EXHIBIT 10.21
OI SECURITY AGREEMENT
THIS OI SECURITY AGREEMENT, dated as of February 21, 1997, made by
OUTSOURCE INTERNATIONAL, INC., a Florida corporation ("OI"), in favor of BANK OF
BOSTON CONNECTICUT, a bank organized under the laws of the state of Connecticut,
as agent (the "Agent") for the benefit of the Agent and the ratable benefit of
the banks and financial institutions (the "Banks") that from time to time are
parties to the Credit Agreement (as hereinafter defined).
1. DEFINITIONS
"ACCOUNT DEBTOR" means a Person who is obligated on a Receivable.
"ACCOUNTS RECEIVABLE COLLECTION ACCOUNT" means a commercial Deposit
Account maintained by OI with the Agent, without liability by the Agent to pay
interest thereon, from which account the Agent shall have the exclusive right to
withdraw funds until all Obligations are paid, performed, and observed in full.
"AFFILIATE"shall have the meaning ascribed to it in the Credit
Agreement.
"AGENT" shall have the meaning ascribed to it in the Credit Agreement.
"AGREEMENT" means this Agreement, including all Schedules hereto, and
all amendments, modifications and supplements hereto and thereto and
restatements hereof and thereof.
"AGREEMENT DATE" means the date on which this Agreement is dated.
"BENEFIT PLAN" means an employee benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which a Person or
any Commonly Controlled Entity is, or within the immediately preceding 6 years
was, an "employer" as defined in Section 3(5) of ERISA, including such plans as
may be established after the Agreement Date.
"CASH SECURITY" means all cash, Instruments, Deposit Accounts, and
other cash equivalents, whether matured or unmatured, whether collected or in
the process of collection, upon which OI presently has or may hereafter have any
claim (other than items which are held in trust by OI for a third party), that
are presently or may hereafter be existing or maintained with, issued by, drawn
upon, or in the possession of the Agent and/or the Banks, or which the Agent
and/or any Bank is entitled to retain or otherwise possess as collateral
pursuant to the provisions of this Agreement or any of the Loan Documents.
"CHATTEL PAPER" shall mean, with respect to the Collateral, (a) any
chattel paper, and (b) any writing or writings which evidence both a monetary
obligation and a security interest in or a lease of specific Goods. If a
transaction relating to the Collateral is evidenced both by such an
agreement for security or a lease and by an Instrument or a series of
Instruments, the group of writings taken together constitutes Chattel Paper.
"CODE" shall have the meaning ascribed to it in the Credit Agreement.
"COLLATERAL" means and includes all of OI's right, title and interest
in and to each of the following, wherever located and whether now or hereafter
existing or now owned or hereafter acquired or arising:
(a) all Receivables,
(b) all Inventory,
(c) all Equipment,
(d) all Contract Rights,
(e) all General Intangibles,
(f) all Deposit Accounts,
(g) all Cash Security,
(h) all mortgages, deeds to secure debt and deeds of trust on real or
personal property, guaranties, leases, security agreements and
other agreements and property which secure or relate to any
Receivable or other Collateral or are acquired for the purpose of
securing and enforcing any item thereof,
(i) all documents of title, policies and certificates of insurance,
securities, Chattel Paper and other Documents and Instruments
evidencing or pertaining to any and all items of Collateral,
(j) all files, correspondence, computer programs, tapes, disks and
related data processing software which contain information
identifying or pertaining to any of the Collateral or any Account
Debtor or showing the amounts thereof or payments thereon or
otherwise necessary or helpful in the realization thereon or the
collection thereof,
(k) any and all products and cash and non-cash Proceeds of the
foregoing (including, but not limited to, any claims to any items
referred to in this definition and any claims against third parties
for loss of, damage to or destruction of any or all of the
Collateral or for Proceeds payable under or unearned premiums with
respect to policies of insurance) in whatever form, including, but
not limited to, cash,
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negotiable instruments and other instruments for the payment of
money, Chattel Paper, security agreements and other documents.
"COMMONLY CONTROLLED ENTITY" shall have the meaning ascribed to it in
the Credit Agreement.
"CONTRACT RIGHTS" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising rights under
contracts not yet earned by performance and not evidenced by an instrument or
chattel paper, to the extent that the same may lawfully be assigned.
"CREDIT AGREEMENT" means the Credit Agreement dated of even date
herewith executed by and among OI, the Agent and the Banks, as the same may
hereafter be amended, modified, supplemented or restated from time to time
"DEFAULT" shall have the meaning ascribed to it in the Credit
Agreement.
"DEPOSIT ACCOUNT" means (a) any deposit account, (b) any demand, time,
savings, passbook, or a similar account maintained with a bank, savings and loan
association, credit union, or similar organization, other than an account
evidenced by a certificate of deposit that is an instrument under the UCC.
