1
EXHIBIT 10.2
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Second
Amendment") is made and entered into as of this 30th day of May, 1997, by and
among STAFFMARK, INC., a Delaware corporation (the "Borrower"), MERCANTILE BANK
NATIONAL ASSOCIATION, as successor by merger to Mercantile Bank of St. Louis
National Association, a national banking association ("Mercantile"), DEPOSIT
GUARANTY NATIONAL BANK, a national bank, THE FIRST NATIONAL BANK OF CHICAGO, a
national bank and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national bank
(collectively, with Mercantile, the "Lenders") and MERCANTILE BANK NATIONAL
ASSOCIATION, as successor by merger to Mercantile Bank of St. Louis National
Association, a national banking association, as agent on behalf of Lenders (in
such capacity, the "Agent").
WITNESSETH:
WHEREAS, the Borrower, Mercantile and the Agent have
previously entered into that certain Credit Agreement dated October 4, 1996, as
amended by a certain First Amendment to Credit Agreement dated as of December
18, 1996 made by and among Borrower, Mercantile and Agent, as partially
assigned to the other Lenders by Mercantile pursuant to three certain
Assignment Agreements each dated as of January 6, 1997 and respectively made by
and among Mercantile, such respective Lenders and the Agent (as amended and as
the same may be further amended from time to time, the "Credit Agreement"); and
WHEREAS, the Borrower has executed and delivered to Lenders,
respectively, its Revolving Credit Notes in the aggregate original principal
amount of $20,000,000.00 (as amended and as the same may be further amended
from time to time, the "Revolving Credit Notes"); and
WHEREAS, the Borrower has executed and delivered to Lenders,
respectively, its Reducing Revolving Credit Notes in the aggregate original
principal amount of $30,000,000.00 (as amended and as the same may be further
amended from time to time, the "Reducing Revolver Notes"); and
WHEREAS, the Borrower, Agent and Lenders desire to make
certain modifications to the Credit Agreement and to amend and restate the
Revolving Credit Notes and the Reducing Revolver Notes upon the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto mutually promise and agree as follows:
1. Section 1 of the Credit Agreement hereby is deleted
in its entirety and the following is substituted in its place:
The "Term" of this Agreement shall commence
on the date hereof and shall end on April 1, 2002, unless
earlier terminated pursuant to Section 3.12 or by
acceleration or otherwise upon the occurrence of an Event of
Default under this Agreement, in which case the Term hereof
shall end on such earlier date.
2. The definition of "Acceptable Acquisition" in
Section 2 of the Credit Agreement hereby is deleted in its entirety and the
following is substituted in its place:
32
2
Acceptable Acquisition shall mean any Acquisition of an
ongoing business similar to or consistent with the Borrower's
current line of business where each of the following are
true: (a) such Acquisition has been: (i) in the event a
corporation or its assets is the subject of such Acquisition,
either (x) approved by the Board of Directors of the
corporation which is the subject of such Acquisition or (y)
recommended by such Board of Directors to the shareholders of
such corporation, (ii) in the event a partnership is the
subject of such Acquisition, approved by a majority (by
percentage of voting power) of the partners of the
partnership which is the subject of such Acquisition, (iii)
in the event an organization or entity other than a
corporation or partnership is the subject of such
Acquisition, approved by a majority (by percentage of voting
power) of the governing body, if any, or by a majority (by
percentage of ownership interest) of the owners of the
organization or entity which is the subject of such
Acquisition or (iv) in the event the corporation, partnership
or other organization or entity which is the subject of such
Acquisition is in bankruptcy, approved by the bankruptcy
court or another court of competent jurisdiction; (b)
Borrower has given Agent and Lenders at least Ten (10)
Business Days prior written notice of such Acquisition if
Lenders' consent is required under the succeeding clause (c)
or Five (5) Business Days prior written notice of such
Acquisition if Lenders' consent is not required under the
succeeding clause (c); (c) if (1) the sum of: (i) the
principal amount of any Loan requested in connection with
such Acquisition, plus (ii) the then outstanding principal
balance of all Loans made in connection with an Acceptable
Acquisition, exceeds $20,000,000.00, and the portion of the
purchase price for such Acquisition payable by Borrower in
cash exceeds $8,000,000.00, or (2) the portion of the
purchase price for such Acquisition payable by Borrower in
cash exceeds the lesser of $15,000,000.00 or 25% of
Consolidated Shareholders' Equity, Borrower has obtained the
prior written consent of the Required Lenders and the Agent;
and (d) Borrower or a wholly-owned Subsidiary of Borrower is
the surviving entity; provided, however, that no Acquisition
shall be an Acceptable Acquisition unless both as of the date
of any such Acquisition and immediately following such
Acquisition the Borrower is, and on a pro forma basis
projects that it will continue to be, in compliance with the
terms, covenants and conditions contained in this Agreement
and the other Transaction Documents.
3. The term "Borrowing Base Certificate" as defined in
Section 3.1(c) of the Credit Agreement hereby is amended and deemed to refer to
the Borrowing Base Certificate in the form of Exhibit A attached to this
Amendment. All references in the Credit Agreement or any of the other
Transaction Documents to the Borrowing Base Certificate shall hereafter mean
the Borrowing Base Certificate in the form of Exhibit A attached to this
Amendment.
Schedule 1 to the Compliance Certificate attached as Exhibit E to the Credit
Agreement is hereby is amended to the form of Schedule 1 attached to this
Amendment. All references in the Credit Agreement or any of the other
Transaction Documents to the Compliance Certificate or to such Schedule 1 shall
hereafter mean the Compliance Certificate with a Schedule 1 in the form of
Schedule 1 attached to this Amendment.
4. The definition of "Consolidated Fixed Charges" in
Section 2 of the Credit Agreement hereby is deleted in its entirety and the
following is substituted in its place:
Consolidated Fixed Charges shall mean the sum of all of the
Borrower's and its Consolidated Subsidiaries' expenses under
any operating leases within the specified period of any such
calculation, plus interest paid during such specified period,
including, without limitation, interest charges during such
period under any Capitalized Leases, plus all income taxes
paid during the specified period of such calculation, plus
all payments of principal made on any Subordinated Debt as
permitted to be paid pursuant to the terms of the
subordination and standby agreement or intercreditor
agreement made between Agent and the holder of any such
Subordinated Debt, plus all cash payments made with respect
to any Deferred Payment Obligations within the specified
period of any such calculation, plus Capital Expenditures
made during the specified period of any such calculation,
excluding any expenditures for capital assets acquired by
Borrower and its Consolidated Subsidiaries in an Acceptable
Acquisition.
33
3
5. A new definition of "Deferred Payment Obligation"
shall be added to Section 2 of the Credit Agreement as follows:
Deferred Payment Obligation shall mean any contingent
obligation incurred by Borrower or any of its Consolidated
Subsidiaries in connection with any Acquisition pursuant to
which Borrower or any such Consolidated Subsidiary upon the
occurrence of specified circumstances would be required to
pay or deliver additional consideration (whether in
installments or in a lump sum) in the form of cash payments
or additional shares of Borrower's stock only (no other forms
of Deferred Payment Obligations being permitted by Agent or
Lenders hereunder without their prior written consent) to the
sellers or other third parties in connection with such
Acquisition.
6. The definition of "Eligible Accounts" in Section 2
of the Credit Agreement hereby is deleted in its entirety and the following is
substituted in its place:
Eligible Accounts shall mean all Accounts, except: (a)
Accounts which remain unpaid for more than ninety (90) days
after their invoice dates and Accounts which are not due and
payable within ninety (90) days after their invoice dates;
(b) Accounts owing by a single Account Debtor, including a
currently scheduled Account, if ten percent (10%) or more of
the balance owing by said Account Debtor upon said Accounts
is ineligible pursuant to clause (a) above; (c) Accounts with
respect to which the Account Debtor is a partner of the
Borrower or any Guarantor or a Related Party of the Borrower
or any Guarantor; (d) Accounts with respect to which payment
by the Account Debtor is or may be conditional and Accounts
commonly known as bill and hold Accounts or Accounts of a
similar or like arrangement; (e) Accounts with respect to
which the Account Debtor is not a resident or citizen of or
otherwise located in the United States of America, unless the
Account is backed by a commercial letter of credit in form
and substance acceptable to Agent and issued or confirmed by
a domestic bank acceptable to Agent; (f) Accounts with
respect to which the Account Debtor is the United States of
America or any department, agency or instrumentality thereof
unless such Accounts are duly assigned to Agent for the
benefit of each of the Lenders in accordance with all
applicable governmental and regulatory rules and regulations
(including, without limitation, the Federal Assignment of
Claims Act of 1940, as amended, if applicable) so that Agent
is recognized by the Account Debtor to have all of the rights
of an assignee of such Accounts; (g) Accounts with respect to
which the Borrower or any Guarantor is or may become liable
to the Account Debtor for goods sold or services rendered by
such Account Debtor to the Borrower or such Guarantor; (h)
Accounts with respect to which the goods giving rise thereto
have not been shipped and delivered to and accepted as
satisfactory by the Account Debtor thereof or with respect to
which the services performed giving rise thereto have not
been completed and accepted as satisfactory by the Account
Debtor thereof; (i) Accounts (other than specialty medical
Accounts or, except as made ineligible below, information
technology Accounts) which are not invoiced (and dated as of
such date) and sent to the Account Debtor thereof
concurrently with or not later than fifteen (15) days after
the shipment and delivery to and acceptance by said Account
Debtor of the goods giving rise thereto or the performance of
the services giving rise thereto, and information technology
Accounts which are not invoiced (and dated as of such date)
and sent to the Account Debtor thereof concurrently with or
not later than thirty (30) days after the shipment and
delivery to and acceptance by said Account Debtor of the
goods giving rise thereto or the performance of the services
giving rise thereto; (j) Accounts which constitute specialty
medical Accounts and which are not invoiced (and dated as of
such date) and sent to the Account Debtor thereof
concurrently with or not later than thirty (30) days after
the shipment and delivery to and acceptance by said Account
Debtor of the goods giving rise thereto or the performance of
the services giving rise thereto; (k) Accounts with respect
to which possession and/or control of the goods sold giving
rise thereto is held, maintained or retained by the Borrower
or any Guarantor (or by any agent or custodian of the
Borrower or any Guarantor) for the account of or subject to
further and/or future direction from the Account Debtor
thereof; (l) Accounts arising from a "sale on approval" or a
"sale or return;" (m) Accounts as to which Agent or the
Required Lenders, at any time or times hereafter, determines,
in good faith, by written notice to Borrower, that the
prospects of payment or performance by the Account Debtor is
or will be impaired; (n) Accounts of an Account Debtor to the
extent,
34
4
but only to the extent, that the same exceed a credit limit
determined by Agent or Required Lenders in their discretion,
by written notice to Borrower, at any time or times
hereafter; (o) Accounts with respect to which the Account
Debtor is located in the State of New Jersey, State of West
Virginia or the State of Minnesota; provided, however, that
such restriction shall not apply if the Borrower or Guarantor
having such Account (i) has filed and has effective (A) in
respect of Account Debtors located in the State of New
Jersey, a Notice of Business Activities Report with the New
Jersey Division of Taxation for the then current year, (B) in
respect of Account Debtors located in the State of West
Virginia, a Notice of Business Activities Report with the
West Virginia Division of Taxation for the then current year,
or (C) in respect of Account Debtors located in the State of
Minnesota, a Minnesota Business Activity Report with the
Minnesota Department of Revenue for the then current year, as
applicable, or (ii) is otherwise exempt from such reporting
requirements under the laws of such State(s); (p) Accounts
which constitute accruals for rebates to customers; (q)
Accounts of HRA, Inc., Tom Bain Personnel, Inc. and
APS-Advanced Personnel Service Acquisition Corporation,
unless: (X) Borrower has requested Agent to file UCC-1
financing statements with the Tennessee Secretary of State's
Office and in the Recorders' Offices of each county in
Tennessee where any of HRA, Inc., Tom Bain Personnel, Inc.
