SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period Commission File No. 0-27682
ended August 31, 1997
GLOBE BUSINESS RESOURCES, INC.
Incorporated under the IRS Employer
laws of Ohio Identification No. 31-1256641
1925 Greenwood Avenue
Cincinnati, OH 45246
Phone: (513) 771-8221
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of September 30, 1997, 4,444,509 shares of the Registrant's common
stock, no par value, were outstanding.
Page 1
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet - 3
August 31, 1997 and February 28, 1997
Consolidated Statement of Income - 4
Three and six months ended August 31, 1997 and 1996
Consolidated Statement of Cash Flows - 5
Six months ended August 31, 1997 and 1996
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 16
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
GLOBE BUSINESS
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
August 31, February 28,
1997 1997
----------- ------------
(Unaudited)
ASSETS:
Cash $ 776 $ 717
Trade accounts receivable, less allowance for
doubtful accounts of $711 and $460, respectively 7,933 5,345
Other receivables 35 342
Prepaid expenses 1,512 1,504
Rental furniture, net 51,680 48,462
Property and equipment, net 7,130 4,907
Goodwill and other intangibles, net 14,699 10,243
Other, net 305 258
-------- --------
Total assets $ 84,070 $ 71,778
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $ 5,012 $ 4,012
Customer deposits 1,624 1,343
Accrued compensation 1,676 1,762
Accrued taxes 848 557
Deferred income taxes 3,788 2,901
Accrued interest payable 764 371
Other accrued expenses 692 480
Debt 37,150 30,516
-------- --------
Total liabilities 51,554 41,942
======== ========
Common stock and other shareholders' equity:
Common stock, no par, 15,000,000 and
10,000,000 shares authorized, 4,443,759
and 4,440,509 shares issued and outstanding 19,915 19,883
Retained earnings 16,685 14,037
Fair market value in excess of historical cost of
acquired net assets attributable to related party
transactions (4,084) (4,084)
-------- --------
Total common stock and other shareholders' equity 32,516 29,836
Total liabilities and shareholders' equity $ 84,070 $ 71,778
======== ========
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
For the For the
three months ended, six months ended
August 31, August 31, August 31, August 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Revenues:
Rental sales $ 12,282 $ 10,363 $ 23,600 $ 19,793
Corporate housing sales 9,390 3,669 16,464 3,669
Retail sales 3,414 3,678 7,214 7,361
-------- -------- -------- --------
25,086 17,710 47,278 30,823
-------- -------- -------- --------
Costs and expenses:
Cost of rental sales 2,799 2,724 5,865 5,191
Cost of corporate housing sales 6,728 2,502 11,619 2,502
Cost of retail sales 2,138 2,306 4,553 4,509
Warehouse and delivery 2,847 2,145 5,343 3,930
Occupancy 1,730 1,460 3,397 2,849
Selling and advertising 2,166 2,102 4,477 3,970
General and administration 3,460 2,287 6,253 4,133
-------- -------- -------- --------
21,868 15,526 41,507 27,084
-------- -------- -------- --------
Operating income 3,218 2,184 5,771 3,739
Other expenses (income):
Interest expense 752 383 1,353 607
Other, net 29 (33) 75 (58)
-------- -------- -------- --------
781 350 1,428 549
-------- -------- -------- --------
Income before income taxes 2,437 1,834 4,343 3,190
Provision for income taxes 951 711 1,695 1,243
-------- -------- -------- --------
Net income $ 1,486 $ 1,123 $ 2,648 $ 1,947
======== ======== ======== ========
Net income per common share $ 0.33 $ 0.26 $ 0.60 $ 0.45
======== ======== ======== ========
Weighted average number
common shares outstanding 4,443 4,309 4,442 4,282
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
For the six months ended,
August 31, August 31,
1997 1996
---------- ----------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,648 $ 1,947
Adjustments to reconcile net income
to net cash provided by
operating activities:
Rental furniture depreciation 3,523 2,917
Other depreciation and amortization 1,023 485
Provision for losses on accounts receivable 255 50
Provision for deferred income taxes 887 507
(Gain)/loss on sale of property and equipment (4) 4
Book value of furniture sales and rental buyouts 5,932 5,811
Changes in assets and liabilities:
Accounts receivable (2,734) (1,205)
Other assets, net (6) (115)
Prepaid expenses 127 (188)
Accounts payable 959 15
Customer deposits 144 (35)
Accrued compensation (181) (854)
Accrued taxes 279 504
Accruted interest payable 393 94
Other accrued expenses 178 (133)
-------- --------
Net cash provided by operating activities 13,523 9,804
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to rental furniture (12,132) (15,150)
Purchases of property and equipment (2,503) (714)
Proceeds from disposition of property and equipment 7 --
Debenture retirement -- (59)
Purchase of businesses, net of cash acquired (5,432) (5,912)
-------- --------
Net cash used in investing activities (20,060) (21,835)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on the revolving credit agreement 56,316 49,023
Repayments on the revolving credit agreement (50,885) (35,853)
Net proceeds (repayments) of other debt 1,370 (595)
Principal payments under capital lease obligations (211) (162)
Exercise of common stock options 6 15
-------- --------
Net cash provided by financing activities 6,596 12,428
-------- --------
Net (decrease)/increase in cash 59 397
Cash at beginning of period 717 133
-------- --------
Cash at end of period $ 776 $ 530
-------- --------
The accompanying notes are an integral part of these financial statements.
Page 5
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
NOTE 1 -- PRESENTATION OF INTERIM INFORMATION
In the opinion of the management of Globe Business Resources, Inc., the
accompanying unaudited consolidated financial statements include all adjustments
considered necessary to present fairly its financial position as of August 31,
1997, and the results of its operations for the three and six months ended
August 31, 1997 and 1996 and its cash flows for the six months ended August 31,
1997 and 1996. Interim results are not necessarily indicative of results for a
full year.
The consolidated financial statements and notes are presented in
accordance with the requirements of Form 10-Q, and do not contain certain
information included in the Company's audited consolidated financial statements
and notes in its Form 10-K for the fiscal year ended February 28, 1997.
NOTE 2 -- ACQUISITIONS
On April 28, 1997, Globe acquired substantially all the assets of
privately owned The Hotel Alternative, Inc. ("THA") for approximately $3,400 in
cash, the assumption of certain liabilities and contingent consideration
consisting of up to $1,000 payable in the fourth quarter of fiscal year 1998 and
up to 50,000 shares of Globe common stock, currently held in escrow, issuable in
the first quarter of fiscal year 1999. THA, with operations in Seattle,
Washington and Portland, Oregon, provides short-term housing to transferring or
temporarily assigned corporate personnel, new hires, trainees and consultants.
THA maintained an inventory of approximately 500 leased housing units and had
annual revenues of approximately $6.0 million for the year ended December 31,
1996.
On June 5, 1997, Globe and the prior owner of Guest Suites, Inc. agreed
to final settlement of contingent consideration related to Globe's December 16,
1996 asset acquisition. The settlement, recorded as an adjustment to the
original purchase price during the second quarter of fiscal 1998, consisted of
$350 and 2,500 shares of Globe common stock.
On July 11, 1997, Globe acquired substantially all the assets of
privately owned Executive Relocation Services, Inc. ("ERS") for approximately
$1,600 in cash, the assumption of certain liabilities and contingent
consideration consisting of up to $500 payable in two installments of up to $250
in the first quarter of fiscal 1999 and fiscal 2000. ERS operates in Nashville,
Tennessee and provides short-term housing to transferring or temporarily
assigned corporate personnel, new hires, trainees and consultants. ERS
maintained an inventory of approximately 200 leased housing units and had annual
revenues of approximately $2.6 million for the year ended December 31, 1996.
In accordance with APB No. 16, these acquisitions were accounted for
using the purchase method.
Page 6
<PAGE>
The purchase price allocation for THA and ERS is as follows:
(Unaudited)
-----------
Cash, receivables and prepaids $ 64
Rental furniture 541
Property and equipment 318
Other assets 41
Goodwill and other intangibles 4,824
------
5,788
Liabilities assumed (341)
------
$5,447
======
The following table sets forth certain Globe consolidated income
statement data on a pro forma basis, as if THA and ERS were acquired at the
beginning of the periods indicated.
Six months ended August 31
1997 1996
------- -------
Revenues $50,155 $37,413
Net income 2,717 2,170
Net income per common share $0.61 $0.51
Weighted average number of common
shares outstanding 4,442 4,282
SUBSEQUENT EVENT
On September 1, 1997, Globe acquired substantially all the assets of
privately owned Research Triangle Guest Houses ("RTGH"), a division of Turner
Creek Enterprises, Inc., for approximately $225 in cash. RTGH operates in
Raleigh/Durham, North Carolina and provides short-term housing to transferring
or temporarily assigned corporate personnel, new hires, trainees and
consultants. RTGH maintained an inventory of approximately 170 leased housing
units and had annual revenues of approximately $2.7 million for the year ended
June 30, 1997.
NOTE 3 -- EARNINGS PER SHARE
Earnings per share for the periods ended August 31, 1997 and 1996 were
determined by dividing net income applicable to common stock by the weighted
average number of shares of common stock outstanding during the period.
Outstanding stock options are not included as common stock equivalents as their
exercise would not cause a dilutive effect in excess of 3%.
Page 7
<PAGE>
The Financial Accounting Standards Board issued SFAS No. 128, "Earnings
Per Share", in February 1997. This Statement must be adopted in the fourth
quarter of fiscal year 1998. Early adoption is not permitted. Had earnings per
share been calculated under the provisions of SFAS No. 128 for the second
quarter and first six months of fiscal years 1998 and 1997, reported earnings
per share and related shares outstanding would have been as follows:
For the For the
three months ended, six months ended,
----------------------- -----------------------
August 31, August 31, August 31, August 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Earnings per common share:
Basic $0.33 $0.26 $0.60 $0.45
Diluted $0.33 $0.26 $0.59 $0.45
Weighted average number of
common shares outstanding:
Basic 4,443 4,309 4,442 4,282
Diluted 4,515 4,325 4,497 4,304
NOTE 4 -- RENTAL FURNITURE
August 31, 1997 February 28, 1997
--------------- -----------------
(Unaduited)
Furniture on rental $42,872 $39,509
Furniture on hand 18,193 16,808
------- -------
61,065 56,317
Accumulated depreciation (9,385) (7,855)
------- -------
$51,680 $48,462
------- -------
Page 8
<PAGE>
NOTE 5 -- DEBT
Outstanding debt consists of:
August 31, February 28,
1997 1997
---------- ---------
(Unaudited)
The 1996 Credit Agreement:
The Fifth Third Bank, PNC Bank,
KeyBank and Fountain Square Commercial
Funding Corp. revolving note, average
interest of 8.11% nd 7.59%, respectively $33,984 $28,554
6.0% note payable to seller of acquired
business, payable in monthly installments,
due December 31, 2000 1,000 1,150
7.5% note payable to seller of acquired
business, payable in monthly installments,
due November 2, 1998 227 271
8.5% construction loan payable to The
Fifth Third Bank, interest payable in
monthly installments, due September 1, 1997 1,520 -
Capital lease obligations 419 541
--------- ---------
$37,150 $30,516
--------- ---------
The funds required for the THA and ERS acquisitions (see Note 2) were
derived from borrowings under the Company's 1996 Credit Agreement. At August 31,
1997, the 1996 Credit Agreement provided a total unused credit facility of
approximately $11.0 million.
SUBSEQUENT EVENTS
On September 1, 1997, the construction loan terms were extended to
December 1, 1997.
On September 29, 1997 the Company completed a private placement of $30.0
million of 7.54% Senior Notes due September 1, 2007, with interest payable
semi-annually on March 1 and September 1. After one year, the Company may redeem
the Senior Notes at a premium.
Also on September 29, 1997, the Company established a new $30.0 million
credit agreement with The Fifth Third Bank and PNC Bank. This agreement replaces
The 1996 Credit Agreement. Interest rates for this revolving line of credit are
based on a leverage formula which initially will be the lesser of the prime rate
minus 25 basis points or LIBOR plus 150 basis points. The term of this agreement
will expire on September 30, 2000.
Both the Senior Notes and the new credit agreement are unsecured.
Page 9
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements beginning on page 3.
GENERAL
Globe is a major participant in the temporary relocation industry,
operating in the rent-to-rent furniture business as well as in corporate
housing. The rent-to-rent furniture business rents quality office and
residential furniture to a variety of corporate and individual customers. The
corporate housing business provides short-term housing through an inventory of
leased housing units to temporarily assigned corporate personnel, new hires,
trainees and consultants. Additionally, the Company sells residential and office
furniture that no longer meets its "showroom condition" standards for rental
through its clearance centers and offers new furniture for sale through its
showrooms and account executives.
The Company's fiscal year ends on February 28/29.
The discussions contained under Results of Operations and Liquidity and
Capital Resources include forward-looking information which is subject to risks
and qualifications including, but not limited to, those set forth in Exhibit 99
to the Company's Form 10-K for the year ended February 28, 1997.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain income
statement data as a percentage of total revenues and certain gross profit data
as a percentage of respective rental, corporate housing and retail sales
revenues.
For the For the
three months ended, six months ended
----------------------- ------------------------
August 31, August 31, August 31, August 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
Revenues:
Rental sales 49.0% 58.5% 49.9% 64.2%
Corporate housing sales 37.4% 20.7% 34.8% 11.9%
Retail sales 13.6% 20.8% 15.3% 23.9%
------ ------ ------ ------
Total revenues 100.0% 100.0% 100.0% 100.0%
Gross profit:
Rental sales 77.2% 73.7% 75.1% 73.8%
Corporate housing sales 28.3% 31.8% 29.4% 31.8%
Retail sales 37.4% 37.3% 36.9% 38.7%
------ ------ ------ ------
Total gross profit 53.5% 57.5% 53.4% 60.4%
Operating expenses 40.7% 45.1% 41.2% 48.3%
------ ------ ------ ------
Operating income 12.8% 12.3% 12.2% 12.1%
Interest/other 3.1% 2.0% 3.0% 1.8%
------ ------ ------ ------
Income before taxes 9.7% 10.4% 9.2% 10.3%
------ ------ ------ ------
Page 10
<PAGE>
Impact of Corporate Housing Acquisitions
----------------------------------------
Globe entered the corporate housing business in fiscal 1997 by making three
asset acquisitions, one in June 1996 and two in December 1996. Globe acquired
two additional corporate housing businesses in the first half of fiscal 1998
with the asset acquisitions of The Hotel Alternative, Inc. in April 1997 and
Executive Relocation Services, Inc. in July 1997. A third corporate housing
acquisition was made in September 1997, subsequent to completion of the second
quarter.
The corporate housing businesses all have lower gross profit margins, as
well as lower operating expenses as a percentage of sales, than Globe's
furniture rental business. As a result, the Company's gross profit margin and
operating expenses as a percentage of sales are both lower in the first half of
fiscal 1998 than in the prior year. Gross profit margin on rental sales for the
first half of 1998 was 75.1%, versus 29.4% for the combined corporate housing
businesses. Comparable gross profit margins for the first half of 1997 were
73.8% and 31.8%, respectively. Because the Company started to integrate its
furniture rental and corporate housing operations in the first quarter of fiscal
1998, operating expenses and, therefore, operating margins for furniture rental
and corporate housing cannot be specifically identified, however, the combined
operating margin for the businesses has improved to 12.2% for the first half of
1998 from 12.1% for the same period of 1997.
Corporate housing companies' assets consist primarily of accounts
receivable, customer deposits and some minor furniture and fixed asset balances.
Consequently, the purchase price for these businesses is allocated largely to
goodwill and other intangibles. Cost of goodwill and other intangibles related
to the fiscal 1998 and 1997 corporate housing acquisitions approximated $15.3
million and is being amortized as a cost of rental revenues on a straight-line
basis primarily over twenty years. Goodwill and intangibles amortization reduced
gross profit by $0.4 million in the first half of fiscal 1998.
Globe plans to continue consolidating corporate housing through additional
acquisitions, thereby capitalizing on the desire of many corporations to have a
corporate housing company that can handle their needs nationally. With the
fiscal 1998 and 1997 acquisitions, Globe has become a market leader in six
markets, with annualized corporate housing revenues in excess of $35 million.
Globe is vying with a small number of corporate housing companies for the number
two position in the industry.
As Globe increases its presence in the corporate housing business it is
possible that competing corporate housing companies may transfer their furniture
rental business to other vendors.
Due to the significant impact of the corporate housing acquisitions on the
Company's operations and financial results, the Company's historical results of
operations and period-to-period comparisons will not be indicative of future
results.
Comparison of Second Quarter Fiscal 1998 to Second Quarter Fiscal 1997
----------------------------------------------------------------------
Total revenues of $25.1 million increased $7.4 million, or 41.6%, in the
second quarter of fiscal 1998, from $17.7 million in the second quarter of
fiscal 1997, primarily due to acquisitions which occurred subsequent to the
second quarter of fiscal 1997. Excluding the corporate housing operations, total
revenues increased $1.7 million, or 11.8%, in the second quarter of fiscal 1998
compared to the second quarter of fiscal 1997.
Rental revenues of $12.3 million in the second quarter of fiscal 1998
increased 18.5% from $10.4 million in the second quarter of fiscal 1997. This
growth was driven by significant volume increases in the California markets as
well as several midwestern markets, and is partially attributable to a furniture
rental acquisition which occurred subsequent to the second quarter of fiscal
1997.
Page 11
<PAGE>
Corporate housing revenues of $9.4 million in the second quarter of fiscal
1998 increased 155.9% from $3.7 million in the second quarter of fiscal 1997.
This increase was primarily driven by acquisitions which occurred subsequent to
the second quarter of fiscal 1997.
Sales revenues of $3.4 million decreased $0.3 million, or 7.2%, in the
second quarter of fiscal 1998 from $3.7 million in the second quarter of fiscal
1997, driven by a down quarter in new office furniture sales and a flat quarter
in clearance sales. Sales revenues should increase in the third quarter due to
several large new office furniture sales expected to be delivered and due to new
advertising programs currently being rolled out which are designed to improve
the trend in clearance sales.
Gross profit of $13.4 million in the second quarter of fiscal 1998
increased $3.2 million, or 31.9%, from $10.2 million in the second quarter of
fiscal 1997 and declined as a percentage of revenues to 53.5% from 57.5% over
the same period due to the higher mix of corporate housing revenues and the
lower margins associated with these revenues.
Operating expenses of $10.2 million in the second quarter of fiscal 1998
increased 27.6% from $8.0 million in the second quarter of fiscal 1997, but, as
a percentage of total revenues declined to 40.7% from 45.1% over the same period
as a result of corporate housing's lower operating expenses as a percent of
sales.
As a result of the changes in revenues, gross profit and operating expenses
discussed above, operating income increased 47.3% to $3.2 million, or 12.8% of
revenues in the second quarter of fiscal 1998, from $2.2 million, or 12.3% of
revenues in the second quarter of fiscal 1997.
Interest/other expense increased $0.4 million to $0.8 million in the second
quarter of fiscal 1998 from $0.4 million in the second quarter of fiscal 1997
and as a percentage of total revenues increased to 3.1% from 2.0% over the same
period. The increased expense for fiscal 1998 was due primarily to higher debt
balances than in the comparable period of fiscal 1997. The debt increase was
driven by funding required for acquisitions.
Income before income taxes of $2.4 million in the second quarter of fiscal
1998 increased $0.6 million, or 32.9%, compared to the second quarter of fiscal
1997 and as a percentage of revenues decreased to 9.7% from 10.4% over the same
period primarily due to interest costs on higher loan balances in fiscal 1998.
The Company's effective tax rate, which includes federal, state and local
taxes, increased slightly to 39.0% in the second quarter of fiscal 1998 as
compared to 38.8% in the second quarter of fiscal 1997.
Comparison of Six Months Ended August 31, 1997
to Six Months Ended August 31, 1996
Total revenues of $47.3 million increased $16.5 million, or 53.4%, in the
first six months of fiscal 1998, from $30.8 million in the first six months of
fiscal 1997, primarily due to acquisitions. Excluding the corporate housing
operations, total revenues increased $3.7 million, or 13.5%, in the first six
months of fiscal 1998 compared to the first six months of fiscal 1997.
Rental revenues of $23.6 million in the first six months of fiscal 1998
increased 19.2% from $19.8 million in the first six months of fiscal 1997,
driven by strong volume growth in the California markets and several midwestern
markets. The growth is partially attributable to furniture rental acquisitions
made during the second and third quarters of fiscal 1997.
Page 12
<PAGE>
Corporate housing revenues of $16.5 million in the first six months of
fiscal 1998 increased from $3.7 million in the first six months of fiscal 1997
due to acquisitions.
Sales revenues of $7.2 million decreased $0.2 million, or 2.0%, in the
first six months of fiscal 1998 from $7.4 million in the first six months of
fiscal 1997. This decrease is largely attributable to a drop in clearance sales,
however, new advertising programs are currently being rolled out which are
designed to reverse the trend.
Gross profit of $25.2 million in the first six months of fiscal 1998
increased $6.6 million, or 35.6%, from $18.6 million in the first six months of
fiscal 1997 and declined as a percentage of revenues to 53.4% from 60.4% over
the same period due to the higher mix of corporate housing revenues and the
lower margins associated with these revenues.
Operating expenses of $19.5 million in the first six months of fiscal
1998 increased 30.8% from $14.9 million in the first six months of fiscal 1997,
but, as a percentage of total revenues declined to 41.2% from 48.3% over the
same period due to the impact of corporate housing's lower operating expenses as
a percentage of sales.
As a result of the changes in revenues, gross profit and operating
expenses discussed above, operating income increased 54.3% to $5.8 million, or
12.2% of revenues in the first six months of fiscal 1998, from $3.7 million, or
12.1% of revenues in the first six months of fiscal 1997.
Interest/other expense increased $0.9 million to $1.4 million in the
first six months of fiscal 1998 from $0.5 million in the first six months of
fiscal 1997 and as a percentage of total revenues increased to 3.0% from 1.8%
over the same period. The increased expense for fiscal 1998 was due primarily to
higher debt balances than in the comparable period of fiscal 1997. The increase
in debt was driven by funding required for acquisitions.
Income before taxes of $4.3 million in the first six months of fiscal
1998 increased $1.2 million, or 36.1%, compared to the first six months of
fiscal 1997 and as a percentage of revenues decreased to 9.2% from 10.3% over
the same period primarily due to interest costs on higher loan balances in
fiscal 1998.
The Company's effective tax rate, which includes federal, state and
local taxes, remained flat at 39.0%.
LIQUIDITY AND CAPITAL RESOURCES
On September 29, 1997, the Company established a $30.0 million unsecured
line of credit which replaced an existing $45.0 million line of credit. Interest
rates for this revolving line of credit are based on a leverage formula, which
is currently the lesser of the prime rate minus 25 basis points or LIBOR plus
150 basis points. At September 30, 1997, the line of credit provided up to $30.0
million of financing for the Company which will be available for acquisitions
and general corporate purposes. The unused line of credit as of September 30,
1997 was $22.8 million.
The term of the line of credit will expire on September 30, 2000,
requiring full payment of the then outstanding balance. The Company expects to
have other financing arrangements in place prior to this date.
Page 13
<PAGE>
On September 29, 1997, the Company completed a private placement of
$30.0 million of unsecured 7.54% Senior Notes due September 1, 2007, with
interest payable semi-annually on March 1 and September 1. These Senior Notes
may be redeemed at a premium after one year.
From March 1997 through September 1997 Globe used approximately $5.7
million from its lines of credit and assumed certain liabilities in completing
three asset acquisitions and reaching a final settlement on contingent
consideration for a fiscal 1997 acquisition. (See note 2 to the consolidated
financial statements for further discussion of these acquisitions.)
The Company's principal use of cash is for furniture purchases. The
Company purchases furniture to replace furniture which has been sold and to
maintain adequate levels of rental furniture to meet existing and new customer
needs. Furniture purchases were $12.1 million in the first six months of fiscal
1998 and $15.1 million in the first six months of fiscal 1997. As the Company's
growth strategies are implemented, furniture purchases are expected to increase.
Capital expenditures were $2.5 million and $0.7 million in the first six
months of fiscal 1998 and 1997, respectively. The significant increase in fiscal
1998 is largely attributable to continued development of a new computer system
and construction of a new building in Indianapolis, Indiana. Costs to further
develop the computer system will be incurred in the next 12-18 months. These
expenses are anticipated to be approximately $0.7 million.
On March 13, 1997, Globe obtained a $1.5 million construction loan in
order to fund construction of the building in Indianapolis. The loan, which is
secured by real estate and the building, is due December 1, 1997. The Company
intends to replace this loan with permanent financing on December 1, 1997. At
September 30, 1997 one thousand was outstanding against the loan.
In the first six months of fiscal 1998 and 1997, net cash provided by
operations was $13.5 million and $9.8 million, respectively, generating $1.1 and
$6.1 million, respectively, less cash than was necessary to fund investing
activities (excluding acquisitions), thus requiring use of the Company's credit
facilities. Furniture purchases, which are typically seasonally weighted to the
first half of the year, are the primary reason for use of the credit facilities.
