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): March 1, 1996
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COMFORCE Corporation
(Exact name of registrant as specified in its charter)
Delaware
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State or Other Jurisdiction of Incorporation
1-6081 36-23262248
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Commission File Number I.R.S. Employer
Identification No.
2001 Marcus Avenue, Lake Success, NY 11042
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Address of principal executive offices Zip Code
Registrant's telephone number, including area code: (516) 352-3200
Not Applicable
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Former name, former address and former fiscal year, if changed since last report
<PAGE>
Item 2. Acquisition of Assets
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On January 18, 1996, COMFORCE Corporation "COMFORCE" or the
"Registrant") announced it had entered into a letter of intent
to acquire Williams Communication Services ("Williams"), a
privately owned company engaged in the technical staffing,
consulting and outsourcing business. See Registrant's Form 8-K
dated January 18, 1996.
On March 1, 1996, COMFORCE Global, Inc., a wholly-owned
subsidiary of COMFORCE, executed a definitive purchase
agreement (the "Purchase Agreement") and completed the
acquisition of substantially all of the assets of Williams
(except for certain current assets retained by Williams), for
consideration consisting of cash of $2,000,000 and contingent
rights to future payments based on earnings over a four year
period. The Purchase Agreement has been filed as an Exhibit
hereto.
The Acquisition of Williams was funded principally by a $2.25
million revolving credit facility established with Chase
Manhattan Bank. The Loan Agreement has been filed as an
exhibit hereto.
Item 7. Financial Statements and Exhibits
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a) Financial Statements of Business Acquired
As of the date of this Current Report on Form 8-K, it
is impracticable for the Registrant to provide the
financial statements as required by this Item 7(a).
In accordance with Item 7(a)(4) of Form 8-K, such
financial statements shall be filed by amendment to
this Form 8-K as soon as practicable, but no later
than 60 days after March 16, 1996.
(b) Pro Forma Financial Information
As of the date of this Current Report on Form 8-K, it
impracticable for the Registrant to provide the
financial statements as required by this Item 7(b).
In accordance with Item 7(b) of Form 8-K, such
financial statements shall be filed by amendment to
this Form 8-K as soon as practicable, but not later
than 60 days after March 16, 1996.
<PAGE>
(c) Exhibits
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99.1 Press Release dated March 5, 1996
10.1 Purchase Agreement among COMFORCE Global, Inc.,
Williams Communications Services,Inc. and Bruce
Anderson
10.2 Loan Agreement among COMFORCE Global, Inc. and
Chase Manhattan Bank
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 thereunder duly authorized.
COMFORCE CORPORATION
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Registrant
Dated: March 13, 1995 CHRISTOPHER P. FRANCO
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Executive Vice President
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
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COMFORCE Corporation Contact: Mr. Robert Gruber
2001 Marcus Avenue Investor Relations Consultant
Lake Success, NY 11042 (212) 628-2554
(516) 352-3200
COMFORCE ANNOUNCES ACQUISITION;
COMPLETES REVOLVING CREDIT FACILITY;
ESTABLISHES INTERNET WEBSITE
Lake Success, NY, March 5, 1996 -- COMFORCE Corporation (ASE: CFS) has
completed the acquisition of Williams Communications Services, Inc., based in
Englewood, Florida. Williams, which was privately owned, provides technical
staffing services to the telecommunications industry. Williams has current
annualized revenue of approximately $4.2 million. Payment of the purchase price
for Williams was made in cash. Terms of the acquisition were not released.
Michael Ferrentino, President of COMFORCE, stated, "The acquisition of
Williams is an important step in realizing our strategic goal of becoming the
leading provider of staffing, consulting, and outsourcing solutions to the
telecommunications industry. The operations of Williams are a natural extension
of the core business of COMFORCE. We are pleased that Bruce Anderson, the
founder of Williams, will continue to lead the COMFORCE Williams team in
Florida." Bruce Anderson stated, "Our partnership with COMFORCE creates a
dynamic team, which provides us with substantially greater resources to offer
enhanced services to our customers."
Revolving Credit Facility
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COMFORCE also announced the completion of a $2.25 million revolving
credit facility with Chase Manhattan Bank, which was used, in part, to finance
the acquisition of Williams. The credit facility is available to fund working
capital needs and future acquisition capital for COMFORCE's telecommunications
group.
Internet Website
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COMFORCE has established a home page on the Internet's World Wide Web.
The COMFORCE Web Site can be accessed at http://www.comforce.com, and features
postings of employment opportunities for prospective COMFORCE employees, as well
as company information for COMFORCE's customers and investors. Mr. Ferrentino
stated, "Our new website is a state of the art marketing tool for COMFORCE as we
change the way the world employs its personnel."
<PAGE>
COMFORCE previously announced the discontinuance of all businesses
unrelated to its technical staffing business, and its intention to divest such
businesses. COMFORCE's former majority shareholder, ARTRA GROUP Incorporated
(NYSE: ATA), has assumed and agreed to discharge all liabilities and obligations
of COMFORCE which arose from the discontinued businesses, and ARTRA is entitled
to receive any proceeds from the sale of such businesses. On February 27, 1996,
ARTRA reported that it is in the final stages of liquidating such discontinued
businesses.
COMFORCE provides telecommunications, information technology and
technical staffing, consulting and outsourcing services worldwide, primarily to
Fortune 500 companies, with an emphasis on wireless communications. The
strategic vision of COMFORCE is to become the leading provider of staffing,
consulting and outsourcing solutions for the information superhighway.
# # #
EXHIBIT 10.1
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated the ___ day of ______________, 19__, by and among
COMFORCE GLOBAL, INC. (hereinafter referred to as the "Purchaser"), a Delaware
corporation, with its principal office at 2001 Marcus Avenue, Lake Success, NY
11042, and WILLIAMS COMMUNICATIONS SERVICES, INC., a Florida corporation, with
its principal office located at 612 North Indiana Avenue, Englewood, FL 34223,
Route 1, Box 19A, Wauchula, FL 33873 (hereinafter referred to as the "Seller"),
and BRUCE ANDERSON, an individual residing at Route 1, Box 19A, Wauchula, FL
33873, (hereinafter alternatively referred to as "Anderson" or "Stockholder").
WHEREAS, the Seller desires to sell and the Purchaser desires to acquire certain
of the properties and assets utilized by Seller in the operation of its business
as they exist as of the Closing Date, and to take over such business and operate
it thereafter as its own, subject only to certain liabilities enumerated herein,
for the purchase price hereinafter described and upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of such sale and of the foregoing and of the
mutual agreements hereinafter set forth, the parties hereto do hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. In addition to the terms defined
throughout this Agreement (as defined), the following terms shall have the
following meanings (such meanings to be equally applicable to the singular and
plural forms thereof):
"Affiliate" means any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person and, without limiting the generality of the foregoing, includes (i) any
Person which beneficially owns or holds 25% or more of any class of voting
securities of such Person or 25% or more of the equity interest in such Person,
(ii) any Person of which such Person beneficially owns or holds 25% or more of
any class of voting securities or in which such Person beneficially owns or
holds 25% or more of the equity interest in such Person and (iii) any director,
officer or employee of such Person. For the purposes of this definition, the
term "control" (including, with correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agreement" means this Agreement together with all exhibits,
schedules, supplements and documents as may be attached hereto or incorporated
herein by reference.
"Billable Employees" means those employees, consultants and
independent contractors of Seller who work or perform services who are on
assignment to Seller's Customers and for whom a direct charge to the Customer is
made.
"Business" means providing one or more of a wide range of
technical and consulting services to communications, governmental customers and
clients through the use of skilled personnel who are generally qualified
designers, drafters, engineers, computer programmers, systems analysts,
technicians and other skilled personnel. The personnel are generally utilized by
the clients and customers on a temporary, project or peak period basis. Primary
lines of business activity include information technology, design, drafting,
engineering, telecommunications, transmission, switching, CATV systems, OSP and
construction, premises network and data services, support services, systems
analysis, technical publications, consulting and technical staff augmentation
services.
<PAGE>
"Closing" the consummation of the within transaction including
the execution and delivery of all Property, funds, documents, certificates,
resolutions, assignments and opinions contemplated in this Agreement.
"Closing Adjustment" shall be the adjustments referenced in
Section 11.2 of this Agreement.
"Closing Date" means the established date for the Closing,
which date shall be and mean such other date as shall be agreed upon by the
parties.
"Customers" those Persons to which Seller has made sales or
rendered services during any time prior to Closing and unless the context so
requires, any prospective customers.
"Escrow Agreement" has the meaning ascribed thereto in Section
3.1(b).
"GAAP" means generally accepted accounting principles in the
United States of America.
"Net Income" means the net operating income of the Business
acquired hereunder, before allocation of Federal and State income taxes and the
Purchaser's general overhead, administrative and management costs and fees. The
operating expenses to be deducted from the revenue of the Business are all
expenses incurred by the Business which shall include, but not be limited to,
office rental and utility expense, wages, payroll associated costs, deductions
and expenses, sales and recruiting expenses, depreciation and interest (but not
including interest on any funds used for acquisition of the assets sold
hereunder). Interest will be limited to the lesser of actual interest or $10,000
per year.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a business trust or any other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
"Primary Contractor" shall have the meaning ascribed thereto
in Section 3.1(a).
"Property" means all of the following assets of the Company to
the extent the same are generally utilized by Company in connection with the
operation of the Business as of the date hereof and/or at any time prior to
Closing:
(a) "General Intangibles" - (i) the sole and exclusive right,
to use the names "Williams Communications Services, Inc.", any similar names,
and, the sole and exclusive right to utilize any and all of the following
associated with, arising out of, relating to or utilized, as of the date hereof,
in connection with the Business: any and all trade names, trademarks,
copyrights, service marks, logos and slogans (including, without limitation, all
registrations, filings and certificates and the sole and exclusive rights to
file and/or prosecute any such registrations, filings and certificates) and (ii)
all Seller=s right title and interest in computer software, programs, know-how,
trade secrets and data bases used in the Business.
(b) "Customer Materials" - any and all agreements, orders,
requirements and inquiries from or with customers (present and/or past) and/or
prospective customers arising out of or relating to the operation of and/or the
Business including, without limitation, any and all of such materials from or
with any of Customers.
