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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 5, 1999
OUTSOURCE INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 000-23147 65-0675628
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1144 EAST NEWPORT CENTER DRIVE, DEERFIELD BEACH, FLORIDA 33442
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(Address of Principal Executive Offices, Zip Code)
Registrant's telephone number, including area code: (954) 418-6200
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Pages 2 of 4 Pages.
ITEM 5. OTHER EVENTS.
As of October 5, 1999, the registrant and its syndicate of lenders led
by BankBoston, N.A. entered into various agreements that (a) replaced the
previously existing securitization facility with a $50.0 million credit facility
based on and secured by the registrant's accounts receivable, expiring December
31, 1999, (b) amended the previously existing receivables purchase and sale
agreement to reflect the replacement of the securitization facility with the
new $50.0 million credit facility, and (c) amended the previously existing $29.9
million revolving credit facility to (i) reduce the maximum availability to
$28.4 million, including existing letters of credit of $6.4 million, (ii) modify
the expiration date from July 27, 2003 to December 31, 1999, (iii) eliminate
certain financial covenants and (iv) add events of default, including a
provision enabling the lender syndicate to increase the stated interest rate
and/or accelerate the maturity date of the facility if, in their sole
discretion, the banks are not satisfied with registrant's business operations or
prospects. The new agreements also contain terms that increase the weighted
average interest rate payable on the outstanding balances, exclusive of related
fees and expenses and not including a higher default rate, from approximately
7.1 percent per annum to approximately 10.8 percent per annum
The above descriptions of the revolving credit facility, the third
amendment to the amended and restated credit agreement and the amended and
restated receivables purchase and sale agreement do not purport to be complete
and are qualified in their entirety by the full text of such documents which are
attached as Exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits
10.55 Third Amendment to Third Amended and Restated Credit Agreement
among Outsource International, Inc., Capital Staffing Fund,
Inc., Outsource Franchising, Inc., Synadyne I, Inc., Synadyne
II, Inc., Synadyne III, Inc., Synadyne IV, Inc., Synadyne V,
Inc., Employees Insurance Services, Inc., Outsource
International of America, Inc., Mass Staff, Inc., Staff All,
Inc., Outsource of Nevada, Inc., Employment Consultants, Inc.,
X-tra Help, Inc., Co-Staff, Inc., Guardian Employer East, LLC,
Guardian Employer West, LLC, each of the bank parties to the
Credit Agreement and BankBoston, N.A., as Agent for the banks,
dated as of October 1, 1999.
2
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Page 3 of 4 Pages.
10.56 Revolving Credit Agreement among Outsource Funding
Corporation, the banks from time to time parties thereto, and
BankBoston, N.A., as Agent for the banks, dated as of October
1, 1999.
10.57 Amended and Restated Receivables Purchase and Sale Agreement
dated as of October 1, 1999 among Outsource International,
Inc., Outsource Franchising, Inc., Capital Staffing Fund,
Inc., Synadyne I, Inc., Synadyne II, Inc., Synadyne III,
Inc., Synadyne IV, Inc., Synadyne V, Inc. and Outsource
International of America, Inc., each as an originator, and
Outsource Funding Corporation, as the buyer, and Outsource
International, Inc., as the servicer.
ITEM 8. CHANGE IN FISCAL YEAR
On October 13, 1999, the registrant's board of directors approved a
change in the registrant's fiscal year from the calendar year ending December 31
to the 52 or 53 week period ending on the Sunday closest to March 31. The report
covering the transition period (from January 1, 2000 through April 2, 2000) will
be filed on Form 10-K.
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 hereunto duly authorized.
OUTSOURCE INTERNATIONAL, INC.
(Registrant)
Date: October 19, 1999 By: /s/ PAUL M. BURRELL
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Paul M. Burrell
President, Chief Executive
Officer and Chairman of the
Board of Directors
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Page 4 of 4 Pages.
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
10.55 Third Amendment to Third Amended and Restated Credit
Agreement among Outsource International, Inc.,
Capital Staffing Fund, Inc., Outsource Franchising,
Inc., Synadyne I, Inc., Synadyne II, Inc., Synadyne
III, Inc., Synadyne IV, Inc., Synadyne V, Inc.,
Employees Insurance Services, Inc., Outsource
International of America, Inc., Mass Staff, Inc.,
Staff All, Inc., Outsource of Nevada, Inc.,
Employment Consultants, Inc., X-tra Help, Inc.,
Co-Staff, Inc., Guardian Employer East, LLC, Guardian
Employer West, LLC, each of the bank parties to the
Credit Agreement and BankBoston, N.A., as Agent for
the banks, dated as of October 1, 1999.
10.56 Revolving Credit Agreement among Outsource Funding
Corporation, the banks from time to time parties
thereto, and BankBoston, N.A., as Agent for the
banks, dated as of October 1, 1999.
10.57 Amended and Restated Receivables Purchase and Sale
Agreement dated as of October 1, 1999 among Outsource
International, Inc., Outsource Franchising, Inc.,
Capital Staffing Fund, Inc., Synadyne I, Inc.,
Synadyne II, Inc., Synadyne III, Inc., Synadyne IV,
Inc., Synadyne V, Inc. and Outsource International of
America, Inc., each as an originator, and Outsource
Funding Corporation, as the buyer, and Outsource
International, Inc., as the servicer.
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Exhibit 10.55
OUTSOURCE INTERNATIONAL, INC.
THIRD AMENDMENT
TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This Third Amendment (this "Third Amendment"), dated as of October 1,
1999, among (a) OUTSOURCE INTERNATIONAL, INC. (the "Borrower"), (b) CAPITAL
STAFFING FUND, INC.; (c) OUTSOURCE FRANCHISING, INC.; (d) SYNADYNE I, INC.; (e)
SYNADYNE II, INC.; (f) SYNADYNE III, INC.; (g) SYNADYNE IV, INC.; (h) SYNADYNE
V, INC.; (i) EMPLOYEES INSURANCE SERVICES, INC.; (j) OUTSOURCE INTERNATIONAL OF
AMERICA, INC.; (k) MASS STAFF, INC.; (l) STAFF ALL, INC.; (m) OUTSOURCE OF
NEVADA, INC.; (n) EMPLOYMENT CONSULTANTS, INC.; (o) X-TRA HELP, INC.; (p)
CO-STAFF, INC.; (q) GUARDIAN EMPLOYER EAST, LLC; (r) GUARDIAN EMPLOYER WEST,
LLC; (s) each of the banks party to the Credit Agreement hereinafter referred to
(collectively, the "Banks") and (t) BANKBOSTON, N.A., as agent for the Banks
(the "Agent"), pursuant to that certain Third Amended and Restated Credit
Agreement (as amended, the "Credit Agreement"), dated as of July 27, 1998, among
the Borrower, the Banks and the Agent. Capitalized terms used herein and which
are not otherwise defined shall have the respective meanings ascribed thereto in
the Credit Agreement.
WHEREAS, (i) the Borrower and (ii) each Subsidiary of the Borrower
party to a Subsidiary Guarantee and whose name appears on the signature page
hereof (a "Guarantor") have requested that the Banks and the Agent agree to
amend the terms of the Credit Agreement in certain respects; and
WHEREAS, the Banks and the Agent are willing to amend the terms of the
Credit Agreement in such respects, upon the terms and subject to the conditions
contained herein; and
NOW, THEREFORE, in consideration of the mutual agreements contained in
the Credit Agreement herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ss.1. AMENDMENT TO DEFINITIONS. Section 1.1 of the Credit Agreement is
hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended by deleting
the definition of "L/C Commitment" set forth therein and substituting in lieu
thereof the following new definition:
"L/C COMMITMENT: An amount equal to $6,359,871, as reduced
automatically from time to time as the amount of L/C
Obligations is reduced."
(b) Section 1.1 of the Credit Agreement is hereby further amended by
deleting the definition of "Letter of Credit" set forth therein and substituting
in lieu thereof the following new definition:
"LETTER OF CREDIT: Collectively, all letters of credit issued,
extended or renewed hereunder."
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(c) Section 1.1 of the Credit Agreement is hereby further amended by
deleting the words "July 27, 2003" appearing in the definition of "Termination
Date", and substituting in lieu thereof the words "December 31, 1999."
(d) Section 1.1 of the Credit Agreement is hereby further amended by
inserting the following new definitions therein in the correct alphabetical
sequence:
"CASH BUDGET. The cash flow forecast dated September 2, 1999,
delivered to the Agent and the Banks, detailing the Borrower
and its Subsidiaries weekly projected cash flows and debt
levels through December 31, 1999."
"L/C PERCENTAGE. Three percent (3%) per annum."
"MAXIMUM COMMITMENT. An amount equal to $22,000,000."
"OUTSOURCE FUNDING CREDIT AGREEMENT. The Revolving Credit
Agreement, dated as of October 1, 1999, among OutSource
Funding Corporation, as borrower, each of the lending
institutions party thereto, as banks, and BankBoston, N.A., as
agent, as the same shall be amended, restated, modified,
extended, renewed or replaced."
"SPECIFIED DATE: The earliest to occur of (a) the Termination
Date, (b) the date of any acceleration of the Obligations, and
(c) the date on which all Obligations are paid in full and the
Banks have no further commitment to extend credit under this
Agreement."
"SPECIFIED PERCENTAGE: (a) During the month of October, 1999,
two and one-half percent (2 1/2%), (b) during the month of
November, 1999, four percent (4%), and (c) from and after
December 1, 1999, five percent (5%)."
ss.2. REVOLVING CREDIT COMMITMENTS. Section 2.1 of the Credit Agreement
is hereby amended by deleting clause (i) therein in its entirety and
substituting in lieu thereof the following new clause (i):
"(i) the aggregate borrowings outstanding hereunder at any one
time (giving effect to all Revolving Credit Loans and
Swingline Loans but excluding all L/C Obligations at such
time) shall not exceed the Maximum Commitment,"
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ss.3. DESIGNATION OF INTEREST RATES; EURODOLLAR INTEREST PERIODS. The
Credit Agreement is hereby further amended by deleting Section 2.2 thereof in
its entirety.
ss.4. INTEREST RATES AND PAYMENT DATES. The Credit Agreement is hereby
further amended by deleting Section 2.3 thereof in its entirety and substituting
in lieu thereof the following new Section 2.3:
"2.3. INTEREST RATES AND PAYMENT DATES.
(a) Each Loan shall bear interest for so long as it
is outstanding and unpaid at the rate per annum equal to the
Alternate Base Rate plus the Specified Percentage.
Notwithstanding anything to the contrary contained herein,
including, without limitation Section 2.4 hereof, the Borrower
agrees that it shall not be permitted to request that Loans
bear interest determined by reference to the Eurodollar Base
Rate.
(b) During the continuance of an Event of Default,
(i) the principal and interest on the Loans shall bear
interest at a rate per annum (the "Default Rate") which is
equal to (A) until December 31, 1999, the rate that would
otherwise be applicable thereto PLUS two percent (2%) and (B)
at all times thereafter, seven percent (7%) above the
Alternate Base Rate as in effect from time to time and (ii)
the rate at which L/C Fees are determined shall be calculated
at the Default Rate.
(c) Interest shall be payable in arrears on each
Interest Payment Date; PROVIDED, HOWEVER, interest accruing at
the Default Rate pursuant to subsection 2.3(b) shall be
payable on receipt of written demand; PROVIDED, FURTHER,
interest in excess of two percent (2%) per annum above the
Alternate Base Rate as in effect from time to time shall be
deferred until the Specified Date.
(d) In the event the total amount of any payment of
principal or interest or amounts due in respect of any
Reimbursement Obligation or of any fee required to be paid
under this Agreement is not received by the Agent or the
Issuing Bank, as the case may be, within ten (10) days
following the due date of such payment, the Borrower shall, in
addition to and together with such payment, pay to the Agent
or the Issuing Bank, as the case may be, a late charge equal
to five percent (5%) of the total amount of such payment or
amount due; PROVIDED, such late charge shall not be payable in
respect of any overdue payment in the event the Borrower was
entitled to an advance in the amount of such payment under the
provisions of subsection 2.1 at the time such payment became
due, the Borrower duly requested such advance in compliance
with the requirements of this Agreement, and the Banks failed
to provide such advance without
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cause; PROVIDED, FURTHER, such late charge shall not be
payable prior to the Specified Date in respect of any deferred
interest payment pursuant to subsection 2.3(c). The Borrower
authorizes the Agent to debit any of the accounts of the
Borrower or its Subsidiaries at or assigned to the Agent on or
after the due date of any such payment and a late charge shall
not be payable to the extent the balances in such accounts are
sufficient on the due date to meet such payment."
ss.5. CONVERSION AND CONTINUATION OPTIONS. The Credit Agreement is
hereby further amended by deleting Section 2.5 thereof in its entirety.
ss.6. MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES. The Credit
Agreement is hereby further amended by deleting Section 2.6 thereof in its
entirety.
ss.7. COMMITMENT FEE. Section 2.8(a) of the Credit Agreement is hereby
amended by (i) deleting the words "Available Revolving Credit Commitment"
therein and substituting in lieu thereof the words "Maximum Commitment" and (ii)
deleting the words "percentage rate per annum set forth opposite the applicable
Consolidated Indebtedness to Consolidated EBITDA Ratio in the Pricing Grid"
therein and substituting in lieu thereof the words "one half of one percent
(0.50%) per annum."
ss.8. AGENT'S FEE. The Credit Agreement is hereby further amended by
deleting the first sentence of Section 2.8(b) thereof in its entirety and
substituting in lieu thereof the following new first sentence of Section 2.8(b):
"(b) The Borrower shall pay to the Agent monthly in advance,
for the Agent's own account, on October 1, 1999 and on the
first day of each month thereafter, an Agent's fee in the
amount of $1,667 per month."
ss.9. PREPAYMENTS. Section 2.10 of the Credit Agreement is hereby
amended by (i) deleting the word "Optional" n the heading therein and (ii)
inserting immediately before the first sentence therein the following new
sentence:
"If at any time the Aggregate Outstanding Extensions of Credit
of all of the Banks exceeds the Maximum Commitment plus the
L/C Commitment the Borrower shall immediately pay the amount
of such excess to the Agent for the respective account of the
Banks."
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ss.10. L/C COMMITMENT. The Credit Agreement is hereby further amended
by deleting Section 3.1(a) thereof in its entirety and substituting in lieu
thereof the following new Section 3.1(a):
"(a) The Issuing Bank shall have no obligation to issue any
new Letter of Credit or to extend or renew any existing Letter
of Credit."
ss.11. LETTER OF CREDIT FEES. The Credit Agreement is hereby further
amended by deleting Section 3.3 thereof in its entirety and substituting in lieu
thereof the following new Section 3.3:
"3.3 FEES, COMMISSION AND OTHER CHARGES.
(a) After issuance of a Letter of Credit, the
Borrower shall pay to the Agent a letter of credit fee (the
"L/C Fee") at the end of each month, in arrears, in an amount
equal to the product of (i) the face amount of such Letter of
Credit, times (ii) the L/C Percentage, times (iii) the term of
such Letter of Credit, expressed as a fraction equal to the
number of days of such term divided by three hundred sixty
(360). Notwithstanding the foregoing, the L/C Fees and
additional fees required to be paid pursuant to this
subsection 3.3(a) in excess of 2% per annum shall be deferred
until the Specified Date.
(b) The Agent shall, promptly following its receipt
thereof, distribute to the Issuing Bank and the L/C
Participants all fees and commissions received by the Agent
for their respective accounts pursuant to this subsection."
ss.12. FINANCIAL CONDITION COVENANTS. The Credit Agreement is hereby
further amended by deleting Section 7.1 thereof in its entirety:
ss.13. ADDITIONAL EVENTS OF DEFAULT. Section 8 of the Credit Agreement
is hereby amended by (i) deleting the period occurring at the end of clause (m)
therein and substituting in lieu thereof the text "; or" and (ii) inserting the
following new clause (n), (o), (p), (q), and (r):
"(n) A default or event of default (or any similar
event as defined in the Receivables Securitization Transaction
documents) shall have occurred and be continuing under any
Receivables Securitization Transaction document; or
(o) A "default" or "event of default" (as such terms
are defined in the OutSource Funding Credit Agreement) shall
have occurred and be continuing under the OutSource Funding
Credit Agreement; or
(p) The Borrower shall default in the observance or
performance of any covenant contained in ss.19 of the Third
Amendment; or
(q) Five (5) Business Days following any date on or
after October 15, 1999 on which the Agent has given written
notice to the Borrower that the Banks, in their sole
discretion, have declared an Event of Default hereunder; or
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(r) On or at any time after October 1, 1999, the
Banks are not satisfied in their sole discretion in all
respects with the status of the business, assets, liabilities
(actual or contingent), historical and projected revenues and
cash flows, operations, material relationships, condition
(financial or otherwise) and prospects of the Borrower and its
Subsidiaries."
ss.14. CERTAIN CROSS DEFAULTS. Section 8 of the Credit Agreement is
hereby further amended by (i) deleting the text "; or" occurring at the end of
clause (f) therein and (ii) inserting the following new language:
; PROVIDED, HOWEVER, any event of default under any
Subordinated Indebtedness shall not be an Event of Default
under this ss.8(f) if either (i) no enforcement action has
been taken by any holder of such Subordinated Indebtedness or
(ii) enforcement action has been taken by a holder of such
Subordinated Indebtedness and (1) the Borrower has taken
prompt action to dismiss such action (2) no attachment, levy
or other similar process has been commenced against the
Borrower and (3) such action has been dismissed or stayed
within ninety (90) days from the commencement of such action.
ss.15. ASSIGNMENTS. Section 10.6 of the Credit Agreement is hereby
amended by inserting the following new clause (i) immediately following clause
(h) therein:
"(i) Notwithstanding the foregoing, no Bank shall assign all
or any part of its rights and obligations under this Agreement
unless concurrently with such assignment, such transferor Bank
assigns to the same Purchasing Bank the same percentage of its
rights and obligations under the OutSource Funding Credit
Agreement."
ss.16. AMENDMENT TO THE SUBSIDIARY GUARANTEES. Each of the Subsidiary
Guarantees are hereby amended by deleting in each case the "net worth"
limitation set forth in ss.2(b) thereof.
ss.17. CONFIRMATION OF OBLIGATIONS. The Borrower hereby confirms that
the obligations of the Borrower arising under each of the Loan Documents to
which it is a party, including Indebtedness consisting of Revolving Credit
Loans, Swingline Loans and L/C Obligations, are included in the Obligations, are
not subject to any claims or defenses whatsoever, and constitute valid and
binding obligations of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law). Each
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Guarantor hereby confirms that the obligations of such Guarantor arising under
each of the Loan Documents to which it is a party are included in the
Obligations, are not subject to any claims or defenses whatsoever, and
constitute valid and binding obligations of such Guarantor enforceable against
such Guarantor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
ss.18. RELEASE. The Borrower and each Guarantor, on the Borrower's and
each Guarantors own behalf and on behalf of the Borrower's and each Guarantors
successors and assigns, hereby waive, release and discharge the Agent and each
Bank and all of the affiliates of the Agent and each Bank, and all of the
directors, officers, employees, attorneys and agents of the Agent, each Bank and
such affiliates, from any and all claims, demands, actions or causes of action
(known and unknown) arising out of or in any way relating to the Loan Documents
and any documents, agreements, dealings or other matters connected with the
Credit Agreement, in each case to the extent arising (x) on or prior to the date
hereof or (y) out of, or relating to, actions, dealings or matters occurring on
or prior to the date hereof. The waivers, releases, and discharges in this
SECTION 18 shall be effective regardless of whether the conditions to this Third
Amendment are satisfied and regardless of any other event that may occur or not
occur after the date hereof.
ss.19. COVENANTS. The Borrower and each Guarantor hereby agrees that:
(a) the Borrower and each Guarantor shall permit the Banks, the Agent
and their advisors to have full and complete access to all information that
Raymond James develops or obtains with respect to the valuation and disposition
of Synadyne and the Borrower and each Guarantor shall authorize Raymond James to
deliver such information to the Banks, the Agent and their advisors, and discuss
the same with them;
(b) the Borrower and each Guarantor shall forthwith cause each
Subsidiary of the Borrower (other than OutSource Funding Corporation) that has
not previously done so, to execute and deliver to the Agent a Subsidiary
Guarantee and a Subsidiary Security Agreement, each in form and substance
satisfactory to the Agent;
(c) the Borrower and each Guarantor shall, to the extent it has not
previously done so, forthwith deliver to the Agent certificates representing one
hundred percent (100%) or, in the case of non-wholly owned Subsidiaries, such
lower percentage as is owned by the Borrower and its Subsidiaries of the capital
stock or other equity interests of each of the Borrower's Subsidiaries, together
with stock transfer powers or other appropriate transfer powers for each of such
certificates, duly executed in blank, all to be held upon the terms of the
Security Documents;
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(d) the Borrower and each Guarantor shall permit the Banks, the Agent
and their advisors to engage the services of consultants in connection with the
valuation of Synadyne and a review of the Borrower's business, and shall permit
the Agent and/or its counsel to continue to retain Nightingale & Associates, LLC
("Nightingale") to, among other things, make visits to, and discuss financial
and operational matters with, the Borrower and its Subsidiaries and to advise
the Agent and the Banks as to the business, operations and financial condition
of the Borrower and its Subsidiaries. Such consultant shall not be limited in
the frequency of visits to the facilities of the Borrower and its Subsidiaries.
The Borrower shall, and shall cause each of its Subsidiaries to, cooperate with
such consultants and provide such consultants with all information reasonably
requested by such consultant in connection with its engagement by the Agent
and/or its counsel. On or before October 12, 1999, the Borrower shall reach an
agreement with Nightingale satisfactory to the Agent in its sole discretion as
to the acceptable format of the weekly cash flow forecast and other financial
information required to be delivered pursuant to ss.19(f) hereof;
(e) in the event that the Borrower is successful in its efforts to
locate a buyer for Synadyne, the Borrower shall deliver to the Banks, on or
before the Borrower's entering into any agreement to effect such sale, (i)
revised cash flow projections, in a form similar to those delivered pursuant to
ss.19(f) hereof, prepared by CrossRoads Capital Partners, LLC, for the period
prior to and following completion of such sale to the Termination Date and (ii)
a copy of the proposed purchase and sale agreement; and
(f) the Borrower shall deliver to the Agent, within 3 days after the
end of each calendar week, a report in the form agreed upon by Nightingale and
the Agent pursuant to ss.19(d) hereof, and prepared in a manner consistent with
each prior acceptable report, setting forth the Borrower's actual cash flow as
at the end of such week versus the cash flow forecast as at the end of such week
as reported in the Cash Budget; and
(g) the Borrower and each Guarantor shall, to the extent that it has
not previously done so, forthwith deliver to the Agent all promissory notes,
intercompany notes and other instruments evidencing any intercompany or other
debt obligations in favor of the Borrower or such Subsidiary, together with
appropriate transfer powers for each, all to be held upon the terms of the
Security Documents.
ss.20. REPRESENTATIONS AND WARRANTIES. The Borrower and each of the
Guarantors represent and warrant to the Banks and the Agents as follows:
(a) REPRESENTATIONS AND WARRANTIES IN CREDIT AGREEMENT. The
representations and warranties of the Borrower and each of the Guarantors
contained in the Credit Agreement, as amended hereby, (a) were true and correct
in all material respects when made, and (b) except (i) as a result of changes in
the ordinary course of business permitted under the Credit Agreement and (ii) to
the extent such representations and warranties by their
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terms are made solely as of a prior date, continue to be true and correct in all
material respects on the date hereof.
(b) AUTHORITY, ETC. The execution and delivery by the Borrower and each
of the Guarantors of this Third Amendment and the performance by the Borrower
and each of the Guarantors of all of their agreements and obligations under this
Third Amendment and the Credit Agreement as amended hereby (i) are within the
corporate authority of the Borrower and each of the Guarantors, (ii) have been
duly authorized by all necessary corporate or proceedings or actions, as the
case may be, by the Borrower and each of the Guarantors, (iii) do not conflict
with or result in any breach or contravention of any provision of law, statute,
rule or regulation to which the Borrower or any of the Guarantors is subject or
any judgment, order, writ, injunction, license or permit applicable to the
Borrower or any of the Guarantors, and (iv) do not conflict with any provision
of the corporate charter, by-laws or partnership agreement of, or any agreement
or other instrument binding upon, the Borrower or any of the Guarantors.
(c) ENFORCEABILITY OF OBLIGATIONS. This Third Amendment, and the Credit
Agreement as amended hereby, and the other Loan Documents constitute the legal,
valid and binding obligations of the Borrower and each of the Guarantors
enforceable against each such Person in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law). After giving effect
to this Third Amendment, no Default or Event of Default exists under the Credit
Agreement.
ss.21. CONDITIONS TO EFFECTIVENESS. This Third Amendment shall be
effective as of the date hereof (the "Effective Date") upon the satisfaction of
the following conditions precedent, on or before October 5, 1999:
(a) receipt by the Agent of an original counterpart signature to this
Third Amendment, duly executed and delivered by the Borrower, each of the
Guarantors, the Banks and the Agent;
(b) the Banks being satisfied in their sole discretion that the
financial information delivered most recently prior to October 1, 1999 with
respect to the Borrower and its Subsidiaries fairly presents the business,
financial condition and prospects of such persons for the periods covered
thereby and there has been no material adverse change in the business, assets,
financial condition or prospects of the Borrower and its Subsidiaries since such
date;
(c) the negotiation, execution and delivery of amendments to the
Receivables Securitization Transaction documents, each in form and substance
satisfactory to the Banks, the Agent and their respective counsel in their sole
discretion;
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(d) the negotiation, execution and delivery of the OutSource Funding
Credit Agreement in form and substance satisfactory to the Banks and the Agent
in their sole discretion;
(e) the Agent being satisfied in its sole discretion that the Borrower
and its Subsidiaries have received all necessary shareholder, regulatory and
other third party approvals, including, without limitation, evidence of
compliance with all state and federal laws applicable to any party to the
transaction;
(f) receipt by the Agent of evidence in form and substance satisfactory
to the Agent in its sole discretion of appropriate corporate approval of all
proposed transactions as well as opinions of counsel satisfactory to it in its
sole discretion as to, among other things, the due consummation of the
transactions, legality, validity and binding effect of all loan, security and
related documents, the absence of any violation of any law or regulation
applicable to the Borrower or any Subsidiary party to a Loan Document;
(g) receipt by the Agent of evidence in form and substance satisfactory
to the Agent in its sole discretion as to the absence of conflict between the
Loan Documents and all other obligations and agreements of the Borrower or a
Subsidiary party to a Loan Document;
(h) receipt by the Agent of evidence satisfactory to it as to the
absence of any action, suit, proceeds or investigations of any kind pending or
threatened the result of which might impair or prevent the consummation of the
transactions described in this Third Amendment, or which question the validity
of the Credit Agreement or any of the Loan Documents;
(i) receipt by the Agent of evidence satisfactory to it as to the
perfection and priority of all security interests in existing and after-acquired
personal property assets of the Borrower and each of its Subsidiaries (other
than Outsource Funding Corporation);
(j) payment by the Borrower of the legal, appraisal, consultant and
out-of-pocket fees and expenses of the Agent incurred in connection with the
restructuring of the existing financing, in each case, to the extent that
invoices for the same have been presented to the Borrower; and
(k) payment by the Borrower of all fees and expenses of Nightingale &
Associates, LLC in connection with consulting services of Nightingale &
Associates, LLC, to the extent that invoices for the same have been presented to
the Borrower (in addition to any amount previously paid as a retainer).
ss.22. MISCELLANEOUS PROVISIONS. (a) Except as otherwise expressly
provided by this Third Amendment, all of the terms, conditions and provisions of
the Credit Agreement shall remain the same. It is declared and agreed by each of
the parties hereto that the Credit Agreement, as amended hereby, shall
<PAGE> 11
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continue in full force and effect, and that this Third Amendment and the Credit
Agreement shall be read and construed as one instrument.
(b) THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED ACCORDING
TO, THE LAWS OF THE STATE OF CONNECTICUT (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW).
(c) This Third Amendment may be executed in any number of counterparts,
but all such counterparts shall together constitute but one instrument. In
making proof of this Third Amendment it shall not be necessary to produce or
account for more than one counterpart signed by each party hereto by and against
which enforcement hereof is sought.
(d) Headings or captions used in this Third Amendment are for
convenience of reference only and shall not define or limit the provisions
hereof.
(e) The Borrower hereby agrees to pay to the Agent, on demand by the
Agent, all reasonable out-of-pocket costs and expenses incurred or sustained by
the Agent in connection with the preparation of this Third Amendment (including
without limitation, recording and filing fees, notarization fees, stamp taxes,
any other tax imposed by reason of the execution and delivery of the Loan
Documents, the reasonable fees and expenses of counsel to the Agent and the
reasonable fees and expenses of the Agent's commercial finance examiners and
commercial auditors).
<PAGE> 12
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IN WITNESS WHEREOF, each of the undersigned has duly executed this
Third Amendment as of the date first set forth above.
OUTSOURCE INTERNATIONAL, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul M. Burrell
Title: President and CEO
CAPITAL STAFFING FUND, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul Mr. Burrell
Title: President
OUTSOURCE FRANCHISING, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul Mr. Burrell
Title: President
SYNADYNE I, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul M. Burrell
Title: Vice President
SYNADYNE II, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul M. Burrell
Title: Vice President
SYNADYNE III, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul M. Burrell
Title: Vice President
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SYNADYNE IV, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul M. Burrell
Title: Vice President
SYNADYNE V, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul M. Burrell
Title: Vice President
EMPLOYEES INSURANCE SERVICES, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul Mr. Burrell
Title: President
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul Mr. Burrell
Title: President
MASS STAFF, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul Mr. Burrell
Title: President
STAFF ALL, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul Mr. Burrell
Title: President
<PAGE> 14
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OUTSOURCE OF NEVADA, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul Mr. Burrell
Title: President
EMPLOYMENT CONSULTANTS, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul Mr. Burrell
Title: President
X-TRA HELP, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul Mr. Burrell
Title: President
CO-STAFF, INC.
