LENDING.............................................. 2
4.1 INITIAL LOAN................................................... 2
4.2 EACH LOAN...................................................... 3
5. INTEREST AND PAYMENT OF INTEREST................................... 3
6. REPAYMENT OF PRINCIPAL............................................. 3
7. PREPAYMENT......................................................... 4
8. REPRESENTATIONS AND WARRANTIES..................................... 4
8.1 EXISTENCE, AUTHORITY, NON-CONTRAVENTION........................ 4
8.2 SEC FILINGS; FINANCIAL STATEMENTS.............................. 4
8.3 LITIGATION..................................................... 5
8.4 OWNERSHIP OF PROPERTIES........................................ 5
8.5 FICTITIOUS NAMES, ETC.......................................... 6
8.6 TAXES.......................................................... 6
8.8 INTELLECTUAL PROPERTIES........................................ 6
8.9 ENVIRONMENTAL.................................................. 6
8.10 REGULATIONS G, U AND X......................................... 7
8.11 ACCURACY OF INFORMATION........................................ 7
8.12 PENSION AND WELFARE PLANS...................................... 7
9. AFFIRMATIVE COVENANTS.............................................. 8
9.1 FINANCIAL STATEMENTS........................................... 8
9.2 EXISTENCE...................................................... 8
9.3 INSURANCE...................................................... 9
9.4 TAXES.......................................................... 9
9.5 BOOKS AND RECORDS.............................................. 9
9.6 DELIVERY OF COLLATERAL......................................... 9
9.7 OTHER.......................................................... 9
10. NEGATIVE COVENANTS................................................. 11
10.1 INDEBTEDNESS................................................... 11
10.2 ENCUMBRANCES................................................... 11
10.3 LIABILITY FOR THIRD PARTY INDEBTEDNESS......................... 12
10.4 EXTENSIONS OF CREDIT........................................... 12
10.5 CAPITAL ACQUISITIONS........................................... 12
10.6 MERGERS, ACQUISITIONS, ETC..................................... 12
10.7 DISPOSITION OF ASSETS.......................................... 12
10.9 DIVIDENDS...................................................... 12
10.10 OTHER CHANGES.................................................. 13
11. COLLATERAL SECURITY................................................ 13
12. DEFAULT; EXTRAORDINARY CORPORATE EVENTS AND REMEDIES............... 13
12.1 EVENTS OF DEFAULT.............................................. 13
12.2 EXTRAORDINARY CORPORATE EVENTS................................. 14
12.3 WAIVERS........................................................ 15
12.4 UNIFORM COMMERCIAL CODE........................................ 16
12.5 EXPENSES; PROCEEDS OF COLLATERAL............................... 16
13. NOTICES............................................................ 16
14. COMPUTATION OF INTEREST; HOLIDAYS.................................. 17
15. FEES AND TAXES..................................................... 18
16. ASSIGNMENT......................................................... 18
17. SEVERABILITY....................................................... 18
18. HEADINGS, GENDER AND NUMBER........................................ 18
19. WAIVER OF JURY TRIAL............................................... 18
20. BINDING AGREEMENT.................................................. 19
21. GOVERNING LAW...................................................... 19
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EXHIBITS
EXHIBIT A Definitions
EXHIBIT B Form of Master Revolving Credit Note
EXHIBIT C Form of Warrant Agreement
SCHEDULES
Schedule 8.1 Subsidiaries
Schedule 8.2(e) Material Adverse Changes
Schedule 8.3 Litigation
Schedule 8.5 Fictitious Names
Schedule 8.9 Environmental
Schedule 8.12 ERISA
Schedule 10.1 Indebtedness
Schedule 10.2 Encumbrances
Schedule 10.4 Extensions of Credit
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REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (this "AGREEMENT") is made as of November
15, 2000 by and between WORLDWIDE XCEED GROUP, INC., a Delaware corporation (the
"BORROWER"), and SPHERION CORPORATION, a Delaware corporation (the "LENDER").
WITNESSETH:
WHEREAS, the Borrower has requested that Lender extend a revolving credit
facility in the aggregate principal amount of FIVE MILLION DOLLARS ($5,000,000)
(the "CREDIT FACILITY"), and Lender is willing to make available such Credit
Facility to the Borrower, upon the terms and conditions hereinafter set forth;
and
WHEREAS, in consideration for and as a condition to the Lender extending
the Credit Facility, the Borrower has agreed to grant the Lender warrants (the
"WARRANTS") to purchase up to 3,500,000 shares of the Borrower's common stock,
par value $0.01 per share, (the "WARRANT SHARES") at a price of $1.6875 per
Warrant Share, in accordance with the terms and conditions of the Warrant
Agreement dated the date hereof in the form attached hereto as EXHIBIT C (the
"WARRANT AGREEMENT").
NOW, THEREFORE, in consideration of the forgoing, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. All capitalized terms used but not defined herein
shall have the meanings set forth in EXHIBIT A attached hereto.
2. LOANS. Lender shall, upon the terms and subject to the conditions of
this Agreement, make, upon the Borrower's request from time to time, revolving
loans (hereinafter referred to as, individually, a "Loan" and, collectively, the
"LOANS") to the Borrower in an aggregate principal amount at any time
outstanding up to but not exceeding five million dollars ($5,000,000) (the
obligation of Lender to make Loans pursuant to the foregoing revolving line of
credit up to but not exceeding the foregoing aggregate principal amount at any
one time outstanding is hereinafter referred to as the "COMMITMENT"). The sum of
the aggregate principal amount of Loans at any one time outstanding shall in no
event exceed the Commitment. Within such limit, the Borrower may borrow, repay,
and reborrow at any time or from time to time from the date hereof to and
including the earlier to occur of (I) May 15, 2002, (II) the occurrence of an
"Event of Default" under and as defined in Section 12.1 hereof, (III) the
occurrence of an "Extraordinary Corporate Event" under and as defined in Section
12.2 hereof, and (iv) the Borrower Termination Date (the earlier of such dates
in clauses (i) through (iv) is hereinafter referred to as the "TERMINATION
DATE"). The Borrower's obligation to pay the Lender the principal and interest
of each Loan shall be further evidenced by a master
revolving credit note, which shall be subject to the terms and conditions of
this Agreement, in substantially the form of EXHIBIT B attached hereto (the
"MASTER REVOLVING CREDIT NOTE").
3. BORROWING REQUESTS. The Borrower shall give Lender at least one (1)
business day prior written notice of each Loan by delivering to Lender a draw
request (a "DRAW REQUEST") specifying (I) the amount of the requested Loan which
shall not be less than $50,000 or a multiple thereof, (II) the requested closing
date of such Loan, and (III) the account information as to where the funds of
the Loan shall be delivered. Each such Loan shall be made in immediately
available funds by wire transfer to the account specified by the Borrower in the
Draw Request. In connection with each such Loan, the Borrower shall furnish to
the Lender a certificate executed by the Chief Executive Officer or Chief
Financial Officer of the Borrower certifying as to the satisfaction as of the
date of the Draw Request of the conditions set forth in Section 4.2 (i), (ii),
(iii) and (iv) hereof (a "DRAW CERTIFICATE").