(c) "Resumes" - all information for or with respect to
current, former or prospective employees in whatever medium that it be
manifested, depicted, stored or presented including, but not limited to, paper,
hardcopy, computer disks, tapes and databases of the Seller whose services are
or have been provided to customers of the Seller prior to the date hereof
(collectively "Customers").
(d) "Real Property" - those leasehold interests described on
Exhibit "A" annexed hereto and made a part hereof.
(e) "Records" - the originals or certified copies of those
business or financial records of the Seller, evidencing the Customer Materials,
Resumes, General Intangibles, Equipment and/or Company Employees.
<PAGE>
(f) "Equipment" - all of the furniture and equipment utilized
by the Company as set forth on Exhibit "B" annexed hereto and made a part
hereof.
(g) "Company Employees" - those persons whose services have
been provided to Customers by the Company at any time during the last 10 months
including, without limitation, the sole and exclusive right to employ such
individuals.
"Purchase Price" has the meaning ascribed thereto in Article
III of this Agreement.
"Purchaser" has the meaning ascribed thereto in the Preamble.
"Receivables" shall have the meaning ascribed thereto in
Section 3.5.
"Receivables Collection Period" shall have the meaning
ascribed thereto in Section 3.5(b) of this Agreement.
"Seller" has the meaning ascribed thereto in the Preamble.
"Stockholder" has the meaning ascribed thereto in the
Preamble.
"U.S. $ or $" means the currency of the United States of
America.
"Western Region" shall have the meaning ascribed thereto in
Section 3.1(a).
1.2 Certain Terms. All references to Articles and Sections herein
are to the Articles and Sections of this Agreement unless otherwise specified.
ARTICLE II
SALE OF THE ASSETS OF THE BUSINESS
2.1 Upon the terms and subject to the conditions set forth in this
Agreement including Article VIII and in consideration of the payment to the
Seller of the purchase price described in Section 3.1, the Seller hereby agrees
to sell, convey, assign and transfer to the Purchaser the following which relate
to the Seller's Business of providing qualified personnel in the contract
technical services industry to its clients on a temporary or project basis:
(a) All contracts and work orders issued pursuant thereto held
by Seller with clients for the providing of services and personnel, which are
listed in Schedule C hereto.
(b) All files and records pertinent, relevant or in any way
connected with the performance of services under the contracts referred to in
2.1 (a) above.
(c) All sales records and client listings dealing with or
pertaining to former or prospective Customers including but not necessarily
limited to records of sales calls and follow-ups previously made in connection
with the solicitation of business.
(d) All personnel files relating to employees wherever
located, in whatever form in which they exist and whatever medium maintained or
stored, including but not necessarily limited to all payroll records, resume
files maintained by Seller including those with respect to personnel previously
employed by Seller and those being maintained for possible future use by Seller
in the performance and conduct of its business, all payroll records, and
year-to-date earning statements and reports. It being agreed that such personnel
files, payroll records, earning statements, reports and inventory of resumes are
an essential and important element of the assets being purchased herein, Seller
represents that it has utilized its best efforts to maintain the files and
inventory of resumes in a current and usable condition.
<PAGE>
(e) The office furniture, fixtures, supplies, brochures, sales
material, computer equipment, and any other equipment owned by the Seller
wherever located, listed and described in Schedule B which is annexed and made a
part hereof.
(f) All signs and any and all other similar assets, including
without limitation, the name "Williams Communications Services, Inc.", and any
variations of such name; good will; and trade names used and usable by the
Seller with respect to the conduct of its business.
(g) All right, title and interest which Seller has to computer
software, programs, know-how, trade secrets and computer data bases utilized in
the Business.
(h) All keys, combinations, security devices and codes for or
with respect to all offices, storage units, vaults, safety deposit boxes of the
Seller;
(i) The originals or all permits, licenses, consents,
authorizations and/or permissions for or with respect to the Business;
(j) A copy of all computer software and programs, licenses,
data bases utilized in connection with the operation of the Business together
with a right to use same;
(k) All physical embodiments of the Property; and
(l) Executed counterparts, and/or copies, as the case may be,
of the instruments and documents required to be delivered to the Purchaser at
the Closing as herein provided.
ARTICLE III
PURCHASE PRICE
3.1 Upon the terms and subject to the conditions, and the performance
of Seller's obligations and duties set forth in this Agreement, and in
consideration for the conveyance, transfer and assignment of the assets and
other rights to the Purchaser as described in Section 1 above, the Purchaser
shall pay the Seller the purchase price set forth below:
a. The sum of TWO MILLION ($2,000,000) DOLLARS on the date of
Closing, provided that Seller has been designated as the "primary contractor" in
the Western region of its customer Reltec. For the purpose of this Agreement
"Primary Contractor" shall mean the vendor of Reltec which is given personnel
requirements prior to any other vendor to Reltec. The "Western Region" shall
mean California and all contiguous states.
(i) If at the Closing, Reltec has not appointed its vendors
for the coming year, or Seller is not the Primary Contractor to Reltec in the
Western Region, then Purchaser shall pay to Seller the sum of ONE MILLION THREE
THOUSAND ($1,300,000) DOLLARS (including a $100,000 earnest money deposit to be
delivered on the date of execution hereof) at Closing and at the same time shall
place the sum of SEVEN HUNDRED THOUSAND ($700,000) DOLLARS into an escrow
account or multiple accounts to be maintained by James F. McCollum, P.A. in
accordance herewith with the Escrow Agreement ("Escrow Funds"). The Escrow Funds
will be released to Purchaser or Seller; as the case may be, as follows:
(A) The Escrow Funds together with accrued interest
will be released to Seller at the earliest of either:
(1) Billable Employees on Purchaser=s payroll
generate -net income- in Williams Division at an annual rate which equals or
exceeds one million dollars for the one hundred eighty (180) day period
beginning with the Closing Date, or
(2) Purchaser has been designated the Primary
Contractor of Reltec in the Western Region.
<PAGE>
(B) If either the Primary Contractor designation or the
Net Income fails to satisfy the requirements set forth in Section
3.1(a)(i)(A)(1) or (2) above, then the Escrow Funds will be released to the
Seller on a prorated basis in accordance with the following formula:
1. Net Income at 12th & 24th months from Closing (Annualized) = Percentage Net
---------------------------------------------------------- Income
$1,000,000 Net Income
2. Percentage Net Income X $700,000 = Seller's Initial Escrow Fund
Payment
3. The difference between the $700,000 Escrow Fund and the Seller's Initial
Escrow Fund Payment will be maintained in escrow.
(C) If the Seller's Initial Escrow Fund Payment is less
than $700,000 then the Escrow Agent shall maintain the balance of the Escrow
Fund for a period of two (2) years from Closing.
(D) If the Purchaser reaches and maintains Net Income
in Williams Division in an amount which equals or exceeds an annual rate of
$1,000,000 for a period of 180 consecutive days commencing at the Closing ending
at any time within two (2) years from the date of Closing, then the balance of
the Escrow Fund will be paid to Seller by the Escrow Agent.
(E) If the Seller cannot meet the requirements of
Section 3.1(a)(i) above then the entire balance of the Escrow Fund will be
returned to the Purchaser by the Escrow Agent notwithstanding the rate of Net
Income earnings at the end of the two year period.
(F) Escrow Agent shall be provided a customary save
harmless and indemnity clause.
(b) In addition to the payments set forth in Sections 3.1(a), above,
the Purchaser shall pay the Seller an amount not to exceed $500,000 per year for
a period of four (4) years on the first, second, third and fourth anniversary of
the Closing Date in accordance with and subject to the following:
(i) The annual potential earn-out of $500,000 per year shall be
reduced on a dollar for dollar basis for each dollar the Net Income of the
Business of the Williams Division for the immediate preceding year is less than
$1,000,000.
(ii) The Seller shall be entitled to a credit to be used in
calculating the availability of a potential earn out in the next succeeding year
for all amounts in excess of $1,000,000 in net income generated by the Business
in the immediate preceding year.
(iii) Shortfalls in any annual Earn Out payment on account of net
earnings less than the $1 million can be made up in subsequent years within the
four year period to the extent net earnings in such subsequent period exceed $1
million.
(c) Seller shall pay sales or other tax, if any, (with the exception
of income tax) related to this transaction.
3.2 Purchaser agrees to provide the Seller with accounting statements,
in reasonable detail, which will indicate the information necessary to make the
calculation referenced in paragraph 3.1 above and 3.3 below. The determination
of Net Income and calculation of any pay-out will be made in accordance with
GAAP. Said statements will be deemed final and correct unless the Seller shall,
within 30 days from the date of delivery of the accounting statements have
contested the information therein by giving Seller written notice. If the Seller
does not contest the accounting statements within the 30 day period, the
statements will be deemed correct and Seller shall waive all right to contest
the statements. Any notice hereunder must specify the disagreement in reasonable
detail.
<PAGE>
3.3 With respect to the collection of accounts receivables due and
owing to the Seller at the time of Closing ("Receivables"); Seller shall bill
and collect its own receivables, provided such is done in a commercially
reasonable manner and provided further that suit will not be filed against any
creditor without prior written permission of Purchaser - which shall not be
unreasonably withheld. To the extent funds cannot be related to pre or post
closing work, the party receiving same shall hold the funds in a separate
account until the invoice is agreed upon.