By: /s/ Paul M. Burrell
-----------------------------
Name: Paul Mr. Burrell
Title: President
GUARDIAN EMPLOYER EAST, LLC
By: /s/ Scott R. Francis
-----------------------------
Name: Scott R. Francis
Title: Manager
GUARDIAN EMPLOYER WEST, LLC
By: /s/ Scott R. Francis
-----------------------------
Name: Scott R. Francis
Title: Manager
<PAGE> 15
BANKBOSTON, N.A., individually and as Agent
By: /s/ C. Christopher Smith
-----------------------------
Name: C. Christopher Smith
Title: Vice President
COMERICA BANK
By: /s/ Martin G. Ellis
-----------------------------
Name: Martin G. Ellis
Title: Vice President
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ John J. McGuire
-----------------------------
Name: John J. McGuire
Title: First Vice President
SUNTRUST BANK, SOUTH FLORIDA,
NATIONAL ASSOCIATION
By: /s/ T. Michael Logan
-----------------------------
Name: T. Michael Logan
Title: Managing Director
FLEET NATIONAL BANK
By: /s/ Daniel D. Butler
-----------------------------
Name: Daniel D. Butler
Title: Vice President
<PAGE> 1
Exhibit 10.56
REVOLVING CREDIT AGREEMENT
DATED as of October 1, 1999
among
OUTSOURCE FUNDING CORPORATION, as Borrower
THE BANKS
from time to time parties thereto
and
BANKBOSTON, N.A., as Agent
<PAGE> 2
<TABLE>
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1. DEFINITIONS AND RULES OF INTERPRETATION.........................................................1
1.1. Definitions..........................................................................1
1.2. Rules of Interpretation..............................................................12
2. THE REVOLVING CREDIT FACILITY...................................................................13
2.1. Commitment to Lend...................................................................13
2.2. Commitment Fee.......................................................................13
2.3. Reduction of Maximum Commitment......................................................14
2.4. The Revolving Credit Notes...........................................................14
2.5. Interest on Loans....................................................................14
2.6. Requests for Loans...................................................................15
2.6.1. General...................................................................15
2.6.2. Swing Line................................................................15
2.7. Funds for Loans......................................................................15
2.7.1. Funding Procedures........................................................15
2.7.2. Advances by Agent.........................................................16
2.8. Change in Borrowing Base.............................................................16
2.9. Settlements..........................................................................16
2.9.1. General...................................................................16
2.9.2. Failure to Make Funds Available...........................................17
2.9.3. No Effect on Other Banks..................................................18
2.10. Repayments of Loans Prior to Event of Default........................................18
2.10.1. Credit for Funds Received in Concentration Account........................18
2.10.2. Application of Payments Prior to Event of Default.........................18
2.11. Repayments of Loans After Event of Default...........................................19
3. REPAYMENT OF THE LOANS..........................................................................19
3.1. Maturity.............................................................................19
3.2. Mandatory Repayments of Loans........................................................19
3.3. Optional Repayments of Loans.........................................................20
4. CERTAIN GENERAL PROVISIONS......................................................................20
4.1. Closing Fee..........................................................................20
4.2. Agent's Fee..........................................................................20
4.3. Funds for Payments...................................................................20
4.3.1. Payments to Agent.........................................................20
4.3.2. No Offset, etc............................................................20
4.4. Computations.........................................................................21
4.5. Additional Costs, etc................................................................21
4.6. Capital Adequacy.....................................................................22
4.7. Certificate..........................................................................23
4.8. Indemnity............................................................................23
4.9. Interest After Default...............................................................23
5. SECURITY........................................................................................23
6. REPRESENTATIONS AND WARRANTIES..................................................................23
6.1. Corporate Authority..................................................................23
6.1.1. Incorporation; Good Standing..............................................23
6.1.2. Authorization.............................................................24
6.1.3. Enforceability............................................................24
</TABLE>
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<TABLE>
<S> <C>
6.2. Governmental Approvals...............................................................24
6.3. Title to Properties; Leases..........................................................24
6.4. Financial Statementsand Projections..................................................24
6.4.1. Fiscal Year...............................................................24
6.4.2. Financial Statements......................................................24
6.4.3. Projections...............................................................25
6.5. No Material Changes, etc.............................................................25
6.6. Franchises, Patents, Copyrights, etc.................................................25
6.7. Litigation...........................................................................26
6.8. No Materially Adverse Contracts, etc.................................................26
6.9. Compliance with Other Instruments, Laws, etc.........................................26
6.10. Tax Status...........................................................................26
6.11. No Event of Default..................................................................26
6.12. Holding Company and Investment Company Acts..........................................26
6.13. Absence of Financing Statements, etc.................................................27
6.14. Perfection of Security Interest......................................................27
6.15. Employee Benefit Plans...............................................................27
6.15.1. In General...............................................................27
6.15.2. Terminability of Welfare Plans...........................................27
6.15.3. Guaranteed Pension Plans.................................................27
6.15.4. Multiemployer Plans......................................................28
6.16. Use of Proceeds......................................................................28
6.16.1. General..................................................................28
6.16.2. Regulations U and X......................................................28
6.16.3. Ineligible Securities....................................................28
6.17. Environmental Compliance.............................................................29
6.18. Bank Accounts........................................................................30
6.19. Year 2000 Problem....................................................................30
6.20. Disclosure...........................................................................30
6.21. Separate Legal Entity................................................................31
7. AFFIRMATIVE COVENANTS OF THE BORROWER...........................................................31
7.1. Punctual Payment.....................................................................31
7.2. Maintenance of Office................................................................31
7.3. Records and Accounts.................................................................31
7.4. Financial Statements, Certificates and Information...................................31
7.5. Notices..............................................................................32
7.5.1. Defaults..................................................................32
7.5.2. Environmental Events......................................................32
7.5.3. Notification of Claims Against Collateral.................................33
7.5.4. Notice of Litigation and Judgments........................................33
7.6. Corporate Existence; Maintenance of Properties.......................................33
7.7. Maintenance of Separate Existence....................................................33
7.8. Insurance............................................................................34
7.9. Taxes................................................................................34
7.10. Inspection of Properties and Books, etc..............................................35
7.10.1. General...................................................................35
7.10.2. Collateral Reports........................................................35
7.10.3. Communication with Accountants............................................35
</TABLE>
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<TABLE>
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7.11. Compliance with Laws, Contracts, Licenses, and Permits...............................36
7.12. Employee Benefit Plans...............................................................36
7.13. Use of Proceeds......................................................................36
7.14. Bank Accounts........................................................................36
7.14.1. General...................................................................36
7.14.2. Acknowledgment of Application.............................................37
7.15. Further Assurances...................................................................37
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER......................................................37
8.1. Restrictions on Indebtedness.........................................................37
8.2. Restrictions on Liens................................................................37
8.3. Restrictions on Investments..........................................................38
8.4. Distributions........................................................................38
8.5. Merger, Consolidation................................................................38
8.5.1. Mergers and Acquisitions..................................................38
8.5.2. Disposition of Assets.....................................................38
8.6. Sale and Leaseback...................................................................38
8.7. Compliance with Environmental Laws...................................................38
8.8. Employee Benefit Plans...............................................................38
8.9. Business Activities..................................................................39
8.10. Fiscal Year..........................................................................39
8.11. Transactions with Affiliates.........................................................39
8.12. Credit and Collection Policy.........................................................39
9. CLOSING CONDITIONS..............................................................................40
9.1. Loan Documents.......................................................................40
9.2. Certified Copies of Charter Documents................................................40
9.3. Corporate Action.....................................................................40
9.4. Incumbency Certificate...............................................................40
9.5. Validity of Liens....................................................................40
9.6. Perfection Certificates and UCC Search Results.......................................40
9.7. Certificates of Insurance............................................................40
9.8. Lock-Box Agreements..................................................................41
9.9. Borrowing Base Report................................................................41
9.10. Accounts Receivable Aging Report.....................................................41
9.11. Solvency Certificate.................................................................41
9.12. Opinion of Counsel...................................................................41
9.13. Payment of Fees......................................................................41
9.14. Receivables Securitization Transaction...............................................41
9.15. Intercompany RPA.....................................................................41
9.16. OI Revolving Credit Agreement........................................................41
9.17. Business Plan........................................................................42
9.18. Retention of Financial Advisor.......................................................42
10. CONDITIONS TO ALL BORROWINGS...................................................................42
10.1. Representations True; No Event of Default............................................42
10.2. No Legal Impediment..................................................................42
10.3. Governmental Regulation..............................................................42
10.4. Proceedings and Documents............................................................42
10.5. Borrowing Base Report................................................................43
</TABLE>
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<TABLE>
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11. EVENTS OF DEFAULT; ACCELERATION; ETC...........................................................43
11.1. Events of Default and Acceleration..................................................43
11.2. Termination of Commitments..........................................................46
11.3. Remedies............................................................................46
11.4. Distribution of Collateral Proceeds.................................................47
12. SETOFF.........................................................................................47
13. THE AGENT......................................................................................48
13.1. Authorization.......................................................................48
13.2. Employees and Agents................................................................49
13.3. No Liability........................................................................49
13.4. No Representations..................................................................49
13.4.1. General...................................................................49
13.4.2. Closing Documentation, etc................................................50
13.5. Payments............................................................................50
13.5.1. Payments to Agent.........................................................50
13.5.2. Distribution by Agent.....................................................50
13.5.3. Delinquent Banks..........................................................50
13.6. Holders of Revolving Credit Notes...................................................51
13.7. Indemnity...........................................................................51
13.8. Agent as Bank.......................................................................51
13.9. Resignation.........................................................................51
13.10. Notification of Defaults and Events of Default......................................52
14. EXPENSES AND INDEMNIFICATION...................................................................52
14.1. Expenses............................................................................52
14.2. Indemnification.....................................................................53
14.3. Survival............................................................................53
15. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION..................................................53
15.1. Sharing of Information with Section 20 Subsidiary...................................53
15.2. Confidentiality.....................................................................54
15.3. Prior Notification..................................................................54
15.4. Other...............................................................................54
16. SURVIVAL OF COVENANTS, ETC.....................................................................55
17. ASSIGNMENT AND PARTICIPATION...................................................................55
17.1. Conditions to Assignment by Banks...................................................55
17.2. Certain Representations and Warranties; Limitations; Covenants......................55
17.3. Register............................................................................57
17.4. New Revolving Credit Notes..........................................................57
17.5. Participations......................................................................57
17.6. Disclosure..........................................................................58
17.7. Assignee or Participant Affiliated with the Borrower................................58
17.8 Miscellaneous Assignment Provisions.................................................59
17.9 Assignment by Borrower..............................................................58
18. NOTICES, ETC...................................................................................59
19. GOVERNING LAW..................................................................................59
20. HEADINGS.......................................................................................60
21. COUNTERPARTS...................................................................................60
22. ENTIRE AGREEMENT, ETC..........................................................................60
23. WAIVER OF JURY TRIAL...........................................................................61
24. CONSENTS, AMENDMENT, WAIVERS, ETC..............................................................61
25. SEVERABILITY...................................................................................61
</TABLE>
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EXHIBITS
Exhibit A - Form of Borrowing Base Report
Exhibit B - Form of Lock-Box Agreement
Exhibit C - Form of Revolving Credit Notes
Exhibit D - Form of Loan Request
Exhibit E - Form of Assignment and Acceptance
SCHEDULES
Schedule 1 - Banks; Commitments
Schedule 6.3 - Title to Properties; Leases
Schedule 6.18 - Bank Accounts
<PAGE> 7
BD DRAFT
10/01/99
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of October 1, 1999 by and
among (a) OUTSOURCE FUNDING CORPORATION (the "Borrower"), a Delaware corporation
having its principal place of business at 1144 Newport Center Drive, Deerfield
Beach, Florida 33442, (b) each of the lending institutions listed on SCHEDULE 1
hereto and (c) BANKBOSTON, N.A. as agent for itself and such other lending
institutions.
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings set forth
in this ss.1 or elsewhere in the provisions of this Credit Agreement referred to
below:
ACCOUNTS RECEIVABLE. All rights of the Borrower to payment for goods
sold, leased or otherwise marketed in the ordinary course of business by the
Originators and all rights of the Borrower to payment for services rendered in
the ordinary course of business by the Originators and all sums of money or
other proceeds due thereon pursuant to transactions with account debtors, except
for that portion of the sum of money or other proceeds due thereon that relate
to sales, use or property taxes in conjunction with such transactions, recorded
on books of account in accordance with generally accepted accounting principles.
AFFILIATE. Any Person that would be considered to be an affiliate of
any other Person under Rule 144(a) of the Rules and Regulations of the
Securities and Exchange Commission, as in effect on the date hereof, if such
Person were issuing securities.
AGENT'S HEAD OFFICE. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
AGENT. BankBoston, N.A. acting as agent for the Banks.
AGENT'S SPECIAL COUNSEL. Bingham Dana LLP or such other counsel as may
be approved by the Agent.
ASSIGNMENT AND ACCEPTANCE. See ss.17.1.
BALANCE SHEET DATE. December 31, 1998.
BANKS. BKB and the other lending institutions listed on SCHEDULE 1
hereto and any other Person who becomes an assignee of any rights and
obligations of a Bank pursuant to ss.17.
<PAGE> 8
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BASE RATE. The higher of (i) the annual rate of interest announced from
time to time by BKB at its head office in Boston, Massachusetts, as its "base
rate" and (ii) one-half of one percent (1/2%) above the Federal Funds Effective
Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall
mean for any day, the rate per annum equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three funds brokers of recognized
standing selected by the Agent.
BASE RATE LOANS. Loans bearing interest calculated by reference to the
Base Rate.
BKB. BankBoston, N.A., a national banking association, in its
individual capacity.
BKB COLLECTION ACCOUNT. See ss.7.14.1.
BORROWER. As defined in the preamble hereto.
BORROWING BASE. At the relevant time of reference thereto, an amount
determined by the Agent by reference to the most recent Borrowing Base Report as
adjusted pursuant to the provisions below, which is equal to the sum of:
(a) 83% of Eligible Accounts Receivable; MINUS
(b) Reserves; PLUS
(c) the Discretionary Amount.
The Agent may, in its sole discretion, from time to time, upon five (5) days'
prior notice to the Borrower, reduce the lending formula with respect to
Eligible Accounts Receivable or Unbilled Accounts Receivable to the extent that
the Agent determines that: (i) the dilution with respect of the Accounts
Receivable for any period has increased in any material respect or may be
reasonably anticipated to increase in any material respect above historical
levels, or (ii) the general creditworthiness of account debtors or other
obligors of the Borrower has declined. In determining whether to reduce the
lending formula(s), the Agent may consider events, conditions, contingencies or
risks which are also considered in determining Eligible Accounts Receivable or
Unbilled Accounts Receivable or in establishing the Reserves.
BORROWING BASE REPORT. A Borrowing Base Report signed by the chief
financial officer of the Borrower and in substantially the form of EXHIBIT A
hereto.
<PAGE> 9
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BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts, are open for the transaction of banking business.
CAPITALIZED LEASES. Leases under which the Borrower is the lessee or
obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the lessee or obligor in
accordance with generally accepted accounting principles.
CERCLA. See ss.6.17(a).
CLOSING DATE. The first date on which the conditions set forth in ss.9
have been satisfied and any Loans are to be made.
CODE. The Internal Revenue Code of 1986.
COLLATERAL. All of the property, rights and interests of the Borrower
that are or are intended to be subject to the security interests created by the
Security Documents.
COMMITMENT. With respect to each Bank, the amount set forth on SCHEDULE
1 hereto as the amount of such Bank's commitment to make Loans to the Borrower,
as the same may be reduced from time to time; or if such commitment is
terminated pursuant to the provisions hereof, zero.
COMMITMENT PERCENTAGE. With respect to each Bank, the percentage set
forth on SCHEDULE 1 hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
CREDIT AGREEMENT. This Revolving Credit Agreement, including the
Schedules and Exhibits hereto.
DEFAULT. See ss.11.1.
DELINQUENT BANK. See ss.13.5.3.
DISCRETIONARY AMOUNT. As at any date of determination, an amount
determined by the Agent in its sole and absolute discretion which shall not
exceed $250,000 at any time.
DISTRIBUTION. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of the Borrower, other than
dividends payable solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of the Borrower, the return of capital by the Borrower to its shareholders
as such; or any other distribution on or in respect of any shares of any class
of capital stock of the Borrower.
DOLLARS or $. Dollars in lawful currency of the United States of
America.
<PAGE> 10
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DOMESTIC LENDING OFFICE. Initially, the office of each Bank designated
as such in SCHEDULE 1 hereto; thereafter, such other office of such Bank, if
any, located within the United States that will be making or maintaining Base
Rate Loans.
DRAWDOWN DATE. The date on which any Loan is made or is to be made.
EAGLEFUNDING. EagleFunding Capital Corporation, a Delaware corporation.
ELIGIBLE ACCOUNTS RECEIVABLE. The aggregate of the unpaid portions of
Accounts Receivable (net of any credits, rebates, offsets, holdbacks or other
adjustments or commissions payable to third parties that are adjustments to such
Accounts Receivable) (i) that the Borrower reasonably and in good faith
determines to be collectible; (ii) that are with account debtors or other
obligors that (A) are not Affiliates of the Borrower, (B) purchased the goods or
services giving rise to the relevant Account Receivable in an arm's length
transaction, (C) are not insolvent or involved in any case or proceeding,
whether voluntary or involuntary, under any bankruptcy, reorganization,
arrangement, insolvency, adjustment of debt, dissolution, liquidation or similar
law of any jurisdiction and (D) are, in the Agent's reasonable judgment,
creditworthy; (iii) that are in payment of obligations that have been fully
performed, do not consist of progress billings or bill and hold invoices and are
not subject to dispute or any other similar claims that would reduce the cash
amount payable therefor; (iv) that are not subject to any pledge, restriction,
security interest or other lien or encumbrance other than those created by the
Loan Documents; (v) in which the Agent has a valid and perfected first priority
security interest; (vi) that (A) with respect to Accounts Receivable originated
by OutSource Franchising, are not outstanding for more than sixty (60) days past
the date of the respective invoices therefor and (B) with respect to the
Accounts Receivable originated by any other Originator, are not outstanding for
more than ninety (90) days past the date of the respective invoices therefor,
(vii) that are not due from an account debtor or other obligor located in
Minnesota unless the Borrower (A) has received a certificate of authority to do
business and is in good standing in such state or (B) has filed a notice of
business activities report with the appropriate office or agency of such state
for the current year; (viii) that are not due from any single account debtor or
other obligor if more than twenty percent (20%) of the aggregate amount of all
Accounts Receivable owing from such account debtor or other obligor are more
than one hundred twenty (120) days past the date of the respective invoices
therefor; (ix) that are payable in Dollars; (x) that are not payable from an
office outside of the United States; (xi) that are not secured by a letter of
credit unless the Agent has a prior, perfected security interest in such letter
of credit and (xii) that satisfy and have been originated in accordance with all
applicable requirements of the Credit and Collection Policy (as defined in the
Receivable Purchase Agreement).
ELIGIBLE ASSIGNEE. Any of (i) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000;
<PAGE> 11
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(ii) a savings and loan association or savings bank organized under the laws of
the United States, or any State thereof or the District of Columbia, and having
a net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (iii) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, PROVIDED that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (iv) the
central bank of any country which is a member of the OECD; and (v) any other
bank, insurance company, commercial finance company or other financial
institution or other Person approved by the Agent, such approval not to be
unreasonably withheld.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
ss.3(2) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.
ENVIRONMENTAL LAWS. See ss.6.17(a).
EPA. See ss.6.17(b).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA AFFILIATE. Any Person which is treated as a single employer with
the Borrower under ss.414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of ss.4043 of ERISA and the regulations
promulgated thereunder.
EVENT OF DEFAULT. See ss.13.1.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Principles that are (i)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to time,
and (ii) consistently applied with past financial statements of the Borrower
adopting the same principles, PROVIDED that in each case a certified public
accountant would, insofar as the use of such accounting principles is pertinent,
be in a position to deliver an unqualified opinion (other than a qualification
regarding changes in generally accepted accounting principles) as to financial
statements in which such principles have been properly applied.
GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
HAZARDOUS SUBSTANCES. See ss.6.17(b).
<PAGE> 12
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INDEBTEDNESS. As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:
(i) every obligation of such Person for money borrowed,
(ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses,
(iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person,
(iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith),
(v) every obligation of such Person under any Capitalized
Lease,
(vi) every obligation of such Person under any lease (a
"synthetic lease") treated as an operating lease under generally
accepted accounting principles and as a loan or financing for U.S.
income tax purposes,
(vii) all sales by such Person of (A) accounts or general
intangibles for money due or to become due, (B) chattel paper,
instruments or documents creating or evidencing a right to payment of
money or (C) other receivables (collectively "receivables"), whether
pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person relating
thereto or a disposition of defaulted receivables for collection and
not as a financing arrangement, and together with any obligation of
such Person to pay any discount, interest, fees, indemnities,
penalties, recourse, expenses or other amounts in connection therewith,
(viii) every obligation of such Person (an "equity related
purchase obligation") to purchase, redeem, retire or otherwise acquire
for value any shares of capital stock of any class issued by such
Person, any warrants, options or other rights to acquire any such
shares, or any rights measured by the value of such shares, warrants,
options or other rights,
(ix) every obligation of such Person under any forward
contract, futures contract, swap, option or other financing agreement
or arrangement (including, without limitation, caps, floors, collars
and
<PAGE> 13
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similar agreements), the value of which is dependent upon interest
rates, currency exchange rates, commodities or other indices (a
"derivative contract"),
(x) every obligation in respect of Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such
entity, except to the extent that the terms of such Indebtedness
provide that such Person is not liable therefor and such terms are
enforceable under applicable law,
(xi) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of
clauses (i) through (x) (the "primary obligation") of another Person
(the "primary obligor"), in any manner, whether directly or indirectly,
and including, without limitation, any obligation of such Person (A) to
purchase or pay (or advance or supply funds for the purchase of) any
security for the payment of such primary obligation, (B) to purchase
property, securities or services for the purpose of assuring the
payment of such primary obligation, or (C) to maintain working capital,
equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such
primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (v) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (w) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the purchaser (other than the Borrower or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or
interest earned on such investment, (x) any synthetic lease shall be the
stipulated loss value, termination value or other equivalent amount, (y) any
derivative contract shall be the maximum amount of any termination or loss
payment required to be paid by such Person if such derivative contract were, at
the time of determination, to be terminated by reason of any event of default or
early termination event thereunder, whether or not such event of default or
early termination event has in fact occurred and (z) any equity related purchase
obligation shall be the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised in such redemption
or purchase price.
INELIGIBLE SECURITIES. Securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. ss.24, Seventh), as amended.
<PAGE> 14
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INTERCOMPANY RPA. The Amended and Restated Receivables Purchase and
Sale Agreement dated as of October 1, 1999 among OI, OutSource Franchising,
Inc., Capital Staffing Fund, Inc., Synadyne I, Inc., Synadyne II, Inc., Synadyne
III, Inc., Synadyne IV, Inc., Synadyne V, Inc., and OutSource International of
America, Inc., each as an originator, and the Borrower, as the buyer, and OI, as
the servicer, as the same may be amended, supplemented, restated or otherwise
modified and in effect from time to time.
INTEREST PAYMENT DATE. As to any Loan, the last day of the calendar
month with respect to interest accrued during such calendar month, including
without limitation, the calendar month which includes the Drawdown Date of such
Loan.
INTEREST PERIOD. With respect to each Loan, (i) initially, the period
commencing on the Drawdown Date of such Loan and ending on the last day of the
calendar month; and (ii) thereafter, each period commencing on the last day of
the next preceding Interest Period and ending on the last day of one of the
calendar months; PROVIDED that all of the foregoing provisions relating to
Interest Periods are subject to the following:
(a) if any Interest Period would end on a day that is not a
Business Day, that Interest Period shall end on the next succeeding
Business Day; and
(b) any Interest Period that would otherwise extend beyond the
Revolving Credit Loan Maturity Date shall end on the Revolving Credit
Loan Maturity Date.
INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(iii) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (iv) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (ii) may be
deducted when paid; and (v) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
LOAN DOCUMENTS. This Credit Agreement, the Revolving Credit Notes and
the Security Documents.
<PAGE> 15
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LOAN REQUEST. See ss.2.6.
LOANS. The revolving credit loans made or to be made by the Banks to
the Borrower pursuant to ss.2.
LOCK-BOX. A post office box to which Accounts Receivable are remitted
for retrieval by a Lock-Box Bank and deposited by such Lock-Box Bank into a
Lock-Box Account.
LOCK-BOX ACCOUNT. An account maintained for the purpose of receiving
cash proceeds of Accounts Receivable of a bank or other financial institution
which has executed a Lock-Box Agreement.
LOCK-BOX AGREEMENT. An agreement, in substantially the form of Exhibit
B, among the Borrower, the Agent and a Lock-Box Bank.
LOCK-BOX BANK. Any of the banks or other financial institutions holding
one or more Lock-Box Accounts.
MAJORITY BANKS. As of any date, the Banks holding at least sixty-six
and two-thirds percent (66 2/3%) of the outstanding principal amount of the
Revolving Credit Notes on such date; and if no such principal is outstanding,
the Banks whose aggregate Commitments constitutes at least sixty-six and
two-thirds percent (66 2/3%) of the Total Commitment.
MAXIMUM COMMITMENT. An amount equal to $50,000,000.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of
ss.3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
OBLIGATIONS. All indebtedness, obligations and liabilities of the
Borrower to any of the Banks and the Agent, individually or collectively,
existing on the date of this Credit Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise, arising or incurred under this Credit Agreement or any of
the other Loan Documents or in respect of any of the Loans or any of the
Revolving Credit Notes or other instruments at any time evidencing any thereof.
OI. OutSource International, Inc., a Florida corporation.
OI REVOLVING CREDIT AGREEMENT. The Third Amended and Restated Credit
Agreement dated as of July 27, 1998 by and among OI, the banks and other
financial institutions from time to time parties thereto and BankBoston, N.A.,
as agent for the banks thereunder, as the same may be amended, restated,
supplemented, replaced or otherwise modified from time to time.
OPERATING ACCOUNT. See ss.2.6.2.
<PAGE> 16
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ORIGINATORS. Collectively, OutSource International, Inc., a Florida
Corporation, Capital Staffing Fund, Inc., a Florida Corporation, OutSource
Franchising, a Florida Corporation, Synadyne I, Inc., a Florida Corporation,
Synadyne II, Inc., a Florida Corporation, Synadyne III, Inc., a Florida
Corporation, Synadyne IV, Inc., a Florida Corporation, Synadyne V, Inc., a
Florida Corporation, and OutSource International of America, Inc., a Florida
Corporation.
OUTSOURCE FRANCHISING. OutSource Franchising, Inc., a Florida
corporation.
OUTSTANDING. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of
ERISA and any successor entity or entities having similar responsibilities.
PERFECTION CERTIFICATE. The Perfection Certificate as defined in the
Security Agreement.
PERMITTED LIENS. Liens, security interests and other encumbrances
permitted by ss.8.2.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
RCRA. See ss.6.17(a).
REAL ESTATE. All real property at any time owned or leased (as lessee
or sublessee) by the Borrower.
RECEIVABLES PURCHASE AGREEMENT. The Receivables Purchase Agreement
dated as of July 27, 1998 among the Borrower, as the seller, EagleFunding, as
the purchaser, BancBoston Robertson Stephens Inc., as the deal agent, and OI, as
the servicer, as the same may be amended, supplemented, restated or otherwise
modified and in effect from time to time.
RECORD. The grid attached to a Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by any Bank with respect to any Loan referred to in such
Revolving Credit Note.
REGISTER. See ss.17.3.
RESERVES. As determined by the Agent, such amounts as the Agent may
from time to time establish and revise (a) to reflect events, conditions,
contingencies or risks which do or may (i) adversely affect either (A) any
material portion of the Collateral, the rights of the Agent or any of the Banks
in any material portion of the Collateral or its value or (B) the security
interest and
<PAGE> 17
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other rights of the Agent or any of the Banks in any material
portion of the Collateral (including the enforceability, perfection and priority
thereof) or (ii) adversely affect in any material respect the assets (other than
any material portion of the Collateral) or business or financial condition of
the Borrower or (b) to reflect the belief of the Agent that any Borrowing Base
Report or other collateral report or financial information furnished by or on
behalf of the Borrower to the Agent or any of the Banks is or may have been
incomplete, inaccurate or misleading in any material respect.
REVOLVING CREDIT LOAN MATURITY DATE. December 31, 1999.
REVOLVING CREDIT NOTE RECORD. A Record with respect to a Revolving
Credit Note.
REVOLVING CREDIT NOTES. See ss.2.4.
SARA. See ss.6.17(a).
SECTION 20 SUBSIDIARY. A Subsidiary of the bank holding company
controlling any Bank, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
SECURITY AGREEMENT. The Security Agreement, dated or to be dated on or
prior to the Closing Date, between the Borrower and the Agent and in form and
substance satisfactory to the Banks and the Agent.
SECURITY DOCUMENTS. The Security Agreement and all other instruments
and documents, including without limitation Uniform Commercial Code financing
statements, required to be executed or delivered pursuant to any Security
Document.
SETTLEMENT. The making or receiving of payments, in immediately
available funds, by the Banks, to the extent necessary to cause each Bank's
actual share of the outstanding amount of Loans (after giving effect to any Loan
Request) to be equal to such Bank's Commitment Percentage of the outstanding
amount of such Loans (after giving effect to any Loan Request), in any case
where, prior to such event or action, the actual share is not so equal.
SETTLEMENT AMOUNT. See ss.2.9.1.
SETTLEMENT DATE. (a) The Drawdown Date relating to any Loan Request,
(b) Friday of each week, or if a Friday is not a Business Day, the Business Day
immediately following such Friday, (c) at the option of the Agent, on any
Business Day following a day on which the account officers of the Agent active
upon the Borrower's account become aware of the existence of an Event of
Default, (d) any Business Day on which the amount of Loans outstanding from BKB
is equal to or greater than BKB's Commitment Percentage of the Maximum
Commitment, (e) the Business Day immediately following any Business Day on which
the amount of Loans outstanding increases or decreases by more than $1,000,000
as compared to the previous Settlement Date, (f) any Business Day
<PAGE> 18
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on which (i) the amount of outstanding Loans decreases and (ii) the amount of
the Agent's Loans outstanding equals zero Dollars ($0).
SETTLING BANK. See ss.2.9.1.
SUBSIDIARY. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
VOTING STOCK. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from
time to time in accordance with its terms and the terms of this Credit
Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have
the meanings assigned to them therein, with the term "instrument" being
that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "ss." refers to that section of
this Credit Agreement unless otherwise indicated.
<PAGE> 19
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(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Credit Agreement as a whole and not to
any particular section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation
of periods of time from a specified date to a later specified date, the
word "from" means "from and including," the words "to" and "until" each
mean "to but excluding," and the word "through" means "to and
including."
(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and measurements
are, however, cumulative and are to be performed in accordance with the
terms thereof.
(l) This Credit Agreement and the other Loan Documents are the
result of negotiation among, and have been reviewed by counsel to,
among others, the Agent and the Borrower and are the product of
discussions and negotiations among all parties. Accordingly, this
Credit Agreement and the other Loan Documents are not intended to be
construed against the Agent or any of the Banks merely on account of
the Agent's or any Bank's involvement in the preparation of such
documents.
2. THE REVOLVING CREDIT FACILITY.
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth
in this Credit Agreement, each of the Banks severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time to time from
the Closing Date up to but not including the Revolving Credit Loan Maturity Date
upon notice by the Borrower to the Agent given in accordance with ss.2.6, such
sums as are requested by the Borrower up to a maximum aggregate principal amount
outstanding (after giving effect to all amounts requested) at any one time equal
to such Bank's Commitment, PROVIDED that the sum of the outstanding amount of
the Loans (after giving effect to all amounts requested) shall not at any time
exceed the lesser of (i) the Maximum Commitment and (ii) the Borrowing Base. The
Loans shall be made PRO RATA in accordance with each Bank's Commitment
Percentage. Each request for a Loan hereunder shall constitute a representation
and warranty by the Borrower that the conditions set forth in ss.9 and ss.10, in
the case of the initial Loans to be made on the Closing Date, and ss.10, in the
case of all other Loans, have been satisfied on the date of such request.
2.2. COMMITMENT FEE. The Borrower agrees to pay to the Agent for the
accounts of the Banks in accordance with their respective Commitment Percentages
a commitment fee calculated at the rate of one-half percent (1/2%) per annum on
the average daily amount during each calendar month or portion thereof from the
date hereof, to the Revolving Credit Loan Maturity Date by which the Maximum
Commitment exceeds the outstanding amount of Loans
<PAGE> 20
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during such calendar month. The commitment fee shall be payable monthly in
arrears on the first day of each calendar month for the immediately preceding
calendar month commencing on the first such date following the date hereof, with
a final payment on the Revolving Credit Maturity Date or any earlier date on
which the Commitments shall terminate.
2.3. REDUCTION OF MAXIMUM COMMITMENT. The Borrower shall have the right
at any time and from time to time upon five (5) Business Days prior written
notice to the Agent to reduce by $1,000,000 or an integral multiple thereof or
terminate entirely the unborrowed portion of the Maximum Commitment, whereupon
the Commitments of the Banks shall be reduced PRO RATA in accordance with their
respective Commitment Percentages of the amount specified in such notice or, as
the case may be, terminated. Promptly after receiving any notice of the Borrower
delivered pursuant to this ss.2.3, the Agent will notify the Banks of the
substance thereof. Upon the effective date of any such reduction or termination,
the Borrower shall pay to the Agent for the respective accounts of the Banks the
full amount of any commitment fee then accrued on the amount of the reduction.
No reduction of the Commitments may be reinstated.