These purchases are expected to slow during the third and fourth quarters. Any
temporary cash deficiencies resulting from the seasonal nature of these
purchases will be funded via the line of credit. The Company expects cash flow
from operations plus the credit facilities to be sufficient to fund the
Company's needs for the foreseeable future.
Page 14
<PAGE>
PART II
ITEM 1
LEGAL PROCEEDINGS
None
ITEM 2
CHANGES IN SECURITIES
On June 5, 1997 the Company issued 2,500 shares of common stock to
Sonnen Schein, Inc., c/o Pamela J. Bayne as part of the final settlement for the
December 16, 1996 asset acquisition of Guest Suites, Inc.
These issuances were exempt from registration under the Securities Act
of 1933 pursuant to the exemptions from registration provided by Section 4(2) of
the Act.
ITEM 3
DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on July 22, 1997.
Each of the following matters was voted upon and approved by the Company's
shareholders as indicated below:
1. Elected the following directors:
a. David D. Hoguet, 4,364,056 votes for, 10,357 abstentions
b. Blair D. Neller, 4,364,056 votes for, 10,357 abstentions
c. Alvin Z. Meisel, 4,364,056 votes for, 10,357 abstentions
d. William R. Griffin, 4,364,056 votes for, 10,357 abstentions
e. Thomas C. Parise, 4,364,056 votes for, 10,357 abstentions.
2. Amended the Articles of Incorporation to increase the number of authorized
shares of Common Stock from ten million to fifteen million shares,
4,317,211 votes for, 44,677 votes against, 12,525 abstentions.
3. Adopted the Globe 1997 Stock Option and Incentive Plan, 3,876,762 votes
for, 478,320 votes against, 19,331 abstentions.
4. Adopted the Globe 1997 Directors Stock Option Plan, 4,281,272 votes for,
76,320 votes against, 16,821 abstentions.
5. Ratified the appointment of Price Waterhouse LLP as independent public
accountants for fiscal 1998, 4,360,731 votes for, 4,665 votes against,
9,017 abstentions.
Page 15
<PAGE>
ITEM 5
OTHER INFORMATION
None
ITEM 6
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Exhibits:
3(i) Amendment to Articles of Incorporation, filed herewith
10.8 1997 Stock Option and Incentive Plan*
10.9 1997 Directors Stock Option Plan*
10.10 Credit Agreement among the Registrant, The Fifth Third Bank and
PNC Bank dated as of September 29, 1997, filed herewith
10.11 7.54% Senior Notes due September 1, 2007 among the Registrant,
Security Life of Denver Insurance Company, Life Insurance Company
of Georgia, Peerless Insurance Company, Indiana Insurance Company
and Southland Life Insurance Company dated as of September 1,
1997, filed herewith
27 Financial Data Schedule
* Incorporated by reference to the definitive proxy statement
for the 1997 annual shareholders meeting.
(b) Reports on Form 8-K filed during the second quarter of 1998: None
Page 16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Globe Business Resources, Inc.
By: /s/Sharon G. Kebe
---------------------------------
Senior Vice President-Finance
and Treasurer
(Principal Financial Officer)
Signed: October 6, 1997
Page 17
AMENDMENT TO ARTICLES OF INCORPORATION
OF
GLOBE BUSINESS RESOURCES, INC.
Filed with the Secretary of State of Ohio on September 19, 1997
RESOLVED, that the first paragraph of Article Four of the Company's Restated and
Amended Articles of Incorporation be amended to read as follows:
"The maximum number of shares which the Company is authorized to have
outstanding is Fifteen Million One Hundred Thousand (15,100,000), of
which:
(1) Fifteen Million (15,000,000) shares of no par value are to
be Common Stock; and
(2) One Hundred Thousand (100,000) shares of no par value are
to be Preferred Stock."
CREDIT AGREEMENT
This Credit Agreement (the "Agreement") is entered into as of the 29thday of
September, 1997, by and among GLOBE BUSINESS RESOURCES, INC., an Ohio
corporation formerly known as and doing business as Globe Furniture Rentals
("Borrower"), THE FIFTH THIRD BANK, an Ohio banking corporation ("Fifth Third")
and PNC BANK, OHIO, NATIONAL ASSOCIATION, a national banking association
("PNC"), as lenders (collectively, the "Banks" and each a "Bank"), and THE FIFTH
THIRD BANK, in its capacity as Agent for the Banks (the "Agent").
W I T N E S S E T H :
Section 1. Definitions.
Certain capitalized terms have the meanings set forth on Exhibit 1 hereto. All
financial terms used in this Agreement but not defined on Exhibit 1 have the
meanings given to them by generally accepted accounting principles. All other
undefined terms have the meanings given to them in the Ohio Uniform Commercial
Code.
Section 2. Loans.
2.1. Revolving Credit Loans.
(a) Subject to the terms and conditions hereof, a line of credit
facility (the "Facility") is hereby established pursuant to which each Bank
hereby severally agrees to make revolving loans (the "Loans") to Borrower
at Borrower's request from time to time during the term of this Agreement
in an aggregate amount not to exceed $30,000,000 minus the face amounts
outstanding under any Letter(s) of Credit. Agent may create and maintain
reserves from time to time based on such credit considerations as Agent may
reasonably deem appropriate. Borrower may borrow, prepay and reborrow
hereunder, provided that the principal amount of all Loans outstanding at
any one time shall not exceed $30,000,000; if the amount of the Loans
outstanding at any time exceeds $30,000,000, Borrower shall immediately pay
the amount of such excess to Agent for the account of Banks in immediately
available funds. Loans will be made ratably by the respective Banks in
proportion to their respective Revolving Credit Commitment Percentages set
forth in Section 2.1 (b), and repayments of Loans shall be for the account
of the respective Banks in the same proportion (subject to the provisions
of this Agreement relating to Defaulting Banks).
(b) The Revolving Credit Commitment and Revolving Credit Commitment
Percentage of each Bank and the Total Revolving Credit Commitment are as
set forth below:
The Fifth Third Bank $20,000,000 66.67%
PNC Bank, Ohio, National Association $10,000,000 33.33%
Total Revolving Credit Commitment $30,000,000 100.00%
(c) If Agent advances to Borrower any portion of a Loan requested by
Borrower before the corresponding amount has been received by Agent from
the Bank which is to send such moneys to Agent, and Agent does not receive
the corresponding amount from the relevant Bank when due, then the relevant
Bank shall immediately pay such sum to Agent, with interest at the rate set
forth in Section 3.1 of this Agreement; and upon demand from Agent, but
without prejudice to Borrower's rights with respect to the relevant Bank,
Borrower shall repay to Agent the amount not paid to Agent by such Bank,
with interest at the rate applicable for Loans. If any Bank fails to make a
Loan to be made by it hereunder, no other Bank shall be responsible for
such failure or be required to advance such sum to Borrower.
(d) Borrower may request a Revolving Loan by utilizing the commercial
sweep, or by written or telephone notice to Agent. Agent will make
Revolving Loans by crediting the amount thereof to Borrower's account with
Agent. The proceeds of the Revolving Loans will be used for general working
capital and capital expenditures as permitted herein.
<PAGE>
(e) On the date hereof, Borrower will duly issue and deliver to each
Bank a Revolving Note in the form of Exhibits 2.1(e) (i) and (ii)
respectively (collectively the "Revolving Notes" and each a "Revolving
Note") in the principal amount of such Bank's Revolving Credit Commitment
and each Revolving Note shall bear interest as set forth in the respective
Revolving Notes.
(f) Advances made to Borrower under the Facility will be made first
under the Revolving Notes in proportional amounts based upon each Bank's
Revolving Credit Commitment Percentage.
(g) The Borrower shall have the right to prepay the indebtedness
represented by the Revolving Notes, in whole at any time or in part from
time to time, without premium or penalty.
(h) The term of the Facility will expire on September 30, 2000 and the
Revolving Notes will become payable in full on that date. So long as no
Event of Default has occurred and Borrower's consolidated financial
condition and business prospects have not deteriorated in any material
respect, Banks will, in good faith, consider renewing the term of the
Facility for additional periods beyond the original maturity date of the
Facility. However, if Borrowers meet the above-mentioned conditions, Banks
will be under no obligation to renew this Facility.
2.2 Letter of Credit Facility.
(a) Agent and Banks hereby agree to grant to Borrower a letter of
credit facility (the "Letter of Credit Facility") under which Borrower may,
from time to time, obtain standby letters of credit and commercial letters
of credit from Bank (the "Letters of Credit" and individually a "Letter of
Credit") in an aggregate amount not to exceed $500,000 outstanding at any
one time (the "Letter of Credit Facility"). The Letters of Credit shall be
in favor of such beneficiaries and for such purposes as an authorized
representative of Borrower specifies, shall have such expiration dates as
Agent and Borrower agree (provided that no Letters of Credit shall have a
term beyond September 30, 2000), and shall otherwise be in such form and
substance as Agent and Borrower agree. Borrower may be entitled to obtain
Letters of Credit from Agent only if (i) Borrower is then entitled to
obtain additional Loans from Agent pursuant to this Section 2.1 (a), and
(ii) the other conditions of this Agreement have been satisfied as if
Borrower was obtaining a Loan.
(b) Borrower agrees to pay to Agent for the pro-rata benefit of each
Bank, a non-refundable fee of one percent (1.00%) per annum of the amount
of each new standby Letter of Credit or each extension of the expiration
date of a standby Letter of Credit. Borrower agrees to pay Agent for the
pro-rata benefit of each Bank, a non-refundable fee for each new commercial
Letter of Credit or each extension of a commercial Letter of Credit based
upon Agent's Letter of Credit Fee Schedule to be delivered to Borrower from
time to time. The fee shall be payable on or before the issuance of each
Letter of Credit.
(c) Amounts equal to the then current face amount of all outstanding
Letters of Credit will be reserved from Borrower's availability under the
Facility. In the event that Agent pays any amount under or on account of a
Letter of Credit issued by it (the payment by Agent under or on account of
the Letter of Credit being herein called a "Draw"), advances shall be made
by Agent to Borrower from amounts available under the Facility in a total
amount equal to the amount of such Draw. Such advances shall be evidenced
by each Bank's Revolving Note in accordance with each Bank's Revolving
Credit Commitment. Borrower hereby irrevocably requests that such advances
be made from the proceeds of the Notes and irrevocably authorizes Agent to
apply the proceeds of such advances to immediately reimburse Agent for the
amount of the Draws.
(d) The obligations of Borrower to Agent and Banks under this
Agreement with respect to the Letters of Credit shall be absolute,
unconditional and irrevocable, and shall be paid and performed strictly in
accordance with the terms of the Agreement, under all circumstances
whatsoever.
(e) Prior to the date of issuance of any Letter of Credit, Borrower
agrees to execute a Letter of Credit Application for each Letter of Credit
(the "Applications"). The obligations of Borrower with respect to each
Letter of Credit shall include the terms of the application for such Letter
of Credit and any other documentation executed between Agent and Borrower
with respect to such Letters of Credit.
<PAGE>
2.3 Adjustments.
(a) On each Settlement Date, Agent will determine the Settlement
Amount and notify Banks of the amount thereof. On the next succeeding
business day either (i) each Bank will pay Agent the amount of any increase
in the Settlement Amount from the last Settlement Date, or (ii) Agent will
pay Banks the amount of any decrease in the Settlement Amount from the last
Settlement Date.
(b) On the first business day after Agent receives from Borrower (i)
any payment of interest, (ii) the Commitment Fee (as defined in Section
4.2), (iii) any payment of the Unused Facility Fee, or (iv) any payment of
any Letter of Credit fees, Agent shall remit to each Bank its pro-rata
share of such payments.
(c) Each statement rendered by Agent in respect of payments made or
funds remitted from Agent to Banks and from Banks to Agent will be final
and binding on Banks, absent manifest error thereon, unless such Bank
notifies Agent of any error within 120 days after the date when each such
statement is mailed or otherwise delivered to Bank.
(d) If any payment received by Agent is rescinded or otherwise
required to be returned by Agent to or for the benefit of Borrower for any
reason, Agent will not be required to remit any portion thereof to Banks,
and, if Agent has remitted any portion thereof to Banks, Banks will, upon
notice by Agent, immediately pay to Agent the amount of such payment
remitted to such Bank by Agent, together with interest at such rate, if
any, as Agent is required to pay thereon.
2.4 Use of Proceeds. The proceeds of the Loans will be used to repay
indebtedness of Borrower owed to Banks and Key Bank, N.A ("Key") under that
certain Amended and Restated Credit Agreement, dated December 16, 1996 (the
"Prior Financing"). However notwithstanding the foregoing, Banks currently have
LIBOR contracts which will not expire prior to the execution of this Agreement
and at the request of Borrower, Banks are willing to purchase certain LIBOR
contracts of the Banks (but not those of Key) prior to the occurrence thereof
with the proceeds of the Loans thereby insuring that such contracts may continue
through their stated maturity. Borrower shall identify which LIBOR contracts
that they wish to continue and which should be paid prior to their maturity .
3. OTHER LOAN TERMS.
3.1 Defaulting Bank. In the event that, at any time, any Bank shall be a
Defaulting Bank, (a) a Defaulted Amount owed to Agent or another Bank shall bear
interest at an annual rate equal to the Federal Funds Rate for the first three
business days such Defaulted Amount is owing, and thereafter at a rate of 3%
above the Federal Funds Rate, and (b) Agent may apply all monies that would
otherwise be payable to the Defaulting Bank under the Loan Documents instead to
the payment of any Defaulted Amounts owed to the following persons, in the
following order of priority: first to Agent, then to the Banks, then to
Borrower. In addition, a Person owed a Defaulted Amount may exercise all
available remedies to collect such Defaulted Amount from the Defaulting Bank.
3.2 Additional Banks.
(a) With the prior written consent of all Banks, one or more
additional Persons (other than a Competitor of Borrower) may become Banks
under this Agreement in order to increase the Revolving Credit Commitments
or replace a portion of the Loans and the commitments of any Bank, subject
to the following conditions:
(i) Each prospective Bank shall duly authorize, execute and
deliver to Agent an addendum to this Agreement in which such Person
becomes a party to this Agreement and all Loan Documents to which the
Banks are parties, makes the undertakings made by Banks herein, and
agrees to perform all its obligations as a Bank under this Agreement
and all such documents and be bound by the term of this Agreement and
all such documents; and
(ii) Borrower shall duly authorize, execute and deliver to Agent
such addendum and authorize, execute and deliver to the prospective
Bank a Revolving Note in a maximum principal amount equal to the
Revolving Credit Commitment amount of such prospective Bank and if
applicable execute and deliver to the Bank reducing its Revolving
Credit Commitment an amended and restated Revolving Note.
<PAGE>
(b) At any time during the term hereof, without the prior consent of
the other Banks or Agent, each Bank may sell to any Person which is not
related to such Bank, an interest in the Loans and such Bank's Revolving
Credit Commitment, in a minimum amount of $2,000,000, provided such Person
is not a Competitor of Borrower and possesses assets at least equal to
$1,000,000,000 and provided the selling Bank notifies the Agent and the
other Banks in writing prior to the date of such transfer. Such right may
be exercised by each Bank only once during the term hereof. Borrower agrees
to execute any additional Revolving Notes, such amendments to this
Agreement and any amended and restated Revolving Notes as may be required
to properly evidence such sale and transfer.
(c) At any time during the term hereof, without the prior consent of
the other Banks or Agent, each Bank may sell to any bank which is wholly
owned by such Bank or is wholly owned by the corporation owning all of the
outstanding common capital stock of such selling Bank, an interest in the
Loans and such Bank's Revolving Credit Commitment, in a minimum amount of
$2,000,000, provided such Bank possesses assets of at least $1,000,000,000
and provided the selling Bank notifies the Agent and the other Banks in
writing prior to the date of such transfer. Borrower agrees to execute any
additional Revolving Notes, such amendments to this Agreement and any
amended and restated Revolving Notes as may be required to properly
evidence such sale and transfer.
(d) At any time during the term hereof, each Bank may sell
participation interests to other Persons (other than a Competitor of
Borrower) with the prior written consent of the Agent and the other Banks.
(e) Agent agrees that, during the term hereof, the Revolving Credit
Commitment Percentage of the Agent shall at all times be at least equal to
the lesser of (i) $9,000,000 of the Facility or (ii) 20% of the aggregate
amount of all of the Revolving Credit Commitments of all Banks.
Notwithstanding the foregoing, Agent may participate its Revolving Credit
Commitment and Revolving Credit Commitment Percentage to Fountain Square
Commercial Funding Corporation without transferring any of its
responsibilities or obligations as Agent.
When the conditions set forth in paragraphs (a), (b) (c) or (d) have been
fulfilled, the prospective Bank shall become a Bank for all purposes and Agent
shall issue to Borrower and Bank a written statement indicating the amount of
the Revolving Credit Commitment of each Bank and the Revolving Credit Commitment
Percentage of each Bank, including the prospective Bank, and stating that date
of which such conditions were fulfilled. On the date such new Person becomes a
Bank, it shall fund Loans equal to its Revolving Credit Commitment Percentage of
Loans outstanding on that date.
Section 4. Fees.
4.1 Unused Facility Fee. Borrower shall pay to Agent for the pro rata
account of Banks (based on each Bank's Revolving Credit Commitment Percentage)
an amount equal to .20% per annum of that portion of the Facility that is not
outstanding on each day (the "Unused Facility Fee"), which will be payable on
the first (1st) day of each calendar month in arrears for the previous calendar
month with a final payment on the termination of this Agreement.
4.2 Commitment Fee. On the execution date of this Agreement, Borrower shall
pay to Agent for the pro rata account of Banks a closing fee in the amount of
$75,000 (the "Commitment Fee").
Section 5. Representations And Warranties.
In order to induce Agent and Banks to enter into this Agreement, Borrower
hereby makes on its own behalf and on behalf of each of the Restricted
Subsidiaries the following representations and warranties to Agent and Banks:
5.1 Organization and Qualification. Borrower and each Restricted Subsidiary
is a duly organized, validly existing corporation or limited liability company,
as applicable, in good standing or with active status under the laws of the
State of their organization. Borrower has the power and authority (corporate and
otherwise) to carry on its business and to enter into and perform this
Agreement, the Notes and the other Loan Documents, is qualified and licensed to
do business in each jurisdiction in which such qualification or licensing is
required and in which the failure to be so qualified would have a material
adverse effect on the Borrower taken as a whole. The historical information
provided by or on the behalf of Borrower and each Restricted Subsidiary to Agent
and Banks with respect to Borrower and each Restricted Subsidiary and its
respective operations is true and correct in all material respects.
<PAGE>
5.2. Due Authorization. The execution, delivery and performance by Borrower
of this Agreement, the Notes and the other Loan Documents have been duly
authorized by all necessary corporate action, and will not contravene any law or
any governmental rule or order binding on Borrower, or the articles of
incorporation or code of regulations or bylaws of Borrower, nor violate any
material agreement or instrument by which Borrower is bound nor result in the
creation of a Lien on any assets of Borrower except the Lien to Agent for the
benefit of Banks herein. Borrower has duly executed and delivered this
Agreement, the Notes and the other Loan Documents and they are valid and binding
obligations of Borrower enforceable according to its respective terms except as
limited by equitable principles and by bankruptcy, insolvency or similar laws
affecting the rights of creditors generally.
5.3. Litigation. Except as set forth in Schedule 5.3 attached hereto, there
are no suits or proceedings pending or, to the knowledge of Borrower, threatened
against or affecting Borrower or any Restricted Subsidiary, and no proceedings
before any governmental body are pending or threatened against Borrower or any
Restricted Subsidiary.
5.4 Margin Stock. No part of the Loans will be used to purchase or carry,
or to reduce or retire or refinance any credit incurred to purchase or carry,
any margin stock (within the meaning of Regulations U and X of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any margin stock. If requested by Bank,
Borrower will and will cause each Restricted Subsidiary to furnish to Bank
statements in conformity with the requirements of Federal Reserve Form U-1.
5.5 Business. Borrower is not nor is any Restricted Subsidiary a party to
or subject to any agreement or restriction which in the opinion of Borrower's or
such Restricted Subsidiary's management is so unusual or burdensome that it
might have a material adverse effect on Borrower's or such Restricted
Subsidiary's business, properties or prospects.
5.6 Licenses, etc. Borrower has and each Restricted Subsidiary has obtain
any and all material licenses, permits, franchises, governmental authorizations,
patents, trademarks, copyrights or other rights necessary for the ownership of
its properties and the advantageous conduct of its business, as conducted by
Borrower and each Restricted Subsidiary on the date hereof. Borrower possesses
and each Restricted Subsidiary possesses adequate licenses, patents, patent
applications, copyrights, trademarks, trademark applications, and trade names to
continue to conduct its business as heretofore conducted by it, without any
conflict with the rights of any other Person or entity, except as set forth in
Schedule 5.6 attached hereto. All of the foregoing are in full force and effect
and none of the foregoing are in known conflict with the rights of others,
except as set forth in Schedule 5.6.
5.7 Laws and Taxes. Borrower is and each Restricted Subsidiary is in
compliance in all material respects with all laws, regulations, rulings, orders,
injunctions, decrees, conditions or other requirements applicable to or imposed
upon Borrower or such Restricted Subsidiary by any law or by any governmental
authority, court or agency. Borrower has and each Restricted Subsidiary has file
all required tax returns and reports that are now required to be filed by it in
connection with any federal, state and local tax, duty or charge levied,
assessed or imposed upon Borrower each Restricted Subsidiary or its assets,
including unemployment, social security, and real estate taxes. Except as set
forth in Schedule 5.7 attached hereto, Borrower has and each Restricted
Subsidiary has paid all taxes which are now due and payable. Except as set forth
in Schedule 5.7 attached hereto, no taxing authority has asserted or assessed
any additional tax liabilities against Borrower or any Restricted Subsidiary
which are outstanding on the date of this Agreement.
<PAGE>
5.8 Financial Condition.
(a) Taken as a whole, the historical financial information relating to
the Borrower and its Restricted Subsidiaries (excluding projections,
forecasts and other forward-looking information) (the "Financial
Information") which has been or which may hereafter be delivered by the
Borrower (or on its behalf) to Agent and Banks is true and correct in all
material respects. All Financial Information in the form of annual,
quarterly or monthly financial statements has been prepared in accordance
with generally accepted accounting principles consistently applied (except
as noted in the notes to such financial statements). Borrower has no
material obligations or liabilities nor has any Restricted Subsidiary have
any material obligations or liabilities of any kind required to be set
forth in audited annual financial statements (or notes thereof) that are
not disclosed in the Financial Information (considered as a whole). There
has been no material adverse change in the financial condition of Borrower
or any of its Restricted Subsidiaries nor has Borrower or any of its
Restricted Subsidiaries suffered any damage, destruction or loss which has
materially adversely affected its business or assets since the submission
of the most recent Financial Information to Bank.
(b) The projections, forecasts and other forward-looking information
prepared by Borrower and its Restricted Subsidiaries and delivered to Agent
and Banks (i) have been prepared in good faith, (ii) are reasonable
extrapolations of Borrower's and its Restricted Subsidiaries' predicted
operations and performance for the periods set forth therein based upon
reasonable assumptions, existing conditions and past performance, and (iii)
reflect Borrower's and the Restricted Subsidiaries actual subjective
expectations for its operations and performance for the periods represented
therein.
5.9 Title. Borrower has and each Restricted Subsidiary has good and
marketable title to the assets reflected on the most recent balance sheet
submitted to Bank, free and clear from all liens and encumbrances of any kind,
except for (collectively, the "Permitted Liens"): (a) current taxes and
assessments not yet due and payable, (b) liens and encumbrances, if any,
reflected or noted on such balance sheet or notes thereto, (c) assets disposed
of in the ordinary course of business, (d) liens granted by Borrower or its
Restricted Subsidiaries under purchase money financing arrangements for the
purchase of real property and/or equipment reasonably required to conduct its
business in the ordinary course; (e) as set forth in Schedule 5.9 attached
hereto; and (f) Liens imposed by law which secure amounts not at the time due
and payable
5.10 Defaults. Borrower is and each Restricted Subsidiary is in compliance
with all material agreements applicable to it and there does not now exist any
default or violation by Borrower or any Restricted Subsidiary or under any of
the terms, conditions or obligations of (a) its Articles of Incorporation,
By-Laws or the Code of Regulations, Articles of Organization or Operating
Agreement, as applicable or (b) any material indenture, mortgage, deed of trust,
franchise, permit, contract, agreement or other material instrument to which
Borrower or any Restricted Subsidiary is a party or by which it is bound, and
the consummation of the transactions contemplated by this Agreement will not
result in such default or violation.
5.11 Environmental Laws.
(a) Borrower has and each Restricted Subsidiary has obtained all
permits, licenses and other authorizations or approvals which are required
under Environmental Laws and Borrower is in compliance in all material
respects with all terms and conditions of the required permits, licenses,
authorizations and approvals, and is also in compliance in all material
respects with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained
in the Environmental Laws.