and APS-Advanced Personnel Service Acquisition Corporation
(whichever subsidiary's or subsidiaries' Accounts are to be
made Eligible Accounts) has an office or holds any inventory
or equipment on all collateral described in the Subsidiary
Security Agreement executed by HRA, Inc., Tom Bain Personnel,
Inc. and/or APS-Advanced Personnel Service Acquisition
Corporation, as the case may be, (Y) Agent has conducted UCC
searches in Tennessee to its satisfaction evidencing that
upon such filings in Tennessee that Agent will hold a first
perfected security interest in all Accounts, inventory,
equipment and other collateral of HRA, Inc., Tom Bain
Personnel, Inc. and/or APS-Advanced Personnel Service
Acquisition Corporation, as the case may be, located in
Tennessee, and (Z) Borrower has paid all search fees, filing
fees, recording fees and other amounts incurred or required
to be paid by Agent under (X) and (Y) above with the filing
in the Tennessee Secretary of State's Office providing for a
maximum collateral value in the State of Tennessee of at
least $10,000,000.00 for HRA, Inc., of at least $5,000,000.00
for Tom Bain Personnel, Inc. and of at least $5,000,000.00
for APS-Advanced Personnel Service Acquisition Corporation,
as the case may be; and (r) Accounts which are not subject to
a first priority perfected security interest in favor of
Agent for the benefit of each of the Lenders.
7. The definition of "Indebtedness" in Section 2 of the
Credit Agreement hereby is deleted in its entirety and the following is
substituted in its place:
Indebtedness of any Person shall mean and include, without
duplication, any and all indebtedness (principal, interest,
fees and other amounts), liabilities and obligations of such
Person which in accordance with generally accepted accounting
principles, consistently applied are or should be classified
upon a balance sheet of such Person as liabilities of such
Person, and in any event shall include all (i) obligations of
such Person for borrowed money or which have been incurred in
connection with the acquisition of Property, (ii) obligations
secured by any Lien or other charge upon any Property owned
by such Person, provided that if such Person has not assumed
or become liable for the payment of such obligations, such
obligations shall still be included in Indebtedness but the
determination of the amount of Indebtedness evidenced by such
obligations shall be limited to the book value of such
Property, (iii) obligations created or arising under any
conditional sale or other title retention agreement with
respect to any Property acquired by such Person, provided
that if the rights and remedies of the seller, lender or
lessor in the event of default under such agreement are
limited solely to repossession or sale of such Property, such
obligations shall still be included in Indebtedness but the
determination of the amount of Indebtedness evidenced by such
obligations shall be limited to the book value of such
Property, (iv) all Guarantees and other contingent
indebtedness, liabilities and obligations of such Person
whether or not reflected on the balance sheet of such Person
(other than any such contingent obligation with respect to
any Deferred Payment Obligation unless such Deferred Payment
Obligation is required to be classified as a liability on the
balance sheet of such Person) and (v) all obligations of such
Person as lessee under any Capitalized Lease.
35
5
8. The definition of "Reducing Revolver Commitment" in
Section 2 of the Credit Agreement hereby is deleted in its entirety and the
following is substituted in its place:
Reducing Revolver Commitment shall mean, subject to
termination or reduction as set forth in Section 3.12 and
subject to quarterly reductions required by Section 3.2(a),
for each Lender the amount set forth as the Reducing Revolver
Commitment of such Lender next to its name on the signature
pages of the Second Amendment to Credit Agreement dated May
30, 1997 made by and among Borrower, Lenders and Agent (the
"Second Amendment") or on the signature pages of any
subsequent Assignment Agreement to which such Lender is a
party.
9. The definition of "Reducing Revolver Notes" in
Section 2 of the Credit Agreement hereby is deleted in its entirety and the
following is substituted in its place:
Reducing Revolver Notes shall mean each of the amended and
restated Reducing Revolver Notes of the Borrower to be
executed and delivered to each of the Lenders pursuant to the
Second Amendment or thereafter pursuant to Section 3.2
herein, as such Notes may from time to time be amended,
modified, extended or renewed.
All references in the Credit Agreement or any of the other Transaction
Documents to the "Reducing Revolver Notes," the "Notes" and other references of
similar import as such relate to the Reducing Revolver Notes, shall hereafter
mean the Reducing Revolver Notes in the forms of Exhibit F through Exhibit I
attached to this Second Amendment.
10. The definition of "Revolving Credit Commitment" in
Section 2 of the Credit Agreement hereby is deleted in its entirety and the
following is substituted in its place:
Revolving Credit Commitment shall mean, subject to
termination or reduction as set forth in Section 3.12, for
each Lender the amount set forth as the Revolving Credit
Commitment of such Lender next to its name on the signature
pages of the Second Amendment or on the signature pages of
any subsequent Assignment Agreement to which such Lender is a
party.
11. The definition of "Revolving Credit Notes" in
Section 2 of the Credit Agreement hereby is deleted in its entirety and the
following is substituted in its place:
Revolving Credit Notes shall mean each of the amended and
restated Revolving Credit Notes of the Borrower to be
executed and delivered to each of the Lenders pursuant to the
Second Amendment or thereafter pursuant to Section 3.1(a), as
such Notes may from time to time be amended, modified,
extended or renewed.
All references in the Credit Agreement or any of the other Transaction
Documents to the "Revolving Credit Notes," the "Notes" and other references of
similar import as such relate to the Revolving Credit Notes, shall hereafter
mean the Revolving Credit Notes in the forms of Exhibit B through Exhibit E
attached to this Second Amendment.
12. Section 3.1(a) of the Credit Agreement hereby is
deleted in its entirety and the following is substituted in its place:
36
6
(a) Subject to the terms and conditions hereof, during the
Term of this Agreement, each Lender hereby severally agrees
to make such loans (individually, a "Revolving Credit Loan"
and collectively, the "Revolving Credit Loans"), to the
Borrower as the Borrower may from time to time request
pursuant to Section 3.3(a). The aggregate principal amount of
Revolving Credit Loans which Lenders, cumulatively, shall be
required to have outstanding hereunder at any one time, plus
the face amount of Letters of Credit issued by Agent and then
outstanding under Section 3.4, shall not exceed the lesser of
(i) the Borrowing Base (as hereinafter defined); or (ii)
Thirty Million Dollars ($30,000,000.00) (the "Total Revolving
Credit Commitment"), and the amount each Lender shall be
required to have outstanding hereunder as Revolving Credit
Loans plus their undivided Pro Rata Share participation
interest in each Letter of Credit issued by Agent under
Section 3.4 shall not exceed, in the aggregate at any one
time outstanding, the lesser of (x) the amount of such
Lender's Revolving Credit Commitment or (y) such Lender's Pro
Rata Share of the then current Borrowing Base. Each Revolving
Credit Loan under this Section 3.1(a) shall be made from the
several Lenders ratably in proportion to their respective
Revolving Credit Commitments. The Revolving Credit Loans from
Lenders to the Borrower shall be evidenced by Revolving
Credit Notes of the Borrower dated as of May 30, 1997 and
payable to the order of each of the Lenders in the respective
original principal amounts of each such Lender's Revolving
Credit Commitment and otherwise in the forms attached as
Exhibits B through E to the Second Amendment and incorporated
herein by reference (as the same may from time to time be
amended, modified, extended or renewed, the "Revolving Credit
Notes"). Subject to the terms and conditions hereof, the
Borrower may borrow, repay and reborrow such sums from
Lenders.
13. Section 3.2(a) of the Credit Agreement hereby is deleted
in its entirety and the following is substituted in its place:
(a) Subject to the terms and conditions hereof, during the
Term of this Agreement, each Lender hereby severally agrees
to make such loans (individually, a "Reducing Revolver Loan,"
and collectively, the "Reducing Revolver Loans"), to the
Borrower as the Borrower may from time to time request
pursuant to Section 3.3(b). The aggregate principal amount of
Reducing Revolver Loans which Lenders, cumulatively, shall be
required to have outstanding hereunder at any one time shall
not exceed the lesser of (i) Seventy Million Dollars
($70,000,000.00), or (ii) three hundred fifty percent (350%)
of the amount of Borrower's Consolidated Proforma Operating
Cash Flow determined as of the most recent fiscal
quarter-end, and the amount each Lender shall be required to
have outstanding hereunder as Reducing Revolver Loans shall
not exceed the lesser of (x) amount of such Lender's Reducing
Revolver Commitment, or (y) such Lender's Pro Rata Share
multiplied times an amount equal to three hundred fifty
percent (350%) of Borrower's Consolidated Proforma Operating
Cash Flow determined as of the most recent fiscal
quarter-end. Each Reducing Revolver Loan under this Section
3.2 shall be made by the Lenders ratably in proportion to
their respective Reducing Revolver Commitments. The Reducing
Revolver Loans shall be evidenced by the Reducing Revolver
Notes of the Borrower, each dated as of May 30, 1997 and
payable by the Borrower to the respective orders of each of
the Lenders in the aggregate original principal amount of
Seventy Million Dollars ($70,000,000.00) and otherwise in the
forms attached as Exhibits F through I to the Second
Amendment and incorporated herein by reference (as the same
may from time to time be amended, modified, extended or
renewed, the "Reducing Revolver Notes"). The Reducing
Revolver Notes shall mature on April 1, 2002, unless earlier
terminated by acceleration or otherwise upon the occurrence
of an Event of Default under this Agreement. Subject to any
such earlier maturity by reason of acceleration or otherwise
and in addition to any voluntary reduction requested by
Borrower pursuant to Section 3.12, the aggregate Reducing
Revolver Commitments of the Lenders shall be reduced by the
amount of Five Million Eight Hundred Thirty-Three Thousand
Three Hundred Thirty-Three and 33/100 Dollars ($5,833,333.33)
on the first day of each fiscal quarter commencing with the
first such reduction on July 1, 1999 and continuing on the
first day of each fiscal quarter thereafter during the Term
hereof, with such reductions being applied to the respective
Reducing Revolver Commitments of the Lenders in accordance
with their Pro Rata Shares thereof. In the event any such
quarterly reduction in the aggregate Reducing Revolver
Commitments shall cause the amount of the Reducing Revolver
Commitments of all of the Lenders to be decreased below the
then outstanding principal amount of all Reducing Revolver
Loans to Borrower, or in the event any reduction in
Borrower's most recent quarter-end Consolidated Proforma
Operating Cash Flow shall cause the aggregate principal
amount of the Reducing Revolver Loans to exceed three hundred
fifty percent (350%) of such most recent
37
7
quarter-end Consolidated Proforma Operating Cash Flow,
Borrower agrees to pay to Agent for distribution to the
Lenders in accordance with their respective Pro Rata Shares
of the Reducing Revolver Commitments, the amount by which the
aggregate outstanding Reducing Revolver Loans then exceeds
the lesser of the then available aggregate Reducing Revolver
Commitments or three hundred fifty percent (350%) of
Borrower's most recent quarter-end Consolidated Proforma
Operating Cash Flow. To the extent such sums have not been
previously repaid pursuant to the preceding sentence, the
entire outstanding and unpaid principal balance of the
Reducing Revolver Loans shall be due and payable on April 1,
2002. Subject to the terms and conditions of this Agreement,
the Borrower may borrow, repay and reborrow the amounts
available under this Section 3.2.
