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Exhibit 10.57
AMENDED AND RESTATED RECEIVABLES
PURCHASE AND SALE AGREEMENT
Dated as of October 1, 1999
Among
OUTSOURCE INTERNATIONAL, INC.,
OUTSOURCE FRANCHISING, INC.,
CAPITAL STAFFING FUND, INC.,
SYNADYNE I, INC.,
SYNADYNE II, INC.,
SYNADYNE III, INC.,
SYNADYNE IV, INC.,
SYNADYNE V, INC.,
and
OUTSOURCE INTERNATIONAL
OF AMERICA, INC.,
each as an Originator,
and
OUTSOURCE FUNDING CORPORATION,
as the Buyer,
and
OUTSOURCE INTERNATIONAL, INC.,
as the Servicer.
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................................................1
SECTION 1.01. Certain Defined Terms................................................1
SECTION 1.02. Accounting and Certain Other Terms...................................9
SECTION 1.03. Other Terms..........................................................9
SECTION 1.04. Computation of Time Periods.........................................10
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES..............................................10
SECTION 2.01. Agreement to Purchase...............................................10
SECTION 2.02. Payment for the Purchases...........................................11
SECTION 2.03. Settlement Procedures...............................................12
SECTION 2.04. Payments and Computations, Etc. ....................................13
SECTION 2.05. Transfer of Records to the Buyer....................................13
ARTICLE III CONDITIONS OF PURCHASES........................................................14
SECTION 3.01. Conditions Precedent to Initial Purchase............................14
SECTION 3.02. Conditions Precedent to All Purchases and
Remittances of Collections........................................14
SECTION 3.03. Effect of Payment of Purchase Price.................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................................15
SECTION 4.01. Representations and Warranties of the Originators...................15
ARTICLE V GENERAL COVENANTS................................................................20
SECTION 5.01. General Covenants...................................................20
ARTICLE VI ADMINISTRATION, COLLECTION AND MONITORING OF ASSETS.............................25
SECTION 6.01. Appointment and Designation of the Servicer.........................25
SECTION 6.02. Collection of Receivables by the Servicer;
Extensions and Amendments of Receivables..........................26
SECTION 6.03. Distribution and Application of Collections.........................26
SECTION 6.04. Other Rights of the Buyer...........................................27
SECTION 6.05. Records; Audits.....................................................27
SECTION 6.06. Receivable Reporting................................................28
SECTION 6.07. Collections and Lock-Boxes..........................................28
SECTION 6.08. UCC Matters; Protection and Perfection of
Transferred Assets................................................29
SECTION 6.09. Obligations of the Originators With Respect to
Receivables.......................................................30
SECTION 6.10. Applications of Collections.........................................30
SECTION 6.11. Annual Servicing Report of Independent Public
Accountants.......................................................30
ARTICLE VII EVENTS OF TERMINATION..........................................................31
SECTION 7.01. Events of Termination...............................................31
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ARTICLE VIII INDEMNIFICATION...............................................................33
SECTION 8.01. Indemnities by the Originators......................................33
ARTICLE IX MISCELLANEOUS...................................................................35
SECTION 9.01. Amendments and Waivers..............................................35
SECTION 9.02. Notices, Etc. ......................................................36
SECTION 9.03. Setoff and Counterclaim.............................................36
SECTION 9.04. No Waiver; Remedies.................................................36
SECTION 9.05. Binding Effect; Assignability.......................................36
SECTION 9.06. Term of this Agreement..............................................36
SECTION 9.07. GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF OBJECTION TO VENUE......................................37
SECTION 9.08. WAIVER OF JURY TRIAL................................................37
SECTION 9.09. Costs, Expenses and Taxes...........................................37
SECTION 9.10. Execution in Counterparts; Severability; Integration................37
SECTION 9.11. Confidentiality.....................................................38
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SCHEDULES
Schedule I -- Condition Precedent Documents
Schedule II -- Description of Credit and Collection Policy
Schedule III -- Lock-Box Banks and Lock-Box Accounts
Schedule IV -- Tradenames, Fictitious Names and "Doing Business As" Names
Schedule V -- List of Franchisees as of Closing Date
EXHIBITS
Exhibit A -- Form of Contracts
Exhibit B -- Form of Asset Report
Exhibit C -- Form of Originator Note
Exhibit D -- Form of Franchise Agreement
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THIS AMENDED AND RESTATED RECEIVABLES PURCHASE AND SALE
AGREEMENT (the "Agreement") is made as of October 1, 1999, by and among
OUTSOURCE INTERNATIONAL, INC., a Florida corporation ("OutSource
International"), OUTSOURCE FRANCHISING, INC., a Florida corporation ("OutSource
Franchising"), CAPITAL STAFFING FUND, INC., a Florida corporation ("CSF"),
SYNADYNE I, INC., a Florida corporation, SYNADYNE II, INC., a Florida
corporation, SYNADYNE III, INC., a Florida corporation, SYNADYNE IV, INC., a
Florida corporation, SYNADYNE V, INC., a Florida corporation, and OUTSOURCE
INTERNATIONAL OF AMERICA, INC., a Florida corporation, as the originators (each
an "Originator" and, collectively, the "Originators"), OUTSOURCE FUNDING
CORPORATION, a Delaware corporation (the "Buyer"), and OUTSOURCE INTERNATIONAL,
INC., in its capacity as the initial Servicer (as defined below).
WITNESSETH:
WHEREAS, pursuant to a Receivables Purchase and Sale
Agreement dated as of July 27, 1998 (as amended from time to time, the
"Original Agreement") by and among the Originators, the Buyer and the Servicer,
the Originators agreed to sell, and the Buyer agreed to purchase, all of the
Originators' right, title and interest in the accounts receivable originated by
the Originators on the terms and conditions provided in the Original Agreement;
WHEREAS, the Originators, the Buyer and the Servicer wish to
amend and restate the Original Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein, the parties hereto, intending to be legally bound
hereby, agree that the Original Agreement is amended and restated in its
entirety to read as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. (a) Certain capitalized
terms used throughout this Agreement are defined above or in this Section 1.01.
(b) As used in this Agreement and its exhibits, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined).
"Actual Dilution" means, on any Business Day with respect to
any Receivable or Receivables, the actual reduction in the Outstanding Balance
of such Receivable or Receivables as a result of any of the Dilution Factors.
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"Adverse Claim" means a lien, security interest, charge,
encumbrance or other right or claim of any Person having the practical effect
of a lien, security interest, charge or encumbrance.
"Affiliate" when used with respect to a Person means any
other Person controlling, controlled by or under common control with such
Person. For purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract, or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.
"Agent" means BankBoston, N.A., as agent for each of the
lending institutions party to the OutSource Funding Credit Agreement.
"Asset Report" means a report, in substantially the form of
Exhibit B, furnished by the Servicer to the Buyer pursuant to Section 6.06(b).
"Asset Report Date" means, with respect to any Collection
Period, the tenth day of such Collection Period, or if such date is not a
Business Day, the next Business Day to occur thereafter.
"Bankruptcy Code" means the United States Bankruptcy Reform
Act of 1978 (11 U.S.C. ss.ss. 101 et seq.), as amended from time to time, or any
successor statute.
"Base Rate" means, on any day, a fluctuating rate of interest
per annum equal to the higher of (a) the per annum rate of interest announced
from time to time by BankBoston, N.A. at its head office in Boston,
Massachusetts as its "base rate", and (b) 1/2 of one percent per annum above
the Federal Funds Rate.
"Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA in respect of which any Originator or any ERISA Affiliate
of any Originator is, or at any time during the immediately preceding six years
was, an "employer" as defined in Section 3(5) of ERISA.
"Business Day" means a day of the year other than a Saturday
or a Sunday on which banks are required to be open in New York City and Boston,
Massachusetts.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Closing Date" means the date on which the Buyer makes the
Initial Purchase of Receivables under this Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute.
"BKB Collection Account" has the meaning set forth in the
OutSource Funding Credit Agreement.
"Collection Account Bank" means BankBoston, N.A., as the
financial institution maintaining the BKB Collection Account.
"Collection Date" means the date following the Termination
Date on which the aggregate Outstanding Balance of all Receivables sold
hereunder has been reduced to zero (or such earlier date which is 365 days
after all outstanding Receivables sold hereunder have become written-off in
accordance with the Credit and Collection Policy), the Buyer has received all
other amounts due to it in connection with this Agreement or any other
agreement executed pursuant hereto or in connection herewith.
"Collection Period" means an accounting period of four or
five weeks as used by the Originators consistent with their present accounting
methods and as set forth in a written calendar to be provided to the Agent at
closing for the remainder of 1999 and to be provided to the Agent on or prior
to December 1st of each year for the immediately succeeding calendar year.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of the Related Security with respect thereto.
"Confidential Information" has the meaning assigned to such
term in Section 9.11.
"Contract" means an invoice issued by an Originator to a
Person, or an agreement between an Originator and a Person, in each case in
substantially the form of one of the forms set forth in Exhibit A pursuant to
or under which such Obligor shall be obligated to make one or more payments to
an Originator.
"Credit and Collection Policy" means those credit and
collection policies and practices relating to Contracts and Receivables
described in Schedule II.
"CSF Advance" means an advance of money by CSF to a
Franchisee.
"Debt" of any Person means (a) indebtedness of such Person
for borrowed money, (b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations of such Person
to pay the deferred purchase price of property or services beyond ordinary
course of business payment terms for trade payables, (d) obligations of such
Person as lessee under leases which shall have been or should be, in accordance
with GAAP, recorded as capital leases, (e) obligations secured by an Adverse
Claim upon property or assets owned by such Person, even though such Person has
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not assumed or become liable for the payment of such obligations and (f)
without duplication obligations of such Person under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(a) through (e) above.
"Defaulted Receivable" means a Receivable (a) as to which any
payment, or part thereof, remains unpaid for more than 150 days from the
original invoice date for such payment, (b) as to which the Obligor thereof has
taken any action constituting an Insolvency Event or suffered any Insolvency
Event or (c) which, consistent with the Credit and Collection Policy, has been
or should be written off the applicable Originator's books as uncollectible.
"Dilution Factors" means, with respect to the Receivables,
any credits, rebates, freight charges, discounts, allowances, disputes,
chargebacks, returned or repossessed goods, inventory transfers, allowances for
early payments and other allowances or adjustments granted in accordance with
the Buyer's or the Originators' usual practices.
"Dilution Adjustment Credit" means, on any Business Day, the
Actual Dilution reported by the Servicer in the most recent applicable Weekly
Settlement Report.
"Discount Factor" means a percentage calculated to provide
the Buyer with a reasonable return on its investment in the Transferred Assets
after taking account of (i) the time value of money based upon the anticipated
dates of collection of the Transferred Assets, (ii) the risk of nonpayment by
the Obligors and (iii) the costs of servicing the Receivables to be performed
by the Originators. The initial Discount Factor shall be 3.0%. The Originators
and the Buyer may agree in writing from time to time to change the Discount
Factor based on changes in one or more of the items affecting the calculation
thereof; provided, however, that any change to the Discount Factor shall take
effect as of the commencement of a Collection Period, shall apply only
prospectively and shall not affect the Purchase Price payment in respect of
Purchases which occurred during any Collection Period ending prior to the
Collection Period during which the Originators and the Buyer agree to make such
change.
"Eligible Receivable" has the meaning assigned to that term
in the Outsource Funding Credit Agreement.
"ERISA" means the U.S. Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means (a) any corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as the Originators; (b) a partnership or other trade or
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business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with the Originators or (c) a member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
the Originators, any corporation described in clause (a) above or any
partnership, trade or business described in clause (b) above.
"Event of Termination" has the meaning assigned to that term
in Section 7.01.
"Franchise Agreement" means a Franchise Agreement
substantially in the form of Exhibit D attached hereto.
"Franchisee" means those entities listed on Schedule V
attached hereto and any other entity which executes a Franchise Agreement with
OutSource International or an Affiliate of OutSource International.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, in each case consistently
applied.
"Indemnified Amounts" has the meaning assigned to that term
in Section 8.01.
"Indemnified Parties" has the meaning assigned to that term
in Section 8.01.
"Initial Purchase" means the initial Purchase made by the
Buyer hereunder.
"Insolvency Event" means, with respect to any Person, any of
the following events: such Person shall make a general assignment for the
benefit of creditors; or any case or proceeding shall be instituted by or
against such Person seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, dissolution, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property.