4. CONDITIONS OF LENDING.
4.1. INITIAL LOAN. The obligation of Lender to make the initial
Loan under this Credit Facility is subject to the following conditions
precedent: (I) Lender shall have received a certified copy of all corporate
actions taken by the Borrower to authorize the execution, delivery and
performance of this Agreement and the borrowing by the Borrower hereunder, and
copies of such audited and other financial statements, federal income tax
returns, and other financial documents as Lender, in its sole discretion, shall
request prior to the execution and delivery of this Agreement; (II) Lender shall
have received a certificate signed by the secretary of the Borrower, attaching
and confirming the accuracy of the Certificate of Incorporation and By-laws of
the Borrower, the incumbency of certain officers of the Borrower authorized to
execute this Agreement and the Master Revolving Credit Note and to make Draw
Requests, in form acceptable to the Lender; (III) Lender shall have received
certificates issued by the appropriate governmental authorities evidencing the
good standing of the Borrower, with respect to both the conduct of business and
the payment of all franchise taxes, as of a date not more than five days prior
to the date hereof, as a corporation organized under the laws of the State of
Delaware and as a foreign corporation authorized to do business under the laws
of the various jurisdictions where it is so qualified, if applicable; (IV)
Lender shall have received an opinion of counsel to the Borrower, in form and
substance satisfactory to Lender and counsel to Lender, as to the enforceability
of this Agreement, as to the perfection of the security interest granted
hereunder, and as to the matters referred to in Sections 8.1, 8.3 and 8.10
hereof; (V) the Borrower shall have executed and delivered the Warrant Agreement
to the Lender prior to the execution and delivery of this Agreement; (VI) the
Borrower shall have executed and delivered the Master Revolving Credit Note to
the Lender prior to the execution and delivery of this Agreement; (VII) the
Lender shall be satisfied, in its sole and absolute discretion, that the
Collateral is free and clear of all liens, mortgages, pledges, assignments,
security interests or other encumbrances, other than the Permitted Liens set
forth only in Sections 10.2 (i), (ii) and (iv) hereof and the Borrower shall
have provided the Lender with appropriate termination statements on Form
U.C.C.-3 evidencing the termination of all
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security interests heretofore granted by the Borrower upon the Collateral or
other evidence of the release of such security interests in form and substance
reasonably satisfactory to the Lender; and (VIII) the Borrower shall have duly
authorized, executed, filed, registered and recorded such UCC financing
statements and other instruments as the Lender may have reasonable requested to
perfect the liens in the Collateral pursuant to this Agreement.
4.2. EACH LOAN. The obligation of Lender to make each Loan to be made by it
hereunder (including the initial Loan) is subject to the following conditions
precedent: (I) no Event of Default, and no event which with notice or lapse of
time or both would become an Event of Default, shall have occurred and be
continuing; (ii) the representations and warranties of the Borrower hereunder
shall be true and correct in all material respects on and as of the date of the
making of such Loan with the same force and effect as if made on and as of such
date (except to the extent the Lender has been notified by the Borrower that any
representation or warranty is not correct and the Lender has explicitly waived
in writing compliance with such representation or warranty); (III) there shall
have been no material adverse change to the financial condition or operations of
the Borrower from the date hereof which would have a Material Adverse Effect on
the Collateral; (IV) the Borrower shall have delivered to Lender not less than
three (3) business days prior to the date of such Loan a Draw Request and a Draw
Certificate; and (V) no Extraordinary Corporate Event shall have occurred and
the Borrower shall not be aware of any actions or proceedings pending or
threatened that could reasonably be expected to result in an Extraordinary
Corporate Event.
5. INTEREST AND PAYMENT OF INTEREST. The Borrower agrees (I) to pay
interest on the outstanding principal balance of Loans hereunder (before and
after the Termination Date) at a fluctuating rate per annum equal to two percent
(2%) per annum plus the "Prime Rate" as publicly announced in the "Money Rates"
section of the WALL STREET JOURNAL (the "INTEREST RATE"); or (II) to pay
interest at a fluctuating rate per annum equal to the Interest Rate plus two
percent (2%) per annum, on any amount of principal which is not paid when due
(whether at stated maturity, by acceleration or otherwise). In no event shall
the rate of interest on Loans hereunder be in excess of the rate authorized by
applicable law. Interest on the Loans accruing during each month shall be paid
by the Borrower on the first day of each month commencing in the month
immediately following of the initial Loan. Payments of interest on the Loans
shall be made by wire transfer of immediately available funds to account of the
Lender as designated in writing by the Lender to the Borrower. For purposes of
this Section 5, the rate of interest shall be calculated on the first business
day of each calendar quarter for all outstanding Loans during such calendar
quarter.
6. REPAYMENT OF PRINCIPAL. On the Termination Date, the Borrower shall
repay the entire aggregate unpaid principal amount of all Loans made by Lender
to the Borrower pursuant to this Agreement (as the same may be amended,
modified, supplemented from time to time) outstanding on the Termination Date
plus all accrued and unpaid interest hereunder.
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7. PREPAYMENT; BORROWER TERMINATION. The Borrower shall have the right at
any time and from time to time, upon one (1) business day's notice to Lender, to
prepay the outstanding principal amount of Loans and any accrued and unpaid
interest hereunder, in whole or in part, without premium or penalty; provided
that prepayments shall be applied first to accrued and unpaid interest due
hereunder, and then to principal. The portion of each partial prepayment of such
outstanding principal made after the Termination Date which is applied to
principal shall be applied to the latest maturing installments of principal.
Prepayments shall not be less than $50,000, or a multiple thereof, other than
payments made on the Termination Date. The Borrower shall have the right to
terminate this Agreement, without premium or penalty, upon three (3) business
days' notice to Lender (the "BORROWER TERMINATION DATE"); provided that such
termination shall not in anyway affect the Borrower's rights pursuant to the
Warrant Agreement.
8. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lender that on the date hereof and on the date of each Loan made
from time to time hereunder:
8.1. EXISTENCE, AUTHORITY, NON-CONTRAVENTION; SUBSIDIARIES. The
Borrower is duly organized, validly existing and in good standing under the laws
of the State of Delaware, and is duly qualified to transact its business and own
property in each state in which its property is located or in which it conducts
its business and where the failure to so qualify would have Material Adverse
Effect, and the Borrower has full power and authority to execute this Agreement,
Master Revolving Credit Note, the Warrant Agreement and to borrow hereunder. The
execution, delivery and performance by the Borrower of this Agreement, the
Master Revolving Credit Note, the Warrant Agreement and all other agreements,
instruments and documents respecting the Loans hereunder have been duly
authorized by all necessary action and will not violate any provision of law or
of the certificate of incorporation (including, without limitation, any
certificate of designations of preferred stock) or bylaws of the Borrower, or
result in a breach or default or require any consent under, or result in the
creation of any lien, charge or encumbrance upon any property or assets of the
Borrower pursuant to any material indenture or other agreement or
instrument(including, without limitation, the subscription agreement and other
agreements executed and delivered between the Borrower and its holders of Series
A Cumulative Convertible Preferred Stock) to which the Borrower is a party or by
which the Borrower or its property may be bound or affected, other than as
specifically provided herein. Except as set forth on SCHEDULE 8.1, the Borrower
does not have any subsidiaries, participate in any partnership or joint venture
(other than the joint venture with the Borrower), or own any outstanding capital
stock of any other corporation.
8.2. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Borrower is a reporting
company under the Securities and Exchange Act of 1934, as amended.
(b) Borrower has timely filed and made available via EDGAR to the Lender
all documents filed with the United States Securities and Exchange Commission
(the "SEC") required to be filed by the Borrower (the "BORROWER SEC REPORTS").
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(c) The Borrower SEC Reports (I) at the time filed, complied in all
material respects with the applicable requirements of the Securities Laws and
other applicable laws and (II) did not, at the time they were filed (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such Borrower SEC Reports or
necessary to make the statements in such Borrower SEC Reports, in light of the
circumstances under which they were made, not materially misleading.
(d) Each of the balance sheets and statements of income and retained
earnings of the Borrower and all other financial documents and information
("BORROWER FINANCIAL STATEMENTS") (including, in each case, any related notes)
contained in the Borrower SEC Reports, complied as to form in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the financial position of the Borrower as at
the respective dates and the results of operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount or effect.
(e) The Borrower has no material contingent obligations, liabilities for
taxes, long-term leases, or unusual forward or long-term commitments not
disclosed by, or reserved against in, the Borrower Financial Statements, and at
the present time there are no material unrealized or anticipated losses from any
unfavorable commitments of the Borrower. Since the date of the latest of such
Borrower Financial Statements there have been no material adverse changes in the
financial condition of the Borrower other than as set forth in SCHEDULE 8.2(E)
hereof.
8.3. LITIGATION. There are no suits or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower which,
if adversely determined, would have a Material Adverse Effect, and there are no
proceedings pending or to the knowledge of the Borrower threatened before any
governmental commission, board, bureau or agency against the Borrower other than
as set forth in SCHEDULE 8.3 hereof.
8.4. OWNERSHIP OF PROPERTIES. With the exception of any security interest
granted to Lender, and other than Permitted Liens, the Borrower owns its
respective properties free and clear of all liens, mortgages, pledges,
assignments, security interests or other encumbrances. Notwithstanding the
foregoing, with the exception of any security interest granted to Lender, and
other than the Permitted Liens set forth only in Section 10.2 (i), (ii) and (iv)
hereof, the Borrower owns the Collateral free and clear of all liens, mortgages,
pledges, assignments, security interests or other encumbrances.