"DOCUMENT" shall mean, with respect to the Collateral, (a) any
document, (b) any document of title, including a bill of lading, dock warrant,
dock receipt, warehouse receipt, or order for the delivery of Goods, and any
other document which in the regular course of business or financing is treated
as adequately evidencing that the Person in possession of it is entitled to
receive, hold, and dispose of the document and the Goods it covers, and (c) any
receipt covering Goods stored under a statute requiring a bond against
withdrawal or requiring a license for the issuance of receipts in the nature of
warehouse receipts even though issued by a Person who is the owner of the Goods
and is not a warehouseman.
"ERISA" shall have the meaning ascribed to it in the Credit Agreement.
"EQUIPMENT" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising machinery, apparatus,
equipment, motor vehicles, tractors, trailers, rolling stock, fittings, fixtures
and other tangible personal property (other than Inventory) of every kind and
description used in such Person's business operations or owned by such Person or
in which such Person has an interest and all parts, accessories and special
tools and all increases and accessions thereto and substitutions and
replacements therefor.
"EVENT OF DEFAULT" shall have the meaning ascribed to it in the Credit
Agreement.
"FINANCING STATEMENTS" means the Uniform Commercial Code financing
statements executed and delivered by OI to the Agent, naming the Agent (for the
benefit of the Agent and the
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ratable benefit of the Banks that from time to time are parties to the Credit
Agreement) as secured party and OI as debtor, in connection with this Agreement.
"FRANCHISEE" means a Person providing temporary personnel and related
services under a LABOR WORLD(R) or OFFICE OURS(R) franchise from OutSource
Franchising, Inc.
"FRANCHISEE FUNDING RECEIVABLES" means and includes, as to OI, all of
OI's now owned or existing and future acquired or arising rights to payment from
Franchisees arising from OI's providing financing of Franchisees' payroll,
payroll tax and other obligations (whether classified under the UCC as accounts,
contract rights, chattel paper, general intangibles or otherwise), and all cash
and non-cash Proceeds thereof.
"GENERAL INTANGIBLES" means, as to any Person, all of such Person's
then owned or existing and future acquired or arising general intangibles,
choses in action and causes of action and all other intangible personal property
of such Person of every kind and nature (other than Receivables), including,
without limitation, Intellectual Property, corporate or other business records,
inventions, designs, blueprints, plans, specifications, trade secrets, goodwill,
computer software, customer lists, registrations, licenses, franchises, tax
refund claims, reversions or any rights thereto and any other amounts payable to
such Person from any Benefit Plan, Multiemployer Plan or other employee benefit
plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and Proceeds thereof, property,
casualty or any similar type of insurance, including errors and omissions
insurance, and any Proceeds thereof, Proceeds of insurance covering the lives of
key employees on which said Person is beneficiary and any letter of credit,
guarantee, claims, security interest or other security held by or granted to
such Person to secure payment by an Account Debtor of any of the Receivables.
"GOODS" means (a) any goods, and (b) all things which are movable at
the time the security interest granted under this Agreement attaches or which
are fixtures but does not include money, Instruments, Documents, Receivables,
Chattel Paper and Contract Rights.
"INSTRUMENT" means:
(a) any instrument relating to or evidencing the Collateral,
(b) any negotiable or nonnegotiable instrument (including, without
limitation, drafts, checks, acceptances, certificates of deposit,
and notes) relating to or evidencing the Collateral, and
(c) any other writing relating to or evidencing the Collateral which:
(1) evidences a right to the payment of money,
(2) is not itself a security agreement or lease, and
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is of a type which in the ordinary course of business is
transferred by delivery with any necessary endorsement or
assignment.
"INTELLECTUAL PROPERTY" means, as to any Person, all of such Person's
then owned existing and future acquired or arising patents, patent rights,
copyrights, works which are the subject of copyrights, trademarks, service
marks, trade names, trade styles, patent, trademark and service mark
applications, and all licenses and rights related to any of the foregoing and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations and continuations-in-part of any of the foregoing and
all rights to sue for past, present and future infringements of any of the
foregoing.
"INVENTORY" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising (a) Goods intended for
sale or lease or for display or demonstration or furnished or to be furnished
under contracts of service, (b) all Goods that are work in process, (c) all
Goods that are raw materials and other materials and supplies of every nature
and description used or which might be used in connection with the manufacture,
packing, shipping, advertising, selling, leasing or furnishing of goods or
otherwise used or consumed in the conduct of business, (d) documents evidencing
and general intangibles relating to any of the foregoing and (e) all substitutes
and replacements for, and parts, accessories, additions, attachments, or
accessions to (a) through (d) above.