14. Section 3.4(a)(iii) of the Credit Agreement hereby
is deleted in its entirety and the following is substituted in its place:
(iii) the aggregate undrawn face amount of all outstanding
Letters of Credit shall not at any one time exceed Seven
Million Five Hundred Thousand Dollars ($7,500,000.00) and the
aggregate undrawn face amount of all outstanding Letters of
Credit plus the outstanding principal amount of all Revolving
Credit Loans shall not at any one time exceed the lesser of
(a) the Borrowing Base or (b) Thirty Million Dollars
($30,000,000.00); and
15. Section 7.1(a)(ix) of the Credit Agreement hereby is
deleted in its entirety and the following two paragraphs are substituted in its
place:
(ix) Within forty-five (45) days after the end of each
fiscal quarter, a schedule of all Deferred Payment
Obligations of Borrower and its Consolidated Subsidiaries
which remain outstanding as of the end of such quarter,
certified by the principal financial officer of Borrower; and
(x) With reasonable promptness, such further information
regarding the business, affairs and/or financial condition of
Borrower or any Subsidiary of Borrower as Agent or any of the
Lenders may from time to time reasonably request.
16. Section 7.1(i)(i) of the Credit Agreement hereby is
deleted in its entirety and the following is substituted in its place:
(i) Fixed Charges Coverage Ratio. Maintain on a
consolidated basis as of each fiscal quarter-end during the
Term hereof a ratio of Consolidated Proforma Operating Cash
Flow to Consolidated Fixed Charges determined for the
12-month period ending as of each such fiscal quarter-end of
not less than (a) 1.25 to 1.0 for each fiscal quarter ending
on or before June 30, 1999, and (b) 1.50 to 1.0 for each
fiscal quarter end thereafter during the Term hereof.
17. Section 7.2(m) of the Credit Agreement hereby is
deleted in its entirety and the following is substituted in its place:
(m) Operating Leases. Neither Borrower nor any Subsidiary
of the Borrower will enter into or permit to remain in effect
any agreements to rent or lease (as lessee) any real or
personal property (other than Capitalized Leases) for initial
terms (including options to renew or extend any term, whether
or not exercised) of more than one (1) year which in the
aggregate (for the Borrower and all Subsidiaries of the
Borrower) provide for payments in excess of $7,500,000.00
during any consecutive twelve-month (12-month) period.
18. In consideration of the amendments and agreements of
Agent and Lenders as set forth herein, Borrower agrees to pay to Agent the fees
set forth in that certain fee letter dated as of the date hereof. Agent shall
pay each Bank from such amount received from Borrower the amendment fee agreed
to between Agent and each such Lender as evidenced by letters from Agent to
each such Lender, with Agent retaining the remaining portion of such amendment
fee for its own account.
38
8
19. The agreements of Agent and the Lenders as set forth
herein are expressly conditioned upon the following:
(a) Execution by Borrower and Guarantors of this
Agreement and each of the Amended and Restated Revolving
Credit Notes and Amended and Restated Reducing Revolver
Notes;
(b) Execution by Guarantors of the Consent of Guarantors
in the form attached to this Agreement;
(c) Delivery to Agent and Lenders of an opinion of
Borrower's counsel in form and substance satisfactory to
Agent and Lenders relating to the due execution, delivery and
enforceability of this Agreement and the other Transaction
Documents and such other matters as Agent and Lenders may
reasonably require; and
(d) Payment by Borrower to Agent of the amendment fee
required under Paragraph 18 above.
20. Borrower hereby represents and warrants to Agent and
to Lenders that:
a. The execution, delivery and performance by
Borrower of this Second Amendment and the amended and restated Reducing
Revolver Notes are within the corporate powers of Borrower, have been duly
authorized by all necessary corporate action and require no action by or in
respect of, or filing with, any governmental or regulatory body, agency or
official. The execution, delivery and performance by Borrower of this Second
Amendment and the amended and restated Reducing Revolver Notes do not conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under or result in any violation of, and Borrower is not
now in default under or in violation of, the terms of the Certificate of
Incorporation or Bylaws of Borrower, any applicable law, any rule, regulation,
order, writ, judgment or decree of any court or governmental or regulatory
agency or instrumentality, or any agreement or instrument to which Borrower is
a party or by which it is bound or to which it is subject;
b. This Second Amendment and the amended and
restated Reducing Revolver Notes have been duly executed and delivered and
constitute the legal, valid and binding obligations of Borrower enforceable in
accordance with their respective terms; and
c. As of the date hereof, all of the covenants,
representations and warranties of Borrower set forth in the Credit Agreement
are true and correct and no "Event of Default" (as defined therein) under or
within the meaning of the Credit Agreement, as hereby amended, has occurred and
is continuing.
21. The Credit Agreement, as hereby amended, the Reducing
Revolver Notes, as hereby amended and restated, and the other Transaction
Documents are and shall remain the binding obligations of Borrower, and except
to the extent amended by this Second Amendment, all of the terms, provisions,
conditions, agreements, covenants, representations, warranties and powers
contained in the Credit Agreement, the Reducing Revolver Notes and the other
Transaction Documents shall be and remain in full force and effect and the same
are hereby ratified and confirmed.
This Second Amendment amends the Credit Agreement and is not a novation
thereof.
22. All references in the Credit Agreement or the other
Transaction Documents to "this Agreement" and any other references of similar
import shall henceforth mean the Credit Agreement as amended by this Second
Amendment.
23. This Second Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that Borrower may not assign, transfer or delegate any of its
rights or obligations hereunder.
24. This Second Amendment is made solely for the benefit
of Borrower, Agent and Lenders as set forth herein, and is not intended to be
relied upon or enforced by any other person or entity.
39
9
25. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO
EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT BORROWER, AGENT AND
LENDERS FROM ANY MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED BY
BORROWER, AGENT AND LENDERS COVERING SUCH MATTERS ARE CONTAINED IN THIS SECOND
AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, WHICH
CONSTITUTE A COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENTS BETWEEN
BORROWER, AGENT AND LENDERS EXCEPT AS BORROWER, AGENT AND LENDERS MAY LATER
AGREE IN WRITING TO MODIFY. THIS SECOND AMENDMENT, THE CREDIT AGREEMENT AND THE
OTHER TRANSACTION DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING
BETWEEN THE PARTIES HERETO AND SUPERSEDE ALL PRIOR AGREEMENTS AND
UNDERSTANDINGS (ORAL OR WRITTEN) RELATING TO THE SUBJECT MATTER HEREOF.
26. This Second Amendment shall be governed by and
construed in accordance with the internal laws of the State of Missouri.
27. In the event of any inconsistency or conflict
between this Second Amendment and the Credit Agreement or the other Transaction
Documents, the terms, provisions and conditions of this Second Amendment shall
govern and control.
IN WITNESS WHEREOF, the parties have caused this Second
Amendment to be executed and delivered by their duly authorized officers as of
the date first above written.
STAFFMARK, INC.
