Exhibit 10.4.2
ALTERNATIVE RATE OPTIONS
PROMISSORY NOTE
(PRIME RATE, LIBOR)
$60,000,000.00 Dated as of: February 3, 1999
Labor Ready, Inc.
Labor Ready Northwest, Inc.
Labor Ready Southwest, Inc.
Labor Ready Central, Inc.
Labor Ready Central II, LLC
Labor Ready Central III, LP
Labor Ready Midwest, Inc.
Labor Ready Mid-Atlantic, Inc.
Labor Ready Mid-Atlantic II, Inc.
Labor Ready Mid-Atlantic III, LP
Labor Ready Northeast, Inc.
Labor Ready Southeast, Inc.
Labor Ready Southeast II, Inc.
Labor Ready Southeast III, LP
Labor Ready GP Co., Inc.
Labor Ready Properties, Inc. (Collectively, "Borrower")
U.S. BANK NATIONAL ASSOCIATION ("Lender")
1. TYPE OF CREDIT. This note is given to evidence Borrower's obligation to repay
all Indebtedness of Borrower to Lender pursuant to the terms of a Loan and
Security Agreement dated as of February 3, 1999 ("Agreement"). Under the terms
of the Agreement, Lender has agreed to make Advances to Borrower under a Line of
Credit. No Advances shall be made which would cause the aggregate amount of
outstanding Indebtedness at any one time to exceed Sixty Million and No/100
Dollars ($60,000,000.00). However, Advances hereunder may be borrowed, repaid
and reborrowed. Capitalized terms not defined herein shall have the meaning
assigned to them in the Agreement.
2. PROMISE TO PAY. For value received Borrower promises to pay to Lender or
order at 1145 Broadway, Suite 1100, Tacoma, WA. the Principal Balance of this
note, with interest thereon at the rate(s) specified in Sections 3 and 7 below.
3. INTEREST RATE. The interest rate on the Principal Balance outstanding may
vary from time to time pursuant to the provisions of this note. Subject to the
provisions of this note, Borrower shall have the option from time to time of
choosing to pay interest at the rate or rates and for the applicable periods of
time based on the rate options provided herein; provided, however, that once
Borrower notifies Lender of its selection of the LIBOR Borrowing Rate option
chosen in accordance with the provisions of this note, such notice shall be
irrevocable.
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The rate options are the Prime Borrowing Rate and the LIBOR Borrowing Rate, each
as defined herein. Interest shall be computed at the applicable rate based upon
a three hundred sixty (360) day year and applied to the actual days applicable.
Interest shall be paid on the first (1st) day of each month until the Expiration
Date, at which time the Principal Balance and all accrued interest will be due.
(a) THE PRIME BORROWING RATE.
(i) The Prime Borrowing Rate is a per annum rate equal to the Prime Rate.
(ii) Whenever Borrower desires to use the Prime Borrowing Rate option,
Borrower shall give Lender notice orally or in writing in accordance with
Section 9 of this note, which notice shall specify the requested effective date
(which must be a Business Day) and principal amount of the Advance or increase
in the Prime Rate Amount, and whether Borrower is requesting a new Advance under
the Line of Credit or conversion of a LIBOR Amount to the Prime Borrowing Rate.
(iii) Subject to Section 7 of this note, interest shall accrue on the
unpaid Principal Balance at the Prime Borrowing Rate unless and except to the
extent that the LIBOR Borrowing Rate is in effect.
(b) THE LIBOR BORROWING RATE.
(i) The LIBOR Borrowing Rate is LIBOR, plus 1.25% per annum.
(ii) Borrower may obtain LIBOR Borrowing Rate quotes from Lender between
8:00 a.m. and 1:00 p.m. (Portland, Oregon time) on any Business Day. Borrower
may request an Advance, conversion of any portion of the Prime Rate Amount to a
LIBOR Amount or a new LIBOR Interest Period for an existing LIBOR Amount, at
such rate only by giving Lender notice in accordance with Section 3 (b) (iii)
before 10:00 a.m. (Portland, Oregon time) on such day.
(iii) Whenever Borrower desires to use the LIBOR Borrowing Rate option,
Borrower shall give Lender irrevocable notice (either in writing or orally and
promptly confirmed in writing) between 8:00 a.m. and 1:00 p.m. (Portland, Oregon
time) two (2) Business Days prior to the desired effective date of such rate.