"LIEN"shall have the meaning ascribed to it in the Credit Agreement.
"LOAN DOCUMENTS" shall have the meaning ascribed to it in the Credit
Agreement.
"LOCATION" means the location of:
(a) OI's place of business, if there is only one such place of
business, or
(b) if there is more than one place of business, the place (1) from
which OI manages the main part of its business operations, and (2)
where Persons dealing with OI would normally look for credit
information.
"MATERIAL ADVERSE EFFECT" shall have the meaning ascribed to it in the
Credit Agreement.
"MULTIEMPLOYER PLAN" shall have the meaning ascribed to it in the
Credit Agreement.
"OBLIGATIONS" means, at any time, all obligations and undertakings of
OI under and in respect of the Credit Agreement, including, without limitation,
OI's obligations and undertakings with respect to the payment of the principal
of, and interest on, each Revolving Credit Note, all of OI's Reimbursement
Obligations, any and all Related Expenses incurred by the Agent and all other
amounts payable, and all other indebtedness owed, by OI under each of the Loan
Documents.
"OI" shall have the meaning ascribed to it in the Credit Agreement.
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"PBGC" shall have the meaning ascribed to it in the Credit Agreement.
"PERSON" shall have the meaning ascribed to it in the Credit Agreement.
"PROCEEDS" means, with respect to the Collateral, (a) any proceeds of
the Collateral, and (b) whatever is received upon the sale, exchange,
collection, or other disposition of Collateral or proceeds, whether cash or
non-cash. Cash Proceeds include, without limitation, moneys, checks, and Deposit
Accounts. Proceeds includes, without limitation, any insurance payable by reason
of loss or damage to the Collateral, and any return or unearned premium upon any
cancellation of insurance. Except as expressly authorized in this Agreement, the
Agent's and the Banks' right to Proceeds specifically set forth herein or
indicated in any financing statement shall never constitute an express or
implied authorization on the part of the Agent or the Banks to OI's sale,
exchange, collection, or other disposition of any or all of the Collateral.
"RECEIVABLES" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising (a) rights to the
payment of money or other forms of consideration of any kind (whether classified
under the UCC as accounts, contract rights, chattel paper, general intangibles
or otherwise) including, but not limited to, accounts receivable, Royalty
Receivables, Franchisee Funding Receivables, letters of credit and the right to
receive payment thereunder, chattel paper, tax refunds, insurance proceeds,
Contract Rights, notes, drafts, instruments, documents, acceptances and all
other debts, obligations and liabilities in whatever form from any Person and
guaranties, security and Liens securing payment thereof, (b) Goods and other
property, whether now owned or hereafter acquired, and whether sold, delivered,
undelivered, in transit or returned, which may be represented by, or the sale or
lease of which may have given rise to, any such right to payment or other debt,
obligation or liability, and (c) cash and non-cash Proceeds of any of the
foregoing.
"RELATED EXPENSES" means any and all costs, liabilities, and expenses
(including, without limitation, losses, damages, penalties, claims, actions,
reasonable attorneys' fees, legal expenses, judgments, suits, and disbursements)
incurred by, imposed upon, or asserted against the Agent (other than costs,
liabilities and expenses incurred by the Agent as a result of gross negligence
or willful misconduct by the Agent) in any attempt by the Agent:
(a) to obtain, preserve, perfect, or enforce the security interest
evidenced by (i) this Agreement, or (ii) any other pledge
agreement, mortgage deed, hypothecation agreement, guaranty,
security agreement, assignment, or security instrument executed or
given by OI to or in favor of the Agent and the Banks,
(b) to obtain payment, performance, and observance of any and all of
the Obligations,
(c) to maintain, insure, collect, preserve, or upon any Event of
Default, repossess and dispose of any of the Collateral, or
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(d) incidental or related to (a) through (c) above, including, without
limitation, interest thereupon from the date incurred, imposed, or
asserted until paid at the rate payable upon each Revolving Credit
Note, but in no event greater than the highest rate permitted by
law.
"REVOLVING CREDIT NOTE" means the Revolving Credit Note as defined in
the Credit Agreement, including any partial or total amendment, renewal,
restatement, extension, or substitution of or for such Revolving Credit Note.