(b) Borrower is not nor is any Restricted Subsidiary aware of, nor has
any such entity received notice of, any past, present or future events,
conditions, circumstances, activities, practices, incidents, actions or
plans which may interfere with or prevent compliance or continued
compliance, in any material respect, with Environmental Laws, or may give
rise to any material common law or legal liability, or otherwise form the
basis of any material claim, action, demand, suit, proceeding, hearing,
study or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling or
the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, chemical, or industrial, toxic
or hazardous substance or waste.
<PAGE>
(c) There is no civil, criminal or administrative action suit, demand,
claim, hearing, notice or demand letter, notice of violation, investigation
or proceeding pending or threatened against Borrower or any Restricted
Subsidiary, relating in any way to Environmental Laws.
5.12 Subsidiaries and Partnerships. Except as set forth in Schedule 5.12
attached hereto, Borrower has no subsidiaries and Borrower is not a party to any
partnership agreement or joint venture greement.
5.13 ERISA. Except as set forth in Schedule 5.13 attached hereto, Borrower
and all Subsidiaries, individuals or entities along with Borrower would be
treated as a single employer under ERISA or the Internal Revenue Code of 1986,
as amended (an "ERISA Affiliate"), are in compliance in all material respects
with all of its obligations to contribute to any "employee benefit plan" as that
term is defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, and any regulations promulgated thereunder from time to time ("ERISA").
Except as set forth in Schedule 5.13 attached hereto, Borrower and each of its
ERISA Affiliates are in compliance in all material respects with ERISA, and
there exists no event described in Section 4043(b) thereof ("Reportable Event").
Section 6. Affirmative Covenants.
6.1 Books and Records. Borrower will and will cause each of its Restricted
Subsidiaries to maintain proper books of account and records and enter therein
complete and accurate entries and records of all of its material transactions in
accordance with generally accepted accounting principles and give
representatives of Agent and Banks access thereto at all reasonable times,
including permission to examine, copy and make abstracts from any such books and
records and such other information which might be helpful to Agent and Banks in
evaluating the status of the Loans as it may reasonably request from time to
time.
6.2 Financial Statements. Borrower will and will cause each of its
Restricted Subsidiaries to maintain a standard and modern system for accounting
and will furnish to Agent and Banks:
(a) Within thirty (30) days after the end of each month, a copy of
Borrower's and each Restricted Subsidiaries' consolidating and consolidated
basis financial statements for that month and for the year to date in a
form reasonably acceptable to Bank, prepared and certified as complete and
correct in all material respects, subject to changes resulting from
year-end adjustments, by the principal financial officer of Borrower and
each Restricted Subsidiary;
(b) Within ninety (90) days after the end of each fiscal year, a copy
of Borrower's consolidating and consolidated financial statements for that
year audited by a firm of independent certified public accountants
acceptable to Agent and Banks (which acceptance will not be unreasonably
withheld), and accompanied by a standard audit opinion of such accountants
without qualification;
(c) With the statements submitted under (b) above, a certificate
signed by the principal financial officer of Borrower and each Restricted
Subsidiary, (i) stating he is familiar with all documents relating to Agent
and Banks and that no Event of Default specified in this Agreement, nor any
event which upon notice or lapse of time, or both would constitute such an
Event of Default, has occurred, or if any such condition or event existed
or exists, specifying it and describing what action Borrower or such
Restricted Subsidiary has taken or proposes to take with respect thereto,
and (ii) setting forth, in summary form, figures showing the financial
status of Borrower and its Restricted Subsidiaries in respect of the
financial restrictions contained in this Agreement;
(d) Prior to the end of each fiscal year, on a consolidated and
consolidating basis, a projected balance sheet, projected income statement
and projected statement of cash flow for the subsequent fiscal year
prepared, to the extent applicable, in accordance with generally accepted
accounting principles consistently applied;
(e) Within three (3) days after an officer of Borrower or any
Restricted Subsidiary obtains knowledge of any condition or event which
constitutes or, after notice or lapse of time or both, constitutes an Event
of Default, a certificate of such person specifying the nature and period
of the existence thereof, and what action Borrower or such Restricted
Subsidiary has taken or is taking or proposes to take in respect thereof;
<PAGE>
(f) Upon request, copies of all federal, state and local income tax
returns and such other information as Agent and Banks may reasonably
request; and
(g) All Securities and Exchange Commission filings.
If at any time Borrower has any additional Subsidiaries which have financial
statements that must be consolidated with those of Borrower under generally
accepted accounting principles, the financial statements required by subsections
(a) and (b) above will be the financial statements of Borrower and all such
subsidiaries prepared on the basis required under subsections (a) and (b) above.
Each of the Banks agree to keep Borrower's and each Restricted Subsidiaries'
financial statements confidential and will not permit such information to be
disclosed other than in accordance each Bank's standard policies and procedures
with regard to the financial information of their commercial customers.
6.3 Condition and Repair. Borrower will and will cause each Restricted
Subsidiary to maintain its assets, taken as a whole, in good repair and working
condition (making allowances for obsolescence in the ordinary course and normal
wear and tear) and will make all appropriate repairs or replacements thereof.
6.4 Insurance. Borrower will and will cause each Restricted Subsidiary to
insure its properties and business against loss or damage of the kinds and in
the amounts customarily insured against by corporations with established
reputations engaged in the same or similar business as Borrower and each
Restricted Subsidiary. All such policies will (a) be issued by financially sound
and reputable insurers, (b) name Agent as an additional insured and, where
applicable, as loss payee under a lender loss payable endorsement satisfactory
to Agent, and (c) will provide for thirty (30) days written notice to Agent
before such policy is altered or canceled all of which will be evidenced by a
Certificate of Insurance delivered to Bank by Borrower and each Restricted
Subsidiary on the date of execution of this Agreement.
6.5 Taxes. Borrower will and will cause each Restricted Subsidiary to pay
when due all taxes, assessments and other governmental charges imposed upon it
or its assets, franchises, business, income or profits before any penalty or
interest accrues thereon, and all claims (including, without limitation, claims
for labor, services, materials and supplies) for sums which by law might be a
lien or charge upon any of its assets, provided that (unless any material item
or property would be lost, forfeited or materially damaged as a result thereof)
no such charge or claim need be paid if it is being diligently contested in good
faith, if Agent is notified in advance of such contest and if Borrower and/or
such Restricted Subsidiary establishes an adequate reserve or other appropriate
provision required by generally accepted accounting principles.
6.6 Existence; Business. Borrower will and will cause each Restricted
Subsidiary (a) subject to Section 7.3 of this Agreement, to maintain its
existence, (b) engage primarily in business of the same general character as
that now conducted, and (c) refrain from entering into any lines of business
substantially different from the business or activities in which Borrower and/or
such Restricted Subsidiary is presently engaged.
6.7 Compliance with Laws. Borrower will and will cause each Restricted
Subsidiary to comply in all material respects with all federal, state and local
laws, regulations and orders applicable to Borrower and such Restricted
Subsidiary or its assets, including but not limited to all Environmental Laws,
and will promptly notify Agent of any violation of any rule, regulation,
statute, ordinance, order or law relating to the public health or the
environment and of any complaint or notifications received by Borrower or any
Restricted Subsidiary regarding to any environmental or safety and health rule,
regulation, statute, ordinance or law.
<PAGE>
6.8 Notice of Default. Borrower will and will cause each Restricted
Subsidiary, within three (3) days of its knowledge thereof, TO give written
notice to Agent and Banks of (a) the occurrence of any event or the existence of
any condition which would be, after notice or lapse of applicable grace periods,
an Event of Default, and (b) the occurrence of any event or the existence of any
condition which would prohibit Borrower or such Restricted Subsidiary from
continuing to make the representations set forth in this Agreement.
6.9 Costs. Borrower will pay to Agent and Banks its fees, reasonable out of
pocket costs and expenses (including, without limitation, reasonable attorneys'
fees, other professionals' fees, appraisal fees, environmental assessment fees
(including Phase I assessments), expert fees, court costs, litigation and other
expense) (collectively, "Costs") reasonably incurred or paid by Agent and Banks
in connection with the negotiating, documenting, administering and enforcing the
Facility, the Loans and the Loan Documents and the defense, preservation and
protection of Bank's rights and remedies thereunder, whether incurred in
bankruptcy, insolvency, foreclosure or other litigation or proceedings or
otherwise. The Costs will be due and payable within three (3) business days
after demand by Agent. If Borrower fails to pay the Costs when upon such demand,
Agent is entitled to disburse such sums as an advance under the Facility.
Thereafter, the Costs will bear interest from the date incurred or disbursed at
the highest rate set forth in the Notes. This provision will survive the
termination of this Agreement and/or the repayment of any amounts due or the
performance of any Obligation.
6.10 Depository/Banking Services. So long as this Agreement is in effect,
Agent will be the principal depository in which substantially all of Borrower's
funds are deposited, and the principal bank of account of Borrower.
6.11 Other Amounts Deemed Loans. If Borrower or any Restricted Subsidiary
fails to pay any tax, assessment, governmental charge or levy or to maintain
insurance within the time permitted or required by this Agreement, or to
discharge any Lien prohibited hereby, or to comply with any other Obligation,
Bank may, but shall not be obligated to, pay, satisfy, discharge or bond the
same for the account of Borrower or such Restricted Subsidiary, and to the
extent permitted by law and at the option of Bank, all monies so paid by Bank on
behalf of Borrower or such Restricted Subsidiary will be deemed Loans and
Obligations.
6.12 Change in Control of Borrower. Throughout the term of this Agreement
and so long as any of the Obligations remain outstanding, David D. Hoguet, Blair
D. Neller and Alvin Z. Meisel shall beneficially own not less than 20%, in the
aggregate, of the outstanding common stock of Borrower. Throughout the term of
this Agreement and so long as any of the Obligations remain outstanding,
Borrower shall own not less than 94% of the outstanding common stock of GranTree
Corporation and shall not own less than a 99% membership interest in Interim
Quarters Ltd.
Section 7. Negative Covenants.
7.1 Pledge or Encumbrance of Assets. Other than the Permitted Liens and
Liens granted by Borrower or any Restricted Subsidiary under purchase money
financing arrangements for the purchase of real property and/or equipment
reasonably required to conduct its business in the ordinary course, Borrower
will not and will not permit any Restricted Subsidiary to create, incur, assume
or permit to exist, arise or attach any Lien in any present or future asset,
Liens existing on the date of this Agreement which have been disclosed to and
approved by Agent as set forth in Schedule 5.9 attached hereto and Liens imposed
by law which secure amounts not at the time due and payable.
7.2 Capital Stock; Dividends. Except as provided herein or in connection
with acquisitions otherwise permitted under Section 7.3 of this Agreement or in
connection with a subsequent public offering of stock, Borrower will not and
will not permit any Restricted Subsidiary, after the execution date of this
Agreement, to issue any additional shares of its capital stock, grant any
warrants, options or other rights to purchase such stock; provided, however,
that Borrower may issue stock dividends and grant options to employees to
acquire not more than 15% of Borrower's outstanding capital stock and may issue
shares of capital stock if and when such options are exercised.. Borrower will
not and will not permit any Restricted Subsidiary (a) to declare or pay any
dividend or distributions (except stock dividends) on its capital stock (b)
except as set forth in Schedule 7.9 attached hereto, make any payments of any
kind to its shareholders (including, without limitation, debt repayments,
payments for goods or services or otherwise, but excluding ordinary salary and
bonus payments to shareholders employed by Borrower or any Restricted
Subsidiary) or (c) redeem any shares of its capital stock in any fiscal year.
Notwithstanding the above, provided there are no Events of Default and one would
not arise as a result of such payment, Borrower may pay dividends or
distributions on its capital stock or repurchase shares of its capital stock so
long as the aggregate amount of such payments and/or purchases is not in excess
of $2,000,000 in any fiscal year of Borrower and its Restricted Subsidiaries.
Any portion of such $2,000,000 which is not utilized in any fiscal year ending
February 28, shall be available for utilization during the next fiscal year (in
addition to the $2,000,000 available to Borrower and its Restricted Subsidiaries
during such year).
<PAGE>
7.3 Merger; Disposition of Assets. Except for a merger and/or a transfer of
assets by and between Borrower and any of its Restricted Subsidiaries, Borrower
will not nor will it permit any Restricted Subsidiary, after the execution date
of this Agreement, (a) to change its capital structure, except as permitted in
this Agreement, (b) to merge or consolidate with any corporation or purchase all
or any substantial part of the assets of any corporation, (c) to amend or change
its Articles of Incorporation, Code of Regulations or By-Laws, Articles of
Organization or Operating Agreement or (d) sell, transfer or otherwise dispose
of all or any substantial part of its assets, other than in the ordinary course
of business, whether now owned or hereafter acquired.
Notwithstanding the foregoing Borrower may, without the prior consent of
Banks, (i) purchase substantially all of the assets of another corporation,
partnership, company or other entity, (ii) purchase stock or other ownership
interest in another entity, (iii) merge with another corporation or have another
entity merged into it, provided that Borrower comply with each of the following
conditions:
(1) the entity whose assets or ownership is to be acquired is engaged
in substantially the same business as that engaged in by the Borrower;
(2) no Event of Default has occurred under this Agreement nor will an
Event of Default occur hereunder as a result of such acquisition or
merger;;
(3) Borrower has availability under the Facility; and
(4) no event of default has occurred under the Term Loan Agreement.
7.4 Investments. Other than Borrower's ownership of (i) GranTree
Corporation capital stock, (ii) the capital stock of Globe Furniture Rentals,
Inc. (incorporated on February 21, 1996), (iii) the membership interest of
Interim Quarters Ltd., (iv) the Corporate Stay International, Inc. capital
stock; and (v) as permitted under Section 7.3 of this Agreement, Borrower will
not purchase or hold beneficially any stock, securities or evidences of
indebtedness of, or make any investment or acquire any interest in, any other
firm, partnership, corporation or entity other than short term investments of
excess working capital in one or more of the following: (a) investments (of one
year or less) in direct or guaranteed obligations of the United States, or any
agencies thereof; and (b) investments (of one year or less) in certificates of
deposit of banks or trust companies organized under the laws of the United
States or any jurisdiction thereof, provided that such banks or trust companies
are insured by the Federal Deposit Insurance Corporation and have capital in
excess of $25,000,000.
7.5 Financial Covenants. The following calculations under this Section 7.5
are to be based on Generally Accepted Accounting Principles (GAAP) as in effect
as of Borrower's and each Restricted Subsidiaries' fiscal year ending February
28, 1997. Should there be any GAAP changes reflected on the future financial
statements of Borrower or any Restricted Subsidiary, Borrower and such
Restricted Subsidiary may provide Agent and Banks with the adjusting entries to
convert such future financial statements to a GAAP presentation consistent with
that in effect as of February 28, 1997, and such adjusting entries shall be
delivered with the financial statements as set forth in Section 6.2 of this
Agreement.
(a) Consolidated Net Worth. Borrower will not permit its Consolidated
Net Worth, , to be less than $28,000,000 plus fifty (50%) of Borrower's
Consolidated Net Income (but, in each case, only if a positive number)
calculated on a cumulative basis commencing with the quarter ending August
31, 1997, and measured as of the last day of each fiscal quarter
thereafter.
(b) Fixed Charge Coverage Ratio. Borrower will not permit its ratio of
Consolidated Cash Flow Available for Fixed Charges for the immediately
preceding four consecutive fiscal quarters to Consolidated Fixed Charges
for the immediately preceding four fiscal quarters to be less than 1.95 :
1.00
<PAGE>
(c) Senior Funded Debt. Borrower will not permit its ratio of Senior
Funded Debt to EBITDA, on a consolidated basis, to be greater than 2.75 :
1.00 at the end of each fiscal quarter commencing August 31, 1997 which
ratio shall be calculated on a rolling four quarter basis.
Total Debt. Borrower will not permit ratio of Total Debt to EBITDA, to
be greater than 3.75 : 1.00 for the immediately preceding four consecutive
fiscal quarters; provided that, in the event that Borrower or any
Restricted Subsidiary acquires all of the capital stock or substantially
all of the assets of any other Person (in accordance with Section 7.3 of
this Agreement), the Borrower may include the EBITDA of such Person for the
prior four fiscal quarters in calculating the EBITDA of the Borrower
pursuant to this paragraph .
The Borrower will not permit any Restricted Subsidiary at any time, to
create, assign, incur, guaranty or otherwise permit to exist any Debt other
than:
(i) existing Debt described in Schedule 7.5(c);
(ii) Debt owed by a Wholly-Owned Restricted Subsidiary to
Borrower or another Wholly-Owned Restricted Subsidiary;
(iii) Debt of Restricted Subsidiaries created after the execution
date of this Agreement not to exceed, in the aggregate at any time
outstanding the greater of (i) 5%of the sum of Consolidated Funded
Debt and Consolidated Net Worth or (ii) $5,000,000, as of the last day
of the immediately preceding fiscal quarter; and
(iv) any extension, renewal, refunding or replacement of any Debt
described in paragraph (i) of this Section 7.5(c); provided that (1)
no such extension, renewal or refunding shall increase the principal
amount of such Debt and (2) immediately after such extension, renewal
or refunding, no default or Event of Default would exist.
(d) Current Ratio. Borrower will not permit its Consolidated Current Ratio,
to be less than 3.00 : 1.00 as of the end of each fiscal quarter during the term
of this Agreement.
Section 8. Events of Default and Remedies.
8.1 Events of Default. Any of the following events will be an Event of
Default ("Event of Default"):
(a) any representation or warranty made by or on behalf of Borrower or
any Restricted Subsidiary herein or in any of the Loan Documents is
incorrect when made or reaffirmed; provided however, Borrower shall have a
period of thirty (30) days in which to cure an Event of Default which
occurs under Sections 5.3, 5.6 or 5.11(b) and (c) of this Agreement; or
(b) Borrower defaults in the payment of any principal or interest on
any Obligation when due and payable, by acceleration or otherwise and such
nonpayment remains uncured for a period of five (5) days thereafter; or
(c) Borrower fails to observe or perform any covenant, condition or
agreement herein and fails to cure such default within 30 days of the
occurrence thereof, provided such 30 day grace period will not apply to
Sections 7.2, 7.3 and 7.5 of this Agreement; or
<PAGE>
(d) a court enters a decree or order for relief with respect to
Borrower or any Restricted Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency or other similar law then in effect, or
appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of Borrower or any Restricted Subsidiary or for
any substantial part of its property, or orders the wind-up or liquidation
of its affairs; or a petition initiating an involuntary case under any such
bankruptcy, insolvency or similar law is filed and is pending for sixty
(60) days without dismissal; or
(e) Borrower or any Restricted Subsidiary commences a voluntary case
under any applicable bankruptcy, insolvency or other similar law in effect,
or makes any general assignment for the benefit of creditors, or fails
generally to pay its debts as such debts become due, or takes corporate
action in furtherance of any of the foregoing; or
(f) Borrower or any Restricted Subsidiary defaults under the terms of
any Indebtedness for borrowed money or lease involving total payment
obligations of Borrower or any Restricted Subsidiary in excess of $300,000,
other than non-payment defaults, and such default gives any creditor or
lessor the right to accelerate the maturity of any such indebtedness or
lease payments; or
(g) final judgment of the payment of money in excess of $100,000 is
rendered against Borrower or any Restricted Subsidiary and remains
undischarged for thirty (30) days during which execution is not effectively
stayed; or
(h) an Event of Default or default (after giving effect to any
applicable cure or grace period) occurs under any of the Loan Documents; or
(i) the dissolution of Borrower; or
(j) the commencement of any foreclosure proceedings, proceedings in
aid of execution, attachment actions, levies against, or the filing by any
taxing authority of a lien against Borrower's or any Restricted
Subsidiary's personal property; or
(k) the loss, theft or substantial damage to Borrower's or any
Restricted Subsidiary's personal property if the result of such occurrence
will be, in Agent's reasonable judgment, the failure or inability of
Borrower or such Restricted Subsidiary to continue substantially normal
operation of its business within thirty (30) days of the date of such
occurrence.
(l) Agent ceases to be Borrower's (i) principal depository bank in
which substantially all of Borrower's funds are deposited, and (ii)
principal bank of account.
(m) (i) the validity or effectiveness of any of the Loan Documents or
its transfer, grant, pledge, mortgage, or assignment by the party executing
such Loan Document is impaired in any material respect; (ii) Borrower
asserts that any Loan Document executed by it is not a legal, valid and
binding obligation of it enforceable in accordance with its terms; or (iii)
any Loan Document is amended, hypothecated, subordinated, terminated or
discharged, or if any person is released from any of its covenants or
obligations under any of the Loan Documents, except as permitted by Agent
and Banks in writing; or
(n) a Reportable Event (as defined in ERISA) occurs with respect to
any employee benefit plan maintained by Borrower or any Restricted
Subsidiary for its employees other than a Reportable Event caused solely by
a decrease in employment; or a trustee is appointed by a United States
District Court to administer any employee benefit plan; or the Pension
Benefit Guaranty Corporation institutes proceedings to terminate any of
Borrower's or any Restricted Subsidiary's employee benefit plans; or
<PAGE>
(o) other than as set forth in Sections 5.9, the filing of any lien or
charge against Borrower's or any Restricted Subsidiary's personal property
or any part thereof regarding indebtedness in excess of $100,000, which is
not removed to the satisfaction of Agent and Banks within a period of 45
days thereafter, or any lien or charge against Borrower's or any Restricted
Subsidiary's personal property or any part thereof regarding indebtedness
in an amount less than $100,000 is not removed to the satisfaction of Agent
and Bank within a period of sixty (60) days; or
(p) an event of default occurs under the Term Loan Agreement.
8.2 Remedies. If any Event of Default occurs Agent, at the written request
of the Required Banks will, unless an Event of Default occurs under Section 8.1
(d) or (e) in which case the following remedies will be immediately available to
Agent: (i) cease advancing money hereunder, (ii) declare all Obligations to be
immediately due and payable, whereupon such Obligations will immediately become
due and payable, (iii) exercise any and all rights and remedies provided by
applicable law and the Loan Documents, (iv) proceed to realize upon Borrower's
personal property or any property securing the Obligations, including, without
limitation, causing all or any part thereof to be transferred or registered in
its name or in the name of any other person, firm or corporation, with or
without designation of the capacity of such nominee, all without presentment,
demand, protest, or notice of any kind, each of which are hereby expressly
waived by Borrower. Borrower shall be liable for any deficiency remaining after
disposition of any its personal property, and waives all valuation and
appraisement laws.
8.3 Default Rate. After the occurrence of an Event of Default, all amounts
of principal outstanding as of the date of the occurrence of such Event of
Default will accrue interest at the Default Rate, in Bank's sole discretion,
without notice to Borrower. This provision does not constitute a waiver of any
Events of Default or an agreement by Agent or Banks to permit any late payments
whatsoever.
8.4 No Remedy Exclusive. No remedy set forth herein is exclusive of any
other available remedy or remedies, but each is cumulative and in addition to
every other remedy available under this Agreement, the Loan Documents or as may
be now or hereafter existing at law, in equity or by statute. Borrower waives
any requirement of marshalling of assets which may be secured by any of the Loan
Documents.
8.5 Effect of Termination. The termination of this Agreement will not
affect any rights of any party or any obligation of any party to the other,
arising prior to the effective date of such termination, and the provisions
hereof shall continue to be fully operative until all transactions entered into,
rights created or Obligations incurred prior to such termination have been fully
disposed of, concluded or liquidated.
8.6 No Adequate Remedy at Law. Borrower recognizes that in the event
Borrower fails to pay, perform, observe or discharge any of its Obligations
under this Agreement, the Notes or the other Loan Documents, no remedy at law
will provide adequate relief to Agents and Banks and Borrower agrees that Agent
and Banks shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving that it has incurred actual damages.
Section 9. Conditions Precedent.
9.1 Conditions to Initial Loans. Agent will have no obligation to make or
advance any Loan until Borrower has delivered to Agent at or before the closing
date, in form and substance satisfactory to Bank:
(a) the executed versions of the Revolving Notes in the forms of
Exhibit 2.1(e)(i) and 2.1(e)(ii) attached hereto respectively.
<PAGE>
(b) A Certificate of Borrower in a form reasonably acceptable to Bank
along with certified copies of the organization documents for Borrower.
(c) A favorable opinion of counsel to Borrower in a form reasonably
acceptable to Bank.
(d) Borrower will pay to Agent all out of pocket expenses reasonably
incurred by Agent and Banks in connection with the preparation of this
Agreement and accompanying documents and the consummation of the
transactions contemplated hereby.
(e) A Certificate of Insurance as described in Section 6.4 hereof.
(f) Borrower has successfully entered into the Term Loan Agreement.
(g) Such additional information and materials as Bank may reasonably
request.
9.2 Conditions to Each Loan. On the date of each Loan, the following
statements will be true:
(a) All of the representations and warranties contained herein and in
the Loan Documents will be correct in all material respects as though made
on such date (except those changes permitted under this Agreement);
(b) No event will have occurred and be continuing, or would result
from such Loan, which constitutes an Event of Default, or would constitute
an Event of Default but for the requirement that notice be given or lapse
of time or both;
(c) Except for general economic conditions or fluctuations in the
economy generally, no event shall have occurred which, in Bank's reasonable
opinion, has a material adverse effect on Borrower's financial condition,
operations, assets or prospects, or on any other property securing the
repayment of the Obligations;
(d) The aggregate unpaid principal amount of the Loans after giving
effect to such Loan will not violate the lending limits set forth in
Section 2.1 of this Agreement.