By: /s/ TERRY C. BELLORA
------------------------------------
Name: Terry C. Bellora
----------------------------------
Title: CFO
---------------------------------
Revolving Credit Commitment: MERCANTILE BANK
$15,900,000.00 NATIONAL ASSOCIATION
Reducing Revolver Commitment:
$37,100,000.00
By: /s/ JOHN C. BILLINGS
------------------------------------
Name: John C. Billings
----------------------------------
Title: Vice President
---------------------------------
Address: 721 Locust Street
St. Louis, Missouri 63101
Attention: Mid America Group
Telecopy No: 314-425-3859
40
10
Revolving Credit Commitment: DEPOSIT GUARANTY NATIONAL BANK
$3,000,000.00
Reducing Revolver Commitment:
$7,000,000.00
By: /s/ STEVE C. KROHN
------------------------------------
Name: Steve C. Krohn
----------------------------------
Title: Senior Vice President
---------------------------------
Address: Post Office Box 1200
Jackson, Mississippi 39215-1200
Attention: Steven C. Krohn, Senior Vice
President
Revolving Credit Commitment: THE FIRST NATIONAL BANK OF CHICAGO
$5,850,000.00
Reducing Revolver Commitment:
$13,650,000.00
By: /s/ JENNY A. GILPIN
------------------------------------
Name: Jenny A. Gilpin
----------------------------------
Title: Vice President
---------------------------------
Address: One First National Plaza, 14th Floor
Mail Suite 0088
Chicago, Illinois 60670-0088
Attention: Jenny A. Gilpin, Vice President
Revolving Credit Commitment: FIRST UNION NATIONAL BANK OF NORTH $5,250,000.00
CAROLINA
Reducing Revolver Commitment:
$12,250,000.00
By: /s/ ALAN P. SPURGIN
------------------------------------
Name: Alan P. Spurgin
----------------------------------
Title: Director
---------------------------------
Address: One First Union Center
301 South College Street
Charlotte, North Carolina 28288-0745
Attention: Alan P. Spurgin, Director
MERCANTILE BANK NATIONAL ASSOCIATION, as Agent
By: s/ JOHN C. BILLINGS
------------------------------------
Name: John C. Billings
----------------------------------
Title: Vice President
---------------------------------
41
11
CONSENT OF GUARANTORS
The undersigned hereby consent to the terms, provisions and
conditions of that certain Second Amendment to Credit Agreement dated as of May
30, 1997 made by and between StaffMark, Inc. as Borrower, and Mercantile Bank
National Association, as successor by merger to Mercantile Bank of St. Louis
National Association, as Agent and the Lenders named therein (the "Second
Amendment"), which amends that certain Credit Agreement dated October 4, 1996
made by and between Borrower, Agent and Lenders, as previously amended and
assigned. The undersigned hereby acknowledge and agree that said amendments by
Borrower, Agent and Lenders will not affect or impair any of the undersigneds'
obligations to Agent and the Lenders (as defined in the Second Amendment)
under: (i) those certain Unlimited Continuing Guaranties and those certain
Security Agreements, each dated October 4, 1996 and one of each executed
respectively by Brewer Personnel Services, Inc., Prostaff Personnel, Inc.,
Maxwell Staffing, Inc., HRA, Inc., First Choice Staffing, Inc., Blethen
Temporaries, Inc., Professional Resources, Inc., Excel Temporary Staffing,
Inc., DP Pros of Burlington, Inc., Personnel Placement, Inc., Jaeger Personnel
Services, Ltd, Dixon Enterprises of Burlington, Inc., Trasec Corp.,
Maxwell/Healthcare, Inc., Square One Rehab, Inc., Maxwell Staffing of Bristow,
Inc. and Technical Staffing, Inc. in favor of Agent and Lenders, guarantying
all of the obligations of Borrower to Agent and Lenders and securing such
guaranties with a first perfected security interest in the assets of such
undersigned subsidiary as specified in each such Security Agreement, which
guaranty obligations and collateral obligations are hereby ratified and
confirmed, (ii) those certain Unlimited Continuing Guaranties and those certain
Security Agreements, each dated as of January 31, 1997 and one of each executed
respectively by The Technology Source Acquisition Corporation, APS-Advanced
Personnel Service Acquisition Corporation, Tom Bain Personnel, Inc., StaffMark
Acquisition Corporation Two, StaffMark Acquisition Corporation Three, StaffMark
Acquisition Corporation Four, StaffMark Acquisition Corporation Five and
StaffMark Acquisition Corporation Six in favor of Agent and Lenders,
guarantying all of the obligations of Borrower to Agent and Lenders and
securing such guaranties with a first perfected security interest in the assets
of such undersigned subsidiary as specified in each such Security Agreement,
which guaranty obligations and collateral obligations are hereby ratified and
confirmed, and (iii) that certain Unlimited Continuing Guaranty and that
certain Security Agreement, each dated as of May ___, 1997 and executed by MRIC
Medical Recruiters International Ltd. in favor of Agent and Lenders,
guarantying all of the obligations of Borrower to Agent and Lenders and
securing such guaranties with a first perfected security interest in the assets
of MRIC Medical Recruiters International Ltd. as specified in such Security
Agreement, which guaranty obligations and collateral obligations are hereby
ratified and confirmed.
Executed this 30th day of May, 1997.
BREWER PERSONNEL SERVICES, INC. HRA, INC.
By: /s/ CLETE T. BREWER By: /s/ CLETE T. BREWER
-------------------------- --------------------------
Title: Vice President Title: Vice President
--------------------------- --------------------------
PROSTAFF PERSONNEL, INC. FIRST CHOICE STAFFING, INC.
By: /s/ CLETE T. BREWER By: /s/ CLETE T. BREWER
-------------------------- --------------------------
Title: Vice President Title: Vice President
--------------------------- --------------------------
MAXWELL STAFFING, INC. BLETHEN TEMPORARIES, INC.
By: /s/ CLETE T. BREWER By: /s/ CLETE T. BREWER
-------------------------- --------------------------
Title: Vice President Title: Vice President
--------------------------- --------------------------
42
12
PROFESSIONAL RESOURCES, INC. MAXWELL HEALTHCARE, INC.
By: /s/ CLETE T. BREWER By: /s/ CLETE T. BREWER
---------------------------- ----------------------------
Title: Vice President Title: Vice President
--------------------------- --------------------------
EXCEL TEMPORARY STAFFING, INC. SQUARE ONE REHAB, INC.
By: /s/ CLETE T. BREWER By: /s/ CLETE T. BREWER
---------------------------- ----------------------------
Title: Vice President Title: Vice President
--------------------------- --------------------------
DP PROS OF BURLINGTON, INC. MAXWELL STAFFING OF BRISTOW, INC.
By: /s/ CLETE T. BREWER By: /s/ CLETE T. BREWER
---------------------------- ----------------------------
Title: Vice President Title: Vice President
--------------------------- --------------------------
PERSONNEL PLACEMENT, INC. TECHNICAL STAFFING, INC.
By: /s/ CLETE T. BREWER By: /s/ CLETE T. BREWER
---------------------------- ----------------------------
Title: Vice President Title: Vice President
--------------------------- --------------------------
JAEGER PERSONNEL SERVICES, LTD. THE TECHNOLOGY SOURCE
ACQUISITION CORPORATION
By: /s/ CLETE T. BREWER By: /s/ TERRY C. BELLORA
---------------------------- ----------------------------
Title: Vice President Title: Vice President
--------------------------- --------------------------
DIXON ENTERPRISES OF BURLINGTON, INC. APS-ADVANCED PERSONNEL SERVICE
ACQUISITION CORPORATION
By: /s/ CLETE T. BREWER By: /s/ TERRY C. BELLORA
---------------------------- ----------------------------
Title: Vice President Title: Vice President
--------------------------- --------------------------
TRASEC CORP. TOM BAIN PERSONNEL, INC.
By: /s/ CLETE T. BREWER By: /s/ TERRY C. BELLORA
---------------------------- ----------------------------
Title: Vice President Title: Vice President
--------------------------- --------------------------
43
13
STAFFMARK ACQUISITION CORPORATION TWO
By: /s/ TERRY C. BELLORA
--------------------------------
Title: Vice President
----------------------------
STAFFMARK ACQUISITION
CORPORATION THREE
By: /s/ TERRY C. BELLORA
--------------------------------
Title: Vice President
----------------------------
STAFFMARK ACQUISITION
CORPORATION FOUR
By: /s/ TERRY C. BELLORA
--------------------------------
Title: Vice President
----------------------------
STAFFMARK ACQUISITION
CORPORATION FIVE
By: /s/ TERRY C. BELLORA
--------------------------------
Title: Vice President
----------------------------
STAFFMARK ACQUISITION
CORPORATION SIX
By: /s/ TERRY C. BELLORA
--------------------------------
Title: Vice President
----------------------------
MRIC MEDICAL RECRUITERS
INTERNATIONAL LTD.
By: /s/ TERRY C. BELLORA
--------------------------------
Title: Vice President
----------------------------
44
14
EXHIBIT A
BORROWING BASE CERTIFICATE
This Borrowing Base Certificate is delivered pursuant to Section
3.1(c) of that certain Credit Agreement dated as of October, 4, 1996, by and
between StaffMark, Inc., the Lenders a party thereto, and Mercantile Bank of
St. Louis National Association as Agent (as from time to time amended, the
"Loan Agreement"). All capitalized terms used and not otherwise defined herein
shall have the respective meanings ascribed to them in the Loan Agreement.
Borrower hereby represents and warrants to Lenders that the following
information is true and correct as of____________________, 19__:
I. BORROWING BASE CALCULATIONS
1. Total Accounts as of $
------------- --------------
2. Less ineligible Accounts
(a) Over 90 days from invoice $
--------------
(b) U. S. Government $
--------------
(c) Due from Related Parties $
--------------
(d) HRA, Inc. Accounts (unless Tennessee UCC financing
statements have been $
--------------
filed)
(e) All other ineligible Accounts $
--------------
(f) Total ineligible Accounts (sum of (a) through (e)) $
--------------
3. Eligible Accounts (Line 1 minus Line 2(f)) $
--------------
4. Advance Rate 85%
5. Borrowing Base (Line 3 multiplied by Line 4 but not to
exceed $30,000,000.00) $
--------------
II. LOAN AVAILABILITY
6. Aggregate principal amount of outstanding Revolving Credit Loans $
--------------
7. Face amount of outstanding Letters of Credit $
--------------
8. Total Outstandings (Line 6 plus Line 7) $
--------------
9. Borrowing Base Excess (Deficit) (Line 5 minus Line 8) (Negative amount $
represents mandatory repayment) --------------
If Line 9 above is negative, this Borrowing Base Certificate is
accompanied by the mandatory repayment required by Section 3.1(d) of the Loan
Agreement.
This Borrowing Base Certificate is dated the_______ day of _________,
19__.
STAFFMARK, INC.
By:
------------------------------
Name:
---------------------------
Title:
---------------------------
45
15
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$15,900,000.00 St. Louis, Missouri
May 30, 1997
FOR VALUE RECEIVED, on April 1, 2002, the undersigned, STAFFMARK, INC.
("Borrower"), hereby promises to pay to the order of MERCANTILE BANK NATIONAL
ASSOCIATION ("Lender"), the principal sum of Fifteen Million Nine Hundred
Thousand Dollars ($15,900,000.00), or such lesser sum as may then be
outstanding hereunder. The aggregate principal amount which Lender shall be
committed to have outstanding hereunder at any one time shall not exceed
Fifteen Million Nine Hundred Thousand Dollars ($15,900,000.00) subject to the
limitation of the "Borrowing Base" (as defined in the Credit Agreement), which
amount may be borrowed, paid, reborrowed and repaid, in whole or in part,
subject to the terms and conditions hereof and of the Credit Agreement
hereinafter identified.
Borrower further promises to pay to the order of Lender interest on
the principal amount from time to time outstanding hereunder on the dates and
at the rate or rates provided for in the Credit Agreement. All payments
hereunder (other than prepayments) shall be applied first to the payment of all
accrued and unpaid interest, with the balance, if any, to be applied to the
payment of principal. All prepayments hereunder shall be applied solely to the
payment of principal.
All payments of principal and interest hereunder shall be made in
lawful currency of the United States in federal or other immediately available
funds at the office of Mercantile Bank National Association (the "Agent")
situated at 721 Locust Street, St. Louis, Missouri 63101, or at such other
place as the Agent shall designate in writing. Interest shall be computed on an
actual day, 360-day year basis. Consistent with the terms of the Credit
Agreement, the Agent shall determine each interest rate applicable to the
advances hereunder, which determination shall be conclusive in the absence of
manifest error.