3.4 (a) The sum of $100,000 shall be immediately wire transferred to
the trust account of James F. McCollum, P.A. - to be held in escrow pending the
closing hereof. James F. McCollum, P.A., as escrow agent is authorized to
deposit said funds and hold same in escrow, subject to clearance and to disburse
said funds in accordance with the terms and conditions of the Contract. Failure
of Purchaser to cause said funds to be transferred within twenty-four hours of
the execution hereof and transmittal back by facsimile shall not excuse
Purchaser=s performance and shall, at the option of Seller, render this Contract
voidable. If in doubt as to agent=s duties of liabilities under the provisions
of this Contract, agent may at agent=s option, continue to hold said funds in
escrow until the parties mutually agree to its disbursement or until a judgment
of a court of competent jurisdiction shall determine the rights of the parties
or agent may deposit same with the clerk of the Circuit Court having
jurisdiction of the dispute. Upon notifying all parties concerned of such
action, all liability on the part of agent shall fully terminate except to the
extent of accounting for any items previously delivered out of escrow. The
parties acknowledge and agree that the Escrow Agent has acted and will continue
to act as counsel to the Seller, including, without limitation, in connection
with any dispute arising hereunder. The Escrow Agent shall not be taken or
omitted hereunder except for its gross negligence, bad faith, or willful
misconduct. Any suit between Purchaser and Seller wherein Escrow Agent is made a
party because of acting as agent hereunder or in any suit wherein agent
interpleades the subject matter of the Escrow Funds or equivalent and charged
and awarded as court costs in favor of the prevailing party. The parties agree
that Escrow Agent shall not be liable to any party or person for misdelivery to
Purchaser or Seller of items subject to this escrow unless such misdelivery is
due to willful breach of the Contract or gross negligence, bad faith or willful
misconduct of the Escrow Agent.
(b) Provided that the Seller is ready, willing and able to
close this transaction in all respect at the time of Closing, if Purchaser is
unable to close this transaction in accordance with the provisions of Section
5.1 below, then the deposit paid by Purchaser may be retained by or for the
account of Seller as agreed upon liquidated damages, consideration for the
execution of this Contract and the full settlement of any claims, whereupon
Purchaser and Seller shall be relieved of all obligations under the Contract; or
Seller, at Seller=s option, may proceed in equity to enforce Seller=s rights
under this Contract. If Seller fails, neglects, or refuses to perform this
Contract, the Purchaser may seek specific performance or elect to receive the
return of Purchaser=s deposit, without thereby waiving any action for damages
resulting from Seller=s reach.
ARTICLE IV
ASSUMPTION OF LIABILITIES BY PURCHASER
4.1 Anything hereinabove contained to the contrary notwithstanding,
Purchaser shall not assume any liabilities of Seller with the exception of the
Customer agreements (Exhibit C) and employee contracts (Exhibit D) Purchaser in
its sole discretion agrees in writing to assume.
ARTICLE V
CLOSING AND CLOSING DATE
5.1 It is the Purchaser=s intention to close this transaction by March
1, 1996 and it will make diligent efforts to do so. However, closing of the
transaction contemplated by this Agreement (the -Closing-) shall take place no
later than March 29, 1996 (-Closing Date-) at the offices of Seller or Seller=s
attorney, James F. McCollum, P.A., 129 South Commerce Avenue, Sebring, Florida
or such other time and place as may be mutually approved by the parties. All
adjustments shall be made as of 12:01 a.m. of the Sunday of the payroll week of
Closing. The parties shall adjust all expenses on a pro rata basis as of the
date operations are assumed by the Purchaser.
5.2 At the Closing, the Seller shall deliver to the Purchaser the
following:
<PAGE>
(a) Assignments of the contracts listed in Schedule C hereto
executed and approved by an authorized representative of Seller's client, in a
form satisfactory to Purchaser.
(b) A Bill of Sale conveying title to the tangible personal
property listed in Schedule B, in the form annexed hereto as Exhibit E.
(c) A certified copy of resolutions adopted unanimously by the
Seller's Board of Directors authorizing the execution, delivery and performance
by the Seller of this Agreement and the consummation of the sale contemplated
hereby, or, at Purchaser's option, a written consent executed by all of the
stockholders of the Seller authorizing and consenting to the sale herein.
(d) Verification in a form satisfactory to Purchaser that
Seller has, at the time of Closing, not less than 60 Billable Employees suitable
for Purchaser's Business; and
(e) The Seller will from time to time at the Purchaser's
request, whether prior to, at, or after the Closing, and without further
consideration, execute and deliver such further instruments and conveyances and
transfers, and take such other action as the Purchaser may reasonably require to
more effectively convey and transfer to the Purchaser any of the assets being
sold hereunder.
(f) Employment agreement between Anderson and Purchaser
executed by them in substantially the same form as annexed hereto as Exhibit D.
(g) Sole Stockholders certification in the form annexed as
Exhibit "D".
5.3 Immediately upon the Closing Date, Seller and its Stockholder will
cease and refrain from using the name "Williams Communications Services, Inc."
or any similar name or derivation thereof except in the context of "...formerly
known as Williams Communication Services, Inc." in order to collect receivables
or make government filings.
5.4 As soon as practicable after the Purchaser's request, provided that
the request is made after Closing, the Seller will change the name of the entity
now known as "Williams Communications Services, Inc.".
5.5 Each party shall have the absolute right in its sole discretion to
waive any Closing requirement at or before Closing. If a party does not waive
its rights in whole or in part and the other party is not ready, willing and
able to perform as of Closing, the non-waiving party shall
<PAGE>
have the right to terminate this Agreement upon written notice. In the event of
such termination, all of the non-waiving party's obligations shall terminate
without further loss, damage, cost, claim, right or remedy in favor of the other
party
5.6 Seller hereby agrees promptly to pay all employee wages and payroll
charges, trade and other accounts payable upon which it is obligated at Closing.
If Seller does not pay such non-assumed liability accounts payable on the later
of the due date thereof or the tenth (10th) day following notice from Purchaser
to pay such accounts or give Purchaser notice that it has a dispute as to the
amount due, then Purchaser may pay or assume such accounts payable, and
thereafter, such amounts shall be reimbursed by Seller to Purchaser, or, at the
Purchaser's option, may be applied against any monies due Seller.
5.7 Seller also agrees (i) to cure any non-waived breaches or defaults
that may exist on the Closing Date, with respect to any of the contracts or
agreements assumed by Purchaser hereunder, and (ii) to make all payments due or
to become due thereunder attributable to periods ending on or before the Closing
Date. In the event Seller fails to cure any such breach or default or make any
such payment when requested to do so by Purchaser, Purchaser will have the right
to cure any such breach or default or make any such payment on or after the
tenth (10th) day following Purchaser's request that Seller do so. Any amounts so
paid by Purchaser to cure any such breach or default shall be reimbursed by
Seller or Stockholder to Purchaser, or at Purchaser's option, may be applied
against any moneys due Seller or Stockholder under the right of offset granted
in Paragraph 10.2.
5.8 Commencing with the execution of this Agreement and to the extent
not previously delivered at or before Closing Purchaser and Seller agree to
commence the preparation of and make diligent application for, to follow up on,
and to actively and diligently pursue all approvals and consents reasonably
requested by Purchaser including but not limited to the consents for approval of
assignment of customer and billable employee contracts in a form reasonably
acceptable to Purchaser. If all such consents, and approvals are not available
at Closing the Stockholder agrees to diligently pursue obtaining such approvals
and consents after the Closing at Purchaser's request, at Stockholder's sole
cost and expense.
ARTICLE VI
SELLER'S AND STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES
In order to induce Purchaser to execute and perform this Agreement,
Seller and Stockholder do hereby represent, warrant, covenant and agree (which
representations, survival warranties, covenants and agreements shall be and be
deemed to be continuing and survive the execution and delivery of this Agreement
and the Closing Date) as follows:
6.1 The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation, with full power
and authority, corporate and otherwise, and with all licenses, permits,
certifications, registrations, approvals, consents and franchises necessary to
own or lease and operate its properties and to conduct its business as presently
being conducted. The Seller is duly qualified to do business as a foreign
corporation,
<PAGE>
and is in good standing, in all jurisdictions, if any, wherein such
qualification is necessary.
6.2 Seller owns and has good and marketable title in and to the
Property and assets to be sold or transferred hereunder free and clear of all
liens, claims and encumbrances and rights and option of others (except as herein
expressly provided to the contrary).
6.3 Anderson is the sole stockholder of the Seller and at the Closing
there shall not be authorized and/or issued and outstanding any shares of
capital stock of the Seller and/or rights to purchase shares of capital stock of
the Seller except those issued to Anderson. The issued and outstanding shares of
the Seller have been duly authorized and validly issued, and all such
outstanding shares are fully paid and non assessable. There are not now nor will
there be at the Closing any outstanding options, warrants and similar rights to
purchase shares of the Seller's capital stock. There are no preemptive rights.
During the period from the date hereof through the Closing, there will be no
shares of the capital stock of the Seller issued. Except as herein provided, no
dividends or other distributions of the assets of the Seller have or will be
declared and/or paid prior to the Closing on or with respect to the capital
stock of the Seller.
6.4 (i) Seller has the full power and authority, corporate and
otherwise, to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby; (ii) the execution, delivery and performance
of this Agreement, the consummation by Seller of the transactions herein
contemplated and the compliance by Seller with the terms of this Agreement have
been duly authorized by all necessary corporate action, and this Agreement has
been duly and properly authorized, executed and delivered by Seller and
Stockholder; (iii) this Agreement is the valid and binding obligation of Seller
and Stockholder, enforceable in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the rights of creditors generally and the
discretion of courts in granting equitable remedies; (iv) the execution,
delivery and performance of this Agreement by Seller and Stockholder and the
consummation by Seller and Stockholder of the transactions herein contemplated
does not, and will not, with or without the giving of notice or the lapse of
time, or both, (A) result in any violation of the Certificate of Incorporation
or By-laws of Seller, (B) result in a breach of or conflict with any of the
terms or provisions of, or constitute a default under, or result in the
modification or termination of, or result in the creation or imposition of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Seller and/or pursuant to, any indenture, mortgage, note, contract,
commitment or other agreement or instrument to which Seller is a party or by
which it or any of its properties or assets are or may be bound or affected; (C)
violate any existing applicable law, rule, regulation, judgment, order or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over Seller or any of its properties or businesses; or (D) have any effect on
any agreement, permit, certification, registration, approval, consent, license
or franchise necessary for Seller to own or lease and operate any of its
properties and to conduct its businesses or the ability of Seller to make use
thereof. No consent, approval, authorization or order of any court, Customer,
<PAGE>
governmental agency, authority or body and/or any party to an agreement to which
Seller is a party and/or by which it is bound, is required in connection with
the execution, delivery and performance of this Agreement, and/or the
consummation by Seller of the transactions contemplated by this Agreement except
as noted on Schedule H".