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8.5. FICTITIOUS NAMES, ETC. Except as set forth on SCHEDULE 8.5 hereof, the
Borrower does not now use and has not used in the past five years any trade or
fictitious name in the conduct of its business, has not changed its name, and
has not been the surviving entity in a merger or consolidation or acquired any
business.
8.6. TAXES. The Borrower has filed all tax returns and reports required by
law to have been filed by it and has paid all income, franchise and other taxes
and charges as they became due except for the payment of taxes which are being
contested in good faith by appropriate proceedings.
8.7. ADVERSE CONTRACTs. The Borrower is not a party to any instrument
affecting its business in a manner which could limit or otherwise adversely
affect the Borrower's ability to enter into this Agreement and the transactions
contemplated hereby.
8.8. INTELLECTUAL PROPERTIES. The Borrower possesses all necessary
patents, trademarks, trade names, copyrights and licenses necessary to conduct
its business as currently conducted.
8.9. ENVIRONMENTAL. Except as set forth in SCHEDULE 8.9:
(a) All facilities and property (including underlying groundwater)
owned or leased by the Borrower are in compliance with all Environmental Laws;
(b) there have been no past, and there are no pending or, to the
Borrower's knowledge, threatened:
(i) claims, complaints, notices or requests for information
received by the Borrower with respect to any alleged violation of any
Environmental Law, or
(ii) complaints, notices or inquiries to the Borrower regarding
potential liability under any Environmental Law;
(c) there have been no releases of Hazardous Materials at, on or
under any property now or previously owned or leased by the Borrower that,
singly or in the aggregate, have, or may reasonably be expected to have, a
Material Adverse Effect;
(d) the Borrower has issued and is in compliance with all permits,
certificates, approvals, licenses and other authorizations relating to
environmental matters and necessary or desirable for its business;
(e) no property now or previously owned or leased by the Borrower
is listed or proposed for listing (with respect to owned property only) on the
"National Priorities List" pursuant to CERCLA, on the CERCLIS or on any similar
state list of sites requiring investigation or clean-up;
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(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or previously,
owned or leased by the Borrower, which existed during or prior to the
Borrower's ownership or tenancy, that, singly or in the aggregate, have, or
may reasonably be expected to have, a Material Adverse Effect;
(g) the Borrower has not directly transported or directly
arranged for the transportation of any Hazardous Material to any location which
is listed or proposed for listing on the "National Priorities List" pursuant to
CERCLA, on the CERCLIS or on any similar state list or which is the subject of
federal, state or local enforcement actions or other investigations which may
lead to material claims against the Borrower thereof for any remedial work,
damage to natural resources or personal injury, including claims under CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property owned or previously owned or leased by the Borrower,
which existed during or prior to the Borrower's ownership or tenancy, that,
singly or in the aggregate, have, or may reasonably be expected to have, a
Material Adverse Effect; and
(i) no conditions exist at, on or under any property now or
previously owned or leased by the Borrower, which existed during or prior to the
Borrower's ownership or tenancy, which, with the passage of time, or the giving
of notice or both, would give rise to liability under any Environmental Law.
8.10. REGULATIONS G, U AND X. The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock, and
no proceeds of any Loans will be used for a purpose which violates, or would be
inconsistent with, Federal Reserve Board Regulations G, U or X. Terms for which
meanings are provided in Federal Reserve Board Regulations G, U or X or any
regulations substituted therefor, as from time to time in effect, are used in
this Section with such meanings.
8.11. ACCURACY OF INFORMATION. All factual information heretofore or
contemporaneously furnished by or on behalf of the Borrower in writing to the
Lender for purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all other such factual information hereafter
furnished by or on behalf of the Borrower to the lender or any Lender will be,
true and accurate in every material fact necessary to make such information not
misleading.
8.12. PENSION AND WELFARE PLANS. During the twelve-consecutive month
period prior to the date of the execution and delivery of this Agreement and
prior to the date of any Loan hereunder, no steps have been taken to terminate
any pension plan, and no contribution failure has occurred with respect to any
pension plan sufficient to give rise to a lien under section 302(f) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). No
condition exists or event or transaction has occurred with respect
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to any pension plan which might result in the incurrence by the Borrower or any
member of a controlled group of any material liability, fine or penalty. Except
as disclosed in SCHEDULE 8.12, neither the Borrower nor any member of the
controlled group has any contingent liability with respect to any
post-retirement benefit under a welfare plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
Section 8.13 ACCOUNTS RECEIVABLE. As of August 31, 2000 (a) each of the
accounts receivable and the total revenue of Pulse Interactive B.V., a
subsidiary of the Borrower, represent less than 5% of the consolidated accounts
receivable and total revenue of the Borrower respectively; and (b) except only
to the extent fully reserved against as set forth in the Borrower Financial
Statements, no defense or setoff to any accounts receivable of the Borrower has
been asserted by the account obligor.
9. AFFIRMATIVE COVENANTS. So long as the Commitment and Lender's
obligations thereunder shall remain outstanding, or there shall be any principal
balance of Loans outstanding hereunder, or any interest accrued or other amounts
due or to become due hereunder remain unpaid, the Borrower will:
9.1 FINANCIAL STATEMENTS. Furnish to Lender (it being understood that
making Borrower SEC Reports available via EDGAR shall constitute delivery
thereof to the Lender):
(a) Within ninety (90) days after the end of each fiscal year of the
Borrower, a true copy of a report on Form 10-K duly filed with the SEC, as
required by the Securities Laws.
(b) Within forty-five (45) days after the end of each fiscal quarter
of the Borrower, a true copy of a report on Form 10-Q duly filed with the SEC,
as required by the Securities Laws.
(c) within forty-five (45) days from the end of each fiscal quarter
of the Borrower, a profit and loss statement (income statement) for the Borrower
prepared by its management and certified by the Chief Executive Officer, Chief
Financial Officer or Chief Operating Officer of the Borrower, as follows: "We
certify that these financial statements are true and correct and subject to
year-end audit adjustments." ; and
(d) Within thirty (30) days after the end of each fiscal quarter of
the Borrower, a certificate from the Borrower stating that no Event of Default
or Extraordinary Corporate Event under this Agreement has occurred. Such
certificate will be issued by the Chief Executive Officer, the Chief Financial
Officer or the Chief Operating Officer of the Borrower.
9.2 EXISTENCE. Preserve and maintain its corporate existence and its
rights, privileges and franchises.
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9.3 INSURANCE. Maintain insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in similar businesses and owning
similar properties doing business in the same general areas in which the
Borrower operates. All insurance policies insuring the Collateral shall name
Lender as loss payee or additional insured. Copies of certificates of such
insurance and all endorsements shall be furnished to Lender within 30 days after
request thereof by the Lender. Such insurance policies shall contain provisions
that no insurance may be cancelled or the coverage limits or other terms thereof
decreased or otherwise materially modified, except upon prior written notice to
Lender given no later than such notice is required to be given to the Borrower,
as the case may be. If the Borrower shall at any time or times hereafter fail to
obtain and/or maintain any of the policies of insurance required herein, or fail
to pay any premium in whole or in part relating to any such policies, Lender may
but shall not be obligated to obtain and/or cause to be maintained insurance
coverage with respect to such property, including at Lender's option the
coverage provided by any or all of the policies of the Borrower, and pay all or
any part of the premium therefor, without thereby waiving any default by the
Borrower, and any sums so disbursed by Lender shall be additional Loans to the
Borrower by Lender payable on demand and shall bear interest at the rate borne
by the Loans from time to time. After the occurrence and during the continuance
of an Event of Default and pursuant to the exercise of its rights and remedies
under Section 12, Lender shall have the right to settle and compromise any and
all claims under any of the policies required to be maintained by the Borrower
hereunder (with the consent of the Borrower which shall not be unreasonably
withheld) and the Borrower hereby appoints Lender as its attorney-in-fact, with
the power, from and after the occurrence and during the continuance of an Event
of Default and pursuant to the exercise of its rights and remedies under Section
12, to demand, receive, and receipt for all monies payable thereunder, to
execute in the name of the Borrower or Lender or both any proof of loss, notice,
draft or other instruments in connection with such policies or any loss
thereunder and generally to do and perform any and all acts as the Borrower, but
for this appointment, might or could perform.