Any oral notice shall be given by, and any written notice or confirmation of an
oral notice shall be signed by the person(s) authorized in Section 9 of this
note, and shall specify the requested effective date of the rate, LIBOR Interest
Period and LIBOR Amount, and whether Borrower is requesting a new Advance at the
LIBOR Borrowing Rate under the Line of Credit, conversion of all or any portion
of the Prime Rate Amount to a LIBOR Amount, or a new LIBOR Interest Period for
an outstanding LIBOR Amount. Notwithstanding any other term of this note,
Borrower may elect the LIBOR Borrowing Rate in the minimum principal amount of
$500,000.00 and in multiples of $100,000.00 above such amount.
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(iv) If at any time the LIBOR Rate is unascertainable or unavailable to
Lender or if LIBOR Rate loans become unlawful, the option to select the LIBOR
Borrowing Rate shall terminate immediately. If the LIBOR Borrowing Rate is then
in effect, (A) it shall terminate automatically with respect to all LIBOR
Amounts (i) on the last day of each then applicable LIBOR Interest Period, if
Lender may lawfully continue to maintain such loans, or (ii) immediately if
Lender may not lawfully continue to maintain such loans through such day, and
(B) subject to Section 7, the Prime Borrowing Rate automatically shall become
effective as to such amounts upon such termination.
(v) If at any time after the date hereof (A) any revision in or adoption of
any applicable law, rule, or regulation or in the interpretation or
administration thereof (i) shall subject Lender or its Eurodollar lending office
to any tax, duty, or other charge, or change the basis of taxation of payments
to Lender with respect to any loans bearing interest based on the LIBOR Rate, or
(ii) shall impose or modify any reserve, insurance, special deposit, or similar
requirements against assets of, deposits with or for the account of, or credit
extended by Lender or its Eurodollar lending office, or impose on Lender or its
Eurodollar lending office any other condition affecting any such loans, and (B)
the result of any of the foregoing is directly (i) to increase the cost to
Lender of making or maintaining any such loans or (ii) to reduce the amount of
any sum receivable under this note by Lender or its Eurodollar lending office,
Borrower shall pay Lender within 15 days after demand by Lender such additional
amount as will compensate Lender for such increased cost or reduction. The
determination hereunder by Lender of such additional amount shall be conclusive
in the absence of manifest error. If Lender demands compensation under this
Section 3(b)(v), Borrower may upon three (3) Business Days' notice to Lender pay
the accrued interest on all LIBOR Amounts, together with any additional amounts
payable under Section 3(b)(vi). Subject to Section 7, upon Borrower's paying
such accrued interest and additional costs, the Prime Borrowing Rate immediately
shall be effective with respect to the unpaid principal balance of such LIBOR
Amounts.
(vi) Borrower shall pay to Lender, on demand, such amount as Lender
reasonably determines (determined as though 100% of the applicable LIBOR Amount
had been funded in the London interbank market) is necessary to compensate
Lender for any direct or indirect losses, expenses, liabilities, costs, expenses
or reductions in yield to Lender, whether incurred in connection with
liquidation or re-employment of funds or otherwise, incurred or sustained by
Lender as a result of: (A) Any payment or prepayment of a LIBOR Amount,
termination of the LIBOR Borrowing Rate or conversion of a LIBOR Amount to the
Prime Borrowing Rate on a day other than the last day of the applicable LIBOR
Interest Period (including as a result of acceleration or a notice pursuant to
Section 3 (b) (v)); or (B) Any failure of Borrower to borrow, continue or prepay
any LIBOR Amount or to convert any portion of the Prime Rate Amount to a LIBOR
Amount after Borrower has given a notice thereof to Lender.
(vii) If Borrower chooses the LIBOR Borrowing Rate, Borrower shall pay
interest based on such rate, plus any other applicable taxes or charges
hereunder, even though Lender may have obtained the funds loaned to Borrower
from sources other than the London interbank market. Lender's determination of
the LIBOR Borrowing Rate and any such taxes or charges shall be conclusive in
the absence of manifest error.
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(viii) Notwithstanding any other term of this note, Borrower may not select
the LIBOR Borrowing Rate if an event of default hereunder has occurred and is
continuing.
(ix) Nothing contained in this note, including without limitation the
determination of any LIBOR Interest Period or Lender's quotation of any LIBOR
Borrowing Rate, shall be construed to prejudice Lender's right, if any, to
decline to make any requested Advance or to require payment on demand.