Lender may record the date and amount of all loans and all payments of
principal and interest hereunder in the records it maintains with respect
thereto. Lender's books and records showing the account between Lender and the
Borrower shall be admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth.
This Note is referred to in that certain Credit Agreement dated
October 4, 1996 by and between the Borrower, Agent, Lender, as successor by
merger to Mercantile Bank of St. Louis National Association, and the other
lenders party thereto (as the same may from time to time be amended, the
"Credit Agreement"), to which Credit Agreement reference is hereby made for a
statement of the terms and conditions upon which the maturity of this Note may
be accelerated, and for other terms and conditions, including prepayment, which
may affect this Note.
This Note is secured by that certain Security Agreement dated October
4, 1996 and executed by Borrower in favor of Agent for the benefit of Lender
and others (as the same may from time to time be amended, the "Security
Agreement"), to which Security Agreement reference is hereby made for a
description of the security and a statement of the terms and conditions upon
which this Note is secured.
This Note is also secured by that certain General Pledge and Security
Agreement dated October 4, 1996 and executed by Borrower in favor of a trustee
for Agent for the benefit of Lender and others (as the same may from time to
time be amended, the "Pledge Agreement"), to which Pledge Agreement reference
is also hereby made for a description of the security and a statement of the
terms and conditions upon which this Note is secured.
This Note is also secured by that certain Trademark Collateral
Assignment and Security Agreement dated October 4, 1996 and executed by
Borrower in favor of Agent for the benefit of Lender and others (as the same
may from time to time be amended, the "Trademark Assignment"), to which
Trademark Assignment reference is hereby made for a description of the security
and a statement of the terms and conditions upon which this Note is secured.
46
16
If the Borrower shall fail to make any payment of any principal of or
interest on this Note as and when the same shall become due and payable, or if
any "Event of Default" (as defined therein) shall occur under or within the
meaning of the Credit Agreement or the Security Agreement, the Pledge Agreement
or the Trademark Assignment, Lender's obligation to make any additional loans
under this Note may be terminated as set forth in the Credit Agreement, and
Agent, on behalf of Lender, may further declare the entire outstanding
principal balance of this Note and all accrued and unpaid interest thereon to
be immediately due and payable.
In the event that any payment of any principal of or interest on this
Note shall not be paid when due, whether by reason of acceleration or
otherwise, and this Note shall be placed in the hands of an attorney or
attorneys for collection or for foreclosure of the Security Agreement, the
Trademark Assignment and/or the Pledge Agreement securing payment hereof, or
for representation of Lender in connection with bankruptcy or insolvency
proceedings relating hereto, the Borrower promises to pay, in addition to all
other amounts otherwise due hereon, the reasonable costs and expenses of such
collection, foreclosure and representation, including, without limitation,
reasonable attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive presentment for
payment, demand, protest, notice of protest and notice of dishonor.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Missouri.
This Note is an amendment, restatement and continuation of that
certain Amended and Restated Revolving Credit Note of Borrower dated January 6,
1997, and payable to the order of Lender in the original principal amount of
$8,000,000.00, and is not a novation thereof. All interest evidenced by such
prior note being restated by this instrument shall continue to be due and
payable until paid.
STAFFMARK, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
47
17
Revolving Credit Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------------------------------------
Amount Amount of Unpaid
Prime of Principal Principal Notation
Date or LIBOR Loan Loan Repaid Balance Made By
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
48
18
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$3,000,000.00 St. Louis, Missouri
May 30, 1997
FOR VALUE RECEIVED, on April 1, 2002, the undersigned, STAFFMARK, INC.
("Borrower"), hereby promises to pay to the order of DEPOSIT GUARANTY NATIONAL
BANK ("Lender"), the principal sum of Three Million Dollars ($3,000,000.00), or
such lesser sum as may then be outstanding hereunder. The aggregate principal
amount which Lender shall be committed to have outstanding hereunder at any one
time shall not exceed Three Million Dollars ($3,000,000.00) subject to the
limitation of the "Borrowing Base" (as defined in the Credit Agreement), which
amount may be borrowed, paid, reborrowed and repaid, in whole or in part,
subject to the terms and conditions hereof and of the Credit Agreement
hereinafter identified.
Borrower further promises to pay to the order of Lender interest on
the principal amount from time to time outstanding hereunder on the dates and
at the rate or rates provided for in the Credit Agreement. All payments
hereunder (other than prepayments) shall be applied first to the payment of all
accrued and unpaid interest, with the balance, if any, to be applied to the
payment of principal. All prepayments hereunder shall be applied solely to the
payment of principal.
All payments of principal and interest hereunder shall be made in
lawful currency of the United States in federal or other immediately available
funds at the office of Mercantile Bank National Association (the "Agent")
situated at 721 Locust Street, St. Louis, Missouri 63101, or at such other
place as the Agent shall designate in writing. Interest shall be computed on an
actual day, 360-day year basis. Consistent with the terms of the Credit
Agreement, the Agent shall determine each interest rate applicable to the
advances hereunder, which determination shall be conclusive in the absence of
manifest error.
Lender may record the date and amount of all loans and all payments of
principal and interest hereunder in the records it maintains with respect
thereto. Lender's books and records showing the account between Lender and the
Borrower shall be admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth.
This Note is referred to in that certain Credit Agreement dated
October 4, 1996 by and between the Borrower, Agent, Lender and the other
lenders party thereto (as the same may from time to time be amended, the
"Credit Agreement"), to which Credit Agreement reference is hereby made for a
statement of the terms and conditions upon which the maturity of this Note may
be accelerated, and for other terms and conditions, including prepayment, which
may affect this Note.
This Note is secured by that certain Security Agreement dated October
4, 1996 and executed by Borrower in favor of Agent for the benefit of Lender
and others (as the same may from time to time be amended, the "Security
Agreement"), to which Security Agreement reference is hereby made for a
description of the security and a statement of the terms and conditions upon
which this Note is secured.
This Note is also secured by that certain General Pledge and Security
Agreement dated October 4, 1996 and executed by Borrower in favor of a trustee
for Agent for the benefit of Lender and others (as the same may from time to
time be amended, the "Pledge Agreement"), to which Pledge Agreement reference
is also hereby made for a description of the security and a statement of the
terms and conditions upon which this Note is secured.
This Note is also secured by that certain Trademark Collateral
Assignment and Security Agreement dated October 4, 1996 and executed by
Borrower in favor of Agent for the benefit of Lender and others (as the same
may from time to time be amended, the "Trademark Assignment"), to which
Trademark Assignment reference is hereby made for a description of the security
and a statement of the terms and conditions upon which this Note is secured.
49
19
If the Borrower shall fail to make any payment of any principal of or
interest on this Note as and when the same shall become due and payable, or if
any "Event of Default" (as defined therein) shall occur under or within the
meaning of the Credit Agreement or the Security Agreement, the Pledge Agreement
or the Trademark Assignment, Lender's obligation to make any additional loans
under this Note may be terminated as set forth in the Credit Agreement, and
Agent, on behalf of Lender, may further declare the entire outstanding
principal balance of this Note and all accrued and unpaid interest thereon to
be immediately due and payable.
In the event that any payment of any principal of or interest on this
Note shall not be paid when due, whether by reason of acceleration or
otherwise, and this Note shall be placed in the hands of an attorney or
attorneys for collection or for foreclosure of the Security Agreement, the
Trademark Assignment and/or the Pledge Agreement securing payment hereof, or
for representation of Lender in connection with bankruptcy or insolvency
proceedings relating hereto, the Borrower promises to pay, in addition to all
other amounts otherwise due hereon, the reasonable costs and expenses of such
collection, foreclosure and representation, including, without limitation,
reasonable attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive presentment for
payment, demand, protest, notice of protest and notice of dishonor.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Missouri.
This Note is an amendment, restatement and continuation of that
certain Revolving Credit Note of Borrower dated January 6, 1997, and payable to
the order of Lender in the original principal amount of $2,000,000.00, and is
not a novation thereof. All interest evidenced by such prior note being
restated by this instrument shall continue to be due and payable until paid.
STAFFMARK, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
50
20
Revolving Credit Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------------------------------------
Amount Amount of Unpaid
Prime of Principal Principal Notation
Date or LIBOR Loan Loan Repaid Balance Made By
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
51
21
EXHIBIT D
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$5,850,000.00 St. Louis, Missouri
May 30, 1997
FOR VALUE RECEIVED, on April 1, 2002, the undersigned, STAFFMARK, INC.
("Borrower"), hereby promises to pay to the order of THE FIRST NATIONAL BANK OF
CHICAGO ("Lender"), the principal sum of Five Million Eight Hundred Fifty
Thousand Dollars ($5,850,000.00), or such lesser sum as may then be outstanding
hereunder. The aggregate principal amount which Lender shall be committed to
have outstanding hereunder at any one time shall not exceed Five Million Eight
Hundred Fifty Thousand Dollars ($5,850,000.00) subject to the limitation of the
"Borrowing Base" (as defined in the Credit Agreement), which amount may be
borrowed, paid, reborrowed and repaid, in whole or in part, subject to the
terms and conditions hereof and of the Credit Agreement hereinafter identified.
Borrower further promises to pay to the order of Lender interest on
the principal amount from time to time outstanding hereunder on the dates and
at the rate or rates provided for in the Credit Agreement. All payments
hereunder (other than prepayments) shall be applied first to the payment of all
accrued and unpaid interest, with the balance, if any, to be applied to the
payment of principal. All prepayments hereunder shall be applied solely to the
payment of principal.
All payments of principal and interest hereunder shall be made in
lawful currency of the United States in federal or other immediately available
funds at the office of Mercantile Bank National Association (the "Agent")
situated at 721 Locust Street, St. Louis, Missouri 63101, or at such other
place as the Agent shall designate in writing. Interest shall be computed on an
actual day, 360-day year basis. Consistent with the terms of the Credit
Agreement, the Agent shall determine each interest rate applicable to the
advances hereunder, which determination shall be conclusive in the absence of
manifest error.
Lender may record the date and amount of all loans and all payments of
principal and interest hereunder in the records it maintains with respect
thereto. Lender's books and records showing the account between Lender and the
Borrower shall be admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth.
This Note is referred to in that certain Credit Agreement dated
October 4, 1996 by and between the Borrower, Agent, Lender and the other
lenders party thereto (as the same may from time to time be amended, the
"Credit Agreement"), to which Credit Agreement reference is hereby made for a
statement of the terms and conditions upon which the maturity of this Note may
be accelerated, and for other terms and conditions, including prepayment, which
may affect this Note.