"Investment" means, with respect to any Person, any direct or
indirect loan, advance or investment by such Person in any other Person,
whether by means of share purchase, capital contribution, loan or otherwise,
excluding the acquisition of Receivables and other Transferred Assets (and
interests therein) pursuant to this Agreement and excluding commission, travel
and similar advances to officers, employees and directors made in the ordinary
course of business.
"Investment Company Act" means the Investment Company Act of
1940, as amended and any successor.
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"Lock-Box" has the meaning set forth in the OutSource Funding
Credit Agreement.
"Lock-Box Account" has the meaning set forth in the OutSource
Funding Credit Agreement.
"Lock-Box Agreement" has the meaning set forth in the
OutSource Funding Credit Agreement.
"Lock-Box Bank" has the meaning set forth in the OutSource
Funding Credit Agreement.
"Material Adverse Effect" means any act, omission, situation,
circumstance, event or undertaking which could, singly or in any combination
with one or more other acts, omissions, situations, circumstances, events or
undertakings, have, or are reasonably likely to have, a material adverse effect
upon (a) the business, assets, properties, liabilities, financial condition, or
results of operations of any Originator and its subsidiaries taken as a whole,
(b) the value of the whole or any material part of the Transferred Assets, the
interests therein transferred or purported to be transferred pursuant to the
terms hereof or the priority of such interests, (c) the respective ability of
the Originators or any of their subsidiaries to perform any obligations under
this Agreement or any other Originator Document to which it is a party, or (d)
the legality, validity, binding effect or enforceability of any Originator
Document or the ability of the Buyer or the Agent to enforce any rights or
remedies under or in connection with any Originator Document.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding five years contributed to by an Originator or
any ERISA Affiliate on behalf of its employees.
"Noncomplying Receivable" means any Receivable with respect
to which any Originator has received notice from the Buyer that such Receivable
was not an Eligible Receivable as of the date purchased hereunder or that such
Originator otherwise breached any representation, warranty or covenant made
with respect to such Receivable hereunder.
"Noncomplying Receivables Adjustment" means, with respect to
any Collection Period, an amount equal to (i) the aggregate Outstanding Balance
for all Receivables which the Buyer identified to the applicable Originator as
Noncomplying Receivables during such Collection Period minus (ii) all
Collections received during such Collection Period on account of Receivables
originated by such Originator with respect to which Noncomplying Receivables
Adjustments were previously paid.
"Obligor" means a Person obligated to make payments pursuant
to a Contract.
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"Originator Documents" means this Agreement, the Lock-Box
Agreements, and all other certificates, instruments, UCC financing statements,
reports, notices, agreements and documents executed or delivered under or in
connection with this Agreement, in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with this
Agreement.
"Originator Loan" has the meaning set forth in Section
2.02(b).
"Originator Note" has the meaning set forth in Section
2.02(c).
"OutSource Funding Credit Agreement" means the Revolving
Credit Agreement, dated as of October ___, 1999, among OutSource Funding
Corporation, as borrower, each of the lending institutions party thereto, as
banks, and BankBoston, N.A., as agent, as the same shall be amended, restated,
modified, extended, renewed or replaced.
"Outstanding Balance" of any Receivable at any time means the
then outstanding principal balance thereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Person succeeding to the functions thereof.
"Permitted Acquisition" has the meaning set forth in the
Revolving Credit Agreement.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, limited liability company, government (or any
agency or political subdivision thereof) or other entity.
"Purchase" means a purchase of Transferred Assets by the
Buyer from the Originators pursuant to Section 2.01.
"Purchase Price" means, with respect to any Purchase on any
date, the aggregate price to be paid to the applicable Originator for such
Purchase in accordance with Section 2.02 for the Receivables, Related Security
and Collections being sold to the Buyer on such date, which price shall equal
the product of (x) the aggregate Outstanding Balance of such Receivables and
(y) one minus the Discount Factor then in effect.
"Receivable" means the indebtedness of any Obligor under a
Contract whether constituting an account, chattel paper, instrument, general
intangible or any other type of property, (a) which arises from a sale of
merchandise or the performance of services by an Originator or (b) which is a
CSF Advance. Each Receivable shall include the right to payment of any interest
or finance charges and other obligations of such Obligor with respect thereto.
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"Records" means all Contracts and other documents, books,
records and other information (including without limitation, computer programs,
tapes, disks, punch cards, data processing software and related property and
rights) maintained with respect to Receivables and the related Obligors which
the applicable Originator has itself generated or in which such Originator has
otherwise obtained an interest.
"Related Security" means with respect to any Receivable:
(a) all of the applicable Originator's interest in the
merchandise (including returned, repossessed or foreclosed
merchandise), if any, relating to the sale which gave rise to such
Receivable;
(b) all other Adverse Claims and property subject thereto
from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or
otherwise;
(c) the assignment to the Buyer of all UCC financing
statements covering any collateral securing payment of such
Receivable;
(d) all guarantees, indemnities, warranties, letters of
credit, insurance policies and proceeds and premium refunds thereof
and other agreements or arrangements of whatever character from time
to time supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or otherwise;
(e) all Records; and
(f) all proceeds of the foregoing.
"Revolving Credit Agreement" means that certain Third Amended
and Restated Credit Agreement dated as of July 27, 1998 by and among OutSource
International, the banks and other financial institutions from time to time
parties thereto and BankBoston, N.A., as successor by merger to Bank of Boston
Connecticut, as agent for the banks thereunder, as the same may be amended,
restated, supplemented, replaced or otherwise modified from time to time, any
successor agreement, and any agreement pursuant to which the Debt issued under
any such "Revolving Credit Agreement" is refinanced.
"Servicer" means at any time the Person then authorized
pursuant to Article VI to service, administer and collect Receivables.
"Servicer Fee" has the meaning assigned to that term in
Section 6.01.
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"Servicer Termination Event" means the occurrence of any of
the following:
(a) any Event of Termination; or
(b) a material failure on the part of the Servicer to observe
or perform any of its duties or obligations as Servicer under this Agreement
and such failure shall remain unremedied for two Business Days after written
notice to the Servicer.
"Settlement Date" means, with respect to any Collection
Period, the fifteenth day of such Collection Period, or if such date is not a
Business Day, the next Business Day to occur thereafter.
"Termination Date" means the date on which the Originators'
obligation to sell and the Buyer's obligation to purchase Receivables hereunder
terminates, which date shall occur on the earliest of (i) the date on which an
Insolvency Event occurs with respect to OutSource International, any Originator
or the Buyer and (iii) upon the occurrence and during the continuance of an
Event of Termination, the date on which the Buyer declares its obligation to
purchase Receivables hereunder to be terminated.
"Transferred Assets" means, with respect to any Purchase or
Purchases, (a) the Receivables sold to the Buyer in connection with such
Purchase or Purchases, (b) all Related Security relating to such Receivables,
and (c) all Collections with respect to, and other proceeds of, such
Receivables.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
"United States" means the United States of America.
"Weekly Settlement Report" means the report prepared by the
Servicer pursuant to Section 5.01(c)(vii).
SECTION 1.02. Accounting and Certain Other Terms. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP, and all accounting determinations made and all financial
statements prepared hereunder shall be made and prepared in accordance with
GAAP. All undefined terms contained in this Agreement which are used in Article
9 of the UCC in the State of New York shall have the meanings provided for by
such Article 9.
SECTION 1.03. Other Terms . The words "herein," "hereof," and
"hereunder" and other words of similar import refer to this Agreement as a
whole, including the exhibits and schedules hereto, as the same may from time
to time be amended or supplemented and not to any particular section,
subsection, or clause contained in this Agreement, and all references to
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Sections, Exhibits and Schedules shall mean, unless the context clearly
indicates otherwise, the Sections hereof and the Exhibits and Schedules
attached hereto, the terms of which Exhibits and Schedules are hereby
incorporated into this Agreement. Whenever appropriate, in the context, terms
used herein in the singular also include the plural, and vice versa.
SECTION 1.04. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES.
SECTION 2.01. Agreement to Purchase. (a) On the terms and
conditions hereinafter set forth, the Buyer agrees to make the Initial Purchase
hereunder on the Closing Date by purchasing from each Originator, and each
Originator agrees to sell to the Buyer, all Receivables of such Originator
existing as of the close of business on the Business Day immediately prior to
the Closing Date, together with all of the Related Security relating to such
Receivables, all Collections with respect to, and other proceeds of, such
Receivables. On each Business Day after the Initial Purchase until the
occurrence of the Termination Date, the Buyer agrees to purchase from each
Originator, and each Originator agrees to sell to the Buyer, all Receivables of
such Originator existing as of the close of business on the immediately
preceding Business Day which have not been previously purchased hereunder,
together with all of the Related Security relating to such Receivables and all
Collections with respect to and other proceeds of such Receivables. Prior to
making any Purchase hereunder, the Buyer may request of any Originator, and the
applicable Originator shall deliver, such approvals, opinions, information,
reports or documents as the Buyer may reasonably request.
(b) It is the intention of the parties hereto that each
Purchase of Receivables to be made hereunder shall constitute a "sale of
accounts," as such term is used in Article 9 of the UCC of the State of New
York, and not a loan secured by such accounts. Except for the Noncomplying
Receivables Adjustment made on each Asset Report Date and the Dilution
Adjustment Credit made on any Business Day, each sale of Receivables by any
Originator to the Buyer is made without recourse; provided, however, that (i)
the Originators shall be liable to the Buyer for all representations,
warranties and covenants made by the Originators pursuant to the terms of this
Agreement, and (ii) such sale does not constitute and is not intended to result
in an assumption by the Buyer or any assignee thereof of any obligation of the
Originators or any other person arising in connection with the Transferred
Assets, or any other obligations of the Originators. In view of the intention
of the parties hereto that the Purchases of Receivables to be made hereunder
shall constitute a sale of such Receivables rather than a loan secured by such
Receivables, each Originator agrees to clearly, expressly and accurately state
on its respective financial statements that the Receivables have been sold to
the Buyer.
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(c) The parties hereto acknowledge that on the Closing Date
OutSource International shall, and from time to time thereafter OutSource
International may (but without any obligation to do so), contribute to the
capital of Buyer such amounts as may be necessary or desirable for the
operation of Buyer's business and the payment of its obligations under this
Agreement. In connection with any such contribution, the parties hereto agree
that OutSource International may, in lieu of making a cash transfer, authorize
Buyer to deduct the amount of such contributions from the Purchase Price
otherwise payable by Buyer to OutSource International on the applicable date.
All of the Receivables so paid for through such deductions shall constitute
Transferred Assets within the meaning of this Agreement and shall be subject to
all of the representations, warranties and covenants hereunder to the same
extent as if Buyer had paid the Purchase Price for such Receivables with cash
from its own funds.
SECTION 2.02. Payment for the Purchases. (a) The Purchase
Price for each Purchase shall be payable in full in cash by the Buyer to the
applicable Originator or its designee on the date of such Purchase; except that
the Buyer may, with respect to any Purchase, offset against such Purchase
Price, (i) any positive Noncomplying Receivables Adjustments or other amounts
shown on an Asset Report as owing from such Originator to the Buyer and which
remain unpaid; (ii) any Dilution Adjustment Credits for Receivables sold by
such Originator reported on the most recent Weekly Settlement Report and any
Dilution Adjustment Credits for Receivables sold by such Originator and
reported in any previous Weekly Settlement Report which remain unpaid; and
(iii) any other amounts owed by such Originator to the Buyer hereunder and
which remain unpaid.
(b) If, on any day, the amount of cash available to the Buyer
under the OutSource Funding Credit Agreement is less than the Purchase Price
owing for all Purchases of Receivables to be made on such day, then the Buyer
may, by written notice to the Originators, elect to pay such remaining part of
the Purchase Price by borrowing a subordinated revolving loan (each an
"Originator Loan") and each Originator shall have irrevocably agreed to
advance, and shall be deemed to have advanced, an Originator Loan in the amount
so specified by the Buyer; provided, however, that the Buyer may not make any
such election and no Originator shall have any obligation to extend any
Originator Loans to the Buyer if, as a result thereof, the aggregate unpaid
principal amount of all of the Originator Loans would exceed the sum of (i) the
aggregate Outstanding Balance of Eligible Receivables as of the opening of
business on such date minus (ii) one hundred ten percent (110%) of outstanding
"Loans" under the OutSource Funding Credit Agreement.