9.4 TAXES. Pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income and profits, or upon any
property belonging to it, prior to the date upon which penalties attach thereto,
except and to the extent that the same are being contested in good faith by
appropriate proceedings.
9.5 BOOKS AND RECORDS. Keep proper books of record and account.
9.6 DELIVERY OF COLLATERAL. Promptly upon a request being made therefor by
Lender, deliver to Lender such collateral or additional collateral as Lender may
require as security or further security, as the case may be, for the repayment
of the Loans.
9.7 OTHER.
(a) Upon written request, furnish to the Lender copies of all
information furnished by the Borrower to the stockholders of the Borrower, or to
any governmental
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authority or general press release within 24 hours after such request (it being
understood that making Borrower SEC Reports available via EDGAR shall constitute
delivery thereof to the Lender).
(b) Within a reasonable time after written request therefor,
make available for inspection during normal business hours by duly authorized
representatives of the Lender any of its books and records, and any information
regarding its financial condition.
(c) Collect its accounts and sell its services only in the ordinary
course of business.
(d) Give notice to the Lender within five days of: (I) any
litigation or proceeding in which it is a party if an adverse decision therein
would reasonably be expected to require the Borrower to pay more than two
hundred thousand dollars ($200,000.00), or deliver assets the aggregate value of
which exceeds such sum (whether or not the claim is considered to be covered by
insurance); and (II) the institution of any other suit or proceeding involving
it that might have a Material Adverse Effect.
(e) Pay when due or cause to be paid when due (or within
applicable grace periods) all indebtedness for borrowed money or for the
deferred purchase price of property owed to third persons, except when the
amount thereof is being contested in good faith by appropriate proceedings, and
adequate reserves therefor have been set aside on the appropriate books of the
Borrower. If the Borrower defaults in the payment of any principal (or
installment thereof) of, or interest on, any such indebtedness, Lender shall
have the right in its discretion, to pay such interest or principal for the
account of the Borrower and be reimbursed, on demand, by the Borrower.
(f) Notify Lender immediately if it becomes aware of the occurrence
of any Event of Default or an Extraordinary Corporate Event (or any facts that
could reasonably be expected to result in the occurrence of an Event of Default
or an Extraordinary Corporate Event).
(g) Notify Lender thirty (30) days in advance of any change in
its address, or in the location of its principal place of business.
(h) Perform and observe all agreements, covenants, obligations, terms
and conditions of this Agreement, the Master Revolving Credit Note, or other
instrument executed in connection with this Agreement and the Master Revolving
Credit Note.
(i) Duly observe, conform and comply with all laws, decisions,
judgments, rules, regulations and orders of all governmental authorities
relative to the conduct of its businesses, its properties, except those being
contested in good faith by appropriate proceedings diligently pursued; and
obtain, maintain and keep in full force and effect all governmental licenses,
authorizations and permits necessary to the proper
10
conduct of its businesses, except to the extent the foregoing would not have any
Material Adverse Effect.
(j) Provide the Lender, on a semi-annual basis, a list of its accounts
receivable.
(k) The Borrower shall use the proceeds from the Loans solely to fund
operating expenses.
10. NEGATIVE COVENANTS. So long as the Commitment and Lender's obligations
thereunder remain outstanding, or there shall be any principal balance of Loans
outstanding hereunder, or any interest accrued or other amounts due or to become
due hereunder remain unpaid, the Borrower will not:
10.1 INDEBTEDNESS. (a) Create, incur, assume or suffer to exist any
indebtedness for borrowed money or for the deferred purchase price of property,
except (I) indebtedness incurred and to be incurred pursuant to this Agreement,
(II) indebtedness owing by the Borrower on the date hereof, (III) trade payables
and contractual obligations to suppliers and customers incurred in the ordinary
course of business; (IV) liability for employees' salaries incurred in the
ordinary course of business, (V) obligations to fund any of Borrower's pension
or employee benefit plans in the ordinary course of business, (VI) tax liability
incurred in the ordinary course of business; (VII) other debt existing on the
date hereof or reflected in the Financial Statements, (VIII) indebtedness of the
Borrower subordinated on terms satisfactory to Lender to the indebtedness
incurred and to be incurred pursuant to this Agreement, and (ix) the
indebtedness described on SCHEDULE 10.1 or (b) prepay any indebtedness other
than the foregoing indebtedness and the indebtedness incurred pursuant to this
Agreement.
10.2 ENCUMBRANCES. Create, incur, assume or suffer to exist, any
mortgage, pledge, lien, security interest, charge or encumbrance of any kind or
nature (including the lien or retained security title of a conditional vendor)
in or upon the Collateral, whether now owned or hereafter acquired, or assign or
otherwise convey any contract rights, accounts receivable or other right to
receive income, except (I) liens for property taxes not delinquent and liens for
taxes which are not yet subject to penalties or are being contested in good
faith by appropriate proceedings, (II) liens in respect of pledges or deposits
made under workmen's compensation, unemployment insurance, social security and
similar legislation or in connection with appeal or surety bonds incidental to
litigation or to secure public or statutory obligations and mechanic's,
repairmen's, materialmen's and other like liens in respect of obligations which
are not due or are being contested in good faith, (III) liens and security
interests existing on the date hereof and disclosed on SCHEDULE 10.2 hereof and
(IV) liens and encumbrances incidental to the conduct of the business of the
Borrower, which are not incurred in connection with any borrowing or the
obtaining of any advance or credit and which do not and will not interfere with
the occupation, use and enjoyment by the Borrower of its respective properties
and assets in the normal course of
11
business or materially impair the value of such properties and assets for the
purpose of such business (the foregoing exceptions being the "PERMITTED LIENS").
10.3 LIABILITY FOR THIRD PARTY INDEBTEDNESS. Except as provided in
Section 10.1, assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligation of any other person,
firm or corporation (except by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business).
10.4 EXTENSIONS OF CREDIT. Except as provided on SCHEDULE 10.4, (i) make
any loan or advance or extend any credit to any person, firm or corporation,
except in the ordinary course of business, or (II) purchase or make any
commitment to purchase or otherwise acquire any stock, bond, debenture, note
or other security of any person, firm or corporation, other than (A) direct
obligations of the United States of America or an agency thereof having a
maturity of less than one year or (B) certificates of deposit or money market
instruments of a financial institution or bank or (C) investments purchased
for an aggregate consideration not to exceed $1,000,000 in any twelve month
period.
10.5 CAPITAL ACQUISITIONS. Make any expenditures for fixed or capital
assets in any one fiscal year other than in accordance with past practices.
10.6 MERGERS, ACQUISITIONS, ETC. Merge into or consolidate with or into
any corporation or have any other corporation or entity merge with or into
the Borrower. For the purposes of this Section 10.6, the acquisition by the
Borrower, by lease, purchase or otherwise, of (I) all of the outstanding
capital stock or securities of any other corporation or entity or (II) all or
substantially all of the assets of any other corporation or entity shall be
deemed to be a merger of such corporation or entity with or into the
Borrower. To the extent that the Lender consents to the acquisition by the
Borrower, by lease, purchase or otherwise, of (I) all of the outstanding
capital stock or securities of any other corporation or entity or (II) all or
substantially all of the assets of any other corporation or entity, then the
Borrower shall cause each newly acquired corporation or entity to become a
guarantor hereunder and to execute all documents and instruments necessary to
effect such guarantee or as may otherwise be requested by the Lender within
ninety (90) days following the consummation of such acquisition.
10.7 DISPOSITION OF ASSETS. Sell, lease, assign, transfer or otherwise
dispose of all or a substantial portion of its assets, including its accounts
receivable, other than in the ordinary course of business.
10.8 DIVIDENDS. Declare or pay any dividend, purchase, redeem or
otherwise acquire for value any of its capital stock now or hereafter
outstanding or return any capital or make any distribution of assets to
stockholders; provided that the Borrower may (I) redeem or effectuate
conversions of the Series A Cumulative Convertible Preferred Stock and (II)
effectuate conversions and exercises of its stock options and other
securities.
12
10.09 OTHER CHANGES. Make or permit to be made any material change in
the character of its business as conducted on the date hereof.