This Note is secured by that certain Security Agreement dated October
4, 1996 and executed by Borrower in favor of Agent for the benefit of Lender
and others (as the same may from time to time be amended, the "Security
Agreement"), to which Security Agreement reference is hereby made for a
description of the security and a statement of the terms and conditions upon
which this Note is secured.
This Note is also secured by that certain General Pledge and Security
Agreement dated October 4, 1996 and executed by Borrower in favor of a trustee
for Agent for the benefit of Lender and others (as the same may from time to
time be amended, the "Pledge Agreement"), to which Pledge Agreement reference
is also hereby made for a description of the security and a statement of the
terms and conditions upon which this Note is secured.
This Note is also secured by that certain Trademark Collateral
Assignment and Security Agreement dated October 4, 1996 and executed by
Borrower in favor of Agent for the benefit of Lender and others (as the same
may from time to time be amended, the "Trademark Assignment"), to which
Trademark Assignment reference is hereby made for a description of the security
and a statement of the terms and conditions upon which this Note is secured.
52
22
If the Borrower shall fail to make any payment of any principal of or
interest on this Note as and when the same shall become due and payable, or if
any "Event of Default" (as defined therein) shall occur under or within the
meaning of the Credit Agreement or the Security Agreement, the Pledge Agreement
or the Trademark Assignment, Lender's obligation to make any additional loans
under this Note may be terminated as set forth in the Credit Agreement, and
Agent, on behalf of Lender, may further declare the entire outstanding
principal balance of this Note and all accrued and unpaid interest thereon to
be immediately due and payable.
In the event that any payment of any principal of or interest on this
Note shall not be paid when due, whether by reason of acceleration or
otherwise, and this Note shall be placed in the hands of an attorney or
attorneys for collection or for foreclosure of the Security Agreement, the
Trademark Assignment and/or the Pledge Agreement securing payment hereof, or
for representation of Lender in connection with bankruptcy or insolvency
proceedings relating hereto, the Borrower promises to pay, in addition to all
other amounts otherwise due hereon, the reasonable costs and expenses of such
collection, foreclosure and representation, including, without limitation,
reasonable attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive presentment for
payment, demand, protest, notice of protest and notice of dishonor.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Missouri.
This Note is an amendment, restatement and continuation of that
certain Revolving Credit Note of Borrower dated January 6, 1997, and payable to
the order of Lender in the original principal amount of $5,400,000.00, and is
not a novation thereof. All interest evidenced by such prior note being
restated by this instrument shall continue to be due and payable until paid.
STAFFMARK, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
53
23
Revolving Credit Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------------------------------------
Amount Amount of Unpaid
Prime of Principal Principal Notation
Date or LIBOR Loan Loan Repaid Balance Made By
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
54
24
EXHIBIT E
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$5,250,000.00 St. Louis, Missouri
May 30, 1997
FOR VALUE RECEIVED, on April 1, 2002, the undersigned, STAFFMARK, INC.
("Borrower"), hereby promises to pay to the order of FIRST UNION NATIONAL BANK
OF NORTH CAROLINA ("Lender"), the principal sum of Five Million Two Hundred
Fifty Thousand Dollars ($5,250,000.00), or such lesser sum as may then be
outstanding hereunder. The aggregate principal amount which Lender shall be
committed to have outstanding hereunder at any one time shall not exceed Five
Million Two Hundred Fifty Thousand Dollars ($5,250,000.00) subject to the
limitation of the "Borrowing Base" (as defined in the Credit Agreement), which
amount may be borrowed, paid, reborrowed and repaid, in whole or in part,
subject to the terms and conditions hereof and of the Credit Agreement
hereinafter identified.
Borrower further promises to pay to the order of Lender interest on
the principal amount from time to time outstanding hereunder on the dates and
at the rate or rates provided for in the Credit Agreement. All payments
hereunder (other than prepayments) shall be applied first to the payment of all
accrued and unpaid interest, with the balance, if any, to be applied to the
payment of principal. All prepayments hereunder shall be applied solely to the
payment of principal.
All payments of principal and interest hereunder shall be made in
lawful currency of the United States in federal or other immediately available
funds at the office of Mercantile Bank National Association (the "Agent")
situated at 721 Locust Street, St. Louis, Missouri 63101, or at such other
place as the Agent shall designate in writing. Interest shall be computed on an
actual day, 360-day year basis. Consistent with the terms of the Credit
Agreement, the Agent shall determine each interest rate applicable to the
advances hereunder, which determination shall be conclusive in the absence of
manifest error.
Lender may record the date and amount of all loans and all payments of
principal and interest hereunder in the records it maintains with respect
thereto. Lender's books and records showing the account between Lender and the
Borrower shall be admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth.
This Note is referred to in that certain Credit Agreement dated
October 4, 1996 by and between the Borrower, Agent, Lender and the other
lenders party thereto (as the same may from time to time be amended, the
"Credit Agreement"), to which Credit Agreement reference is hereby made for a
statement of the terms and conditions upon which the maturity of this Note may
be accelerated, and for other terms and conditions, including prepayment, which
may affect this Note.
This Note is secured by that certain Security Agreement dated October
4, 1996 and executed by Borrower in favor of Agent for the benefit of Lender
and others (as the same may from time to time be amended, the "Security
Agreement"), to which Security Agreement reference is hereby made for a
description of the security and a statement of the terms and conditions upon
which this Note is secured.
This Note is also secured by that certain General Pledge and Security
Agreement dated October 4, 1996 and executed by Borrower in favor of a trustee
for Agent for the benefit of Lender and others (as the same may from time to
time be amended, the "Pledge Agreement"), to which Pledge Agreement reference
is also hereby made for a description of the security and a statement of the
terms and conditions upon which this Note is secured.
This Note is also secured by that certain Trademark Collateral
Assignment and Security Agreement dated October 4, 1996 and executed by
Borrower in favor of Agent for the benefit of Lender and others (as the same
may from time to time be amended, the "Trademark Assignment"), to which
Trademark Assignment reference is hereby made for a description of the security
and a statement of the terms and conditions upon which this Note is secured.
55
25
If the Borrower shall fail to make any payment of any principal of or
interest on this Note as and when the same shall become due and payable, or if
any "Event of Default" (as defined therein) shall occur under or within the
meaning of the Credit Agreement or the Security Agreement, the Pledge Agreement
or the Trademark Assignment, Lender's obligation to make any additional loans
under this Note may be terminated as set forth in the Credit Agreement, and
Agent, on behalf of Lender, may further declare the entire outstanding
principal balance of this Note and all accrued and unpaid interest thereon to
be immediately due and payable.
In the event that any payment of any principal of or interest on this
Note shall not be paid when due, whether by reason of acceleration or
otherwise, and this Note shall be placed in the hands of an attorney or
attorneys for collection or for foreclosure of the Security Agreement, the
Trademark Assignment and/or the Pledge Agreement securing payment hereof, or
for representation of Lender in connection with bankruptcy or insolvency
proceedings relating hereto, the Borrower promises to pay, in addition to all
other amounts otherwise due hereon, the reasonable costs and expenses of such
collection, foreclosure and representation, including, without limitation,
reasonable attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive presentment for
payment, demand, protest, notice of protest and notice of dishonor.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Missouri.
This Note is an amendment, restatement and continuation of that
certain Revolving Credit Note of Borrower dated January 6, 1997, and payable to
the order of Lender in the original principal amount of $4,600,000.00, and is
not a novation thereof. All interest evidenced by such prior note being
restated by this instrument shall continue to be due and payable until paid.
STAFFMARK, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
56
26
Revolving Credit Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------------------------------------
Amount Amount of Unpaid
Prime of Principal Principal Notation
Date or LIBOR Loan Loan Repaid Balance Made By
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
57
27
AMENDED AND RESTATED REDUCING REVOLVER NOTE
$37,100,000.00 St. Louis, Missouri
May 30, 1997
FOR VALUE RECEIVED, on April 1, 2002, the undersigned, STAFFMARK, INC.
("Borrower"), hereby promises to pay to the order of MERCANTILE BANK NATIONAL
ASSOCIATION ("Lender"), the principal sum of Thirty-Seven Million One Hundred
Thousand Dollars ($37,100,000.00), or such lesser sum as may then be
outstanding hereunder. The aggregate principal amount which Lender shall be
committed to have outstanding hereunder at any one time shall not exceed
Thirty-Seven Million One Hundred Thousand Dollars ($37,100,000.00) subject to
the limitations and reductions of that certain Credit Agreement dated October
4, 1996 made by and among Borrower, Lender, as successor by merger to
Mercantile Bank of St. Louis National Association, the other lenders party
thereto and Mercantile Bank National Association, as successor by merger to
Mercantile Bank of St. Louis National Association, as agent (the "Agent"), as
amended (as the same may be amended, modified, restated or extended from time
to time, the "Credit Agreement"), which amount may be borrowed, paid,
reborrowed and repaid, in whole or in part, subject to the terms and conditions
hereof and of the Credit Agreement hereinafter identified.
Borrower further promises to pay to the order of Lender interest on
the principal amount from time to time outstanding hereunder on the dates and
at the rate or rates provided for in the Credit Agreement. All payments
hereunder (other than prepayments) shall be applied first to the payment of all
accrued and unpaid interest, with the balance, if any, to be applied to the
payment of principal. All prepayments hereunder shall be applied solely to the
payment of principal.
Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed for all Loans made hereunder. Consistent with the
terms of the Credit Agreement, the Agent shall determine each interest rate
applicable to the advances hereunder, which determination shall be conclusive
in the absence of manifest error. All such payments of principal, interest and
fees shall be made in lawful money of the United States of America in federal
or other immediately available funds at the office of Agent situated at 721
Locust Street, St. Louis, Missouri 63101, or at such other place as the Agent
shall designate in writing. This Note may be prepaid at any time subject to and
in accordance with Sections 3.6 and 3.16 of the Credit Agreement.
Lender may record the date and amount of all loans and all payments of
principal and interest hereunder in the records it maintains with respect
thereto. Lender's books and records showing the account between Lender and the
Borrower shall be admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth.
This Note is referred to in the Credit Agreement, to which Credit
Agreement reference is hereby made for a statement of the terms and conditions
upon which the maturity of this Note may be accelerated, and for other terms
and conditions, including prepayment, which may affect this Note.
This Note is secured by that certain Security Agreement dated October
4, 1996 and executed by Borrower in favor of Agent for the benefit of Lender
and others (as the same may from time to time be amended, the "Security
Agreement"), to which Security Agreement reference is hereby made for a
description of the security and a statement of the terms and conditions upon
which this Note is secured.