(c) The Originator Loans advanced by each Originator shall be
evidenced by, and payable in accordance with the terms and provisions of, a
promissory note (the "Originator Note") payable to such Originator in the form
of Exhibit C attached hereto. On each Business Day, to the extent that the
Buyer receives either Collections or proceeds from any loans under the
OutSource Funding Credit Agreement which, in any case, it is not required to
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hold in trust for, or remit to, the Servicer or the Agent, then the Buyer shall
remit such funds to the Originators (net of any funds needed to pay existing
expenses which are then accrued and unpaid) in the following order of priority
and application: first to pay the Purchase Price owed on such date; second to
pay any Noncomplying Receivables Adjustment payments owed under Section 2.03;
and third to pay amounts owed under the Originator Notes.
(d) The Originator Loans shall, subject to the terms of the
Originator Note, be subordinated to the prior right and payment in full of all
obligations of the Buyer under the OutSource Funding Credit Agreement. The
Buyer shall, to the extent reasonably practicable, use its best efforts (i) to
allocate the amount of Originator Loans made on any day first to OutSource
International and then ratably according to the respective Purchase Prices owed
to each other Originator for Receivables sold on such date and (ii) to allocate
payments of principal and interest on the Originator Notes ratably to each
Originator other than OutSource International according to the outstanding
principal amounts thereof and thereafter to OutSource International.
SECTION 2.03. Settlement Procedures. (a) Weekly. The
Servicer shall, as part of the Weekly Settlement Report, note the Dilution
Adjustment Credit due to the Buyer from any Originator. The Buyer shall,
pursuant to Section 2.02, subtract such Dilution Adjustment Credit from the
Purchase Price which would otherwise be owed to such Originator on such day
and, if the amount of such credit exceeds the amount of such Purchase Price,
the unused amount of the Dilution Adjustment Credit shall be applied as a
prepayment of the then outstanding principal amount of the Originator Note
issued in favor of such Originator. Any remaining unutilized amount of the
Dilution Adjustment Credit shall be credited by the Buyer against all future
Purchases from such Originator; provided, however, that if such credits are not
fully utilized within five (5) Business Days, the applicable Originator shall
pay the remaining amount of such credit in cash on the next succeeding Business
Day.
(b) Monthly. On or prior to each Asset Report Date, the
Servicer shall prepare and deliver to the Buyer pursuant to 6.06(b), a
statement of the Noncomplying Receivables Adjustment due to the Buyer from any
Originator or from the Buyer to any Originator, as the case may be. If the
Noncomplying Receivables Adjustment is a positive number, such number shall be
shown on the Asset Report as an amount due to the Buyer and the Buyer shall
subtract such Noncomplying Receivables Adjustment from the Purchase Price which
would otherwise be owed to the applicable Originator on such day and, if the
amount of such adjustment exceeds the amount of such Purchase Price, the unused
positive amount of the Noncomplying Receivables Adjustment shall be applied as
a prepayment of the then outstanding principal amount of the Originator Note
held by such Originator. Any remaining unutilized positive amount of the
Noncomplying Receivables Adjustment shall be credited by the Buyer against all
future Purchases from the applicable Originator; provided, however, that if
such credits are not fully utilized within five (5) Business Days, such
Originator shall pay the remaining amount of such adjustment in cash on the
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next succeeding Business Day. Alternatively, if the Noncomplying Receivables
Adjustment is a negative number, such number shall be shown on the Asset Report
as an amount due to such Originator, and the Buyer shall pay to such Originator
the amount, if any, shown on the Asset Report as the net amount due from Buyer
to such Originator. To the extent that such net amount due remains unpaid as of
the end of such Asset Report Date, the principal amount of the Originator Note
issued to such Originator shall be increased on the applicable Asset Report
Date by such remaining unpaid amount, subject, however, to the limits on the
amounts of the Originator Note permitted under Section 2.02(b) above.
(c) Generally. Until the Originators or the Buyer shall
notify the Servicer of any exceptions to the calculations contained therein,
the calculations of the Dilution Adjustment Credit and Noncomplying Receivables
Adjustment in each Weekly Settlement Report and each Asset Report shall be
deemed to be correct as originally delivered. If any Originator or the Buyer
shall have notified the Servicer of any exceptions to such calculations, such
Originator and the Buyer shall promptly endeavor to resolve the matters set
forth in such notice. If no such resolution is agreed upon on or before the
next Asset Report Date, however, then the Asset Report originally delivered by
the Servicer shall, absent manifest error, continue to be presumed correct
until a resolution is reached to the contrary. Nothing contained in this
Section 2.03(c) shall be deemed to limit the rights of the Buyer under Section
8.01.
SECTION 2.04. Payments and Computations, Etc. All amounts to
be paid by any Originator or the Servicer to the Buyer hereunder shall be paid
in accordance with the terms hereof no later than 11:00 A.M. (Boston,
Massachusetts time) on the day when due in immediately available funds to such
account as the Buyer may from time to time specify in writing. Payments
received by the Buyer after such time shall be deemed to have been received on
the next Business Day. In the event that any payment becomes due on a day which
is not a Business Day, then such payment shall be made on the next succeeding
Business Day. Each of the Originators shall, and if any Originator is the
Servicer, the Servicer shall, to the extent permitted by law, pay to the Buyer,
on demand, interest on all amounts not paid when due hereunder (whether owing
by any Originator individually or as Servicer) at 2.0% per annum above the Base
Rate, payable on demand; provided, however, that such interest rate shall not
at any time exceed the maximum rate permitted by applicable law. All
computations of interest payable hereunder shall be made on the basis of a year
of 360 days for the actual number of days (including the first but excluding
the last day) elapsed.
SECTION 2.05. Transfer of Records to the Buyer. (a) Each
Purchase of Receivables hereunder shall include the transfer to the Buyer of
all of the applicable Originator's right and title to and interest in the
Records relating to such Receivables and rights to the use of such Originator's
computer software to access and create the Records, and each Originator hereby
agrees that such transfer shall be effected automatically with each such
Purchase, without any action on the part of the parties hereto or any further
documentation.
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(b) Each Originator shall take such action requested by the
Buyer, from time to time hereafter, that may be necessary or appropriate to
ensure that the Buyer and its assignees have (i) an enforceable ownership
interest in the Records relating to the Receivables purchased hereunder and
(ii) an enforceable right (whether by license or sublicense or otherwise) to
use all of the computer software used to account for the Receivables and/or to
recreate such Records.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The
Initial Purchase hereunder is subject to the conditions precedent that the
Buyer shall have received on or before the date of such purchase the items
listed in Schedule I, each (unless otherwise indicated) dated such date, in
form and substance satisfactory to the Buyer.
SECTION 3.02. Conditions Precedent to All Purchases and
Remittances of Collections. Each Purchase (including the Initial Purchase)
from the Originator by the Buyer shall be subject to the further conditions
precedent that (a) with respect to any such Purchase (other than the Initial
Purchase), on or prior to the date of such Purchase, the Servicer shall have
delivered to the Buyer, in each case in form and substance satisfactory to the
Buyer, a completed Asset Report dated as of the most recent Asset Report Date,
and a completed Weekly Settlement Report dated no more than seven Business Days
prior to the date of such Purchase, and in each case containing such additional
information as may be reasonably requested by the Buyer; (b) on the date of
such Purchase, the following statements shall be true:
(i) The representations and warranties contained in Section
4.01 are correct on and as of such day as though made on and as of
such date,
(ii) No event has occurred and is continuing, or would result
from such Purchase, which constitutes an Event of Termination, and
(iii) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or
governmental body, agency or instrumentality shall prohibit or enjoin,
the making of such Purchase by the Buyer in accordance with the
provisions hereof.
and (c) the Buyer shall have received such other approvals, opinions or
documents as the Buyer may reasonably request.
SECTION 3.03. Effect of Payment of Purchase Price. Each
Originator, by accepting the proceeds of the Purchase Price for a Purchase,
shall be deemed to have certified to the Buyer the satisfaction of the
conditions precedent described in the immediately preceding Section 3.02. Upon
the payment of the Purchase Price for any Purchase, (whether in cash or by the
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making of an Originator Loan pursuant to Section 2.02(b)), title to the
Transferred Assets included in such Purchase shall vest irrevocably in the
Buyer, whether or not the conditions precedent to such Purchase were in fact
satisfied; provided, however, that the Buyer shall not be deemed to have waived
thereby any claim for indemnification it may have under this Agreement for the
failure by any Originator in fact to have satisfied any such condition
precedent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Originators. The Originators represent and warrant that as of the date hereof,
as of the date of the Initial Purchase and as of the date of each subsequent
Purchase:
(a) Each of the Originators is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to do business, and is in
good standing, in every jurisdiction in which the nature of its business
requires it to be so qualified and the failure to do so could reasonably be
expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the
Originators of this Agreement and all other Originator Documents to be entered
into by them, including the Originators' use of the proceeds of Purchases, are
within each Originator's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene (i) each Originator's charter or
by-laws, (ii) any law, rule or regulation applicable to the Originators, (iii)
any contractual restriction binding on or affecting each Originator or its
property or (iv) any order, writ, judgment, award, injunction or decree binding
on or affecting each Originator or its property, and do not result in or
require the creation of any Adverse Claim upon or with respect to any of its
properties (other than in favor of the Buyer with respect to the Transferred
Assets); and no transaction contemplated hereby requires compliance with any
bulk sales act or similar law. This Agreement and each other Originator
Document to be entered into by the Originators have each been duly executed and
delivered by the Originators.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Originators of
this Agreement or any other Originator Document to be entered into by them,
except for the filing of the UCC financing statements referred to in Article
III, all of which financing statements have been duly filed and are in full
force and effect.
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(d) This Agreement and each other Originator Document to be
entered into by the Originators constitute the legal, valid and binding
obligation of the Originators enforceable against each Originator in accordance
with their respective terms subject to bankruptcy and similar laws affecting
creditors generally and principles of equity.
(e) (i) OutSource International has furnished to the Buyer
and the Agent (A) copies of the audited consolidated balance sheets of
OutSource International and its consolidated subsidiaries as at December 31,
1998, and the related audited consolidated statements of income, shareholders'
equity and cash flows for the fiscal year of OutSource International and its
consolidated subsidiaries then ended reported on by Deloitte & Touche, LLP,
which financial statements present fairly in all material respects in
accordance with GAAP the financial position of OutSource International and its
consolidated subsidiaries as at December 31, 1998, and the results of
operations of OutSource International and its consolidated subsidiaries for the
fiscal year of OutSource International then ended, and (B) copies of the
unaudited consolidated balance sheets of OutSource International and its
consolidated subsidiaries as at June 30, 1999, and the related unaudited
consolidated statements of income, shareholders' equity and cash flows for the
three-month period then ended, which financial statements present fairly in all
material respects in accordance with GAAP the financial position of OutSource
International and its consolidated subsidiaries as at June 30, 1999, and the
results of operations of OutSource International and its consolidated
subsidiaries for the three-month period then ended; and (ii) since June 30,
1999, (A) no material adverse change has occurred in the business, assets,
liabilities, financial condition, or results of operations or business
prospects of OutSource International and its subsidiaries taken as a whole, and
(B) no event has occurred or failed to occur which has had, or may have, singly
or in the aggregate, a Material Adverse Effect.
(f) There is no pending or threatened action or proceeding
affecting any Originator or any subsidiaries of any Originator before any
court, governmental agency or arbitrator that could reasonably be expected to
have a Material Adverse Effect. None of the Originators, or any subsidiary of
any Originator is in default with respect to any order of any court, arbitrator
or governmental body except for defaults with respect to orders of governmental
agencies which defaults are not material to the business or operations of the
Originators or any subsidiary of any of the Originators.
(g) No proceeds of any Purchase will be used by the
Originators to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(h) Immediately prior to each Purchase hereunder, each
Receivable to be sold hereunder, together with the Contract related thereto and
the other Transferred Assets relating thereto, is owned by the applicable
Originator free and clear of any Adverse Claim except as provided herein or
permitted hereby, and the Buyer shall acquire all of such Originator's right,
title and interest in such Transferred Assets and a valid and perfected first
priority ownership interest in each such Receivable then existing or thereafter
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arising and in the Related Security and Collections with respect thereto, free
and clear of any Adverse Claim except as created hereby or by the Buyer in the
OutSource Funding Credit Agreement or any related document. No effective
financing statement or other instrument similar in effect covering any
Transferred Assets shall at any time be on file in any recording office except
such as may be filed in favor of the Buyer relating to this Agreement or in
favor of the Agent under the OutSource Funding Credit Agreement. The Purchases
of the Transferred Assets by the Buyer constitute true and valid sales and
transfers for consideration (and not merely a pledge of such Transferred Assets
for security purposes), enforceable against creditors of the Buyers and no
Transferred Assets shall constitute property of any Originator.