The acceptance by Borrower of the proceeds of each Loan will be deemed to
constitute a representation and warranty by such Borrower that the conditions in
Section 9.2 of this Agreement, other than those that have been waived in writing
by Bank, have been satisfied.
Section 10. Agent.
10.1 Appointment. Each Bank hereby irrevocably designates and appoints
Fifth Third as Agent of such Bank, and each such Bank hereby irrevocably
authorizes Fifth Third, as Agent for such Bank, to take such actions on its
behalf under the provisions of this Agreement, and to exercise such powers and
perform such duties as are expressly delegated to Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto;
provided, however, that Agent shall not be required to take any action that
exposes Agent to personal liability or that is contrary to this Agreement or
applicable law. Each Bank hereby authorizes, consents to and directs Borrower to
deal with Agent as true and lawful agent of such Bank to the extent set forth
hereunder. Notwithstanding any provision to the contrary elsewhere in this
Agreement, Agent shall not have any duties or responsibilities, except those
expressly set forth herein or therein, or any fiduciary relationship with any
Bank, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or otherwise exist against
Agent.
10.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. Agent shall
not be responsible for the negligence or misconduct of any agents or reliance
upon advice of counsel in good faith shall be full justification for any act or
omission of Agent.
<PAGE>
10.3 Exculpatory Provisions. Neither Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (a)
liable to any of Banks or Borrower for any action lawfully taken or omitted to
be taken by it or by any such person under or in connection with the Loan
Documents, except that Agent shall be liable for its own willful misconduct or
gross negligence, or (b) responsible in any manner to any of Banks for any
recitals, statements, representations or warranties made by Borrower or any
officer thereof, contained in the Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, the Loan Documents or for the value, legality,
validity, effectiveness, genuineness, enforceability or sufficiency of the Loan
Documents or the Notes or any failure of Borrower to perform its obligations
hereunder or thereunder. Agent shall not be under any obligation to any Bank to
ascertain or inquire as to the observance or performance of any of the
agreements contained in, or conditions of, the Loan Documents or any of the
Notes, or to inspect the properties, books or records of Borrower or any
Subsidiary. Agent, in its capacity as such, shall not be under any liability or
responsibility whatsoever, as Agent, to Borrower or any other as a consequence
of any failure or delay in performance by, or breach by, any Bank of any of its
obligations under any of the Loan Documents, or as a consequence of any
determination as to the classification or qualification of the transactions
contemplated by the Loan Documents under any regulatory rules or regulations.
10.4 Reliance by Agent. Agent shall be entitled to rely and shall be fully
protected in relying upon, any writing, resolution, notice (whether written,
oral or telephonic), consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order, other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons or in acting upon any
representation or warranty made or deemed to be made hereunder and upon advice
and statements of legal counsel (including, without limitation, counsel to
Borrower), independent accountants and other experts selected by Agent. Agent
may deem and treat payee of any Note as the owner thereof for all purposes.
Agent shall be fully justified in failing or refusing to take any action under
the Loan Documents unless it shall first receive such advice or concurrence of
Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under the Loan Documents and the Notes in accordance with a request of the
Required Banks, and any such request and any action taken or failure to act
pursuant thereto shall be binding upon all Banks and all future holders of the
Notes.
10.5 Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
Agent has received written notice from a Bank or Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that Agent receives such a notice,
Agent shall promptly give notice thereof to Banks and Borrower. Agent shall take
such action with respect to any such Event of Default as shall be reasonably
directed by the Required Banks; provided that, unless and until Agent shall have
received such direction, Agent, in its capacity as such, may (but shall not be
obliged to) take such action, or refrain from taking such action, with respect
to any such Event of Default.
10.6 Non-Reliance on Agent and Other Banks. Each Bank expressly
acknowledges that neither Agent, any other Bank nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates has made
any representations or warranties to it and that no act by Agent or any other
Bank hereafter taken, including any review of the affairs of Borrower or its
Subsidiaries, shall be deemed to constitute any representation or warranty by
Agent or any other Bank to such Bank. Each Bank represents to Agent and each
other Bank that it has independently and without reliance upon Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, assets, financial and other condition, creditworthiness
and prospects of Borrower and its Subsidiaries, and made its own decision to
make Loans hereunder and enter into this Agreement or the Loan Documents. Each
Bank also represents that it will, independently and without reliance upon Agent
or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analyses, appraisals
and decisions in taking or not taking action under this Agreement, and make such
investigation as it deems necessary to inform itself as to the business,
operations, property, assets, financial and other condition, creditworthiness
and/or prospects of Borrower and its Subsidiaries. Except for any notices,
reports and other documents expressly required to be furnished by Agent to Banks
hereunder, Agent shall not have any duty or responsibility to provide any Bank
with any credit or other information concerning the business, operations,
property, assets, financial and other condition, creditworthiness or prospects
of Borrower or Subsidiaries which may come into the possession of Agent or any
of its officers, directors, employees, agents, attorneys-in-fact or affiliates.
<PAGE>
10.7 Indemnification by Banks.
(a) Banks agree to indemnify Agent in its capacity as such (to the
extent not reimbursed by Borrower and without limiting any obligation of
Borrower to do so), ratably according to the amounts of their Revolving
Credit Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at the time following the payment of the
Obligations) be imposed on, incurred by or asserted against Agent in any
way relating to or arising out of this Agreement, the Loan Documents or any
of the Notes or any action taken or omitted by Agent under or in connection
with any of the foregoing; provided that no Bank shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to
the extent resulting solely from Agent's willful misconduct or gross
negligence without the consent or conscious acquiescence of the reimbursing
Bank.
(b) Without limiting the foregoing, the Bank agrees to reimburse Agent
promptly upon demand for its Revolving Credit Commitment Percentage of any
costs and expenses incurred by Agent that are payable by Borrower under the
Loan Documents to the extent that Agent is not promptly reimbursed for such
costs and expenses by Borrower; and, if Agent is later reimbursed for any
such costs and expenses by Borrower, Agent shall repay such reimbursed
amounts to Banks on account of such costs and expenses.
(c) The agreements in this subsection shall survive termination of
this Agreement, payment of the Notes, and payment of all other amounts
payable hereunder.
10.8 Agent in Its Individual Capacity. Agent and its affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
Borrower and its Subsidiaries as though Agent were not Agent hereunder. With
respect to the Loans made by it and all renewals, extensions or deferrals of the
payment thereof, Agent shall have the same rights and powers under this
Agreement as any Bank and may exercise the same as though it were not Agent, and
the terms "Bank" and "Banks" shall include Agent in its individual capacity.
10.9 Successor Agent. If at any time it deems it advisable, in its sole
discretion, Agent may resign as Agent upon 60 days' written notice to Banks and
Borrower. If Agent shall resign as Agent under this Agreement, then Banks shall
appoint a successor Agent for Banks. If appointment of a successor Agent by
Banks and acceptance of the appointment by the successor have not occurred
within 60 days after Agent gives the above-described notice of resignation,
Agent may appoint a successor agent, which shall be a commercial bank organized
under the laws of the United States or any state thereof having combined capital
and surplus of at least $250,000,000. Upon acceptance by the successor agent of
the agency hereunder and notice thereof to Borrower, such successor agent shall
succeed to the rights, powers and duties of Agent, and the term "Agent" shall
mean such successor agent, effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent or any other
parties to this Agreement or any holders of the Notes, and such former Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Agent's resignation or removal hereunder as Agent, the provisions
of this Section 8 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement. If at any time
hereunder there shall not be a duly appointed and acting Agent, Borrower agrees
to make each payment due hereunder and under its Notes directly to Bank entitled
thereto during such time.
<PAGE>
10.10 Amendments and Waivers. With the written consent of each Bank, Agent
and the appropriate parties to the Loan Documents may, from time to time, enter
into written amendments, supplements or modifications thereof and, with the
consent of each Bank, Agent on behalf of the Banks may execute and deliver to
any such parties a written instrument waiving, on such terms and conditions as
Agent may specify in such instrument, any of the requirements of the Loan
Documents or any Default or Event of Default and its consequences, or releasing
or discharging any guarantor from its obligations under a guarantee; provided,
however, that no such amendment, supplement, modification or waiver shall (i)
increase the Revolving Credit Commitment or Revolving Credit Commitment
Percentage of any Bank, (ii) extend the maturity date of any Note, (iii)
decrease the rate of interest of, extend the time or manner of payment of or
increase or forgive interest due under any Notes, forgive any principal amount
due under any Note, or forgive, extend the time or manner of payment of any
fees, costs or expenses due hereunder or under any of the Loan Documents, (iv)
permit the extension of this Agreement, (v) change the provisions of this
subsection 10.10, (vi) amend or change the provisions of Sections 2.1(a) or
2.1(b) of this Agreement, or (vii) amend or change the provisions of Section 7.5
of this Agreement, without the consent of all of the Banks; and provided
further, however, that no such amendment, supplement, modification or waiver
shall amend, modify or waive any provision of this subsection 10.10 or otherwise
change any of the rights or obligations of Agent hereunder or under the Loan
Documents without the written consent of Agent. Any such amendment, supplement,
modification or waiver shall apply equally to each of Banks and shall be binding
upon the parties to the applicable agreement, Banks, Agent and their successors
and assigns. In the case of any waiver, the parties to the applicable agreement,
Banks and Agent shall be restored to their former position and rights hereunder
and under the outstanding Notes and Loan Documents, and any Default or Event of
Default waived shall not extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.
10.11 Setoff; Sharing.
(a) Upon the occurrence of an Event of Default and acceleration of the
maturity of the Loans each Bank is hereby authorized, at any time or from
time to time thereafter, without prior notice to Borrower or any other
Person any such notice being hereby expressly waived, to set-off and to
appropriate and apply any and all deposits and any other indebtedness or
property at any time held or owning by such Bank to or for the credit or
the account of Borrower, whether or not related to this Agreement or any
transaction or occurrence hereunder, against and on account of the
Obligations of Borrower regardless of whether or not such Bank shall have
made any demand hereunder and although such Obligations, or any of them,
shall be contingent or unmatured. The rights and remedies granted to each
Bank under this subsection 10.11 shall be in addition to, and not in
substitution for, any rights or remedies, including, without limitation,
any right of set-off or banker's lien, to which such Bank may otherwise be
entitled.
(b) Each Bank agrees, for the benefit of the other Bank, that with
respect to all sums received or realized by such Bank, after an Event of
Default or the maturity of the Loans (whether by acceleration, notice of
intention to prepay in full or otherwise) equitable adjustment will be made
among all of the Banks so that, in effect, all such sums shall be shared
ratably by each of Banks (based upon such Bank's percentage of the unpaid
amount of all of the Loans then outstanding owing to all of the Banks),
whether received by the exercise of the right of set-off or banker's lien,
by counterclaim or cross-action, by the enforcement of any of the Notes or
otherwise. If any Bank shall, after maturity of the Loans (whether by
reason of acceleration, notice of intention to prepay in full or otherwise)
receive any payment on its Loans or on any commitment fees in a sum or sums
in excess of its pro rata portion of the sum of the aggregate principal
amount of the Loans then outstanding, then any such Bank shall, if
requested by the other Bank, purchase for cash from the other Bank an
interest in its Loans in such amounts as shall result in Banks sharing such
payment ratably according to the aggregate principal amount of the Loans
then outstanding from each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from any such Bank,
the purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest except as required by law or
by any judgment or settlement relating to such recovery. Borrower agrees
that any Bank so purchasing a participation in the Loans made by the other
Bank may exercise all rights of set-off, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such Bank
were a direct holder of Loans in the amount of such participation. Nothing
contained herein shall require any Bank to exercise any such right or shall
effect the right of any Bank to exercise, and retain the benefits of
exercising any such right with respect to any other indebtedness of
obligation of Borrower.
<PAGE>
10.12 Enforcement. Each Bank authorizes Agent to take all actions
contemplated by this Agreement and any of the other Loan Documents and each Bank
agrees that no Bank shall have any right individually to seek or to enforce any
remedy or to realize upon any security for the Obligations, it being understood
and agreed that such rights and remedies may be exercised only by Agent, for the
benefit of Banks.
Section 11. Miscellaneous Provisions.
11.1 Miscellaneous. This Agreement, the exhibits and the other Loan
Documents are the complete agreement of the parties hereto and supersede all
previous understandings relating to the subject matter hereof. This Agreement
may be amended only in writing signed by the parties against whom enforcement of
the amendment is sought. This Agreement may be executed in counterparts. If any
part of this Agreement is held invalid, illegal or unenforceable, the remainder
of this Agreement will not in any way be affected. This Agreement is and is
intended to be a continuing agreement and will remain in full force and effect
until the Loans are finally and irrevocably paid in full and the Facility is
terminated.
11.2 Binding Effect. This Agreement will be binding upon and inure to the
benefit of the respective legal representatives, successors and assigns of the
parties hereto; however, except as set forth in Section 7.3 of this Agreement,
Borrower may not assign or transfer any of its rights or delegate any of its
Obligations under this Agreement or any of the Loan Documents, by operation of
law or otherwise. With the prior written consent of all the Banks, one or more
additional Persons may become Banks under this Agreement in order to increase
the Revolving Credit Commitments or replace a portion of the Loans and the
commitments of any Bank, subject to the terms of this Agreement. The Banks may
disclose to all prospective and actual assignees and participants all financial,
business and other information about Borrower which a Bank may possess at any
time.
11.3 Subsidiaries. If Borrower has any additional Subsidiaries at any time
during the term of this Agreement, the term "Borrower" in each representation,
warranty and covenant herein will mean "Borrower" and each Subsidiary
individually and in the aggregate, and such Borrower will cause each Subsidiary
to be in compliance therewith.
11.4 Survival. All representations, warranties, covenants and agreements
made by Borrower herein and in the Loan Documents will survive the execution and
delivery of this Agreement, the Loan Documents and the issuance of the Notes.
11.5 Delay or Omission. No delay or omission on the part of Agent or Banks
in exercising any right, remedy or power arising from any Event of Default will
impair any such right, remedy or power or any other right remedy or power or be
considered a waiver or any right, remedy or power or any Event of Default nor
will the action or omission to act by Agent or Banks upon the occurrence of any
Event of Default impair any right, remedy or power arising as a result thereof
or affect any subsequent Event of Default of the same or different nature.
11.6 Notices. Any notices under or pursuant to this Agreement will be
deemed duly sent when delivered in hand or when mailed by registered or
certified mail, return receipt requested, addressed as follows:
THE FIFTH THIRD BANK
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Asset Based Lending Department
PNC BANK, OHIO, NATIONAL ASSOCIATION 201 East Fifth Street
Cincinnati, Ohio 45202
Attention: Middle Market Corporate Banking - Third floor
GLOBE BUSINESS RESOURCES, INC.,
Spectrum Office Tower
11260 Chester Road, Suite 400
Cincinnati, Ohio 45246
Attention: David D. Hoguet, Chief Executive Officer
With a copy to Keating, Muething & Klekamp, P.L.L.
1800 Provident Tower
Cincinnati, Ohio 45202
Attention: Edward Steiner, Esq.
<PAGE>
Any party may change such address by sending written notice of the change to the
other parties.
11.7 No Partnership. Nothing contained herein or in any of the Loan
Documents is intended to create or will be construed to create any partnership,
joint venture or other relationship between any Bank and Borrower other than as
expressly set forth herein or therein and will not create any joint venture,
partnership or other relationship.
11.8 Indemnification by Borrower. If after receipt of any payment of all or
part of the Obligations, Agent or Banks are for any reason compelled to
surrender such payment to any person or entity, because such payment is
determined to be void or voidable as a preference, impermissible setoff, or
diversion of trust funds, or for any other reason, this Agreement will continue
in full force and effect and Borrower will be liable to, and will indemnify,
save and hold Agent and Banks, its officers, directors, attorneys, and employees
harmless of and from the amount of such payment surrendered. The provisions of
this Section will be and remain effective notwithstanding any contrary action
which may have been taken by Agent or Banks in reliance on such payment, and any
such contrary action so taken will be without prejudice to Agent or Banks'
rights under this Agreement and will be deemed to have been conditioned upon
such payment becoming final, indefeasible and irrevocable. In addition, Borrower
will indemnify, defend, save and hold Agent and Banks, its officers, directors,
attorneys, and employees harmless of, from and against all claims, demands,
liabilities, judgments, losses, damages, costs and expenses, joint or several
(including all accounting fees and attorneys' fees reasonably incurred), that
Agent and Banks or any such indemnified party may incur arising out of this
Agreement, any of the Loan Documents or any act taken by Bank hereunder except
for the willful misconduct or gross negligence of such indemnified party. The
provisions of this Section will survive the termination of this Agreement.
11.9 Governing Law; Jurisdiction. This Agreement, the Notes and the other
Loan Documents will be governed by the domestic laws of the State of Ohio.
Borrower agrees that the state and federal courts in Hamilton County, Ohio, or
any other court in which Bank initiates proceedings have exclusive jurisdiction
over all matters arising out of this Agreement, and that service of process in
any such proceeding will be effective if mailed to Borrower at its address
described in the Notices section of this Agreement. AGENT, BANKS AND BORROWER
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, Agent, Banks and Borrower have executed this Agreement by
their duly authorized officers as of the date first above written.
GLOBE BUSINESS RESOURCES, INC.
By:________________________________________
Its:_______________________________________
PNC BANK, OHIO, NATIONAL ASSOCIATION
By: ______________________________________
Its: ______________________________________
THE FIFTH THIRD BANK,
for itself and as Agent for the Banks
By: _______________________________________
Its:_______________________________________
<PAGE>
EXHIBITS
TO
CREDIT AGREEMENT
BETWEEN
GLOBE BUSINESS RESOURCES, INC.
AND
THE FIFTH THIRD BANK, as AGENT
THE FIFTH THIRD BANK and PNC BANK, OHIO, NATIONAL ASSOCIATION
Page
Exhibit 1 - Definitions 21
Exhibit 2.1(e)(i) - Revolving Note (Fifth Third) 26
Exhibit 2.1(e)(ii) - Revolving Note (PNC) 29
Schedule 5.3 - Litigation 32
Schedule 5.6 - Licenses 33
Schedule 5.7 - Laws and Taxes 34
Schedule 5.9 - Title 35
Schedule 5.12 - Subsidiaries and Partnerships 36
Schedule 5.13 - ERISA 37
Schedule 7.5(c) - Debt 38
Schedule 1(3) - Competitors 39
Exhibit 9.1 (b) - Certificate of Borrower for Borrower 40
Attachment C - Directors' Resolution
Exhibit 9.1 (c) - Form of Opinion of Borrower's Counsel 41
<PAGE>
EXHIBIT 1
DEFINITIONS
1. "Affiliate" means any Person (other than a Restricted Subsidiary) (i) who is
a director or executive officer of the Borrower or any Subsidiary, (ii) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Borrower, (iii) which
beneficially owns or holds securities representing 5% or more of the combined
voting power of the Voting Stock of Borrower or any Subsidiary, or (iv) of which
securities representing 5% or more of the combined voting power of its Voting
Stock (or in the case of a Person not a corporation, 5% or more of its equity)
is beneficially owned or held by the Borrower or any Subsidiary. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
2. "Capitalized Leases" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
3. "Competitor" means any Person listed on Schedule 1(3) attached hereto.
4. "Consolidated Cash Flow Available for Fixed Charges" for any period will mean
the sum of (i) Consolidated Net Income, (ii) taxes, depreciation and
amortization as determined in accordance with GAAP and (iii) Consolidated Fixed
Charges.
5. "Consolidated Current Ratio" will mean the ratio of (x) the total cash,
receivables and rental furniture (valued at the lower of cost or fair market
value, net of accumulated depreciation) of the Borrower and its Restricted
Subsidiaries to (y) the total of accounts payable, customer deposits and accrued
expenses of the Borrower and its Restricted Subsidiaries.
6. "Consolidated Fixed Charges" means for any period, on a consolidated basis,
the sum of (a) all Rentals (other than Rentals on Capitalized Leases and Rentals
paid by the Borrower or any Restricted Subsidiary with respect to apartments
used in the corporate housing operations of the Borrower or any Restricted
Subsidiary) payable during such period by the Borrower and its Restricted
Subsidiaries with respect to leases having an original term in excess of one
year, and (b) all Interest Charges on all Debt (including the interest component
of Rentals on Capitalized Leases) of the Borrower and its Restricted
Subsidiaries.
7. "Consolidated Funded Debt" means Funded Debt of the Borrower and its
Restricted Subsidiaries determined in accordance with GAAP.
8. "Consolidated Net Income" means consolidated net income and net losses of the
Borrower and its Restricted Subsidiaries determined in accordance with GAAP,
after excluding the sum of (i) any net loss or any undistributed net income of
any Person in which Borrower has an ownership interest other than a Restricted
Subsidiary; (ii) any net loss or any undistributed net income of any Restricted
Subsidiary prior to the date it becomes a Restricted Subsidiary; (iii) any gain
or net loss (net of any tax effect) resulting from the sale of any capital
assets by Borrower or Restricted Subsidiary other than in the ordinary course of
business; (iv) extraordinary, unusual or non-recurring gains or losses; (v)
gains resulting from the write-up of assets; (vi) any earnings of any Restricted
Subsidiary unavailable for payment to any Borrower; and (vii) proceeds of any
life insurance policy.
9. "Consolidated Net Worth" means at any date, with respect to the Borrower and
its Restricted Subsidiaries, the total amount of (i)capital stock (except
treasury stock but including preferred stock) plus (ii) paid-in surplus, plus
(iii) general contingency reserves, plus (iv)retained earnings (deficit) at such
date, and plus (v) fair market value in excess of historical cost of acquired
net assets attributable to related transactions, all as determined on a
consolidated basis in accordance with GAAP.
<PAGE>
10. "Debt" means (i) all items of borrowings, including Capitalized Leases,
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet as of the date at which Debt
is to be determined (other than items of borrowings of Borrower from a
Wholly-Owned Restricted Subsidiary), (ii) all Guaranties (other than Guaranties
of Debt of Borrower or any Wholly-Owned Restricted Subsidiary by Borrower or a
Subsidiary), letters of credit and endorsement (other than of notes, bills and
checks presented to banks for collection or deposit in the ordinary course of
business), in each case to support Debt of other Persons; and (iii) all items of
borrowings secured by any mortgage, pledge or Lien existing on property owned
subject to such mortgage, pledge or Lien, whether or not the borrowings secured
thereby shall have been assumed by Borrower or any Subsidiary.
11. "Default" means any event that, with the giving of notice or the passage of
time, or both, would be an Event of Default.
12 "Defaulted Amount" means with respect to any Bank at any time, any amount
that was required to be paid by such Bank to Borrower, Agent or any other Bank
under any Loan Document at or prior to such time and that has not been paid by
such Bank.
13. "Defaulting Bank" means at any time, each Bank with respect to which a
Defaulted Amount exists.
14. "Default Rate" means three percent (3%) in excess of the interest rate
otherwise in effect under amounts outstanding under the Notes. In no event will
the interest rate accruing under such Notes be increased to be in excess of the
maximum interest rate permitted by applicable state or federal usury laws then
in effect.
15. "EBITDA" shall mean earnings of the Borrower's and its Restricted
Subsidiaries before interest, taxes, depreciation and amortization, all as
determined in accordance with GAAP.
16. "Environmental Laws" means all federal, state, local and foreign laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial toxic or hazardous substances or wastes
into the environment (including without limitation ambient air, surface water,
ground water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes, and any and all regulations, codes, plans, orders, decrees,
judgments, injunctions, notices or demand letters issued, entered promulgated or
approved thereunder.
17. "ERISA" means the Federal Employee Retirement Income Security Act of 1974.
18. "Event(s) of Default" will have the meaning set forth in Section 8 of the
Agreement.
19. "Facility" will have the meaning set forth in Section 2.1 of the Agreement.
20. "Funded Debt" means without duplication: (i) all Debt having a final
maturity of more than one year from the date of creation thereof (or which is
renewable or extendible at the option of the obligor for a period or periods of
more than one year from the date of creation) and including current maturities
thereof and (ii) any Debt outstanding pursuant to any instrument or agreement
providing for maturity on demand or within one year from the date of the
creation thereof.
21. "GAAP" means generally accepted accounting principles as in effect from time
to time in the United States of America.
<PAGE>
22. "Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services primarily for
the purpose of assuring the owner of such indebtedness or obligation of the
ability of any other Person to make payment of the indebtedness or
obligations; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
23. "Interest Charges" means, for any period, all interest, including
capitalized interest, and all amortization of debt discount and expense on any
particular Debt for which such calculations are being made. Computations of
Interest Charges on a pro forma basis for Debt having a variable interest rate
shall be calculated at the rate in effect on the date of any determination.
24. "Letter of Credit Facility" will have the meaning set forth in Section 2.2
of the Agreement.