4. COMPUTATION OF INTEREST. All interest under Section 3 and Section 7 will be
computed at the applicable rate based on a 360-day year and applied to the
actual number of days elapsed.
5. PREPAYMENT.
(a) Prepayments of all or any part of the Prime Rate Amount may be made at any
time without penalty.
(b) Except as otherwise specifically set forth herein, Borrower may not prepay
all or any part of any LIBOR Amount or terminate any LIBOR Borrowing Rate,
except on the last day of the applicable LIBOR Interest Period.
6. PAYMENT BY AUTOMATIC DEBIT. Borrower hereby authorizes Lender to
automatically deduct the amount of all principal and interest payments from
account number 153501534249 at a branch of Lender. If there are insufficient
funds in the account to pay the automatic deduction in full, Lender may allow
the account to become overdrawn, or Lender may reverse the automatic deduction.
Borrower will pay all the fees on the account which result from the automatic
deductions, including any overdraft and non-sufficient funds charges. If for any
reason Lender does not charge the account for a payment, or if an automatic
payment is reversed, the payment is still due according to this note. If the
account is a Money Market Account, the number of withdrawals from that account
is limited as set out in the account agreement. Lender may cancel the automatic
deduction at any time in its discretion.
7. DEFAULT.
(a) Without prejudice to any right of Lender to require payment on demand or to
decline to make any requested Advance, each of the following shall be an event
of default: (i) Borrower fails to make any payment when due, (ii) Borrower fails
to perform or comply with any material term, covenant or obligation in this
note, the Agreement, or the Related Documents, or in any other agreement or loan
Borrower has with Lender, (iii) Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement. or any other agreement,
in favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this note or perform
Borrower's obligations under this note, the Agreement, or the Related Documents,
(iv) Any representation or statement made or furnished to Lender by Borrower or
on Borrower's behalf is false or misleading in any material respect either now
or at the time made or furnished, (v) Borrower becomes insolvent. liquidates or
dissolves. a receiver is appointed for any part of Borrower's property, (vi)
Borrower makes an assignment for
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the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws, (vii) There is any
material adverse change in the financial condition or management of Borrower.
(b) Upon the occurrence of an event of default and after such notice, if any, as
may be required under the Agreement, Lender may declare the entire unpaid
Principal Balance and all accrued unpaid interest immediately due and payable.
Upon default, including failure to pay upon final maturity, Lender, at its
option, may also, if permitted under applicable law, increase the interest rate
on this note to a rate equal to the Prime Borrowing Rate plus 5%. The interest
rate will not exceed the maximum rate permitted by applicable law. In addition,
if any payment of principal or interest is 15 or more days past due, Borrower
will be charged a late charge of 5% of the delinquent payment.
8. EVIDENCE OF PRINCIPAL BALANCE; PAYMENT ON DEMAND. Holder's records shall, at
any time, be conclusive evidence of the unpaid Principal Balance and interest
owing on this note in the absence of manifest error. Notwithstanding any other
provisions of this note, in the event holder makes Advances hereunder which
cause the aggregate amount of the Indebtedness at any time to exceed Sixty
Million and No/100 Dollars ($60,000,000.00), Borrower agrees that all such
Advances, with interest, shall be payable on demand.
9. REQUESTS FOR ADVANCES.
(a) Any Advance may be made or interest rate option selected upon the request of
any of the undersigned, any person or persons authorized in subsection (b) of
this Section 9, and any person or persons otherwise authorized to execute and
deliver promissory notes to Lender on behalf of Borrower.
(b) Borrower hereby authorizes any one of the following individuals to request
Advances and to select interest rate options: Glenn Welstad, Bob Breen, Bob
Sovern, Joseph Havlin and Joseph P. Sambataro, Jr., unless Lender is otherwise
instructed in writing.
(c) All Advances shall be disbursed by deposit directly to Borrower's account
number 153501534249 at a branch of Lender, or by cashier's check issued to
Borrower.
(d) Borrower agrees that Lender shall have no obligation to verify the identity
of any person making any request pursuant to this Section 9, and Borrower
assumes all risks of the validity and authorization of such requests. In
consideration of Lender agreeing, at its sole discretion, to make Advances upon
such requests, Borrower promises to pay holder, in accordance with the
provisions of this note, the Principal Balance together with interest thereon
and other sums due hereunder, although any Advances may have been requested by a
person or persons not authorized to do so.
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10. NOTICES. Any notice hereunder shall be given in accordance with Section 14.9
of the Agreement.