(i) No Asset Report or Weekly Settlement Report (if prepared
by OutSource International, an Originator or any Affiliate thereof, or to the
extent that information contained therein is supplied by OutSource
International, an Originator or any such Affiliates), information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished by OutSource International or an Originator to the Buyer in
connection with this Agreement is or will be inaccurate in any material respect
as of the date it is or shall be dated or (except as otherwise disclosed to the
Buyer, as the case may be, at such time) as of the date so furnished, and no
such document contains or will contain any material misstatement of fact or
omits or shall omit to state a material fact or any fact necessary to make the
statements contained therein not misleading.
(j) The principal place of business and chief executive
office of the Originators and the offices where the Originators keep all the
Records are located at the addresses of the Originators referred to in Section
9.02 hereof (or at such other locations as to which the notice and other
requirements specified in Section 6.08 shall have been satisfied).
(k) The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts at such Lock-Box
Banks and the names, addresses and account numbers of all accounts to which
Collections of the Receivables outstanding before the Initial Purchase
hereunder have been sent, are specified in Schedule III (which shall be deemed
to be amended in respect of terminating or adding any Lock-Box Account or
Lock-Box Bank upon satisfaction of the notice and other requirements specified
in respect thereof). The Originators have no other lock-box accounts or similar
deposit accounts for the collection of the Transferred Assets except for the
Lock-Box Accounts.
(l) Except as described in Schedule IV, none of the
Originators has any trade names, fictitious names, assumed names or "doing
business as" names or other names under which it has done (at any time during
the five year period preceding the date hereof) or is currently doing business.
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(m) No event has occurred and is continuing, or would result
from any Purchase hereunder or from the application of the proceeds therefrom,
which constitutes an Event of Termination.
(n) The Purchase Price constitutes reasonably equivalent
value in consideration for the transfer to the Buyer of the Transferred Assets
from the Originators and no such transfer shall have been made for or on
account of an antecedent debt owed by any Originator to the Buyer and no such
transfer is or may be voidable under any Section of the Bankruptcy Code.
(o) Each Originator has received advice from its counsel
which is consistent with the conclusions set forth in the legal opinion(s) of
Rudnick & Wolfe, counsel to the Originators relating to the issues of
substantive consolidation and true sale of the Receivables and the related
property.
(p) Each Originator is solvent at the time of (and
immediately after) each transfer of Transferred Assets to the Buyer hereunder.
(q) Each Originator has accounted for and has otherwise
treated each Purchase of Transferred Assets hereunder in its books, records and
financial statements as a sale to the Buyer, in each case consistent with GAAP
and with the requirements set forth herein.
(r) OutSource International owns one hundred percent (100%)
of the outstanding capital stock of the Buyer and has not granted or issued any
options, warrants or other rights to acquire any such capital stock.
(s) None of the Originators has (i) guaranteed any obligation
of the Buyer, allowed any of its other Affiliates to guarantee any obligations
of the Buyer, and no Originator nor any of its other Affiliates has held itself
out as responsible for debts of the Buyer or actions with respect to the
business and affairs of the Buyer; or (ii) permitted the commingling or pooling
of its funds or other assets with those of the Buyer and has otherwise
permitted any other of its Affiliates to commingle or pool any of their funds
or other assets with those of the Buyer. Each of the Originators (i) has agreed
with the Buyer, and has caused each of its other Affiliates to the extent
applicable to agree with the Buyer, to allocate between themselves shared
corporate operating services and expenses which are not reflected in the
Servicer Fee (including, without limitation, the services of shared employees,
consultants and agents and reasonable legal and auditing expenses) on the basis
of the reasonably projected use or the projected value of services rendered,
and otherwise on a basis reasonably related to actual use or the value of
services rendered, (ii) has not named the Buyer, and has not allowed any other
Affiliate to name the Buyer, as a direct or contingent beneficiary or loss
payee on any insurance policy covering the property of the Originators,
OutSource International or any other Affiliates; and (iii) acknowledges that
the Buyer and the Agent are entering into the transactions contemplated by the
OutSource Funding Credit Agreement in reliance on the Buyer's identity as a
separate legal entity from the Originators, OutSource International and any
other Affiliates.
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(t) None of the Originators is an "investment company" or a
company controlled by an "investment company" registered or required to be
registered under the Investment Company Act, or otherwise subject to any other
federal or state statute or regulation limiting its ability to incur
indebtedness.
(u) None of the Originators is engaged, principally or as one
of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" (as each of the quoted
terms is defined or used in Regulation G, T, U or X). No part of the proceeds
of any Transferred Asset has been used for so purchasing or carrying margin
stock or for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation G, T, U or X.
(v) Each of the Originators and the Servicer has the right
(whether by license, sublicense or assignment) to use all of the computer
software used by the Servicer and/or the Originators to account for the
Transferred Assets to the extent necessary to administer the Transferred
Assets, and to assign (by way of sale) or sublicense such rights to use all of
such software to the Buyer.
(w) None of the Originators' inventory, the sale of which
would give rise to a Receivable, is subject to any Adverse Claim except as
contemplated under the Revolving Credit Agreement.
(x) Each Originator has filed or caused to be filed all
Federal, state and local tax returns which are required to be filed by it, and
has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the applicable Originator has
set aside adequate reserves on its books in accordance with GAAP and which
proceedings have not given rise to any Adverse Claim.
(y) Each Receivable sold hereunder is, as of the date of
sale, unless otherwise identified to the Buyer and the Agent on or prior to
such date, an Eligible Receivable.
(z) The copy of the Credit and Collection Policy attached
hereto as Schedule II is a true and complete copy thereof.
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ARTICLE V
GENERAL COVENANTS
SECTION 5.01. General Covenants.
(a) Compliance with Laws; Preservation of Corporate
Existence. The Originators shall comply in all material respects with all
applicable laws (including, without limitation, ERISA and the Code), rules,
regulations, orders and Originator Documents and preserve and maintain their
corporate existence, rights, franchises, qualifications and privileges where
the failure to comply could reasonably be expected to have a Material Adverse
Effect.
(b) Sales, Liens, Etc. Except as otherwise specifically
provided herein, no Originator shall (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to, any Transferred Asset, or upon or with respect
to any Lock-Box Account, the BKB Collection Account or any other account to
which any Collections of any Receivable are sent, or assign any right to
receive income in respect thereof or (ii) create or suffer to exist any Adverse
Claim upon or with respect to any of the Originators' inventory, the sale of
which would give rise to a Receivable, except such Adverse Claims as are
contemplated under the Intercreditor Agreement.
(c) General Reporting Requirements. OutSource International
and each Originator will provide, or cause to be provided, to the Buyer the
following:
(i) as soon as available and in any event within 90
days after the end of each fiscal year of OutSource
International, consolidated balance sheets of OutSource
International and its consolidated subsidiaries and the
related statement of income, shareholders' equity and cash
flows for such year, each prepared in accordance with GAAP
and reported on by nationally recognized independent public
accountants acceptable to the Buyer;
(ii) as soon as available and in any event within 45
days after the end of each of the first three quarters of
each fiscal year of OutSource International, consolidated
balance sheets of OutSource International and its
consolidated subsidiaries and the related statements of
income, shareholders' equity and cash flows each for the
period commencing at the end of the previous fiscal year and
ending with the end of such quarter, prepared in accordance
with GAAP and certified by a senior financial officer of
OutSource International;
(iii) promptly after the sending or filing thereof
(as the case may be), copies of (1) all reports which
OutSource International sends to any of its securityholders
and (2) all reports and registration statements which
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OutSource International files with the Securities and
Exchange Commission or any national securities exchange other
than registration statements relating to employee benefit
plans and to registrations of securities for selling
securityholders and (3) all reports, notices and/or
certificates which OutSource International delivers to any of
its "Lenders" under the Revolving Credit Agreement;
(iv) promptly after the filing or receiving thereof,
copies of all reports and notices with respect to any
Reportable Event defined in Article IV of ERISA which the
applicable Originator or any ERISA Affiliate files under
ERISA with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor
or which the applicable Originator or any ERISA Affiliate
receives from such Corporation;
(v) as soon as possible and in any event within
three days after the occurrence of each Event of Termination
or each event which, with the giving of notice or lapse of
time or both, would constitute an Event of Termination, a
statement of the chief financial officer or chief accounting
officer of the applicable Originator setting forth details of
such Event of Termination or event and the action which the
applicable Originator has taken and proposes to take with
respect thereto;
(vi) promptly following the Buyer's request
therefor, such other information respecting the Receivables
or the conditions or operations, financial or otherwise, of
the Originators, OutSource International or any of their
Affiliates as the Buyer may from time to time reasonably
request in order to protect the interests of the Buyer in
connection with this Agreement; and
(vii) no later than 10:00 a.m. Boston, Massachusetts
time on each Thursday of each calendar week (or if such day
is not a Business Day, then the next Business Day to occur
thereafter), a Weekly Settlement Report in form and substance
satisfactory to the Agent setting forth, as of the close of
business of the preceding Sunday, the Dilution Adjustment
Credits and the Transferred Assets.
(d) Merger, Acquisition, Etc. No Originator shall enter into
any merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer, or otherwise dispose of, any of its property, business or
assets, or acquire the Capital Stock or assets constituting a business unit, or
enter into a new line of business or make any material change in its present
method of conducting business, except:
(1) dispositions of inventory in the ordinary course of
business;
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(2) dispositions of unnecessary, obsolete or worn out
equipment;
(3) sales of Transferred Assets to the Buyer contemplated by
and in accordance with the terms of this Agreement;
(4) merger or consolidation of any Originator with or into
OutSource International (provided that OutSource International shall
be the continuing or surviving corporation) or with or into any one or
more of the other Originators;
(5) any sale, lease, transfer or other disposition of any
Originator of any or all of its assets (upon voluntary liquidation or
otherwise) to OutSource International or any other Originator; and
(6) any Permitted Acquisition; provided, however, that any
receivables acquired by an Originator from any Person shall not be
sold to the Buyer under Section 2.01 hereof except to the extent such
receivables are Eligible Receivables and the sale thereof would not
otherwise cause a breach of any provision of this Agreement.
(e) Accounting of Purchases. Each Originator will not prepare
any financial statements which shall account for the transactions contemplated
hereby in any manner other than as the sale of the Transferred Assets to the
Buyer or in any other respect account for or treat the transactions
contemplated hereby in any manner other than as a sale of the Transferred
Assets by the applicable Originator to the Buyer (it being understood, however,
that such sales may not be recognized for all accounting and tax purposes due
to principles of consolidated financial reporting and the filing of tax returns
on a consolidated basis).
(f) ERISA Matters. No Originator will (a) fail to comply in
all material respects with ERISA and the provisions of the Code applicable to
the Benefit Plans; (b) engage or permit any ERISA Affiliate to engage in any
prohibited transaction which would subject any Originator to a material tax or
penalty imposed on a prohibited transaction; (c) permit to exist any
accumulated funding deficiency, as defined in Section 302(a) of ERISA and
Section 412(a) of the Code, or funding deficiency with respect to any Benefit
Plan other than a Multiemployer Plan; (d) incur any liability to the PBGC over
and above the premiums required by law; and (e) terminate any Benefit Plan in a
manner which could result in the imposition of a lien on the property of any
Originator or any such ERISA Affiliate.
(g) Maintenance of Separate Existence. Each Originator will
take all actions required on its part to help maintain the Buyer's status as a
separate legal entity, including, without limitation, (i) not misleading third
parties as to the Buyer's identity as an entity with assets and liabilities
distinct from those of the Originators and their Affiliates; (ii) not holding
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itself out to be responsible for the debts or decisions or actions relating to
the business and affairs of the Buyer; (iii) using its best efforts not to
commingle its funds or other assets with those of the Buyer, and not to hold
its assets in any manner that would create an appearance that such assets
belong to the Buyer or that the Buyer's assets belong to it; (iv) taking such
other actions as are necessary on its part to ensure that the representations
made in Section 4.01(s) hereunder are true and correct at all times; (v) taking
such actions as are necessary on its part to ensure that the Buyer's corporate
procedures required by its certificate of incorporation and by-laws are duly
and validly taken; and (vi) taking such other actions on its part to ensure
that the factual assumptions set forth in, and forming the basis of the legal
opinion(s) of Rudnick & Wolfe, counsel to the Originators, issued in connection
with this Agreement and relating to the issues of substantive consolidation and
true sale of the Receivables and the related property, are true and correct at
all times. Without limiting the foregoing, the Originators will cause any
financial statements consolidated with those of the Buyer to contain footnotes
or other disclosures which describe the Buyer's business and otherwise inform
the Originators' creditors that the Buyer is a separate corporate entity whose
creditors have a claim on its assets prior to those assets becoming available
to its equity holders and therefore to any creditors of the Originators or any
of their Affiliates.