2.4. THE REVOLVING CREDIT NOTES. The Loans shall be evidenced by
separate promissory notes of the Borrower in substantially the form of EXHIBIT C
hereto (each a "Revolving Credit Note"), dated as of the Closing Date and
completed with appropriate insertions. One Revolving Credit Note shall be
payable to the order of each Bank in a principal amount equal to such Bank's
Commitment or, if less, the outstanding amount of all Loans made by such Bank,
plus interest accrued thereon, as set forth below. The Borrower irrevocably
authorizes each Bank to make or cause to be made, at or about the time of the
Drawdown Date of any Loan or at the time of receipt of any payment of principal
on such Bank's Revolving Credit Note, an appropriate notation on such Bank's
Revolving Credit Note Record reflecting the making of such Loan or (as the case
may be) the receipt of such payment. The outstanding amount of the Loans set
forth on such Bank's Revolving Credit Note Record shall be PRIMA FACIE evidence
of the principal amount thereof owing and unpaid to such Bank, but the failure
to record, or any error in so recording, any such amount on such Bank's
Revolving Credit Note Record shall not limit or otherwise affect the obligations
of the Borrower hereunder or under any Revolving Credit Note to make payments of
principal of or interest on any Revolving Credit Note when due.
2.5. INTEREST ON LOANS. Except as otherwise provided in ss.4.9,
(a) Each Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate of two percent (2%)
per annum above the Base Rate.
(b) The Borrower promises to pay interest on each Loan in
arrears on each Interest Payment Date with respect thereto.
<PAGE> 21
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2.6. REQUESTS FOR LOANS.
2.6.1. GENERAL. The Borrower shall give to the Agent written
notice in the form of EXHIBIT D hereto (or telephonic notice confirmed
in a writing in the form of EXHIBIT D hereto) of each Loan requested
hereunder (a "Loan Request") no less than one (1) Business Day prior to
the proposed Drawdown Date of any Loan. Each such notice shall specify
(A) the principal amount of the Loan requested, and (B) the proposed
Drawdown Date of such Loan. Promptly upon receipt of any such notice,
the Agent shall notify each of the Banks thereof. Each such notice
shall be irrevocable and binding on the Borrower and shall obligate the
Borrower to accept the Loan requested from the Banks on the proposed
Drawdown Date. Each Loan Request shall be in a minimum aggregate amount
of $250,000 or an integral multiple thereof.
2.6.2. SWING LINE. Notwithstanding the notice and minimum
amount requirements set forth in ss.2.6.2 but otherwise in accordance
with the terms and conditions of this Credit Agreement, the Agent may,
in its sole discretion and without conferring with the Banks, make
Loans to the Borrower (i) by entry of credits to the Borrower's
operating account (No. 51002998) (the "Operating Account") with the
Agent to cover checks or other charges which the Borrower has drawn or
made against such account or (ii) in an amount as otherwise requested
by the Borrower. The Borrower hereby requests and authorizes the Agent
to make from time to time such Loans by means of appropriate entries of
such credits sufficient to cover checks and other charges then
presented for payment from the Operating Account or as otherwise so
requested. The Borrower acknowledges and agrees that the making of such
Loans shall, in each case, be subject in all respects to the provisions
of this Credit Agreement as if they were Loans covered by a Loan
Request including, without limitation, the limitations set forth in
ss.2.1 and the requirements that the applicable provisions of ss.9 (in
the case of Loans made on the Closing Date) and ss.10 be satisfied. All
actions taken by the Agent pursuant to the provisions of this ss.2.6.2
shall be conclusive and binding on the Borrower and the Banks absent
the Agent's gross negligence or willful misconduct. Prior to a
Settlement, interest on Loans made pursuant to this ss.2.6.2 shall be
for the account of the Agent.
2.7. FUNDS FOR LOANS.
2.7.1. FUNDING PROCEDURES. Not later than 11:00 a.m. (Boston
time) on the proposed Drawdown Date of any Loans, each of the Banks
will make available to the Agent, at the Agent's Head Office, in
immediately available funds, the amount of such Bank's Commitment
Percentage of the amount of the requested Loans. Upon receipt from each
Bank of such amount, and upon receipt of the documents required by
ss.ss.9 and 10 and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Agent will make available to the
<PAGE> 22
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Borrower the aggregate amount of such Loans made available to the Agent
by the Banks. The failure or refusal of any Bank to make available to
the Agent at the aforesaid time and place on any Drawdown Date the
amount of its Commitment Percentage of the requested Loans shall not
relieve any other Bank from its several obligation hereunder to make
available to the Agent the amount of such other Bank's Commitment
Percentage of any requested Loans.
2.7.2. ADVANCES BY AGENT. The Agent may, unless notified to
the contrary by any Bank prior to a Drawdown Date, assume that such
Bank has made available to the Agent on such Drawdown Date the amount
of such Bank's Commitment Percentage of the Loans to be made on such
Drawdown Date, and the Agent may (but it shall not be required to), in
reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes available to the Agent such
amount on a date after such Drawdown Date, such Bank shall pay to the
Agent on demand an amount equal to the product of (i) the average
computed for the period referred to in clause (iii) below, of the
weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, TIMES
(ii) the amount of such Bank's Commitment Percentage of such Loans,
TIMES (iii) a fraction, the numerator of which is the number of days
that elapse from and including such Drawdown Date to the date on which
the amount of such Bank's Commitment Percentage of such Loans shall
become immediately available to the Agent, and the denominator of which
is 365. A statement of the Agent submitted to such Bank with respect to
any amounts owing under this paragraph shall be PRIMA FACIE evidence of
the amount due and owing to the Agent by such Bank. If the amount of
such Bank's Commitment Percentage of such Loans is not made available
to the Agent by such Bank within three (3) Business Days following such
Drawdown Date, the Agent shall be entitled to recover such amount from
the Borrower on demand, with interest thereon at the rate per annum
applicable to the Loans made on such Drawdown Date.
2.8. CHANGE IN BORROWING BASE. The Borrowing Base shall be determined
weekly by the Agent by reference to the Borrowing Base Report and other
information obtained by or provided to the Agent. The Agent shall give to the
Borrower written notice of any change in the Borrowing Base formula determined
by the Agent. In the case of a reduction in the lending formula with respect to
Eligible Accounts Receivable, such notice shall be effective five (5) Business
Days after its receipt by the Borrower, and in the case of any change in the
general criteria for Eligible Accounts Receivable, such notice shall be
effective the next Business Day after its receipt by the Borrower. Prior to the
time that such notice becomes effective the Borrowing Base shall be computed as
it would have been computed in the absence of such notice.
2.9. SETTLEMENTS.
2.9.1. GENERAL. On each Settlement Date, the Agent shall, not
later than 11:00 a.m. (Boston time), give telephonic or facsimile
notice
<PAGE> 23
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(i) to the Banks and the Borrower of the respective outstanding amount
of Loans made by the Agent on behalf of the Banks from the immediately
preceding Settlement Date through the close of business on the prior
day on such date pursuant to a Loan Request and (ii) to the Banks of
the amount (a "Settlement Amount") that each Bank (a "Settling Bank")
shall pay to effect a Settlement of any Loan. A statement of the Agent
submitted to the Banks and the Borrower or to the Banks with respect to
any amounts owing under this ss.2.9 shall bE PRIma FACie evidence of
the amount due and owing. Each Settling Bank shall, not later than 3:00
p.m. (Boston time) on such Settlement Date, effect a wire transfer of
immediately available funds to the Agent in the amount of the
Settlement Amount for such Settling Bank. All funds advanced by any
Bank as a Settling Bank pursuant to this ss.2.9 shall for all purposes
be treated as a Loan made by such Settling Bank to the Borrower and all
funds received by any Bank pursuant to this ss.2.9 shall for all
purposes be treated as repayment of amounts owed with respect to Loans
made by such Bank. In the event that any bankruptcy, reorganization,
liquidation, receivership or similar cases or proceedings in which the
Borrower is a debtor prevent a Settling Bank from making any Loan to
effect a Settlement as contemplated hereby, such Settling Bank will
make such dispositions and arrangements with the other Banks with
respect to such Loans, either by way of purchase of participations,
distribution, PRO TANTO assignment of claims, subrogation or otherwise
as shall result in each Bank's share of the outstanding Loans being
equal, as nearly as may be, to such Bank's Commitment Percentage of the
outstanding amount of the Loans.
2.9.2. FAILURE TO MAKE FUNDS AVAILABLE. The Agent may, unless
notified to the contrary by any Settling Bank prior to a Settlement
Date, assume that such Settling Bank has made or will make available to
the Agent on such Settlement Date the amount of such Settling Bank's
Settlement Amount, and the Agent may (but it shall not be required to),
in reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Settling Bank makes available to the Agent
such amount on a date after such Settlement Date, such Settling Bank
shall pay to the Agent on demand an amount equal to the product of (i)
the average computed for the period referred to in clause (iii) below,
of the weighted average interest rate paid by the Agent for federal
funds acquired by the Agent during each day included in such period,
times (ii) the amount of such Settlement Amount, times (iii) a
fraction, the numerator of which is the number of days that elapse from
and including such Settlement Date to the date on which the amount of
such Settlement Amount shall become immediately available to the Agent,
and the denominator of which is 360. A statement of the Agent submitted
to such Settling Bank with respect to any amounts owing under this
ss.2.9.2 shall be prima facie evidence of the amount due and owing to
the Agent by such Settling Bank. If such Settling Bank's Settlement
Amount is not made available to the Agent by such Settling Bank within
three (3) Business Days following such Settlement Date, the Agent shall
be
<PAGE> 24
-18-
entitled to recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to the Loans as of
such Settlement Date.
2.9.3. NO EFFECT ON OTHER BANKS. The failure or refusal of any
Settling Bank to make available to the Agent at the aforesaid time and
place on any Settlement Date the amount of such Settling Bank's
Settlement Amount shall not (i) relieve any other Settling Bank from
its several obligations hereunder to make available to the Agent the
amount of such other Settling Bank's Settlement Amount or (ii) impose
upon any Bank, other than the Settling Bank so failing or refusing, any
liability with respect to such failure or refusal or otherwise increase
the Commitment of such other Bank.
2.10. REPAYMENTS OF LOANS PRIOR TO EVENT OF DEFAULT.
2.10.1. CREDIT FOR FUNDS RECEIVED IN CONCENTRATION ACCOUNT.
Prior to the occurrence of an Event of Default as to which the account
officers of the Agent active upon the Borrower's account have actual
knowledge, (i) all funds and cash proceeds in the form of money, checks
and like items received in the BKB Collection Account as contemplated
by ss.7.14 shall be credited, on the same Business Day on which the
Agent determines that good collected funds have been received, and,
prior to the receipt of good collected funds, on a provisional basis
until final receipt of good collected funds, and applied as
contemplated by ss.2.10.2, (ii) all funds and cash proceeds in the form
of a wire transfer received in the BKB Collection Account as
contemplated by ss.7.14 shall be credited on the same Business Day as
the Agent's receipt of such amounts (or up to such later date as the
Agent determines that good collected funds have been received), and
applied as contemplated by ss.2.10.2, and (iii) all funds and cash
proceeds in the form of an automated clearing house transfer received
in the BKB Collection Account as contemplated by ss.7.14 shall be
credited, on the next Business Day following the Agent's receipt of
such amounts (or up to such later date as the Agent determines that
good collected funds have been received), and applied as contemplated
by ss.2.10.2. For purposes of the foregoing provisions of this
ss.2.10.1, the Agent shall not be deemed to have received any such
funds or cash proceeds on any day unless received by the Agent before
2:30 p.m. (Boston time) on such day. The Borrower further acknowledges
and agrees that any such provisional credits or credits in respect of
wire or automatic clearing house funds transfers shall be subject to
reversal if final collection in good funds of the related item is not
received by, or final settlement of the funds transfer is not made in
favor of, the Agent in accordance with the Agent's customary procedures
and practices for collecting provisional items or receiving settlement
of funds transfers.
<PAGE> 25
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2.10.2. APPLICATION OF PAYMENTS PRIOR TO EVENT OF DEFAULT.
(a) Prior to the occurrence of an Event of Default of
which the account officers of the Agent active on the
Borrower's account have knowledge, all funds transferred to
the BKB Collection Account and for which the Borrower has
received credits shall be applied to the Obligations as
follows:
(i) first, to pay amounts then due and
payable to OI to be applied by OI to amounts
outstanding under the OI Revolving Credit Agreement;
(ii) second, to pay amounts then due and
payable under this Agreement, the Revolving Credit
Notes and the other Loan Documents;
(iii) third, to reduce Loans made by the
Agent pursuant to ss.2.6.2 and for which Settlement
has not then been made;
(iv) fourth, to reduce other Loans;
(v) fifth to the Operating Account.
(b) All prepayments of the Loans pursuant to this
ss.2.10.2 shall be allocated among the Banks making such
Loans, in proportion, as nearly as practicable, to the
respective unpaid principal amount of such Loans outstanding,
with adjustments to the extent practicable to equalize any
prior payments or repayments not exactly in proportion. Prior
to any Settlement Date, however, all prepayments of the Loans
shall be applied in accordance with this ss.2.10.2, first to
outstanding Loans of the Agent.
2.11. REPAYMENTS OF LOANS AFTER EVENT OF DEFAULT. Following the
occurrence and during the continuance of an Event of Default of which the
account officers of the Agent active on the Borrower's account have knowledge,
all funds transferred to the BKB Collection Account and for which the Borrower
has received credits shall be applied to the Obligations in accordance with
ss.11.4.
3. REPAYMENT OF THE LOANS.
3.1. MATURITY. The Borrower promises to pay on the Revolving Credit
Loan Maturity Date, and there shall become absolutely due and payable on the
Revolving Credit Loan Maturity Date, all of the Loans outstanding on such date,
together with any and all accrued and unpaid interest thereon.
3.2. MANDATORY REPAYMENTS OF LOANS. If at any time the sum of the
outstanding amount of the Loans exceeds the lesser of (i) the Maximum Commitment
and (ii) the Borrowing Base, then the Borrower shall immediately pay the amount
of such excess to the Agent for application to the Loans. Each
<PAGE> 26
-20-
prepayment of Revolving Credit Loans shall be allocated among the Banks in
proportion, as nearly as practicable, to the respective unpaid principal amount
of each Bank's Revolving Credit Note, with adjustments to the extent practicable
to equalize any prior payments or repayments not exactly in proportion.
3.3. OPTIONAL REPAYMENTS OF LOANS. The Borrower shall have the right,
at its election, to repay the outstanding amount of the Loans, as a whole or in
part, at any time without penalty or premium. The Borrower shall give the Agent,
no later than 10:00 a.m., Boston time, at least three (3) Business Days prior
written notice, of any proposed repayment of any Loan pursuant to this ss.3.3
specifying the proposed date of payment of Loans and the principal amount to be
paid. Each such partial prepayment of the Loans shall be in an integral multiple
of $100,000 shall be accompanied by the payment of accrued interest on the
principal repaid to the date of payment. Each partial prepayment shall be
allocated among the Banks, in proportion, as nearly as practicable, to the
respective unpaid principal amount of each Bank's Revolving Credit Note, with
adjustments to the extent practicable to equalize any prior repayments not
exactly in proportion.
4. CERTAIN GENERAL PROVISIONS.
4.1. CLOSING FEE. The Borrower agrees to pay to the Agent, for the PRO
RATA accounts of the Banks, a fully earned closing fee in the amount of $125,000
payable on the date which is the earliest to occur of (a) October 22, 1999, (b)
the date of any acceleration of the Obligations of the Borrower to the Banks and
(c) the date on which all Obligations of the Borrower to the Banks are paid in
full and the Banks have no further commitment to extend credit.
4.2. AGENT'S FEE. The Borrower shall pay to the Agent monthly in
advance, for the Agent's own account, on the Closing Date and each month after
the Closing Date, an Agent's fee in the amount of $2,500 per month.
4.3. FUNDS FOR PAYMENTS.
4.3.1. PAYMENTS TO AGENT. All payments of principal, interest,
commitment fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made on the due date thereof to the Agent
in Dollars, for the respective accounts of the Banks and the Agent, at
the Agent's Head Office or at such other place that the Agent may from
time to time designate, in each case at or about 11:00 a.m. (Boston,
Massachusetts, time or other local time at the place of payment) and in
immediately available funds.
4.3.2. NO OFFSET, ETC. All payments by the Borrower hereunder
and under any of the other Loan Documents shall be made without
recoupment, setoff or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions
of
<PAGE> 27
-21-
any nature now or hereafter imposed or levied by any jurisdiction or
any political subdivision thereof or taxing or other authority therein
unless the Borrower is compelled by law to make such deduction or
withholding. If any such obligation is imposed upon the Borrower with
respect to any amount payable by it hereunder or under any of the other
Loan Documents, the Borrower will pay to the Agent, for the account of
the Banks or (as the case may be) the Agent, on the date on which such
amount is due and payable hereunder or under such other Loan Document,
such additional amount in Dollars as shall be necessary to enable the
Banks or the Agent to receive the same net amount which the Banks or
the Agent would have received on such due date had no such obligation
been imposed upon the Borrower. The Borrower will deliver promptly to
the Agent certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document.
4.4. COMPUTATIONS. All computations of interest on the Loans and of
commitment or other fees shall be based on a 360-day year and paid for the
actual number of days elapsed. Whenever a payment hereunder or under any of the
other Loan Documents becomes due on a day that is not a Business Day, the due
date for such payment shall be extended to the next succeeding Business Day, and
interest shall accrue during such extension. The outstanding amount of the Loans
as reflected on the Revolving Credit Note Records from time to time shall be
considered correct and binding on the Borrower unless within five (5) Business
Days after receipt of any notice by the Agent or any of the Banks of such
outstanding amount, the Agent or such Bank shall notify the Borrower to the
contrary.
4.5. ADDITIONAL COSTS, ETC. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank or the Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect
to this Credit Agreement, the other Loan Documents, such Bank's
Commitment or the Loans (other than taxes based upon or measured by the
income or profits of such Bank or the Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Loans or any other amounts payable
to any Bank or the Agent under this Credit Agreement or the other Loan
Documents, or
<PAGE> 28
-22-
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement)
any special deposit, reserve, assessment, liquidity, capital adequacy
or other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or commitments of an office of any Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, the Loans, such Bank's Commitment, or any class of loans or
commitments of which any of the Loans or such Bank's Commitment forms a
part, and the result of any of the foregoing is
(i) to increase the cost to any Bank of making,
funding, issuing, renewing, extending or maintaining any of
the Loans or such Bank's Commitment, or
(ii) to reduce the amount of principal, interest, or
other amount payable to such Bank or the Agent hereunder on
account of such Bank's Commitment or any of the Loans, or
(iii) to require such Bank or the Agent to make any
payment or to forego any interest or other sum payable
hereunder, the amount of which payment or foregone interest or
other sum is calculated by reference to the gross amount of
any sum receivable or deemed received by such Bank or the
Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, upon demand made by such Bank or
(as the case may be) the Agent at any time and from time to time and as often as
the occasion therefor may arise, pay to such Bank or the Agent such additional
amounts as will be sufficient to compensate such Bank or the Agent for such
additional cost, reduction, payment or foregone interest or other sum.
4.6. CAPITAL ADEQUACY. If after the date hereof any Bank or the Agent
determines that (i) the adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (ii) compliance by such Bank or the
Agent or any corporation controlling such Bank or the Agent with any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding capital adequacy, has the
effect of reducing the return on such Bank's or the Agent's commitment with
respect to any Loans to a level below that which such Bank or the Agent could
have achieved but for such adoption, change or compliance (taking into
consideration such Bank's or the Agent's then existing policies with respect to
capital adequacy and assuming full utilization of such entity's capital) by any
amount deemed by such Bank or (as the case may be) the Agent to be material,
<PAGE> 29
-23-
then such Bank or the Agent may notify the Borrower of such fact. To the extent
that the amount of such reduction in the return on capital is not reflected in
the Base Rate, the Borrower agrees to pay such Bank or (as the case may be) the
Agent for the amount of such reduction in the return on capital as and when such
reduction is determined upon presentation by such Bank or (as the case may be)
the Agent of a certificate in accordance with ss.5.9 hereof. Each Bank shall
allocate such cost increases among its customers in good faith and on an
equitable basis.
4.7. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to ss.ss.4.5 or 4.6 and a brief explanation of such amounts
which are due, submitted by any Bank or the Agent to the Borrower, shall be
conclusive, absent manifest error, that such amounts are due and owing.
4.8. INDEMNITY. The Borrower agrees to indemnify each Bank and to hold
each Bank harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Bank may sustain or incur as a consequence of
default by the Borrower in making a borrowing after the Borrower has given (or
is deemed to have given) a Loan Request.
4.9. INTEREST AFTER DEFAULT. During the continuance of a Default or an
Event of Default the principal of the Loans shall, until such Default or Event
of Default has been cured or remedied or such Default or Event of Default has
been waived by the Majority Banks pursuant to ss.24, bear interest at a rate per
annum equal to four percent (4%) above the rate of interest otherwise applicable
to such Loans pursuant to ss.2.5.
5. SECURITY.
The Obligations shall be secured by a perfected first priority security
interest (subject only to Permitted Liens entitled to priority under applicable
law) in all of the assets of the Borrower, whether now owned or hereafter
acquired, pursuant to the terms of the Security Documents to which the Borrower
is a party.
6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and the Agent as
follows:
6.1. CORPORATE AUTHORITY.
6.1.1. INCORPORATION; GOOD STANDING. The Borrower (i) is a
corporation duly organized, validly existing and in good standing under
the laws of its state of incorporation, (ii) has all requisite
corporate power to own its property and conduct its business as now
conducted and as presently contemplated, and (iii) is in good standing
as a foreign corporation and is duly authorized to do business in each
jurisdiction where such qualification is necessary except where a
failure to be so
<PAGE> 30
-24-
qualified would not have a materially adverse effect on the business,
assets or financial condition of the Borrower.
6.1.2. AUTHORIZATION. The execution, delivery and performance
of this Credit Agreement and the other Loan Documents to which the
Borrower is or is to become a party and the transactions contemplated
hereby and thereby (i) are within the corporate authority of such
Person, (ii) have been duly authorized by all necessary corporate
proceedings, (iii) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to
which the Borrower is subject or any judgment, order, writ, injunction,
license or permit applicable to the Borrower and (iv) do not conflict
with any provision of the corporate charter or bylaws of, or any
agreement or other instrument binding upon, the Borrower.
6.1.3. ENFORCEABILITY. The execution and delivery of this
Credit Agreement and the other Loan Documents to which the Borrower is
or is to become a party will result in valid and legally binding
obligations of such Person enforceable against it in accordance with
the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief
is subject to the discretion of the court before which any proceeding
therefor may be brought.
6.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by
the Borrower of this Credit Agreement and the other Loan Documents to which the
Borrower is or is to become a party and the transactions contemplated hereby and
thereby do not require the approval or consent of, or filing with, any
governmental agency or authority other than those already obtained.
6.3. TITLE TO PROPERTIES; LEASES. Except as indicated on SCHEDULE 6.3
hereto, the Borrower owns all of the assets reflected in the balance sheet of
the Borrower as at the Balance Sheet Date or acquired since that date (except
property and assets sold or otherwise disposed of in the ordinary course of
business since that date), subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens.
6.4. FINANCIAL STATEMENTS AND PROJECTIONS.
6.4.1. FISCAL YEAR. The Borrower has a fiscal year which is
the twelve months ending on December 31 of each calendar year.
<PAGE> 31
-25-
6.4.2. FINANCIAL STATEMENTS.
(a) There has been furnished to the Agent a balance
sheet of the Borrower as at the Balance Sheet Date, and a
statement of income for the fiscal year then ended, certified
by the Borrower's independent certified public accountants.
Such balance sheet and statement of income have been prepared
in accordance with generally accepted accounting principles
and fairly present the financial condition of the Borrower as
at the close of business on the date thereof and the results
of operations for the fiscal year then ended. There are no
contingent liabilities of the Borrower as of such date
involving material amounts, known to the officers of the
Borrower not disclosed in said balance sheet and the related
notes thereto.
(b) There has been furnished to the Agent the form
10-Q for the quarterly period ended June 30, 1999 as filed
with the Securities and Exchange Commission. There are no
contingent liabilities of the Borrower as of such date
involving material amounts known to the officers of the
Borrower not disclosed in said balance sheet and the related
notes thereto.
6.4.3. PROJECTIONS. The projections of the annual operating
budgets, balance sheets and cash flow statements of OI to the extent
that such relate to the Borrower, copies of which have been delivered
to each Bank, disclose all material assumptions made with respect to
general economic, financial and market conditions used in formulating
such projections. To the knowledge of the Borrower, no facts exist that
(individually or in the aggregate) would result in any material change
in any of such projections. The projections are based upon reasonable
estimates and assumptions, have been prepared on the basis of the
assumptions stated therein and reflect the reasonable estimates of OI
of the results of operations and other information projected therein.
6.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date, except as
disclosed in the quarterly financial statements furnished to the Agent pursuant
to ss.6.4.2(b) hereto, there has occurred no materially adverse change in the
financial condition or business of the Borrower as shown on or reflected in the
balance sheet of the Borrower as at the Balance Sheet Date, or the statement of
income for the fiscal year then ended, other than changes in the ordinary course
of business that have not had any materially adverse effect either individually
or in the aggregate on the business or financial condition of the Borrower.
Since the Balance Sheet Date, the Borrower has not made any Distribution.
6.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower possesses all
franchises, patents, copyrights, trademarks, trade names, licenses and permits,
and rights in respect of the foregoing, adequate for the conduct of its business
substantially as now conducted without known conflict with any rights of others.
<PAGE> 32
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6.7. LITIGATION. There are no actions, suits, proceedings or
investigations of any kind pending or threatened against the Borrower before any
court, tribunal or administrative agency or board that, if adversely determined,
might, either in any case or in the aggregate, materially adversely affect the
properties, assets, financial condition or business of the Borrower or
materially impair the right of the Borrower, to carry on business substantially
as now conducted by the Borrower, or result in any substantial liability not
adequately covered by insurance, or for which adequate reserves are not
maintained on the balance sheet of the Borrower, or which question the validity
of this Credit Agreement or any of the other Loan Documents, or any action taken
or to be taken pursuant hereto or thereto.
6.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. The Borrower is not subject
to any charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation that has or is expected in the future to have a
materially adverse effect on the business, assets or financial condition of the
Borrower. The Borrower is not a party to any contract or agreement that has or
is expected, in the judgment of the Borrower's officers, to have any materially
adverse effect on the business of the Borrower.
6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. The Borrower is not
in violation of any provision of its charter documents, bylaws, or any agreement
or instrument to which it may be subject or by which it or any of its properties
may be bound or any decree, order, judgment, statute, license, rule or
regulation, in any of the foregoing cases in a manner that could result in the
imposition of substantial penalties or materially and adversely affect the
financial condition, properties or business of the Borrower.
6.10. TAX STATUS. The Borrower (i) has made or filed all federal and
state income and all other tax returns, reports and declarations required by any
jurisdiction to which any of them is subject, (ii) has paid all taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and by appropriate proceedings and (iii) has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Borrower know of no basis for any such
claim.
6.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred
and is continuing.
6.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. The Borrower is not
a "holding company", or a "subsidiary company" of a "holding company", or an
affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is it an "investment company", or an
"affiliated company" or a "principal underwriter" of an
<PAGE> 33
-27-
"investment company", as such terms are defined in the Investment Company Act of
1940.
6.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry, or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrower or rights thereunder.
6.14. PERFECTION OF SECURITY INTEREST. All filings, assignments,
pledges and deposits of documents or instruments have been made and all other
actions have been taken that are necessary or advisable, under applicable law,
to establish and perfect the Agent's security interest in the Collateral. The
Collateral and the Agent's rights with respect to the Collateral are not subject
to any setoff, claims, withholdings or other defenses. The Borrower is the owner
of the Collateral free from any lien, security interest, encumbrance and any
other claim or demand, except for Permitted Liens.
6.15. EMPLOYEE BENEFIT PLANS.
6.15.1. IN GENERAL. Each Employee Benefit Plan and each
Guaranteed Pension Plan has been maintained and operated in compliance
in all material respects with the provisions of ERISA and, to the
extent applicable, the Code, including but not limited to the
provisions thereunder respecting prohibited transactions and the
bonding of fiduciaries and other persons handling plan funds as
required by ss.412 of ERISA. The Borrower has heretofore delivered to
the Agent the most recently completed annual report, Form 5500, with
all required attachments, and actuarial statement required to be
submitted under ss.103(d) of ERISA, with respect to each Guaranteed
Pension Plan.
6.15.2. TERMINABILITY OF WELFARE PLANS. No Employee Benefit
Plan, which is an employee welfare benefit plan within the meaning of
ss.3(1) or ss.3(2)(B) of ERISA, provides benefit coverage subsequent to
termination of employment, except as required by Title I, Part 6 of
ERISA or the applicable state insurance laws. The Borrower may
terminate each such Plan at any time (or at any time subsequent to the
expiration of any applicable bargaining agreement) in the discretion of
the Borrower without liability to any Person other than for claims
arising prior to termination.
6.15.3. GUARANTEED PENSION PLANS. Each contribution required
to be made to a Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding deficiency, the notice
or lien provisions of ss.302(f) of ERISA, or otherwise, has been timely
made. No waiver of an accumulated funding deficiency or extension of
amortization periods has been received with respect to any Guaranteed
Pension Plan, and neither the Borrower nor any ERISA Affiliate is
<PAGE> 34
-28-
obligated to or has posted security in connection with an amendment to
a Guaranteed Pension Plan pursuant to ss.307 of ERISA or ss.401(a)(29)
of the Code. No liability to the PBGC (other than required insurance
premiums, all of which have been paid) has been incurred by the
Borrower or any ERISA Affiliate with respect to any Guaranteed Pension
Plan and there has not been any ERISA Reportable Event (other than an
ERISA Reportable Event as to which the requirement of 30 days notice
has been waived), or any other event or condition which presents a
material risk of termination of any Guaranteed Pension Plan by the
PBGC. Based on the latest valuation of each Guaranteed Pension Plan
(which in each case occurred within twelve months of the date of this
representation), and on the actuarial methods and assumptions employed
for that valuation, the aggregate benefit liabilities of all such
Guaranteed Pension Plans within the meaning of ss.4001 of ERISA did not
exceed the aggregate value of the assets of all such Guaranteed Pension
Plans, disregarding for this purpose the benefit liabilities and assets
of any Guaranteed Pension Plan with assets in excess of benefit
liabilities.
6.15.4. MULTIEMPLOYER PLANS. Neither the Borrower nor any
ERISA Affiliate has incurred any material liability (including
secondary liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan under
ss.4201 of ERISA or as a result of a sale of assets described in
ss.4204 of ERISA. Neither the Borrower nor any ERISA Affiliate has been
notified that any Multiemployer Plan is in reorganization or insolvent
under and within the meaning of ss.4241 or ss.4245 of ERISA or is at
risk of entering reorganization or becoming insolvent, or that any
Multiemployer Plan intends to terminate or has been terminated under
ss.4041A of ERISA.
6.16. USE OF PROCEEDS.
6.16.1. GENERAL. The proceeds of the Loans shall be used (i)
on the initial Drawdown Date, to repurchase outstanding receivables
purchased from the Borrower by EagleFunding pursuant to the Receivables
Purchase Agreement, and (ii) thereafter, to purchase receivables
pursuant to the Intercompany RPA and to pay operating expenses.
6.16.2. REGULATIONS U AND X. No portion of any Loan is to be
used for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221
and 224.
6.16.3. INELIGIBLE SECURITIES. No portion of the proceeds of
any Loans is to be used, for the purpose of knowingly purchasing, or
providing credit support for the purchase of, during the underwriting
or placement period or within 30 days thereafter, any Ineligible
Securities underwritten or privately placed by a Section 20 Subsidiary.