6.5 The Seller is not in violation of, or in default under, (i) any
term or provision of its Certificate of Incorporation or By-Laws; (ii) any
material term or provision or any financial covenant of any indenture, mortgage,
contract, commitment or other agreement or instrument to which it is a party or
by which it or any of its properties or business is or may be bound or affected;
or (iii) any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over it or any of its properties or business. Seller owns,
possesses or has obtained all governmental and other licenses, permits,
certifications, registrations, approvals or consents and other authorizations
necessary to own or lease, as the case may be, and to operate its properties and
to conduct its business or operations as presently conducted and all such
governmental and other licenses, permits, certifications, registrations,
approvals, consents and other authorizations are outstanding and in good
standing, and there are no proceedings pending or, to the best of its knowledge,
threatened, or any basis therefore existing, seeking to cancel, terminate or
limit such licenses, permits, certifications, registrations, approvals or
consents or authorizations.
6.6 Prior to the date hereof Seller has delivered to Purchaser the
compiled financial statement of the Seller described on Exhibit "I" annexed
hereto and made a part hereof ("Financial Statements"); copies of which have
been initialed by the parties hereto for identification. The Financial
Statements fairly present the financial position of the Seller as of the
respective dates thereof and the results of operations, and changes in financial
position of the Seller, for each of the periods covered thereby and are true and
accurate. The Financial Statements have been prepared in conformity with
generally accepted accounting principles, applied on a consistent basis
throughout the entire periods involved. As of the date of any balance sheet
forming a part of the Financial Statements, and except as and to the extent
reflected or reserved against therein, the Seller did not have any material
liabilities, debts, obligations or claims (absolute or contingent) asserted
against it and/or which should have been reflected in a balance sheet or the
notes thereto; and all assets reflected thereon are properly reported and
present fairly the value of the assets therein stated in accordance with
generally accepted accounting principles.
6.7 The financial and other books and records of the Seller (including
those forming a part of the Property) (i) are in all material respects true,
complete and correct and have, at all times, been maintained in accordance with
good business and accounting practices; (ii) contain a complete and accurate
description, and specify the location, of all trucks, automobiles, machinery,
equipment, furniture, supplies, tools, drawings and all other tangible personal
property (collectively the "Personal Property") owned by, in the possession of,
or used by the Seller in connection with the operation of the Business in the
normal course of business; (iii) except as set forth on Exhibit "J" annexed
hereto and made a part hereof, none of such Personal Property is leased or
subject to a security agreement, conditional sales contract or other title
retention or security agreement or is other than in the possession of and under
the control of the
<PAGE>
Seller, (iv) the Personal Property reflected in such books and records
constitutes all of the tangible personal property necessary for the conduct by
the Seller of the Business as now conducted; and all of the same is in normal
operating condition and the use thereof as presently employed conforms to all
applicable laws and regulations.
6.8 Annexed hereto and labeled Exhibit "A" is a schedule setting forth
a description of each parcel of improved or unimproved real property owned by or
leased to the Seller. Exhibit "A" is true correct and complete in all respect;
each of such leases are in full force and effect with no event of default in
existence or event or occurrence which, with the passage of time and/or giving
of notice would or could mature into an event of default thereunder.
6.9 The Seller owns all rights to utilize the General Intangibles free
and clear of all liens, claims and encumbrances and rights and options of third
parties (including without limitation former or present officers, directors,
stockholders, employees and agent, but excluding the rights of licensors); the
Seller has not licensed or leased any of the General Intangibles and/or any
interest therein to any person and/or entity; the Seller has not infringed, nor
is infringing, upon the rights of others with respect to the General
Intangibles; and the Seller has not received any notice of conflict with the
asserted rights of others with respect to the General Intangibles and the Seller
knows of no basis therefore; and to the best of the knowledge, of the Seller, no
others have infringed upon the General Intangibles.
6.10 The Customer Materials, Resumes and Records represent all of such
materials at any time utilized in connection with, arising out of or relating to
the Business; and none of Seller nor any employee, officer, director or
stockholder of Seller has or shall retain copies thereof and have not prior to
the date hereof, and shall not prior to the Closing, provide to any person or
entity or authorize or permit another to make, receive or utilize any of such
Customer Materials, Resumes or Records and/or the information therein or thereon
reflected, except as permitted in Article VIII.
6.11 The Seller did not have any material liabilities, debts,
obligations or claims asserted against it, whether accrued, absolute, contingent
or otherwise, and whether due or to become due, including, but not limited to,
liabilities on account of due and unpaid taxes, other governmental charges or
lawsuits except as listed on Exhibit "K".
6.12 Since the date of the most recent balance sheet included in the
Financial Statement, there has been no material adverse change to the business
of the Seller nor its prospects and the Seller has not, except as set forth on
Exhibit "L" annexed hereto and made a part hereof, (i) incurred any obligation
or liability (absolute or contingent, secured or unsecured) except obligations
and liabilities incurred in the ordinary course of the operation or business of
its business as carried on at and prior to such date; (ii) canceled, without
payment in full, any notes, loans or other obligations receivable or other debts
or claims held by it other than in the ordinary course of business; (iii) sold,
assigned, transferred, abandoned, mortgaged, pledged or subjected to lien any
contract, permit, license, franchise or other agreement other than sales or
other dispositions of goods or services in the ordinary course of business at
customary prices; (iv) increased compensation payable to any of its officers,
directors or other employees including
<PAGE>
in the term "compensation", salaries, fringe benefits, pensions, profit
participation and payment of benefits of any kind whatsoever); (v) entered into
any line of business other than that conducted by it on such date or entered
into any transaction in the ordinary course of its business; (vi) conducted any
line of business in any manner except by transactions customary in the operation
of its business as conducted on such date; (vii) declared, made or paid, or set
aside for payment, any cash or non-cash dividends or other distribution on any
shares of its capital stock; (viii) changed or modified any accounting practice;
(ix) waived any rights; (x) made any capital expenditure; (xi) pay any amounts
to shareholders except the usual salary and benefits; (xii) entered into any
agreement too take any of the actions above referenced.
6.13 Seller has not incurred any liability for any finders fees or
similar payments in connection with the transactions herein contemplated except
as set forth herein.
6.14 Except as set forth on Exhibit "M" annexed hereto and made a part
hereof, the Seller is not in default under the terms of any outstanding
agreement which is material to the business, operations, properties, assets or
condition of the Company; and there exists no event of default or event which,
with notice and/or the passage of time, or both, would constitute any such
default.
6.15 Except as set forth on Exhibit "N" annexed hereto and made a part
hereof, there are no claims, actions, suits, proceedings, arbitrations,
investigations or inquiries against the Seller before any court or governmental
agency, court or tribunal, domestic, or foreign, or before any private
arbitration tribunal, pending, or, to the best of the knowledge of Seller,
threatened against the Seller or involving its properties or businesses; nor, to
the best of the knowledge of Seller, is there any basis for any such claim,
action, suit, proceeding, arbitration, investigation or inquiry to be made by
any person and/or entity, including without limitation any customer, supplier,
lender, stockholder, former or current employee, agent or landlord. There are no
outstanding orders, judgments or decrees or any court, governmental agency or
other tribunal specifically naming the Seller and/or enjoining the Seller from
taking, or requiring the Seller to take, any action, and/or by which the Seller,
and/or its properties or businesses are bound or subject.
6.16 The Seller has filed all federal tax returns (whether relating to
income, sales, franchise, withholding, real or personal property, employment or
otherwise) required to be filed under the laws of the United States and Florida,
and has been paid in full all taxes which are due pursuant such returns or
claimed to be due by any taxing authority or otherwise due and owing. No
penalties or other charges are or will become due with respect to the late
filing of any such return. To the best of the knowledge of Seller, after due
investigation, each such tax return heretofore filed by the Seller correctly and
accurately reflects the amount of its tax liability thereunder. The Seller has
withheld, collected and paid all other levies, assessments, license fees and
taxes to the extent required and, with respect to payments, to the extent that
the same have become due and payable. Seller may owe taxes in other states and
shall indemnify Comforce for any liability it may incur therefore.
6.17 Since the date of the most recent balance sheet included in
<PAGE>
the Financial Statements, the Seller has not sustained any material loss or
interference with its business of any kind nature or description including
without limitation, from fire, storm, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree; nor have there been, and prior to the
Closing, there will not be, any material adverse change in or affecting the
general affairs, management, financial condition, stockholders_ equity, results
of operations or properties of the Seller.
6.18 No labor problems exist with the employees of the Seller or are
imminent, which would adversely affect the Seller.
6.19 Neither the Seller nor its present or former officers, directors,
employees or agents (including any third party acting on behalf of the Seller)
have: (i) directly or indirectly, made or authorized to be made, any bribes,
kickbacks or other payments of a similar nature, whether lawful or not, to any
person or entity, public or private, regardless of the form thereof, whether in
money, property or services, to obtain favorable treatment in securing business
or to obtain special concessions or to pay for favorable treatment for business
secured or for special concessions already obtained; (ii) paid funds or property
of any kind was donated, loaned or made available, directly or indirectly, for
the benefit of, or for the purpose of opposing, any government or subdivision
thereof, either domestic or foreign; (iii) the Seller has not made any loans,
donations, or other disbursements, directly or indirectly, to officers or
employees of the Seller, for contributions made, or to be made, directly or
indirectly, for the benefit of, or for the purpose of opposing, any government
or subdivision thereof, either domestic or foreign; and (iv) the Seller has not
and does not maintain a bank account or other account of any kind, whether
domestic or foreign, which account was not reflected in the corporate books.
6.20 The corporate record books of the Seller have been duly and
properly maintained, are in good order, complete, accurate, up to date and with
all necessary signatures, and set forth all meetings and actions heretofore held
and/or taken by the stockholders and/or directors of the Seller, as the case may
be, and/or as set forth in all certificates of votes of stockholders or
directors hereto fore furnished to anyone at any time.
6.21 The copies of the Certificate of Incorporation (and all amendments
thereto) and the By-Laws of the Seller heretofore delivered by the Seller and
initialed by the parties hereto for identification, are true, correct and
complete in all respects; are, and shall remain, in full force and effect; and
shall not be altered, amended, modified, terminated or rescinded prior to the
Closing without the prior written consent of the Purchaser in each instance.