(h) Supplemental Opinions. Each Originator will cause to be
delivered to the Buyer within 30 days following the Buyer's request therefor,
but in no event more frequently than once during each calendar year commencing
after the first anniversary date of the Initial Purchase, supplemental opinions
of outside counsel to the Originators in form and substance satisfactory to the
Buyer, reaffirming the opinions set forth in the opinion letters of Rudnick &
Wolfe delivered to the Buyer in connection with the Initial Purchase hereunder
pursuant to Section 3.01 or providing in reasonable detail the reasons why any
such opinions cannot be reaffirmed.
(i) Change in Corporate Name. No Originator will make any
change to its corporate name or use any trade names, fictitious names, assumed
names or conduct business under any names other than those described in
Schedule IV, unless at least 30 days prior to the effective date of any such
name change or use, the applicable Originator shall have delivered to the Buyer
such financing statements (Form UCC-1 and UCC-3) executed by such Originator
which the Buyer may request to reflect such name change or use, together with
such other documents and instruments that the Buyer may request in connection
therewith.
(j) Audits. At any time and from time to time upon prior
written notice from the Buyer during regular business hours and on an annual
(or more frequent) basis, if requested by the Buyer, the Originators will
permit the Buyer, or their agents or representatives, (i) to examine and make
copies of and abstracts from all Records, (ii) to visit the offices and
properties of the Originators for the purpose of examining such Records, and to
discuss matters relating to the Receivables or the Originators' performance
hereunder with any of the officers or employees of the Originators having
knowledge of such matters and (iii) to have access to its software for the
purposes of examining such Records. Each such audit shall be at the sole
expense of the Originators.
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(k) Keeping of Records and Books of Account. The Originators
will maintain (or cause to be maintained) and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing the Receivables in the event of the destruction of the
originals thereof) and keep and maintain, all documents, books, records and
other information which are reasonably necessary or advisable for the
collection of the Transferred Assets (including all Receivables and Collections
included therein). Such books and records shall be marked to indicate the sales
of all Receivables and Related Security hereunder and shall include, without
limitation, records adequate to permit the daily identification of each new
Receivable and all collections of and adjustments (including, without
limitation, adjustments on account of Dilution Factors) to each Receivable.
(l) Location of Records. Each Originator will keep its chief
place of business and chief executive office, and the offices where it keeps
the Records, at the addresses referred to in Section 9.02, or, in any such
case, upon 30 days' prior written notice to the Buyer, at such other locations
within the United States where all action required by Section 6.09 shall have
been taken and completed.
(m) Credit and Collection Policies. Each Originator will
comply in all material respects with the Credit and Collection Policy in regard
to each Receivable and the related Contract. The Originators shall not, without
the written consent of the Buyer and the Agent, make any change in the Credit
and Collection Policy.
(n) Change in Payment Instructions to Obligors. The
Originators will not add or terminate any bank as a Lock-Box Bank from those
listed in Schedule III or make any change in its instructions to Obligors
regarding payments to be made to any Lock-Box Bank, unless the Buyer shall have
given its prior written consent to such addition, termination or change (which
consent shall not be unreasonably withheld) and the Buyer shall have received
(i) ten Business Days' prior notice of such addition, termination or change,
(ii) prior to the effective date of such addition, termination or change, (x)
executed copies of Lock-Box Agreements executed by each new Lock-Box Bank and
the applicable Originator and (y) copies of all agreements and documents signed
by either the applicable Originator or the respective Lock-Box Bank with
respect to any new Lock-Box Account, and (iii) the prior written consent of the
Buyer to such addition, termination or change (which consent shall not be
unreasonably withheld).
(o) Taxes. Each Originator will file or cause to be filed all
federal, state and local tax returns which are required to be filed by it. Each
Originator shall pay or cause to be paid all taxes shown to be due and payable
on such returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the applicable Originator
shall have set aside adequate reserves on its books in accordance with GAAP.
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(p) Segregation of Collections. The Originators will to the
fullest extent practicable prevent the deposit into any of the Lock-Box
Accounts of any funds other than Collections and, to the extent that any such
funds are nevertheless deposited into any of such Lock-Box Accounts, such funds
will be relatively insignificant in amount and the applicable Originator will
promptly identify any such funds to the Servicer for segregation and remittance
to the owner thereof. To the extent that an Obligor has assigned other
receivables as payment for any Receivables and the Collections of such
receivables exceeds the balance of such Receivables, the applicable Originator
will promptly identify any such funds to the Servicer for segregation and
remittance to the applicable Obligor.
(q) Insolvency. So long as the Buyer is not "insolvent"
within the meaning of the Bankruptcy Code, OutSource International and the
Originators will not cause the Buyer to file a voluntary petition under the
Bankruptcy Code or any other bankruptcy or insolvency laws.
ARTICLE VI
ADMINISTRATION, COLLECTION AND MONITORING OF ASSETS
SECTION 6.01. Appointment and Designation of the Servicer.
The Originators and the Buyer hereby appoint the Person (the "Servicer")
designated by the Buyer from time to time pursuant to this Section 6.01, as the
Buyer's agent to service, administer and collect the Receivables and otherwise
to enforce its rights and interests in, to and under the Receivables, the
Related Security and the Contracts. The Servicer's authorization under this
Agreement shall terminate on the Collection Date. Until the Buyer gives notice
to the Originators of a designation of a new Servicer, OutSource International
is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Servicer pursuant to the terms hereof. The Buyer may
designate as Servicer any Person to succeed OutSource International or any
successor Servicer, on the condition in each case that any such Person so
designated shall agree to perform the duties and obligations of the Servicer
pursuant to the terms hereof. Each of the Originators and the Servicer hereby
grants to any successor Servicer an irrevocable power of attorney to take any
and all steps in such Originators' or the Servicer's name, as applicable, and
on behalf of the Buyer, as may be necessary or desirable, in the determination
of the successor Servicer, to collect all amounts due under any and all
Receivables, including, without limitation, endorsing the applicable
Originator's name on checks and other instruments representing Collections and
enforcing such Receivables and the related Contracts. The Servicer may, with
the prior consent of the Buyer, subcontract with any other Person for
servicing, administering or collecting the Receivables, provided that the
Servicer shall remain liable for the performance of the duties and obligations
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of the Servicer pursuant to the terms hereof. Notwithstanding anything to the
contrary contained in this Agreement, the Servicer, if not OutSource
International, an Originator or an Affiliate thereof, shall have no obligation
to collect, enforce or take any other action described in this Article VI with
respect to any Receivable that is not a Transferred Asset other than to deliver
to the Originators the Collections and documents with respect to any such
Receivable that is not a Transferred Asset as described in Sections 6.03 and
6.06(b). The Buyer shall pay to the Servicer a collection fee (the "Servicer
Fee") of 1% per annum on the average daily amount of the Outstanding Balance of
Purchased Receivables, from the date hereof until the Collection Date, payable
on each Settlement Date; provided, however, that such fee shall be payable only
from Collections; and provided, further, that, upon three Business Days' notice
to the Agent, the Servicer may (if not OutSource International or an Affiliate
thereof), elect to be paid, as such fee, another percentage per annum on the
average daily amount of outstanding Receivables, but in no event shall the
Servicer Fee payable in respect of any Collection Period after the date any
such election is made exceed 110% of the reasonable and appropriate costs and
expenses of the Servicer incurred during such Collection Period.
SECTION 6.02. Collection of Receivables by the Servicer;
Extensions and Amendments of Receivables. The Servicer shall take or cause to
be taken all such actions as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy; provided, however, that, (a) the Buyer shall have
the absolute and unlimited right to direct the Servicer (whether the Servicer
is OutSource International, an Originator or otherwise) to commence or settle
any legal action, to enforce collection of any Transferred Asset or to
foreclose upon or repossess any Related Security, and (b) the Servicer shall
not make the Buyer a party to any litigation without the express written
consent of the Buyer. If the Termination Date shall not have occurred,
OutSource International, while it is Servicer, may, in accordance with the
Credit and Collection Policy, (1) extend the maturity or adjust the Outstanding
Balance of any Defaulted Receivable as OutSource International may determine to
be appropriate to maximize Collections thereof and (2) adjust the Outstanding
Balance of any Receivable to reflect Actual Dilution and any reductions or
cancellations as a result of setoff in respect of any claim by the Obligor
thereof, in accordance with the requirements of the Credit and Collection
Policy and provided that such extension or adjustment shall not alter the
status of such Receivable as a Defaulted Receivable or limit the rights of the
Buyer under this Agreement. Except as otherwise permitted pursuant to the next
preceding sentence, neither the Servicer nor the Originators will extend,
amend, cancel or otherwise modify the terms of any Transferred Asset, or amend,
modify, cancel or waive any term or condition of any Contract related thereto
without the prior written approval of the Buyer.
SECTION 6.03. Distribution and Application of Collections.
The Servicer shall set aside and segregate funds and shall be required to
segregate all Collections on the Receivables from the other funds belonging to
the Servicer. The Servicer shall as soon as practicable following receipt turn
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over to the applicable Originator the Collections of any Receivable which is
not a Transferred Asset less, in the event neither OutSource International, an
Originator nor an Affiliate thereof is the Servicer, all reasonable and
appropriate out-of-pocket costs and expenses of such Servicer of servicing,
collecting and administering the Receivables to the extent not covered by the
Servicer Fee received by it.
SECTION 6.04. Other Rights of the Buyer. At any time
following the occurrence of a Servicer Termination Event or the designation of
a Servicer other than OutSource International, an Originator or any Affiliate
of either thereof pursuant to Section 6.01:
(a) The Buyer may or, at the request of the Buyer, the
Originators shall (in either case, at the Originators' expense) direct the
Obligors of Receivables, or any of them, to pay all amounts payable under any
Receivable directly to the Buyer or its designee;
(b) The Buyer may, or at the request of the Buyer, the
Originators shall (in either case, at the Originators' expense) give each of
the Obligors notice of the Buyer's interests in the Transferred Assets; and
(c) The Originators shall, at the Buyer's request and at the
Originators' expense, (i) assemble all Records and make the same available to
the Buyer or its designee at a place selected by the Buyer or its designee, and
(ii) segregate all cash, checks and other instruments received by it from time
to time constituting Collections of Receivables in a manner acceptable to the
Buyer and, promptly following receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer, to
the Buyer or its designee.
SECTION 6.05. Records; Audits. (a) The Servicer will maintain
and implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing the Receivables in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each new Transferred
Asset and all Collections of and adjustments to each existing Transferred
Asset).
(b) The Servicer, whether or not OutSource International, an
Originator or an Affiliate thereof, shall hold all Records in trust for the
Buyer. Subject to the receipt of contrary instructions from the Buyer, each
Originator will deliver all Records to such Servicer; provided, however, that
the Servicer, if other than OutSource International or an Originator, shall as
soon as practicable upon demand deliver to the Originators all Records in its
possession relating to Receivables of the Originators other than Transferred
Assets, and copies of Records in its possession relating to Transferred Assets.
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(c) The Servicer will, from time to time during regular
business hours as requested by the Buyer, permit the Buyer, or its agents or
representatives, (i) to examine and make copies of and abstracts from all
Records and (ii) to visit the offices and properties of the Servicer for the
purpose of examining such Records and to discuss matters relating to the
Receivables or the Servicer's or the Originators' performance hereunder with
any of the officers or employees of the Servicer or the Originators having
knowledge of such matters.
SECTION 6.06. Receivable Reporting. (a) The Servicer, so long
as it is OutSource International, an Originator or an Affiliate thereof, and
otherwise the Originators, will deliver to the Buyer (i) prior to the Asset
Report Date occurring during each Collection Period hereafter, a report
identifying the Transferred Assets (and the aged balance thereof), by Obligor
and invoice number, as of the last day of the next preceding Collection Period,
(ii) as of the Termination Date, a report identifying the Transferred Assets
(and the aged balance thereof), by Obligor and invoice number, within five (5)
Business Days after the Termination Date, (iii) upon the Buyer's request, no
less frequently than once per week, a report identifying the Transferred Assets
by Obligor and invoice number as of the close of business on the preceding
Sunday and (iv) prior to the Asset Report Date occurring in each Collection
Period hereafter, a report identifying the outstanding accounts payable of each
of the Originators as of the last day of the next preceding Collection Period,
identified by the relevant account payee.