11. COLLATERAL SECURITY. As collateral security for the payment of the
indebtedness and other liabilities of the Borrower hereunder, and all
interest, taxes, fees, charges, expenses, and attorney's fees chargeable to
the Borrower or incurred by Lender hereunder or under any other document or
instrument delivered in connection herewith (all of the foregoing being
hereinafter referred to as the "OBLIGATIONS"), Lender shall have and Borrower
hereby grants to Lender a first priority and perfected lien upon and a
security interest in any and all current and future accounts receivable of
the Borrower and the proceeds of all such accounts receivable (all such
monies, securities and proceeds being hereinafter collectively called the
"COLLATERAL"). From and after the occurrence of an Event of Default, Lender
may, at its option and without obligation to do so, transfer to or register
in the name of its nominee(s) all or any part of the Collateral and it may do
so before or after the maturity of any of the Obligations. Lender is hereby
appointed the Borrower's attorney-in-fact for the purpose of taking any
action and executing any instruments which Lender deems necessary or
appropriate in order better to assure and confirm unto Lender its rights,
powers and remedies with respect to the Collateral or any part thereof
(including, without limitation, the right to execute and file on the
Borrower's behalf appropriate financing statements), which appointment is
irrevocable and coupled with an interest.
12. DEFAULT; EXTRAORDINARY CORPORATE EVENTS AND REMEDIES.
12.1 EVENTS OF DEFAULT. If any of the following events (each, an "EVENT
OF DEFAULT") shall occur and be continuing:
(a) The Borrower shall (I) fail to make any payment when due of
principal or interest due under this Agreement, or (II) within five (5) business
days of demand from the Lender, any fee, charge or other amount owing to the
Lender hereunder; or
(b) The Borrower shall otherwise default in the performance of any
term, covenant or condition contained herein and such default shall continue
unremedied for a period of ten (10) days after written notice thereof has been
given to the Borrower by the Lender; or
(c) Any representation or warranty made by the Borrower and contained
herein shall prove to be untrue in any material respect as of the date on which
made; or
(d) Any obligation of the Borrower in an outstanding principal amount
in excess of $50,000 for the payment of borrowed money or for the deferred
purchase price of property (other that as set forth in Section 12.1(a)) is not
paid when due, whether at stated maturity, by acceleration or otherwise, or is
declared to be due and payable prior to the stated maturity thereof and the
Borrower is in default with respect thereto; or
13
(e) The Borrower shall become insolvent or bankrupt or cease to pay
its or his debts as they mature or shall make an assignment for the benefit of
creditors, or a trustee or receiver or liquidator shall be appointed for the
Borrower or for a substantial part of the property of the Borrower, or
bankruptcy, reorganization, arrangement, insolvency or similar proceedings shall
be instituted by or against the Borrower under the laws of any jurisdiction; or
(f) Mr. Howard A. Tullman, ceases to serve as the Chief Executive
Officer or as a Director of the Borrower for any reason; or
(g) The Borrower's shares of Common Stock are delisted from the
NASDAQ National Market and no longer trade on a national securities exchange.
THEN, and in any such event, (I) Lender may at its option and without notice of
any kind immediately terminate the Commitment and all other commitments and
obligations to make loans or advances or otherwise to extend credit to the
Borrower, and may by written notice to the Borrower, at its option declare the
outstanding principal and accrued interest of the Loans to be immediately due
and payable, whereupon the same shall become and be immediately due and payable
without presentment, demand, protest, deduction, set-off or further notice of
any kind, all of which are expressly waived by the Borrower; (II) (A) if any
Event of Default specified in subsections (a), (e), (f) or (g) of this Section
12.1 shall continue unremedied for a period of five (5) business days after the
occurrence of such Event of Default, or (B) any Event of Default specified in
subsections (b), (c) or (d) of this Section 12.1 shall continue unremedied for a
period of thirty (30) calendar days after the occurrence of such Event of
Default, Lender shall be immediately released from its non-solicitation
obligations with respect to the Borrower's employees contained in (X) the Joint
Marketing Agreement dated April 27, 2000 between the Lender and the Borrower
(the "JOINT MARKETING AGREEMENT"), and (Y) any and all other agreements between
the Lender and Borrower; and (III) (A) if any Event of Default specified in
subsections (a), (e), (f) or (g) of this Section 12.1 shall continue unremedied
for a period of five (5) business days after the occurrence of such Event of
Default, or (B) any Event of Default specified in subsections (b), (c) or (d) of
this Section 12.1 shall continue unremedied for a period of thirty (30) calendar
days after the occurrence of such Event of Default, all contracts and agreements
that the Borrower has entered into pursuant to the Joint Marketing Agreement
shall, at the Lender's option, be assigned to the Lender.
12.2 EXTRAORDINARY CORPORATE EVENTS. If any of the following events
(each, an "EXTRAORDINARY CORPORATE EVENT") shall occur:
(a) (i) the merger or consolidation of the Borrower with and into any
corporation or other legal entity, or a merger of any corporation or other legal
entity with or into the Borrower if, in the case of such merger or
consolidation, immediately after such merger or consolidation, the stockholders
of the Borrower immediately prior thereto own, in the aggregate, capital stock
of the surviving or resulting corporation or entity not having the voting power
to elect a majority of the board of directors of such corporation, (ii) any
14
reorganization, recapitalization or reclassification of shares of capital stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value, as a result of a subdivision or combination of the
capital stock), or (iii) any sale or transfer of the assets of the Borrower
which represent 50% or more of the total value of the assets of the Borrower
(other than in the ordinary course of business consistent with past practices);
or
(b) The sale of equity or debt securities of the Borrower that
results in gross proceeds to the Borrower of at least $5,000,000 (exclusive of
any proceeds raised for the express and sole purpose of redeeming or
repurchasing the Series A Cumulative Convertible Preferred Stock of the
Borrower); or
(c) Any single transaction or series or related transactions in which
the stockholders of the Borrower immediately prior to such transaction do not
own at least a majority of the outstanding shares of capital stock following
such transaction (a "Change of Control"); PROVIDED, that (i) the conversion or
redemption of the Series A Cumulative Convertible Preferred Stock into shares of
the Borrower's common stock and the sale of such shares from time to time
(exclusive of a transaction or series of transactions, upon the consummation of
such transaction or series of transactions, that results in a single person or
entity or related or affiliated entities holding a majority of the then
outstanding shares of capital stock following such transaction) and (ii) the
exercise by the Lender of its warrants for common stock of the Borrower, shall
not be deemed to constitute an Extraordinary Corporate Event; or
(d) A change in the majority of the members of the Borrower's Board
of Directors, which change is not supported and approved by at least a majority
of the current incumbent directors (or a majority of the current incumbent
directors) then remaining on the Board,
THEN, and in any such event, Lender may at its option and without notice of any
kind immediately terminate the Commitment and all other commitments and
obligations to make loans or advances or otherwise to extend credit to the
Borrower, and may by written notice to the Borrower, at its option declare the
outstanding principal and accrued interest of the Loans to be immediately due
and payable, whereupon the same shall become and be immediately due and payable
without presentment, demand, protest, deduction, set-off or further notice of
any kind, all of which are expressly waived by the Borrower.
12.3 WAIVERS. In addition to the foregoing waivers, the Borrower
expressly (i) waives all other notices in connection with the delivery,
acceptance, performance, default or enforcement of this Agreement, or of any
document or instrument evidencing any security for payment of indebtedness
under this Agreement, (ii) consents to any and all delays, extensions,
renewals or other modifications of this Agreement or waivers of any term
hereof and (iii) agrees that no such action, failure to act or failure to
exercise any right or remedy on the part of Lender shall in any way affect,
impair or be a defense to the Obligations or be construed as a waiver by
Lender of, or otherwise affect, any of Lender's
15
rights under this Agreement, or under any document or instrument evidencing any
security for the payment of the Borrower's obligations under this Agreement.
12.4 UNIFORM COMMERCIAL CODE. Upon the occurrence of any such Event of
Default or an Extraordinary Corporate Event, Lender shall have the right to
exercise in respect of the Collateral all the rights and remedies available
to a secured party upon default under the Uniform Commercial Code (the
"CODE") in effect at the time in New York. For purposes of the Code, the
Borrower agrees that (I) in the event that notice to the Borrower is
required, written notice mailed by ordinary mail to the Borrower at the
address currently in effect for the Borrower under Section 12 hereof five (5)
business days prior to the date of public sale of the Collateral or prior to
the date after which private sale or any other disposition of the Collateral
will be made shall constitute reasonable notice, but notice given in any
other reasonable manner or at any other reasonable time shall be sufficient;
(II) without precluding any other methods of sale, the sale of Collateral
shall have been made in a commercially reasonable manner, but in any event,
Lender may sell at its option on such terms as it may choose without assuming
any credit risk and without any obligation to advertise; (III) at Lender's
request the Borrower will assemble the Collateral, or any part thereof, and
make such Collateral available to Lender at a time and place designated by
Lender, all at the expense of the Borrower and (IV) the Borrower shall remain
liable for any deficiency of the proceeds of any sale or other disposition of
the Collateral to pay in full the Obligations.