6.22 The officers and members of the Board of Directors of the Seller
are as set forth on Exhibit "O" annexed hereto and made a part hereof; and
during the period from the date hereof until the Closing, there shall be no
change in such officerships and/or memberships without the prior written consent
of the Purchaser in each instance.
6.23 Except as set forth on Exhibit"P" annexed hereto and made a part
hereof, no officer or director of the Seller or the Seller (and/or any member of
their respective immediate families) has a financial interest (direct or
indirect) in any competitor, supplier or customer of the Seller.
<PAGE>
6.24 Each of the agreements and purchase orders described on Exhibit
"Q" annexed hereto and made a part hereof are in full force and effect, have not
been altered, amended, modified, terminated or rescinded, are fully enforceable
in accordance with their respective terms.
6.25 Other than as set forth on Exhibit "R" annexed hereto and made a
part hereof, the Seller is not a party (i) to any contract or agreement calling
for the payment of more than $10,000 per annum or $25,000 in the aggregate
and/or which cannot be terminated on no more than 90 days prior written notice
from the Seller to the other party thereto; (ii) to any profit sharing, bonus,
deferred compensation, pension or retirement plan, severance policy or other
similar agreement or arrangement; (iii) to any collective bargaining agreement;
or (iv) to any agreement not entered into in the ordinary course of business.
6.26 Seller represents that the Customer contracts of the Company are
effective and there exists no breach or default with respect to same. That the
copies of those contracts previously delivered to Purchaser are accurate and
complete and there exist no amendments or set of facts with respect to same
which were not previously disclosed. Seller knows of no present condition or set
of facts that the requirements or pricing for personnel in such contracts shall
materially be reduced or changed adversely. That Seller is not presently aware
of any past deficiencies in its performance of services under such contracts
that might adversely affect the continuation of supplying services under such
contracts.
6.27 There have been no past proceedings or are there any proceedings
now pending nor, to Seller's knowledge or belief, threatened against Company
before the National Labor Relations Board, State Department of Labor, State
Commission on Human Rights and Opportunities, State Department of Labor, Equal
Employment Opportunity Commission or any other local, state or Federal agencies
having jurisdiction over employee rights with respect to hiring, tenure,
conditions of employment within the three year period prior to the execution of
this Agreement.
6.28 Seller, to its best knowledge and belief, represents that Seller
has made, reported and remitted all appropriate Federal, State and local payroll
related deductions and taxes to Florida and state of employee residence
including: FICA, FUTA, SUI and income tax withholdings presently due and owing;
all Florida and state of employee residence Sales and Use Taxes; and further
warrants that it will report and remit all withholdings and taxes due for
activities prior to the Closing Date.
6.29 That none of the contracts referenced or listed on Exhibit "Q"
were obtained or executed based in whole or in part on the fact or
representation that Seller is a minority or woman owned or operated business or
a small business enterprise as those or similar terms are defined by Federal or
state statutes or regulations.
6.30 The Seller has not been the subject of any union organizing
activity and there have been no attempts to unionize the employees of Seller.
<PAGE>
6.31 Seller has paid all employees whether staff or Billable Employees
in accordance with applicable state and federal law. All non exempt employees
have been paid appropriate and correct premium wages where applicable. There
have been no past or present exempt employees on the payroll of Seller; no
payment for the lease and/or rental of vehicles or equipment; and no payment or
reimbursement to employees for moving, meals, incidental or lodging expenses
(commonly known as per diem payments) and no payments to Billable Employees as
consultants or independent contractors with the exception of those listed on
Exhibit "S" annexed hereto and made a part hereof.
6.32 Seller has not retained the services of any independent contractor
or consultant for assignment to Customers except as listed on Exhibit "T"
annexed hereto and made a part hereof.
6.33 There are no contracts, agreements, or arrangements, written or
oral, relating to the conduct of the business of the Seller to be sold hereunder
to which Seller is a party or is bound, except as may be referred to in this
Agreement, or any schedule or exhibit annexed hereto.
6.34 Exhibit "U" contains complete, correct and current copies of all
insurance policies in effect as of the time of this agreement. Seller represents
that the coverage provided is valid and adequate to fully cover against all
suits, claims, obligations, damages and liabilities arising from the conduct of
the business or the property utilized therein, including damage to property or
personal injury. Seller shall keep such coverage in effect through the date of
Closing.
6.35 The representations, warranties, covenants and agreement of the
Seller and Stockholder contained in this Agreement, including, without
limitation, those contained in this Paragraph 6.35, are true, complete, accurate
and correct in all respects as of the date hereof and shall be true, accurate
and correct and complete, in all respects as of the Closing; and will not
contain any untrue statement of any material fact, or omit to state a material
fact in order to make any or all of such representations and warranties not
materially misleading as of this date and as of the Closing Date; and at the
Closing the Seller shall deliver to the Purchaser a certificate, executed by
Anderson remaking each of the Seller's representations, warranties, covenants
and agreement set forth in this Agreement, including without limitation, those
set forth in this Paragraph 6.35.
ARTICLE VII
PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Seller as follows:
7.1 The Purchaser is a corporation duly organized, validly existing and
in good standing under and by virtue of the laws of the State of Delaware, and
the execution and delivery of this Agreement and the purchase contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Purchaser.
<PAGE>
7.2 The Purchaser has corporate power to execute and perform this
Agreement, and to consummate the transactions contemplated hereby.
7.3 The execution and performance of this Agreement by Purchaser will
not conflict with, or result in a breach of, any of the terms, conditions, or
provisions of any law or any regulations, order, writ, injunction, or decree of
any court or governmental instrumentality, or of the corporate charter or
by-laws of the Purchaser or of any agreement, whether written or oral, or other
instrument to which it is a party or by which it is bound, or constitute (with
the giving of notice or the passage of time, or both) a default thereunder.
ARTICLE VIII
ACCESS AND INFORMATION
8.1 From and after the Closing Date, and for a period of seven (7)
years thereafter, the Seller shall give to the Purchaser, and the Purchaser
shall maintain the same intact in the State of Florida and shall not remove or
destroy the same without the written consent of the Seller, all operating books
and financial records (other than corporate records) relating to the business to
be sold hereunder (including paid supplier invoices, customers' billings and
payroll records and returns). Seller need not, however, give to or leave in
Purchaser's possession any of the following, unless they are found to be
necessary for the continued operation of the business to be sold hereunder:
Seller's corporate, financial and accounting books, records, journals, the
general ledger and all other journals and ledgers which constitute books of
original entry, bank statements, canceled checks and internal financial
statements. From and after the Closing Date, the Purchaser shall give to the
Seller and its representatives from time to time upon request of the Seller full
access during normal working hours to any and all books, contracts and other
records (including credit files) of the Seller left in the possession of the
Purchaser, including the right to make copies thereof. This right to access may
be unilaterally extended by Purchaser by written notice to accommodate any
audit, investigation, lawsuit or similar need, whether perceived or real by
Seller.
8.2 From and after the Closing Date, and for a period of seven (7)
years, the Seller shall give to the Purchaser and its representatives from time
to time within the State of Florida upon request of the Purchaser full access
during normal working hours to all books, contracts and other records, including
credit files, which are not to be conveyed to the Purchaser hereunder and which
are relevant to the present business which have been retained in the Seller's
possession, including the right to make copies of relevant portions thereof. The
Seller shall be obligated to give reasonable notice of not less than thirty (30)
days in writing to the Purchaser of the Seller's intention to dispose of or
destroy any such books, contracts or other records related to the business and
shall, at the Purchaser's request, turn over to the Purchaser any of the books
contracts, or other records set forth in any such notice to the extent that they
relate to the business.
<PAGE>
ARTICLE IX
INDEMNIFICATION
9.1 The Seller and the Stockholder individually agree to indemnify and
hold the Purchaser harmless against all losses, liabilities, deficiency, damage
or expense, including reasonable counsel fees, resulting from: the assertion of
claims and made against the assets sold hereunder by creditors of the Seller,
whether such creditors be disclosed or undisclosed by Seller to Purchaser and
whether or not related to any states Bulk Sales law.
ARTICLE X
INDEMNIFICATION AND OFF SET
10.1 In addition to the indemnifications set forth in other sections
hereof and subject to the limitations hereinafter described, the Seller and
Stockholder agree, jointly and severally, to indemnify, exonerate, defend and
save the Purchaser its Affiliates, officers, directors, employees and
representatives (collectively the "Purchaser" for the purposes of this Section
10) harmless from, against, for and in respect of the full amounts of any and
all damages, losses, demands, obligations, tax, interest, penalty, suit,
judgment, order, lien, liabilities, debts, claims, actions, causes of action,
encumbrances, costs and expenses, whether administrative, judicial or otherwise,
of every kind and nature, including, without limitation, reasonable attorneys',
consultants', accountants' and expert witness fees, suffered, sustained,
incurred or required to be paid at any time after the Closing by the Purchaser
based upon, arising out of, resulting from or because of:
(a) any obligations of the Seller or Stockholder incurred in
connection with the making and performance of this Agreement;
(b) any claim, demand or cause of action asserted against the
Purchaser with respect to any claims, obligations or liabilities whatsoever,
whether disclosed or undisclosed, absolute or contingent, direct or indirect due
or to become due, now existing or arising hereafter, for debts, liabilities,
contractual obligations, violations, torts, events or incidents existing,
incurred, accrued or occurring prior to Closing;
(c) the untruth, inaccuracy, incompleteness, violation or
breach of any representation, warranty, agreement, undertaking or covenant of
Sellers contained in or made pursuant to this Agreement or any acts or
circumstances constituting untruth, inaccuracy, violation or breach;
(d) any claims made against or expense incurred by Purchaser
including, but not limited to, those with respect to the conditions or
operations of the Seller made by regulatory or administrative agencies having
jurisdiction over the Seller resulting from violations of local, state or
federal laws or regulations by Seller or any of their respective agents,
servants or employees, or resulting form a failure to collect or remit state or
local taxes, arising prior to the Closing;
(e) all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees, interest, and penalties) incurred by the
Purchaser in connection with any action, suit, proceeding, demand, assessment or
judgment incident to any of the matters indemnified against.