"ROYALTY RECEIVABLES" means and includes, as to OI, any indebtedness
owed to OI and any right of OI to payment or performance from any other Person
(whether such indebtedness or right is now existing or hereafter created and
whether or not yet earned by any performance by OI and regardless of how such
indebtedness or right might be evidenced or documented), for or in connection
with the granting or authorizing by OI of any right, permission or license to
use or continue using any franchise or any tradename, trademark, servicemark,
copyrighted or otherwise protected material, or other similar rights held wholly
or partly by OI, including, without limitation, any right, permission or license
to use or continue using goods marked with any such name or mark or embodying
any such copyrighted or otherwise protected material, and including all
"accounts," "general intangibles," "instruments," "security," "promissory
notes," "documents," and "chattel paper" (as such terms are defined in the
Connecticut Uniform Commercial Code) evidencing, embodying, or derived from any
of the foregoing, and all cash or non-cash Proceeds thereof.
"SUBSIDIARY" shall have the meaning ascribed to it in the Credit
Agreement.
"TRADEMARK ASSIGNMENT" means the Trademark Security Agreement dated of
even date herewith among OI, OutSource Franchising, Inc., and the Agent, with
respect to certain trademarks, trademark applications and related property owned
by OI and OutSource Franchising, Inc., as the same may hereafter be amended,
modified, supplemented or restated from time to time.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of Connecticut. The terms "accounts," "chattel paper," "documents,"
"equipment," "instruments," "general intangibles" and "inventory," as and when
used (without being capitalized) in this Agreement shall have the meanings given
those terms in the UCC.
2. SECURITY INTEREST IN COLLATERAL
In consideration of and as security for the full and complete payment,
performance, and observance of all Obligations, OI hereby pledges and assigns
all of the Collateral to the Agent (for the ratable benefit of the Agent and the
Banks) and grants to the Agent (for the ratable benefit of the Agent and the
Banks) a continuing security interest in, and a continuing Lien upon, all of the
Collateral, and any and all property of OI now or hereafter in the possession of
or pledged or assigned to the Agent, and all products, replacements and Proceeds
of, and accessions and additions to, any of the foregoing.
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3. WARRANTIES
OI represents and warrants to the Agent and the Banks (which
representations and warranties shall survive the execution of the Credit
Agreement, the delivery of each Revolving Credit Note, and the extension of
credit) that:
(a) OI is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,
has the power and authority to own it properties and to carry on
its business as now being and hereafter proposed to be conducted
and is duly qualified and authorized to do business in each
jurisdiction in which failure to be so qualified and authorized
would have a Material Adverse Effect and is subject to taxation as
a C Corporation under the Code;
(b) the execution, delivery, and performance hereof are within OI's
corporate powers, have been duly authorized, and are not in
contravention of law or the terms of OI's articles or certificate
of incorporation, by-laws, or regulations, or of any indenture,
agreement, or undertaking to which OI is party or by which it is or
may be bound;
(c) except for any security interest granted to or in favor of the
Agent and the Banks and except for any security interest permitted
by the terms of the Credit Agreement, OI is, and as to Collateral
to be acquired after the date hereof will be, the owner of the
Collateral free from any claim, lien, encumbrance, or security
interest of any type, and OI agrees that it will defend, at its
sole expense, the Collateral against all other claims and demands
of all Persons at any time claiming the same or any interest
therein;
(d) the office where OI keeps all of its records pertaining to its
Receivables is located at 1144 East Newport Center Drive, Deerfield
Beach, Florida 33442;
(e) subject to any limitation stated herein or in connection herewith,
all information furnished to the Agent concerning OI or the
Collateral, is or will be at the time such information is
furnished, accurate and correct in all material respects and
complete insofar as is necessary to give the Agent true and
accurate knowledge of the subject matter;
(f) OI is the lawful owner of and has full and unqualified right to
transfer a security interest in all of the Collateral to the Agent.
Such Collateral is not, and will not, so long as OI has any
Obligations to the Agent, be subject to any financing statement,
encumbrance, claim, lien, or security interest of any type except
any granted to or in favor of the Agent and except as permitted by
the terms of the Credit Agreement;
(g) Each Benefit Plan is in substantial compliance with ERISA, and
neither OI nor any Commonly Controlled Entity has received any
notice asserting that a Benefit Plan is not in compliance with
ERISA. No material liability to the PBGC or to a
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Multiemployer Plan has been, or is expected by OI to be, incurred
by OI or any Commonly Controlled Entity;
(h) OI is solvent, having assets of a fair value which exceed the
amount required to pay its debts (including contingent,
subordinated, unmatured and unliquidated liabilities) as they
become absolute and matured, and OI is able to and anticipates that
it will be able to meet its debts as they mature and has adequate
capital to conduct the business in which it is or proposes to be
engaged;
(i) During the one-year period preceding the Agreement Date, OI has not
been known as or used any corporate or fictitious name other than
the corporate name of OI on the Agreement Date, except for those
listed in Schedule 3.1, attached hereto. All trade names or styles
under which OI creates Receivables, or to which instruments in
payment of Receivables are made payable, are listed in Schedule
3.2, attached hereto;
(j) OI's principal place of business, chief executive office and other
places of business are located at the addresses set forth on
Schedule 3.3, attached hereto. The location of OI's Equipment is
also indicated on Schedule 3.3. OI's chief executive office, its
other places of business, and the location of its Inventory and
Equipment will be and remain located only at the foregoing
location(s) unless relocated in compliance with Section 4(c) below;
(k) OI has duly executed and delivered the Trademark Assignment to the
Agent;
(l) OI at the present time maintains no inventory at any Location; and
(m) Except for OutSource Franchising, Inc., neither OI nor any
Subsidiary of OI grant franchises or have done so in the past. In
the case of OutSource Franchising, Inc., LABOR WORLD(R) and OFFICE
OURS(R) are the only trademarks that are or have been licensed for
use by franchisees.