This Note is also secured by that certain Trademark Collateral
Assignment and Security Agreement dated October 4, 1996 and executed by
Borrower in favor of Agent for the benefit of Lender and others (as the same
may from time to time be amended, the "Trademark Assignment"), to which
Trademark Assignment reference is hereby made for a description of the security
and a statement of the terms and conditions upon which this Note is secured.
This Note is also secured by that certain General Pledge and Security
Agreement dated October 4, 1996 and executed by Borrower in favor of Agent for
the benefit of Lender and others (as the same may from time to time be amended,
the "Pledge Agreement"), to which Pledge Agreement reference is hereby made for
a description of the security and a statement of the terms and conditions upon
which this Note is secured.
58
28
If the Borrower shall fail to make any payment of any principal of or
interest on this Note as and when the same shall become due and payable, or if
any "Event of Default" (as defined therein) shall occur under or within the
meaning of the Credit Agreement or the Security Agreement, the Pledge Agreement
or the Trademark Assignment, Lender's obligation to make any additional loans
under this Note may be terminated as set forth in the Credit Agreement, and
Agent, on behalf of Lender, may further declare the entire outstanding
principal balance of this Note and all accrued and unpaid interest thereon to
be immediately due and payable.
In the event that any payment of any principal of or interest on this
Note shall not be paid when due, whether by reason of acceleration or
otherwise, and this Note shall be placed in the hands of an attorney or
attorneys for collection or for foreclosure of the Security Agreement, the
Trademark Assignment and/or the Pledge Agreement securing payment hereof, or
for representation of Lender in connection with bankruptcy or insolvency
proceedings relating hereto, the Borrower promises to pay, in addition to all
other amounts otherwise due hereon, the reasonable costs and expenses of such
collection, foreclosure and representation, including, without limitation,
reasonable attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive presentment for
payment, demand, protest, notice of protest and notice of dishonor.
This Note shall be governed by and construed according to the laws of
the State of Missouri.
This Note is an amendment, restatement and continuation of that
certain Amended and Restated Reducing Revolver Note of Borrower dated January
6, 1997, and payable to the order of Lender in the original principal amount of
$12,000,000.00, and is not a novation thereof. All interest evidenced by such
prior note being restated by this instrument shall continue to be due and
payable until paid.
STAFFMARK, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
59
29
Reducing Revolver Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------------------------------------
Amount Amount of Unpaid
Prime of Principal Principal Notation
Date or LIBOR Loan Loan Repaid Balance Made By
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
60
30
AMENDED AND RESTATED REDUCING REVOLVER NOTE
$7,000,000.00 St. Louis, Missouri
May 30, 1997
FOR VALUE RECEIVED, on April 1, 2002, the undersigned, STAFFMARK, INC.
("Borrower"), hereby promises to pay to the order of DEPOSIT GUARANTY NATIONAL
BANK ("Lender"), the principal sum of Seven Million Dollars ($7,000,000.00), or
such lesser sum as may then be outstanding hereunder. The aggregate principal
amount which Lender shall be committed to have outstanding hereunder at any one
time shall not exceed Seven Million Dollars ($7,000,000.00) subject to the
limitations and reductions of that certain Credit Agreement dated October 4,
1996 made by and among Borrower, Lender, the other lenders party thereto and
Mercantile Bank National Association, as successor by merger to Mercantile Bank
of St. Louis National Association, as agent (the "Agent"), as amended (as the
same may be amended, modified, restated or extended from time to time, the
"Credit Agreement"), which amount may be borrowed, paid, reborrowed and repaid,
in whole or in part, subject to the terms and conditions hereof and of the
Credit Agreement hereinafter identified.
Borrower further promises to pay to the order of Lender interest on
the principal amount from time to time outstanding hereunder on the dates and
at the rate or rates provided for in the Credit Agreement. All payments
hereunder (other than prepayments) shall be applied first to the payment of all
accrued and unpaid interest, with the balance, if any, to be applied to the
payment of principal. All prepayments hereunder shall be applied solely to the
payment of principal.
Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed for all Loans made hereunder. Consistent with the
terms of the Credit Agreement, the Agent shall determine each interest rate
applicable to the advances hereunder, which determination shall be conclusive
in the absence of manifest error. All such payments of principal, interest and
fees shall be made in lawful money of the United States of America in federal
or other immediately available funds at the office of Agent situated at 721
Locust Street, St. Louis, Missouri 63101, or at such other place as the Agent
shall designate in writing. This Note may be prepaid at any time subject to and
in accordance with Sections 3.6 and 3.16 of the Credit Agreement.
Lender may record the date and amount of all loans and all payments of
principal and interest hereunder in the records it maintains with respect
thereto. Lender's books and records showing the account between Lender and the
Borrower shall be admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth.
This Note is referred to in the Credit Agreement, to which Credit
Agreement reference is hereby made for a statement of the terms and conditions
upon which the maturity of this Note may be accelerated, and for other terms
and conditions, including prepayment, which may affect this Note.
This Note is secured by that certain Security Agreement dated October
4, 1996 and executed by Borrower in favor of Agent for the benefit of Lender
and others (as the same may from time to time be amended, the "Security
Agreement"), to which Security Agreement reference is hereby made for a
description of the security and a statement of the terms and conditions upon
which this Note is secured.
This Note is also secured by that certain Trademark Collateral
Assignment and Security Agreement dated October 4, 1996 and executed by
Borrower in favor of Agent for the benefit of Lender and others (as the same
may from time to time be amended, the "Trademark Assignment"), to which
Trademark Assignment reference is hereby made for a description of the security
and a statement of the terms and conditions upon which this Note is secured.
This Note is also secured by that certain General Pledge and Security
Agreement dated October 4, 1996 and executed by Borrower in favor of Agent for
the benefit of Lender and others (as the same may from time to time be amended,
the "Pledge Agreement"), to which Pledge Agreement reference is hereby made for
a description of the security and a statement of the terms and conditions upon
which this Note is secured.
61
31
If the Borrower shall fail to make any payment of any principal of or
interest on this Note as and when the same shall become due and payable, or if
any "Event of Default" (as defined therein) shall occur under or within the
meaning of the Credit Agreement or the Security Agreement, the Pledge Agreement
or the Trademark Assignment, Lender's obligation to make any additional loans
under this Note may be terminated as set forth in the Credit Agreement, and
Agent, on behalf of Lender, may further declare the entire outstanding
principal balance of this Note and all accrued and unpaid interest thereon to
be immediately due and payable.
In the event that any payment of any principal of or interest on this
Note shall not be paid when due, whether by reason of acceleration or
otherwise, and this Note shall be placed in the hands of an attorney or
attorneys for collection or for foreclosure of the Security Agreement, the
Trademark Assignment and/or the Pledge Agreement securing payment hereof, or
for representation of Lender in connection with bankruptcy or insolvency
proceedings relating hereto, the Borrower promises to pay, in addition to all
other amounts otherwise due hereon, the reasonable costs and expenses of such
collection, foreclosure and representation, including, without limitation,
reasonable attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive presentment for
payment, demand, protest, notice of protest and notice of dishonor.
This Note shall be governed by and construed according to the laws of
the State of Missouri.
This Note is an amendment, restatement and continuation of that
certain Reducing Revolver Note of Borrower dated January 6, 1997, and payable
to the order of Lender in the original principal amount of $3,000,000.00, and
is not a novation thereof. All interest evidenced by such prior note being
restated by this instrument shall continue to be due and payable until paid.
STAFFMARK, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
62
32
Revolving Revolver Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------------------------------------
Amount Amount of Unpaid
Prime of Principal Principal Notation
Date or LIBOR Loan Loan Repaid Balance Made By
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
63
33
EXHIBIT H
AMENDED AND RESTATED REDUCING REVOLVER NOTE
$13,650,000.00 St. Louis, Missouri
May 30, 1997
FOR VALUE RECEIVED, on April 1, 2002, the undersigned, STAFFMARK, INC.
("Borrower"), hereby promises to pay to the order of THE FIRST NATIONAL BANK OF
CHICAGO ("Lender"), the principal sum of Thirteen Million Six Hundred Fifty
Thousand Dollars ($13,650,000.00), or such lesser sum as may then be
outstanding hereunder. The aggregate principal amount which Lender shall be
committed to have outstanding hereunder at any one time shall not exceed
Thirteen Million Six Hundred Fifty Thousand Dollars ($13,650,000.00) subject to
the limitations and reductions of that certain Credit Agreement dated October
4, 1996 made by and among Borrower, Lender, the other lenders party thereto and
Mercantile Bank National Association, as successor by merger to Mercantile Bank
of St. Louis National Association, as agent (the "Agent"), as amended (as the
same may be amended, modified, restated or extended from time to time, the
"Credit Agreement"), which amount may be borrowed, paid, reborrowed and repaid,
in whole or in part, subject to the terms and conditions hereof and of the
Credit Agreement hereinafter identified.
Borrower further promises to pay to the order of Lender interest on
the principal amount from time to time outstanding hereunder on the dates and
at the rate or rates provided for in the Credit Agreement. All payments
hereunder (other than prepayments) shall be applied first to the payment of all
accrued and unpaid interest, with the balance, if any, to be applied to the
payment of principal. All prepayments hereunder shall be applied solely to the
payment of principal.
Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed for all Loans made hereunder. Consistent with the
terms of the Credit Agreement, the Agent shall determine each interest rate
applicable to the advances hereunder, which determination shall be conclusive
in the absence of manifest error. All such payments of principal, interest and
fees shall be made in lawful money of the United States of America in federal
or other immediately available funds at the office of Agent situated at 721
Locust Street, St. Louis, Missouri 63101, or at such other place as the Agent
shall designate in writing. This Note may be prepaid at any time subject to and
in accordance with Sections 3.6 and 3.16 of the Credit Agreement.
Lender may record the date and amount of all loans and all payments of
principal and interest hereunder in the records it maintains with respect
thereto. Lender's books and records showing the account between Lender and the
Borrower shall be admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth.
This Note is referred to in the Credit Agreement, to which Credit
Agreement reference is hereby made for a statement of the terms and conditions
upon which the maturity of this Note may be accelerated, and for other terms
and conditions, including prepayment, which may affect this Note.
This Note is secured by that certain Security Agreement dated October
4, 1996 and executed by Borrower in favor of Agent for the benefit of Lender
and others (as the same may from time to time be amended, the "Security
Agreement"), to which Security Agreement reference is hereby made for a
description of the security and a statement of the terms and conditions upon
which this Note is secured.
This Note is also secured by that certain Trademark Collateral
Assignment and Security Agreement dated October 4, 1996 and executed by
Borrower in favor of Agent for the benefit of Lender and others (as the same
may from time to time be amended, the "Trademark Assignment"), to which
Trademark Assignment reference is hereby made for a description of the security
and a statement of the terms and conditions upon which this Note is secured.