12.5 EXPENSES; PROCEEDS OF COLLATERAL. The Borrower will pay to Lender,
as soon as incurred, all costs and expenses, including attorneys' fees
(which, however, shall not exceed $30,000 before the execution of this
Agreement), related or incidental to the care, holding, retaking, preparing
for sale, selling or collection of or realization upon any of the Collateral
or relating or incidental to the establishment or preserving or enforcement
of the rights of Lender hereunder or in respect of any of the Collateral, and
obtaining legal advice with regard to any of the foregoing. Further, net
proceeds of the Collateral resulting from sale, collection or otherwise, and
other available monies coming into the hands of Lender, may be applied by it,
before or after the occurrence of an Event of Default, to the satisfaction or
reduction of such of the costs and expenses and the Borrower's indebtedness
on account of any Obligation as Lender may see fit, whether or not matured.
The remedies of Lender shall be cumulative and may be exercised concurrently
or separately. No failure or delay on the part of Lender in exercising any
right or remedy granted to it hereby or otherwise provided by law shall
operate as a waiver thereof.
13. NOTICES. Any notice required to be given hereunder shall be deemed
to have been given if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof
of service) or hand delivery, addressed as follows:
16
(a) If to the Lender:
Spherion Corporation
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attention: Lisa Iglesias
General Counsel
Telephone: (954) - 938-7600
Facsimile: (954) - 938-7780
With copies to (which copy shall not constitute notice):
Baker & McKenzie
1200 Brickell Avenue
Miami, Florida 33131
Attention: Andrew Hulsh
Telephone: (305) - 789-8900
Facsimile: (305) - 789-8953
(b) If to the Borrower:
Worldwide Xceed Group, Inc.
233 Broadway
New York, New York 10279
Attention: Chief Legal Officer
Telephone: 312.360.6587
Facsimile: 312.360.6575
with a copy to (which copy shall not constitute notice):
Katten Muchin Zavis
525 West Monroe
Chicago, Illinois 60661
Attention: Linda Wight, Esq.
Telephone: 312.902.5563
Facsimile: 312.577.4499
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
14. COMPUTATION OF INTEREST; HOLIDAYS. Interest and premiums (if any)
shall be computed on a 360-day year basis. Whenever any payment to be made
hereunder shall be stated to be due on a Saturday, Sunday, or a public
holiday under the laws of the State of Florida, such payment may be made on
the next succeeding business day, and
17
such extension of time shall in such case be included in computing interest and
premiums (if any) in connection with such payment.
15. FEES AND TAXES. The Borrower agrees to pay any and all taxes (other
than taxes on or measured by net income of Lender) incurred or payable in
connection with the execution and delivery of this Agreement and all Loans,
as well as all costs and expenses (including attorneys' fees) incurred by
Lender in enforcing any of the Obligations. The Borrower also agrees to pay
within three business (3) days following receipt of an invoice of the legal
fees and expenses of Baker & McKenzie, counsel to the Lender, in connection
with the transactions contemplated hereby, not to exceed $30,000 for the
expenses incurred prior to the execution of this Agreement.
16. ASSIGNMENT. Lender may assign this Agreement and deliver to the
assignee(s) all or any of the property then held by it as security hereunder,
and the assignee(s) shall thereupon become vested with all the powers and
rights herein given to Lender with respect thereto; and Lender shall
thereafter be forever relieved and fully discharged from any liability or
responsibility in the matter.
17. SEVERABILITY. In the event any one or more of the provisions of
this Agreement shall for any reason be held invalid, illegal or
unenforceable, in whole or in part or in any respect, or in the event any one
or more of the provisions of this Agreement operate or would prospectively
operate to invalidate this Agreement, then and in any of those events, such
provision or provisions only shall be deemed null and void and shall not
affect any other provision of this Agreement and the remaining provisions of
this Agreement shall remain operative and in full force and effect and shall
in no way be affected, prejudiced or disturbed thereby.
18. HEADINGS, GENDER AND NUMBER. Headings of Sections and Subsections
herein are for reference purposes only and shall have no effect on the
meaning, interpretation or enforcement of this Agreement. Whenever the
context requires, the gender of all words used herein shall include the
masculine, feminine and neuter, and the number of all such words shall
include the singular and plural thereof.
19. WAIVER OF JURY TRIAL. The Borrower and Lender severally,
voluntarily, knowingly and intentionally WAIVE ANY AND ALL RIGHTS TO TRIAL BY
JURY in any legal action or proceeding arising under or in connection with
this Agreement, regardless of whether such action or proceeding concerns any
contractual or tortious or other claim. The Borrower and any such guarantor
severally acknowledge that this waiver of jury trial is a material inducement
to Lender in accepting this Agreement, that Lender would not have accepted
this Agreement without this jury trial waiver, and that each of them has been
represented by an attorney or has had an opportunity to consult with an
attorney regarding this Agreement and understands the legal effect of this
jury trial waiver.
18
20. BINDING AGREEMENT. This Agreement shall be binding upon the
Borrower and its successors and assigns and the terms hereof shall inure to
the benefit of Lender and its successors and assigns.
21. GOVERNING LAW. This Agreement shall be deemed to have been made
under, and shall in all respects be governed by, the laws of the State of New
York without regard to any conflict of law rule or principal that would give
effect to the laws of another jurisdiction, and none of its terms or
provisions may be waived, modified, amended or terminated except as Lender
may consent thereto in writing.
22. CONFIDENTIALITY. Notwithstanding any other provision contained
herein, if the Lender receives information regarding the Borrower which is
not otherwise publicly available (such information, the "CONFIDENTIAL
INFORMATION"), the Lender(i) shall not use or distribute such Confidential
Information in any manner whatsoever which would violate any applicable
securities laws, (ii) shall not disclose such information to any third
parties except such disclosure as shall may be required by Lender to comply
with any applicable law, rule, regulation, administrative order or court
order, and (iii) other than as set forth in the preceding clause (ii), shall
undertake to keep all such Confidential Information confidential and shall
undertake all necessary actions which a prudent person or institution would
take to keep such Confidential Information confidential.
19
IN WITNESS WHEREOF, the parties hereto have executed this Revolving
Credit Agreement as of the day and year first written above.
ATTEST: SPHERION CORPORATION
/s/ Lisa Iglesias By: /s/ Roy G. Krause
- ----------------------------- ------------------------------
Secretary Name: Roy Krause
----------------------------
Title: CFO
----------------------------
ATTEST: WORLDWIDE XCEED GROUP, INC.
/s/ Richard Dennerline By: /s/ Douglas C. Laux
- ----------------------------- -----------------------------
Secretary Name: Douglas C. Laux
----------------------------
Title: Chief Financial Officer
----------------------------
20
EXHIBIT A
DEFINITIONS
1. DEFINED TERMS. The following capitalized terms, when used in this
Agreement, shall have the following respective meanings:
"ENVIRONMENTAL LAWS" shall mean all applicable federal, state or local
statutes, laws ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment including, but not limited to, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended ("CERCLA"), and the Comprehensive Environmental Response Compensation
Liability Information Systems List ("CERCLIS").
"HAZARDOUS MATERIAL" shall mean:
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous
or toxic chemical, material or substance within the
meaning of any other applicable federal, state or
local law, regulation, ordinance or requirement
(including consent decrees and administrative orders)
relating to or imposing liability or standards of
conduct concerning any hazardous, toxic or dangerous
waste, substance or material, all as amended or
hereafter amended.
"MATERIAL ADVERSE EFFECT" shall mean (A) a materially adverse effect on
the assets, business, operations, properties or condition (financial or
otherwise) of the Borrower, (B) an impairment of the ability of the Borrower to
perform any of its obligations hereunder or under the Master Revolving Credit
Note, or (C) an impairment of the validity or enforceability of, or an
impairment of the rights, remedies or benefits available to the Lender under
this Agreement or the Master Revolving Credit Note or (D) any significant
diminution of the amount which the Lender would be likely to receive (after
giving consideration to delays in payment and costs of enforcement) in the
liquidation of any of the Collateral.