<PAGE> 35
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6.17. ENVIRONMENTAL COMPLIANCE. The Borrower has taken all necessary
steps to investigate the past and present condition and usage of the Real Estate
and the operations conducted thereon and, based upon such diligent
investigation, has determined that:
(a) none of the Borrower or any operator of the Real Estate or
any operations thereon is in violation, or alleged violation, of any
judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation, those arising
under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any state
or local statute, regulation, ordinance, order or decree relating to
health, safety or the environment (hereinafter "Environmental Laws"),
which violation would have a material adverse effect on the environment
or the business, assets or financial condition of the Borrower;
(b) the Borrower has not received notice from any third party
including, without limitation, any federal, state or local governmental
authority, (i) that any one of them has been identified by the United
States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B; (ii) that any
hazardous waste, as defined by 42 U.S.C. ss.6903(5), any hazardous
substances as defined by 42 U.S.C. ss.9601(14), any pollutant or
contaminant as defined by 42 U.S.C. ss.9601(33) and any toxic
substances, oil or hazardous materials or other chemicals or substances
regulated by any Environmental Laws ("Hazardous Substances") which any
one of them has generated, transported or disposed of has been found at
any site at which a federal, state or local agency or other third party
has conducted or has ordered that the Borrower conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Law; or (iii) that it is or shall be a named party to any
claim, action, cause of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise) arising out of any
third party's incurrence of costs, expenses, losses or damages of any
kind whatsoever in connection with the release of Hazardous Substances;
(c) (i) no portion of the Real Estate has been used for the
handling, processing, storage or disposal of Hazardous Substances
except in accordance with applicable Environmental Laws; and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the Real Estate; (ii) in the
course of any activities conducted by the Borrower, or operators of its
properties, no Hazardous Substances have been generated or are being
used on the Real Estate except in accordance with applicable
Environmental Laws; (iii) there have been no releases (i.e. any past or
present
<PAGE> 36
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releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or threatened
releases of Hazardous Substances on, upon, into or from the properties
of the Borrower, which releases would have a material adverse effect on
the value of any of the Real Estate or adjacent properties or the
environment; (iv) to the best of the Borrower's knowledge, there have
been no releases on, upon, from or into any real property in the
vicinity of any of the Real Estate which, through soil or groundwater
contamination, may have come to be located on, and which would have a
material adverse effect on the value of, the Real Estate; and (v) in
addition, any Hazardous Substances that have been generated on any of
the Real Estate have been transported offsite only by carriers having
an identification number issued by the EPA, treated or disposed of only
by treatment or disposal facilities maintaining valid permits as
required under applicable Environmental Laws, which transporters and
facilities have been and are, to the best of the Borrower's knowledge,
operating in compliance with such permits and applicable Environmental
Laws; and
(d) none of the Borrower or the Real Estate is subject to any
applicable environmental law requiring the performance of Hazardous
Substances site assessments, or the removal or remediation of Hazardous
Substances, or the giving of notice to any governmental agency or the
recording or delivery to other Persons of an environmental disclosure
document or statement by virtue of the transactions set forth herein
and contemplated hereby, or to the effectiveness of any other
transactions contemplated hereby.
6.18. BANK ACCOUNTS. SCHEDULE 6.18 sets forth the account numbers and
location of all Lock-Box Accounts and other bank accounts of the Borrower.
6.19. YEAR 2000 PROBLEM. The Borrower has (i) reviewed the areas within
their businesses and operations which could be adversely affected by failure to
become "Year 2000 Compliant" (i.e. that computer applications, imbedded
microchips and other systems used by the Borrower or any of its material
vendors, will be able properly to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a detailed plan and timetable to become Year 2000
Compliant in a timely manner, and (iii) committed adequate resources to support
the Year 2000 plan of the Borrower. Based upon such review, the Borrower
reasonably believes that the Borrower will become "Year 2000 Compliant" in a
timely manner except to the extent that failure to do so will not have any
materially adverse effect on the business or financial condition of the
Borrower.
6.20. DISCLOSURE. None of this Credit Agreement or any of the other
Loan Documents contains any untrue statement of a material fact or omits to
state a material fact (known to the Borrower in the case of any document or
information not furnished by it) necessary in order to make the statements
herein or therein not misleading. There is no fact known to the Borrower which
<PAGE> 37
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materially adversely affects, or which is reasonably likely in the future to
materially adversely affect, the business, assets, financial condition or
prospects of the Borrower, exclusive of effects resulting from changes in
general economic conditions, legal standards or regulatory conditions.
6.21. SEPARATE LEGAL ENTITY. The Borrower is operated as an entity with
assets and liabilities distinct from those of OI and any Affiliate thereof
(other than the Borrower).
7. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or
Revolving Credit Note is outstanding or any Bank has any obligation to make any
Loans:
7.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Loans and the commitment
fees, Agent's fee and closing fee provided for in this Credit Agreement, all in
accordance with the terms of this Credit Agreement and the Revolving Credit
Notes.
7.2. MAINTENANCE OF OFFICE. The Borrower will maintain its chief
executive office at 1144 Newport Center Drive, Deerfield Beach, Florida, or at
such other place in the United States of America as the Borrower shall designate
upon written notice to the Agent, where notices, presentations and demands to or
upon the Borrower in respect of the Loan Documents may be given or made.
7.3. RECORDS AND ACCOUNTS. The Borrower will (i) keep true and accurate
records and books of account in which full, true and correct entries will be
made in accordance with generally accepted accounting principles, (ii) maintain
adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties,
contingencies, and other reserves, and (iii) at all times engage DeLoitte &
Touche, LLP or other independent certified public accountants satisfactory to
the Agent as the independent certified public accountants of the Borrower and
will not permit more than thirty (30) days to elapse between the cessation of
such firm's (or any successor firm's) engagement as the independent certified
public accountants of the Borrower and the appointment in such capacity of a
successor firm as shall be satisfactory to the Agent.
7.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower
will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of
the Borrower, copies of the unaudited balance sheet of the Borrower as
at the end of such quarter, and the related statement of income and
statement of cash flow for the portion of the Borrower's fiscal year
then
<PAGE> 38
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elapsed, all in reasonable detail and prepared in accordance with
generally accepted accounting principles, together with a certification
by the principal financial or accounting officer of the Borrower that
the information contained in such financial statements fairly presents
the financial position of the Borrower on the date thereof (subject to
year-end adjustments);
(b) as soon as practicable, but in any event within thirty
(30) days after the end of each month in each fiscal year of the
Borrower, unaudited monthly financial statements of the Borrower for
such month prepared in accordance with generally accepted accounting
principles, together with a certification by the principal financial or
accounting officer of the Borrower that the information contained in
such financial statements fairly presents the financial condition of
the Borrower and its Subsidiaries on the date thereof (subject to
year-end adjustments);
(c) contemporaneously with the filing or mailing thereof,
copies of all material of a financial nature filed with the Securities
and Exchange Commission or sent to the stockholders of the Borrower;
(d) at the end of each week, a Borrowing Base Report setting
forth the Borrowing Base as at the end of such calendar day or other
date so requested by the Agent;
(e) within fifteen (15) days after the end of each calendar
month, an Accounts Receivable aging report; and
(f) from time to time such other financial data and
information (including accountants, management letters) as the Agent or
any Bank may reasonably request.
7.5. NOTICES.
7.5.1. DEFAULTS. The Borrower will promptly notify the Agent
and each of the Banks in writing of the occurrence of any Default or
Event of Default. If any Person shall give any notice or take any other
action in respect of a claimed default (whether or not constituting an
Event of Default) under this Credit Agreement or any other note,
evidence of indebtedness, indenture or other obligation to which or
with respect to which the Borrower is a party or obligor, whether as
principal or surety, the Borrower shall forthwith give written notice
thereof to each of the Banks, describing the notice or action and the
nature of the claimed default.
7.5.2. ENVIRONMENTAL EVENTS. The Borrower will promptly give
notice to the Agent (i) of any violation of any Environmental Law that
the Borrower reports in writing or is reportable by such Person in
writing (or for which any written report supplemental to any oral
report is made) to any federal, state or local environmental agency and
(ii) upon becoming
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aware thereof, of any inquiry, proceeding, investigation, or other
action, including a notice from any agency of potential environmental
liability, of any federal, state or local environmental agency or
board, that has the potential to materially affect the assets,
liabilities, financial conditions or operations of the Borrower, or the
Agent's security interests pursuant to the Security Documents.
7.5.3. NOTIFICATION OF CLAIMS AGAINST COLLATERAL. The Borrower
will, immediately upon becoming aware thereof, notify the Agent in
writing of any setoff, claims (including, with respect to the Real
Estate, environmental claims), withholdings or other defenses to which
any material portion of the Collateral, or the Agent's rights with
respect to such Collateral, are subject.
7.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will
give notice to the Agent in writing within fifteen (15) days of
becoming aware of any litigation or proceedings threatened in writing
or any pending litigation and proceedings affecting the Borrower or to
which the Borrower is or becomes a party involving an uninsured claim
against the Borrower that could reasonably be expected to have a
materially adverse effect on the Borrower and stating the nature and
status of such litigation or proceedings. The Borrower will give notice
to the Agent, in writing, in form and detail satisfactory to the Agent,
within ten (10) days of any judgment not covered by insurance, final or
otherwise, against the Borrower in an amount in excess of $25,000.
7.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights and franchises and will not convert
to a limited liability company. The Borrower (i) will cause all of its
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment, (ii) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrower may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, and (iii)
will continue to engage primarily in the businesses now conducted by them and in
related businesses; PROVIDED that nothing in this ss.7.6 shall prevent the
Borrower from discontinuing the operation and maintenance of any of its
properties if such discontinuance is, in the judgment of the Borrower, desirable
in the conduct of its business and that do not in the aggregate materially
adversely affect the business of the Borrower.
7.7. MAINTENANCE OF SEPARATE EXISTENCE. The Borrower will do all things
necessary to maintain its corporate existence separate and apart from OI and all
other Affiliates of OI, including, without limitation, (i) practicing and
adhering to corporate formalities, such as maintaining appropriate corporate
books and records, (ii) maintaining at all times at least one "Independent
Director", as defined in and as required under the Borrower's Certificate of
<PAGE> 40
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Incorporation, (iii) owning or leasing pursuant to written leases all office
furniture and equipment necessary to operate its business, (iv) refraining from
(A) guaranteeing or otherwise becoming liable for any obligations of any of its
Affiliates, (B) having obligations guaranteed by its Affiliates, (C) holding
itself out as responsible for debts of any of its Affiliates or for decisions or
actions with respect to the affairs of any of its Affiliates, and (D) being
named as a direct or contingent beneficiary or loss payee on any insurance
policy of any Affiliate, (v) maintaining all of its deposit and other bank
accounts and all of its assets separate from those of any other Person, (vi)
maintaining all of its financial records separate and apart from those of any
other Person and ensuring that OI's and its Subsidiaries consolidated financial
statements contain appropriate disclosures concerning the Borrower's separate
existence, (vii) compensating all its employees, officers, consultants and
agents for services provided to it by such Persons, or reimbursing any of its
Affiliate, out of its own funds, (viii) maintaining office space that is
physically segregated from that of any of its Affiliates (even if such office
space is subleases from or is on or near premises occupied by any of its
Affiliates) and a separate telephone number which will be answered only in its
name, (ix) accounting for and managing all of its liabilities separately from
those of any of its Affiliates, (x) allocating, on an arm's-length basis, all
shares corporate operating services, leases and expenses, including, without
limitation, those associated with the services of shared consultants and agents
and shared computer equipment and software, (xi) refraining from paying
dividends or making Distributions, loans or other advances to any of its
Affiliates except, in each case, as duly authorized by its board of directors
and in accordance with applicable corporation law, (xii) refraining from filing
or otherwise initiating or supporting the filing of a motion in any bankruptcy
or other insolvency proceeding involving the Borrower, OI or any other Affiliate
of the Borrower to substantively consolidate assets and liabilities of the
Borrower with the assets and liabilities of any such Person or any other
Affiliate of the Borrower, (xiii) maintaining adequate capitalization in light
of its business and purpose and without the need for ongoing capital
contributions from OI, (xiv) conducting all of its business (whether written or
oral) solely in its own name, (xv) require that its employees, if any, when
conducting its business identify themselves as such and not as employees of any
other Affiliate of the Borrower (including, without limitation, by means of
providing appropriate employees with business or identification cards
identifying such employees as the Borrower's employees), and (xvi) taking all
other actions necessary to maintain its separate legal existence.
7.8. INSURANCE. The Borrower will maintain with financially sound and
reputable insurers insurance with respect to its properties and business against
such casualties and contingencies as shall be in accordance with the general
practices of businesses engaged in similar activities in similar geographic
areas and in amounts, containing such terms, in such forms and for such periods
as may be reasonable and prudent and in accordance with the terms of the
Security Agreement.
7.9. TAXES. The Borrower will duly pay and discharge, or cause to be
paid and discharged, before the same shall become overdue, all taxes,
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assessments and other governmental charges imposed upon it and its real
properties, sales and activities, or any part thereof, or upon the income or
profits therefrom, as well as all claims for labor, materials, or supplies that
if unpaid might by law become a lien or charge upon any of its property;
PROVIDED that any such tax, assessment, charge, levy or claim need not be paid
if the validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and if the Borrower shall have set aside on its books
adequate reserves with respect thereto; and PROVIDED FURTHER that the Borrower
will pay all such taxes, assessments, charges, levies or claims forthwith upon
the commencement of proceedings to foreclose any lien that may have attached as
security therefor.
7.10. INSPECTION OF PROPERTIES AND BOOKS, ETC.
7.10.1. GENERAL. The Borrower shall permit the Banks, through
the Agent or any of the Banks' other designated representatives, to
visit and inspect any of the properties of the Borrower, to examine the
books of account of the Borrower (and to make copies thereof and
extracts therefrom), and to discuss the affairs, finances and accounts
of the Borrower with, and to be advised as to the same by, its and
their officers, all at such reasonable times and intervals as the Agent
or any Bank may reasonably request.
7.10.2. COLLATERAL REPORTS. Upon the request of the Agent, the
Borrower will obtain and deliver to the Agent, or, if the Agent so
elects, will cooperate with the Agent in the Agent's obtaining, a
report of an independent collateral auditor satisfactory to the Agent
(which may be affiliated with one of the Banks) with respect to the
Accounts Receivable components included in the Borrowing Base, which
report shall indicate whether or not the information set forth in the
Borrowing Base Report most recently delivered is accurate and complete
in all material respects based upon a review by such auditors of the
Accounts Receivable (including verification with respect to the amount,
aging, identity and credit of the respective account debtors and the
billing practices of the Borrower). All such collateral value reports
shall be conducted and made at the expense of the Borrower.
7.10.3. COMMUNICATION WITH ACCOUNTANTS. The Borrower
authorizes the Agent and, if accompanied by the Agent, the Banks to
communicate directly with the Borrower's independent certified public
accountants and authorizes such accountants to disclose to the Agent
and the Banks any and all financial statements and other supporting
financial documents and schedules including copies of any management
letter with respect to the business, financial condition and other
affairs of the Borrower. At the request of the Agent, the Borrower
shall deliver a letter addressed to such accountants instructing them
to comply with the provisions of this ss.7.10.3.
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7.11. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The
Borrower will comply with (i) the applicable laws and regulations wherever its
business is conducted, including all Environmental Laws, (ii) the provisions of
its charter documents and by-laws, (iii) all agreements and instruments by which
it or any of its properties may be bound and (iv) all applicable decrees,
orders, and judgments. If at any time while any Loan or Revolving Credit Note is
outstanding or any Bank has any obligation to make Loans hereunder, any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Borrower may fulfill any of its obligations hereunder, the Borrower
will immediately take or cause to be taken all reasonable steps within the power
of the Borrower to obtain such authorization, consent, approval, permit or
license and furnish the Banks with evidence thereof.
7.12. EMPLOYEE BENEFIT PLANS. The Borrower will (i) promptly upon
filing the same with the Department of Labor or Internal Revenue Service,
furnish to the Agent a copy of the most recent actuarial statement required to
be submitted under ss.103(d) of ERISA and Annual Report, Form 5500, with all
required attachments, in respect of each Guaranteed Pension Plan and (ii)
promptly upon receipt or dispatch, furnish to the Agent any notice, report or
demand sent or received in respect of a Guaranteed Pension Plan under ss.ss.302,
4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a
Multiemployer Plan, under ss.ss.4041A, 4202, 4219, 4242, or 4245 of ERISA.
7.13. USE OF PROCEEDS. The Borrower will use the proceeds of the Loans
solely as set forth in ss.6.16 hereto.
7.14. BANK ACCOUNTS.
7.14.1. GENERAL. On or prior to the Closing Date, the Borrower
will, (i) amend the existing depository account (the "BKB Collection
Account") to provide for the BKB Collection Account to be under the
control of the Agent for the benefit of the Banks and the Agent, in the
name of the Borrower, (ii) instruct all account debtors and other
obligors, pursuant to notices of assignment and instruction letters in
form and substance satisfactory to the Agent, to cause all cash
proceeds of Accounts Receivable to be either (a) remitted to a Lock-Box
and will cause each Lock-Box Bank to retrieve such proceeds of Accounts
Receivable promptly and deposit the same to the respective Lock-Box
Accounts or (b) deposited directly with a Lock-Box Bank in a Lock-Box
Account, (iii) direct all depository institutions with Lock-Box
Accounts to cause all funds held in each such Lock-Box Account to be
transferred no less frequently than once each day to, and only to, the
BKB Collection Account, and (iv) at all times ensure that immediately
upon the Borrower's receipt of any funds constituting or cash proceeds
of any Collateral, all such amounts shall have been deposited in a
Lock-Box Account or the BKB Collection Account.
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7.14.2. ACKNOWLEDGMENT OF APPLICATION. The Borrower hereby
agrees that all amounts received by the Agent in the BKB Collection
Account will be the sole and exclusive property of the Agent, for the
accounts of the Banks and the Agent, to be applied in accordance
ss.2.10 or ss.2.11 as applicable.
7.15. FURTHER ASSURANCES. The Borrower will cooperate with the Banks
and the Agent and execute such further instruments and documents as the Banks or
the Agent shall reasonably request to carry out to their satisfaction the
transactions contemplated by this Credit Agreement and the other Loan Documents.
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or
Revolving Credit Note is outstanding or any Bank has any obligation to make any
Loans:
8.1. RESTRICTIONS ON INDEBTEDNESS. The Borrower will not create, incur,
assume, guarantee or be or remain liable, contingently or otherwise, with
respect to any Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under any
of the Loan Documents; and
(b) Indebtedness arising under the Intercompany RPA.
8.2. RESTRICTIONS ON LIENS. The Borrower will not (i) create or incur
or suffer to be created or incurred or to exist any lien, encumbrance, mortgage,
pledge, charge, restriction or other security interest of any kind upon any of
its property or assets of any character whether now owned or hereafter acquired,
or upon the income or profits therefrom; (ii) transfer any of such property or
assets or the income or profits therefrom for the purpose of subjecting the same
to the payment of Indebtedness or performance of any other obligation in
priority to payment of its general creditors; (iii) acquire, or agree or have an
option to acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device or arrangement; (iv)
suffer to exist for a period of more than thirty (30) days after the same shall
have been incurred any Indebtedness or claim or demand against it that if unpaid
might by law or upon bankruptcy or insolvency, or otherwise, be given any
priority whatsoever over its general creditors; or (v) sell, assign, pledge or
otherwise transfer any "receivables" as defined in clause (vii) of the
definition of the term "Indebtedness," with or without recourse; PROVIDED that
the Borrower or any of its Subsidiaries may create or incur or suffer to be
created or incurred or to exist:
(a) liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties
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to secure claims for labor, material or supplies in respect of
obligations not overdue;
(b) liens in favor of the Agent for the benefit of the Banks
and the Agent under the Loan Documents; and
(c) liens created in connection with the Intercompany RPA.
8.3. RESTRICTIONS ON INVESTMENTS. The Borrower will not make or permit
to exist or to remain outstanding any Investment.
8.4. DISTRIBUTIONS. The Borrower will not make any Distributions.
8.5. MERGER, CONSOLIDATION.
8.5.1. MERGERS AND ACQUISITIONS. The Borrower will not become
a party to any merger or consolidation, or agree to or effect any asset
acquisition or stock acquisition.
8.5.2. DISPOSITION OF ASSETS. The Borrower will not become a
party to or agree to or effect any disposition of assets, other than
the disposition of obsolete assets, in each case in the ordinary course
of business consistent with past practices.
8.6. SALE AND LEASEBACK. The Borrower will not enter into any
arrangement, directly or indirectly, whereby the Borrower shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property that the Borrower intends to use for substantially the same
purpose as the property being sold or transferred.
8.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrower will not (i) use
any of the Real Estate or any portion thereof for the handling, processing,
storage or disposal of Hazardous Substances, (ii) cause or permit to be located
on any of the Real Estate any underground tank or other underground storage
receptacle for Hazardous Substances, (iii) generate any Hazardous Substances on
any of the Real Estate, (iv) conduct any activity at any Real Estate or use any
Real Estate in any manner so as to cause a release (i.e. releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping) or threatened release of Hazardous Substances
on, upon or into the Real Estate or (v) otherwise conduct any activity at any
Real Estate or use any Real Estate in any manner that would violate any
Environmental Law or bring such Real Estate in violation of any Environmental
Law.
8.8. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA
Affiliate will:
(a) engage in any "prohibited transaction" within the meaning
of ss.406 of ERISA or ss.4975 of the Code which could result in a
material liability for the Borrower; or
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(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in ss.302 of
ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of the Borrower pursuant to ss.302(f) or ss.4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances
requiring the posting of security pursuant to ss.307 of ERISA or
ss.401(a)(29) of the Code; or
(e) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of ss.4001 of ERISA) of
all Guaranteed Pension Plans exceeding the value of the aggregate
assets of such Plans, disregarding for this purpose the benefit
liabilities and assets of any such Plan with assets in excess of
benefit liabilities.
8.9. BUSINESS ACTIVITIES. The Borrower will not engage directly or
indirectly in any type of business other than the business conducted by it on
the Closing Date.
8.10. FISCAL YEAR. The Borrower will not change the date of the end of
its fiscal year from that set forth in ss.6.4.1.
8.11. TRANSACTIONS WITH AFFILIATES. The Borrower will not engage in any
transaction with any Affiliate (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such Affiliate or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any such Affiliate has a substantial
interest or is an officer, director, trustee or partner, on terms more favorable
to such Person than would have been obtainable on an arm's-length basis in the
ordinary course of business. Nothing in this ss.8.11 shall be deemed to prohibit
the Borrower from consummating the ongoing sales of Accounts Receivables and
related transactions contemplated by the Intercompany RPA.
8.12. CREDIT AND COLLECTION POLICY. The Borrower will not amend,
supplement or otherwise modify the terms of the Credit and Collection Policy (as
defined in the Receivables Purchase Agreement).
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9. CLOSING CONDITIONS.
The obligations of the Banks to make the initial Loans shall be subject
to the satisfaction of the following conditions precedent on or before October
5, 1999:
9.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the Banks.
Each Bank shall have received a fully executed copy of each such document.
9.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Agent shall have
received from the Borrower a copy, certified by a duly authorized officer of
such Person to be true and complete on the Closing Date, of each of (i) its
charter or other incorporation documents as in effect on such date of
certification, and (ii) its by-laws as in effect on such date.
9.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by the Borrower of this Credit Agreement and
the other Loan Documents to which it is or is to become a party shall have been
duly and effectively taken, and evidence thereof satisfactory to the Agent shall
have been provided to the Agent.
9.4. INCUMBENCY CERTIFICATE. The Agent shall have received from the
Borrower an incumbency certificate, dated as of the Closing Date, signed by a
duly authorized officer of the Borrower, and giving the name and bearing a
specimen signature of each individual who shall be authorized: (i) to sign, in
the name and on behalf of each of the Borrower, each of the Loan Documents to
which the Borrower is or is to become a party; (ii) to make Loan Requests; and
(iii) to give notices and to take other action on its behalf under the Loan
Documents.
9.5. VALIDITY OF LIENS. The Security Documents shall be effective to
create in favor of the Agent a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) security interest in
the Collateral. All filings, recordings, deliveries of instruments and other
actions necessary or desirable in the opinion of the Agent to protect and
preserve such security interests shall have been duly effected. The Agent shall
have received evidence thereof in form and substance satisfactory to the Agent.
9.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Agent shall
have received from the Borrower a completed and fully executed Perfection
Certificate and the results of UCC searches with respect to its Collateral,
indicating no liens other than Permitted Liens and otherwise in form and
substance satisfactory to the Agent.
9.7. CERTIFICATES OF INSURANCE. The Agent shall have received (i) a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of the Security Agreements and (ii) certified copies of all
policies evidencing such insurance (or certificates therefore signed by the
insurer or an agent authorized to bind the insurer).
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9.8. LOCK-BOX AGREEMENTS. The Borrower shall have established the BKB
Collection Account, and the Agent shall have received a Lock-Box Agreement
executed by each depository institution with a Lock-Box Account.
9.9. BORROWING BASE REPORT. The Agent shall have received from the
Borrower the initial Borrowing Base Report dated as of the Closing Date.
9.10. ACCOUNTS RECEIVABLE AGING REPORT. The Agent shall have received
from the Borrower the most recent Accounts Receivable aging report of the
Borrower dated as of a date which shall be no more than fifteen (15) days prior
to the Closing Date and the Borrower shall notify the Agent in writing on the
Closing Date of any material deviation from the Accounts Receivable values
reflected in such Accounts Receivable aging report and shall provide the Agent
with such supplementary documentation as the Agent may reasonably request.
9.11. SOLVENCY CERTIFICATE. The Agent shall have received an officer's
certificate of the Borrower dated as of the Closing Date as to the solvency of
the Borrower following the consummation of the transactions contemplated herein
and in form and substance satisfactory to the Agent.
9.12. OPINION OF COUNSEL. Each of the Banks and the Agent shall have
received (i) a favorable opinion addressed to the Banks and the Agent, dated as
of the Closing Date, in form and substance satisfactory to the Banks and the
Agent, from Brian Nugent, Esq., counsel to the Borrower and (ii) a favorable
opinion addressed to the Banks and the Agent, dated as of the Closing Date,
relating to the issues of substantive consolidation and true sale of the
Accounts Receivables and the related property, in form and substance
satisfactory to the Banks and the Agent, from Rudnick & Wolfe, counsel to the
Borrower.
9.13. PAYMENT OF FEES. The Borrower shall have paid to the Agent, the
Agent's fee pursuant to ss.4.2.
9.14. RECEIVABLES SECURITIZATION TRANSACTION. The Agent shall have
received evidence satisfactory to the Agent in its sole discretion that (i) the
Borrower has repurchased from EagleFunding the then outstanding receivables
purchased from the Borrower by EagleFunding, (ii) EagleFunding has been released
from any obligations under the Credit Agreement and (iii) the Receivables
Purchase Agreement has been terminated.
9.15. INTERCOMPANY RPA. The Intercompany RPA shall have been amended
and restated, shall be in full force and effect and shall be in form and
substance satisfactory to the Agent in its sole discretion. Each Bank shall have
received a fully executed copy of such document.
9.16. OI REVOLVING CREDIT AGREEMENT. The Agent shall have received
evidence satisfactory to the Agent in its sole discretion that all necessary
waivers and consents under the OI Revolving Credit Agreement have been given by
the appropriate parties.
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9.17. BUSINESS PLAN. The Agent shall be satisfied in its sole
discretion with (i) the due diligence examination, (ii) the general business
plan of OI and its Subsidiaries prepared by Crossroad Capital Partners LLC and
(iii) all cash forecasts and other financial information with respect to the
Borrower, and OI and its Subsidiaries.
9.18. RETENTION OF FINANCIAL ADVISOR. The Borrower agrees that the
Agent and/or its counsel may continue to retain Nightingale & Associates, LLC
to, among other things, make visits to, and discuss financial and operational
matters with, the Borrower and to advise the Agent and the Banks as to the
business, operations and financial condition of the Borrower. Such consultant
shall not be limited in the frequency of visits to the facilities of the
Borrower. The Borrower shall cooperate with such consultant and provide such
consultant with all information reasonably requested by such consultant in
connection with its engagement by the Agent and/or its counsel.
10. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan whether on or after the
Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
10.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of any of the Borrower contained in this Credit
Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Credit Agreement shall be true as of the
date as of which they were made and shall also be true at and as of the time of
the making of such Loan, with the same effect as if made at and as of that time
(except to the extent of changes resulting from transactions contemplated or
permitted by this Credit Agreement and the other Loan Documents and changes
occurring in the ordinary course of business that singly or in the aggregate are
not materially adverse, and to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default shall have occurred and be continuing. The Agent shall have received a
certificate of the Borrower signed by an authorized officer of the Borrower to
such effect.
10.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Loan.
10.3. GOVERNMENTAL REGULATION. The Agent shall have received such
statements in substance and form reasonably satisfactory to the Agent as the
Agent shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System.
10.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan
<PAGE> 49
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Documents and all other documents incident thereto shall be satisfactory in
substance and in form to the Banks and to the Agent and the Agent's Special
Counsel, and the Banks, the Agent and such counsel shall have received all
information and such counterpart originals or certified or other copies of such
documents as the Agent may reasonably request.
10.5. BORROWING BASE REPORT. The Agent shall have received the most
recent Borrowing Base Report required to be delivered to the Agent in accordance
with ss.7.4(e).
11. EVENTS OF DEFAULT; ACCELERATION; ETC.
11.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) the Borrower shall fail to pay any principal of the Loans
when the same shall become due and payable, whether at the stated date
of maturity or any accelerated date of maturity or at any other date
fixed for payment;
(b) the Borrower shall fail to pay any interest on the Loans,
the commitment fee, the Agent's fee, or other sums due hereunder or
under any of the other Loan Documents, when the same shall become due
and payable, whether at the stated date of maturity or any accelerated
date of maturity or at any other date fixed for payment;
(c) the Borrower shall fail to comply with any of its
covenants contained in ss.ss.7 or 8;
(d) the Borrower shall fail to perform any term, covenant or
agreement contained herein or in any of the other Loan Documents (other
than those specified elsewhere in this ss.11.1) for fifteen (15) days
after written notice of such failure has been given to the Borrower by
the Agent;
(e) any representation or warranty of the Borrower in this
Credit Agreement or any of the other Loan Documents or in any other
document or instrument delivered pursuant to or in connection with this
Credit Agreement shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;
(f) the Borrower shall fail to pay at maturity, or within any
applicable period of grace, any obligation for borrowed money or credit
received or in respect of any Capitalized Leases, or fail to observe or
perform any material term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing borrowed money
or credit received or in respect of any Capitalized Leases for such
period of time as would permit (assuming the giving of appropriate
notice if
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required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof, or any such holder or
holders shall rescind or shall have a right to rescind the purchase of
any such obligations;
(g) the Borrower shall make an assignment for the benefit of
creditors, or admit in writing its inability to pay or generally fail
to pay its debts as they mature or become due, or shall petition or
apply for the appointment of a trustee or other custodian, liquidator
or receiver of the Borrower or of any substantial part of the assets of
the Borrower or shall commence any case or other proceeding relating to
the Borrower under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
law of any jurisdiction, now or hereafter in effect, or shall take any
action to authorize or in furtherance of any of the foregoing, or if
any such petition or application shall be filed or any such case or
other proceeding shall be commenced against the Borrower and the
Borrower shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition or application shall not have
been dismissed within forty-five (45) days following the filing
thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower bankrupt
or insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of
the Borrower in an involuntary case under federal bankruptcy laws as
now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
final judgment against the Borrower that, with other outstanding final
judgments, undischarged, against the Borrower exceeds in the aggregate
$25,000;
(j) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded or the Agent's security interests,
liens in a substantial portion of the Collateral shall cease to be
perfected, or shall cease to have the priority contemplated by the
Security Documents, in each case otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
approval of the Banks, or any action at law, suit or in equity or other
legal proceeding to cancel, revoke or rescind any of the Loan Documents
shall be commenced by or on behalf of the Borrower or its stockholders,
or any court or any other governmental or regulatory authority or
agency of competent jurisdiction shall make a determination that, or
issue a judgment, order, decree or ruling to the effect that, any one
or more of the Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof;
<PAGE> 51
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(k) the Borrower or any ERISA Affiliate incurs any liability
to the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA
in an aggregate amount exceeding $25,000, or the Borrower or any ERISA
Affiliate is assessed withdrawal liability pursuant to Title IV of
ERISA by a Multiemployer Plan requiring aggregate annual payments
exceeding $10,000, or any of the following occurs with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to
make a required installment or other payment (within the meaning of
ss.302(f)(1) of ERISA), PROVIDed that the Agent determines in its
reasonable discretion that such event (A) could be expected to result
in liability of the Borrower or any of its Subsidiaries to the PBGC or
such Guaranteed Pension Plan in an aggregate amount exceeding $10,000
and (B) could constitute grounds for the termination of such Guaranteed
Pension Plan by the PBGC, for the appointment by the appropriate United
States District Court of a trustee to administer such Guaranteed
Pension Plan or for the imposition of a lien in favor of such
Guaranteed Pension Plan; or (ii) the appointment by a United States
District Court of a trustee to administer such Guaranteed Pension Plan;
or (iii) the institution by the PBGC of proceedings to terminate such
Guaranteed Pension Plan;
(l) the Borrower shall be enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory
agency from conducting any material part of its business and such order
shall continue in effect for more than thirty (30) days;
(m) there shall occur any material damage to, or loss, theft
or destruction of, any material portion of the Collateral, whether or
not insured, or any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty, which in
any such case causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing activities at
any facility of the Borrower or any of its Subsidiaries;
(n) there shall occur the loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter
acquired by the Borrower if such loss, suspension, revocation or
failure to renew would have a material adverse effect on the business
or financial condition of the Borrower;
(o) the Borrower shall be indicted for a state or federal
crime, or any civil or criminal action shall otherwise have been
brought or threatened against the Borrower, a punishment for which in
any such case could include the forfeiture of any assets of the
Borrower included in the Borrowing Base or any assets of the Borrower
not included in the Borrowing Base but having a fair market value in
excess of $10,000;
(p) there shall occur an event of default under the OI
Revolving Credit Agreement;
<PAGE> 52
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(q) five (5) Business Days following any date on or after
October 15, 1999 on which the Agent has given written notice to the
Borrower that the Banks, in their sole discretion, have declared an
Event of Default hereunder.