4. COVENANTS
OI undertakes, covenants, and agrees that, until the full and complete
payment, performance, and observance of all Obligations, OI:
(a) shall provide the Agent with at least thirty (30) days prior
written notification of:
(1) any change in any location where OI's Inventory or Equipment is
maintained, and any new locations where OI's Inventory or
Equipment is to be maintained,
(2) any change in the location of the office where OI's records
pertaining to its Receivables are kept,
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(3) the location of any new places of business and the changing or
closing of any of its existing places of business,
(4) any change in the location of OI's chief executive office,
(5) any change in OI's name, and
(6) any change in OI's Location;
PROVIDED, HOWEVER, that anything herein to the contrary
notwithstanding, (A) with respect to location openings and
closings, OI may satisfy the requirement of this subsection with
respect to such locations, by submitting to the Agent, on a
quarterly basis, a list of all locations opened and closed, and (B)
with respect to moving either Collateral or Equipment from location
to location, no notice need be provided pursuant to this subsection
so long as either (i) OI, or a Subsidiary, as the case may be,
executes and delivers to the Agent a UCC financing statement
appropriate for filing to perfect the Agent's security interest in
the Collateral in its new location, or (ii) the Agent has
previously filed a UCC financing statement which perfects the
Agent's security interest in the Collateral in its new location.
(b) shall promptly pay and discharge before they become delinquent, all
taxes, assessments, and governmental charges of every kind and
nature that have been lawfully levied, assessed, or imposed upon OI
or its properties including the use thereof, or any of the
Obligations, which, if unpaid, would become Liens against its
assets, including, without limitation, all sums due and owing any
taxing authority for income and other taxes withheld from the wages
and salaries of its employees, except to the extent OI is
reasonably contesting in good faith any such tax, assessment, or
charge with an adequate reserve provided therefor;
(c) shall at all reasonable times allow the Agent by or through any of
its officers, agents, employees, attorneys, or accountants to:
(1) examine, inspect, and make extracts from OI's books and other
records,
(2) examine and inspect OI's Collateral wherever located, and
(3) arrange for verification of OI's Receivables, under reasonable
procedures;
(d) shall promptly deliver to the Agent upon reasonable request:
(1) additional information and statements with respect to the
Collateral,
(2) OI's Instruments, Chattel Paper, Documents, and any other
writings relating to or evidencing any of OI's Receivables
(including, without limitation, computer printouts or
typewritten reports listing the current mailing address of all
present Account Debtors), and
(3) any other writings and information the Agent may reasonably
request;
(e) shall upon request of the Agent promptly take such action and
promptly make, execute, and deliver all such additional and further
items, deeds, assurances, and
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instruments as the Agent may reasonably require, including, without
limitation, Financing Statements, so as to completely vest in,
perfect and ensure to the Agent its rights hereunder and in and to
the Collateral, including, without limitation, such actions or
items that may be appropriate due to changes in applicable laws
after the date hereof, to evidence or to perfect the security
interests granted to the Agent hereunder;
(f) hereby authorizes the Agent or the Agent's designated agent (but
without obligation by the Agent to do so) to incur Related Expenses
(whether prior to, upon, or subsequent to any Event of Default),
and OI shall promptly repay, reimburse, and indemnify the Agent for
any and all Related Expenses. As long as no Default or Event of
Default exists, the Agent agrees to give OI periodic reports of the
Related Expenses subject to reimbursement under this subsection;
(g) shall not, without the prior written consent of the Agent, pledge,
grant a security interest, or otherwise voluntarily place any Lien
upon any Collateral except any security interest granted to or in
favor of the Agent and the Banks and except as permitted by the
terms of the Credit Agreement; and
(h) shall not use any Collateral in violation of any applicable
statute, ordinance, or regulation.