"SECURITIES LAWS" means the Securities Act of 1933, as amended, the
Securities and Exchange Act of 1934, as amended,
A-1
the Investment Borrower Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations promulgated under any of the foregoing.
2. OTHER DEFINED TERMS. The following capitalized terms, when used in
this Agreement without definition, shall have the meanings set forth in the
Sections of this Agreement indicated below:
DEFINED TERM SECTION REFERENCE
Agreement Preamble
Borrower Preamble
Borrower Financial Statements Section 8.2(d)
Borrower SEC Reports Section 8.2(a)
Borrower Termination Date Section 7
CERCLA Definition of Environmental Laws
CERCLIS Definition of Environmental Laws
Code Section 12.11
Collateral Section 11
Commitment Section 2
Confidential Information Section 22
Credit Facility First Whereas clause
Draw Certificate Section 3
Draw Request Section 3
ERISA Section 8.12
Events of Default Section 12.1
Extraordinary Corporate Events Section 12.2
Fair Market Value Section 10.8
Joint Marketing Agreement Section 12.1
Interest Rate Section 5
Lender Preamble
Loan(s) Section 2
Master Revolving Credit Note Section 2
Obligations Section 11
Permitted Liens Section 10.2
SEC Section 8.2(a)
Termination Date Section 2
Warrant Agreement Second Whereas clause
Warrants Second Whereas clause
Warrant Shares Second Whereas clause
A-2
EXHIBIT B
MASTER REVOLVING CREDIT NOTE
$5,000,000 November 15, 2000
New York, New York
FOR VALUE RECEIVED, the undersigned, WORLDWIDE XCEED GROUP, INC., a
Delaware corporation (the "Borrower"), promises to pay to the order of SPHERION
CORPORATION, a Delaware corporation (the "LENDER"), the principal sum of FIVE
MILLION DOLLARS ($5,000,000), or so much of those Loans as may be outstanding
from time to time pursuant to that Revolving Credit Agreement dated the date
hereof by and between the Lender and the Borrower (the "REVOLVING CREDIT
AGREEMENT"), together with interest on the principal balance (the "PRINCIPAL
BALANCE") from time to time outstanding hereunder at a fluctuating rate equal to
two percent (2%) per annum over the "Prime Rate" as publicly announced in the
"Money Rates" section of the WALL STREET JOURNAL (the "INTEREST RATE"). The rate
of interest shall be calculated on the first business day of each calendar
quarter for all Loans outstanding during such calendar quarter. Payments to the
Lender of principal and/or accrued interest under this Note shall be made to
Lender by wire transfer in immediately available funds to an account designated
by Lender to the Borrower in writing or, at Lender's option, to Spherion
Corporation, 2050 Spectrum Boulevard, Fort Lauderdale, Florida, 33309, or at
such other place as the Lender may from time to time designate to the Borrower
in writing. All capitalized terms used but not defined herein shall have the
respective meanings set forth in the Revolving Credit Agreement.
Interest shall be payable by the Borrower only in arrears, commencing
on the 1st day of the month following the date of this Master Revolving Credit
Note (the "NOTE") and thereafter on the 1st day of each of month until the
Termination Date (as defined below).
This Note shall mature on the earlier to occur (the "MATURITY DATE") of
(i) May 15, 2002 , (II) the occurrence of an "Event of Default" under and as
defined in Section 12.1 of the Revolving Credit Agreement, (III) the occurrence
of an "Extraordinary Corporate Event" under and as defined in Section 12.2 of
the Revolving Credit Agreement , and (iv) the Borrower Termination Date, at
which time the entire unpaid Principal Balance and any accrued and unpaid
interest shall be due and payable. The Borrower may prepay the Principal Balance
of and/or accrued and unpaid interest on this Note, in whole or in part, at any
time and from time to time prior to the Maturity Date without premium or
penalty; provided, however, that any such prepayments of the Principal Balance
shall be made only in multiples of $50,000. Any amounts prepaid by the Borrower
may be reborrowed; provided, however, that at no time may the outstanding
Principal Balance hereof exceed $5,000,000.
B-1
All payments made hereunder shall be credited first to accrued and
unpaid interest and then to principal; provided that, upon an Event of Default
or an Extraordinary Corporate Event (as defined in the Revolving Credit
Agreement), the Lender may, in its sole discretion, and in such order as it may
choose, apply any payment to interest, principal and/or lawful charges and
expenses then accrued.
Interest hereunder shall be charged only on the sums advanced from the
date of advance to the date of repayment. Notwithstanding anything to the
contrary contained herein, the Borrower does not intend or expect to pay, nor
does the Lender intend or expect to charge, accept or collect any interest which
when added to any other charge upon the Principal Balance, shall be in excess of
the highest lawful rate allowable under the laws of the State of Florida or the
United States of America, whichever is higher or unlimited. Should acceleration,
prepayment or any other charges upon the Principal Balance or any portion
thereof result in the computation or earning of interest in excess of the
highest lawful rate allowable under the laws of the State of Florida or the
United States of America, whichever is higher or unlimited, then any and all
such excess is hereby waived and shall be applied against the remaining
Principal Balance, if any, and thereafter refunded to the Borrower.
If any Event of Default or an Extraordinary Corporate Event occurs, the
Lender may, at its option, accelerate maturity, and the unpaid Principal Balance
hereof and all unpaid accrued interest shall thereupon immediately become due
and payable without presentment, demand, notice or protest, and the Lender shall
have the right to set off against this Note all money owed by Lender in any
capacity to the Borrower. Interest shall accrue at a fluctuating rate per annum
equal to the Interest Rate plus two percent (2%) per annum, on the entire unpaid
principal amount hereof, from the date of such Event of Default or Extraordinary
Corporate Event until the date the unpaid principal amount hereof is paid in
full. In addition, the occurrence of an Event of Default or Extraordinary
Corporate Event shall immediately terminate the Borrower's right to further
borrowings under this Master Revolving Credit Note. The Borrower further agrees
to pay all costs of collection, including attorneys' fees (inclusive of any
bankruptcy proceedings), in case the principal of this Note or any interest
thereof is not paid when due.
No delay or omission on the part of the Lender in exercising any right
hereunder shall operate as a waiver of such right or any other right under this
Note. In addition, the waiver by the Lender of the Borrower's prompt and
complete performance of, or default under, any provision of this Note shall not
operate or be construed as a waiver of any subsequent breach or default, and the
failure by the Lender to exercise any right or remedy which it may possess
hereunder shall not operate or be construed as a bar to the exercise of any such
right or remedy upon the occurrence of any subsequent breach or default.
This Note may not be modified, amended or terminated, except in a
writing executed by the Borrower and the Lender.
B-2
This Note shall be governed by and construed in accordance with the
laws of the State of New York.
This Note shall be binding upon the Borrower and its successors and
permitted assigns; provided that Borrower may not assign this Note without
Lender's prior written consent.
B-3
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note
on the 15th day of November, 2000.
WORLDWIDE XCEED GROUP, INC.
By: /s/ Douglas C. Laux
-----------------------------------
Name: Douglas C. Laux
Title: Chief Financial Officer
ATTEST:
/s/ Richard Dennerline
- -----------------------------
Secretary
B-4
SCHEDULE 8.1
SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES
None, except:
Pulse Interactive B.V., a wholly-owned subsidiary.
Selling stockholders of Pulse Interactive have the right to receive up to two
(2) subsequent earn-out payments of Xceed Common Stock during the first year
following the acquisition (the acquisition is dated February 2000). The first
earn-out payment became payable in September 2000 in the amount of approximately
82,000 shares of Common Stock. The second earn-out payment, if any, is due in
March 2001.
S-1
SCHEDULE 8.2 (D)
MATERIAL ADVERSE CHANGES
None, except as disclosed in the Borrower's Form 10-K for Fiscal Year Ending
August 31, 2000
S-2
SCHEDULE 8.3
LITIGATION
NONE, EXCEPT:
- - VANCE SPEARS V. X-CEED, INC. This action was filed in the Los Angeles
Superior Court and was recently removed to the United States District
Court, Central District of California, No. CV-00-10531 LGB (AIJx).