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Revolving Credit Notes and the other Loan Documents to be, and they shall
thereupon forthwith become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrower; PROVIDED that in the event of any Event of Default
specified in ss.ss.11.1(g), 11.1(h) or 11.1(j), all such amounts shall become
immediately due and payable automatically and without any requirement of notice
from the Agent or any Bank.
11.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of
Default specified in ss.11.1(g), ss.11.1(h) or ss.11.1(j) shall occur, any
unused portion of the credit hereunder shall forthwith terminate and each of the
Banks shall be relieved of all obligations to make Loans to the Borrower. If any
other Event of Default shall have occurred and be continuing, or if on any
Drawdown Date the conditions precedent to the making of the Loans to be made on
such Drawdown Date are not satisfied, the Agent may and, upon the request of the
Majority Banks, shall, by notice to the Borrower, terminate the unused portion
of the credit hereunder, and upon such notice being given such unused portion of
the credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Loans. If any such notice is given
to the Borrower the Agent will forthwith furnish a copy thereof to each of the
Banks. No termination of the credit hereunder shall relieve the Borrower of any
of the Obligations or any of its existing obligations to any of the Banks
arising under other agreements or instruments.
11.3. REMEDIES. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Loans pursuant to ss.11.1, each Bank, if owed
any amount with respect to the Loans, may proceed to protect and enforce its
rights by suit in equity, action at law or other appropriate proceeding, whether
for the specific performance of any covenant or agreement contained in this
Credit Agreement and the other Loan Documents or any instrument pursuant to
which the Obligations to such Bank are evidenced, including as permitted by
applicable law the obtaining of the EX PARTE appointment of a receiver, and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of such Bank.
No remedy herein conferred upon any Bank or the Agent or the holder of any
Revolving Credit Note is intended to be exclusive of any other remedy and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or any other provision of law.
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11.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that the Agent
receives proceeds as contemplated by ss.2.11 or in the event that, following the
occurrence or during the continuance of any Default or Event of Default, the
Agent or any Bank, as the case may be, receives any monies in connection with
the enforcement of any the Security Documents, or otherwise with respect to the
realization upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies
by the Agent, for the exercise, protection or enforcement by the Agent
of all or any of the rights, remedies, powers and privileges of the
Agent under this Credit Agreement or any of the other Loan Documents or
in respect of the Collateral or in support of any provision of adequate
indemnity to the Agent against any taxes or liens which by law shall
have, or may have, priority over the rights of the Agent to such
monies;
(b) Second, to all other Obligations in such order or
preference as the Majority Banks may determine; PROVIDED, HOWEVER, that
(i) distributions shall be made (A) PARI PASSU among Obligations with
respect to the Agent's fee payable pursuant to ss.4.2 and all other
Obligations and (B) with respect to each type of Obligation owing to
the Banks, such as interest, principal, fees and expenses, among the
Banks PRO RATA, and (ii) the Agent may in its discretion make proper
allowance to take into account any Obligations not then due and
payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Banks and the Agent
of all of the Obligations, to the payment of any obligations required
to be paid pursuant to ss.9-504(1)(c) of the Uniform Commercial Code of
the Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the
Borrower or to such other Persons as are entitled thereto.
12. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrower and any securities or other property of the Borrower
in the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (i) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
the Revolving Credit Notes held by such Bank, such amount shall be applied
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ratably to such other Indebtedness and to the Indebtedness evidenced by all such
Revolving Credit Notes held by such Bank, and (ii) if such Bank shall receive
from the Borrower, whether by voluntary payment, exercise of the right of
setoff, counterclaim, cross action, enforcement of the claim evidenced by the
Revolving Credit Notes held by such Bank by proceedings against the Borrower at
law or in equity or by proof thereof in bankruptcy, reorganization, liquidation,
receivership or similar proceedings, or otherwise, and shall retain and apply to
the payment of the Revolving Credit Note or Revolving Credit Notes held by such
Bank any amount in excess of its ratable portion of the payments received by all
of the Banks with respect to the Revolving Credit Notes held by all of the
Banks, such Bank will make such disposition and arrangements with the other
Banks with respect to such excess, either by way of distribution, PRO TANTO
assignment of claims, subrogation or otherwise as shall result in each Bank
receiving in respect of the Revolving Credit Notes held by its proportionate
payment as contemplated by this Credit Agreement; PROVIDED that if all or any
part of such excess payment is thereafter recovered from such Bank, such
disposition and arrangements shall be rescinded and the amount restored to the
extent of such recovery, but without interest.
13. THE AGENT.
13.1. AUTHORIZATION.
(a) The Agent is authorized to take such action on behalf of
each of the Banks and to exercise all such powers as are hereunder and
under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably
incident thereto, PROVIDED that no duties or responsibilities not
expressly assumed herein or therein shall be implied to have been
assumed by the Agent.
(b) The relationship between the Agent and each of the Banks
is that of an independent contractor. The use of the term "Agent" is
for convenience only and is used to describe, as a form of convention,
the independent contractual relationship between the Agent and each of
the Banks. Nothing contained in this Credit Agreement nor the other
Loan Documents shall be construed to create an agency, trust or other
fiduciary relationship between the Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Agent is nevertheless
a "representative" of the Banks, as that term is defined in Article 1
of the Uniform Commercial Code, for purposes of actions for the benefit
of the Banks and the Agent with respect to all collateral security and
guaranties contemplated by the Loan Documents. Such actions include the
designation of the Agent as "secured party", "mortgagee" or the like on
all financing statements and other documents and instruments, whether
recorded or otherwise, relating to the attachment,
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perfection, priority or enforcement of any security interests,
mortgages or deeds of trust in collateral security intended to secure
the payment or performance of any of the Obligations, all for the
benefit of the Banks and the Agent.
13.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrower.
13.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
13.4. NO REPRESENTATIONS.
13.4.1. GENERAL. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the
Revolving Credit Notes, any of the other Loan Documents or any
instrument at any time constituting, or intended to constitute,
collateral security for the Revolving Credit Notes, or for the value of
any such collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Revolving
Credit Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents or in
any certificate or instrument hereafter furnished to it by or on behalf
of the Borrower, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting, or
intended to constitute, collateral security for the Revolving Credit
Notes or to inspect any of the properties, books or records of the
Borrower or any of its Subsidiaries. The Agent shall not be bound to
ascertain whether any notice, consent, waiver or request delivered to
it by the Borrower or any holder of any of the Revolving Credit Notes
shall have been duly authorized or is true, accurate and complete. The
Agent has not made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to the
Banks, with respect to the credit worthiness or financial conditions of
the Borrower or any of its Subsidiaries. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other
Bank, and based upon such information and
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documents as it has deemed appropriate, made its own credit analysis
and decision to enter into this Credit Agreement.
13.4.2. CLOSING DOCUMENTATION, ETC. For purposes of
determining compliance with the conditions set forth in ss.9, each Bank
that has executed this Credit Agreement shall be deemed to have
consented to, approved or accepted, or to be satisfied with, each
document and matter either sent, or made available, by the Agent to
such Bank for consent, approval, acceptance or satisfaction, or
required thereunder to be to be consent to or approved by or acceptable
or satisfactory to such Bank, unless an officer of the Agent active
upon the Borrower's account shall have received notice from such Bank
prior to the Closing Date specifying such Bank's objection thereto and
such objection shall not have been withdrawn by notice to the Agent to
such effect on or prior to the Closing Date.
13.5. PAYMENTS.
13.5.1. PAYMENTS TO AGENT. A payment by the Borrower to the
Agent hereunder or any of the other Loan Documents for the account of
any Bank shall constitute a payment to such Bank. The Agent agrees
promptly to distribute to each Bank such Bank's PRO RATA share of
payments received by the Agent for the account of the Banks except as
otherwise expressly provided herein or in any of the other Loan
Documents.
13.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent
the distribution of any amount received by it in such capacity
hereunder, under the Revolving Credit Notes or under any of the other
Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have
been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as shall be determined
by such court.
13.5.3. DELINQUENT BANKS. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (i) to make available to the Agent its
PRO RATA share of any Loan or (ii) to comply with the provisions of
ss.12 with respect to making dispositions and arrangements with the
other Banks, where such Bank's share of any payment received, whether
by setoff or otherwise, is in excess of its PRO RATA share of such
payments due and payable to all of the Banks, in each case as, when and
to the full extent required by the provisions of this Credit Agreement,
shall be deemed delinquent (a "Delinquent Bank") and shall be deemed a
Delinquent
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Bank until such time as such delinquency is satisfied. A Delinquent
Bank shall be deemed to have assigned any and all payments due to it
from the Borrower, whether on account of outstanding Loans, interest,
fees or otherwise, to the remaining nondelinquent Banks for application
to, and reduction of, their respective PRO RATA shares of all
outstanding Loans. The Delinquent Bank hereby authorizes the Agent to
distribute such payments to the nondelinquent Banks in proportion to
their respective PRO RATA shares of all outstanding Loans. A Delinquent
Bank shall be deemed to have satisfied in full a delinquency when and
if, as a result of application of the assigned payments to all
outstanding Loans of the nondelinquent Banks, the Banks' respective PRO
RATA shares of all outstanding Loans have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
13.6. HOLDERS OF REVOLVING CREDIT NOTES. The Agent may deem and treat
the payee of any Revolving Credit Note as the absolute owner thereof for all
purposes hereof until it shall have been furnished in writing with a different
name by such payee or by a subsequent holder.
13.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
harmless the Agent and its Affiliates from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent or such Affiliate has not
been reimbursed by the Borrower as required by ss.14), and liabilities of every
nature and character arising out of or related to this Credit Agreement, the
Revolving Credit Notes, or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Agent's actions taken
hereunder or thereunder, except to the extent that any of the same shall be
directly caused by the Agent's willful misconduct or gross negligence.
13.8. AGENT AS BANK. In its individual capacity, BKB shall have the
same obligations and the same rights, powers and privileges in respect to its
Commitment and the Loans made by it, and as the holder of any of the Revolving
Credit Notes, as it would have were it not also the Agent.
13.9. RESIGNATION. The Agent may resign at any time by giving sixty
(60) days prior written notice thereof to the Banks and the Borrower. Upon any
such resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the
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retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation, the provisions of
this Credit Agreement and the other Loan Documents shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as Agent.
13.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this ss.13.10 it shall promptly notify the other
Banks of the existence of such Default or Event of Default.
14. EXPENSES AND INDEMNIFICATION.
14.1. EXPENSES. The Borrower agrees to pay (i) the reasonable costs of
producing and reproducing this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein, (ii) any taxes (including
any interest and penalties in respect thereto) payable by the Agent or any of
the Banks (other than taxes based upon the Agent's or any Bank's net income) on
or with respect to the transactions contemplated by this Credit Agreement (the
Borrower hereby agreeing to indemnify the Agent and each Bank with respect
thereto), (iii) the reasonable fees, expenses and disbursements of the Agent's
Special Counsel or any local counsel to the Agent incurred in connection with
the preparation, syndication, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, any
amendments, modifications, approvals, consents or waivers hereto or hereunder,
or the cancellation of any Loan Document upon payment in full in cash of all of
the Obligations or pursuant to any terms of such Loan Document for providing for
such cancellation, (iv) the fees, expenses and disbursements of the Agent or any
of its Affiliates incurred by the Agent or such Affiliate in connection with the
preparation, syndication, administration or interpretation of the Loan Documents
and other instruments mentioned herein, including all title insurance premiums
and surveyor, engineering and appraisal charges, (v) any fees, costs, expenses
and bank charges, including bank charges for returned checks, incurred by the
Agent in establishing, maintaining or handling lock box accounts and other
accounts for the collection of any of the Collateral; (vi) all reasonable
out-of-pocket expenses (including without limitation reasonable attorneys' fees
and costs, which attorneys may be employees of any Bank or the Agent, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any Bank or the Agent in connection
with (A) the enforcement of or preservation of rights under any of the Loan
Documents against the Borrower or the administration thereof after the
occurrence of a Default or Event of Default and (B) any litigation, proceeding
or dispute whether arising hereunder or otherwise, in any way related to any
Bank's or the Agent's relationship with the Borrower or any of its Subsidiaries,
(vii) all reasonable fees, expenses and disbursements of any Bank or the Agent
incurred in connection with UCC searches or UCC filings and (viii) any fees,
costs and expenses of the Agent's commercial finance examiners, commercial
auditors and/or consultants.
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14.2. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Agent, its Affiliates and the Banks from and against any and all
claims, actions and suits whether groundless or otherwise, and from and against
any and all liabilities, losses, damages and expenses of every nature and
character arising out of this Credit Agreement or any of the other Loan
Documents or the transactions contemplated hereby including, without limitation,
(i) any actual or proposed use by the Borrower or any of its Subsidiaries of the
proceeds of any of the Loans, (ii) the reversal or withdrawal of any provisional
credits granted by the Agent upon the transfer of funds from lock box, bank
agency or concentration accounts or in connection with the provisional honoring
of checks or other items, (iii) the Borrower entering into or performing this
Credit Agreement or any of the other Loan Documents or (iv) with respect to the
Borrower and its respective properties and assets, the violation of any
Environmental Law, the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release or threatened release of any Hazardous Substances
or any action, suit, proceeding or investigation brought or threatened with
respect to any Hazardous Substances (including, but not limited to, claims with
respect to wrongful death, personal injury or damage to property), in each case
including, without limitation, the reasonable fees and disbursements of counsel
and allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding; PROVIDED, HOWEVER, that the
Borrower shall not be liable for any such liabilities, losses, damages or
expenses to the extent arising directly from the gross negligence or willful
misconduct of the Person seeking indemnification therefor. In litigation, or the
preparation therefor, the Banks and the Agent and its Affiliates shall be
entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrower
under this ss.14.2 are unenforceable for any reason, the Borrower hereby agrees
to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law.
14.3. SURVIVAL. The covenants contained in this ss.14 shall survive
payment or satisfaction in full of all other Obligations.
15. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
15.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. The Borrower
acknowledges that from time to time financial advisory, investment banking and
other services may be offered or provided to the Borrower, in connection with
this Credit Agreement or otherwise, by a Section 20 Subsidiary. The Borrower
hereby authorizes (a) such Section 20 Subsidiary to share with the Agent and
each Bank any information delivered to such Section 20 Subsidiary by the
Borrower, and (b) the Agent and each Bank to share with such Section 20
Subsidiary any information delivered to the Agent or such Bank by the Borrower
pursuant to this Credit Agreement, or in connection with the decision of such
Bank to enter into this Credit Agreement; it being understood, in each case,
that any such Section 20 Subsidiary receiving such information shall be bound by
the confidentiality provisions of this Credit
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Agreement. Such authorization shall survive the payment and satisfaction in full
of all of Obligations.
15.2. CONFIDENTIALITY. Each of the Banks and the Agent agrees, on
behalf of itself and each of its Affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower pursuant to this Credit
Agreement that is identified by such Person as being confidential at the time
the same is delivered to the Banks or the Agent, PROVIDED that nothing herein
shall limit the disclosure of any such information (a) after such information
shall have become public other than through a violation of this ss.15, (b) to
the extent required by statute, rule, regulation or judicial process, (c) to
counsel for any of the Banks or the Agent, (d) to bank examiners or any other
regulatory authority having jurisdiction over any Bank or the Agent, or to
auditors or accountants, (e) to the Agent, any Bank or any Section 20
Subsidiary, (f) in connection with any litigation to which any one or more of
the Banks, the Agent or any Section 20 Subsidiary is a party, or in connection
with the enforcement of rights or remedies hereunder or under any other Loan
Document, (g) to a Subsidiary or Affiliate of such Bank as provided in ss.15.1
or (h) to any assignee or participant (or prospective assignee or participant)
so long as such assignee or participant agrees to be bound by the provisions of
ss.17.6. Moreover, each of the Agent, the Banks and any Section 20 Subsidiary is
hereby expressly permitted by the Borrower to refer to any of the Borrower in
connection with any advertising, promotion or marketing undertaken by the Agent,
such Bank or such Section 20 Subsidiary and, for such purpose, the Agent, such
Bank or such Section 20 Subsidiary may utilize any trade name, trademark, logo
or other distinctive symbol associated with the Borrower or any of its
businesses.
15.3. PRIOR NOTIFICATION. Unless specifically prohibited by applicable
law or court order, each of the Banks and the Agent shall, prior to disclosure
thereof, notify the Borrower of any request for disclosure of any such
non-public information by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) or pursuant to legal
process.
15.4. OTHER. In no event shall any Bank or the Agent be obligated or
required to return any materials furnished to it or any Section 20 Subsidiary by
the Borrower. The obligations of each Bank under this ss.15 shall supersede and
replace the obligations of such Bank under any confidentiality letter in respect
of this financing signed and delivered by such Bank to the Borrower prior to the
date hereof and shall be binding upon any assignee of, or purchaser of any
participation in, any interest in any of the Loans or Reimbursement Obligations
from any Bank.
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16. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Revolving Credit Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of the Borrower pursuant
hereto shall be deemed to have been relied upon by the Banks and the Agent,
notwithstanding any investigation heretofore or hereafter made by any of them,
and shall survive the making by the Banks of the Loans, as herein contemplated,
and shall continue in full force and effect so long as any amount due under this
Credit Agreement or the Revolving Credit Notes or any of the other Loan
Documents remains outstanding or any Bank has any obligation to make any Loans,
and for such further time as may be otherwise expressly specified in this Credit
Agreement. All statements contained in any certificate or other paper delivered
to any Bank or the Agent at any time by or on behalf of the Borrower pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower hereunder.
17. ASSIGNMENT AND PARTICIPATION.
17.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein,
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and the same portion of
the Loans at the time owing to it) and the Revolving Credit Notes held by it;
PROVIDED that (i) the Agent shall have given its prior written consent to such
assignment, (ii) each such assignment shall be of a constant, and not a varying,
percentage of all the assigning Bank's rights and obligations under this Credit
Agreement, (iii) concurrently with each such assignment, the assigning Bank
shall assign to the same Eligible Assignee the same percentage of such Bank's
rights and obligations under the OI Revolving Credit Agreement, (iv) each
assignment shall be in an amount that is a whole multiple of 5,000,000 or such
Bank's entire commitment and (v) the parties to such assignment shall execute
and deliver to the Agent, for recording in the Register (as hereinafter
defined), an Assignment and Acceptance, substantially in the form of EXHIBIT E
hereto (an "Assignment and Acceptance"), together with any Revolving Credit
Notes subject to such assignment. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days after
the execution thereof, (i) the assignee thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder, and (ii) the assigning Bank shall, to the
extent provided in such assignment and upon payment to the Agent of the
registration fee referred to in ss.17.3, be released from its obligations under
this Credit Agreement.
17.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS.
By executing and delivering an Assignment and Acceptance, the
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parties to the assignment thereunder confirm to and agree with each other and
the other parties hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest;
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
the Borrower or any other Person primarily or secondarily liable in
respect of any of the Obligations, or the performance or observance by
the Borrower or any other Person primarily or secondarily liable in
respect of any of the Obligations of any of their obligations under
this Credit Agreement or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in ss.6.4 and ss.7.4 and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance
upon the assigning Bank, the 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 decisions in taking or not taking
action under this Credit Agreement;
(e) such assignee represents and warrants that it is an
Eligible Assignee;
(f) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Credit Agreement and the other Loan Documents as are delegated to
the Agent by the terms hereof or thereof, together with such powers as
are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Credit Agreement are required to be performed by it as a Bank; and
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(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance.
17.3. REGISTER. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Loans owing to the Banks from time to
time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Banks may treat each Person
whose name is recorded in the Register as a Bank hereunder for all purposes of
this Credit Agreement. The Register shall be available for inspection by the
Borrower and the Banks at any reasonable time and from time to time upon
reasonable prior notice. Upon each such recordation, the assigning Bank agrees
to pay to the Agent a registration fee in the sum of $3,500.
17.4. NEW REVOLVING CREDIT NOTES. Upon its receipt of an Assignment and
Acceptance executed by the parties to such assignment, together with each
Revolving Credit Note subject to such assignment, the Agent shall (i) record the
information contained therein in the Register, and (ii) give prompt notice
thereof to the Borrower and the Banks (other than the assigning Bank). Within
five (5) Business Days after receipt of such notice, the Borrower, at its own
expense, shall execute and deliver to the Agent, in exchange for each
surrendered Revolving Credit Note, a new Revolving Credit Note to the order of
such Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Revolving Credit
Note to the order of the assigning Bank in an amount equal to the amount
retained by it hereunder. Such new Revolving Credit Notes shall provide that
they are replacements for the surrendered Revolving Credit Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Revolving Credit Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
the assigned Revolving Credit Notes. Within five (5) days of issuance of any new
Revolving Credit Notes pursuant to this ss.17.4, the Borrower shall deliver an
opinion of counsel, addressed to the Banks and the Agent, relating to the due
authorization, execution and delivery of such new Revolving Credit Notes and the
legality, validity and binding effect thereof, in form and substance
satisfactory to the Banks. The surrendered Revolving Credit Notes shall be
cancelled and returned to the Borrower.
17.5. PARTICIPATIONS. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; PROVIDED
that (i) each such participation shall be in an amount of not less than
$5,000,000 of the selling Bank's commitment, (ii) any such sale or participation
shall not affect the rights and duties of the selling Bank hereunder to the
Borrower and (iii) the only rights granted to the participant pursuant to such
participation arrangements with respect to waivers, amendments or modifications
of the
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Loan Documents shall be the rights to approve waivers, amendments or
modifications that would reduce the principal of or the interest rate on any
Loans, extend the term or increase the amount of the Commitment of such Bank as
it relates to such participant, reduce the amount of any commitment fees or
Letter of Credit Fees to which such participant is entitled or extend any
regularly scheduled payment date for principal or interest.
17.6. DISCLOSURE. The Borrower agrees that in addition to disclosures
made in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
PROVIDED that such assignees or participants or potential assignees or
participants shall agree (i) to treat in confidence such information unless such
information otherwise becomes public knowledge, (ii) not to disclose such
information to a third party, except as required by law or legal process and
(iii) not to make use of such information for purposes of transactions unrelated
to such contemplated assignment or participation. For purposes of this ss.19.6
an assignee or participant or potential assignee or participant may include a
counterparty with whom such Bank has entered into or potentially might enter
into a derivative contract referenced to credit or other risks or events arising
under this Credit Agreement or any other Loan Document.
17.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agent pursuant to ss.13.1 or ss.13.2, and
the determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Loans. If any Bank sells a participating interest
in any of the Loans to a participant, and such participant is the Borrower or an
Affiliate of the Borrower, then such transferor Bank shall promptly notify the
Agent of the sale of such participation. A transferor Bank shall have no right
to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents or for purposes of
making requests to the Agent pursuant to ss.13.1 or ss.13.2 to the extent that
such participation is beneficially owned by the Borrower or any Affiliate of the
Borrower, and the determination of the Majority Banks shall for all purposes of
this Credit Agreement and the other Loan Documents be made without regard to the
interest of such transferor Bank in the Loans to the extent of such
participation.
17.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall
retain its rights to be indemnified pursuant to ss.14 with respect to any claims
or actions arising prior to the date of such assignment. If any assignee Bank is
not incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
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hereunder or under any of the other Loan Documents for its account, deliver to
the Borrower and the Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes. If any Reference Bank
transfers all of its interest, rights and obligations under this Credit
Agreement, the Agent shall, in consultation with the Borrower and with the
consent of the Borrower and the Majority Banks, appoint another Bank to act as a
Reference Bank hereunder. Anything contained in this ss.17 to the contrary
notwithstanding, (a) any Bank may at any time pledge all or any portion of its
interest and rights under this Credit Agreement (including all or any portion of
its Revolving Credit Notes) to any of the twelve Federal Reserve Banks organized
under ss.4 of the Federal Reserve Act, 12 U.S.C. ss.341 and (b) any Bank that is
a fund that invests in bank loans may at any time pledge all or any portion of
its interests and rights with respect to its Term Note to any trustee for, or
any other representative of, holders of obligations owed or securities issued by
such fund as security for such obligations or securities, PROVIDED that any
foreclosure or similar action by such trustee or other representative shall be
subject to the other provisions of this ss.18. No such pledge or the enforcement
thereof shall release the pledgor Bank from its obligations hereunder or under
any of the other Loan Documents.
17.9. ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer
any of its rights or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.
18. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Revolving Credit Notes shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first class
mail, postage prepaid, sent by overnight courier, or sent by telegraph,
telecopy, facsimile or telex and confirmed by delivery via courier or postal
service, addressed as follows:
(a) if to the Borrower, at 1144 Newport Center Drive,
Deerfield Beach, Florida 33442, Attention: Scott R. Francis, CFO and
Joseph Wasch, Vice President, or such other address for notice as the
Borrower shall last have furnished in writing to the Person giving the
notice; with a copy to Brian Nugent, Esq., at 1144 Newport Center
Drive, Deerfield Beach, Florida 33442;
(b) if to the Agent, at 100 Federal Street, Boston,
Massachusetts 02110, Attention: C. Christopher Smith, Vice President,
or such other address for notice as the Agent shall last have furnished
in writing to the Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on
SCHEDULE 1 hereto, or such other address for notice as such Bank shall
have last furnished in writing to the Person giving the notice.
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Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
19. GOVERNING LAW.
THIS CREDIT AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SS.18. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
20. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
21. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
22. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in ss.26.
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23. WAIVER OF JURY TRIAL.
The Borrower hereby waives its right to a jury trial with respect to
any action or claim arising out of any dispute in connection with this Credit
Agreement, the Revolving Credit Notes or any of the other Loan Documents, any
rights or obligations hereunder or thereunder or the performance of such rights
and obligations. Except as prohibited by law, the Borrower hereby waives any
right it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Borrower (i)
certifies that no representative, agent or attorney of any Bank or the Agent has
represented, expressly or otherwise, that such Bank or the Agent would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that the Agent and the Banks have been induced to enter into this
Credit Agreement, the other Loan Documents to which it is a party by, among
other things, the waivers and certifications contained herein.
24. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Credit Agreement, any
consent or approval required or permitted by this Credit Agreement to be given
by the Banks may be given, and any term of this Credit Agreement or of any other
instrument related hereto or mentioned herein may be amended, and the
performance or observance by the Borrower of any terms of this Credit Agreement
or such other instrument or the continuance of any Default or Event of Default
may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Borrower and the written consent of the Majority Banks. Notwithstanding the
foregoing, the rate of interest on the Revolving Credit Notes (other than
interest accruing pursuant to ss.4.9 following the effective date of any waiver
by the Majority Banks of the Default oR Event of Default relating thereto) or
the amount of the commitment fee may not be decreased without the written
consent of each Bank affected thereby; the amount of the Commitments may not be
increased without the written consent of the Borrower and of each Bank affected
thereby; the Revolving Credit Loan Maturity Date may not be postponed without
the written consent of each Bank affected thereby; this ss.24 and the definition
of MajoritY Banks may not be amended, without the written consent of all of the
Banks; and the amount of the Agent's fee and ss.13 may not be amended without
the written consent of the Agent. No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of either Bank in exercising
any right shall operate as a waiver thereof or otherwise be prejudicial thereto.
No notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
25. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
<PAGE> 68
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part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
<PAGE> 69
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IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
OUTSOURCE FUNDING CORPORATION
By: /S/ JOSEPH C. WASCH
-----------------------------------
Name: Joseph C. Wasch
Title: Vice President
BANKBOSTON, N.A., individually and as Agent
By: /S/ C. CHRISTOPHER SMITH
-----------------------------------
Name: C. Christopher Smith
Title: Vice President
COMERICA BANK
BY: /s/ MARTIN G. ELLIS
-----------------------------------
Name: Martin G. Ellis
Title: Vice President
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ JOHN J. McGUIRE
-----------------------------------
Name: John J. McGuire
Title: First Vice President
SUNTRUST BANK, SOUTH FLORIDA, NATIONAL ASSOCIATION
By: /s/ T. MICHAEL LOGAN
-----------------------------------
Name: T. Michael Logan
Title: Managing Director
<PAGE> 70
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FLEET NATIONAL BANK
By: /s/ DANIEL D. BUTLER
-----------------------------------
Name: Daniel D. Butler
Title: Vice President
<PAGE> 1
Exhibit 10.57
AMENDED AND RESTATED RECEIVABLES
PURCHASE AND SALE AGREEMENT
Dated as of October 1, 1999
Among
OUTSOURCE INTERNATIONAL, INC.,
OUTSOURCE FRANCHISING, INC.,
CAPITAL STAFFING FUND, INC.,
SYNADYNE I, INC.,
SYNADYNE II, INC.,
SYNADYNE III, INC.,
SYNADYNE IV, INC.,
SYNADYNE V, INC.,
and
OUTSOURCE INTERNATIONAL
OF AMERICA, INC.,
each as an Originator,
and
OUTSOURCE FUNDING CORPORATION,
as the Buyer,
and
OUTSOURCE INTERNATIONAL, INC.,
as the Servicer.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I DEFINITIONS......................................................................1
SECTION 1.01. Certain Defined Terms................................................1
SECTION 1.02. Accounting and Certain Other Terms...................................9
SECTION 1.03. Other Terms..........................................................9
SECTION 1.04. Computation of Time Periods.........................................10
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES..............................................10
SECTION 2.01. Agreement to Purchase...............................................10
SECTION 2.02. Payment for the Purchases...........................................11
SECTION 2.03. Settlement Procedures...............................................12
SECTION 2.04. Payments and Computations, Etc. ....................................13
SECTION 2.05. Transfer of Records to the Buyer....................................13
ARTICLE III CONDITIONS OF PURCHASES........................................................14
SECTION 3.01. Conditions Precedent to Initial Purchase............................14
SECTION 3.02. Conditions Precedent to All Purchases and
Remittances of Collections........................................14
SECTION 3.03. Effect of Payment of Purchase Price.................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................................15
SECTION 4.01. Representations and Warranties of the Originators...................15
ARTICLE V GENERAL COVENANTS................................................................20
SECTION 5.01. General Covenants...................................................20
ARTICLE VI ADMINISTRATION, COLLECTION AND MONITORING OF ASSETS.............................25
SECTION 6.01. Appointment and Designation of the Servicer.........................25
SECTION 6.02. Collection of Receivables by the Servicer;
Extensions and Amendments of Receivables..........................26
SECTION 6.03. Distribution and Application of Collections.........................26
SECTION 6.04. Other Rights of the Buyer...........................................27
SECTION 6.05. Records; Audits.....................................................27
SECTION 6.06. Receivable Reporting................................................28
SECTION 6.07. Collections and Lock-Boxes..........................................28
SECTION 6.08. UCC Matters; Protection and Perfection of
Transferred Assets................................................29
SECTION 6.09. Obligations of the Originators With Respect to
Receivables.......................................................30
SECTION 6.10. Applications of Collections.........................................30
SECTION 6.11. Annual Servicing Report of Independent Public
Accountants.......................................................30
ARTICLE VII EVENTS OF TERMINATION..........................................................31
SECTION 7.01. Events of Termination...............................................31
</TABLE>
<PAGE> 3
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE VIII INDEMNIFICATION...............................................................33
SECTION 8.01. Indemnities by the Originators......................................33
ARTICLE IX MISCELLANEOUS...................................................................35
SECTION 9.01. Amendments and Waivers..............................................35
SECTION 9.02. Notices, Etc. ......................................................36
SECTION 9.03. Setoff and Counterclaim.............................................36
SECTION 9.04. No Waiver; Remedies.................................................36
SECTION 9.05. Binding Effect; Assignability.......................................36
SECTION 9.06. Term of this Agreement..............................................36
SECTION 9.07. GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF OBJECTION TO VENUE......................................37
SECTION 9.08. WAIVER OF JURY TRIAL................................................37
SECTION 9.09. Costs, Expenses and Taxes...........................................37
SECTION 9.10. Execution in Counterparts; Severability; Integration................37
SECTION 9.11. Confidentiality.....................................................38
</TABLE>
<PAGE> 4
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SCHEDULES
Schedule I -- Condition Precedent Documents
Schedule II -- Description of Credit and Collection Policy
Schedule III -- Lock-Box Banks and Lock-Box Accounts
Schedule IV -- Tradenames, Fictitious Names and "Doing Business As" Names
Schedule V -- List of Franchisees as of Closing Date
EXHIBITS
Exhibit A -- Form of Contracts
Exhibit B -- Form of Asset Report
Exhibit C -- Form of Originator Note
Exhibit D -- Form of Franchise Agreement
<PAGE> 5
THIS AMENDED AND RESTATED RECEIVABLES PURCHASE AND SALE
AGREEMENT (the "Agreement") is made as of October 1, 1999, by and among
OUTSOURCE INTERNATIONAL, INC., a Florida corporation ("OutSource
International"), OUTSOURCE FRANCHISING, INC., a Florida corporation ("OutSource
Franchising"), CAPITAL STAFFING FUND, INC., a Florida corporation ("CSF"),
SYNADYNE I, INC., a Florida corporation, SYNADYNE II, INC., a Florida
corporation, SYNADYNE III, INC., a Florida corporation, SYNADYNE IV, INC., a
Florida corporation, SYNADYNE V, INC., a Florida corporation, and OUTSOURCE
INTERNATIONAL OF AMERICA, INC., a Florida corporation, as the originators (each
an "Originator" and, collectively, the "Originators"), OUTSOURCE FUNDING
CORPORATION, a Delaware corporation (the "Buyer"), and OUTSOURCE INTERNATIONAL,
INC., in its capacity as the initial Servicer (as defined below).