(b) On or prior to the Asset Report Date occurring in each
Collection Period, the Servicer shall prepare and forward to the Buyer, an
Asset Report relating to all Transferred Assets, as of the close of business of
the Servicer on the last day of the preceding Collection Period.
SECTION 6.07. Collections and Lock-Boxes. The Originators and
the Servicer will:
(i) instruct all Obligors to cause all Collections
to be either (A) remitted to a Lock-Box and will cause each
Lock-Box Bank to retrieve such Collections promptly and
deposit the same to the respective Lock-Box Accounts or (B)
deposited directly with the Lock-Box Bank, and
(ii) pursuant to the OutSource Funding Credit
Agreement, instruct all Lock-Box Banks to transfer such
Collections in same day funds to the BKB Collection Account
maintained with the BKB Collection Account Bank. If the
Originators receive any Collections, the applicable
Originator will remit such Collections to the BKB Collection
Account within one Business Day following such Originator's
receipt thereof. The Originators will not add or terminate
any bank as a Lock-Box Bank from those listed in Schedule III
or make any change in their instructions to Obligors
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regarding payments to be made to any Lock Box or any Lock-Box
Bank, unless the Buyer shall have received at least ten
Business Days' prior written notice of such addition,
termination or change and all actions reasonably requested by
the Buyer to protect and perfect the interest of the Buyer in
the Collections of Transferred Assets have been taken and
completed. The Originators hereby transfer to the Buyer,
effective upon the Initial Purchase, the exclusive ownership
and control of each of the Lock-Box Accounts, and each
Lock-Box Bank shall be instructed to remit any amounts
deposited in its Lock-Box Accounts solely according to the
direction of the Buyer or its assigns. The Originators hereby
agree to take any further action necessary that the Buyer may
reasonably request to effect such transfer.
SECTION 6.08. UCC Matters; Protection and Perfection of
Transferred Assets. Each Originator will keep its principal place of business
and chief executive office, and the office where it keeps the Records, at the
address of such Originator referred to in Section 9.02 or, upon 30 days' prior
written notice to the Buyer, at such other locations within the United States
where all actions reasonably requested by the Buyer to protect and perfect the
interest of the Buyer in the Transferred Assets have been taken and completed.
Each Originator will not make any change to its corporate name or use any
tradenames, fictitious names, assumed names, "doing business as" names or other
names other than those described in Schedule IV, unless prior to the effective
date of any such name change or use, the applicable Originator delivers to the
Buyer such executed financing statements as the Buyer may request to reflect
such name change or use, together with such other documents and instruments as
the Buyer may request in connection therewith. Each Originator agrees that from
time to time, at its expense, it will promptly execute and deliver all further
instruments and documents, and take all further action that the Buyer may
reasonably request in order to perfect, protect or more fully evidence the
Transferred Assets acquired by the Buyer hereunder, or to enable the Buyer to
exercise or enforce any of its respective rights hereunder. Without limiting
the generality of the foregoing, the Originators will: (a) upon the request of
the Buyer, execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate or as the Buyer may request, and
(b) on or prior to the date hereof, mark their master data processing records
evidencing such Transferred Assets and related Contracts with a legend,
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acceptable to the Buyer, evidencing that the Buyer or its assigns have
purchased all right and title thereto. Each Originator hereby authorizes the
Buyer to file one or more financing or continuation statements, and amendments
thereto and assignments thereof, relative to all or any of the Transferred
Assets now existing or hereafter arising without the signature of the
applicable Originator where permitted by law. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
Transferred Assets or any part thereof shall be sufficient as a financing
statement. The Originators shall, upon the request of the Buyer at any time and
at the Originators' expense, notify the Obligors of Transferred Assets, or any
of them, of the ownership of Transferred Assets by the Buyer. If the
Originators fail to perform any of their agreements or obligations under this
Section 6.08, the Buyer may (but shall not be required to) itself perform, or
cause performance of, such agreement or obligation, and the expenses of the
Buyer incurred in connection therewith shall be payable by the Originators upon
the Buyer's demand therefor. For purposes of enabling the Buyer to exercise its
rights described in the preceding sentence and elsewhere in this Article VI,
the Originators hereby authorize the Buyer to take any and all steps in the
Originators' names and on behalf of the Originators necessary or desirable, in
the determination of the Buyer, to collect all amounts due under any and all
Receivables, including, without limitation, endorsing the Originators' names on
checks and other instruments representing Collections and enforcing such
Receivables and the related Contracts.
SECTION 6.09. Obligations of the Originators With Respect to
Receivables. Each Originator will (a) at its expense, regardless of any
exercise by the Buyer of its rights hereunder, timely and fully perform and
comply with all material provisions, covenants and other promises required to
be observed by it under the Contracts related to the Transferred Assets to the
same extent as if Transferred Assets therein had not been sold hereunder and
(b) pay when due any taxes, including without limitation, sales and excise
taxes, payable in connection with the Transferred Assets. In no event shall the
Buyer have any obligation or liability with respect to any Transferred Assets
or related Contracts, nor shall it be obligated to perform any of the
obligations of the Originators or any of their Affiliates thereunder. The
Originators will timely and fully comply in all material respects with the
Credit and Collection Policy in regard to each Receivable and the related
Contract. The Originators will not make any change in the character of their
businesses or in the Credit and Collection Policy, which change would, in
either case, impair the collectibility of any Transferred Asset.
SECTION 6.10. Applications of Collections. Any payment by an
Obligor in respect of any indebtedness owed by it to any Originator shall,
except as otherwise specified by such Obligor or otherwise required by contract
or law and unless otherwise instructed by the Buyer, be applied as a Collection
of any Receivables constituting Transferred Assets of such Obligor, in the
order of the age of such Receivables, starting with the oldest such Receivable,
to the extent of any amounts then due and payable thereunder, before being
applied to any Receivable that is not a Transferred Asset or other indebtedness
of such Obligor.
SECTION 6.11. Annual Servicing Report of Independent Public
Accountants. On an annual basis on or before March 31 of each calendar year,
the Servicer shall cause nationally recognized independent public accountants
acceptable to the Buyer to furnish a report to each of the Servicer and the
Buyer substantially to the effect that (i) such accountants have examined
certain documents and records relating to the servicing of Receivables under
this Agreement, compared the information contained in the Weekly Settlement
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Reports and Asset Reports delivered by or on behalf of the Originators under
this Agreement during the annual period covered by such report (or such shorter
initial period, as the case may be) with such documents and records and that,
on the basis of such examination, and subject to such reasonable limitations
and qualifications as may be set forth in such report, such accountants are of
the opinion that the servicing has been conducted substantially in compliance
with the terms and conditions as set forth in Article VI of this Agreement,
except for such exceptions as they believe to be immaterial and such other
exceptions as shall be set forth in such statement and (ii) such accountants
have compared the mathematical calculations of each amount set forth in the
Weekly Settlement Reports and Asset Reports delivered pursuant to this
Agreement during the period covered by such report with the Servicer's computer
reports which were the source of such amounts and that on the basis of such
comparison, such accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be immaterial and such
other exceptions as shall be set forth in such statement.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following
events ("Events of Termination") shall occur:
(a) (i) The Servicer (if OutSource International, an
Originator or any Affiliate thereof) shall fail to perform or observe any term,
covenant or agreement hereunder (other than as referred to in clause (ii) of
this Section 7.01(a)) and such failure shall remain unremedied for two Business
Days after written notice to the Servicer or (ii) either the Servicer (if
OutSource International, an Originator or any Affiliate thereof) or any
Originator shall fail to make any payment or deposit to be made by it hereunder
when due; or
(b) Any representation or warranty made or deemed to be made
by OutSource International or any Originator (or any of their officers or
agents) under or in connection with this Agreement or any Asset Report or other
information or report delivered pursuant hereto shall prove to have been false
or incorrect in any material respect when made or (ii) any representation or
warranty made or deemed to be made by the Servicer (or any of its officers or
agents) under or in connection with this Agreement shall prove to have been
false or incorrect in any material respect when made; or
(c) Any Originator (individually or in its capacity as
Servicer) shall fail to perform or observe any other term, covenant or
agreement contained in this Agreement on its part to be performed or observed
and any such failure shall remain unremedied for two Business Days after
written notice thereof shall have been given by the Buyer to the Originators;
or
(d) (i) Any Originator shall fail to pay any principal of or
premium or interest on any Debt, if the aggregate principal amount of such Debt
is $500,000 or more, when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
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such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or (ii) any
other default or any event which, with the passage of time or the giving of
notice, or both, would constitute a default under any agreement or instrument
relating to any such Debt, shall occur and shall continue after the applicable
grace period, if any, specified in such agreement or instrument; provided,
however, that, if such default arises solely under the Revolving Credit
Agreement and the lenders thereunder have waived or rescinded such event, such
event shall not constitute an "Event of Termination" hereunder; or (iii) any
Debt of any Originator, or of any of their Affiliates, if, in the case of any
Originator the aggregate principal amount of such Debt is $500,000 or more,
shall be declared to be due and payable or required to be prepaid (other than
by a regularly scheduled required prepayment) prior to the stated maturity
thereof; or
(e) Either (i) any Purchase shall for any reason, except to
the extent permitted by the terms hereof, cease to create a valid and perfected
ownership interest in each Transferred Asset with respect thereto free and
clear of an Adverse Claim or (ii) this Agreement shall for any reason cease to
evidence the transfer to the Buyer of legal and equitable title to, and
ownership of, the Transferred Assets; or
(f) (i) Any Originator or any of their respective Affiliates
shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against any Originator seeking to adjudicate it a bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its property and,
in the case of any such proceeding instituted against (but not by) any
Originator or any such Affiliate, either such proceeding shall have remained
undismissed or unstayed for a period of 60 days or any order for relief of the
sort described above shall have been entered; or (ii) any Originator shall take
any corporate action to authorize any of the actions set forth in clause (i)
above in this Section 7.01(f); or
(g) There shall have occurred and be continuing an "Event of
Default" under the OutSource Funding Credit Agreement; or
(h) A Servicer Termination Event shall have occurred and be
continuing; or
(i) Any Originator or the Servicer shall fail to perform or
observe any material term, covenant or agreement contained in the Credit and
Collection Policy and such failure shall remain unremedied for two Business
Days after written notice to Servicer and Seller; or
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(j) The IRS or the PBGC shall have filed notice of one or
more Adverse Claims against any Originator or any of their ERISA Affiliates
under ERISA or the Code, unless such Adverse Claim does not purport to cover
the Receivables, and such notice shall have remained in effect for more than
thirty (30) Business Days unless, prior to the expiration of such period, such
Adverse Claims shall have been adequately bonded by such Originator or any of
their ERISA Affiliates (as the case may be) in a transaction with respect to
which the Buyer has given its prior written approval; or
(k) The Buyer shall have become subject to registration as an
"investment company" within the meaning of the Investment Company Act; or
(l) The Revolving Credit Agreement shall cease to be in full
force and effect; or
(m) The OutSource Funding Credit Agreement and related Loan
and Security Documents shall cease to be in full force and effect.