11. ATTORNEY FEES. Whether or not litigation or arbitration is commenced,
Borrower promises to pay all costs of collecting overdue amounts. Without
limiting the foregoing, in the event that holder consults an attorney regarding
the enforcement of any of its rights under this note or any document securing
the same, or if this note is placed in the hands of an attorney for collection
or if suit or litigation is brought to enforce this note or any document
securing the same, Borrower promises to pay all costs thereof including such
additional sums as the court or arbitrator(s) may adjudge reasonable as attorney
foes, including without limitation, costs and attorney fees incurred in any
appellate court, in any proceeding under the bankruptcy code, or in any
receivership and post-judgment attorney fees incurred in enforcing any judgment.
12. WAIVERS; CONSENT. Each party hereto, whether maker, co-maker, guarantor or
otherwise, waives diligence, demand, presentment for payment, notice of
non-payment, protest and notice of protest and waives all defenses based on
suretyship or impairment of collateral. Without notice to Borrower and without
diminishing or affecting Lender's rights or Borrower's obligations hereunder,
Lender may deal in any manner with any person who at any time is liable for, or
provides any real or personal property collateral for, any indebtedness of
Borrower to Lender, including the indebtedness evidenced by this note. Without
limiting the foregoing, Lender may, in its sole discretion: (a) make secured or
unsecured loans to Borrower and agree to any number of waivers, modifications,
extensions and renewals of any length of such loans, including the loan
evidenced by this note; (b) impair, release (with or without substitution of new
collateral), fail to perfect a security interest in, fail to preserve the value
of, fail to dispose of in accordance with applicable law, any collateral
provided by any person; (c) sue, fail to sue, agree not to sue, release, and
settle or compromise with, any person.
13. JOINT AND SEVERAL LIABILITY. All undertakings of the undersigned Borrowers
are joint and several. Lender's rights and remedies under this note shall be
cumulative.
14. SEVERABILITY. If any term or provision of this note is declared by a court
of competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
balance of the terms and provisions hereof, which terms and provisions shall
remain binding and enforceable, and this note shall be construed as if such
illegal, invalid or unenforceable provision had not been contained herein. In
the event there is a conflict between a provision of this note and a provision
in the Agreement, the provision of the Agreement shall control.
15. GOVERNING LAW. This note shall be governed by and construed and enforced in
accordance with the State of Washington without regard to conflicts of law
principles; PROVIDED, however, that to the extent that Lender has greater rights
or remedies under Federal law, this provision shall not be deemed to deprive
Lender of such rights and remedies may be available under Federal law.
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16. DISCLOSURE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
THE UNDERSIGNED BORROWER HEREBY ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS
DOCUMENT.
BORROWER:
LABOR READY, INC.
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
Executive Vice President and
Chief Financial Officer
LABOR READY NORTHWEST, INC.
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
LABOR READY SOUTHWEST, INC.
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
LABOR READY CENTRAL, INC.
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
(SIGNATURES OF BORROWER CONTINUED ON FOLLOWING PAGE)
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BORROWER (CONTINUED):
LABOR READY CENTRAL II, LLC
By: Labor Ready Central, Inc.,
Its Sole Member
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
LABOR READY CENTRAL III, LP
By: Labor Ready GP Co., Inc.,
Its General Partner
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
LABOR READY MIDWEST, INC.
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
LABOR READY MID-ATLANTIC, INC.
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
(SIGNATURES OF BORROWER CONTINUED ON FOLLOWING PAGE)
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BORROWER (CONTINUED):
LABOR READY MID-ATLANTIC II, INC.
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
LABOR READY MID-ATLANTIC III, LP
By: Labor Ready GP Co., Inc.,
Its General Partner
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
LABOR READY NORTHEAST, INC.
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
LABOR READY SOUTHEAST, INC.
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
LABOR READY SOUTHEAST II, INC.
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
(SIGNATURES OF BORROWER CONTINUED ON FOLLOWING PAGE)
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BORROWER (CONTINUED):
LABOR READY SOUTHEAST III, LP
By: Labor Ready GP Co., Inc.
Its General Partner
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
LABOR READY GP CO., INC.
By: /s/ Joseph P. Sambataro, Jr.
-----------------------------
Joseph P. Sambataro, Jr.
President
LABOR READY PROPERTIES, INC.
By: /s/ Joseph P. Sambataro, Jr.
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Joseph P. Sambataro, Jr.
President
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