WITNESSETH:
WHEREAS, pursuant to a Receivables Purchase and Sale
Agreement dated as of July 27, 1998 (as amended from time to time, the
"Original Agreement") by and among the Originators, the Buyer and the Servicer,
the Originators agreed to sell, and the Buyer agreed to purchase, all of the
Originators' right, title and interest in the accounts receivable originated by
the Originators on the terms and conditions provided in the Original Agreement;
WHEREAS, the Originators, the Buyer and the Servicer wish to
amend and restate the Original Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein, the parties hereto, intending to be legally bound
hereby, agree that the Original Agreement is amended and restated in its
entirety to read as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. (a) Certain capitalized
terms used throughout this Agreement are defined above or in this Section 1.01.
(b) As used in this Agreement and its exhibits, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined).
"Actual Dilution" means, on any Business Day with respect to
any Receivable or Receivables, the actual reduction in the Outstanding Balance
of such Receivable or Receivables as a result of any of the Dilution Factors.
<PAGE> 6
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"Adverse Claim" means a lien, security interest, charge,
encumbrance or other right or claim of any Person having the practical effect
of a lien, security interest, charge or encumbrance.
"Affiliate" when used with respect to a Person means any
other Person controlling, controlled by or under common control with such
Person. For purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract, or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.
"Agent" means BankBoston, N.A., as agent for each of the
lending institutions party to the OutSource Funding Credit Agreement.
"Asset Report" means a report, in substantially the form of
Exhibit B, furnished by the Servicer to the Buyer pursuant to Section 6.06(b).
"Asset Report Date" means, with respect to any Collection
Period, the tenth day of such Collection Period, or if such date is not a
Business Day, the next Business Day to occur thereafter.
"Bankruptcy Code" means the United States Bankruptcy Reform
Act of 1978 (11 U.S.C. ss.ss. 101 et seq.), as amended from time to time, or any
successor statute.
"Base Rate" means, on any day, a fluctuating rate of interest
per annum equal to the higher of (a) the per annum rate of interest announced
from time to time by BankBoston, N.A. at its head office in Boston,
Massachusetts as its "base rate", and (b) 1/2 of one percent per annum above
the Federal Funds Rate.
"Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA in respect of which any Originator or any ERISA Affiliate
of any Originator is, or at any time during the immediately preceding six years
was, an "employer" as defined in Section 3(5) of ERISA.
"Business Day" means a day of the year other than a Saturday
or a Sunday on which banks are required to be open in New York City and Boston,
Massachusetts.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Closing Date" means the date on which the Buyer makes the
Initial Purchase of Receivables under this Agreement.
<PAGE> 7
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"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute.
"BKB Collection Account" has the meaning set forth in the
OutSource Funding Credit Agreement.
"Collection Account Bank" means BankBoston, N.A., as the
financial institution maintaining the BKB Collection Account.
"Collection Date" means the date following the Termination
Date on which the aggregate Outstanding Balance of all Receivables sold
hereunder has been reduced to zero (or such earlier date which is 365 days
after all outstanding Receivables sold hereunder have become written-off in
accordance with the Credit and Collection Policy), the Buyer has received all
other amounts due to it in connection with this Agreement or any other
agreement executed pursuant hereto or in connection herewith.
"Collection Period" means an accounting period of four or
five weeks as used by the Originators consistent with their present accounting
methods and as set forth in a written calendar to be provided to the Agent at
closing for the remainder of 1999 and to be provided to the Agent on or prior
to December 1st of each year for the immediately succeeding calendar year.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of the Related Security with respect thereto.
"Confidential Information" has the meaning assigned to such
term in Section 9.11.
"Contract" means an invoice issued by an Originator to a
Person, or an agreement between an Originator and a Person, in each case in
substantially the form of one of the forms set forth in Exhibit A pursuant to
or under which such Obligor shall be obligated to make one or more payments to
an Originator.
"Credit and Collection Policy" means those credit and
collection policies and practices relating to Contracts and Receivables
described in Schedule II.
"CSF Advance" means an advance of money by CSF to a
Franchisee.
"Debt" of any Person means (a) indebtedness of such Person
for borrowed money, (b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations of such Person
to pay the deferred purchase price of property or services beyond ordinary
course of business payment terms for trade payables, (d) obligations of such
Person as lessee under leases which shall have been or should be, in accordance
with GAAP, recorded as capital leases, (e) obligations secured by an Adverse
Claim upon property or assets owned by such Person, even though such Person has
<PAGE> 8
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not assumed or become liable for the payment of such obligations and (f)
without duplication obligations of such Person under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(a) through (e) above.
"Defaulted Receivable" means a Receivable (a) as to which any
payment, or part thereof, remains unpaid for more than 150 days from the
original invoice date for such payment, (b) as to which the Obligor thereof has
taken any action constituting an Insolvency Event or suffered any Insolvency
Event or (c) which, consistent with the Credit and Collection Policy, has been
or should be written off the applicable Originator's books as uncollectible.
"Dilution Factors" means, with respect to the Receivables,
any credits, rebates, freight charges, discounts, allowances, disputes,
chargebacks, returned or repossessed goods, inventory transfers, allowances for
early payments and other allowances or adjustments granted in accordance with
the Buyer's or the Originators' usual practices.
"Dilution Adjustment Credit" means, on any Business Day, the
Actual Dilution reported by the Servicer in the most recent applicable Weekly
Settlement Report.
"Discount Factor" means a percentage calculated to provide
the Buyer with a reasonable return on its investment in the Transferred Assets
after taking account of (i) the time value of money based upon the anticipated
dates of collection of the Transferred Assets, (ii) the risk of nonpayment by
the Obligors and (iii) the costs of servicing the Receivables to be performed
by the Originators. The initial Discount Factor shall be 3.0%. The Originators
and the Buyer may agree in writing from time to time to change the Discount
Factor based on changes in one or more of the items affecting the calculation
thereof; provided, however, that any change to the Discount Factor shall take
effect as of the commencement of a Collection Period, shall apply only
prospectively and shall not affect the Purchase Price payment in respect of
Purchases which occurred during any Collection Period ending prior to the
Collection Period during which the Originators and the Buyer agree to make such
change.
"Eligible Receivable" has the meaning assigned to that term
in the Outsource Funding Credit Agreement.
"ERISA" means the U.S. Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means (a) any corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as the Originators; (b) a partnership or other trade or
<PAGE> 9
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business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with the Originators or (c) a member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
the Originators, any corporation described in clause (a) above or any
partnership, trade or business described in clause (b) above.
"Event of Termination" has the meaning assigned to that term
in Section 7.01.
"Franchise Agreement" means a Franchise Agreement
substantially in the form of Exhibit D attached hereto.
"Franchisee" means those entities listed on Schedule V
attached hereto and any other entity which executes a Franchise Agreement with
OutSource International or an Affiliate of OutSource International.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, in each case consistently
applied.
"Indemnified Amounts" has the meaning assigned to that term
in Section 8.01.
"Indemnified Parties" has the meaning assigned to that term
in Section 8.01.
"Initial Purchase" means the initial Purchase made by the
Buyer hereunder.
"Insolvency Event" means, with respect to any Person, any of
the following events: such Person shall make a general assignment for the
benefit of creditors; or any case or proceeding shall be instituted by or
against such Person seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, dissolution, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property.
"Investment" means, with respect to any Person, any direct or
indirect loan, advance or investment by such Person in any other Person,
whether by means of share purchase, capital contribution, loan or otherwise,
excluding the acquisition of Receivables and other Transferred Assets (and
interests therein) pursuant to this Agreement and excluding commission, travel
and similar advances to officers, employees and directors made in the ordinary
course of business.
"Investment Company Act" means the Investment Company Act of
1940, as amended and any successor.
<PAGE> 10
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"Lock-Box" has the meaning set forth in the OutSource Funding
Credit Agreement.
"Lock-Box Account" has the meaning set forth in the OutSource
Funding Credit Agreement.
"Lock-Box Agreement" has the meaning set forth in the
OutSource Funding Credit Agreement.
"Lock-Box Bank" has the meaning set forth in the OutSource
Funding Credit Agreement.
"Material Adverse Effect" means any act, omission, situation,
circumstance, event or undertaking which could, singly or in any combination
with one or more other acts, omissions, situations, circumstances, events or
undertakings, have, or are reasonably likely to have, a material adverse effect
upon (a) the business, assets, properties, liabilities, financial condition, or
results of operations of any Originator and its subsidiaries taken as a whole,
(b) the value of the whole or any material part of the Transferred Assets, the
interests therein transferred or purported to be transferred pursuant to the
terms hereof or the priority of such interests, (c) the respective ability of
the Originators or any of their subsidiaries to perform any obligations under
this Agreement or any other Originator Document to which it is a party, or (d)
the legality, validity, binding effect or enforceability of any Originator
Document or the ability of the Buyer or the Agent to enforce any rights or
remedies under or in connection with any Originator Document.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding five years contributed to by an Originator or
any ERISA Affiliate on behalf of its employees.
"Noncomplying Receivable" means any Receivable with respect
to which any Originator has received notice from the Buyer that such Receivable
was not an Eligible Receivable as of the date purchased hereunder or that such
Originator otherwise breached any representation, warranty or covenant made
with respect to such Receivable hereunder.
"Noncomplying Receivables Adjustment" means, with respect to
any Collection Period, an amount equal to (i) the aggregate Outstanding Balance
for all Receivables which the Buyer identified to the applicable Originator as
Noncomplying Receivables during such Collection Period minus (ii) all
Collections received during such Collection Period on account of Receivables
originated by such Originator with respect to which Noncomplying Receivables
Adjustments were previously paid.
"Obligor" means a Person obligated to make payments pursuant
to a Contract.
<PAGE> 11
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"Originator Documents" means this Agreement, the Lock-Box
Agreements, and all other certificates, instruments, UCC financing statements,
reports, notices, agreements and documents executed or delivered under or in
connection with this Agreement, in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with this
Agreement.
"Originator Loan" has the meaning set forth in Section
2.02(b).
"Originator Note" has the meaning set forth in Section
2.02(c).
"OutSource Funding Credit Agreement" means the Revolving
Credit Agreement, dated as of October ___, 1999, among OutSource Funding
Corporation, as borrower, each of the lending institutions party thereto, as
banks, and BankBoston, N.A., as agent, as the same shall be amended, restated,
modified, extended, renewed or replaced.
"Outstanding Balance" of any Receivable at any time means the
then outstanding principal balance thereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Person succeeding to the functions thereof.
"Permitted Acquisition" has the meaning set forth in the
Revolving Credit Agreement.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, limited liability company, government (or any
agency or political subdivision thereof) or other entity.
"Purchase" means a purchase of Transferred Assets by the
Buyer from the Originators pursuant to Section 2.01.
"Purchase Price" means, with respect to any Purchase on any
date, the aggregate price to be paid to the applicable Originator for such
Purchase in accordance with Section 2.02 for the Receivables, Related Security
and Collections being sold to the Buyer on such date, which price shall equal
the product of (x) the aggregate Outstanding Balance of such Receivables and
(y) one minus the Discount Factor then in effect.
"Receivable" means the indebtedness of any Obligor under a
Contract whether constituting an account, chattel paper, instrument, general
intangible or any other type of property, (a) which arises from a sale of
merchandise or the performance of services by an Originator or (b) which is a
CSF Advance. Each Receivable shall include the right to payment of any interest
or finance charges and other obligations of such Obligor with respect thereto.
<PAGE> 12
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"Records" means all Contracts and other documents, books,
records and other information (including without limitation, computer programs,
tapes, disks, punch cards, data processing software and related property and
rights) maintained with respect to Receivables and the related Obligors which
the applicable Originator has itself generated or in which such Originator has
otherwise obtained an interest.
"Related Security" means with respect to any Receivable:
(a) all of the applicable Originator's interest in the
merchandise (including returned, repossessed or foreclosed
merchandise), if any, relating to the sale which gave rise to such
Receivable;
(b) all other Adverse Claims and property subject thereto
from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or
otherwise;
(c) the assignment to the Buyer of all UCC financing
statements covering any collateral securing payment of such
Receivable;
(d) all guarantees, indemnities, warranties, letters of
credit, insurance policies and proceeds and premium refunds thereof
and other agreements or arrangements of whatever character from time
to time supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or otherwise;
(e) all Records; and
(f) all proceeds of the foregoing.
"Revolving Credit Agreement" means that certain Third Amended
and Restated Credit Agreement dated as of July 27, 1998 by and among OutSource
International, the banks and other financial institutions from time to time
parties thereto and BankBoston, N.A., as successor by merger to Bank of Boston
Connecticut, as agent for the banks thereunder, as the same may be amended,
restated, supplemented, replaced or otherwise modified from time to time, any
successor agreement, and any agreement pursuant to which the Debt issued under
any such "Revolving Credit Agreement" is refinanced.
"Servicer" means at any time the Person then authorized
pursuant to Article VI to service, administer and collect Receivables.
"Servicer Fee" has the meaning assigned to that term in
Section 6.01.
<PAGE> 13
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"Servicer Termination Event" means the occurrence of any of
the following:
(a) any Event of Termination; or
(b) a material failure on the part of the Servicer to observe
or perform any of its duties or obligations as Servicer under this Agreement
and such failure shall remain unremedied for two Business Days after written
notice to the Servicer.
"Settlement Date" means, with respect to any Collection
Period, the fifteenth day of such Collection Period, or if such date is not a
Business Day, the next Business Day to occur thereafter.
"Termination Date" means the date on which the Originators'
obligation to sell and the Buyer's obligation to purchase Receivables hereunder
terminates, which date shall occur on the earliest of (i) the date on which an
Insolvency Event occurs with respect to OutSource International, any Originator
or the Buyer and (iii) upon the occurrence and during the continuance of an
Event of Termination, the date on which the Buyer declares its obligation to
purchase Receivables hereunder to be terminated.
"Transferred Assets" means, with respect to any Purchase or
Purchases, (a) the Receivables sold to the Buyer in connection with such
Purchase or Purchases, (b) all Related Security relating to such Receivables,
and (c) all Collections with respect to, and other proceeds of, such
Receivables.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
"United States" means the United States of America.
"Weekly Settlement Report" means the report prepared by the
Servicer pursuant to Section 5.01(c)(vii).
SECTION 1.02. Accounting and Certain Other Terms. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP, and all accounting determinations made and all financial
statements prepared hereunder shall be made and prepared in accordance with
GAAP. All undefined terms contained in this Agreement which are used in Article
9 of the UCC in the State of New York shall have the meanings provided for by
such Article 9.
SECTION 1.03. Other Terms . The words "herein," "hereof," and
"hereunder" and other words of similar import refer to this Agreement as a
whole, including the exhibits and schedules hereto, as the same may from time
to time be amended or supplemented and not to any particular section,
subsection, or clause contained in this Agreement, and all references to
<PAGE> 14
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Sections, Exhibits and Schedules shall mean, unless the context clearly
indicates otherwise, the Sections hereof and the Exhibits and Schedules
attached hereto, the terms of which Exhibits and Schedules are hereby
incorporated into this Agreement. Whenever appropriate, in the context, terms
used herein in the singular also include the plural, and vice versa.
SECTION 1.04. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES.
SECTION 2.01. Agreement to Purchase. (a) On the terms and
conditions hereinafter set forth, the Buyer agrees to make the Initial Purchase
hereunder on the Closing Date by purchasing from each Originator, and each
Originator agrees to sell to the Buyer, all Receivables of such Originator
existing as of the close of business on the Business Day immediately prior to
the Closing Date, together with all of the Related Security relating to such
Receivables, all Collections with respect to, and other proceeds of, such
Receivables. On each Business Day after the Initial Purchase until the
occurrence of the Termination Date, the Buyer agrees to purchase from each
Originator, and each Originator agrees to sell to the Buyer, all Receivables of
such Originator existing as of the close of business on the immediately
preceding Business Day which have not been previously purchased hereunder,
together with all of the Related Security relating to such Receivables and all
Collections with respect to and other proceeds of such Receivables. Prior to
making any Purchase hereunder, the Buyer may request of any Originator, and the
applicable Originator shall deliver, such approvals, opinions, information,
reports or documents as the Buyer may reasonably request.
(b) It is the intention of the parties hereto that each
Purchase of Receivables to be made hereunder shall constitute a "sale of
accounts," as such term is used in Article 9 of the UCC of the State of New
York, and not a loan secured by such accounts. Except for the Noncomplying
Receivables Adjustment made on each Asset Report Date and the Dilution
Adjustment Credit made on any Business Day, each sale of Receivables by any
Originator to the Buyer is made without recourse; provided, however, that (i)
the Originators shall be liable to the Buyer for all representations,
warranties and covenants made by the Originators pursuant to the terms of this
Agreement, and (ii) such sale does not constitute and is not intended to result
in an assumption by the Buyer or any assignee thereof of any obligation of the
Originators or any other person arising in connection with the Transferred
Assets, or any other obligations of the Originators. In view of the intention
of the parties hereto that the Purchases of Receivables to be made hereunder
shall constitute a sale of such Receivables rather than a loan secured by such
Receivables, each Originator agrees to clearly, expressly and accurately state
on its respective financial statements that the Receivables have been sold to
the Buyer.
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(c) The parties hereto acknowledge that on the Closing Date
OutSource International shall, and from time to time thereafter OutSource
International may (but without any obligation to do so), contribute to the
capital of Buyer such amounts as may be necessary or desirable for the
operation of Buyer's business and the payment of its obligations under this
Agreement. In connection with any such contribution, the parties hereto agree
that OutSource International may, in lieu of making a cash transfer, authorize
Buyer to deduct the amount of such contributions from the Purchase Price
otherwise payable by Buyer to OutSource International on the applicable date.
All of the Receivables so paid for through such deductions shall constitute
Transferred Assets within the meaning of this Agreement and shall be subject to
all of the representations, warranties and covenants hereunder to the same
extent as if Buyer had paid the Purchase Price for such Receivables with cash
from its own funds.
SECTION 2.02. Payment for the Purchases. (a) The Purchase
Price for each Purchase shall be payable in full in cash by the Buyer to the
applicable Originator or its designee on the date of such Purchase; except that
the Buyer may, with respect to any Purchase, offset against such Purchase
Price, (i) any positive Noncomplying Receivables Adjustments or other amounts
shown on an Asset Report as owing from such Originator to the Buyer and which
remain unpaid; (ii) any Dilution Adjustment Credits for Receivables sold by
such Originator reported on the most recent Weekly Settlement Report and any
Dilution Adjustment Credits for Receivables sold by such Originator and
reported in any previous Weekly Settlement Report which remain unpaid; and
(iii) any other amounts owed by such Originator to the Buyer hereunder and
which remain unpaid.
(b) If, on any day, the amount of cash available to the Buyer
under the OutSource Funding Credit Agreement is less than the Purchase Price
owing for all Purchases of Receivables to be made on such day, then the Buyer
may, by written notice to the Originators, elect to pay such remaining part of
the Purchase Price by borrowing a subordinated revolving loan (each an
"Originator Loan") and each Originator shall have irrevocably agreed to
advance, and shall be deemed to have advanced, an Originator Loan in the amount
so specified by the Buyer; provided, however, that the Buyer may not make any
such election and no Originator shall have any obligation to extend any
Originator Loans to the Buyer if, as a result thereof, the aggregate unpaid
principal amount of all of the Originator Loans would exceed the sum of (i) the
aggregate Outstanding Balance of Eligible Receivables as of the opening of
business on such date minus (ii) one hundred ten percent (110%) of outstanding
"Loans" under the OutSource Funding Credit Agreement.
(c) The Originator Loans advanced by each Originator shall be
evidenced by, and payable in accordance with the terms and provisions of, a
promissory note (the "Originator Note") payable to such Originator in the form
of Exhibit C attached hereto. On each Business Day, to the extent that the
Buyer receives either Collections or proceeds from any loans under the
OutSource Funding Credit Agreement which, in any case, it is not required to
<PAGE> 16
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hold in trust for, or remit to, the Servicer or the Agent, then the Buyer shall
remit such funds to the Originators (net of any funds needed to pay existing
expenses which are then accrued and unpaid) in the following order of priority
and application: first to pay the Purchase Price owed on such date; second to
pay any Noncomplying Receivables Adjustment payments owed under Section 2.03;
and third to pay amounts owed under the Originator Notes.
(d) The Originator Loans shall, subject to the terms of the
Originator Note, be subordinated to the prior right and payment in full of all
obligations of the Buyer under the OutSource Funding Credit Agreement. The
Buyer shall, to the extent reasonably practicable, use its best efforts (i) to
allocate the amount of Originator Loans made on any day first to OutSource
International and then ratably according to the respective Purchase Prices owed
to each other Originator for Receivables sold on such date and (ii) to allocate
payments of principal and interest on the Originator Notes ratably to each
Originator other than OutSource International according to the outstanding
principal amounts thereof and thereafter to OutSource International.
SECTION 2.03. Settlement Procedures. (a) Weekly. The
Servicer shall, as part of the Weekly Settlement Report, note the Dilution
Adjustment Credit due to the Buyer from any Originator. The Buyer shall,
pursuant to Section 2.02, subtract such Dilution Adjustment Credit from the
Purchase Price which would otherwise be owed to such Originator on such day
and, if the amount of such credit exceeds the amount of such Purchase Price,
the unused amount of the Dilution Adjustment Credit shall be applied as a
prepayment of the then outstanding principal amount of the Originator Note
issued in favor of such Originator. Any remaining unutilized amount of the
Dilution Adjustment Credit shall be credited by the Buyer against all future
Purchases from such Originator; provided, however, that if such credits are not
fully utilized within five (5) Business Days, the applicable Originator shall
pay the remaining amount of such credit in cash on the next succeeding Business
Day.
(b) Monthly. On or prior to each Asset Report Date, the
Servicer shall prepare and deliver to the Buyer pursuant to 6.06(b), a
statement of the Noncomplying Receivables Adjustment due to the Buyer from any
Originator or from the Buyer to any Originator, as the case may be. If the
Noncomplying Receivables Adjustment is a positive number, such number shall be
shown on the Asset Report as an amount due to the Buyer and the Buyer shall
subtract such Noncomplying Receivables Adjustment from the Purchase Price which
would otherwise be owed to the applicable Originator on such day and, if the
amount of such adjustment exceeds the amount of such Purchase Price, the unused
positive amount of the Noncomplying Receivables Adjustment shall be applied as
a prepayment of the then outstanding principal amount of the Originator Note
held by such Originator. Any remaining unutilized positive amount of the
Noncomplying Receivables Adjustment shall be credited by the Buyer against all
future Purchases from the applicable Originator; provided, however, that if
such credits are not fully utilized within five (5) Business Days, such
Originator shall pay the remaining amount of such adjustment in cash on the
<PAGE> 17
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next succeeding Business Day. Alternatively, if the Noncomplying Receivables
Adjustment is a negative number, such number shall be shown on the Asset Report
as an amount due to such Originator, and the Buyer shall pay to such Originator
the amount, if any, shown on the Asset Report as the net amount due from Buyer
to such Originator. To the extent that such net amount due remains unpaid as of
the end of such Asset Report Date, the principal amount of the Originator Note
issued to such Originator shall be increased on the applicable Asset Report
Date by such remaining unpaid amount, subject, however, to the limits on the
amounts of the Originator Note permitted under Section 2.02(b) above.
(c) Generally. Until the Originators or the Buyer shall
notify the Servicer of any exceptions to the calculations contained therein,
the calculations of the Dilution Adjustment Credit and Noncomplying Receivables
Adjustment in each Weekly Settlement Report and each Asset Report shall be
deemed to be correct as originally delivered. If any Originator or the Buyer
shall have notified the Servicer of any exceptions to such calculations, such
Originator and the Buyer shall promptly endeavor to resolve the matters set
forth in such notice. If no such resolution is agreed upon on or before the
next Asset Report Date, however, then the Asset Report originally delivered by
the Servicer shall, absent manifest error, continue to be presumed correct
until a resolution is reached to the contrary. Nothing contained in this
Section 2.03(c) shall be deemed to limit the rights of the Buyer under Section
8.01.
SECTION 2.04. Payments and Computations, Etc. All amounts to
be paid by any Originator or the Servicer to the Buyer hereunder shall be paid
in accordance with the terms hereof no later than 11:00 A.M. (Boston,
Massachusetts time) on the day when due in immediately available funds to such
account as the Buyer may from time to time specify in writing. Payments
received by the Buyer after such time shall be deemed to have been received on
the next Business Day. In the event that any payment becomes due on a day which
is not a Business Day, then such payment shall be made on the next succeeding
Business Day. Each of the Originators shall, and if any Originator is the
Servicer, the Servicer shall, to the extent permitted by law, pay to the Buyer,
on demand, interest on all amounts not paid when due hereunder (whether owing
by any Originator individually or as Servicer) at 2.0% per annum above the Base
Rate, payable on demand; provided, however, that such interest rate shall not
at any time exceed the maximum rate permitted by applicable law. All
computations of interest payable hereunder shall be made on the basis of a year
of 360 days for the actual number of days (including the first but excluding
the last day) elapsed.
SECTION 2.05. Transfer of Records to the Buyer. (a) Each
Purchase of Receivables hereunder shall include the transfer to the Buyer of
all of the applicable Originator's right and title to and interest in the
Records relating to such Receivables and rights to the use of such Originator's
computer software to access and create the Records, and each Originator hereby
agrees that such transfer shall be effected automatically with each such
Purchase, without any action on the part of the parties hereto or any further
documentation.
<PAGE> 18
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(b) Each Originator shall take such action requested by the
Buyer, from time to time hereafter, that may be necessary or appropriate to
ensure that the Buyer and its assignees have (i) an enforceable ownership
interest in the Records relating to the Receivables purchased hereunder and
(ii) an enforceable right (whether by license or sublicense or otherwise) to
use all of the computer software used to account for the Receivables and/or to
recreate such Records.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The
Initial Purchase hereunder is subject to the conditions precedent that the
Buyer shall have received on or before the date of such purchase the items
listed in Schedule I, each (unless otherwise indicated) dated such date, in
form and substance satisfactory to the Buyer.
SECTION 3.02. Conditions Precedent to All Purchases and
Remittances of Collections. Each Purchase (including the Initial Purchase)
from the Originator by the Buyer shall be subject to the further conditions
precedent that (a) with respect to any such Purchase (other than the Initial
Purchase), on or prior to the date of such Purchase, the Servicer shall have
delivered to the Buyer, in each case in form and substance satisfactory to the
Buyer, a completed Asset Report dated as of the most recent Asset Report Date,
and a completed Weekly Settlement Report dated no more than seven Business Days
prior to the date of such Purchase, and in each case containing such additional
information as may be reasonably requested by the Buyer; (b) on the date of
such Purchase, the following statements shall be true:
(i) The representations and warranties contained in Section
4.01 are correct on and as of such day as though made on and as of
such date,
(ii) No event has occurred and is continuing, or would result
from such Purchase, which constitutes an Event of Termination, and
(iii) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or
governmental body, agency or instrumentality shall prohibit or enjoin,
the making of such Purchase by the Buyer in accordance with the
provisions hereof.
and (c) the Buyer shall have received such other approvals, opinions or
documents as the Buyer may reasonably request.
SECTION 3.03. Effect of Payment of Purchase Price. Each
Originator, by accepting the proceeds of the Purchase Price for a Purchase,
shall be deemed to have certified to the Buyer the satisfaction of the
conditions precedent described in the immediately preceding Section 3.02. Upon
the payment of the Purchase Price for any Purchase, (whether in cash or by the
<PAGE> 19
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making of an Originator Loan pursuant to Section 2.02(b)), title to the
Transferred Assets included in such Purchase shall vest irrevocably in the
Buyer, whether or not the conditions precedent to such Purchase were in fact
satisfied; provided, however, that the Buyer shall not be deemed to have waived
thereby any claim for indemnification it may have under this Agreement for the
failure by any Originator in fact to have satisfied any such condition
precedent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Originators. The Originators represent and warrant that as of the date hereof,
as of the date of the Initial Purchase and as of the date of each subsequent
Purchase:
(a) Each of the Originators is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to do business, and is in
good standing, in every jurisdiction in which the nature of its business
requires it to be so qualified and the failure to do so could reasonably be
expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the
Originators of this Agreement and all other Originator Documents to be entered
into by them, including the Originators' use of the proceeds of Purchases, are
within each Originator's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene (i) each Originator's charter or
by-laws, (ii) any law, rule or regulation applicable to the Originators, (iii)
any contractual restriction binding on or affecting each Originator or its
property or (iv) any order, writ, judgment, award, injunction or decree binding
on or affecting each Originator or its property, and do not result in or
require the creation of any Adverse Claim upon or with respect to any of its
properties (other than in favor of the Buyer with respect to the Transferred
Assets); and no transaction contemplated hereby requires compliance with any
bulk sales act or similar law. This Agreement and each other Originator
Document to be entered into by the Originators have each been duly executed and
delivered by the Originators.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Originators of
this Agreement or any other Originator Document to be entered into by them,
except for the filing of the UCC financing statements referred to in Article
III, all of which financing statements have been duly filed and are in full
force and effect.
<PAGE> 20
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(d) This Agreement and each other Originator Document to be
entered into by the Originators constitute the legal, valid and binding
obligation of the Originators enforceable against each Originator in accordance
with their respective terms subject to bankruptcy and similar laws affecting
creditors generally and principles of equity.