then, and in any such event, the Buyer may, by notice to the Originators
declare the Termination Date to have occurred, except that, in the case of any
event described in Section 7.01(f) above, the Termination Date shall be deemed
to have occurred automatically upon the occurrence of such event. Upon any such
declaration or automatic occurrence, the Buyer shall have, in addition to all
other rights and remedies under this Agreement or otherwise, all other rights
and remedies provided under the UCC of the applicable jurisdiction and other
applicable laws, which rights shall be cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnities by the Originators. Without
limiting any other rights which the Buyer may have hereunder or under
applicable law, each of the Originators, on a joint and several basis, hereby
agrees to indemnify the Buyer and its assigns, and each of their respective
directors, officers, employees, agents and attorneys (all of the foregoing
being collectively referred to as "Indemnified Parties") from and against any
and all damages, losses, claims, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or resulting from:
(i) the sale of any Receivable under this Agreement which is
not at the date of Purchase an Eligible Receivable;
38
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(ii) reliance on any representation or warranty made or
deemed made by any Originator, the Servicer (if OutSource International, an
Originator or one of its Affiliates) or any of their respective officers under
or in connection with this Agreement, which shall have been false or incorrect
in any material respect when made or deemed made or delivered;
(iii) the failure by any Originator or the Servicer (if
OutSource International, an Originator or one of its Affiliates) to comply with
any term, provision or covenant contained in this Agreement or any of the other
Originator Documents, or with any applicable law, rule or regulation with
respect to any Receivable, the related Contract or the Related Security, or the
nonconformity of any Receivable, the related Contract or the Related Security
with any such applicable law, rule or regulation;
(iv) (A) the failure to vest and maintain vested in the Buyer
or to transfer to the Buyer, legal and equitable title to and ownership of, the
Receivables and the other Transferred Assets which are, or are purported to be,
sold by the Originators hereunder; or (B) the failure to grant to the Buyer a
valid and perfected ownership interest under Article 9 of the UCC in and to the
Receivables which are, or are purported to be, Transferred Assets, together
with all Collections and Related Security; in each case free and clear of any
Adverse Claim whether existing at the time of the Purchase of any such
Receivable or at any time thereafter (other than Adverse Claims created in
favor of the Buyer hereunder or by the Buyer under the OutSource Funding Credit
Agreement);
(v) the failure by any Originator to make any payment
required on its part to be made hereunder;
(vi) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables and other Transferred Assets which are, or are purported to be,
sold by the Originators hereunder, whether at the time of any Purchase or at
any subsequent time;
(vii) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable which is, or is purported to be sold by an Originator hereunder
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other
claim resulting from the sale of the merchandise or services related to such
Receivable or the furnishing or failure to furnish such merchandise or
services;
(viii) any failure of any Originator or the Servicer (if
OutSource International, an Originator or one of its Affiliates) to perform its
duties or obligations in accordance with the provisions of this Agreement or
any failure by any Originator or any Affiliate thereof to perform its
respective duties under the Contracts;
39
-35-
(ix) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of whatever
sort arising out of or in connection with goods and/or merchandise which are
the subject of any Receivable or Contract;
(x) the failure to pay when due any taxes, including without
limitation, sales, excise or personal property taxes payable in connection with
the Transferred Assets;
(xi) the commingling of Collections of Transferred Assets at
any time with other funds;
(xii) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of Purchases or the ownership by the
Buyer of Transferred Assets except any such investigation, litigation or
proceeding arising from the gross negligence or willful misconduct of the
Buyer;
(xiii) any attempt by any Person to void or otherwise avoid
any transfer of a Transferred Asset from the Originators to the Buyer under any
statutory provision or common law or equitable action, including, without
limitation, any provision of the Bankruptcy Code; or
(xiv) the failure of any Originator or any of their
respective agents or representatives (including, without limitation, agents,
representatives and employees of the Originators acting pursuant to authority
granted under Section 6.01) to remit to the Servicer, Collections of
Transferred Assets remitted to such Originator or any such agent or
representative.
Any amounts subject to the indemnification provisions of this
Section 8.01 shall be paid by the applicable Originator to the Buyer within
five (5) Business Days following the Buyer's written demand therefor.
Notwithstanding any other provision of this Agreement to the contrary, the
Originators shall not indemnify the Indemnified Parties for or with respect to
any Indemnified Amounts that would constitute recourse for uncollectible
Transferred Assets due to credit reasons.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments and Waivers. No amendment to or
modification of any provision of this Agreement shall be effective without the
written agreement of the parties hereto and the written consent of the Agent.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
40
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SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including telex communication and communication by facsimile copy)
and mailed, telexed, transmitted or delivered, as to each party hereto, at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto. All such notices and communications shall be effective, upon
receipt, or in the case of (a) notice by mail, five days after being deposited
in the United States mails, first class postage prepaid, (b) notice by telex,
when telexed against receipt of answerback, or (c) notice by facsimile copy,
when verbal communication of receipt is obtained, except that notices and
communications pursuant to Article II shall not be effective until received.
SECTION 9.03. Setoff and Counterclaim. All payments to be
made by the Originators or the Servicer under this Agreement shall be made free
and clear of any counterclaim, set-off, deduction or other defense, which the
Originators or the Servicer may have against the Buyer, or against each other.
SECTION 9.04. No Waiver; Remedies. No failure on the part of
the Buyer to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9.05. Binding Effect; Assignability. (a) This
Agreement shall be binding upon and inure to the benefit of the Originators,
the Buyer and their respective successors and permitted assigns. None of the
Originators may assign its rights and obligations or any interest herein
without the prior written consent of the Buyer. The Buyer may, with the consent
of the Agent, assign at any time all of its rights and obligations hereunder
and interests herein without the consent of the Originators. Without limiting
the foregoing, the Originators acknowledge and agree that, any such assignee of
the Buyer (and any further assignee of such assignee) shall have the right, as
the assignee of the Buyer (or the assignee of such assignee), to enforce the
Buyer's rights and remedies under this Agreement directly against such party
(including, without limitation, the right (i) to appoint a successor Servicer
and (ii) to give or withhold any and all consents, requests, notices,
directions, approvals, demands, extensions or waivers under or with respect to
this Agreement or the obligations in respect of any Originator hereunder to the
same extent as the Buyer may do), but without any obligation on the part of any
such assignee to perform any of the obligations of the Buyer hereunder. Each of
the Originators also agrees that it shall send to the Agent a copy of all
notices required or desired to be given by the Originators to the Buyer
hereunder.
SECTION 9.06. Term of this Agreement. This Agreement,
including, without limitation, the Originators' obligations to observe its
covenants set forth in Articles V and VI, and the Servicer's obligation to
observe its covenants set forth in Article VI, shall remain in full force and
41
-37-
effect until the Collection Date; provided, however, that the rights and
remedies with respect to any breach of any representation and warranty made or
deemed made by OutSource International or the Originators pursuant to Articles
III and IV, and the indemnification and payment provisions of Article VIII
shall be continuing and shall survive any termination of this Agreement.
SECTION 9.07. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF OBJECTION TO VENUE. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE BUYER, THE ORIGINATORS,
AND THE SERVICER EACH HEREBY AGREES TO THE JURISDICTION OF ANY FEDERAL COURT
LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY WAIVES
ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.
SECTION 9.08. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THE BUYER, THE ORIGINATORS AND THE SERVICER EACH WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF
THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
SECTION 9.09. Costs, Expenses and Taxes. In addition to the
rights of indemnification granted to the Buyer and the Indemnified Parties
under Article VIII hereof, the Originators agree to pay on demand, on a joint
and several basis, all costs and expenses of the Buyer and its assignee
incurred in connection with the preparation, execution, delivery,
administration (including periodic auditing), amendment or modification of, or
any waiver or consent issued in connection with, this Agreement and the other
documents to be delivered hereunder or in connection herewith, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Buyer and its assignee with respect thereto, and with respect to
advising the Buyer and its assignee as to its respective rights and remedies
under this Agreement and the other documents to be delivered hereunder or in
connection herewith, and all costs and expenses, if any (including reasonable
counsel fees and expenses), incurred by the Buyer and its assignee in
connection with the enforcement of this Agreement and the other documents to be
delivered hereunder or in connection herewith.
SECTION 9.10. Execution in Counterparts; Severability;
Integration. This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
42
-38-
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
SECTION 9.11. Confidentiality. Except to the extent
otherwise required by applicable laws, rules or regulation, unless the provider
thereof shall otherwise consent in writing, each Originator agrees that it
shall (i) maintain the confidentiality of information obtained as a result of
being a party hereto, to any related documents or to any of the transactions
contemplated hereby or thereby (including, without limitation, the contents of
any summary of indicative terms and conditions with respect to such
transactions, and the provisions of this Agreement and any of the other
Originator Documents) ("Confidential Information") and (ii) not disclose,
deliver or otherwise make available to any third party any part of any such
Confidential Information; provided, however, that the Originators may disclose
any Confidential Information (w) to its legal counsel, auditors and
accountants, (x) as may be required or requested by any governmental authority,
regulatory body or rating agency, (y) subject to a written confidentiality
agreement having terms substantially similar to this Section 9.11, to any
financial institution or other party that extends or is considering the
extension of material debt or equity financing to the applicable Originator or
(z) as may be required or appropriate in response to a court order or in
connection with any litigation; provided further, however, that the Originators
shall have no obligation of confidentiality whatsoever in respect of any
information which may be generally available to the public or becomes available
to the public through no fault of the Buyer.
43
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE ORIGINATORS: OUTSOURCE INTERNATIONAL, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
OUTSOURCE FRANCHISING, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
44
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CAPITAL STAFFING FUND, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
SYNADYNE I, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
SYNADYNE II, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
45
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SYNADYNE III, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
SYNADYNE IV, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
SYNADYNE V, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
46
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OUTSOURCE INTERNATIONAL
OF AMERICA, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
47
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THE BUYER: OUTSOURCE FUNDING CORPORATION
By: /s/ Joseph C. Wasch
-------------------------------------
Name: Joseph C. Wasch
Title: Vice President
1144 E. Newport Center Drive
Suite 2A
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
THE SERVICER: OUTSOURCE INTERNATIONAL, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
48
SCHEDULE I
CONDITION PRECEDENT DOCUMENTS
As required by Section 3.01 of the Agreement, each of the
following items must be delivered to the Buyer prior to the Closing Date:
(a) A copy of this Agreement duly executed by each of the
Originators, the Servicer and the Buyer;
(b) A certificate of the Secretary or Assistant Secretary of
each Originator dated the date of this Agreement, certifying (i) the names and
true signatures of the incumbent officers of each of the Originators authorized
to sign this Agreement and the other Originator Documents to be delivered by it
hereunder, (ii) that the copy of the certificate of incorporation of each of
the Originators attached thereto is a complete and correct copy and that such
certificate of incorporation has not been amended, modified or supplemented and
is in full force and effect, (iii) that the copy of the by-laws of each of the
Originators attached thereto is a complete and correct copy and that such
by-laws have not been amended, modified or supplemented and are in full force
and effect, and (iv) the resolutions of each Originator's board of directors
approving and authorizing the execution, delivery and performance by each of
the Originators of this Agreement and the other Originator Documents to which
it is a party;
(c) Good standing certificates for each Originator issued by
the Secretaries of State of their respective jurisdiction of incorporation;
(d) Acknowledgment copies of proper financing statements (the
"Facility Financing Statements"), dated a date reasonably near to the Closing
Date, describing the Receivables and Related Security and naming each
Originator as seller of Receivables and Related Security, the Buyer as
purchaser, or other, similar instruments or documents, as may be necessary or,
in the opinion of the Buyer, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the Buyer's interests in all
Receivables and Related Security and other Transferred Assets;
(e) Acknowledgment copies of proper financing statements, if
any, necessary to release all security interests and other rights of any Person
in the Receivables and Related Security previously granted by any Originator;
(f) Certified copies of requests for information or copies
(or a similar search report certified by a party acceptable to the Buyer),
dated a date reasonably near to the Closing Date, listing all effective
financing statements (including the Facility Financing Statements) which name
49
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any Originator and/or OutSource International (under their present names and
any previous names) as debtor and which are filed in the jurisdictions in which
the Facility Financing Statements were filed, together with copies of such
financing statements (none of which, other than the Facility Financing
Statements, shall cover any Receivables or Contracts);
(g) Executed copies of Lock-Box Agreements with each of the
Lock-Box Banks;
(h) An opinion of Rudnick & Wolfe, counsel to the Originators
relating to the issues of substantive consolidation and true sale of the
Receivables and the related property, in form and substance satisfactory to the
Buyer;
(i) An opinion of Brian Nugent, Esq., counsel to the
Originators, issued in connection with this Agreement and relating to corporate
issues, perfection and priority of security interests, form and substance
satisfactory to the Buyer; and
(j) A fully and correctly completed Asset Report, as of the
last day of the most recently concluded Collection Period and a fully and
correctly completed Weekly Settlement Report as of the most recent Business
Day.
50
SCHEDULE II
DESCRIPTION OF CREDIT AND COLLECTION POLICY
Attached.
51
SCHEDULE III
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
LOCK-BOX BANK:
LaSalle Bank N.A.
135 South LaSalle Street
Chicago, Illinois 60603
TITLE OF ACCOUNT NO. ACCOUNT NO. LOCK-BOX NO.