25. "Lien" means any security interest, mortgage, pledge, assignment, lien or
other encumbrance of any kind, including interests of vendors or lessors under
conditional sale contracts and capitalized leases.
26. "Loan Documents" means this Agreement, the Notes, and every other document
or agreement executed by any party evidencing, guarantying or securing any of
the Obligations; and "Loan Document" means any one of the Loan Documents.
27. "Loans" means the revolving loans made under the Facility.
28. "Notes" means each of the Revolving Notes.
29. "Obligation(s)" means all loans, advances, indebtedness, liabilities and
obligations of Borrower owed to each of Agent and Banks of every kind and
description whether now existing or hereafter arising including without
limitation, those owed by Borrower to others and acquired by any one (1) or more
of the Banks, by purchase, assignment or otherwise, and whether direct or
indirect, primary or as guarantor or surety, absolute or contingent, liquidated
or unliquidated, matured or unmatured, whether or not secured by collateral, and
including without limitation all liabilities, obligations and indebtedness
arising under this Agreement, the Notes and the other Loan Documents, all
obligations to perform or forbear from performing acts, all amounts represented
by letters of credit now or hereafter issued by Bank for the benefit of or at
the request of Borrower, and all expenses and attorneys' fees incurred by any of
the Banks under this Agreement or any other document or instrument related to
any of the foregoing.
30. "Participant" means any Person who purchases an interest in any of the
Loans, including any Person who purchases a sub-participation or other interest
in any of the Loans from any Participant.
<PAGE>
31. "Person" means any individual, firm, partnership, joint venture,
corporation, association, business enterprise, trust, governmental body or other
entity, whether acting in an individual, fiduciary or other capacity.
32. "Permitted Liens" has the meaning assigned thereto as set forth in Section
5.9 of this Agreement.
33. "Prime Rate" means the rate of interest per annum announced to be its prime
rate from time to time by Agent at its principal office in Cincinnati, Ohio
whether or not Agent will at times lend to borrowers at lower rates of interest
or, if there is no such prime rate, then its base rate or such other rate as may
be substituted by Bank for the prime rate.
34. "Rentals" means and includes as of the date of any determination thereof,
all payments (including as such all payments which the lessee is obligated to
make to the lessor on termination of the lease or surrender of the property)
payable by the Borrower or any Restricted Subsidiary, as lessee or sublessee
under a lease of real or personal property, but shall be exclusive of any
amounts required to be paid by the Borrower or a Restricted Subsidiary (whether
or not designated as rents or additional rents) on account of maintenance,
repairs, insurance, taxes and similar charges.
35. "Required Banks" means at any time (a) Banks, other than those disqualified
pursuant to clause (b) of this definition whose Revolving Credit Commitments are
together at least 75% of the Revolving Credit Commitment of Banks other than
those disqualified pursuant to clause (b) of this definition; provided, however,
(b) if any Bank is a Defaulting Bank and has been a Defaulting Bank for more
than 15 days at such time, then Revolving Credit Commitment of such Bank shall
not be considered in determining the percentage set forth in clause (a) of this
definition and such Bank shall not be entitled to a vote on any relevant matter.
36. "Restricted Subsidiary" shall mean any Subsidiary (i) of which more than 80%
of the voting securities are owned by a Borrower and/or one or more Wholly-Owned
Restricted Subsidiaries, and (ii) which the Borrower has designated as a
"Restricted Subsidiary" by notice in writing given to Agent, provided that the
designation of a Subsidiary as "restricted" shall not be changed to
"unrestricted".
37. "Revolving Credit Commitment" means with respect to each Bank, the dollar
amount set forth opposite the name of such Bank in Section 2.1(b) of this
Agreement.
38. "Revolving Credit Commitment Percentage" means, with respect to each Bank,
the percentage set forth opposite the name of such Bank in Section 2.1(b) of
this Agreement.
39. "Revolving Note" has the meaning assigned to that term in Section 2.1 of
this Agreement.
40. "Senior Funded Debt" shall mean and include all Funded Debt not expressly
junior or subordinate to any other Debt of Borrower and its Restricted
Subsidiaries.
41. "Settlement Amount" means as of a Settlement Date, an amount equal to the
result obtained by multiplying (i) the balance of the Loans as of the close of
business of the business day immediately preceding such Settlement Date, by (ii)
the Revolving Credit Commitment Percentage as of the close of business on the
business day immediately preceding such Settlement Date.
42. "Settlement Date" means the first day of each week while the Loans remain
outstanding, provided that if any such day is not a business day, then on the
next succeeding business day.
<PAGE>
43. "Subsidiary" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interest to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership, limited liability
company, or joint venture if more than an 80% interest in the profits or capital
thereof is owned by such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries (unless such partnership can and does
ordinarily take major business actions without the prior approval of such Person
or one or more of its Subsidiaries). Unless the context otherwise clearly
requires, any reference to a "Subsidiary" is a reference to a Subsidiary of
Borrower.
44. "Term Loan Agreement" shall mean the $30,000,000 Note Purchase Agreement
entered by and among Borrower, Security Life of Denver Insurance Company, Life
Insurance Company of Georgia, Peerless Insurance Company, Indiana Insurance
Company and Southland Life Insurance Company.
45. "Total Debt" shall mean all debt of Borrower and its Restricted Subsidiaries
determined on a consolidated basis in accordance with GAAP
46. "Total Revolving Credit Commitment" means the dollar amount identified as
such in paragraph 2.1(b) hereof.
47. "Voting Stock" means capital stock of any class of a corporation having
ordinary voting powers to vote for the election of members of the board of
directors of such corporation or Person performing similar functions.
48. "Wholly-Owned Subsidiary" means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity interest (except directors' qualifying
shares) and voting interest of which are owned by any one or more of the
Borrower and the Borrower's Wholly-Owned Subsidiaries at such time.
<PAGE>
EXHIBIT 2.1(E)(I)
REVOLVING NOTE
$20,000,000 Cincinnati, Ohio
September 29, 1997
(Effective Date)
For value received, GLOBE BUSINESS RESOURCES, INC., an Ohio corporation
formerly known as and doing business as Globe Furniture Rentals, ("Borrower"),
hereby promises to pay to the order of THE FIFTH THIRD BANK, an Ohio banking
corporation (the "Bank"), at its offices, located at 38 Fountain Square Plaza,
Cincinnati, Ohio 45263, in lawful money of the United States of America and in
immediately available funds, the principal sum of Twenty Million Dollars
($20,000,000) or such lesser unpaid principal amount as may be advanced by Bank
pursuant to the terms of the Credit Agreement of even date herewith by and
between Borrower, The Fifth Third Bank, Agent, The Fifth Third Bank, and PNC
Bank, Ohio, National Association, as Banks, as the same may be amended from time
to time (the "Agreement").
The principal balance outstanding hereunder shall bear interest from the
date of the first advance until paid at a floating rate of interest equal to the
percent per annum set forth below, which rate of interest will fluctuate on a
periodic basis as provided herein to the rate specified by the following table
based upon the ratio of the amount of Borrower's Total Debt to EBITDA, on a
consolidated basis:
TOTAL DEBT TO EBITDA THEN INTEREST RATE EQUALS
Greater than or equal to 1.86 : 1.00 Borrower's option of:
(i) Prime Rate minus. 25% or
(ii) LIBOR Rate plus 1.50%
Less than 1.86 : 1.00 Borrower's option of:
(i) Prime Rate minus .50% or
(ii) LIBOR Rate plus 1.25%
In the event the Borrower meets the requirements set forth above, Borrower
may elect to have all or any portion of the Note in minimum increments of
$1,000,000 per election (provided such amounts are not then subject to another
LIBOR Election) bear interest at the per annum rate equal to the percentage in
excess of the LIBOR Rate as set forth above (a "LIBOR Election"). Such notice
shall be delivered to Agent in writing at least 2 business days prior to the
date of such advance and shall inform Agent of the amount of the Note to be
subject to the LIBOR Election, the LIBOR Interest Period and the effective date
for the LIBOR Interest Period. Borrower shall not be permitted to have more than
six (6) separate LIBOR Elections outstanding at any one time during the term
hereof.
On the Effective Date, the initial interest rates for advances hereunder
will be based upon a Total Debt to EBITDA ratio of greater than 1.86 : 1.00 for
Borrower.
Interest rate changes based upon changes in the foregoing chart will be
made effective as of the date of the first advance hereunder and on the first
day of the calendar month following the review by Agent of Borrower's quarterly
financial statements. In addition to changes occurring pursuant to fluctuations
in the foregoing chart, the interest rate charged hereunder shall change
automatically upon each change in the Prime Rate. Interest will be calculated
based on a 360-day year and charged for the actual number of days elapsed, and
will be payable on the first day of each calendar month commencing November 1,
1997 and continuing on the first (1st) day of each calendar month thereafter
during the term hereof unless an interest rate based upon the LIBOR Rate is in
effect, in which case the accrued interest shall be due and payable at the end
of the LIBOR Interest Period and Agent will remit to Bank its pro-rata share
within 1 business day after Agent's receipt thereof. If any amount as to which a
<PAGE>
LIBOR Election is in effect is repaid on a day other than the last day of the
applicable LIBOR Interest Period, or becomes payable on a day other than the
last day of the applicable LIBOR Interest Period due to acceleration or
otherwise, the Borrower shall pay, on demand by the Agent, such amount (as
determined by the Agent) as is required to compensate the Banks for any losses,
costs or expenses which the Banks may incur as a result of such payment or
acceleration, including, without limitation, any loss, cost or expense
(including loss of profit) incurred by reason of liquidation or reemployment of
deposits or other funds acquired by the Banks to fund or maintain such amount
bearing interest at the LIBOR Rate plus the percentage as set forth in the chart
above.
After maturity, whether by acceleration or otherwise, this Note will bear
interest, at the election of Bank and without notice to Borrower (computed and
adjusted in the same manner, and with the same effect, as interest hereon prior
to maturity), payable on demand, at a rate per annum equal to the Default Rate,
until paid, and whether before or after the entry of judgment hereon.
The Prime Rate means the rate of interest per annum announced to be its
Prime Rate from time to time by Agent at its principal office in Cincinnati,
Ohio whether or not Agent will at times lend to borrowers at lower rates of
interest, or, if there is no such Prime Rate, then its base rate or such other
rate as may be substituted by Agent for the Prime Rate.
LIBOR Interest Period means, with respect to which amounts outstanding
hereunder will accrue interest at the LIBOR Rate for a period of 30, 60, 90, 120
or 180 days commencing on a business day selected by Borrower pursuant to this
Note. Such LIBOR Interest Period shall end on the day in the succeeding calendar
month which corresponds numerically to the beginning day of such LIBOR Interest
Period, provided, however, that if there is no such numerically corresponding
day in such succeeding month, such LIBOR Interest Period shall end on the last
business day of such succeeding month. If a LIBOR Interest Period would
otherwise end on a day which is not a business day, such LIBOR Interest Period
shall end on the next succeeding business day.
LIBOR Rate means the rate (adjusted for reserves if Bank is required to
maintain reserves with respect to relevant advances) being asked on an amount of
Eurodollar deposits equal to the amount of the Note subject to a LIBOR Election
on the first day of a LIBOR Interest Period and which has a maturity
corresponding to the maturity of the LIBOR Interest Period, as reported by the
TELERATE rate reporting system (or any successor) as determined by Bank by noon
on the Effective Date of the LIBOR Interest Period. Each determination by Bank
of the LIBOR Rate shall be conclusive in the absence of manifest error.
Borrower's right to accrue interest at the LIBOR Rate shall be terminated
automatically if Bank, by telephonic notice, shall notify Borrower that LIBOR
deposits with a maturity equal to the LIBOR Interest Period and in an amount
equal to the then current outstanding principal amount of the Note are not
readily available in the London Inter-Bank Offered Rate Market, or that, by
reason of circumstances affecting such Market, adequate and reasonable methods
do not exist for ascertaining the interest rate applicable to such deposits for
the LIBOR Interest Period.
In addition, notwithstanding anything herein contained to the contrary, if,
prior to or during any period with respect to which the LIBOR Rate is in effect,
any change in any law, regulation or official directive, or in the
interpretation thereof, by any governmental body charged with the administration
thereof, shall make it unlawful for the Bank to find or maintain its funding in
Eurodollars of any portion of the Note subject to the LIBOR Rate or otherwise to
give effect to Bank's obligations as contemplated hereby, (i) Bank may, by
written notice to Borrower, declare Bank's obligations in respect of the LIBOR
Rate to be terminated forthwith, and (ii) the LIBOR Rate with respect to Bank
shall forthwith cease to be in effect, and interest shall from and after such
date be calculated based on the Prime Rate.
On September 30, 2000, all outstanding principal and all accrued and unpaid
interest will be due and payable.
The principal amount of each loan made by Bank under this Note and the
amount of each prepayment made by Borrower under this Note will be recorded by
Bank in the regularly maintained data processing records of Bank.
<PAGE>
The aggregate unpaid principal amount of all loans set forth in such
records will be presumptive evidence of the principal amount owing and unpaid on
this Note. However, failure by Bank to make any such entry will not limit or
otherwise affect Borrower's obligations under this Note or the Agreement.
All payments received by Agent under this Note will be applied first to
payment of amounts advanced by Bank on behalf of Borrower or which may be due
for insurance, taxes and attorneys' fees or other charges to be paid by Borrower
pursuant to the Agreement and the Loan Documents (as defined in the Agreement),
then to accrued interest on this Note, then to principal which will be repaid in
the inverse order of maturity.
This Note is one of the Revolving Notes referred to in the Agreement, and
is entitled to the benefits, and is subject to the terms, of the Agreement.
Capitalized terms used but not otherwise defined herein will have the meanings
attributed thereto in the Agreement. The maturity of this Note is subject to
acceleration upon the terms, set forth in the Agreement. Except as otherwise
expressly provided in the Agreement, if any payment on this Note becomes due and
payable on a day other than one on which Agent is open for business (a "Business
Day"), the maturity thereof will be extended to the next Business Day, and
interest will be payable at the rate specified herein during such extension
period.
After the occurrence of an Event of Default, all amounts of principal
outstanding as of the date of the occurrence of such Event of Default will bear
interest at the Default Rate, in Bank's sole discretion, without notice to
Borrower. This provision does not constitute a waiver of any Events of Default
or an agreement by Bank to permit any late payments whatsoever.
In no event will the interest rate on this Note exceed the highest rate
permissible under any law which a court of competent jurisdiction will, in a
final determination, deem applicable hereto. In the event that a court
determines that Bank has received interest and other charges under this Note in
excess of the highest permissible rate applicable hereto, such excess will be
deemed received on account of, and will automatically be applied to reduce the
amounts due to Bank from Borrower under this Note, other than interest, and the
provisions hereof will be deemed amended to provide for the highest permissible
rate. If there are no such amounts outstanding, Bank will refund to Borrower
such excess.
Borrower and all endorsers, sureties, guarantors and other persons liable
on this Note hereby waive presentment for payment, demand, notice of dishonor,
protest, notice of protest and all other demands and notices in connection with
the delivery, performance and enforcement of this Note, and consent to one or
more renewals or extensions of this Note.
This Note may not be changed orally, but only by an instrument in writing.
This Note is being delivered in, is intended to be performed in, will be
construed and enforceable in accordance with, and be governed by the internal
laws of, the State of Ohio without regard to principles of conflict of laws.
Borrower agrees that the State and Federal courts in Hamilton County, Ohio or
any other court in which Bank initiates proceedings will have exclusive
jurisdiction over all matters arising out of this Note, and that service of
process in any such proceeding will be effective if mailed to Borrower at its
address described in the Notices section of the Agreement. BORROWER HEREBY
WAIVES THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE.
GLOBE BUSINESS RESOURCES, INC.
By:
----------------------------------
Its:
----------------------------------
<PAGE>
EXHIBIT 2.1(E)(II)
REVOLVING NOTE
$10,000,000 Cincinnati, Ohio
September 29, 1997
(Effective Date)
For value received, GLOBE BUSINESS RESOURCES, INC., an Ohio corporation
formerly known as and doing business as Globe Furniture Rentals ("Borrower"),
hereby promises to pay to the order of PNC BANK, OHIO, NATIONAL ASSOCIATION, a
national banking association (the "Bank"), at Agent's offices, located at 38
Fountain Square Plaza, Cincinnati, Ohio 45263, in lawful money of the United
States of America and in immediately available funds, the principal sum of Ten
Million Dollars ($10,000,000) or such lesser unpaid principal amount as may be
advanced by Bank pursuant to the terms of the Credit Agreement of even date
herewith by and between Borrower, The Fifth Third Bank, Agent and The Fifth
Third Bank and PNC Bank, Ohio, National Association, as Banks, as the same may
be amended from time to time (the "Agreement").
The principal balance outstanding hereunder shall bear interest from the
date of the first advance until paid at a floating rate of interest equal to the
percent per annum set forth below, which rate of interest will fluctuate on a
periodic basis as provided herein to the rate specified by the following table
based upon the ratio of the amount of Borrower's Total Debt to EBITDA, on a
consolidated basis:
TOTAL DEBT TO EBITDA THEN INTEREST RATE EQUALS
Greater than or equal to 1.86 : 1.00 Borrower's option of:
(i) Prime Rate minus. 25% or
(ii) LIBOR Rate plus 1.50%
Less than 1.86 : 1.00 Borrower's option of:
(i) Prime Rate minus .50% or
(ii) LIBOR Rate plus 1.25%
In the event the Borrower meets the requirements set forth above, Borrower
may elect to have all or any portion of the Note in minimum increments of
$1,000,000 per election (provided such amounts are not then subject to another
LIBOR Election) bear interest at the per annum rate equal to the percentage in
excess of the LIBOR Rate as set forth above (a "LIBOR Election"). Such notice
shall be delivered to Agent in writing at least 2 business days prior to the
date of such advance and shall inform Agent of the amount of the Note to be
subject to the LIBOR Election, the LIBOR Interest Period and the effective date
for the LIBOR Interest Period. Borrower shall not be permitted to have more than
six (6) separate LIBOR Elections outstanding at any one time during the term
hereof.
On the Effective Date, the initial interest rates for advances hereunder
will be based upon a Total Debt to EBITDA ratio of greater than 1.86 : 1.00 for
Borrower.
Interest rate changes based upon changes in the foregoing chart will be
made effective as of the date of the first advance hereunder and on the first
day of the calendar month following the review by Agent of Borrower's quarterly
financial statements. In addition to changes occurring pursuant to fluctuations
in the foregoing chart, the interest rate charged hereunder shall change
automatically upon each change in the Prime Rate. Interest will be calculated
based on a 360-day year and charged for the actual number of days elapsed, and
will be payable on the first day of each calendar month commencing November 1,
1997 and continuing on the first (1st) day of each calendar month thereafter
during the term hereof unless an interest rate based upon the LIBOR Rate is in
effect, in which case the accrued interest shall be due and payable at the end
of the LIBOR Interest Period and Agent will remit to Bank its pro-rata share
<PAGE>
within 1 business day after Agent's receipt thereof. If any amount as to which a
LIBOR Election is in effect is repaid on a day other than the last day of the
applicable LIBOR Interest Period, or becomes payable on a day other than the
last day of the applicable LIBOR Interest Period due to acceleration or
otherwise, the Borrower shall pay, on demand by the Agent, such amount (as
determined by the Agent) as is required to compensate the Banks for any losses,
costs or expenses which the Banks may incur as a result of such payment or
acceleration, including, without limitation, any loss, cost or expense
(including loss of profit) incurred by reason of liquidation or reemployment of
deposits or other funds acquired by the Banks to fund or maintain such amount
bearing interest at the LIBOR Rate plus the percentage as set forth in the chart
above.
After maturity, whether by acceleration or otherwise, this Note will bear
interest, at the election of Bank and without notice to Borrower (computed and
adjusted in the same manner, and with the same effect, as interest hereon prior
to maturity), payable on demand, at a rate per annum equal to the Default Rate,
until paid, and whether before or after the entry of judgment hereon.
The Prime Rate means the rate of interest per annum announced to be its
Prime Rate from time to time by Agent at its principal office in Cincinnati,
Ohio whether or not Agent will at times lend to borrowers at lower rates of
interest, or, if there is no such Prime Rate, then its base rate or such other
rate as may be substituted by Agent for the Prime Rate.
LIBOR Interest Period means, with respect to which amounts outstanding
hereunder will accrue interest at the LIBOR Rate for a period of 30, 60, 90, 120
or 180 days commencing on a business day selected by Borrower pursuant to this
Note. Such LIBOR Interest Period shall end on the day in the succeeding calendar
month which corresponds numerically to the beginning day of such LIBOR Interest
Period, provided, however, that if there is no such numerically corresponding
day in such succeeding month, such LIBOR Interest Period shall end on the last
business day of such succeeding month. If a LIBOR Interest Period would
otherwise end on a day which is not a business day, such LIBOR Interest Period
shall end on the next succeeding business day.
LIBOR Rate means the rate (adjusted for reserves if Bank is required to
maintain reserves with respect to relevant advances) being asked on an amount of
Eurodollar deposits equal to the amount of the Note subject to a LIBOR Election
on the first day of a LIBOR Interest Period and which has a maturity
corresponding to the maturity of the LIBOR Interest Period, as reported by the
TELERATE rate reporting system (or any successor) as determined by Bank by noon
on the Effective Date of the LIBOR Interest Period. Each determination by Bank
of the LIBOR Rate shall be conclusive in the absence of manifest error.
Borrower's right to accrue interest at the LIBOR Rate shall be terminated
automatically if Bank, by telephonic notice, shall notify Borrower that LIBOR
deposits with a maturity equal to the LIBOR Interest Period and in an amount
equal to the then current outstanding principal amount of the Note are not
readily available in the London Inter-Bank Offered Rate Market, or that, by
reason of circumstances affecting such Market, adequate and reasonable methods
do not exist for ascertaining the interest rate applicable to such deposits for
the LIBOR Interest Period.
In addition, notwithstanding anything herein contained to the contrary, if,
prior to or during any period with respect to which the LIBOR Rate is in effect,
any change in any law, regulation or official directive, or in the
interpretation thereof, by any governmental body charged with the administration
thereof, shall make it unlawful for the Bank to find or maintain its funding in
Eurodollars of any portion of the Note subject to the LIBOR Rate or otherwise to
give effect to Bank's obligations as contemplated hereby, (i) Bank may, by
written notice to Borrower, declare Bank's obligations in respect of the LIBOR
Rate to be terminated forthwith, and (ii) the LIBOR Rate with respect to Bank
shall forthwith cease to be in effect, and interest shall from and after such
date be calculated based on the Prime Rate.
On September 30, 2000, all outstanding principal and all accrued and unpaid
interest will be due and payable.
<PAGE>
The principal amount of each loan made by Bank under this Note and the
amount of each prepayment made by Borrower under this Note will be recorded by
Bank in the regularly maintained data processing records of Bank. The aggregate
unpaid principal amount of all loans set forth in such records will be
presumptive evidence of the principal amount owing and unpaid on this Note.
However, failure by Bank to make any such entry will not limit or otherwise
affect Borrower's obligations under this Note or the Agreement.
All payments received by Agent under this Note will be applied first to
payment of amounts advanced by Bank on behalf of Borrower or which may be due
for insurance, taxes and attorneys' fees or other charges to be paid by Borrower
pursuant to the Agreement and the Loan Documents (as defined in the Agreement),
then to accrued interest on this Note, then to principal which will be repaid in
the inverse order of maturity.
This Note is one of the Revolving Notes referred to in the Agreement, and
is entitled to the benefits, and is subject to the terms, of the Agreement.
Capitalized terms used but not otherwise defined herein will have the meanings
attributed thereto in the Agreement. The maturity of this Note is subject to
acceleration upon the terms, set forth in the Agreement. Except as otherwise
expressly provided in the Agreement, if any payment on this Note becomes due and
payable on a day other than one on which Agent is open for business (a "Business
Day"), the maturity thereof will be extended to the next Business Day, and
interest will be payable at the rate specified herein during such extension
period.
After the occurrence of an Event of Default, all amounts of principal
outstanding as of the date of the occurrence of such Event of Default will bear
interest at the Default Rate, in Bank's sole discretion, without notice to
Borrower. This provision does not constitute a waiver of any Events of Default
or an agreement by Bank to permit any late payments whatsoever.
In no event will the interest rate on this Note exceed the highest rate
permissible under any law which a court of competent jurisdiction will, in a
final determination, deem applicable hereto. In the event that a court
determines that Bank has received interest and other charges under this Note in
excess of the highest permissible rate applicable hereto, such excess will be
deemed received on account of, and will automatically be applied to reduce the
amounts due to Bank from Borrower under this Note, other than interest, and the
provisions hereof will be deemed amended to provide for the highest permissible
rate. If there are no such amounts outstanding, Bank will refund to Borrower
such excess.
Borrower and all endorsers, sureties, guarantors and other persons liable
on this Note hereby waive presentment for payment, demand, notice of dishonor,
protest, notice of protest and all other demands and notices in connection with
the delivery, performance and enforcement of this Note, and consent to one or
more renewals or extensions of this Note.