5. COLLECTION AND RECEIPT OF PROCEEDS
(a) Upon the occurrence and continuance of any Event of Default and
after written notification thereof to OI, the Agent or the Agent's
designated agent shall have the right and power (as OI's hereby
constituted and appointed attorney-in-fact), which, being coupled
with an interest, shall remain irrevocable until all Obligations
are fully and completely paid, performed, and observed, at any time
to:
(1) notify the Account Debtors on any or all of OI's Receivables of
the Agent's security interest in and assignment of those
Receivables upon which the respective Account Debtors are
liable, and to request from such Account Debtors, in the
Agent's name or in OI's name, information concerning the
Receivables and amounts owing thereon,
(2) notify and require the Account Debtors on any or all of OI's
Receivables to make payment upon such Receivables directly to
the Agent,
(3) receive, retain, acquire, take, endorse, assign, deliver,
accept, and deposit, in the Agent's name or OI's name, any and
all of OI's cash, Instruments, Chattel Paper, Documents, cash
and non-cash Proceeds, collections of Receivables, and any
other such writings relating to any of the Collateral
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theretofore collected, received or retained by OI pursuant to
Subsection 5(b) below or thereafter collected, received, or
retained by OI,
(4) exercise any and all of the rights granted the Agent in
Subsections 5(c) and 5(d) below, and
(5) take such other action with respect to any or all of the
Collateral, in such manner and at such times, as the Agent may
deem advisable, including, without limitation, the following:
collection, legal proceedings, compromises, settlements,
adjustments, extensions, postponements, exchanges, releases,
and sales.
(b) Except as otherwise provided in Subsections 5(a), 5(c), or 5(d),
upon the occurrence and continuance of an Event of Default, OI is
authorized (1) to collect and enforce, by all lawful means, all of
OI's Receivables, and (2) to receive and retain, by all lawful
means, any and all Proceeds. OI shall hold, as trustee upon an
express trust for the Agent as beneficiary thereof, all such lawful
collections of Receivables and all such Proceeds received by OI.
Any costs, liabilities, or expenses incurred by OI in the
collection or enforcement of such Receivables, and in the receipt
of Proceeds shall be borne solely by OI. OI as trustee shall not
commingle such collections of Receivables and such Proceeds with
any other property not held in trust for the Agent; any property
held or commingled with such collections of Receivables such
Proceeds is hereby conclusively established between OI and the
Agent to be collections of Receivables and Proceeds.
(c) With respect to OI's Instruments, Documents, and Chattel Paper:
(1) Upon the Agent's written request, OI shall immediately deliver
or cause to be delivered to the Agent all of OI's Instruments,
Chattel Paper, and Documents, appropriately endorsed either, at
the Agent's option, (i) to the Agent's order, without
limitation or qualification, or (ii) for deposit in the
Accounts Receivable Collection Account. The Agent, or the
Agent's designated agent, is hereby constituted and appointed
OI's attorney-in-fact with authority and power to so endorse
any and all Instruments, Documents, and Chattel Paper upon OI's
failure to do so. Such authority and power, being coupled with
an interest, shall be (i) irrevocable until all Obligations are
paid, performed, and observed in full, (ii) exercisable by the
Agent at any time and without any request upon OI by the Agent
to so endorse, and (iii) exercisable in the Agent's name or
OI's name;
(2) OI hereby waives presentment, demand, notice of dishonor,
protest, notice of protest, and any and all other similar
notices with respect thereto, regardless of the form of any
endorsement thereof;
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(3) The Agent shall not be bound or obligated to take any action to
preserve any rights therein against any prior parties thereto.
(d) Upon the occurrence and continuance of any Event of Default and
after the Agent's written notification thereof to OI: (i) the
lawful collection and enforcement of all of OI's Receivables and
the lawful receipt and retention by OI of all Proceeds shall be as
agent for the Agent and the Banks; (ii) all such collections and
Proceeds shall be remitted daily by OI to the Agent in the form in
which they are received by OI, either by mailing or by delivering
such collections and Proceeds to the Agent, appropriately endorsed
for deposit in the Accounts Receivable Collections Account. The
Agent may, in its sole discretion, at any time and from time to
time, apply all or any portion of the collected balance in the
Accounts Receivable Collections Account allowing three (3) days for
collection and clearance of remittances as a credit against OI's
outstanding Obligations. If any remittance shall be dishonored, or
if, upon final payment, any claim with respect thereto shall be
made against the Agent on its warranties of collection, the Agent
may charge the amount of such item against the Accounts Receivable
Collections Account or any other Deposit Account maintained by OI
with the Agent, and, in any event, retain same and OI's interest
therein as additional security for the Obligations. The Agent may,
in its sole discretion, at any time and from time to time, release
funds from the Accounts Receivable Collections Account to OI for
use in OI's business. The balance in the Accounts Receivable
Collections Account may be withdrawn by OI upon termination of this
Agreement in accordance with Subsection 9(d). Upon the occurrence
and continuance of any Event of Default and after the Agent's
written request, OI will cause all remittances representing all
collections and all Proceeds to be mailed to a lock box in
Hartford, Connecticut (or such other location designated by the
Agent) to which the Agent shall have access for the processing of
such items in accordance with the provisions, terms, and conditions
of the Agent's customary lock box agreement.