<PAGE>
10.2 Seller and Stockholder being the holder of all of the issued and
outstanding shares of Seller, individually hereby grants to Purchaser the right
of full offset against any monies due Seller or Stockholder, either under this
Agreement or any other agreement the Stockholder may have with Purchaser, or
Purchaser's Affiliates, including employment agreements, for the purpose of
applying same to any sums that might become due to Purchaser as a result of the
indemnities herein made or as a result of a breach of any of the covenants,
representations or warranties herein contained. Said right of offset shall in no
way limit Purchaser's ability to collect any funds due and owing to it from the
Seller or the Stockholder.
ARTICLE XI
EFFECTIVE DATES OF TRANSACTIONS
11.1 The effective date of the purchase and sale contemplated herein
shall be to the date of execution with adjustments to be made immediately after
midnight on the Sunday of the payroll week of Closing.
11.2 In amplification of the above stated general understanding of the
parties, the following provisions will govern specific aspects of the change in
ownership:
(a) Seller will remain liable for all of its accounts payable
for items actually delivered or services actually rendered, all payroll
obligations including the deduction and payment to the appropriate Federal state
and local authorities for income tax withholdings, FICA, FUTA, SUI and all other
payroll deductions, and Sales and Use taxes accrued or incurred on or before the
effective date.
(b) The Purchaser shall pay for all supplies and equipment
actually delivered or services actually rendered after the effective date,
provided, however, that such supplies and equipment or such services were
purchased or rendered in the ordinary course of the business and are necessary
for the continuation of the business.
(c) The Purchaser shall be obligated to perform all contracts
and purchase orders with clients with respect to items not performed prior to
effective date, provided that such contracts and purchase orders were entered
into by Seller in the ordinary course of business, disclosed to Purchaser prior
to Closing, and further provided that such obligations arise from services
rendered on or after the date of Closing.
(d) All expenses paid or obligations incurred by Seller, if
any, as a result of which Purchaser will receive after effective date the
benefit of a portion of the consideration for such expenses shall be prorated
between the parties in an equitable manner reflecting the relative benefit
received by each. All expenses paid or obligations incurred by Purchaser (other
than Payables) as a result of which Seller has received on or before effective
date the benefit of a portion of the consideration for such expenses shall be
prorated between the parties in an equitable manner reflecting the relative
benefit received by each. All of such prorations shall be made in accordance
with normal business practice.
<PAGE>
(e) All obligations of the Seller for commissions payable to
commission sales agents which relate to work done on or before effective date
shall remain the obligation of the Seller. Purchaser shall be responsible for
all sales commissions for work done after the effective date.
(f) All inquiries and communications received by the Seller
after the effective date will be forthwith mailed to the Purchaser to the extent
the same relate to the business sold by the Seller hereunder.
ARTICLE XII
COVENANTS AND AGREEMENT BY SELLER
From the date hereof until the Closing Date, Seller covenants and
agrees that:
12.1 Conduct of Business.
(a) Seller shall operate the Business in the usual and
ordinary course;
(b) Seller shall not remove or transfer from the Company any
assets for less than full and fair consideration, including but not limited to,
the payment of cash dividends;
(c) Permit the officers and other authorized representatives
of Purchaser (i) full and unrestricted access, from time to time and at one or
more times, to the plants, properties, offices and books and records of the
Seller, during normal business hours, and in connection with such books and
records, such inspection shall be at the offices where such records are normally
maintained, and such parties shall be entitled to make copies of and abstracts
from any of such books and records; (ii) the opportunity to meet, correspond and
communicate with the officers, directors, employees, counsel and accountants to
the Seller, and to secure from each such information as such parties shall deem
necessary or appropriate; and (iii) to review and copy such other, further and
additional financial and operating date, materials and information as to the
business and operations of the Seller as may be requested by such parties;
provided however that all such information and material secured by such parties
in the course of such investigation shall be and be deemed to be confidential
and shall be used solely in connection with the transactions herein described,
and all written memoranda and documents and/or other tangible evidence of such
information shall either be returned to the Seller and/or destroyed in the event
the subject acquisition is not consummated.
(d) Maintain all insurance coverages in full force and effect.
(e) Retain the Business' current employees so that they will
remain employable after Closing.
(f) Take and perform any and all actions necessary to render
accurate and/or maintain the accuracy of, all of the representations and
warranties of the Seller and Stockholder
<PAGE>
herein contained and/or satisfy each covenant or condition required to be
performed or satisfied by the Seller and Stockholder at or prior to the Closing
and/or to cause or permit the implementation of the within acquisition.
(g) Not take or perform any action which would or might cause
any representation or warranty made by the Seller and Stockholder herein to be
rendered inaccurate, in whole or in part and/or which would prevent, inhibit or
preclude the satisfaction, in whole or in part of any covenant required to be
performed or satisfied by the Seller and Stockholder at or prior to the Closing
and/or the implementation of the within acquisition.
(h) Cause the Seller to perform, in all material respects all
of the Company's obligations under all material agreements, leases and documents
relating to or affecting the Property and Business; and use its best efforts to
preserve, intact, the relationships with the Company's suppliers, customers,
employees and other having business relations with the Company so that the
Business will be intact at Closing.
(i) Immediately advise Purchaser of any event, condition or
occurrence which constitutes or may, with the passage of time and/or giving of
notice constitute, a breach of any representation or warranty of the Seller or
Stockholder herein contained and/or which prevents, inhibits or limits or may
prevent, inhibit or limit Seller or Stockholder from satisfying, in full and on
a timely basis, any covenant, term or condition herein contained and/or
implementing this Agreement.
(j) Seller or Stockholder will permit access to Customer
representatives and will accompany and introduce Purchaser representatives to
the Customers as may be requested, among other things, Seller=s performance, the
existence of any defaults prices an prospects for further work. This access will
not obviate or release Seller or Stockholder from liability for any
representation or warranty made with respect to the Customers or Customer
contracts. Other than obligations to preserve confidential information as
contained in this Agreement, the Purchaser shall have no liability with respect
to or arising out of meeting with the Customers.
(k) Neither Seller nor Stockholder will solicit or entertain
any offers through principals, agents or brokers to purchase, sell, encumber or
otherwise transfer any or all of the stock or assets of Seller, with the
exception of the sale of goods or services in the ordinary course of business,
unless and until this agreement has been terminated in accordance with its
terms. Seller and Stockholder agree to promptly notify Purchaser in the event
either of them receive any such inquiry or offer.
(l) Not take any action in the singular or aggregate which
results, or with the passage of time is likely to result in a material adverse
change to the business or the prospects of the business of Seller.
<PAGE>
ARTICLE XIII
COVENANTS AND AGREEMENTS BY PURCHASER
13.1 Anderson and Purchaser shall enter into an employment agreement in
accordance with the terms contained in Exhibit "D" hereto. Said agreement shall
among other things provide that Anderson will have significant discretion in
managing the operations of the Business after the Closing and throughout the
contingent payout period.
ARTICLE XIV
SELLER'S CONDITIONS TO CLOSING
The obligation of Seller and Stockholder to consummate the transactions
contemplated by this Agreement is, unless waived by Seller, subject to the
fulfillment, on or before the Closing, of each of the following conditions:
(a) No third party injunction or restraining order shall be in
effect which prohibits, restricts or enjoins, and no suit, action or proceeding
shall be pending which seeks to prohibit, restrict, enjoin, nullify, seek
material damages with respect to or otherwise materially adversely affect the
consummation of the transactions contemplated hereby;
(b) All covenants of Purchaser under this Agreement to be
performed prior to the Closing shall have been performed in all material
respects, except to the extent attributable to actions expressly permitted or
consented to by Seller in writing; or otherwise waived
(c) At the Closing, Seller shall have received a certificate,
executed by the President and Secretary of the Purchaser (effective as of the
Closing), and in form and content reasonably acceptable to Seller, certifying
the truth and accuracy of the representations and warranties of the Purchaser
herein contained.
(d) Seller shall have received from Purchaser a certificate
from the Department of State of the State of Delaware to the effect that
Purchaser is in good standing in such state;
(e) All material authorizations, approvals or waivers of any
federal or state regulatory bodies shall have been obtained;
(f) Seller shall have received all certificates, instruments,
agreements and other documents to be delivered at or before Closing as provided
in this Agreement and a certificate signed by an officer of Purchaser confirming
the matters set forth in paragraphs (a), (b), (c) and (e) above; and
(g) Purchaser shall tender to Seller the Purchase Price
required to be paid at Closing in immediately available funds by check or bank
wire to an account or accounts designated by Seller.
<PAGE>
ARTICLE XV
PURCHASER'S CONDITIONS TO CLOSING
The obligation of Purchaser to consummate the transactions contemplated
by this Agreement is, unless waived by Purchaser, subject to the fulfillment, on
or before the Closing, of each of the following conditions:
(a) No injunction or restraining order shall be in effect
which prohibits, restricts or enjoins, and no suit, action or proceeding shall
be pending which seeks to prohibit, restrict, enjoin, nullify, seek material
damages with respect to or otherwise materially adversely affect the
consummation of the transactions contemplated hereby;
(b) All covenants of Seller and Stockholder under this
Agreement to be performed prior to the Closing shall have been performed in all
material respects, except to the extent attributable to actions expressly
permitted or consented to by Purchaser in writing;
(c) At the Closing, Purchaser shall have received a
certificate, executed by the President and Secretary of the Seller and
Stockholder (effective as of the Closing), and in form and content reasonably
acceptable to Purchaser, certifying the truth and accuracy of the
representations and warranties of the Seller and Stockholder herein contained.
(d) Purchaser shall have received from each of Seller a
certificate from the Department of State of the State of Florida to the effect
that Seller is in good standing in such state;
(e) Purchaser has received such documentation as may be
necessary to establish that Purchaser is not required to withhold any portion of
the Purchase Price pursuant to Section 1445 of the Internal Revenue Code of 1986
(substantially in the form of Exhibit V hereto);
(f) Purchaser shall have received all Property, assets,
certificates, instruments, agreements and other documents to be delivered by
Seller at or before Closing as provided in this Agreement, including a
certificate signed by an officer of Seller confirming the matters set forth in
paragraphs (a), (b), (c) and (e) above;
(g) Prior to the Closing there shall not have occurred any
material adverse change in the Business, nor shall any event have occurred or
condition exist which, with the passage of time or the giving of notice, may
cause or create any such adverse material change.