This Note may not be changed orally, but only by an instrument in writing.
This Note is being delivered in, is intended to be performed in, will be
construed and enforceable in accordance with, and be governed by the internal
laws of, the State of Ohio without regard to principles of conflict of laws.
Borrower agrees that the State and Federal courts in Hamilton County, Ohio or
any other court in which Bank initiates proceedings will have exclusive
jurisdiction over all matters arising out of this Note, and that service of
process in any such proceeding will be effective if mailed to Borrower at its
address described in the Notices section of the Agreement. BORROWER HEREBY
WAIVES THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE.
GLOBE BUSINESS RESOURCES, INC.
By:
---------------------------------
Its:
---------------------------------
<PAGE>
SCHEDULE 5.3
LITIGATION
<PAGE>
SCHEDULE 5.6
LICENSES
<PAGE>
SCHEDULE 5.7
LAWS AND TAXES
<PAGE>
SCHEDULE 5.9
TITLE
<PAGE>
SCHEDULE 5.12
SUBSIDIARIES AND PARTNERSHIPS
<PAGE>
SCHEDULE 5.13
ERISA
<PAGE>
SCHEDULE 7.5(c)
DEBT
<PAGE>
SCHEDULE 1(3)
COMPETITORS
<PAGE>
EXHIBIT 9.1(B)
GLOBE BUSINESS RESOURCES, INC.
CERTIFICATE OF BORROWER
RE: $30,000,000 FINANCING
<PAGE>
EXHIBIT 9.1(C)
OPINION OF COUNSEL FOR BORROWER
GLOBE BUSINESS RESOURCES, INC.
$30,000,000 Principal Amount
7.54% Senior Notes due September 1, 2007
--------------------
NOTE PURCHASE AGREEMENT
--------------------
Dated as of September 1, 1997
PPN: 379395 A* 7
<PAGE>
TABLE OF CONTENTS
Page
1. AUTHORIZATION OF NOTES...............................................1
2. SALE AND PURCHASE OF NOTES...........................................1
3. CLOSING..............................................................2
4. CONDITIONS TO CLOSING................................................2
4.1. Representations and Warranties................................2
4.2. Performance; No Default.......................................2
4.3. Compliance Certificates.......................................2
4.4. Opinions of Counsel...........................................3
4.5. Purchase Permitted By Applicable Law, etc.....................3
4.6. Sale of Other Notes...........................................3
4.7. Payment of Special Counsel Fees...............................3
4.8. Private Placement Number......................................4
4.9. Changes in Corporate Structure................................4
4.10. Proceedings and Documents.....................................4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................4
5.1. Organization; Power and Authority.............................4
5.2. Authorization, etc............................................4
5.3. Disclosure....................................................5
5.4. Organization and Ownership of Shares of Subsidiaries..........5
5.5. Financial Statements..........................................6
5.6. Compliance with Laws, Other Instruments, etc..................6
5.7. Governmental Authorizations, etc..............................6
5.8. Litigation; Observance of Statutes and Orders.................6
5.9. Taxes.........................................................7
5.10. Title to Property; Leases.....................................7
5.11. Licenses, Permits, etc........................................7
5.12. Compliance with ERISA.........................................7
5.13. Private Offering by the Company...............................8
5.14. Use of Proceeds; Margin Regulations...........................8
5.15. Existing Debt.................................................9
5.16. Foreign Assets Control Regulations, etc.......................9
5.17. Status under Certain Statutes.................................9
<PAGE>
6. REPRESENTATIONS OF THE PURCHASER.....................................9
6.1. Purchase for Investment.......................................9
6.2. Source of Funds..............................................10
7. INFORMATION AS TO COMPANY...........................................11
7.1. Financial and Business Information...........................11
7.2. Officer's Certificate........................................13
7.3. Inspection...................................................14
8. PREPAYMENT OF THE NOTES.............................................15
8.1. Required Prepayments.........................................15
8.2. Optional Prepayments with Make-Whole Amount..................15
8.3. Allocation of Partial Prepayments............................15
8.4. Maturity; Surrender, etc.....................................16
8.5. Purchase of Notes............................................16
8.6. Make-Whole Amount............................................16
9. AFFIRMATIVE COVENANTS...............................................18
9.1. Compliance with Law..........................................18
9.2. Insurance....................................................18
9.3. Maintenance of Properties....................................18
9.4. Payment of Taxes.............................................18
9.5. Corporate Existence, etc.....................................19
10. NEGATIVE COVENANTS..................................................19
10.1. Transactions with Affiliates.................................19
10.2. Merger, Consolidation, etc...................................19
10.3. Consolidated Net Worth.......................................20
10.4. Debt.........................................................21
10.5. Current Ratio................................................21
10.6. Fixed Charge Coverage Ratio..................................21
10.7. Liens........................................................22
10.8. Sale of Assets...............................................23
10.9. Nature of Business...........................................23
10.10. Pari Passu Position..........................................23
11. EVENTS OF DEFAULT...................................................24
12. REMEDIES ON DEFAULT, ETC............................................25
12.1. Acceleration.................................................25
12.2. Other Remedies...............................................26
12.3. Rescission...................................................26
12.4. No Waivers or Election of Remedies, Expenses, etc............27
<PAGE>
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.......................27
13.1. Registration of Notes........................................27
13.2. Transfer and Exchange of Notes...............................27
13.3. Replacement of Notes.........................................28
14. PAYMENTS ON NOTES...................................................28
14.1. Place of Payment.............................................28
14.2. Home Office Payment..........................................28
15. EXPENSES, ETC.......................................................29
15.1. Transaction Expenses.........................................29
15.2. Survival.....................................................29
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT...........................................................30
17. AMENDMENT AND WAIVER................................................30
17.1. Requirements.................................................30
17.2. Solicitation of Holders of Notes.............................30
17.3. Binding Effect, etc..........................................31
17.4. Notes held by Company, etc...................................31
18. NOTICES.............................................................31
19. REPRODUCTION OF DOCUMENTS...........................................32
20. CONFIDENTIAL INFORMATION............................................32
21. SUBSTITUTION OF PURCHASER...........................................33
22. MISCELLANEOUS.......................................................34
22.1. Successors and Assigns.......................................34
22.2. Payments Due on Non-Business Days............................34
22.3. Severability.................................................34
22.4. Construction.................................................34
22.5. Counterparts.................................................34
22.6. Governing Law................................................35
SCHEDULE A -- Information Relating To Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary
Stocks
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.15 -- Existing Debt and Liens
SCHEDULE 10.7 -- Existing Liens
SCHEDULE 13.2 -- Competitors
EXHIBIT 1 -- Form of 7.54% Senior Note due September 1, 2007
EXHIBIT 4.4 -- Forms of Opinions
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
The Spectrum Office Towers
11260 Chester Road, Suite 400
Cincinnati, Ohio 45246
7.54% Senior Notes due September 1, 2007
Dated as of September 1, 1997
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
GLOBE BUSINESS RESOURCES, INC., an Ohio corporation (the
"Company"), agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $30,000,000 aggregate
principal amount of its 7.54% Senior Notes due September 1, 2007 (the "Notes",
such term to include any such notes issued in substitution therefor pursuant to
Section 13 of this Agreement). The Notes shall be substantially in the form set
out in Exhibit 1, with such changes therefrom, if any, as may be approved by you
and the Company. Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite your
name in Schedule A at the purchase price of 100% of the principal amount
thereof. Your obligation hereunder and the obligations of the other Purchasers
are several and not joint obligations and you shall have no obligation hereunder
and no liability to any Person for the performance or non-performance by any
other Purchaser hereunder.
<PAGE>
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the other
Purchasers shall occur at the offices of Gardner, Carton & Douglas, 321 N. Clark
St., Chicago, Illinois 60610, at 10:00 a.m., Central time, at a closing on
September 1, 1997 (the "Closing"), or on such other Business Day as may be
agreed upon by the Company and the Purchasers. At the Closing the Company will
deliver to you in the form of a single Note (or such greater number of Notes in
denominations of at least $100,000 as you may request) dated the date of the
Closing and registered in your name (or in the name of your nominee), against
delivery by you to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company at The Fifth Third Bank, Account
Number 711-23737, Account Name: Globe Collection Account, ABA number: 042000314.
If at the Closing the Company shall fail to tender such Notes to you as provided
above in this Section 3, or any of the conditions specified in Section 4 shall
not have been fulfilled to your satisfaction, you shall, at your election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights you may have by reason of such failure or such
nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the respective Notes to be sold
to you at the Closing is subject to the fulfillment to your satisfaction, prior
to or at the Closing, of the following conditions:
4.1. Representations and Warranties.
The representations and warranties of the Company in this Agreement
shall be correct in all material respects (other than representations and
warranties that are subject to a materiality qualifier, which shall be correct
in all respects) when made and at the time of the Closing other than
representations and warranties given as of a certain date, which shall be
correct in all material respects (or correct in all respects, as the case may
be) as of such date.
2
<PAGE>
4.2. Performance; No Default.
The Company shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing and, after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Section 5.14), no Default or Event of Default shall have occurred and be
continuing as of the Closing.
4.3. Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled and
certifying as to such factual matters as you may have specified pursuant to
Section 4.5.
(b) Secretary's Certificate. The Company shall have delivered to
you a certificate, as to which there shall be no personal (as opposed to
corporate) liability dated the date of the Closing certifying as to the
resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes and the Agreement.
4.4. Opinions of Counsel.
You shall have received opinions in form and substance satisfactory to
you, dated the date of the Closing (a) from Keating, Meuthing & Klekamp, P.L.L.,
special counsel for the Company, covering the matters set forth in Exhibit 4.4
and covering such other matters incident to the transactions contemplated hereby
as you or your counsel may reasonably request (and the Company hereby instructs
its counsel to deliver such opinion to you) and (b) from Gardner, Carton &
Douglas, your special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4 and covering such other
matters incident to such transactions as you may reasonably request.
4.5. Purchase Permitted By Applicable Law, etc.
On the date of the Closing, your purchase of the Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.
3
<PAGE>
4.6. Sale of Other Notes.
Contemporaneously with the Closing the Company shall sell to the
other Purchasers and the other Purchasers shall purchase the Notes to be
purchased by them as specified in Schedule A.
4.7. Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall have
paid on or before the Closing the reasonable fees, charges and disbursements of
your special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to such Closing.
4.8. Private Placement Number.
A Private Placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes
by your special counsel or the placement agent.
4.9. Changes in Corporate Structure.
Except as specified in Schedule 4.9, at any time following the date of
the most recent financial statements referred to in Schedule 5.5, the Company
shall not have changed its jurisdiction of incorporation or been a party to any
merger or consolidation and shall not have succeeded to all or any substantial
part of the liabilities of any other entity.
4.10. Proceedings and Documents.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be reasonably satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Purchasers as of the Closing
that:
5.1. Organization; Power and Authority.
The Company is a corporation organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing (or the local law
equivalent) in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing (or the local law equivalent) would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and the Notes
and to perform the provisions hereof and thereof.
4
<PAGE>
5.2. Authorization, etc.
This Agreement and the Notes have been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement constitutes, and
upon execution and delivery thereof each Note will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5.3. Disclosure.
The Company, through its agent, William Blair & Company, L.L.C., has
delivered to you and each other Purchaser a copy of a Placement Memorandum,
dated July 1997 (the "Memorandum"), relating to the transactions contemplated
hereby. With respect to the historical information contained herein and therein,
this Agreement, the Memorandum, the documents, certificates or other writings
furnished to the Purchasers and the financial statements listed in Schedule 5.5,
taken as a whole, do not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. With
respect to the projections, forecasts and other forward-looking information
contained in this Agreement, the Memorandum, the documents, certificates or
other writings furnished to the Purchasers and the financial statements listed
in Schedule 5.5, taken as a whole, such projections, forecasts and other
forward-looking information were prepared in good faith based upon reasonable
assumptions by management of the Company and reflect the Company's actual
subjective expectations for its operations and performance for the indicated
periods. Except as disclosed in the Memorandum or as expressly described in one
of the documents, certificates or other writings furnished to the Purchasers, or
in the financial statements listed in Schedule 5.5, since February 28, 1997,
there has been no change in the financial condition, operations, business or
properties of the Company or any of its Subsidiaries except changes that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
5.4. Organization and Ownership of Shares of Subsidiaries.
(a) Schedule 5.4 is (except as noted therein) a complete and correct
list of the Company's Subsidiaries, showing, as to each Subsidiary, the correct
name thereof, the jurisdiction of its organization, whether such Subsidiary is a
Restricted Subsidiary, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and each
other Subsidiary.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity organized, validly existing and in good standing (or the local law
equivalent) under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
5
<PAGE>
(or the local law equivalent) in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing (or the local law equivalent) would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
5.5. Financial Statements.
The Company has delivered to each Purchaser copies of the financial
statements of the Company and its Subsidiaries listed on Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6. Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this Agreement
and the Notes will not (i) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any property
of the Company or any Subsidiary under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter or by-laws, or any
other Material agreement or instrument to which the Company or any Subsidiary is
bound or by which the Company or any Subsidiary or any of their respective
properties may be bound or affected, (ii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental Authority applicable to the
Company or any Subsidiary or (iii) assuming the correctness of the
representations and warranties of the Purchasers in this Agreement, violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Subsidiary.
5.7. Governmental Authorizations, etc.
Assuming the correctness of the representations and warranties of the
Purchasers in this Agreement, no consent, approval or authorization of, or
registration, filing or declaration with, any Governmental Authority is required
in connection with the execution, delivery or performance by the Company of this
Agreement or the Notes.
5.8. Litigation; Observance of Statutes and Orders.
(a) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
6
<PAGE>
(b) Neither the Company nor any Subsidiary is in default under any
order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
5.9. Taxes.
The Company and its Subsidiaries have filed all income tax returns that
are required to have been filed in any jurisdiction, and have paid all taxes
shown to be due and payable on such returns and all other taxes and assessments
payable by them, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (i) the amount of which is not individually or in the aggregate
Material or (ii) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which the Company or a Subsidiary, as the case may be, has established adequate
reserves in accordance with GAAP. The Federal income tax liabilities of the
Company and its Subsidiaries have been determined by the Internal Revenue
Service and paid for all fiscal years up to and including the fiscal year ended
February 28, 1997.
5.10. Title to Property; Leases.
The Company and its Subsidiaries have good and sufficient title to their
respective Material properties, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Agreement, except for those defects
in title and Liens that, individually or in the aggregate, would not have a
Material Adverse Effect. All Material leases are valid and subsisting and are in
full force and effect in all material respects.
5.11. Licenses, Permits, etc.
The Company and its Subsidiaries own, possess all licenses, permits,
franchises, authorizations, patents, copyrights, service marks, trademarks and
trade names, or rights thereto, that are Material, without known conflict with
the rights of others, except for those conflicts that, individually or in the
aggregate, would not have a Material Adverse Effect.
5.12. Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated and administered
each Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that would reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not be individually or in the aggregate
Material.
7
<PAGE>
(b) The Company has no aggregate benefit liabilities under any Plan. The
term "benefit liabilities" has the meaning specified in section 4001 of ERISA
and the terms "current value" and "present value" have the meaning specified in
section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)- (D) of the Code. The
representation by the Company in the first sentence of this Section 5.12(e) is
made in reliance upon and subject to the accuracy of your representation in
Section 6.2 as to the sources of the funds to be used to pay the purchase price
of the Notes to be purchased by you.
5.13. Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any Person other than you, and not more than 49 other Institutional Investors,
each of which has been offered the Notes at a private sale for investment.
Neither the Company nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes to the registration
requirements of Section 5 of the Securities Act.
5.14. Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes to repay
existing bank Debt and for general corporate purposes. No part of the proceeds
from the sale of the Notes hereunder will be used, directly or indirectly, for
the purpose of buying or carrying any margin stock within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System (12 CFR
207), or for the purpose of buying or carrying or trading in any securities
under such circumstances as to involve the Company in a violation of Regulation
X of said Board (12 CFR 224) or to involve any broker or dealer in a violation
of Regulation T of said Board (12 CFR 220). Margin stock does not constitute
more than 5% of the value of the consolidated assets of the Company and its
Subsidiaries and the Company does not have any present intention that margin
stock will constitute more than 5% of the value of such assets. As used in this
Section, the terms "margin stock" and "purpose of buying or carrying" shall have
the meanings assigned to them in said Regulation G.
8
<PAGE>
5.15. Existing Debt.
Except as described therein, Schedule 5.15 sets forth a complete and
correct list of all outstanding Debt of the Company and its Subsidiaries as of
September 1, 1997, since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or maturities of
the Debt of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Debt of the Company or such
Subsidiary and no event or condition exists with respect to any Debt of the
Company or any Subsidiary that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such to become due and
payable before its stated maturity or before its regularly scheduled dates of
payment.
5.16. Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. Purchase for Investment.
You represent that you are purchasing the Notes for your own account or
for one or more separate accounts maintained by you or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
6.2. Source of Funds.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) if you are an insurance company, the Source does not include assets
allocated to any separate account maintained by you in which any employee
benefit plan (or its related trust) has any interest, other than a separate
account that is maintained solely in connection with your fixed contractual
9
<PAGE>
obligations under which the amounts payable, or credited, to such plan and to
any participant or beneficiary of such plan (including any annuitant) are not
affected in any manner by the investment performance of the separate account; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of Prohibited Transaction Exemption ("PTE") 90-1
(issued January 29, 1990), or (ii) a bank collective investment fund, within the
meaning of the PTE 91-38 (issued July 12, 1991) and, except as you have
disclosed to the Company in writing pursuant to this paragraph (b), no employee
benefit plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to such
pooled separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified professional
asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption),
no employee benefit plan's assets that are included in such investment fund,
when combined with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity of
such QPAM and (ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company in writing
pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this paragraph
(e); or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA; or
(g) if you are an insurance company and the Source includes assets of
your general account, the acquisition of the Notes by the Purchaser is exempt
under PTE 95-60 (issued July 12, 1995).
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in section 3 of ERISA.
10
<PAGE>
7. INFORMATION AS TO COMPANY.
7.1. Financial and Business Information.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- within 45 days after the end of each quarterly
fiscal period in each fiscal year of the Company (other than the last quarterly
fiscal period of each such fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income and cash flows of the
Company and its Subsidiaries, for such quarter and (in the case of the
second and third quarters) for the portion of the fiscal year ending
with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer (as to which certificate there shall not
be any personal (as opposed to corporate) liability) as fairly presenting, in
all material respects, the financial position of the companies being reported on
and their results of operations and cash flows, subject to changes resulting
from year-end adjustments; provided, that delivery within the time period
specified above of copies of the Company's Quarterly Report on Form 10-Q
prepared in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the requirements
of this Section 7.1(a);
(b) Annual Statements -- within 90 days after the end of each fiscal year
of the Company, duplicate copies of,
(i) audited consolidated and unaudited consolidating balance
sheets of the Company and its Subsidiaries, as at the end of such
year, and
(ii) audited consolidated and unaudited consolidating statements
of income and cash flows and audited consolidated statements of
changes in stockholders' equity of the Company and its Subsidiaries,
for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied in the case of the consolidated statements only
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all
material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and
have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted
auditing standards, and that such audit provides a reasonable
basis for such opinion in the circumstances; and
11
<PAGE>
(B) by a certificate of such accountants stating that they
have reviewed this Agreement and stating further whether, in
making their audit, they have become aware of any condition or
event that then constitutes a Default or an Event of Default,
and, if they are aware that any such condition or event then
exists, specifying the nature and period of the existence thereof
(it being understood that such accountants shall not be liable,
directly or indirectly, for any failure to obtain knowledge of
any Default or Event of Default unless such accountants should
have obtained knowledge thereof in making an audit in accordance
with generally accepted auditing standards or did not make such
an audit),
and provided that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to stockholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the requirements therefor,
containing all of the foregoing information and filed with the Securities and
Exchange Commission, together with the accountant's certificate described in
clause (B) above, shall be deemed to satisfy the requirements of this Section
7.1(b), other than with respect to required consolidating statements;
(c) SEC and Other Reports -- promptly upon their becoming available, and
if applicable, one copy of (i) each financial statement, report, notice or proxy
statement sent by the Company or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each registration statement
that shall have become effective (without exhibits except as expressly requested
by such holder), and each final prospectus and all amendments thereto filed by
the Company or any Subsidiary with the Securities and Exchange Commission;
(d) Notice of Default or Event of Default -- promptly, and in any event
within five days after a Responsible Officer becoming aware of the existence of
any Default or Event of Default, a written notice specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five Business
Days after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any, that the
Company or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the regulations thereunder, for
which notice thereof has not been waived pursuant to such regulations as
in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, or in
12
<PAGE>
the imposition of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or
such penalty or excise tax provisions, if such liability or Lien, taken
together with any other such liabilities or Liens then existing, would
reasonably be expected to have a Material Adverse Effect; and
(f) Requested Information -- with reasonable promptness, such other data
and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder and
under the Notes as from time to time may be reasonably requested by any such
holder of Notes.
7.2. Officer's Certificate.
Each set of financial statements delivered to a holder of Notes pursuant
to Section (a) or Section (b) of Section 7.1 shall be accompanied by a
certificate of a Senior Financial Officer (as to which certificate there shall
be no personal (as opposed to corporate) liability) setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations, if applicable) required in order to establish whether the Company
was in compliance with the requirements of Sections 10.2 through 10.10 hereof,
inclusive, during the quarterly or annual period covered by the statements then
being furnished (including, with respect to each such Section, where applicable,
the calculations of the maximum or minimum amount, ratio or percentage, as the
case may be, permissible under the terms of such Sections, and the calculation
of the amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
7.3. Inspection.
The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to discuss the affairs, finances
and accounts of the Company and its Subsidiaries with the Company's officers,
and, with the consent of the Company (which consent will not be unreasonably
withheld) to visit the other offices and properties of the Company and each
Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing;
and
13
<PAGE>
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or properties of
the Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. PREPAYMENT OF THE NOTES.
8.1. Required Prepayments.
In addition to payment of all outstanding principal of the Notes at
maturity, on September 1, 2001 and on each September 1 thereafter to and
including September 1, 2006 the Company will prepay $4,285,714 principal amount
(or such lesser principal amount as shall then be outstanding) of the Notes,
with the remaining principal payable at maturity on September 1, 2007, at par
and without payment of the Make-Whole Amount or any premium, provided that upon
any partial prepayment of the Notes pursuant to Section 8.2 or 8.3 or purchase
of the Notes permitted by Section 8.5, the principal amount of each required
prepayment of the Notes becoming due under this Section 8.1 on and after the
date of such prepayment or purchase shall be reduced in the same proportion as
the aggregate unpaid principal amount of the Notes is reduced as a result of
such prepayment or purchase.
8.2. Optional Prepayments with Make-Whole Amount.
Beginning on the day after the first anniversary of the Closing Date,
the Company may, at its option, upon notice as provided below, prepay at any
time all, or from time to time any part of, the Notes, in an amount not less
than $1,000,000 of the aggregate principal amount of the Notes then outstanding
in the case of a partial prepayment, at 100% of the principal amount so prepaid,
plus the Make-Whole Amount determined for the prepayment date with respect to
such principal amount. The Company will give each holder of Notes written notice
of each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer (as to
which certificate there shall be no personal (as opposed to corporate)
liability) as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer (as to which certificate there shall
be no personal (as opposed to corporate) liability) specifying the calculation
of such Make-Whole Amount as of the specified prepayment date.
14
<PAGE>
8.3. Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.
8.4. Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and canceled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.5. Purchase of Notes.
The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except (a) upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes or (b) pursuant to an
offer to purchase made by the Company or an Affiliate pro rata to the holders of
all Notes at the time outstanding upon the same terms and conditions. Any such
offer shall provide each holder with sufficient information to enable it to make
an informed decision with respect to such offer, and shall remain open for at
least 30 Business Days. If the holders of more than 50% of the principal amount
of the Notes then outstanding accept such offer, the Company shall promptly
notify the remaining holders of such fact and the expiration date for the
acceptance by holders of Notes of such offer shall be extended by the number of
days necessary to give each such remaining holder at least 15 Business Days from
its receipt of such notice to accept such offer. The Company will promptly
cancel all Notes acquired by it or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this Agreement and
no Notes may be issued in substitution or exchange for any such Notes.
8.6. Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.
15
<PAGE>
"Discounted Value" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of any
Note, the yield to maturity implied by (i) the yields reported, as of 10:00 A.M.
(New York City time) on the second Business Day preceding the Settlement Date
with respect to such Called Principal, on the display designated as "Page 678"
on the Telerate Access Service (or such other display as may replace Page 678 on
Telerate Access Service) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, plus .50%, or (ii) if such yields are not reported as of such
time or the yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date, plus
.50%. Such implied yield will be determined, if necessary, by (a) converting
U.S. Treasury bill quotations to bond-equivalent yields in accordance with
accepted financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the duration closest to and greater
than the Remaining Average Life and (2) the actively traded U.S. Treasury
security with the duration closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Notes, then the
amount of the next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
16
<PAGE>
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
9.1. Compliance with Law.
The Company will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental Laws, and will obtain
and maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
9.2. Insurance.
The Company will and will cause each of its Subsidiaries to maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.