6. INSURANCE
OI shall at all times maintain insurance upon its Collateral through
insurance policies in such form, written by such companies, in such amounts, for
such period, and against such risks as may be acceptable to the Agent, with
provisions satisfactory to the Agent for payment of all losses thereunder to the
Agent and OI as their interests may appear (including a loss payable endorsement
in favor of the Agent), and, if required by the Agent, OI will deposit the
policies with the Agent. Any such policies of insurance shall provide for no
less than ten (10) days prior written cancellation notice to the Agent. Any sums
exceeding $100,000.00 received by the Agent in payment of insurance losses,
returns, or unearned premiums under the policies, and, during the existence of a
Default or Event of Default, all sums, may, at the option of the Agent, be
applied upon any Obligation whether or not the same is then due and payable, or
may be delivered to OI for the purpose of replacing, repairing, or restoring its
Inventory. OI hereby assigns to the Agent any return
13
of unearned premiums which may be due upon cancellation of any such policies for
any reason and directs the insurers to pay Agent any amount so due. The Agent,
or the Agent's designated agent, is hereby constituted and appointed OI's
attorney-in-fact (either in the name of OI or in the name of the Agent) to make
adjustments of all insurance losses, sign all applications, receipts, releases,
and other papers necessary for the collection of any such loss, and any return
of unearned premium, execute proof of loss, make settlements, and endorse and
collect all Instruments payable to OI or issued in connection therewith.
Notwithstanding any action by the Agent hereunder, any and all risk of loss or
damage to OI's Collateral to the extent of any and all deficiencies in the
effective insurance coverage thereof is hereby expressly assumed by OI.
7. EVENT OF DEFAULT
Upon the occurrence of any Event of Default as such term is defined in
the Credit Agreement, any and all Obligations shall, at the option of the Agent
and notwithstanding any period of time permitted or allowed by any writing
evidencing an Obligation, become immediately due and payable without notice,
demand, protest, or presentment, all of which are hereby expressly waived by OI.
8. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT
Upon the occurrence of any Event of Default and at all times
thereafter, the Agent shall have the rights and remedies of a secured party
under the Connecticut Uniform Commercial Code in addition to the rights and
remedies provided elsewhere within this Agreement or in any other writing
executed by OI. The Agent may require OI to assemble the Collateral and make it
available to the Agent at a reasonably convenient place to be designated by the
Agent. Unless the Collateral is perishable, threatens to decline speedily in
value, or is of a type customarily sold on a recognized market, the Agent will
give OI reasonable notice of the time and place of any public sale of the
Collateral or of the time after which any private sale or other intended
disposition thereof is to be made. The requirement of reasonable notice shall be
met if such notice is mailed (deposited for delivery, postage prepaid, by U.S.
mail) to either, at the Agent's option, (1) OI's Location (as modified by any
change therein which OI has supplied in writing to the Agent) or (2) OI's
address at which the Agent customarily communicates with OI, at least ten (10)
days before the time of the public sale or the time after which any private sale
or other intended disposition thereof is to be made. At any such public or
private sale, the Agent may purchase the Collateral. After deduction for the
Agent's Related Expenses, the residue of any such sale shall be applied in
satisfaction of the Obligations in such order of preference as the Agent may
determine. Any excess, to the extent permitted by law, shall be paid to OI, and
OI shall remain liable for any deficiency.
9. GENERAL
(a) If any provision, term, or portion, of this Agreement, (including,
without limitation, (1) any indebtedness, obligation, liability,
contract, agreement, indenture, warranty, covenant, guaranty,
representation, or condition of this Agreement made, assumed, or
entered into, (2) any act or action taken under this Agreement, or
(3) any
14
application of this Agreement) is for any reason held to be illegal
or invalid, such illegality or invalidity shall not affect any
other such provision, term, or portion of this Agreement, each of
which shall be construed and enforced as if such illegal or invalid
provision, term, or portion were not contained in this Agreement.
Any illegality or invalidity of any application of this Agreement
shall not affect any legal and valid application of this Agreement,
and each provision, term, and portion of this Agreement shall be
deemed to be effective, operative, made, entered into, or taken in
the manner and to the full extent permitted by law.