(e) (i) OutSource International has furnished to the Buyer
and the Agent (A) copies of the audited consolidated balance sheets of
OutSource International and its consolidated subsidiaries as at December 31,
1998, and the related audited consolidated statements of income, shareholders'
equity and cash flows for the fiscal year of OutSource International and its
consolidated subsidiaries then ended reported on by Deloitte & Touche, LLP,
which financial statements present fairly in all material respects in
accordance with GAAP the financial position of OutSource International and its
consolidated subsidiaries as at December 31, 1998, and the results of
operations of OutSource International and its consolidated subsidiaries for the
fiscal year of OutSource International then ended, and (B) copies of the
unaudited consolidated balance sheets of OutSource International and its
consolidated subsidiaries as at June 30, 1999, and the related unaudited
consolidated statements of income, shareholders' equity and cash flows for the
three-month period then ended, which financial statements present fairly in all
material respects in accordance with GAAP the financial position of OutSource
International and its consolidated subsidiaries as at June 30, 1999, and the
results of operations of OutSource International and its consolidated
subsidiaries for the three-month period then ended; and (ii) since June 30,
1999, (A) no material adverse change has occurred in the business, assets,
liabilities, financial condition, or results of operations or business
prospects of OutSource International and its subsidiaries taken as a whole, and
(B) no event has occurred or failed to occur which has had, or may have, singly
or in the aggregate, a Material Adverse Effect.
(f) There is no pending or threatened action or proceeding
affecting any Originator or any subsidiaries of any Originator before any
court, governmental agency or arbitrator that could reasonably be expected to
have a Material Adverse Effect. None of the Originators, or any subsidiary of
any Originator is in default with respect to any order of any court, arbitrator
or governmental body except for defaults with respect to orders of governmental
agencies which defaults are not material to the business or operations of the
Originators or any subsidiary of any of the Originators.
(g) No proceeds of any Purchase will be used by the
Originators to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(h) Immediately prior to each Purchase hereunder, each
Receivable to be sold hereunder, together with the Contract related thereto and
the other Transferred Assets relating thereto, is owned by the applicable
Originator free and clear of any Adverse Claim except as provided herein or
permitted hereby, and the Buyer shall acquire all of such Originator's right,
title and interest in such Transferred Assets and a valid and perfected first
priority ownership interest in each such Receivable then existing or thereafter
<PAGE> 21
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arising and in the Related Security and Collections with respect thereto, free
and clear of any Adverse Claim except as created hereby or by the Buyer in the
OutSource Funding Credit Agreement or any related document. No effective
financing statement or other instrument similar in effect covering any
Transferred Assets shall at any time be on file in any recording office except
such as may be filed in favor of the Buyer relating to this Agreement or in
favor of the Agent under the OutSource Funding Credit Agreement. The Purchases
of the Transferred Assets by the Buyer constitute true and valid sales and
transfers for consideration (and not merely a pledge of such Transferred Assets
for security purposes), enforceable against creditors of the Buyers and no
Transferred Assets shall constitute property of any Originator.
(i) No Asset Report or Weekly Settlement Report (if prepared
by OutSource International, an Originator or any Affiliate thereof, or to the
extent that information contained therein is supplied by OutSource
International, an Originator or any such Affiliates), information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished by OutSource International or an Originator to the Buyer in
connection with this Agreement is or will be inaccurate in any material respect
as of the date it is or shall be dated or (except as otherwise disclosed to the
Buyer, as the case may be, at such time) as of the date so furnished, and no
such document contains or will contain any material misstatement of fact or
omits or shall omit to state a material fact or any fact necessary to make the
statements contained therein not misleading.
(j) The principal place of business and chief executive
office of the Originators and the offices where the Originators keep all the
Records are located at the addresses of the Originators referred to in Section
9.02 hereof (or at such other locations as to which the notice and other
requirements specified in Section 6.08 shall have been satisfied).
(k) The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts at such Lock-Box
Banks and the names, addresses and account numbers of all accounts to which
Collections of the Receivables outstanding before the Initial Purchase
hereunder have been sent, are specified in Schedule III (which shall be deemed
to be amended in respect of terminating or adding any Lock-Box Account or
Lock-Box Bank upon satisfaction of the notice and other requirements specified
in respect thereof). The Originators have no other lock-box accounts or similar
deposit accounts for the collection of the Transferred Assets except for the
Lock-Box Accounts.
(l) Except as described in Schedule IV, none of the
Originators has any trade names, fictitious names, assumed names or "doing
business as" names or other names under which it has done (at any time during
the five year period preceding the date hereof) or is currently doing business.
<PAGE> 22
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(m) No event has occurred and is continuing, or would result
from any Purchase hereunder or from the application of the proceeds therefrom,
which constitutes an Event of Termination.
(n) The Purchase Price constitutes reasonably equivalent
value in consideration for the transfer to the Buyer of the Transferred Assets
from the Originators and no such transfer shall have been made for or on
account of an antecedent debt owed by any Originator to the Buyer and no such
transfer is or may be voidable under any Section of the Bankruptcy Code.
(o) Each Originator has received advice from its counsel
which is consistent with the conclusions set forth in the legal opinion(s) of
Rudnick & Wolfe, counsel to the Originators relating to the issues of
substantive consolidation and true sale of the Receivables and the related
property.
(p) Each Originator is solvent at the time of (and
immediately after) each transfer of Transferred Assets to the Buyer hereunder.
(q) Each Originator has accounted for and has otherwise
treated each Purchase of Transferred Assets hereunder in its books, records and
financial statements as a sale to the Buyer, in each case consistent with GAAP
and with the requirements set forth herein.
(r) OutSource International owns one hundred percent (100%)
of the outstanding capital stock of the Buyer and has not granted or issued any
options, warrants or other rights to acquire any such capital stock.
(s) None of the Originators has (i) guaranteed any obligation
of the Buyer, allowed any of its other Affiliates to guarantee any obligations
of the Buyer, and no Originator nor any of its other Affiliates has held itself
out as responsible for debts of the Buyer or actions with respect to the
business and affairs of the Buyer; or (ii) permitted the commingling or pooling
of its funds or other assets with those of the Buyer and has otherwise
permitted any other of its Affiliates to commingle or pool any of their funds
or other assets with those of the Buyer. Each of the Originators (i) has agreed
with the Buyer, and has caused each of its other Affiliates to the extent
applicable to agree with the Buyer, to allocate between themselves shared
corporate operating services and expenses which are not reflected in the
Servicer Fee (including, without limitation, the services of shared employees,
consultants and agents and reasonable legal and auditing expenses) on the basis
of the reasonably projected use or the projected value of services rendered,
and otherwise on a basis reasonably related to actual use or the value of
services rendered, (ii) has not named the Buyer, and has not allowed any other
Affiliate to name the Buyer, as a direct or contingent beneficiary or loss
payee on any insurance policy covering the property of the Originators,
OutSource International or any other Affiliates; and (iii) acknowledges that
the Buyer and the Agent are entering into the transactions contemplated by the
OutSource Funding Credit Agreement in reliance on the Buyer's identity as a
separate legal entity from the Originators, OutSource International and any
other Affiliates.
<PAGE> 23
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(t) None of the Originators is an "investment company" or a
company controlled by an "investment company" registered or required to be
registered under the Investment Company Act, or otherwise subject to any other
federal or state statute or regulation limiting its ability to incur
indebtedness.
(u) None of the Originators is engaged, principally or as one
of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" (as each of the quoted
terms is defined or used in Regulation G, T, U or X). No part of the proceeds
of any Transferred Asset has been used for so purchasing or carrying margin
stock or for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation G, T, U or X.
(v) Each of the Originators and the Servicer has the right
(whether by license, sublicense or assignment) to use all of the computer
software used by the Servicer and/or the Originators to account for the
Transferred Assets to the extent necessary to administer the Transferred
Assets, and to assign (by way of sale) or sublicense such rights to use all of
such software to the Buyer.
(w) None of the Originators' inventory, the sale of which
would give rise to a Receivable, is subject to any Adverse Claim except as
contemplated under the Revolving Credit Agreement.
(x) Each Originator has filed or caused to be filed all
Federal, state and local tax returns which are required to be filed by it, and
has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the applicable Originator has
set aside adequate reserves on its books in accordance with GAAP and which
proceedings have not given rise to any Adverse Claim.
(y) Each Receivable sold hereunder is, as of the date of
sale, unless otherwise identified to the Buyer and the Agent on or prior to
such date, an Eligible Receivable.
(z) The copy of the Credit and Collection Policy attached
hereto as Schedule II is a true and complete copy thereof.
<PAGE> 24
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ARTICLE V
GENERAL COVENANTS
SECTION 5.01. General Covenants.
(a) Compliance with Laws; Preservation of Corporate
Existence. The Originators shall comply in all material respects with all
applicable laws (including, without limitation, ERISA and the Code), rules,
regulations, orders and Originator Documents and preserve and maintain their
corporate existence, rights, franchises, qualifications and privileges where
the failure to comply could reasonably be expected to have a Material Adverse
Effect.
(b) Sales, Liens, Etc. Except as otherwise specifically
provided herein, no Originator shall (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to, any Transferred Asset, or upon or with respect
to any Lock-Box Account, the BKB Collection Account or any other account to
which any Collections of any Receivable are sent, or assign any right to
receive income in respect thereof or (ii) create or suffer to exist any Adverse
Claim upon or with respect to any of the Originators' inventory, the sale of
which would give rise to a Receivable, except such Adverse Claims as are
contemplated under the Intercreditor Agreement.
(c) General Reporting Requirements. OutSource International
and each Originator will provide, or cause to be provided, to the Buyer the
following:
(i) as soon as available and in any event within 90
days after the end of each fiscal year of OutSource
International, consolidated balance sheets of OutSource
International and its consolidated subsidiaries and the
related statement of income, shareholders' equity and cash
flows for such year, each prepared in accordance with GAAP
and reported on by nationally recognized independent public
accountants acceptable to the Buyer;
(ii) as soon as available and in any event within 45
days after the end of each of the first three quarters of
each fiscal year of OutSource International, consolidated
balance sheets of OutSource International and its
consolidated subsidiaries and the related statements of
income, shareholders' equity and cash flows each for the
period commencing at the end of the previous fiscal year and
ending with the end of such quarter, prepared in accordance
with GAAP and certified by a senior financial officer of
OutSource International;
(iii) promptly after the sending or filing thereof
(as the case may be), copies of (1) all reports which
OutSource International sends to any of its securityholders
and (2) all reports and registration statements which
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OutSource International files with the Securities and
Exchange Commission or any national securities exchange other
than registration statements relating to employee benefit
plans and to registrations of securities for selling
securityholders and (3) all reports, notices and/or
certificates which OutSource International delivers to any of
its "Lenders" under the Revolving Credit Agreement;
(iv) promptly after the filing or receiving thereof,
copies of all reports and notices with respect to any
Reportable Event defined in Article IV of ERISA which the
applicable Originator or any ERISA Affiliate files under
ERISA with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor
or which the applicable Originator or any ERISA Affiliate
receives from such Corporation;
(v) as soon as possible and in any event within
three days after the occurrence of each Event of Termination
or each event which, with the giving of notice or lapse of
time or both, would constitute an Event of Termination, a
statement of the chief financial officer or chief accounting
officer of the applicable Originator setting forth details of
such Event of Termination or event and the action which the
applicable Originator has taken and proposes to take with
respect thereto;
(vi) promptly following the Buyer's request
therefor, such other information respecting the Receivables
or the conditions or operations, financial or otherwise, of
the Originators, OutSource International or any of their
Affiliates as the Buyer may from time to time reasonably
request in order to protect the interests of the Buyer in
connection with this Agreement; and
(vii) no later than 10:00 a.m. Boston, Massachusetts
time on each Thursday of each calendar week (or if such day
is not a Business Day, then the next Business Day to occur
thereafter), a Weekly Settlement Report in form and substance
satisfactory to the Agent setting forth, as of the close of
business of the preceding Sunday, the Dilution Adjustment
Credits and the Transferred Assets.
(d) Merger, Acquisition, Etc. No Originator shall enter into
any merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer, or otherwise dispose of, any of its property, business or
assets, or acquire the Capital Stock or assets constituting a business unit, or
enter into a new line of business or make any material change in its present
method of conducting business, except:
(1) dispositions of inventory in the ordinary course of
business;
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(2) dispositions of unnecessary, obsolete or worn out
equipment;
(3) sales of Transferred Assets to the Buyer contemplated by
and in accordance with the terms of this Agreement;
(4) merger or consolidation of any Originator with or into
OutSource International (provided that OutSource International shall
be the continuing or surviving corporation) or with or into any one or
more of the other Originators;
(5) any sale, lease, transfer or other disposition of any
Originator of any or all of its assets (upon voluntary liquidation or
otherwise) to OutSource International or any other Originator; and
(6) any Permitted Acquisition; provided, however, that any
receivables acquired by an Originator from any Person shall not be
sold to the Buyer under Section 2.01 hereof except to the extent such
receivables are Eligible Receivables and the sale thereof would not
otherwise cause a breach of any provision of this Agreement.
(e) Accounting of Purchases. Each Originator will not prepare
any financial statements which shall account for the transactions contemplated
hereby in any manner other than as the sale of the Transferred Assets to the
Buyer or in any other respect account for or treat the transactions
contemplated hereby in any manner other than as a sale of the Transferred
Assets by the applicable Originator to the Buyer (it being understood, however,
that such sales may not be recognized for all accounting and tax purposes due
to principles of consolidated financial reporting and the filing of tax returns
on a consolidated basis).
(f) ERISA Matters. No Originator will (a) fail to comply in
all material respects with ERISA and the provisions of the Code applicable to
the Benefit Plans; (b) engage or permit any ERISA Affiliate to engage in any
prohibited transaction which would subject any Originator to a material tax or
penalty imposed on a prohibited transaction; (c) permit to exist any
accumulated funding deficiency, as defined in Section 302(a) of ERISA and
Section 412(a) of the Code, or funding deficiency with respect to any Benefit
Plan other than a Multiemployer Plan; (d) incur any liability to the PBGC over
and above the premiums required by law; and (e) terminate any Benefit Plan in a
manner which could result in the imposition of a lien on the property of any
Originator or any such ERISA Affiliate.
(g) Maintenance of Separate Existence. Each Originator will
take all actions required on its part to help maintain the Buyer's status as a
separate legal entity, including, without limitation, (i) not misleading third
parties as to the Buyer's identity as an entity with assets and liabilities
distinct from those of the Originators and their Affiliates; (ii) not holding
<PAGE> 27
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itself out to be responsible for the debts or decisions or actions relating to
the business and affairs of the Buyer; (iii) using its best efforts not to
commingle its funds or other assets with those of the Buyer, and not to hold
its assets in any manner that would create an appearance that such assets
belong to the Buyer or that the Buyer's assets belong to it; (iv) taking such
other actions as are necessary on its part to ensure that the representations
made in Section 4.01(s) hereunder are true and correct at all times; (v) taking
such actions as are necessary on its part to ensure that the Buyer's corporate
procedures required by its certificate of incorporation and by-laws are duly
and validly taken; and (vi) taking such other actions on its part to ensure
that the factual assumptions set forth in, and forming the basis of the legal
opinion(s) of Rudnick & Wolfe, counsel to the Originators, issued in connection
with this Agreement and relating to the issues of substantive consolidation and
true sale of the Receivables and the related property, are true and correct at
all times. Without limiting the foregoing, the Originators will cause any
financial statements consolidated with those of the Buyer to contain footnotes
or other disclosures which describe the Buyer's business and otherwise inform
the Originators' creditors that the Buyer is a separate corporate entity whose
creditors have a claim on its assets prior to those assets becoming available
to its equity holders and therefore to any creditors of the Originators or any
of their Affiliates.
(h) Supplemental Opinions. Each Originator will cause to be
delivered to the Buyer within 30 days following the Buyer's request therefor,
but in no event more frequently than once during each calendar year commencing
after the first anniversary date of the Initial Purchase, supplemental opinions
of outside counsel to the Originators in form and substance satisfactory to the
Buyer, reaffirming the opinions set forth in the opinion letters of Rudnick &
Wolfe delivered to the Buyer in connection with the Initial Purchase hereunder
pursuant to Section 3.01 or providing in reasonable detail the reasons why any
such opinions cannot be reaffirmed.
(i) Change in Corporate Name. No Originator will make any
change to its corporate name or use any trade names, fictitious names, assumed
names or conduct business under any names other than those described in
Schedule IV, unless at least 30 days prior to the effective date of any such
name change or use, the applicable Originator shall have delivered to the Buyer
such financing statements (Form UCC-1 and UCC-3) executed by such Originator
which the Buyer may request to reflect such name change or use, together with
such other documents and instruments that the Buyer may request in connection
therewith.
(j) Audits. At any time and from time to time upon prior
written notice from the Buyer during regular business hours and on an annual
(or more frequent) basis, if requested by the Buyer, the Originators will
permit the Buyer, or their agents or representatives, (i) to examine and make
copies of and abstracts from all Records, (ii) to visit the offices and
properties of the Originators for the purpose of examining such Records, and to
discuss matters relating to the Receivables or the Originators' performance
hereunder with any of the officers or employees of the Originators having
knowledge of such matters and (iii) to have access to its software for the
purposes of examining such Records. Each such audit shall be at the sole
expense of the Originators.
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(k) Keeping of Records and Books of Account. The Originators
will maintain (or cause to be maintained) and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing the Receivables in the event of the destruction of the
originals thereof) and keep and maintain, all documents, books, records and
other information which are reasonably necessary or advisable for the
collection of the Transferred Assets (including all Receivables and Collections
included therein). Such books and records shall be marked to indicate the sales
of all Receivables and Related Security hereunder and shall include, without
limitation, records adequate to permit the daily identification of each new
Receivable and all collections of and adjustments (including, without
limitation, adjustments on account of Dilution Factors) to each Receivable.
(l) Location of Records. Each Originator will keep its chief
place of business and chief executive office, and the offices where it keeps
the Records, at the addresses referred to in Section 9.02, or, in any such
case, upon 30 days' prior written notice to the Buyer, at such other locations
within the United States where all action required by Section 6.09 shall have
been taken and completed.
(m) Credit and Collection Policies. Each Originator will
comply in all material respects with the Credit and Collection Policy in regard
to each Receivable and the related Contract. The Originators shall not, without
the written consent of the Buyer and the Agent, make any change in the Credit
and Collection Policy.
(n) Change in Payment Instructions to Obligors. The
Originators will not add or terminate any bank as a Lock-Box Bank from those
listed in Schedule III or make any change in its instructions to Obligors
regarding payments to be made to any Lock-Box Bank, unless the Buyer shall have
given its prior written consent to such addition, termination or change (which
consent shall not be unreasonably withheld) and the Buyer shall have received
(i) ten Business Days' prior notice of such addition, termination or change,
(ii) prior to the effective date of such addition, termination or change, (x)
executed copies of Lock-Box Agreements executed by each new Lock-Box Bank and
the applicable Originator and (y) copies of all agreements and documents signed
by either the applicable Originator or the respective Lock-Box Bank with
respect to any new Lock-Box Account, and (iii) the prior written consent of the
Buyer to such addition, termination or change (which consent shall not be
unreasonably withheld).
(o) Taxes. Each Originator will file or cause to be filed all
federal, state and local tax returns which are required to be filed by it. Each
Originator shall pay or cause to be paid all taxes shown to be due and payable
on such returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the applicable Originator
shall have set aside adequate reserves on its books in accordance with GAAP.
<PAGE> 29
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(p) Segregation of Collections. The Originators will to the
fullest extent practicable prevent the deposit into any of the Lock-Box
Accounts of any funds other than Collections and, to the extent that any such
funds are nevertheless deposited into any of such Lock-Box Accounts, such funds
will be relatively insignificant in amount and the applicable Originator will
promptly identify any such funds to the Servicer for segregation and remittance
to the owner thereof. To the extent that an Obligor has assigned other
receivables as payment for any Receivables and the Collections of such
receivables exceeds the balance of such Receivables, the applicable Originator
will promptly identify any such funds to the Servicer for segregation and
remittance to the applicable Obligor.
(q) Insolvency. So long as the Buyer is not "insolvent"
within the meaning of the Bankruptcy Code, OutSource International and the
Originators will not cause the Buyer to file a voluntary petition under the
Bankruptcy Code or any other bankruptcy or insolvency laws.
ARTICLE VI
ADMINISTRATION, COLLECTION AND MONITORING OF ASSETS
SECTION 6.01. Appointment and Designation of the Servicer.
The Originators and the Buyer hereby appoint the Person (the "Servicer")
designated by the Buyer from time to time pursuant to this Section 6.01, as the
Buyer's agent to service, administer and collect the Receivables and otherwise
to enforce its rights and interests in, to and under the Receivables, the
Related Security and the Contracts. The Servicer's authorization under this
Agreement shall terminate on the Collection Date. Until the Buyer gives notice
to the Originators of a designation of a new Servicer, OutSource International
is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Servicer pursuant to the terms hereof. The Buyer may
designate as Servicer any Person to succeed OutSource International or any
successor Servicer, on the condition in each case that any such Person so
designated shall agree to perform the duties and obligations of the Servicer
pursuant to the terms hereof. Each of the Originators and the Servicer hereby
grants to any successor Servicer an irrevocable power of attorney to take any
and all steps in such Originators' or the Servicer's name, as applicable, and
on behalf of the Buyer, as may be necessary or desirable, in the determination
of the successor Servicer, to collect all amounts due under any and all
Receivables, including, without limitation, endorsing the applicable
Originator's name on checks and other instruments representing Collections and
enforcing such Receivables and the related Contracts. The Servicer may, with
the prior consent of the Buyer, subcontract with any other Person for
servicing, administering or collecting the Receivables, provided that the
Servicer shall remain liable for the performance of the duties and obligations
<PAGE> 30
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of the Servicer pursuant to the terms hereof. Notwithstanding anything to the
contrary contained in this Agreement, the Servicer, if not OutSource
International, an Originator or an Affiliate thereof, shall have no obligation
to collect, enforce or take any other action described in this Article VI with
respect to any Receivable that is not a Transferred Asset other than to deliver
to the Originators the Collections and documents with respect to any such
Receivable that is not a Transferred Asset as described in Sections 6.03 and
6.06(b). The Buyer shall pay to the Servicer a collection fee (the "Servicer
Fee") of 1% per annum on the average daily amount of the Outstanding Balance of
Purchased Receivables, from the date hereof until the Collection Date, payable
on each Settlement Date; provided, however, that such fee shall be payable only
from Collections; and provided, further, that, upon three Business Days' notice
to the Agent, the Servicer may (if not OutSource International or an Affiliate
thereof), elect to be paid, as such fee, another percentage per annum on the
average daily amount of outstanding Receivables, but in no event shall the
Servicer Fee payable in respect of any Collection Period after the date any
such election is made exceed 110% of the reasonable and appropriate costs and
expenses of the Servicer incurred during such Collection Period.
SECTION 6.02. Collection of Receivables by the Servicer;
Extensions and Amendments of Receivables. The Servicer shall take or cause to
be taken all such actions as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy; provided, however, that, (a) the Buyer shall have
the absolute and unlimited right to direct the Servicer (whether the Servicer
is OutSource International, an Originator or otherwise) to commence or settle
any legal action, to enforce collection of any Transferred Asset or to
foreclose upon or repossess any Related Security, and (b) the Servicer shall
not make the Buyer a party to any litigation without the express written
consent of the Buyer. If the Termination Date shall not have occurred,
OutSource International, while it is Servicer, may, in accordance with the
Credit and Collection Policy, (1) extend the maturity or adjust the Outstanding
Balance of any Defaulted Receivable as OutSource International may determine to
be appropriate to maximize Collections thereof and (2) adjust the Outstanding
Balance of any Receivable to reflect Actual Dilution and any reductions or
cancellations as a result of setoff in respect of any claim by the Obligor
thereof, in accordance with the requirements of the Credit and Collection
Policy and provided that such extension or adjustment shall not alter the
status of such Receivable as a Defaulted Receivable or limit the rights of the
Buyer under this Agreement. Except as otherwise permitted pursuant to the next
preceding sentence, neither the Servicer nor the Originators will extend,
amend, cancel or otherwise modify the terms of any Transferred Asset, or amend,
modify, cancel or waive any term or condition of any Contract related thereto
without the prior written approval of the Buyer.
SECTION 6.03. Distribution and Application of Collections.
The Servicer shall set aside and segregate funds and shall be required to
segregate all Collections on the Receivables from the other funds belonging to
the Servicer. The Servicer shall as soon as practicable following receipt turn
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over to the applicable Originator the Collections of any Receivable which is
not a Transferred Asset less, in the event neither OutSource International, an
Originator nor an Affiliate thereof is the Servicer, all reasonable and
appropriate out-of-pocket costs and expenses of such Servicer of servicing,
collecting and administering the Receivables to the extent not covered by the
Servicer Fee received by it.
SECTION 6.04. Other Rights of the Buyer. At any time
following the occurrence of a Servicer Termination Event or the designation of
a Servicer other than OutSource International, an Originator or any Affiliate
of either thereof pursuant to Section 6.01:
(a) The Buyer may or, at the request of the Buyer, the
Originators shall (in either case, at the Originators' expense) direct the
Obligors of Receivables, or any of them, to pay all amounts payable under any
Receivable directly to the Buyer or its designee;
(b) The Buyer may, or at the request of the Buyer, the
Originators shall (in either case, at the Originators' expense) give each of
the Obligors notice of the Buyer's interests in the Transferred Assets; and
(c) The Originators shall, at the Buyer's request and at the
Originators' expense, (i) assemble all Records and make the same available to
the Buyer or its designee at a place selected by the Buyer or its designee, and
(ii) segregate all cash, checks and other instruments received by it from time
to time constituting Collections of Receivables in a manner acceptable to the
Buyer and, promptly following receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer, to
the Buyer or its designee.
SECTION 6.05. Records; Audits. (a) The Servicer will maintain
and implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing the Receivables in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each new Transferred
Asset and all Collections of and adjustments to each existing Transferred
Asset).
(b) The Servicer, whether or not OutSource International, an
Originator or an Affiliate thereof, shall hold all Records in trust for the
Buyer. Subject to the receipt of contrary instructions from the Buyer, each
Originator will deliver all Records to such Servicer; provided, however, that
the Servicer, if other than OutSource International or an Originator, shall as
soon as practicable upon demand deliver to the Originators all Records in its
possession relating to Receivables of the Originators other than Transferred
Assets, and copies of Records in its possession relating to Transferred Assets.
<PAGE> 32
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(c) The Servicer will, from time to time during regular
business hours as requested by the Buyer, permit the Buyer, or its agents or
representatives, (i) to examine and make copies of and abstracts from all
Records and (ii) to visit the offices and properties of the Servicer for the
purpose of examining such Records and to discuss matters relating to the
Receivables or the Servicer's or the Originators' performance hereunder with
any of the officers or employees of the Servicer or the Originators having
knowledge of such matters.
SECTION 6.06. Receivable Reporting. (a) The Servicer, so long
as it is OutSource International, an Originator or an Affiliate thereof, and
otherwise the Originators, will deliver to the Buyer (i) prior to the Asset
Report Date occurring during each Collection Period hereafter, a report
identifying the Transferred Assets (and the aged balance thereof), by Obligor
and invoice number, as of the last day of the next preceding Collection Period,
(ii) as of the Termination Date, a report identifying the Transferred Assets
(and the aged balance thereof), by Obligor and invoice number, within five (5)
Business Days after the Termination Date, (iii) upon the Buyer's request, no
less frequently than once per week, a report identifying the Transferred Assets
by Obligor and invoice number as of the close of business on the preceding
Sunday and (iv) prior to the Asset Report Date occurring in each Collection
Period hereafter, a report identifying the outstanding accounts payable of each
of the Originators as of the last day of the next preceding Collection Period,
identified by the relevant account payee.
(b) On or prior to the Asset Report Date occurring in each
Collection Period, the Servicer shall prepare and forward to the Buyer, an
Asset Report relating to all Transferred Assets, as of the close of business of
the Servicer on the last day of the preceding Collection Period.
SECTION 6.07. Collections and Lock-Boxes. The Originators and
the Servicer will:
(i) instruct all Obligors to cause all Collections
to be either (A) remitted to a Lock-Box and will cause each
Lock-Box Bank to retrieve such Collections promptly and
deposit the same to the respective Lock-Box Accounts or (B)
deposited directly with the Lock-Box Bank, and
(ii) pursuant to the OutSource Funding Credit
Agreement, instruct all Lock-Box Banks to transfer such
Collections in same day funds to the BKB Collection Account
maintained with the BKB Collection Account Bank. If the
Originators receive any Collections, the applicable
Originator will remit such Collections to the BKB Collection
Account within one Business Day following such Originator's
receipt thereof. The Originators will not add or terminate
any bank as a Lock-Box Bank from those listed in Schedule III
or make any change in their instructions to Obligors
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regarding payments to be made to any Lock Box or any Lock-Box
Bank, unless the Buyer shall have received at least ten
Business Days' prior written notice of such addition,
termination or change and all actions reasonably requested by
the Buyer to protect and perfect the interest of the Buyer in
the Collections of Transferred Assets have been taken and
completed. The Originators hereby transfer to the Buyer,
effective upon the Initial Purchase, the exclusive ownership
and control of each of the Lock-Box Accounts, and each
Lock-Box Bank shall be instructed to remit any amounts
deposited in its Lock-Box Accounts solely according to the
direction of the Buyer or its assigns. The Originators hereby
agree to take any further action necessary that the Buyer may
reasonably request to effect such transfer.
SECTION 6.08. UCC Matters; Protection and Perfection of
Transferred Assets. Each Originator will keep its principal place of business
and chief executive office, and the office where it keeps the Records, at the
address of such Originator referred to in Section 9.02 or, upon 30 days' prior
written notice to the Buyer, at such other locations within the United States
where all actions reasonably requested by the Buyer to protect and perfect the
interest of the Buyer in the Transferred Assets have been taken and completed.
Each Originator will not make any change to its corporate name or use any
tradenames, fictitious names, assumed names, "doing business as" names or other
names other than those described in Schedule IV, unless prior to the effective
date of any such name change or use, the applicable Originator delivers to the
Buyer such executed financing statements as the Buyer may request to reflect
such name change or use, together with such other documents and instruments as
the Buyer may request in connection therewith. Each Originator agrees that from
time to time, at its expense, it will promptly execute and deliver all further
instruments and documents, and take all further action that the Buyer may
reasonably request in order to perfect, protect or more fully evidence the
Transferred Assets acquired by the Buyer hereunder, or to enable the Buyer to
exercise or enforce any of its respective rights hereunder. Without limiting
the generality of the foregoing, the Originators will: (a) upon the request of
the Buyer, execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate or as the Buyer may request, and
(b) on or prior to the date hereof, mark their master data processing records
evidencing such Transferred Assets and related Contracts with a legend,
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acceptable to the Buyer, evidencing that the Buyer or its assigns have
purchased all right and title thereto. Each Originator hereby authorizes the
Buyer to file one or more financing or continuation statements, and amendments
thereto and assignments thereof, relative to all or any of the Transferred
Assets now existing or hereafter arising without the signature of the
applicable Originator where permitted by law. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
Transferred Assets or any part thereof shall be sufficient as a financing
statement. The Originators shall, upon the request of the Buyer at any time and
at the Originators' expense, notify the Obligors of Transferred Assets, or any
of them, of the ownership of Transferred Assets by the Buyer. If the
Originators fail to perform any of their agreements or obligations under this
Section 6.08, the Buyer may (but shall not be required to) itself perform, or
cause performance of, such agreement or obligation, and the expenses of the
Buyer incurred in connection therewith shall be payable by the Originators upon
the Buyer's demand therefor. For purposes of enabling the Buyer to exercise its
rights described in the preceding sentence and elsewhere in this Article VI,
the Originators hereby authorize the Buyer to take any and all steps in the
Originators' names and on behalf of the Originators necessary or desirable, in
the determination of the Buyer, to collect all amounts due under any and all
Receivables, including, without limitation, endorsing the Originators' names on
checks and other instruments representing Collections and enforcing such
Receivables and the related Contracts.
SECTION 6.09. Obligations of the Originators With Respect to
Receivables. Each Originator will (a) at its expense, regardless of any
exercise by the Buyer of its rights hereunder, timely and fully perform and
comply with all material provisions, covenants and other promises required to
be observed by it under the Contracts related to the Transferred Assets to the
same extent as if Transferred Assets therein had not been sold hereunder and
(b) pay when due any taxes, including without limitation, sales and excise
taxes, payable in connection with the Transferred Assets. In no event shall the
Buyer have any obligation or liability with respect to any Transferred Assets
or related Contracts, nor shall it be obligated to perform any of the
obligations of the Originators or any of their Affiliates thereunder. The
Originators will timely and fully comply in all material respects with the
Credit and Collection Policy in regard to each Receivable and the related
Contract. The Originators will not make any change in the character of their
businesses or in the Credit and Collection Policy, which change would, in
either case, impair the collectibility of any Transferred Asset.