OutSource International, Inc. [__________] [__________]
Capital Staffing Fund, Inc. [__________] [__________]
52
SCHEDULE IV
TRADENAMES, FICTITIOUS NAMES AND "DOING BUSINESS AS" NAMES
OutSource International, Inc.:
None
OutSource Franchising, Inc.:
None
Capital Staffing Fund, Inc.:
None
Synadyne I, Inc.:
Synadyne
Synadyne II, Inc.:
Synadyne
Synadyne III, Inc.:
Labor World
Payroll Partners
Synadyne
Synadyne IV, Inc.:
Synadyne
Synadyne V, Inc.:
Synadyne
OutSource International of America, Inc.:
Labor Quick
Labor World
Office Network
Office Ours
Senior Achievement
Tandem
53
SCHEDULE V
LIST OF FRANCHISEES AS OF CLOSING DATE
[List of Franchisees]
54
EXHIBIT A
FORM OF CONTRACTS
Attached.
55
EXHIBIT B
FORM OF ASSET REPORT
Attached.
56
EXHIBIT C
FORM OF ORIGINATOR NOTE
Attached.
57
EXHIBIT C
FORM OF
OUTSOURCE FUNDING CORPORATION
NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE
[Date]
THIS NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE AND ANY
INTEREST REPRESENTED HEREBY SHALL NOT BE TRANSFERRED,
ASSIGNED, EXCHANGED, CONVEYED, PLEDGED, HYPOTHECATED, OR
OTHERWISE THE SUBJECT OF A GRANT OF A SECURITY INTEREST,
ABSENT THE PRIOR WRITTEN CONSENT OF THE HOLDER AND THE AGENT,
AND ANY ATTEMPT TO TRANSFER, ASSIGN, CONVEY, PLEDGE,
HYPOTHECATE OR GRANT A SECURITY INTEREST IN THIS NOTE OR ANY
INTEREST REPRESENTED HEREBY, EXCEPT WITH THE PRIOR WRITTEN
CONSENT OF THE HOLDER AND THE AGENT, SHALL BE VOID AND OF NO
EFFECT.
OUTSOURCE FUNDING CORPORATION (the "Issuer"), for value
received, hereby promises to pay to [INSERT APPLICABLE ORIGINATOR] (the
"Holder"), or its permitted assigns, at its address for payments set forth in
the Originator Sale Agreement hereinafter referred to, an amount equal to the
aggregate principal amount of the Originator Loans, as calculated under the
Originator Sale Agreement from time to time (which amount shall be equal to the
Purchase Price of the Purchase made on or about [____________________] minus
the amount of cash paid to the Holder on the date of such Purchase pursuant to
Section 2.02(a) of the Originator Sale Agreement minus the amount of the
Purchase Price of the Purchase paid by way of a capital contribution under
Section 2.01(c) of the Originator Sale Agreement, upon the date occurring one
year and one day after the occurrence of the Collection Date (the "Final
Payment Date"), unless earlier prepaid pursuant to the provisions for repayment
referred to herein, to the extent permitted under the terms of the Originator
Sale Agreement, and to pay interest (computed on the basis of a 360-day year
and the actual number of days in each calendar year) on the unpaid principal
sum, at a variable interest rate per annum equal to the Base Rate, from the
date such principal sum is advanced, such interest being payable on (a)
[____________________], and on each Settlement Date thereafter and (b) on the
earlier of (1) the date of prepayment and (2) the Final Payment Date, until the
principal hereof is paid in full. The Holder shall enter on the grid attached
hereto, as Attachment A, information reflecting the date and the amount of any
payments made hereon.
58
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Payments of the principal of and interest on this
Non-negotiable Subordinated Promissory Note (the "Note") will be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts by check mailed to, or
wire transfer in federal funds to the account of, the Holder as directed by the
Holder. If any payment on this Note shall remain unpaid on the due date
thereof, the same shall thereafter be payable with interest thereon (to the
extent permitted by law) at a variable rate equal to 2% per annum above the
Base Rate, from such due date to the date of payment thereof.
This Note is issued under the Amended and Restated
Receivables Purchase and Sale Agreement dated as of October 1, 1999, among
OutSource International, Inc. ("OutSource International"), Capital Staffing
Fund, Inc., OutSource Franchising, Inc., Synadyne I, Inc., Synadyne II, Inc.,
Synadyne III, Inc., Synadyne IV, Inc., Synadyne V, Inc., and OutSource
International of America, Inc., as the originators, OutSource International, as
the "Servicer" thereunder, and the Issuer (as amended, restated, supplemented
or otherwise modified from time to time, the "Originator Sale Agreement"), and
is an "Originator Note" described in, and is subject to the terms and
conditions set forth in, the Originator Sale Agreement. This Note represents
all or a portion of the Purchase Price for Receivables purchased by the Issuer
from the Holder pursuant to the terms of the Originator Sale Agreement. Each
capitalized term utilized herein which is defined in the Originator Sale
Agreement shall have the meaning ascribed to such term in the Originator Sale
Agreement.
This Note is subject to prepayment in full or in part at the
option of the Issuer at any time upon three Business Days' prior notice to the
Holder, without a premium, subject in all events to the terms of the Originator
Sale Agreement.
This Note is subordinate and junior in right and time of
payment to all obligations and required payments or deposits of the Issuer in
favor of BankBoston, N.A., as agent (the "Agent") for the banks party to the
OutSource Funding Credit Agreement (collectively, together with their
respective successors and assignees, the "Senior Claimants"), howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter, or due or to become due on or before the Final
Payment Date (collectively, the "Senior Issuer Claims"), pursuant to the
following subordination provisions (the "Subordination Provisions"):
(A) The Holder agrees upon any distribution of all or any of
the assets of the Issuer to creditors of the Issuer upon the dissolution,
winding up, total or partial liquidation, arrangement, reorganization,
adjustment protection, relief, or composition of the Issuer or its debts, any
payment or distribution of any kind in respect of this Note (including, without
limitation, cash, property, securities and any payment or distribution which
may be payable or deliverable by reason of the payment of any other Debt of the
Issuer being subordinated to the payment of this Note) that otherwise would be
payable or deliverable upon or with respect to this Note, directly or
indirectly, by set-off or in any other manner, including, without limitation,
59
-3-
from or by way of liquidation of the Transferred Assets, shall be paid or
delivered directly to the Agent for application (in the case of cash) to, or as
Related Security or Collections on, the Transferred Assets, for the payment or
prepayment in full of all amounts payable under the Senior Issuer Claims, until
all of the Senior Issuer Claims shall have been indefeasibly paid in full in
cash. The Agent is irrevocably authorized and empowered (in its own name or in
the name of the Holder or otherwise), but shall have no obligation, to demand,
sue for, collect and receive every payment or distribution referred to in the
preceding sentence and give acquittance therefor and to file claims and proofs
of claim and take such other action (including, without limitation, voting this
Note and enforcing any security interest or other lien securing payment of this
Note) as the Agent may request to (i) collect this Note for the account of
itself and the other Senior Claimants and to file appropriate claims or proofs
of claim in respect of this Note, (ii) execute and deliver to the Agent such
powers of attorney, assignments or other instruments as the Agent may request
in order to enable the Agent to enforce any and all claims with respect to, and
any security interest and other liens securing payment of, this Note, and (iii)
collect and receive any and all payments or distribution which may be payable
or deliverable upon or with respect to this Note.
(B) All payments or distributions upon or with respect to
this Note that are received by the Holder contrary to the provisions of this
Note, any of the Originator Sale Agreement, the OutSource Funding Credit
Agreement or the Lock-Box Agreement, or any of the other documents, agreements
and instruments entered into in connection therewith and the transactions
contemplated thereby (collectively, the "Facility Documents") shall be received
in trust for the benefit of the Senior Claimants, shall be segregated from
other funds and property held by the Holder and shall be forthwith paid over to
the Agent in the same form as so received (with any necessary endorsement) to
be applied (in the case of cash) to, or held as Related Security or Collections
(in the case of non-cash property) for the payment or prepayment in full of the
Senior Issuer Claims until the Senior Issuer Claims shall have been
indefeasibly paid in full in cash. The Holder agrees that no payment or
distribution to any of the Senior Claimants pursuant to the provisions of this
Note shall entitle the Holder to exercise any rights of subrogation in respect
thereof against the Issuer until the Senior Issuer Claims shall have been
indefeasibly paid in full and in cash. The Holder and the Issuer hereby waive
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Senior Issuer Claims and any requirement that the Agent or any
other Person protect, secure, perfect or insure any security interest or lien
on any property subject thereto or exhaust any right or take any action against
the Issuer or any other Person or any assets or property.
(C) The Holder agrees and confirms that none of the Senior
Claimants (including, without limitation, the Agent) shall have any duty
whatsoever to the Holder as holder of this Note and that none of the Senior
Claimants shall be liable to the Holder for any action taken or omitted, to the
extent authorized under the terms of any Facility Document, with respect to
this Note.
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(D) Prior to the indefeasible payment in full and in cash of
all of the Senior Issuer Claims, the Holder will not seek to collect, ask,
demand, sue for or take or receive from the Issuer in cash or other property,
by set-off or in any other manner, any amounts owing under this Note in any
manner, or exercise or enforce any of its rights under this Note.
(E) The Holder and the Issuer agree that at no time hereafter
will any part of the indebtedness represented by this Note be represented by
any negotiable instruments or other writings except this Note.
(F) The Holder and the Issuer waive notice of and consent to
the creation of additional Senior Issuer Claims from time to time pursuant to
the other Facility Documents, and any other obligation, any extensions granted
by any of the Senior Claimants with respect thereto, the taking or releasing of
collateral or any obligors or guarantors for the payment thereof, and the
releasing of the Holder or any other subordinating creditors. No failure or
delay by any of the Senior Claimants to exercise any right granted herein, or
in any other agreement or bylaw shall constitute a waiver of such right or of
any other right.
(G) The Holder and the Issuer agree to execute and deliver to
any of the Senior Claimants, such additional documents, and to take such
further actions as any of such Senior Claimants may hereafter reasonably
require to evidence the subordination of this Note.
(H) The terms of this Note and the subordination effected
hereby and the rights of the Senior Claimants, and the obligations of the
Holder and the Issuer arising hereunder and under the Originator Sale
Agreement, shall not be affected, modified or impaired in any manner or to any
extent by (i) any amendment or modification of or supplement to any provision
of any Facility Document, or any instrument or document executed or delivered
pursuant thereto or in connection with the transactions contemplated thereby;
(ii) the validity or enforceability of any of such documents; (iii) any
exercise or non-exercise of any right, power or remedy under or in respect of
any of the Issuer or the Senior Issuer Claims or any agreements, instruments or
documents related thereto or arising at law or equity; or (iv) any waiver,
consent release, indulgence, extension, renewal, modification, delay or other
action, inaction, or omission in respect of the Issuer, the Senior Issuer
Claims or any of the instruments, documents or agreements related thereto.
(I) All payments of principal, interest and all other amounts
payable in respect of the Senior Issuer Claims must be paid before any portion
of the principal amount of this Note may be paid or prepaid. All payments of
principal, interest and all other amounts then due and payable in respect of
the Senior Issuer Claims must be paid before any portion of the accrued
interest on this Note may be paid on any day. All scheduled payments of
principal and interest then due on this Note shall be payable only to the
extent that the Issuer has available funds to make such payments, and is
permitted to make such payments under the Facility Documents (including,
without limitation, the Originator Sale Agreement).
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The Holder, and any assignee of the Holder, by accepting this
Note, hereby agrees to the Subordination Provisions. Neither this Note nor any
right of the Holder to receive any payment thereunder, shall be assigned,
transferred, exchanged, pledged, hypothecated, participated or otherwise
conveyed; provided, however, that the Holder may pledge or otherwise transfer
this Note with the prior written consent of the Issuer and the Agent; provided,
further, that any assignee of this Note shall be bound by all of the terms
applicable to this Note set forth in the Facility Documents.
The Holder of this Note and any of its assignees, by its
acceptance hereof, hereby covenants and agrees that it will not at any time
institute against the Issuer, or join any other Person in instituting against
the Issuer, any proceedings of the type referred to in clause (i) of Section
7.01(f) of the Originator Sale Agreement, or take any corporate action in
furtherance of any such action.
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed manually by its undersigned officer duly authorized thereunto.
Dated: [Date]
OUTSOURCE FUNDING CORPORATION
By:
-------------------------------------
Name:
Title:
62
EXHIBIT D
FORM OF FRANCHISE AGREEMENT
Attached.