(b) The Agent shall not be deemed to have waived any of the Agent's
rights hereunder or under any other writing executed by OI unless
such waiver be in writing and signed by the Agent. No delay or
omission on the part of the Agent in exercising any right shall
operate as a waiver of such right or any other right. A waiver on
any one occasion shall not be construed as a bar to or waiver of
any right or remedy on any future occasion. All of the Agent's
rights and remedies, whether evidenced hereby or by any other
writing shall be cumulative and may be exercised singularly or
concurrently. Any written demands, written requests, or written
notices to OI that the Agent may elect to give shall be effective
when deposited for delivery, postage prepaid, by U.S. mail, and
addressed either, at the Agent's option, to (l) OI's Location (as
modified by any change therein which OI has supplied in writing to
the Agent) or (2) OI's address at which the Agent customarily
communicates with OI. If at any time or times, by assignment or
otherwise, the Agent transfers any of the Obligations or any part
of the Collateral to another Person, such transfer shall carry with
it the Agent's powers and rights under this Agreement with respect
to the Obligation or Collateral so transferred and the transferee
shall have said powers and rights, whether or not they are
specifically referred to in the transfer. To the extent that the
Agent retains any of the Obligations or any part of the Collateral,
the Agent will continue to have the rights and powers herein set
forth with respect thereto.
(c) The laws of the State of Connecticut, without regard to principles
of conflict of laws, shall govern the construction of this
Agreement and the rights and duties of the parties hereto. This
Agreement contains the entire agreement between the parties hereto
and no oral agreement shall be binding. OI agrees that the Agent
may make a photocopy of this Agreement in the ordinary course of
business and such photocopy may be used in place of the original of
this Agreement. A carbon, photographic or other reproduction of
this Agreement may be used as a financing statement. This Agreement
shall be binding upon and inure to the benefit of OI and the Agent
and their respective successors and assigns. The rights and powers
herein given to the Agent are in addition to those otherwise
created or existing in the same Collateral by virtue of other
agreements or writings.
(d) OI hereby releases the Agent from and agrees to indemnify and hold
harmless the Agent, and its officers, agents, and employees from
any and all claims of OI or any other Person for damage or loss
caused by any act or acts hereunder or in furtherance
15
hereof whether by omission or commission, and whether based
upon any error of judgment or mistake of law or fact (except
gross negligence or willful misconduct) on the part of the
Agent, or its officers, agents, and employees.
(e) The Agent has the right, in addition to all other rights and
remedies available to it, to set off at any time the unpaid balance
of each Revolving Credit Note and any other Obligations against any
indebtedness owing to OI by the Agent, including, without
limitation, all Cash Security.
(f) OI will cooperate with the Agent in order to fill in all blank
spaces herein, to correct patent errors herein, to complete or
correct the description of the Collateral, and to fill in any
missing date on this Agreement.
10. SUBMISSION TO JURISDICTION; WAIVERS. OI hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Security Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the nonexclusive general jurisdiction of the Courts of the
State of Connecticut, the courts of the United States of America for the
District of Connecticut, and appellate courts from any thereof; and
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead the
same.
OI, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE AGENT AND OI ARISING OUT OF, IN CONNECTION WITH, RELATING
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION
WITH THIS AGREEMENT OR ANY NOTE, GUARANTEE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS
RELATED THERETO.
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
OI: OUTSOURCE INTERNATIONAL, INC.,
By: /s/ PAUL BURRELL
---------------------------------
Name: Paul Burrell
Title: President
AGENT: BANK OF BOSTON CONNECTICUT
By: /s/ ROGER J. RODE, JR.
-----------------------------------
Name: Roger J. Rode, Jr.
Title: Director
17
SCHEDULE 3.1
TRADE NAMES
Labor World
Office Ours
Payroll Partners
18
SCHEDULE 3.2
ALL TRADE NAMES OR STYLES UNDER WHICH OI CREATES RECEIVABLES,
OR TO WHICH INSTRUMENTS IN PAYMENT OF RECEIVABLES ARE MADE PAYABLE
Labor World
Office Ours
Payroll Partners
SCHEDULE 3.3
PRINCIPAL PLACE OF BUSINESS OF OI:
1144 East Newport Center Drive
Deerfield Beach, FL 33487
LOCATION OF OI'S CHIEF EXECUTIVE OFFICE:
1144 East Newport Center Drive
Deerfield Beach, FL 33487
LOCATIONS OF OI'S OTHER PLACES OF BUSINESS:
See attached summary of leased locations on Attachment "A".
LOCATION(S) OF OI'S INVENTORY: NONE
LOCATION(S) OF OI'S EQUIPMENT:
Miscellaneous owned equipment, approximately 250,000, at leased
locations in Attachment "A".