9.3. Maintenance of Properties.
The Company will and will cause each of its Subsidiaries to maintain and
keep, or cause to be maintained and kept, their respective properties in good
repair, working order and condition (other than ordinary wear and tear), so that
the business carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance would not, individually
or in the aggregate, have a Material Adverse Effect.
9.4. Payment of Taxes.
The Company will and will cause each of its Subsidiaries to file all
income tax or similar tax returns required to be filed in any jurisdiction and
to pay and discharge all taxes shown to be due and payable on such returns and
all other taxes, assessments, governmental charges, or levies payable by any of
them, to the extent such taxes and assessments have become due and payable and
before they have become delinquent, provided that neither the Company nor any
Subsidiary need pay any such tax or assessment if (i) the amount, applicability
or validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (ii) the nonpayment of all such
taxes and assessments in the aggregate would not reasonably be expected to have
a Material Adverse Effect.
17
<PAGE>
9.5. Corporate Existence, etc.
The Company will at all times preserve and keep in full force and effect
its corporate existence. Subject to Sections 10.2 and 10.8, the Company will at
all times preserve and keep in full force and effect the corporate existence of
each of its Subsidiaries (unless merged into the Company or another Subsidiary)
and all rights and franchises of the Company and its Subsidiaries unless, in the
good faith judgment of the Company, the termination of or failure to preserve
and keep in full force and effect such corporate existence, right or franchise
would not, individually or in the aggregate, have a Material Adverse Effect.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
10.1. Transactions with Affiliates.
The Company will not and will not permit any Subsidiary to enter into
directly or indirectly any Material transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or exchange
of properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except pursuant to the
reasonable requirements of the Company's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would be obtainable in a comparable arm's-length transaction with a Person
not an Affiliate.
10.2. Merger, Consolidation, etc.
(a) The Company shall not consolidate with or merge with any other
corporation (other than a Wholly-Owned Restricted Subsidiary) or convey,
transfer or lease substantially all of its assets in a single transaction or
series of transactions to any Person (other than a Wholly-Owned Restricted
Subsidiary) unless:
(i) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the
case may be, shall be a solvent corporation organized and existing under
the laws of the United States or any State thereof (including the
District of Columbia), and, if the Company is not such corporation, such
corporation shall have executed and delivered to each holder of any
Notes its assumption of the due and punctual performance and observance
of each covenant and condition of this Agreement and the Notes (pursuant
to such agreements and instruments as shall be reasonably satisfactory
to the Required Holders), and the Company shall have caused to be
delivered to each holder of Notes an opinion of independent counsel
reasonably satisfactory to the Required Holders, to the effect that all
agreements or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing.
18
<PAGE>
No conveyance, transfer or lease of substantially all of the assets of
the Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed in
this Section 10.2 from its liability under this Agreement or the Notes.
(b) Except for transactions that are otherwise in compliance with
Section 10.8, the Company shall not permit any Restricted Subsidiary to
consolidate with or merge into any other Person or convey, transfer or lease
substantially all of its assets in a single transaction or series of
transactions to any Person unless:
(i) the Restricted Subsidiary consolidates with or merges into
the Company or another Wholly-Owned Restricted Subsidiary or a Person
which becomes a Wholly-Owned Restricted Subsidiary as a result of such
consolidation or merger; or
(ii) the Restricted Subsidiary conveys, transfers or leases all
or a substantial part of its assets to the Company or to another
Wholly-Owned Restricted Subsidiary or to a Person which becomes a
Wholly-Owned Restricted Subsidiary as a result of such conveyance,
transfer or lease.
(c) The Company shall not (i) permit any Restricted Subsidiary to issue
shares of capital stock to any Person except the Company or another Wholly-Owned
Restricted Subsidiary or (ii) sell, transfer or otherwise dispose of shares or
capital stock of any of the Company's Restricted Subsidiaries other than to the
Company or another Restricted Subsidiary; provided, however, that the Company
may sell, transfer or otherwise dispose of shares of capital stock of any
Restricted Subsidiary if such sale, transfer or disposition would be permitted
pursuant to Section 10.8 hereof.
10.3. Consolidated Net Worth.
The Company will not, at any time, permit its Consolidated Net Worth to
be less than the sum of (a) $25,000,000 plus (b) 50% of Consolidated Net Income
(but, in each case, only if a positive number) calculated on a cumulative basis
commencing with the quarter ending August 31, 1997, and measured as of the last
day of each fiscal quarter thereafter.
10.4. Debt.
(a) The Company and its Restricted Subsidiaries shall not, at any time,
permit: (i) the ratio of Senior Funded Debt to EBITDA to be greater than 3:00 to
1:00 for the immediately preceding four consecutive fiscal quarters and (ii) the
ratio of Total Debt to EBITDA to be greater than 4:00 to 1:00 for the
immediately preceding four consecutive fiscal quarters; provided that, in the
event the Company or any Restricted Subsidiary acquires all of the capital stock
or substantially all of the assets or any other Person, the Company may include
the EBITDA of such Person for the prior four fiscal quarters in calculating the
EBITDA of the Company pursuant to this paragraph (a).
(b) The Company will not permit any Restricted Subsidiaries at any time,
to create, assign, incur, guaranty, or otherwise permit to exist any Debt other
than:
19
<PAGE>
(i) existing Debt described in Schedule 5.15;
(ii) Debt owed by a Wholly-Owned Restricted Subsidiary to the
Company or another Wholly-Owned Restricted Subsidiary;
(iii) subject to compliance with Section 10.7(j), Debt of
Restricted Subsidiaries created after the Closing Date not to exceed,
in the aggregate at any time outstanding, 15% of the sum of
Consolidated Funded Debt and Consolidated Net Worth as of the last day
of the immediately preceding fiscal quarter; and
(iv) any extension, renewal, refunding or replacement of any Debt
described in paragraph (i) of this Section 10.4(b); provides that (1)
no such extension, renewal or refunding shall increase the principal
amount of such Debt and (2) immediately after such extension, renewal
or refunding, no Default or Event of Default would exist.
Notwithstanding the foregoing, the Company will not permit at any time
Corporate Stay International Inc. or Globe Furniture Rentals, Inc. to create,
assign, incur, guarantee or otherwise permit to exist any Debt.
10.5. Current Ratio.
The Company will not permit, as of the end of each fiscal quarter, its
Consolidated Current Ratio to be less than 2:50 to 1:00.
10.6. Fixed Charge Coverage Ratio.
The Company will not, as of the end of any fiscal quarter, permit the
ratio of Consolidated Cash Flow Available for Fixed Charges for the immediately
preceding four consecutive fiscal quarters to Consolidated Fixed Charges for the
immediately preceding four consecutive fiscal quarters to be less than 1:75 to
1:00.
10.7. Liens.
The Company will not, and will not permit any Restricted Subsidiary to,
create, assume, or incur, or permit to exist, directly or indirectly, any Lien
on its properties or assets, whether now owned or hereafter acquired, except:
(a) Liens for property taxes, assessments, or other governmental charges
not then due and delinquent or the validity of which is being contested in good
faith and as to which the Company has established adequate reserves on its books
in accordance with GAAP;
(b) Liens arising in the ordinary course of business and not incurred in
connection with the borrowing of money, including Liens securing claims of
carriers, warehousemen, mechanics, materialmen, employees, landlords and other
similar Liens that in the aggregate do not materially interfere with the conduct
of business of the Company and its Restricted Subsidiaries, taken as a whole, or
materially impair the value of the property or assets of the Company and its
Restricted Subsidiaries, taken as a whole;
20
<PAGE>
(c) Liens incidental to the normal conduct of the business of the
Company or any Restricted Subsidiary (not incurred for the borrowing of money),
including Liens in connection with workers' compensation, unemployment
insurance, and other governmental insurance or benefits;
(d) Liens resulting from judgments or court proceedings, provided the
execution of such Liens is effectively stayed, such Liens are being contested in
good faith by appropriate proceedings and the Company has established adequate
reserves for such matters on its books in accordance with GAAP;
(e) minor survey exceptions, easements, encroachments, rights-of-way,
and zoning ordinances which customarily exist on real property and which do not
materially detract from the value of such property;
(f) Liens securing Debt of a Restricted Subsidiary to the Company or
another Wholly-Owned Restricted Subsidiary;
(g) existing Liens on property of the Company or any Restricted
Subsidiary described on Schedule 10.7;
(h) Liens securing the payment of the purchase price of assets provided
(i) any such Liens are created within 180 days after the acquisition of such
assets; (ii) at the time of acquisition of such assets, Debt secured by such
Liens does not exceed the purchase price thereof (including any interest or
other finance charges); (iii) such Liens do not extend to other property of the
Company or any Restricted Subsidiary; and (iv) Debt secured by such Liens is
permitted by Section 10.4 hereof;
(i) Liens created pursuant to Capitalized Leases permitted by Section
10.4 hereof; and
(j) Liens not permitted by paragraphs (a) through (i) above to secure
Debt; provided that at the time of incurrence of such Debt, (i) the aggregate
amount of Secured Debt permitted by this Section 10.7(j) plus the aggregate
amount of outstanding Debt of Restricted Subsidiaries permitted by Section
10.4(b)(iii) will not, as of the date of incurrence of such Debt, exceed 20% of
the sum of Consolidated Net Worth plus Consolidated Funded Debt and (ii) the
Company is in compliance with Section 10.4 hereof.
Notwithstanding the foregoing, the Company will not permit Corporate Stay
International Inc. or Globe Furniture Rentals, Inc. to create, assign, incur or
permit to exist, directly or indirectly, any Lien on any trademarks or
tradenames owned by either of such Restricted Subsidiaries.
10.8. Sale of Assets.
The Company will not, and will not permit any Restricted Subsidiary to,
sell, lease, transfer or otherwise (including by way of merger) dispose of
(collectively a "Disposition") any assets, including capital stock of
Subsidiaries, in one or a series of transactions, other than in the ordinary
course of business, to any Person, except to the Company or a Wholly-Owned
Restricted Subsidiary, (i) if, in any fiscal year, after giving effect to such
21
<PAGE>
Disposition, the aggregate net book value of assets subject to Dispositions
(other than Dispositions involving the Exchange of Assets) during such fiscal
year would, when added to the net book value attributable to any Negative
Exchanges of Assets, exceed 5% of Consolidated Total Assets as of the end of the
fiscal quarter immediately preceding such Disposition or (ii) if a Default or
Event of Default exists or would exist as a result of such Disposition; provided
that, in no event shall the Company or its Restricted Subsidiaries sell for less
than face value any of its trade receivables except on commercially reasonable
terms in the ordinary course of business in conjunction with the sale of Market
Property, except that the face value of trade receivables sold in conjunction
with the sale of Market Property shall be included as Dispositions for purposes
of clause (i) above.
10.9. Nature of Business.
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business if, as a result thereof, the business then to be
conducted by the Company and its Restricted Subsidiaries, taken as a whole,
would cease to be substantially the same as the business of the Company and its
Restricted Subsidiaries described in the Memorandum.
10.10. Pari Passu Position
The Company agrees that neither it nor its Restricted Subsidiaries shall
have outstanding any Debt to commercial banks that is not on a pari passu basis
with the Notes.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) Any default in the payment of interest when due on any of the
Notes and continuance of such default for a period of five days;
(b) Any default in the payment of the principal or Make-Whole Amount of
any of the Notes at maturity, upon acceleration of maturity or at any date fixed
for prepayment;
(c) (i) Any default in the payment of the principal of, or interest or
premium on, any other Debt of the Company and its Restricted Subsidiaries that
is outstanding in an aggregate principal amount in excess of $1,000,000 as and
when due and payable and the continuation of such default beyond the period of
grace, if any, allowed with respect thereto, or (ii) any default (other than a
payment default) in compliance with any term or provision under any loan
agreements or other instruments evidencing Debt of the Company and its
Restricted Subsidiaries in an aggregate outstanding principal amount in excess
of $1,000,000, and the continuation of such default beyond the period of grace,
if any, allowed with respect thereto.
(d) Any default in the observance or performance of Sections 10.1,
10.2, and Sections 10.4 through 10.10;
(e) Any default in the observance or performance of any other covenant
or provision of this Agreement which is not remedied within 30 days after the
22
<PAGE>
earlier of (i) a Responsible Officer obtaining knowledge of such default and
(ii) the Company receiving written notice thereof from any holder of a Note;
(f) Any representation or warranty made pursuant to Section 4.1 by or on
behalf of the Company or any Restricted Subsidiary in this Agreement, or made by
or on behalf of the Company in any written statement or certificate furnished by
or on behalf of the Company in connection with the issuance and sale of the
Notes or furnished by or on behalf of the Company or any Restricted Subsidiary
pursuant to this Agreement, proves incorrect as of the date of the issuance or
making thereof;
(g) Any judgment, writ or warrant of attachment or any similar process
in an aggregate amount in excess of $2,000,000 shall be entered or filed against
the Company or any Restricted Subsidiary or against any property or assets of
either and remain unpaid, uninsured, unindemnified, unvacated, unbonded or
unstayed (through appeal or otherwise) for sixty (60) days or, if stayed pending
appeal, are not discharged within sixty (60) days after expiration of such stay;
(h) The Company or any Restricted Subsidiary shall
(i) generally not pay its debts as they become due or admit in
writing its inability to pay its debts generally as they become due;
(ii) file a petition in bankruptcy or for reorganization or for
the adoption of an arrangement under the Federal Bankruptcy Code, or
any similar applicable bankruptcy or insolvency law, as now or in the
future amended (herein collectively called "Bankruptcy Laws"); file an
answer or other pleading admitting or failing to deny the material
allegations of such a petition; fail to obtain the dismissal of such a
petition within 60 days of its filing or be subject to an order for
relief or a decree approving such a petition; or file an answer or
other pleading seeking, consenting to or acquiescing in relief
provided for under the Bankruptcy Laws;
(iii) make an assignment of all or a substantial part of its
property for the benefit of its creditors;
(iv) seek or consent to or acquiesce in the appointment of a
receiver, liquidator, custodian or trustee of it or for all or a
substantial part of its property;
(v) be finally adjudicated bankrupt or insolvent;
(vi) be subject to the entry of a court order, which shall not be
vacated, set aside or stayed within 60 days of the date of entry, (A)
appointing a receiver, liquidator, custodian or trustee of it or for all
or a substantial part of its property, (B) for relief pursuant to an
involuntary case brought under, or effecting an arrangement in,
bankruptcy, (C) for a reorganization pursuant to the Bankruptcy Laws, or
(D) for any other judicial modification or alteration of the rights of
creditors; or
(vii) be subject to the assumption of custody or sequestration by
a court of competent jurisdiction of all or a substantial part of its
property, which custody or sequestration shall not be suspended or
terminated within 60 days from its inception.
23
<PAGE>
12. REMEDIES ON DEFAULT, ETC.
12.1. Acceleration.
(a) If an Event of Default with respect to the Company described in
paragraph (h) of Section 11 has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 25% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section
11 has occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it or
them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the fullest extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from prepayment by the
Company (except as herein specifically provided for) and that the provision for
payment of a Make-Whole Amount by the Company in the event that the Notes are
prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such circumstances.
12.2. Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3. Rescission.
At any time after any Notes have been declared due and payable pursuant
to clause (b) or (c) of Section 12.1, the holders of not less than 76% in
24
<PAGE>
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereto.
12.4. No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all reasonable costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. Registration of Notes.
The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.
13.2. Transfer and Exchange of Notes.
(a) Except as provided in paragraph (b) of this Section 13.2, upon
surrender of any Note at the principal executive office of the Company for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or his attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and deliver,
at the Company's expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange
25
<PAGE>
therefor, in an aggregate principal amount equal to the unpaid principal amount
of the surrendered Note. Each such new Note shall be payable to such Person as
such holder may request and shall be substantially in the form of Exhibit 1.
Each such new Note shall be dated and bear interest from the date to which
interest shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $100,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2.
(b) The Company shall not be required to register a transfer of Notes to
any Person which is a Competitor.
13.3. Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $50,000,000, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. PAYMENTS ON NOTES.
14.1. Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made at the
address of the Purchasers set forth in Schedule A hereto. The Company may at any
time, by notice to each holder of a Note, change the place of payment of the
Notes so long as such place of payment shall be either the principal office of
the Company in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction.
14.2. Home Office Payment.
26
<PAGE>
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 14.2.
15. EXPENSES, ETC.
15.1. Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated, the
Company will pay all reasonable costs and expenses (including reasonable
attorneys' fees of a special counsel and, if reasonably required, local or other
counsel) annually incurred by you and each other Purchaser or holder of a Note
in connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement or the Notes (whether
or not such amendment, waiver or consent becomes effective), including, without
limitation: (a) the reasonable costs and expenses incurred in enforcing or
defending (or determining whether or how to enforce or defend) any rights under
this Agreement or the Notes or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note, and (b) the
reasonable costs and expenses, including financial advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary or
in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Company will pay, and will save you
and each other holder of a Note harmless from, all claims in respect of any
fees, costs or expenses if any, of brokers and finders (other than those
retained by you).
15.2. Survival.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
27
<PAGE>
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the partial
payment of the Notes, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties pursuant to Section 4.1 of the
Company under this Agreement. Subject to the preceding sentence, this Agreement
and the Notes embody the entire agreement and understanding between you and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. Requirements.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it
is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby, (i) subject to
the provisions of Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.
17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of Notes as consideration
for or as an inducement to the entering into by any holder of Notes or any
waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently paid, or security is concurrently granted, on the
same terms, ratably to each holder of Notes then outstanding even if such holder
did not consent to such waiver or amendment.
28
<PAGE>
17.3. Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
17.4. Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified for
such communications in Schedule A, or at such other address as you or it shall
have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such address
as such other holder shall have specified to the Company in writing, or
(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of Sharon G. Kebe, Globe Business Resources,
Inc., The Spectrum Office Towers, 11260 Chester Road, Suite 400, Cincinnati,
Ohio 45246, or at such other address as the Company shall have specified to the
holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
29
<PAGE>
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
any information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Subsidiary, provided that
such term does not include information that (a) was publicly known or otherwise
known to you prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any Person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements delivered to
you under Section 7.1 that are otherwise publicly available. You will maintain
the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, officers, employees, agents,
attorneys and affiliates, (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor (except a Competitor) to which you sell or offer to sell
such Note or any part thereof or any participation therein (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (v) any Person from which you offer
to purchase any security of the Company (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 20), (vi) any federal or state regulatory authority
having jurisdiction over you, (vii) the National Association of Insurance
Commissioners or any similar organization, or any nationally recognized rating
agency that requires access to information about your investment portfolio, or
(viii) any other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to you, (x) in response to any subpoena or other legal process, (y)
in connection with any litigation to which you are a party or (z) if an Event of
30
<PAGE>
Default has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under your Notes
and this Agreement. Each holder of a Note, by its acceptance of a Note, will be
deemed to have agreed to be bound by and to be entitled to the benefits of this
Section 20 as though it were a party to this Agreement. On reasonable request by
the Company in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this Agreement
or its nominee), such holder will enter into an agreement with the Company
embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
22. MISCELLANEOUS.
22.1. Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
22.2. Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of or Make-Whole Amount or interest on any Note that is
due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.
22.3. Severability.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
31
<PAGE>
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4. Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.5. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6. Governing Law.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
* * * * *
32
<PAGE>
If you are in agreement with the foregoing, please sign the form
of agreement on the accompanying counterpart of this Agreement and return it to
the Company, whereupon the foregoing shall become a binding agreement between
you and the Company.
Very truly yours,
GLOBE BUSINESS RESOURCES, INC.
By:
--------------------------------
Its:
--------------------------------
33
<PAGE>
The foregoing is hereby agreed to as of the date hereof.
SECURITY LIFE OF DENVER INSURANCE COMPANY
By:
--------------------------------
Its:
--------------------------------
By:
--------------------------------
Its:
--------------------------------
LIFE INSURANCE COMPANY OF GEORGIA
By:
--------------------------------
Its:
--------------------------------
By:
--------------------------------
Its:
--------------------------------
PEERLESS INSURANCE COMPANY
By:
--------------------------------
Its:
--------------------------------
By:
--------------------------------
Its:
--------------------------------
INDIANA INSURANCE COMPANY
By:
--------------------------------
Its:
--------------------------------
By:
--------------------------------
Its:
--------------------------------
SOUTHLAND LIFE INSURANCE COMPANY
By:
--------------------------------
Its:
--------------------------------
By:
--------------------------------
Its:
--------------------------------
34
<PAGE>
SCHEDULE A-1
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
Security Life of Denver Insurance Company $14,000,000
(1) All payments on account of Notes held by such purchaser shall be made by
wire transfer of immediately available funds for credit to:
Boston Safe Deposit & Trust Co.
Boston, Massachusetts
MBS Income
Account DD #: 125261
ABA #: 011-001-234
CC 1253
Credit to: Security Life of Denver Insurance Company
Account #INGF1007002
Each such wire transfer shall set forth the name of the Corporation, the
full title (including the Coupon rate, issuance date, and final maturity
date) of the Notes on account of which such payment is made, a reference
to the PPN, and the due date and application (as among principal,
premium and interest) of the payment being made.
(2) Address for all notices relating to payments:
ING Investment Management, Inc.
5780 Powers Ferry Road
Suite 300
Atlanta, Georgia 30327-4349
Attention: Securities Accounting
Fax: (770) 690-4899
5
<PAGE>
(3) Address for all other communications and notices:
ING Investment Management, Inc.
5780 Powers Ferry Road
Suite 300
Atlanta, Georgia 30327-4349
Attention: Private Placements
Fax: (770) 690-4899
Tax ID #: 84-0499703
6
<PAGE>
SCHEDULE A-2
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
Life Insurance Company of Georgia $9,000,000
(1) All payments on account of Notes held by such purchaser shall be made by
wire transfer of immediately available funds for credit to:
Wachovia Bank
Winston-Salem, North Carolina
For the account of: Life Insurance Company of Georgia
Account #: 58-16680-10
ABA #: 053100494
Template#: 401216
Attention: Trust Income Processing
Each such wire transfer shall set forth the name of the Corporation, the
full title (including the Coupon rate, issuance date, and final maturity
date) of the Notes on account of which such payment is made, a reference
to the PPN, and the due date and application (as among principal,
premium and interest) of the payment being made.
(2) Address for all notices relating to payments:
ING Investment Management, Inc.
5780 Powers Ferry Road
Suite 300
Atlanta, Georgia 30327-4349
Attention: Securities Accounting
Fax: (770) 690-4899
7
<PAGE>
(3) Address for all other communications and notices:
ING Investment Management, Inc.
5780 Powers Ferry Road
Suite 300
Atlanta, Georgia 30327-4349
Attention: Private Placements
Fax: (770) 690-4899
Tax ID #: 58-0298930
8
<PAGE>
SCHEDULE A-3
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
Peerless Insurance Company $3,000,000
(1) All payments on account of Notes held by such purchaser shall be made by
wire transfer of immediately available funds for credit to:
Boston Safe Deposit & Trust Co.
Boston, Massachusetts
MBS Income
Account DD#: 125261
ABA #: 011-001-234
CC 1253
Credit to: Peerless Insurance Company
Account #INGF1019002
Each such wire transfer shall set forth the name of the Corporation, the
full title (including the Coupon rate, issuance date, and final maturity
date) of the Notes on account of which such payment is made, a reference
to the PPN, and the due date and application (as among principal,
premium and interest) of the payment being made.
(2) Address for all notices relating to payments:
ING Investment Management, Inc.
5780 Powers Ferry Road
Suite 300
Atlanta, Georgia 30327-4349
Attention: Securities Accounting
Fax: (770) 690-4899
9
<PAGE>
(3) Address for all other communications and notices:
ING Investment Management, Inc.
5780 Powers Ferry Road
Suite 300
Atlanta, Georgia 30327-4349
Attention: Private Placements
Fax: (770) 690-4899
Tax ID #: 02-0177030
10
<PAGE>
SCHEDULE A-4
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
Indiana Insurance Company $2,000,000
(1) All payments on account of Notes held by such purchaser shall be made by
wire transfer of immediately available funds for credit to:
Boston Safe Deposit & Trust Co.
Boston, Massachusetts
MBS Income
Account DD#: 125261
ABA #: 011-001-234
CC 1253
Credit to: Indiana Insurance Company
Account #INGF1016002
Each such wire transfer shall set forth the name of the Corporation, the
full title (including the Coupon rate, issuance date, and final maturity
date) of the Notes on account of which such payment is made, a reference
to the PPN, and the due date and application (as among principal,
premium and interest) of the payment being made.
(2) Address for all notices relating to payments:
ING Investment Management, Inc.
5780 Powers Ferry Road
Suite 300
Atlanta, Georgia 30327-4349
Attention: Securities Accounting
Fax: (770) 690-4899
11
<PAGE>
(3) Address for all other communications and notices:
ING Investment Management, Inc.