This Note is also secured by that certain General Pledge and Security
Agreement dated October 4, 1996 and executed by Borrower in favor of Agent for
the benefit of Lender and others (as the same may from time to time be amended,
the "Pledge Agreement"), to which Pledge Agreement reference is hereby made for
a description of the security and a statement of the terms and conditions upon
which this Note is secured.
64
34
If the Borrower shall fail to make any payment of any principal of or
interest on this Note as and when the same shall become due and payable, or if
any "Event of Default" (as defined therein) shall occur under or within the
meaning of the Credit Agreement or the Security Agreement, the Pledge Agreement
or the Trademark Assignment, Lender's obligation to make any additional loans
under this Note may be terminated as set forth in the Credit Agreement, and
Agent, on behalf of Lender, may further declare the entire outstanding
principal balance of this Note and all accrued and unpaid interest thereon to
be immediately due and payable.
In the event that any payment of any principal of or interest on this
Note shall not be paid when due, whether by reason of acceleration or
otherwise, and this Note shall be placed in the hands of an attorney or
attorneys for collection or for foreclosure of the Security Agreement, the
Trademark Assignment and/or the Pledge Agreement securing payment hereof, or
for representation of Lender in connection with bankruptcy or insolvency
proceedings relating hereto, the Borrower promises to pay, in addition to all
other amounts otherwise due hereon, the reasonable costs and expenses of such
collection, foreclosure and representation, including, without limitation,
reasonable attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive presentment for
payment, demand, protest, notice of protest and notice of dishonor.
This Note shall be governed by and construed according to the laws of
the State of Missouri.
This Note is an amendment, restatement and continuation of that
certain Reducing Revolver Note of Borrower dated January 6, 1997, and payable
to the order of Lender in the original principal amount of $8,100,000.00, and
is not a novation thereof. All interest evidenced by such prior note being
restated by this instrument shall continue to be due and payable until paid.
STAFFMARK, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
65
35
Reducing Revolver Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------------------------------------
Amount Amount of Unpaid
Prime of Principal Principal Notation
Date or LIBOR Loan Loan Repaid Balance Made By
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
66
36
EXHIBIT I
AMENDED AND RESTATED REDUCING REVOLVER NOTE
$12,250,000.00 St. Louis, Missouri
May 30, 1997
FOR VALUE RECEIVED, on April 1, 2002, the undersigned, STAFFMARK, INC.
("Borrower"), hereby promises to pay to the order of FIRST UNION NATIONAL BANK
OF NORTH CAROLINA ("Lender"), the principal sum of Twelve Million Two Hundred
Fifty Thousand Dollars ($12,250,000.00), or such lesser sum as may then be
outstanding hereunder. The aggregate principal amount which Lender shall be
committed to have outstanding hereunder at any one time shall not exceed Twelve
Million Two Hundred Fifty Thousand Dollars ($12,250,000.00) subject to the
limitations and reductions of that certain Credit Agreement dated October 4,
1996 made by and among Borrower, Lender, the other lenders party thereto and
Mercantile Bank National Association, as successor by merger to Mercantile Bank
of St. Louis National Association, as agent (the "Agent"), as amended (as the
same may be amended, modified, restated or extended from time to time, the
"Credit Agreement"), which amount may be borrowed, paid, reborrowed and repaid,
in whole or in part, subject to the terms and conditions hereof and of the
Credit Agreement hereinafter identified.
Borrower further promises to pay to the order of Lender interest on
the principal amount from time to time outstanding hereunder on the dates and
at the rate or rates provided for in the Credit Agreement. All payments
hereunder (other than prepayments) shall be applied first to the payment of all
accrued and unpaid interest, with the balance, if any, to be applied to the
payment of principal. All prepayments hereunder shall be applied solely to the
payment of principal.
Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed for all Loans made hereunder. Consistent with the
terms of the Credit Agreement, the Agent shall determine each interest rate
applicable to the advances hereunder, which determination shall be conclusive
in the absence of manifest error. All such payments of principal, interest and
fees shall be made in lawful money of the United States of America in federal
or other immediately available funds at the office of Agent situated at 721
Locust Street, St. Louis, Missouri 63101, or at such other place as the Agent
shall designate in writing. This Note may be prepaid at any time subject to and
in accordance with Sections 3.6 and 3.16 of the Credit Agreement.
Lender may record the date and amount of all loans and all payments of
principal and interest hereunder in the records it maintains with respect
thereto. Lender's books and records showing the account between Lender and the
Borrower shall be admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth.
This Note is referred to in the Credit Agreement, to which Credit
Agreement reference is hereby made for a statement of the terms and conditions
upon which the maturity of this Note may be accelerated, and for other terms
and conditions, including prepayment, which may affect this Note.
This Note is secured by that certain Security Agreement dated October
4, 1996 and executed by Borrower in favor of Agent for the benefit of Lender
and others (as the same may from time to time be amended, the "Security
Agreement"), to which Security Agreement reference is hereby made for a
description of the security and a statement of the terms and conditions upon
which this Note is secured.
This Note is also secured by that certain Trademark Collateral
Assignment and Security Agreement dated October 4, 1996 and executed by
Borrower in favor of Agent for the benefit of Lender and others (as the same
may from time to time be amended, the "Trademark Assignment"), to which
Trademark Assignment reference is hereby made for a description of the security
and a statement of the terms and conditions upon which this Note is secured.
This Note is also secured by that certain General Pledge and Security
Agreement dated October 4, 1996 and executed by Borrower in favor of Agent for
the benefit of Lender and others (as the same may from time to time be amended,
the "Pledge Agreement"), to which Pledge Agreement reference is hereby made for
a description of the security and a statement of the terms and conditions upon
which this Note is secured.
67
37
If the Borrower shall fail to make any payment of any principal of or
interest on this Note as and when the same shall become due and payable, or if
any "Event of Default" (as defined therein) shall occur under or within the
meaning of the Credit Agreement or the Security Agreement, the Pledge Agreement
or the Trademark Assignment, Lender's obligation to make any additional loans
under this Note may be terminated as set forth in the Credit Agreement, and
Agent, on behalf of Lender, may further declare the entire outstanding
principal balance of this Note and all accrued and unpaid interest thereon to
be immediately due and payable.
In the event that any payment of any principal of or interest on this
Note shall not be paid when due, whether by reason of acceleration or
otherwise, and this Note shall be placed in the hands of an attorney or
attorneys for collection or for foreclosure of the Security Agreement, the
Trademark Assignment and/or the Pledge Agreement securing payment hereof, or
for representation of Lender in connection with bankruptcy or insolvency
proceedings relating hereto, the Borrower promises to pay, in addition to all
other amounts otherwise due hereon, the reasonable costs and expenses of such
collection, foreclosure and representation, including, without limitation,
reasonable attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive presentment for
payment, demand, protest, notice of protest and notice of dishonor.
This Note shall be governed by and construed according to the laws of
the State of Missouri.
This Note is an amendment, restatement and continuation of that
certain Reducing Revolver Note of Borrower dated January 6, 1997, and payable
to the order of Lender in the original principal amount of $6,900,000.00, and
is not a novation thereof. All interest evidenced by such prior note being
restated by this instrument shall continue to be due and payable until paid.
STAFFMARK, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
68
38
Reducing Revolving Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------------------------------------
Amount Amount of Unpaid
Prime of Principal Principal Notation
Date or LIBOR Loan Loan Repaid Balance Made By
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
69
39
Schedule 1
To Compliance Certificate (The
Certificate attached hereto is as of )
Capitalized terms used herein shall have the meanings set forth in the
Credit Agreement dated as of October 4, 1996 among StaffMark, Inc., Mercantile
Bank of St. Louis National Association, as agent, and the lenders named therein
(as amended, restated, supplemented or otherwise modified from time to time,
the "Agreement"). Subsection references herein relate to the subsections of the
Agreement.
A. MAXIMUM CAPITAL EXPENDITURES
1. Actual Capital Expenditures for current Fiscal Year-To-Date $
---------------
2. Maximum Permitted (Section 7.2(i)) $
---------------
B. CONSOLIDATED PROFORMA OPERATING CASH FLOW
For the 12 months ended ____________________:
1. Net Income (excluding extraordinary items) $
---------------
2. Income Tax Expense $
---------------
3. Interest Expense $
---------------
4. Amortization and Depreciation Expenses $
---------------
5. Operating Lease Expense $
---------------
6. Proforma Operating Cash Flow (Sum of Lines B1 through B5) $
---------------
C. FIXED CHARGE COVERAGE RATIO
1. Proforma Operating Cash Flow (Line B6 above) $
---------------
2. Capital Expenditures $
---------------
3. Interest Paid $
---------------
4. Scheduled payments of principal on Indebtedness $
---------------
5. Income Taxes Paid $
---------------
6. Deferred Payment Obligations Paid $
---------------
7. Fixed Charges (Sum of C2 through C6) $
---------------
8. Fixed Charges Coverage (C1 divided by C7) _____ to 1.0
9. Minimum Required (Section 7.1(i)(i)) _____ to 1.0
D. OTHER INDEBTEDNESS
1. Purchase money debt as of $
---------------
-------------------------
2. Maximum permitted (Section 7.2(a)(iii)) $ 4,000,000.00
3. Subordinated Debt as of $
---------------
------------------------------
4. Maximum permitted (Section 7.2(a)(v)) $ 5,000,000.00
5. Other Indebtedness $
---------------
6. Maximum permitted (Section 7.2(a)(vi)) $ 1,000,000.00
E. RESTRICTION ON LEASES
1. Direct and indirect obligations with respect to leases $
---------------
2. Maximum permitted (Section 7.2(m)) $
---------------
F. MAXIMUM LEVERAGE RATIO
1. Average Revolving Credit Loans outstanding $
---------------
2. Average Reducing Revolver Loans outstanding $
---------------
3. Face amount of Letters of Credit outstanding $
---------------
70
40
4. Other Borrowed Money Indebtedness outstanding $
---------------
5. Adjusted Total Funded Debt outstanding as of (Sum of F1 $
through F4) ---------------
6. Proforma Operating Cash Flow (from B6 above) $
---------------
7. Leverage Ratio (F5 divided by F6) _____ to 1.0
8. Maximum Permitted (Section 7.1(i)(ii)) _____ to 1.0
G. SHAREHOLDERS' EQUITY
1. Shareholders' Equity $
---------------
2. Beginning Required Shareholders' Equity $
---------------
3. Cumulative Quarterly Net Income (excluding any Quarterly Net Losses) for $
Quarters ending September 30, 1996 and thereafter ---------------
4. Net Proceeds of Capital Stock issued subsequent to October , 1996 $
---- ---------------
5. Total Required Shareholders' Equity (sum of G2 through G4) $
---------------
71