(h) Prior to the Closing, all corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be in form and
content reasonably satisfactory to Purchaser and its counsel, and Purchaser and
its counsel shall have received all counterpart originals or certified or other
copies of such documents and instruments as they may reasonably request.
(i) All statutory requirements for the valid consummation by
<PAGE>
the Seller of the transactions herein described shall have been fully and timely
satisfied; all authorizations, consents and approvals of all Federal, state and
local governmental agencies and authorities required to be obtained in order to
permit consummation by Seller of the transactions herein described, and/or to
permit the Business to continue unimpaired in all material respects immediately
following the Closing shall have been obtained and shall be in full force and
effect; and no action or proceeding to suspend, revoke, cancel, terminate,
modify or alter any of such authorizations, consents or approvals shall be
pending or threatened.
(j) Purchaser shall have received all the documentation
including the Bill of Sale and Anderson=s employment agreement required to be
delivered to it pursuant the provisions of the Agreement.
(k) Purchaser shall have received an opinion of counsel to
Seller with respect to those matters set forth on Exhibit "W" hereto.
ARTICLE XVI
TERMINATION
16.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement and any agreement ancillary hereto may be
terminated and the transactions contemplated hereby abandoned at any time prior
to or at the Closing by:
(a) mutual consent of Seller and Purchaser;
(b) Seller, if any of the conditions set forth in Article XIV
shall not have been met and shall not have been waived by Seller as of the
Closing Date, and at such time Seller is not in material breach or default of
its obligations contained in this Agreement; or
(c) Purchaser, if any of the conditions set forth in Article
XV shall not have been met and shall not have been waived by Purchaser as of the
Closing Date, and at such time Purchaser is not in material breach or default of
any of its obligations contained in this Agreement. Any party desiring to
terminate this Agreement pursuant to this Article XVI shall give notice of such
termination to the other party hereto in accordance with Section 21.7.
16.2 Effect of Termination.
(a) If this Agreement is terminated in accordance with Section
16.1, then all rights and obligations of the parties hereunder shall terminate
and be of no further effect; provided, however, that no such termination shall
relieve any party of liability for any breach of its obligations under this
Agreement prior to such termination.
<PAGE>
ARTICLE XVII
PUBLIC ANNOUNCEMENT
Seller and Stockholder recognize and agree that the Purchaser is a
public company and that the Seller and the Stockholder will not make any public
announcement concerning this Agreement or the negotiations and to keep same
confidential unless given written permission from the Purchaser to make any
announcement or otherwise disclose the information. Purchaser shall have the
right to announce the transaction contemplated hereby and/or the negotiations
between the parties upon notice to the Seller and whether or not the
announcement is required by law regulation or the rules of any public stock
exchange on which Purchaser=s stock is listed.
ARTICLE XVIII
NEGATIVE COVENANTS
18.1 It is understood by the parties herein that the negative covenants
contained in this Section and the one following are a prime and essential
consideration on which Purchaser will rely prior to and after the Closing Date
in consummating this Agreement.
18.2 Seller and Stockholder agree that in consideration of the sale of
its business to Purchaser that for a period of five (5) years after the Closing
Date, they jointly and individually will not:
(a) directly or indirectly, own, manage, operate, control, be
employed by, participate in, render service to, solicit customers for, or be
connected with any business which competes with Purchaser, or any of its
affiliated corporations with respect to the business of supplying technical
personnel and services to others within the States of Florida, California and
Ohio.
(b) solicit or accept any business from clients or potential
clients of Seller that Seller or Stockholder may have contacted or been assigned
at any time during the three (3) year period prior to Closing; or
(c) approach directly or indirectly any employee (billable or
staff) without regard to location for the purpose of attempting to or actually
soliciting or hiring that employee from its/his account or the account of
another.
18.3 It is recognized by Seller and Stockholder that an action for
damages may not be an adequate remedy for Purchaser in the event of the breach
of any of the negative covenants contained in this Agreement, and therefore, it
is agreed that in addition to any other rights Purchaser may have in the event
of a breach of this Agreement, Purchaser shall have the right to judicial
enforcement of said covenants by way of injunction, restraining order or any
other similar equitable relief. If any portion of the foregoing covenants is
invalid or unenforceable due to area or time, such fact shall not affect the
validity or enforceability of the remaining portions or prevent enforcement of
restrictions to the extent a court of competent jurisdiction may consider
reasonable. The parties agree that in any event said restrictions shall be
enforced to the maximum extent permitted by law.
18.4 The time period of the negative covenant may be extended for a
<PAGE>
period of time equal to that time period utilized during the pendency of any
action by a court of competent jurisdiction in its discretion.
18.5 Seller will deliver negative covenant agreements in the form
annexed as Exhibit "X" for those employees designated by Purchaser at Closing.
ARTICLE XIX
NO BROKERS
19.1 The parties represent and warrant to the other that there are no
claims for brokerage commissions or finders' fees in connection with the
transactions contemplated hereby.
ARTICLE XX
FEES AND EXPENSES
20.1 Except as herein otherwise provided, each of the parties hereto
shall pay its own legal and accounting charges and other expenses incident to
the execution of this Agreement and the consummation of the transactions
contemplated hereby.
ARTICLE XXI
MISCELLANEOUS
21.1 This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. All covenants and
agreements made by or on behalf of any of the parties hereto shall be binding
upon and inure to the benefit of their respective successors and assigns, unless
otherwise specifically set forth herein. The terms and provisions of this
Agreement may not be modified or amended, except in writing signed by all
parties hereto. No representations, warranties, or covenants, express or
implied, have been made by any party to this Agreement in connection with the
subject matter hereof, except as expressly set forth in this Agreement and the
exhibits hereto. The headings in this Agreement are for the convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
21.2 No terms and provisions hereof, including, without limitation, the
terms and provisions contained in this sentence, shall be waived, modified or
altered so as to impose any additional obligations or liability or grant any
additional right or remedy, and no custom, payment, act, knowledge, extension of
time, favor or indulgence, gratuitous or otherwise, or words or silence at any
time, shall impose any additional obligation or liability or grant any
additional right or remedy or be deemed a waiver or release of any obligation,
liability, right or remedy except as set forth in a written instrument properly
executed and delivered by the party sought to be charged, expressly stating that
it is, and the extent to which it is, intended to be so effective. No assent,
express or implied, by either party, or waiver by either party, to or of any
breach of any term or provision of this Agreement or of the exhibits or
schedules shall be deemed to be an assent or waiver to or of such or any
succeeding breach of the same or any other such term or provision.
<PAGE>
21.3 The captions of this Agreement are for convenience and reference
only, and in no way define, describe, extend or limit the scope or intent of
this Agreement or the intent of any provisions hereof.
21.4 Stockholder agrees that it will, and will cause Seller at any time
before and after the Closing to execute and deliver all additional documents,
and do any other acts or things that may be reasonably requested by Purchaser in
order to further perfect Purchaser's rights and interests contemplated hereunder
and that they will aid in the prosecution, defense or other litigation with
third persons of any rights arising from this Agreement, all without further
consideration.
21.5 Jurisdiction. This Agreement shall be governed by the laws of the
State of Florida Any judicial proceeding brought against any of the parties to
this Agreement on any dispute arising out of this Agreement or any matter
related hereto shall be brought in the courts of the State of Florida or in the
United States District Court for the Middle District of Florida (or the same
Bankruptcy Courts), and, by execution and delivery of this Agreement, each of
the parties to this Agreement accepts for itself or himself the process in any
action or proceeding by the mailing of copies of such process to such party at
its or his address as set forth in Section 21.7, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. Each
party hereto irrevocably waives to the fullest extent permitted by law any
objection that it or her may nor or hereafter have to the laying of the venue of
any judicial proceeding brought in such courts and any claim that any such
judicial proceeding has been brought in an inconvenient forum. The foregoing
consent to jurisdiction shall not constitute general consent to service of
process for any purpose except as provided above and shall not be deemed to
confer rights on any person other than the respective parties to this Agreement.
EACH PARTY HERETO WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING UNDER THIS
AGREEMENT.
21.6 Captions. The Article and Section captions used herein are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
21.7 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to any other
party shall be in writing and shall be deemed to have been given (a) upon
personal delivery, if delivered by hand, (b) three days after the date of
sending such notice by certified mail, return receipt requested, or (c) the next
business day if sent by facsimile transmission or by an over night courier
service, and in each case of mailing, postage prepaid and at the respective
addresses or numbers set forth below:
To Seller: Bruce Anderson
Route 1, Box 19A
Wauchula, FL 33873
with a copy to: James F. McCollum, Esquire
129 South Commerce Avenue
Sebring, FL 33870
<PAGE>
To Purchaser: COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11042
Attn: President
with a copy to: Marc D. Freedman, Attorney At Law
70 Hilltop Road
Suite 2000
Ramsey, NJ 07446
Attention: Marc D. Freedman, Esq.
FAX: 201-825-4505
To Stockholder: Bruce Anderson
612 North Indiana Avenue
Englewood, FL 34223
with a copy to: James F. McCollum, Esquire
129 South Commerce Avenue
Sebring, FL 33870
21.8 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by Seller or Stockholder, other than by
operation of law or with the prior written consent of the Purchaser, and any
purported transfer, assignment, pledge or hypothecation in violation of this
Section shall be void. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective administrators,
successors and permitted assigns. Notwithstanding the foregoing the Purchaser
may assign its rights and obligations hereunder to any Affiliate or subsidiary
company upon notice to Seller.
21.9 Severability. In the event any provision of this Agreement is
found to be void and unenforceable by a court of competent jurisdiction or
arbitration panel, the remaining provisions of this Agreement shall nevertheless
be binding upon the parties with the same effect as though the void or
unenforceable part had been severed and deleted.
21.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
taken together shall constitute one instrument.
21.11 Entire Agreement. This Agreement, including the other documents
referred to herein, contains the entire understanding of the parties hereto with
respect to the purchase of the assets under this Agreement and supersedes all
prior agreements, correspondence, conversation, negotiations and understandings
between the parties with respect to such subject matter.