SECTION 6.10. Applications of Collections. Any payment by an
Obligor in respect of any indebtedness owed by it to any Originator shall,
except as otherwise specified by such Obligor or otherwise required by contract
or law and unless otherwise instructed by the Buyer, be applied as a Collection
of any Receivables constituting Transferred Assets of such Obligor, in the
order of the age of such Receivables, starting with the oldest such Receivable,
to the extent of any amounts then due and payable thereunder, before being
applied to any Receivable that is not a Transferred Asset or other indebtedness
of such Obligor.
SECTION 6.11. Annual Servicing Report of Independent Public
Accountants. On an annual basis on or before March 31 of each calendar year,
the Servicer shall cause nationally recognized independent public accountants
acceptable to the Buyer to furnish a report to each of the Servicer and the
Buyer substantially to the effect that (i) such accountants have examined
certain documents and records relating to the servicing of Receivables under
this Agreement, compared the information contained in the Weekly Settlement
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Reports and Asset Reports delivered by or on behalf of the Originators under
this Agreement during the annual period covered by such report (or such shorter
initial period, as the case may be) with such documents and records and that,
on the basis of such examination, and subject to such reasonable limitations
and qualifications as may be set forth in such report, such accountants are of
the opinion that the servicing has been conducted substantially in compliance
with the terms and conditions as set forth in Article VI of this Agreement,
except for such exceptions as they believe to be immaterial and such other
exceptions as shall be set forth in such statement and (ii) such accountants
have compared the mathematical calculations of each amount set forth in the
Weekly Settlement Reports and Asset Reports delivered pursuant to this
Agreement during the period covered by such report with the Servicer's computer
reports which were the source of such amounts and that on the basis of such
comparison, such accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be immaterial and such
other exceptions as shall be set forth in such statement.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following
events ("Events of Termination") shall occur:
(a) (i) The Servicer (if OutSource International, an
Originator or any Affiliate thereof) shall fail to perform or observe any term,
covenant or agreement hereunder (other than as referred to in clause (ii) of
this Section 7.01(a)) and such failure shall remain unremedied for two Business
Days after written notice to the Servicer or (ii) either the Servicer (if
OutSource International, an Originator or any Affiliate thereof) or any
Originator shall fail to make any payment or deposit to be made by it hereunder
when due; or
(b) Any representation or warranty made or deemed to be made
by OutSource International or any Originator (or any of their officers or
agents) under or in connection with this Agreement or any Asset Report or other
information or report delivered pursuant hereto shall prove to have been false
or incorrect in any material respect when made or (ii) any representation or
warranty made or deemed to be made by the Servicer (or any of its officers or
agents) under or in connection with this Agreement shall prove to have been
false or incorrect in any material respect when made; or
(c) Any Originator (individually or in its capacity as
Servicer) shall fail to perform or observe any other term, covenant or
agreement contained in this Agreement on its part to be performed or observed
and any such failure shall remain unremedied for two Business Days after
written notice thereof shall have been given by the Buyer to the Originators;
or
(d) (i) Any Originator shall fail to pay any principal of or
premium or interest on any Debt, if the aggregate principal amount of such Debt
is $500,000 or more, when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
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such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or (ii) any
other default or any event which, with the passage of time or the giving of
notice, or both, would constitute a default under any agreement or instrument
relating to any such Debt, shall occur and shall continue after the applicable
grace period, if any, specified in such agreement or instrument; provided,
however, that, if such default arises solely under the Revolving Credit
Agreement and the lenders thereunder have waived or rescinded such event, such
event shall not constitute an "Event of Termination" hereunder; or (iii) any
Debt of any Originator, or of any of their Affiliates, if, in the case of any
Originator the aggregate principal amount of such Debt is $500,000 or more,
shall be declared to be due and payable or required to be prepaid (other than
by a regularly scheduled required prepayment) prior to the stated maturity
thereof; or
(e) Either (i) any Purchase shall for any reason, except to
the extent permitted by the terms hereof, cease to create a valid and perfected
ownership interest in each Transferred Asset with respect thereto free and
clear of an Adverse Claim or (ii) this Agreement shall for any reason cease to
evidence the transfer to the Buyer of legal and equitable title to, and
ownership of, the Transferred Assets; or
(f) (i) Any Originator or any of their respective Affiliates
shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against any Originator seeking to adjudicate it a bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its property and,
in the case of any such proceeding instituted against (but not by) any
Originator or any such Affiliate, either such proceeding shall have remained
undismissed or unstayed for a period of 60 days or any order for relief of the
sort described above shall have been entered; or (ii) any Originator shall take
any corporate action to authorize any of the actions set forth in clause (i)
above in this Section 7.01(f); or
(g) There shall have occurred and be continuing an "Event of
Default" under the OutSource Funding Credit Agreement; or
(h) A Servicer Termination Event shall have occurred and be
continuing; or
(i) Any Originator or the Servicer shall fail to perform or
observe any material term, covenant or agreement contained in the Credit and
Collection Policy and such failure shall remain unremedied for two Business
Days after written notice to Servicer and Seller; or
<PAGE> 37
-33-
(j) The IRS or the PBGC shall have filed notice of one or
more Adverse Claims against any Originator or any of their ERISA Affiliates
under ERISA or the Code, unless such Adverse Claim does not purport to cover
the Receivables, and such notice shall have remained in effect for more than
thirty (30) Business Days unless, prior to the expiration of such period, such
Adverse Claims shall have been adequately bonded by such Originator or any of
their ERISA Affiliates (as the case may be) in a transaction with respect to
which the Buyer has given its prior written approval; or
(k) The Buyer shall have become subject to registration as an
"investment company" within the meaning of the Investment Company Act; or
(l) The Revolving Credit Agreement shall cease to be in full
force and effect; or
(m) The OutSource Funding Credit Agreement and related Loan
and Security Documents shall cease to be in full force and effect.
then, and in any such event, the Buyer may, by notice to the Originators
declare the Termination Date to have occurred, except that, in the case of any
event described in Section 7.01(f) above, the Termination Date shall be deemed
to have occurred automatically upon the occurrence of such event. Upon any such
declaration or automatic occurrence, the Buyer shall have, in addition to all
other rights and remedies under this Agreement or otherwise, all other rights
and remedies provided under the UCC of the applicable jurisdiction and other
applicable laws, which rights shall be cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnities by the Originators. Without
limiting any other rights which the Buyer may have hereunder or under
applicable law, each of the Originators, on a joint and several basis, hereby
agrees to indemnify the Buyer and its assigns, and each of their respective
directors, officers, employees, agents and attorneys (all of the foregoing
being collectively referred to as "Indemnified Parties") from and against any
and all damages, losses, claims, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or resulting from:
(i) the sale of any Receivable under this Agreement which is
not at the date of Purchase an Eligible Receivable;
<PAGE> 38
-34-
(ii) reliance on any representation or warranty made or
deemed made by any Originator, the Servicer (if OutSource International, an
Originator or one of its Affiliates) or any of their respective officers under
or in connection with this Agreement, which shall have been false or incorrect
in any material respect when made or deemed made or delivered;
(iii) the failure by any Originator or the Servicer (if
OutSource International, an Originator or one of its Affiliates) to comply with
any term, provision or covenant contained in this Agreement or any of the other
Originator Documents, or with any applicable law, rule or regulation with
respect to any Receivable, the related Contract or the Related Security, or the
nonconformity of any Receivable, the related Contract or the Related Security
with any such applicable law, rule or regulation;
(iv) (A) the failure to vest and maintain vested in the Buyer
or to transfer to the Buyer, legal and equitable title to and ownership of, the
Receivables and the other Transferred Assets which are, or are purported to be,
sold by the Originators hereunder; or (B) the failure to grant to the Buyer a
valid and perfected ownership interest under Article 9 of the UCC in and to the
Receivables which are, or are purported to be, Transferred Assets, together
with all Collections and Related Security; in each case free and clear of any
Adverse Claim whether existing at the time of the Purchase of any such
Receivable or at any time thereafter (other than Adverse Claims created in
favor of the Buyer hereunder or by the Buyer under the OutSource Funding Credit
Agreement);
(v) the failure by any Originator to make any payment
required on its part to be made hereunder;
(vi) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables and other Transferred Assets which are, or are purported to be,
sold by the Originators hereunder, whether at the time of any Purchase or at
any subsequent time;
(vii) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable which is, or is purported to be sold by an Originator hereunder
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other
claim resulting from the sale of the merchandise or services related to such
Receivable or the furnishing or failure to furnish such merchandise or
services;
(viii) any failure of any Originator or the Servicer (if
OutSource International, an Originator or one of its Affiliates) to perform its
duties or obligations in accordance with the provisions of this Agreement or
any failure by any Originator or any Affiliate thereof to perform its
respective duties under the Contracts;
<PAGE> 39
-35-
(ix) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of whatever
sort arising out of or in connection with goods and/or merchandise which are
the subject of any Receivable or Contract;
(x) the failure to pay when due any taxes, including without
limitation, sales, excise or personal property taxes payable in connection with
the Transferred Assets;
(xi) the commingling of Collections of Transferred Assets at
any time with other funds;
(xii) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of Purchases or the ownership by the
Buyer of Transferred Assets except any such investigation, litigation or
proceeding arising from the gross negligence or willful misconduct of the
Buyer;
(xiii) any attempt by any Person to void or otherwise avoid
any transfer of a Transferred Asset from the Originators to the Buyer under any
statutory provision or common law or equitable action, including, without
limitation, any provision of the Bankruptcy Code; or
(xiv) the failure of any Originator or any of their
respective agents or representatives (including, without limitation, agents,
representatives and employees of the Originators acting pursuant to authority
granted under Section 6.01) to remit to the Servicer, Collections of
Transferred Assets remitted to such Originator or any such agent or
representative.
Any amounts subject to the indemnification provisions of this
Section 8.01 shall be paid by the applicable Originator to the Buyer within
five (5) Business Days following the Buyer's written demand therefor.
Notwithstanding any other provision of this Agreement to the contrary, the
Originators shall not indemnify the Indemnified Parties for or with respect to
any Indemnified Amounts that would constitute recourse for uncollectible
Transferred Assets due to credit reasons.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments and Waivers. No amendment to or
modification of any provision of this Agreement shall be effective without the
written agreement of the parties hereto and the written consent of the Agent.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
<PAGE> 40
-36-
SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including telex communication and communication by facsimile copy)
and mailed, telexed, transmitted or delivered, as to each party hereto, at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto. All such notices and communications shall be effective, upon
receipt, or in the case of (a) notice by mail, five days after being deposited
in the United States mails, first class postage prepaid, (b) notice by telex,
when telexed against receipt of answerback, or (c) notice by facsimile copy,
when verbal communication of receipt is obtained, except that notices and
communications pursuant to Article II shall not be effective until received.
SECTION 9.03. Setoff and Counterclaim. All payments to be
made by the Originators or the Servicer under this Agreement shall be made free
and clear of any counterclaim, set-off, deduction or other defense, which the
Originators or the Servicer may have against the Buyer, or against each other.
SECTION 9.04. No Waiver; Remedies. No failure on the part of
the Buyer to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9.05. Binding Effect; Assignability. (a) This
Agreement shall be binding upon and inure to the benefit of the Originators,
the Buyer and their respective successors and permitted assigns. None of the
Originators may assign its rights and obligations or any interest herein
without the prior written consent of the Buyer. The Buyer may, with the consent
of the Agent, assign at any time all of its rights and obligations hereunder
and interests herein without the consent of the Originators. Without limiting
the foregoing, the Originators acknowledge and agree that, any such assignee of
the Buyer (and any further assignee of such assignee) shall have the right, as
the assignee of the Buyer (or the assignee of such assignee), to enforce the
Buyer's rights and remedies under this Agreement directly against such party
(including, without limitation, the right (i) to appoint a successor Servicer
and (ii) to give or withhold any and all consents, requests, notices,
directions, approvals, demands, extensions or waivers under or with respect to
this Agreement or the obligations in respect of any Originator hereunder to the
same extent as the Buyer may do), but without any obligation on the part of any
such assignee to perform any of the obligations of the Buyer hereunder. Each of
the Originators also agrees that it shall send to the Agent a copy of all
notices required or desired to be given by the Originators to the Buyer
hereunder.
SECTION 9.06. Term of this Agreement. This Agreement,
including, without limitation, the Originators' obligations to observe its
covenants set forth in Articles V and VI, and the Servicer's obligation to
observe its covenants set forth in Article VI, shall remain in full force and
<PAGE> 41
-37-
effect until the Collection Date; provided, however, that the rights and
remedies with respect to any breach of any representation and warranty made or
deemed made by OutSource International or the Originators pursuant to Articles
III and IV, and the indemnification and payment provisions of Article VIII
shall be continuing and shall survive any termination of this Agreement.
SECTION 9.07. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF OBJECTION TO VENUE. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE BUYER, THE ORIGINATORS,
AND THE SERVICER EACH HEREBY AGREES TO THE JURISDICTION OF ANY FEDERAL COURT
LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY WAIVES
ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.
SECTION 9.08. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THE BUYER, THE ORIGINATORS AND THE SERVICER EACH WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF
THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
SECTION 9.09. Costs, Expenses and Taxes. In addition to the
rights of indemnification granted to the Buyer and the Indemnified Parties
under Article VIII hereof, the Originators agree to pay on demand, on a joint
and several basis, all costs and expenses of the Buyer and its assignee
incurred in connection with the preparation, execution, delivery,
administration (including periodic auditing), amendment or modification of, or
any waiver or consent issued in connection with, this Agreement and the other
documents to be delivered hereunder or in connection herewith, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Buyer and its assignee with respect thereto, and with respect to
advising the Buyer and its assignee as to its respective rights and remedies
under this Agreement and the other documents to be delivered hereunder or in
connection herewith, and all costs and expenses, if any (including reasonable
counsel fees and expenses), incurred by the Buyer and its assignee in
connection with the enforcement of this Agreement and the other documents to be
delivered hereunder or in connection herewith.
SECTION 9.10. Execution in Counterparts; Severability;
Integration. This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
<PAGE> 42
-38-
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
SECTION 9.11. Confidentiality. Except to the extent
otherwise required by applicable laws, rules or regulation, unless the provider
thereof shall otherwise consent in writing, each Originator agrees that it
shall (i) maintain the confidentiality of information obtained as a result of
being a party hereto, to any related documents or to any of the transactions
contemplated hereby or thereby (including, without limitation, the contents of
any summary of indicative terms and conditions with respect to such
transactions, and the provisions of this Agreement and any of the other
Originator Documents) ("Confidential Information") and (ii) not disclose,
deliver or otherwise make available to any third party any part of any such
Confidential Information; provided, however, that the Originators may disclose
any Confidential Information (w) to its legal counsel, auditors and
accountants, (x) as may be required or requested by any governmental authority,
regulatory body or rating agency, (y) subject to a written confidentiality
agreement having terms substantially similar to this Section 9.11, to any
financial institution or other party that extends or is considering the
extension of material debt or equity financing to the applicable Originator or
(z) as may be required or appropriate in response to a court order or in
connection with any litigation; provided further, however, that the Originators
shall have no obligation of confidentiality whatsoever in respect of any
information which may be generally available to the public or becomes available
to the public through no fault of the Buyer.
<PAGE> 43
-39-
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE ORIGINATORS: OUTSOURCE INTERNATIONAL, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
OUTSOURCE FRANCHISING, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
<PAGE> 44
-40-
CAPITAL STAFFING FUND, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
SYNADYNE I, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
SYNADYNE II, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
<PAGE> 45
-41-
SYNADYNE III, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
SYNADYNE IV, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
SYNADYNE V, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
<PAGE> 46
-42-
OUTSOURCE INTERNATIONAL
OF AMERICA, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
<PAGE> 47
-43-
THE BUYER: OUTSOURCE FUNDING CORPORATION
By: /s/ Joseph C. Wasch
-------------------------------------
Name: Joseph C. Wasch
Title: Vice President
1144 E. Newport Center Drive
Suite 2A
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
THE SERVICER: OUTSOURCE INTERNATIONAL, INC.
By: /s/ Scott R. Francis
-------------------------------------
Name: Scott R. Francis
Title: Chief Financial Officer
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Scott Francis
Facsimile No.: (954) 418-3365
Telephone No.: (954) 418-6573
<PAGE> 48
SCHEDULE I
CONDITION PRECEDENT DOCUMENTS
As required by Section 3.01 of the Agreement, each of the
following items must be delivered to the Buyer prior to the Closing Date:
(a) A copy of this Agreement duly executed by each of the
Originators, the Servicer and the Buyer;
(b) A certificate of the Secretary or Assistant Secretary of
each Originator dated the date of this Agreement, certifying (i) the names and
true signatures of the incumbent officers of each of the Originators authorized
to sign this Agreement and the other Originator Documents to be delivered by it
hereunder, (ii) that the copy of the certificate of incorporation of each of
the Originators attached thereto is a complete and correct copy and that such
certificate of incorporation has not been amended, modified or supplemented and
is in full force and effect, (iii) that the copy of the by-laws of each of the
Originators attached thereto is a complete and correct copy and that such
by-laws have not been amended, modified or supplemented and are in full force
and effect, and (iv) the resolutions of each Originator's board of directors
approving and authorizing the execution, delivery and performance by each of
the Originators of this Agreement and the other Originator Documents to which
it is a party;
(c) Good standing certificates for each Originator issued by
the Secretaries of State of their respective jurisdiction of incorporation;
(d) Acknowledgment copies of proper financing statements (the
"Facility Financing Statements"), dated a date reasonably near to the Closing
Date, describing the Receivables and Related Security and naming each
Originator as seller of Receivables and Related Security, the Buyer as
purchaser, or other, similar instruments or documents, as may be necessary or,
in the opinion of the Buyer, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the Buyer's interests in all
Receivables and Related Security and other Transferred Assets;
(e) Acknowledgment copies of proper financing statements, if
any, necessary to release all security interests and other rights of any Person
in the Receivables and Related Security previously granted by any Originator;
(f) Certified copies of requests for information or copies
(or a similar search report certified by a party acceptable to the Buyer),
dated a date reasonably near to the Closing Date, listing all effective
financing statements (including the Facility Financing Statements) which name
<PAGE> 49
-2-
any Originator and/or OutSource International (under their present names and
any previous names) as debtor and which are filed in the jurisdictions in which
the Facility Financing Statements were filed, together with copies of such
financing statements (none of which, other than the Facility Financing
Statements, shall cover any Receivables or Contracts);
(g) Executed copies of Lock-Box Agreements with each of the
Lock-Box Banks;
(h) An opinion of Rudnick & Wolfe, counsel to the Originators
relating to the issues of substantive consolidation and true sale of the
Receivables and the related property, in form and substance satisfactory to the
Buyer;
(i) An opinion of Brian Nugent, Esq., counsel to the
Originators, issued in connection with this Agreement and relating to corporate
issues, perfection and priority of security interests, form and substance
satisfactory to the Buyer; and
(j) A fully and correctly completed Asset Report, as of the
last day of the most recently concluded Collection Period and a fully and
correctly completed Weekly Settlement Report as of the most recent Business
Day.
<PAGE> 50
SCHEDULE II
DESCRIPTION OF CREDIT AND COLLECTION POLICY
Attached.
<PAGE> 51
SCHEDULE III
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
LOCK-BOX BANK:
LaSalle Bank N.A.
135 South LaSalle Street
Chicago, Illinois 60603
TITLE OF ACCOUNT NO. ACCOUNT NO. LOCK-BOX NO.
OutSource International, Inc. [__________] [__________]
Capital Staffing Fund, Inc. [__________] [__________]
<PAGE> 52
SCHEDULE IV
TRADENAMES, FICTITIOUS NAMES AND "DOING BUSINESS AS" NAMES
OutSource International, Inc.:
None
OutSource Franchising, Inc.:
None
Capital Staffing Fund, Inc.:
None
Synadyne I, Inc.:
Synadyne
Synadyne II, Inc.:
Synadyne
Synadyne III, Inc.:
Labor World
Payroll Partners
Synadyne
Synadyne IV, Inc.:
Synadyne
Synadyne V, Inc.:
Synadyne
OutSource International of America, Inc.:
Labor Quick
Labor World
Office Network
Office Ours
Senior Achievement
Tandem
<PAGE> 53
SCHEDULE V
LIST OF FRANCHISEES AS OF CLOSING DATE
[List of Franchisees]
<PAGE> 54
EXHIBIT A
FORM OF CONTRACTS
Attached.
<PAGE> 55
EXHIBIT B
FORM OF ASSET REPORT
Attached.
<PAGE> 56
EXHIBIT C
FORM OF ORIGINATOR NOTE
Attached.
<PAGE> 57
EXHIBIT C
FORM OF
OUTSOURCE FUNDING CORPORATION
NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE
[Date]
THIS NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE AND ANY
INTEREST REPRESENTED HEREBY SHALL NOT BE TRANSFERRED,
ASSIGNED, EXCHANGED, CONVEYED, PLEDGED, HYPOTHECATED, OR
OTHERWISE THE SUBJECT OF A GRANT OF A SECURITY INTEREST,
ABSENT THE PRIOR WRITTEN CONSENT OF THE HOLDER AND THE AGENT,
AND ANY ATTEMPT TO TRANSFER, ASSIGN, CONVEY, PLEDGE,
HYPOTHECATE OR GRANT A SECURITY INTEREST IN THIS NOTE OR ANY
INTEREST REPRESENTED HEREBY, EXCEPT WITH THE PRIOR WRITTEN
CONSENT OF THE HOLDER AND THE AGENT, SHALL BE VOID AND OF NO
EFFECT.
OUTSOURCE FUNDING CORPORATION (the "Issuer"), for value
received, hereby promises to pay to [INSERT APPLICABLE ORIGINATOR] (the
"Holder"), or its permitted assigns, at its address for payments set forth in
the Originator Sale Agreement hereinafter referred to, an amount equal to the
aggregate principal amount of the Originator Loans, as calculated under the
Originator Sale Agreement from time to time (which amount shall be equal to the
Purchase Price of the Purchase made on or about [____________________] minus
the amount of cash paid to the Holder on the date of such Purchase pursuant to
Section 2.02(a) of the Originator Sale Agreement minus the amount of the
Purchase Price of the Purchase paid by way of a capital contribution under
Section 2.01(c) of the Originator Sale Agreement, upon the date occurring one
year and one day after the occurrence of the Collection Date (the "Final
Payment Date"), unless earlier prepaid pursuant to the provisions for repayment
referred to herein, to the extent permitted under the terms of the Originator
Sale Agreement, and to pay interest (computed on the basis of a 360-day year
and the actual number of days in each calendar year) on the unpaid principal
sum, at a variable interest rate per annum equal to the Base Rate, from the
date such principal sum is advanced, such interest being payable on (a)
[____________________], and on each Settlement Date thereafter and (b) on the
earlier of (1) the date of prepayment and (2) the Final Payment Date, until the
principal hereof is paid in full. The Holder shall enter on the grid attached
hereto, as Attachment A, information reflecting the date and the amount of any
payments made hereon.
<PAGE> 58
-2-
Payments of the principal of and interest on this
Non-negotiable Subordinated Promissory Note (the "Note") will be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts by check mailed to, or
wire transfer in federal funds to the account of, the Holder as directed by the
Holder. If any payment on this Note shall remain unpaid on the due date
thereof, the same shall thereafter be payable with interest thereon (to the
extent permitted by law) at a variable rate equal to 2% per annum above the
Base Rate, from such due date to the date of payment thereof.
This Note is issued under the Amended and Restated
Receivables Purchase and Sale Agreement dated as of October 1, 1999, among
OutSource International, Inc. ("OutSource International"), Capital Staffing
Fund, Inc., OutSource Franchising, Inc., Synadyne I, Inc., Synadyne II, Inc.,
Synadyne III, Inc., Synadyne IV, Inc., Synadyne V, Inc., and OutSource
International of America, Inc., as the originators, OutSource International, as
the "Servicer" thereunder, and the Issuer (as amended, restated, supplemented
or otherwise modified from time to time, the "Originator Sale Agreement"), and
is an "Originator Note" described in, and is subject to the terms and
conditions set forth in, the Originator Sale Agreement. This Note represents
all or a portion of the Purchase Price for Receivables purchased by the Issuer
from the Holder pursuant to the terms of the Originator Sale Agreement. Each
capitalized term utilized herein which is defined in the Originator Sale
Agreement shall have the meaning ascribed to such term in the Originator Sale
Agreement.
This Note is subject to prepayment in full or in part at the
option of the Issuer at any time upon three Business Days' prior notice to the
Holder, without a premium, subject in all events to the terms of the Originator
Sale Agreement.
This Note is subordinate and junior in right and time of
payment to all obligations and required payments or deposits of the Issuer in
favor of BankBoston, N.A., as agent (the "Agent") for the banks party to the
OutSource Funding Credit Agreement (collectively, together with their
respective successors and assignees, the "Senior Claimants"), howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter, or due or to become due on or before the Final
Payment Date (collectively, the "Senior Issuer Claims"), pursuant to the
following subordination provisions (the "Subordination Provisions"):
(A) The Holder agrees upon any distribution of all or any of
the assets of the Issuer to creditors of the Issuer upon the dissolution,
winding up, total or partial liquidation, arrangement, reorganization,
adjustment protection, relief, or composition of the Issuer or its debts, any
payment or distribution of any kind in respect of this Note (including, without
limitation, cash, property, securities and any payment or distribution which
may be payable or deliverable by reason of the payment of any other Debt of the
Issuer being subordinated to the payment of this Note) that otherwise would be
payable or deliverable upon or with respect to this Note, directly or
indirectly, by set-off or in any other manner, including, without limitation,
<PAGE> 59
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from or by way of liquidation of the Transferred Assets, shall be paid or
delivered directly to the Agent for application (in the case of cash) to, or as
Related Security or Collections on, the Transferred Assets, for the payment or
prepayment in full of all amounts payable under the Senior Issuer Claims, until
all of the Senior Issuer Claims shall have been indefeasibly paid in full in
cash. The Agent is irrevocably authorized and empowered (in its own name or in
the name of the Holder or otherwise), but shall have no obligation, to demand,
sue for, collect and receive every payment or distribution referred to in the
preceding sentence and give acquittance therefor and to file claims and proofs
of claim and take such other action (including, without limitation, voting this
Note and enforcing any security interest or other lien securing payment of this
Note) as the Agent may request to (i) collect this Note for the account of
itself and the other Senior Claimants and to file appropriate claims or proofs
of claim in respect of this Note, (ii) execute and deliver to the Agent such
powers of attorney, assignments or other instruments as the Agent may request
in order to enable the Agent to enforce any and all claims with respect to, and
any security interest and other liens securing payment of, this Note, and (iii)
collect and receive any and all payments or distribution which may be payable
or deliverable upon or with respect to this Note.
(B) All payments or distributions upon or with respect to
this Note that are received by the Holder contrary to the provisions of this
Note, any of the Originator Sale Agreement, the OutSource Funding Credit
Agreement or the Lock-Box Agreement, or any of the other documents, agreements
and instruments entered into in connection therewith and the transactions
contemplated thereby (collectively, the "Facility Documents") shall be received
in trust for the benefit of the Senior Claimants, shall be segregated from
other funds and property held by the Holder and shall be forthwith paid over to
the Agent in the same form as so received (with any necessary endorsement) to
be applied (in the case of cash) to, or held as Related Security or Collections
(in the case of non-cash property) for the payment or prepayment in full of the
Senior Issuer Claims until the Senior Issuer Claims shall have been
indefeasibly paid in full in cash. The Holder agrees that no payment or
distribution to any of the Senior Claimants pursuant to the provisions of this
Note shall entitle the Holder to exercise any rights of subrogation in respect
thereof against the Issuer until the Senior Issuer Claims shall have been
indefeasibly paid in full and in cash. The Holder and the Issuer hereby waive
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Senior Issuer Claims and any requirement that the Agent or any
other Person protect, secure, perfect or insure any security interest or lien
on any property subject thereto or exhaust any right or take any action against
the Issuer or any other Person or any assets or property.
(C) The Holder agrees and confirms that none of the Senior
Claimants (including, without limitation, the Agent) shall have any duty
whatsoever to the Holder as holder of this Note and that none of the Senior
Claimants shall be liable to the Holder for any action taken or omitted, to the
extent authorized under the terms of any Facility Document, with respect to
this Note.
<PAGE> 60
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(D) Prior to the indefeasible payment in full and in cash of
all of the Senior Issuer Claims, the Holder will not seek to collect, ask,
demand, sue for or take or receive from the Issuer in cash or other property,
by set-off or in any other manner, any amounts owing under this Note in any
manner, or exercise or enforce any of its rights under this Note.
(E) The Holder and the Issuer agree that at no time hereafter
will any part of the indebtedness represented by this Note be represented by
any negotiable instruments or other writings except this Note.
(F) The Holder and the Issuer waive notice of and consent to
the creation of additional Senior Issuer Claims from time to time pursuant to
the other Facility Documents, and any other obligation, any extensions granted
by any of the Senior Claimants with respect thereto, the taking or releasing of
collateral or any obligors or guarantors for the payment thereof, and the
releasing of the Holder or any other subordinating creditors. No failure or
delay by any of the Senior Claimants to exercise any right granted herein, or
in any other agreement or bylaw shall constitute a waiver of such right or of
any other right.
(G) The Holder and the Issuer agree to execute and deliver to
any of the Senior Claimants, such additional documents, and to take such
further actions as any of such Senior Claimants may hereafter reasonably
require to evidence the subordination of this Note.
(H) The terms of this Note and the subordination effected
hereby and the rights of the Senior Claimants, and the obligations of the
Holder and the Issuer arising hereunder and under the Originator Sale
Agreement, shall not be affected, modified or impaired in any manner or to any
extent by (i) any amendment or modification of or supplement to any provision
of any Facility Document, or any instrument or document executed or delivered
pursuant thereto or in connection with the transactions contemplated thereby;
(ii) the validity or enforceability of any of such documents; (iii) any
exercise or non-exercise of any right, power or remedy under or in respect of
any of the Issuer or the Senior Issuer Claims or any agreements, instruments or
documents related thereto or arising at law or equity; or (iv) any waiver,
consent release, indulgence, extension, renewal, modification, delay or other
action, inaction, or omission in respect of the Issuer, the Senior Issuer
Claims or any of the instruments, documents or agreements related thereto.
(I) All payments of principal, interest and all other amounts
payable in respect of the Senior Issuer Claims must be paid before any portion
of the principal amount of this Note may be paid or prepaid. All payments of
principal, interest and all other amounts then due and payable in respect of
the Senior Issuer Claims must be paid before any portion of the accrued
interest on this Note may be paid on any day. All scheduled payments of
principal and interest then due on this Note shall be payable only to the
extent that the Issuer has available funds to make such payments, and is
permitted to make such payments under the Facility Documents (including,
without limitation, the Originator Sale Agreement).
<PAGE> 61
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The Holder, and any assignee of the Holder, by accepting this
Note, hereby agrees to the Subordination Provisions. Neither this Note nor any
right of the Holder to receive any payment thereunder, shall be assigned,
transferred, exchanged, pledged, hypothecated, participated or otherwise
conveyed; provided, however, that the Holder may pledge or otherwise transfer
this Note with the prior written consent of the Issuer and the Agent; provided,
further, that any assignee of this Note shall be bound by all of the terms
applicable to this Note set forth in the Facility Documents.
The Holder of this Note and any of its assignees, by its
acceptance hereof, hereby covenants and agrees that it will not at any time
institute against the Issuer, or join any other Person in instituting against
the Issuer, any proceedings of the type referred to in clause (i) of Section
7.01(f) of the Originator Sale Agreement, or take any corporate action in
furtherance of any such action.
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed manually by its undersigned officer duly authorized thereunto.
Dated: [Date]
OUTSOURCE FUNDING CORPORATION
By:
-------------------------------------
Name:
Title:
<PAGE> 62
EXHIBIT D
FORM OF FRANCHISE AGREEMENT
Attached.