5780 Powers Ferry Road
Suite 300
Atlanta, Georgia 30327-4349
Attention: Private Placements
Fax: (770) 690-4899
Tax ID #: 35-0410010
12
<PAGE>
SCHEDULE A-5
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
Southland Life Insurance Company $2,000,000
(1) All payments on account of Notes held by such purchaser shall be made by
wire transfer of immediately available funds for credit to:
Boston Safe Deposit & Trust Co.
Boston, Massachusetts
MBS Income
Account DD#: 125261
ABA #: 011-001-234
CC 1253
Credit to: Southland Life Insurance Company
Account #INGF1013002
Each such wire transfer shall set forth the name of the Corporation, the
full title (including the Coupon rate, issuance date, and final maturity
date) of the Notes on account of which such payment is made, a reference
to the PPN, and the due date and application (as among principal,
premium and interest) of the payment being made.
(2) Address for all notices relating to payments:
ING Investment Management, Inc.
5780 Powers Ferry Road
Suite 300
Atlanta, Georgia 30327-4349
Attention: Securities Accounting
Fax: (770) 690-4899
13
<PAGE>
(3) Address for all other communications and notices:
ING Investment Management, Inc.
5780 Powers Ferry Road
Suite 300
Atlanta, Georgia 30327-4349
Attention: Private Placements
Fax: (770) 690-4899
Tax ID #: 75-0572420
14
<PAGE>
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Affiliate" means any Person (other than a Restricted Subsidiary) (i)
who is a director or executive officer of the Company or any Subsidiary, (ii)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (iii) which
beneficially owns or holds securities representing 5% or more of the combined
voting power of the Voting Stock of the Company or any Subsidiary, or (iv) of
which securities representing 5% or more of the combined voting power of its
Voting Stock (or in the case of a Person not a corporation, 5% or more of its
equity) is beneficially owned or held by the Company or any Subsidiary. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in Chicago, Illinois are required or authorized to be
closed.
"Capitalized Lease" means, at any time, a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" means Globe Business Resources, Inc., an Ohio corporation.
"Competitor" means any Person listed on Schedule 13.2 hereof, as such
Schedule may be amended in writing from time to time by the Company.
"Consolidated Cash Flow Available for Fixed Charges" for any period
shall mean the sum of (i) Consolidated Net Income, (ii) taxes, depreciation and
amortization, as determined in accordance with GAAP, and (iii) Consolidated
Fixed Charges.
"Consolidated Current Ratio" shall mean the ratio of (x) the total of
cash, receivables, and rental furniture, (valued at lower of cost or fair market
value, net of accumulated depreciation) of the Company and its Restricted
Subsidiaries to (y) the total of accounts payable, customer deposits and accrued
expenses of the Company and its Restricted Subsidiaries.
1
<PAGE>
"Consolidated Fixed Charges" means, for any period, on a consolidated
basis, the sum of (a) all Rentals (other than Rentals on Capitalized Leases and
Rentals paid by the Company or any Restricted Subsidiary with respect to
apartments used in the corporate housing operations of the Company or any
Restricted Subsidiary) payable during such period by the Company and its
Restricted Subsidiaries with respect to leases having an original term in excess
of one year, and (b) all Interest Charges on all Debt (including the interest
component of Rentals on Capitalized Leases) of the Company and its Restricted
Subsidiaries.
"Consolidated Funded Debt" means Funded Debt of the Company and its
Restricted Subsidiaries determined on a consolidated basis in accordance with
GAAP.
"Consolidated Net Income" means consolidated net income and net losses
of the Company and its Restricted Subsidiaries, determined in accordance with
GAAP, after excluding the sum of (i) any net loss or any undistributed net
income of any Person in which the Company has an ownership interest other than a
Restricted Subsidiary; (ii) any net loss or any undistributed net income of any
Restricted Subsidiary prior to the date it becomes a Restricted Subsidiary;
(iii) any gain or net loss (net of any tax effect) resulting from the sale of
any capital assets by the Company or Restricted Subsidiary other than in the
ordinary course of business; (iv) extraordinary, unusual, or non-recurring gains
or losses; (v) gains resulting from the write-up of assets; (vi) any earnings of
any Restricted Subsidiary unavailable for payment to the Company; and (vii)
proceeds of any life insurance policy.
"Consolidated Net Worth" means, at any date, with respect to the Company
and its Restricted Subsidiaries, the total amount of (i) capital stock (except
treasury stock but including preferred stock) plus (ii) paid-in surplus, plus
(iii) general contingency reserves and plus (iv) retained earnings (deficit) at
such date, plus (v) fair market value in excess of historical cost of acquired
net assets attributable to related party transactions, all as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Total Assets" means the total assets of the Company and
its Restricted Subsidiaries determined on a consolidated basis in accordance
with GAAP.
"Debt" means (i) all items of borrowings, including Capitalized Leases,
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet as of the date at which Debt
is to be determined (other than items of borrowings of the Company from a
Wholly-Owned Restricted Subsidiary), (ii) all Guaranties (other than Guaranties
of Debt of the Company or a Wholly-Owned Restricted Subsidiary by the Company or
a Subsidiary), letters of credit and endorsements (other than of notes, bills
and checks presented to banks for collection or deposit in the ordinary course
of business), in each case to support Debt of other Persons; and (iii) all items
of borrowings secured by any mortgage, pledge or Lien existing on property owned
subject to such mortgage, pledge, or Lien, whether or not the borrowings secured
thereby shall have been assumed by the Company or any Subsidiary.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
2
<PAGE>
"Default Rate" means 9.54% per annum.
"Disposition" has the meaning set forth in Section 10.8 hereof.
"EBITDA" means earnings of the Company and its Restricted Subsidiaries
before interest, taxes, depreciation and amortization, all as determined in
accordance with GAAP.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.
"Exchange of Assets" means any contemporaneous exchange of assets used
in the operating business of the Company or any Restricted Subsidiary for assets
to be used in the operating business of the Company or any Restricted
Subsidiary.
"Funded Debt" means without duplication: (i) all Debt having a final
maturity of more than one year, from the date of creation thereof (or which is
renewable or extendible at the option of the obligor for a period or periods of
more than one year from the date of creation), and including current maturities
thereof, and (ii) any Debt outstanding pursuant to any instrument or agreement
providing for maturity on demand or within one year from the date of the
creation thereof, except to the extent such Debt has not been outstanding for a
period of thirty consecutive days during the immediately preceding twelve
months.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
3
<PAGE>
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary, or
(b) any entity or agency exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;
(c) to lease properties or to purchase properties or services primarily for
the purpose of assuring the owner of such indebtedness or obligation of the
ability of any other Person to make payment of the indebtedness or obligation;
or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
"Institutional Investor" means (a) any original purchaser of a Note and
(b) any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form.
"Interest Charges" means, for any period, all interest, including
capitalized interest, and all amortization of debt discount and expense on any
particular Debt for which such calculations are being made. Computations of
Interest Charges on a pro forma basis for Debt having a variable interest rate
shall be calculated at the rate in effect on the date of any determination.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
4
<PAGE>
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Market Property" means the identifiable assets associated with the
Company's individual operational units in specific geographic markets (e.g.,
metropolitan Phoenix), if sold together as an operational unit.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, or properties of the Company and its
Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement or the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Negative Exchange of Assets" means any Exchange of Assets in which the
book value of assets received by the Company or any Restricted Subsidiary in an
Exchange of Assets is less than the book value of assets transferred by the
Company or any Restricted Subsidiary in such Exchange of Assets.
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate. No Officer's Certificate shall impose
any personal (as opposed to corporate) liability.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited
liability company, joint venture, association, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
5
<PAGE>
"Preferred Stock" means any class of capital stock of a corporation that
is preferred over any other class of capital stock of such corporation as to the
payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Property" or "Properties" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Rentals" means and includes as of the date of any determination
thereof, all payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Company or a Restricted Subsidiary, as lessee or
sublessee under a lease of real or personal property, but shall be exclusive of
any amounts required to be paid by the Company or a Restricted Subsidiary
(whether or not designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes and similar charges.
"Required Holders" means, at any time, the holders of at least 66-2/3%
in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Restricted Subsidiary" means any Subsidiary (i) of which more than 80%
of the voting securities are owned by the Company and/or one or more
Wholly-Owned Restricted Subsidiaries, and (ii) which the Company has designated
as a "Restricted Subsidiary" by notice in writing given to the holders of the
Notes, provided that the designation of a Subsidiary as "restricted" shall not
be changed to "unrestricted".
"Securities Act" means the Securities Act of 1933, as amended from time
to time and the rules and regulations promulgated thereunder from time to time
in effect.
"Secured Debt" means Debt secured by Liens.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Senior Funded Debt" shall mean and include all Funded Debt not
expressly junior or subordinate to any other Debt of the Company and its
Restricted Subsidiaries.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership, limited liability
6
<PAGE>
company, or joint venture if more than a 80% interest in the profits or capital
thereof is owned by such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries (unless such partnership can and does
ordinarily take major business actions without the prior approval of such Person
or one or more of its Subsidiaries). Unless the context otherwise clearly
requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the
Company.
"Total Debt" means all debt of the Company and its Restricted
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Voting Stock" means capital stock of any class of a corporation having
ordinary voting powers to vote for the election of members of the board of
directors of such corporation or Persons performing similar functions.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity interests (except directors' qualifying
shares) and voting interests of which are owned by any one or more of the
Company and the Company's other Wholly-Owned Subsidiaries at such time.
7
<PAGE>
SCHEDULE 4.9
CHANGES IN CORPORATE STRUCTURE
1
<PAGE>
SCHEDULE 5.4
SUBSIDIARIES OF THE COMPANY AND
OWNERSHIP OF SUBSIDIARY STOCKS
1
<PAGE>
SCHEDULE 5.5
FINANCIAL STATEMENTS
The financial statements referenced in Section 5.5 consist of all of the
financial statements contained in the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1997 and all of the financial statements
contained in the Company's Quarterly Report on Form 10-Q for the quarterly
period ended May 31, 1997.
1
<PAGE>
SCHEDULE 5.15
EXISTING DEBT AND LIENS
1
<PAGE>
SCHEDULE 10.7
EXISTING LIENS
1
<PAGE>
SCHEDULE 13.2
COMPETITORS
1
<PAGE>
EXHIBIT 1
GLOBE BUSINESS RESOURCES, INC.
7.54% SENIOR NOTE
DUE SEPTEMBER 1, 2007
No. [_____] _________, 1997
$[_______] PPN: __________
FOR VALUE RECEIVED, the undersigned, GLOBE BUSINESS RESOURCES,
INC. (herein called the "Company"), a corporation organized and existing under
the laws of the State of Ohio, hereby promises to pay to
______________________________, or registered assigns, the principal sum of
____________________ DOLLARS on ________, 2007, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 7.54% per annum from the date hereof, payable
semiannually, on the first day of September and the first day of March in each
year, commencing March 1, 1998, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Agreement referred to below), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate per annum equal to
9.54%.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America in the manner and at such place as shall have been designated in the
Note Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to the Note Purchase Agreement, dated as of September 1, 1997
(as from time to time amended, the "Note Agreement"), between the Company and
the respective Purchasers named therein and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, (i) to have
agreed to the confidentiality provisions set forth in Section 20 of the Note
Agreement and (ii) to have made the representations set forth in Sections 6.1
and 6.2 of the Note Agreement.
This Note is a registered Note and, as provided in the Note Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company will not be affected by any notice to the contrary.
The Company will make required prepayments of principal on the dates and
in the amounts specified in the Note Agreement. This Note is also subject to
1
<PAGE>
optional prepayment, in whole or from time to time in part, at the times and on
the terms specified in the Note Agreement, but not otherwise.
If an Event of Default, as defined in the Note Agreement, occurs and is
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner, at the price (including any applicable Make-Whole
Amount) and with the effect provided in the Note Agreement.
This Note and the Note Agreement are governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Illinois.
GLOBE BUSINESS RESOURCES, INC.
By:
---------------------------------
Title:
---------------------------------
2
<PAGE>
EXHIBIT 4.4
LEGAL OPINIONS
A. The opinion of Gardner, Carton & Douglas, special counsel for the
Purchasers, shall be to the effect that:
1. The Company is a corporation organized and validly existing in good
standing under the laws of the State of Ohio with all requisite corporate
power and authority to carry on the business now being conducted by it, to
enter into and perform the Agreement and to issue and sell the Notes.
2. The Agreement has been duly authorized by proper corporate action
on the part of the Company, has been duly executed and delivered by an
authorized officer of the Company and constitutes the legal, valid and
binding agreement of the Company, enforceable in accordance with its terms,
except to the extent that enforcement of the Agreement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application relating to or affecting the enforcement of the
rights of creditors or by equitable principles, regardless of whether
enforcement is sought in a proceeding in equity or at law.
3. The Notes have been duly authorized by proper corporate action on
the part of the Company, have been duly executed and delivered by an
authorized officer of the Company, and constitute the legal, valid and
binding obligations of the Company, enforceable in accordance with their
terms, except to the extent that enforcement of the Notes may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application relating to or affecting the enforcement of the
rights of creditors or by equitable principles, regardless of whether
enforcement is sought in a proceeding in equity or at law.
4. Based upon the representations set forth in the Agreement, the
offering, sale and delivery of the Notes do not require the registration of
the Note under the Securities Act of 1933, as amended, nor the
qualification of an indenture under the Trust Indenture Act of 1939, as
amended.
5. The issuance and sale of the Notes and compliance with the terms
and provisions of the Notes and the Agreement will not conflict with or
result in any breach of any of the provisions of the Certificate of
Incorporation or By-laws of the Company.
The opinion of Gardner, Carton & Douglas also shall state that the opinion
of Keating, Muething & Klekamp, P.L.L., special counsel for the Company,
delivered to you pursuant to the Agreement, is satisfactory in form and scope to
Gardner, Carton & Douglas, and, in their opinion, the Purchasers and it are
justified in relying thereon and shall cover such other matters relating to the
sale of the Notes as the Purchasers may reasonably request.
B. The opinion of Keating, Muething & Klekamp, P.L.L., special counsel for
the Company, shall cover all matters specified in clauses 1 through 4 set forth
above and shall also be to the effect that:
1
<PAGE>
1. The Company has full corporate power and authority to conduct the
activities in which it is now engaged and own its Property.
2. Each of the Subsidiaries of the Company is a corporation duly
organized and validly existing in good standing under the laws of its
jurisdiction of incorporation, and each has all requisite corporate power
and authority to carry on the business now being conducted by it and own
its Property.
3. Each of the Company and its Subsidiaries is duly qualified and in
good standing as a foreign corporation authorized to do business in each
jurisdiction where the nature of the business transacted by it or the
character of its Properties owned or leased makes such qualification or
licensing necessary except for such jurisdictions where individually or in
the aggregate, failure to so qualify would not have a material adverse
affect on its business, properties, or condition, financial or otherwise.
4. No authorization, approval or consent of any governmental or
regulatory body is necessary or required in connection with the lawful
execution and delivery by the Company of the Agreement or the lawful
offering, issuance and sale of the Notes, and no designation, filing,
declaration, registration and/or qualification with any governmental
authority is required by the Company in connection with such offer,
issuance and sale.
5. The issuance and sale of the Notes and compliance with the terms
and provisions of the Notes and the Agreement will not conflict with, or
result in any breach of any of the provisions of, or constitute a default
under, or result in the creation or imposition of any lien or encumbrance
upon any of the property of the Company pursuant to the provisions of the
Certificate of Incorporation or other charter document or By-laws of the
Company or any Subsidiary or any loan agreement under which the Company or
any Subsidiary is bound, or other agreement or instrument known to such
counsel (after due inquiry) to which the Company or any Subsidiary is bound
or any Ohio or Federal law (including usury laws) or regulation, order,
writ, injunction or decree of any court or governmental authority
applicable to the Company known to such counsel.
6. The Notes do not violate any applicable usury law, and the
transaction is not usurious under Ohio law.
7. There are no actions, suits or proceedings pending or, to the best
of such counsel's knowledge after due inquiry, threatened against, or
affecting the Company or its Subsidiaries, at law or in equity or before or
by any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which are likely to result, either individually or collectively, in any
adverse change in the business, Properties, operations or condition,
financial or otherwise, of the Company or any Subsidiary.
2
<PAGE>
8. The choice of law in the Note Agreement and Notes of Illinois law
as the law governing the Note Agreement and the Notes is valid and
enforceable and would be recognized and applied in an action brought before
a court of competent jurisdiction in the State of Ohio.
9. All of the issued and outstanding shares of capital stock of each
Subsidiary have been duly and validly issued, are fully paid and
nonassessable and, to the knowledge of such counsel, are owned by the
Company free and clear of any Lien or encumbrance.
10. To the best knowledge of such counsel, after due inquiry, the
Company and each Subsidiary have all franchises, permits, licenses and
other authority as are material to enable them to carry on their respective
business as now being conducted and as proposed to be conducted, and none
of them is in default under any of such franchises, permits, licenses or
other authority, which default would have a material adverse effect on the
operations or financial condition of the Company and its Subsidiaries on a
consolidated basis.
11. Neither the Company nor any Subsidiary is: (i) a "public utility
company" or a "holding company," or an "affiliate" or a "subsidiary
company" of a "holding company," or an "affiliate" of such a "subsidiary
company," as such terms are defined in the Public Utility Holding Company
Act of 1935, as amended, or (ii) a "public utility" as defined in the
Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such
"affiliated person," as such terms are defined in the Investment Company
Act of 1940, as amended.
The opinion of Keating, Muething & Klekamp, P.L.L. shall cover such other
matters relating to the sale of the Notes as the Purchasers may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company and with respect to matters governed by
the laws of any jurisdiction other than the United States of America, the State
of Ohio and the corporate law of the State of Delaware, such counsel may rely
upon the opinions of counsel deemed (and stated in their opinion to be deemed)
by them to be competent and reliable.
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
7.54% SENIOR NOTE
DUE SEPTEMBER 1, 2007
No. R-1 September 29, 1997
$14,000,000 PPN: 379395A*7
FOR VALUE RECEIVED, the undersigned, GLOBE BUSINESS RESOURCES,
INC. (herein called the "Company"), a corporation organized and existing under
the laws of the State of Ohio, hereby promises to pay to Security Life of Denver
Insurance Company, or registered assigns, the principal sum of FOURTEEN MILLION
DOLLARS on September 1, 2007, with interest (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of
7.54% per annum from the date hereof, payable semiannually, on the first day of
September and the first day of March in each year, commencing March 1, 1998,
until the principal hereof shall have become due and payable, and (b) to the
extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Agreement referred to
below), payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum equal to 9.54%.
Payments of principal of, interest on and any Make-Whole Amount
with respect to this Note are to be made in lawful money of the United States of
America in the manner and at such place as shall have been designated in the
Note Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of September
1, 1997 (as from time to time amended, the "Note Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Agreement and (ii) to have made the representations set
forth in Sections 6.1 and 6.2 of the Note Agreement.
This Note is a registered Note and, as provided in the Note
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Agreement, but not otherwise.
<PAGE>
If an Event of Default, as defined in the Note Agreement, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Agreement.
This Note and the Note Agreement are governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Illinois.
GLOBE BUSINESS RESOURCES, INC.
By:
------------------------------
Title:
------------------------------
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
7.54% SENIOR NOTE
DUE SEPTEMBER 1, 2007
No. R-2 September 29, 1997
$9,000,000 PPN: 379395A*7
FOR VALUE RECEIVED, the undersigned, GLOBE BUSINESS RESOURCES,
INC. (herein called the "Company"), a corporation organized and existing under
the laws of the State of Ohio, hereby promises to pay to Life Insurance Company
of Georgia, or registered assigns, the principal sum of NINE MILLION DOLLARS on
September 1, 2007, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 7.54% per
annum from the date hereof, payable semiannually, on the first day of September
and the first day of March in each year, commencing March 1, 1998, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Agreement referred to below), payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum equal to 9.54%.
Payments of principal of, interest on and any Make-Whole Amount
with respect to this Note are to be made in lawful money of the United States of
America in the manner and at such place as shall have been designated in the
Note Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of September
1, 1997 (as from time to time amended, the "Note Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Agreement and (ii) to have made the representations set
forth in Sections 6.1 and 6.2 of the Note Agreement.
This Note is a registered Note and, as provided in the Note
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Agreement, but not otherwise.
<PAGE>
If an Event of Default, as defined in the Note Agreement, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Agreement.
This Note and the Note Agreement are governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Illinois.
GLOBE BUSINESS RESOURCES, INC.
By:
------------------------------
Title:
------------------------------
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
7.54% SENIOR NOTE
DUE SEPTEMBER 1, 2007
No. R-3 September 29, 1997
$3,000,000 PPN: 379395A*7
FOR VALUE RECEIVED, the undersigned, GLOBE BUSINESS RESOURCES,
INC. (herein called the "Company"), a corporation organized and existing under
the laws of the State of Ohio, hereby promises to pay to Peerless Insurance
Company, or registered assigns, the principal sum of THREE MILLION DOLLARS on
September 1, 2007, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 7.54% per
annum from the date hereof, payable semiannually, on the first day of September
and the first day of March in each year, commencing March 1, 1998, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Agreement referred to below), payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum equal to 9.54%.
Payments of principal of, interest on and any Make-Whole Amount
with respect to this Note are to be made in lawful money of the United States of
America in the manner and at such place as shall have been designated in the
Note Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of September
1, 1997 (as from time to time amended, the "Note Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Agreement and (ii) to have made the representations set
forth in Sections 6.1 and 6.2 of the Note Agreement.
This Note is a registered Note and, as provided in the Note
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Agreement, but not otherwise.
<PAGE>
If an Event of Default, as defined in the Note Agreement, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Agreement.
This Note and the Note Agreement are governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Illinois.
GLOBE BUSINESS RESOURCES, INC.
By:
------------------------------
Title:
------------------------------
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
7.54% SENIOR NOTE
DUE SEPTEMBER 1, 2007
No. R-4 September 29, 1997
$2,000,000 PPN: 379395A*7
FOR VALUE RECEIVED, the undersigned, GLOBE BUSINESS RESOURCES,
INC. (herein called the "Company"), a corporation organized and existing under
the laws of the State of Ohio, hereby promises to pay to Indiana Insurance
Company, or registered assigns, the principal sum of TWO MILLION DOLLARS on
September 1, 2007, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 7.54% per
annum from the date hereof, payable semiannually, on the first day of September
and the first day of March in each year, commencing March 1, 1998, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Agreement referred to below), payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum equal to 9.54%.
Payments of principal of, interest on and any Make-Whole Amount
with respect to this Note are to be made in lawful money of the United States of
America in the manner and at such place as shall have been designated in the
Note Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of September
1, 1997 (as from time to time amended, the "Note Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Agreement and (ii) to have made the representations set
forth in Sections 6.1 and 6.2 of the Note Agreement.
This Note is a registered Note and, as provided in the Note
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Agreement, but not otherwise.
<PAGE>
If an Event of Default, as defined in the Note Agreement, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Agreement.
This Note and the Note Agreement are governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Illinois.
GLOBE BUSINESS RESOURCES, INC.
By:
------------------------------
Title:
------------------------------
<PAGE>
GLOBE BUSINESS RESOURCES, INC.
7.54% SENIOR NOTE
DUE SEPTEMBER 1, 2007
No. R-5 September 29, 1997
$2,000,000 PPN: 379395A*7
FOR VALUE RECEIVED, the undersigned, GLOBE BUSINESS RESOURCES,
INC. (herein called the "Company"), a corporation organized and existing under
the laws of the State of Ohio, hereby promises to pay to Southland Life
Insurance Company, or registered assigns, the principal sum of TWO MILLION
DOLLARS on September 1, 2007, with interest (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of
7.54% per annum from the date hereof, payable semiannually, on the first day of
September and the first day of March in each year, commencing March 1, 1998,
until the principal hereof shall have become due and payable, and (b) to the
extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Agreement referred to
below), payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum equal to 9.54%.
Payments of principal of, interest on and any Make-Whole Amount
with respect to this Note are to be made in lawful money of the United States of
America in the manner and at such place as shall have been designated in the
Note Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of September
1, 1997 (as from time to time amended, the "Note Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Agreement and (ii) to have made the representations set
forth in Sections 6.1 and 6.2 of the Note Agreement.
This Note is a registered Note and, as provided in the Note
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Agreement, but not otherwise.
<PAGE>
If an Event of Default, as defined in the Note Agreement, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Agreement.
This Note and the Note Agreement are governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Illinois.
GLOBE BUSINESS RESOURCES, INC.
By:
------------------------------
Title:
------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> AUG-31-1997
<CASH> 776
<SECURITIES> 0
<RECEIVABLES> 8,644
<ALLOWANCES> 711
<INVENTORY> 51,680
<CURRENT-ASSETS> 0
<PP&E> 11,887
<DEPRECIATION> 4,757
<TOTAL-ASSETS> 84,070
<CURRENT-LIABILITIES> 0
<BONDS> 0
19,915
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 84,070
<SALES> 3,414
<TOTAL-REVENUES> 25,086
<CGS> 2,138
<TOTAL-COSTS> 21,868
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 752
<INCOME-PRETAX> 2,437
<INCOME-TAX> 951
<INCOME-CONTINUING> 1,486
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,486
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