Plaintiff alleges common law claims of fraud, negligent misrepresentation,
and breach of contract premised upon his claim that he was offered
employment with the company, quit his job in reliance on that offer, and
then was told that there would be no job position for him. The amount of
plaintiff's alleged damages is not yet clear. On the one hand, plaintiff
has denied that his alleged damages are less than $125,000. On the other
hand, he states that his lost income was $21,450 as of August 31, 2000,
that he has also lost benefits and that his lost income continues at the
rate of about $15,000 per year. Plaintiff has filed a motion to remand the
action to state court, which motion is set for hearing on November 27,
2000. At this juncture, in light of the fact that plaintiff's deposition
has yet to be taken and discovery has been limited, it is premature to
evaluate the Company's exposure.
- - JEANNE LAHAIE V. XCEED INC. This claim is currently pending before the
United States Equal Employment Opportunity Commission, Charge No.
370A01126, in San Francisco, California. Plaintiff alleges that she was
sexually harassed and that she was retaliated against for having brought
the harassment to the attention of management. On behalf of the Company, we
filed a position statement with the EEOC on or about September 19, 2000,
denying the allegations. The EEOC is currently investigating this matter.
At this juncture, it is premature to evaluate the company's exposure.
- - YETUNDE A. JUDE V. XCEED INC. This claim was filed with the United States
Equal Employment Opportunity Commission, Charge No. 110A03544, in Atlanta,
Georgia. Plaintiff claimed that she had been discriminated against on the
basis of her race and retaliated against, presumably because she complained
about alleged unfair treatment by her team members. On behalf of the
Company, we filed a position statement with the EEOC on or about September
8, 2000. On September 29, 2000, the EEOC issued a determination that there
was insufficient evidence to support plaintiff's claims, and it advised
plaintiff of her right to sue. Plaintiff has 90 days from her receipt of
that notice to file a lawsuit alleging discrimination.
- - JOHN HALL V. XCEED INC. This claim was filed on about August 3, 2000 with
the United States Equal Employment Opportunity Commission ("EEOC"), Charge
No. 160A02438, in New York, New York and has been resolved by the EEOC in
Xceed's favor.
S-3
- - BRENDA ISAAC V. XCEED, INC., MCLAUGHLIN & STERN, L.L.P., WERNER G. HAASE,
AND RICHARD J. BLUMBERG. 00 Civ. 7461, filed in the United States District
Court for the Southern District of New York on October 3, 2000. The
complaint alleges violations of Section 10(b) of the Securities and
Exchange Act of 1934 and common law fraud arising from the 1999 merger of
Xceed Motivation Atlanta, Inc. and Xceed, Inc., as well as breach of
contract arising from certain provisions of the merger agreement. Plaintiff
demands $2,217,989.51 in compensatory damages and $100 million in punitive
damages. A response is not yet due. In the event that the litigation
proceeds, the Company has informed us that it intends to vigorously contest
and defend against the allegations.
- - TARGET CAPITAL CORP. AND YITZ GROSSMAN V. X-CEED, INC., A NEW YORK
CORPORATION FORMERLY KNOWN AS WATER-JEL TECHNOLOGIES, INC., WATER-JEL
TECHNOLOGIES, INC., A NEW YORK CORPORATION, AND X-CEED, INC., A DELAWARE
CORPORATION, A/K/A XCEED, INC., A DELAWARE CORPORATION, 00 Civ. 604424,
filed in New York Supreme Court on October 12, 2000. The complaint alleges
breaches of contract relating to two consulting agreements between
plaintiffs and Water-Jel Technologies, Inc. Plaintiff demands compensatory
damages in the amount of $681,115 plus interest. In the event that the
litigation proceeds, the Company has informed us that it intends to
vigorously contest and defend against the allegations.
- - On May 26, 2000, Xceed filed a lawsuit in the Superior Court of N.Y.,
Commercial Division for $1,500,000 for services performed. Drinks
counterclaimed on July 21, 2000 for $14,000,000 alleging Xceed's poor
performance caused Drinks.com Inc. to loose projected revenue. Xceed has
filed a motion to dismiss Drinks counterclaim.
- - Although no suit has been filed, Xceed is aware of a potential claim by a
former client, ForestFactory, Inc., regarding what it contends were
substandard services supplied by Xceed. ForestFactory, Inc. has disputed
the two remaining and outstanding invoices in their entirety, an aggregate
amount of $1,418,563.70. Xceed and ForestFactory have addressed
ForestFactory's grievances in good faith negotiations, and have arrived at
what appears at this time to be a final resolution and settlement. Said
final resolution and settlement has been reduced to a written agreement by
Xceed's in-house legal department and counsel for ForestFactory, but the
agreement has not, as of the date of this letter, been signed by either
party.
We are aware of three claims for stock options against the Company, none of
which has been escalated to litigation:
- - Graham Barron claims he is entitled to 11,000 Methodfive stock options. We do
not believe his claim has merit because he failed to timely exercise his stock
options.
- - Gregg Rock claims he was deprived of the opportunity to purchase 7,500
Methodfive stock options at the strike price. We do not believe his claim has
merit because the Company is in no way responsible for Mr. Rock's failure to
exercise his options.
S-4
- - Rebecca Stupak raised a claim for the option to purchase 1,900 shares of
Methodfive stock. The Company has reached a settlement with Ms. Stupak.
S-5
SCHEDULE 8.5
FICTITIOUS NAMES
NONE, EXCEPT:
Xceed Inc.
X-Ceed, Inc.
Water-Jel Technologies, Inc., a division which has been sold and discontinued
Journeycorp, a division which has been sold and discontinued
Names of companies acquired by the Borrower by merger:
5th Floor Interactive, LLC
Distributed Systems Solutions, Inc.
Catalyst Consulting Services, Inc.
Big Theory, LLC
Sterling Carteret, Inc.
Methodfive Inc.
Zabit and Associates, Inc.
Reset, Inc.
Mercury Seven, Inc.
Enterprise Solution Group, Inc.
None of the foregoing companies survived any such mergers.
Pulse Interactive, B.V., as subsidiary
S-6
SCHEDULE 8.9
ENVIRONMENTAL
- NONE -
S-7
SCHEDULE 8.12
ERISA
- NONE -
S-8
SCHEDULE 10.1
EXISTING INDEBTEDNESS
NONE, EXCEPT:
(i) Two existing Chase Manhattan Bank Letters of Credit in the amounts of
$322,569.00 and $1,316,215.50.
(ii) One Chase Manhattan Bank Unsecured Line of Credit in the amount of
$5,000,000.00.
S-9
SCHEDULE 10.2
ENCUMBRANCES
None, except***:
1. Debtor: Catalyst Consulting Services, Inc.
Secured Party: First Security Bank, N.A. Small Business Loan Servicing
Jurisdiction: Department of Commerce/UCC Division, Utah Secretary of State
Original File Number: 98628420
Original File Date: 12/22/98
Collateral: Inventory, Accounts, General Intangibles, Equipment, Products
and Proceeds
2. Debtor: Methodfive LLC
Secured Party: Fleet Bank, N.A.
Jurisdiction: New York Department of State
Original File Number: 97209968
Original File Date: 10/09/97
Collateral: Accounts, Accounts Receivable, Contract Rights, General
Intangibles, Chattel Paper, Inventory, Machinery, Equipment, Fixtures,
Products and Proceeds
3. Debtor: X-Ceed, Inc.
Secured Party: The Chase Manhattan Bank
Jurisdiction: New York Department of State
Original File Number: 99254330
Original File Date: 12/20/99
Collateral: Inventory, Equipment, Accounts, Fixtures, Chattel Paper,
General Intangibles, Products and Proceeds
4. Debtor: 5th Floor Interactive
Secured Parties: Rockford Industries, Inc.; Chase Bank of Texas, N.A.
National Association, as Trustee
Jurisdiction: New York Department of State
Original File Number: 98243792
Original File Date: 11/17/98
Collateral: Equipment, Inventory, Accounts, Machinery, Fixtures, All
Assets, Proceeds
The encumbrances set forth in items 1 - 4 above need to be released or
subordinated as to accounts receivable in a form satisfactory to Lender, in each
case, prior to the making of the initial loan under the Revolving Credit
Agreement.
S-10
***This report is subject to change based on those outstanding lien search
reports.
S-11
SCHEDULE 10.4
EXISTING EXTENSIONS OF CREDIT
None
S-12