21.12 Amendments. This Agreement may not be changed orally, but only
by an agreement in writing signed by all of the parties hereto, and no waiver
<PAGE>
of compliance with any provision or condition hereof and no consent provided for
herein shall be effective unless evidenced by an instrument in writing duly
executed by the party hereto seeking to be charged with such waiver or consent.
21.13 Third Party Beneficiaries. Each party hereto intends that this
agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto and their respective
successors and assigns as permitted under Section 21.8.
21.14 Gender. As used in this Agreement, any gender includes a
reference to all other genders and the singular includes a reference to the
plural and vice versa.
ARTICLE XXII
EFFECT OF CLOSING
22.1 The terms of this Agreement shall survive the Closing and shall
not become merged therein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
WILLIAMS COMMUNICATIONS
COMFORCE GLOBAL, INC. SERVICES, INC.
By:_________________________ By:________________________________
Michael Ferrentino, President Bruce Anderson, President
----------------------------------
Bruce Anderson, Individually and
as Sole Stockholder
<PAGE>
EXHIBITS AND SCHEDULES
Section Description Designation
- ------- ----------- -----------
1(d) and 6.8 Real Property Exhibit A
1.1(f) and 2.1(e) Equipment, Furniture and Fixtures Exhibit B
2.1(a), 4.1 and 5.2 Customer Contracts (3) Exhibit C
3.1(b) Escrow Agreement Schedule II
5.2(b) Bill of Sale Exhibit E
5.2(d)(ii) List of Billable Employees Schedule F
5.2(g) and 13.1 Employment Agreements Exhibit D
5.2(h) Sole Shareholder Certification Exhibit G
6.4 Consents Necessary Schedule H
6.6 Financial Statements Exhibit I
6.7 Leases & Security Interests Exhibit J
6.11 Liabilities Exhibit K
6.12 Liabilities Since Last Financial Statement Exhibit L
6.14 Defaults on Contracts Exhibit M
6.15 Litigation Exhibit N
6.22 Directors and Officers Exhibit O
6.23 Conflicts Exhibit P
6.24 List of Customer Contracts Exhibit Q
6.25 Material Contracts Exhibit R
6.31 Payments to Employees Exhibit S
6.32 Consultants and Independent Contractors Exhibit T
6.34 Insurance Policies Exhibit U
15(e) IRS Section 1445 Certificate Exhibit V
15(k) Purchaser's Attorney's Opinion Letter Exhibit W
18.6 Restrictive Covenant Agreements Exhibit X
EXHIBIT 10.2
$2,250,000
REVOLVING CREDIT AGREEMENT
dated as of February 29, 1996
between
COMFORCE GLOBAL, INC., as Borrower
and
THE CHASE MANHATTAN BANK, N.A., as Bank
<PAGE>
THIS REVOLVING CREDIT AGREEMENT (the "Agreement") dated as of
February 29, 1996, between COMFORCE GLOBAL, INC., a corporation organized under
the laws of Delaware (the "Borrower") and THE CHASE MANHATTAN BANK, N.A., a
national banking association organized under the laws of the United States of
America (the "Bank").
The Borrower desires that the Bank extend credit as provided
herein, and the Bank is prepared to extend such credit. Accordingly, the
Borrower and the Bank agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement the
following terms have the following meanings (terms defined in the singular to
have a correlative meaning when used in the plural and vice versa):
"Acquired Assets" means all assets of Seller acquired by
Borrower pursuant to the terms of the Purchase Agreement.
"Acquisition" means any transaction pursuant to which the
Borrower or any of its Subsidiaries, (a) acquires equity securities (or
warrants, options or other rights to acquire such securities) of any corporation
or other business entity which is not then a Subsidiary of the Borrower,
pursuant to a solicitation of tenders therefor, or in one or more negotiated
block, market or other transactions not involving a tender offer, or a
combination of any of
- 1 -
<PAGE>
the foregoing, which results in the Borrower having a controlling interest in
such corporation or other business entity, or (b) makes any entity not then a
Subsidiary of the Borrower a Subsidiary of the Borrower, or causes any such
entity to be merged into the Borrower or any of its Subsidiaries, in any case
pursuant to a merger, purchase or assets or any reorganization providing for the
delivery or issuance to the holders of such entity's then outstanding
securities, in exchange for such securities, of cash or securities of the
Borrower or any of its Subsidiaries, or a combination thereof, or (c) purchases
all or substantially all of the business or assets of any entity.
"Affiliate" means with respect to any Person, any Person: (a)
that directly or indirectly controls, or is controlled by, or is under common
control with, such Person; (b) that directly or indirectly beneficially owns or
holds 5% or more of any class of voting stock of such Person; (c) 5% or more of
the voting stock of which is directly or indirectly beneficially owned or held
by such Person; (d) which is a partnership in which such Person is a general
partner, or (e) each of such Person's officers, directors joint venturers and
partners. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Agreement" means this Revolving Credit Agreement, as amended
or supplemented from time to time. References to Articles, Sections, Exhibits,
Schedules and the like refer to the Articles, Sections, Exhibits, Schedules and
the like of this Agreement unless otherwise indicated.
- 2 -
<PAGE>
"Amortization" means amortization in accordance with GAAP.
"Borrowing Base" means at any time an amount equal to
seventy-five percent (75%) of the Borrower's Eligible Receivables.
"Borrowing Base Certificate" means a certificate signed by the
Chief Executive Officer or the Chief Financial Officer of the Borrower in the
form of Exhibit B annexed hereto with such changes as the Banks may require from
time to time.
"Business Day" means any day on which commercial banks in New
York City are not authorized or required to close.
"Capital Lease" means any lease which has been capitalized on
the balance sheet of the lessee in accordance with GAAP.
"Closing Date" means the date this Agreement has been executed
by the Borrower and the Bank.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
- 3 -
<PAGE>
"Collateral" means accounts personal property of the Borrower,
whether now existing or hereafter arising, which is subject or which is to be
subject to the Liens granted by the Security Agreement.
"Commitment" means the obligation of the Bank to extend
revolving credit to the Borrower in accordance with the terms hereof in the
aggregate principal amount of $2,250,000, as such amount may be reduced or
otherwise modified from time to time in accordance with the terms hereof.
"Current Portion of Borrower's Long Term Debt" means, on the
date of determination, that portion of the Borrower's Debt (including Capital
Leases) that is due and payable within the next 12 months and shall include the
outstanding principal balance of the Loans hereunder.
"Debt" means, with respect to any Person: (a) indebtedness of
such Person for borrowed money; (b) indebtedness for the deferred purchase price
of property or services; (c) the face amount of any outstanding letters of
credit issued for the account of such Person; (d) obligations arising under
acceptance facilities; (e) guaranties, endorsements (other than for collection
in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person,
or otherwise to assure a creditor against loss; (f) obligations secured by any
Lien on property of such Person; (g) obligations of such Person as lessee under
Capital Leases; and (h) indebtedness of such Person evidenced by a note, bond,
indenture or similar instrument.
- 4 -
<PAGE>
"Default" means any event which with the giving of notice or
lapse of time, or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any
Loan and, to the extent permitted by law, any other amount payable by the
Borrower under this Agreement or the Note a rate per annum equal to 2% above the
rate of interest otherwise applicable to such Loan or other amount.
"Depreciation" means depreciation in accordance with GAAP.
"Dividends" means, for any period, dividends paid by the
Borrower.
"Dollars" and the sign "$" mean lawful money of the United
States of America.
"EBIT" means, for any period with respect to any entity, the
sum of (i) net income for such period, calculated without taking into account
the aggregate amount of extraordinary losses or extraordinary gains during such
period plus (ii) the aggregate amount of income taxes for such period plus (iii)
Interest Expenses for such period.
"Effective Net Worth" means, at any particular date, (i) the
amount of excess of Total Assets over Total Liabilities which would, in
conformity with GAAP, be included under shareholders' equity on a balance sheet
of the Borrower as at such date, excluding, however, from the determination of
Total Assets all intangible assets, including, without limitation,
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organizational expenses, patents, trademarks, copyrights, goodwill, covenants
not to compete, research and developmental costs, training costs, and deferred
charges, less (ii) all amounts due at any time and from time to time from
Affiliates, less (iii) all shareholder loans, less (iv) all treasury stock.
"Eligible Receivables" shall mean the gross amount of the
Borrower's accounts receivable, arising out of sales in the ordinary course of
business made by the Borrower which are not in dispute or subject to credit,
allowance, defense, offset, counterclaim or adjustment (other than any discount
allowed for prompt payment) and for which records are maintained at a location
of the Borrower in the United States; provided however, that the following items
shall not be deemed Eligible Receivables: intercompany accounts (i.e., owing
from any affiliate of the Borrower); credit balances over 90 days from invoice
date; sales tax and freight charges; government accounts; deposits/prepayments;
contra accounts; foreign accounts; and amounts billed not shipped.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the protection of the environment
(including, without limitation, ambient air, surface water, ground water, or
land), including, without limitation, any of the same relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes or that relate to emissions, discharges,
releases or threatened releases of pollutants,
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<PAGE>
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, including any rules and regulations
promulgated thereunder.
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as the Borrower or is under common
control (within the meaning of Section 414(c) of the Code) with the Borrower.
"Event of Default" has the meaning given such term in Section
8.01.
"Facility Documents" means this Agreement, the Note, the
Security Agreement, the Guaranty, and all other documents or instruments
executed in connection herewith or therewith.
"Forfeiture Proceeding" means the commencement by any
governmental agency or governmental instrumentality of any prejudgment action or
proceeding affecting the Borrower pursuant to any statute, rule or regulation
which permits any governmental agency or governmental instrumentality to obtain
a prejudgment seizure or forfeiture of any of their property.
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"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time, applied on a basis
consistent with those used in the preparation of the financial statements
referred to in Section 5.05.
"Guarantor" means COMFORCE Corporation, a Delaware
corporation.
"Guaranty" means the Guaranty dated the date hereof and
executed by the Guarantors in favor of the Bank.
"Hazardous Substance" means any material, whether animate or
inanimate, raw, processed or waste by-product, which in itself or as found or
used, is potentially toxic, noxious or harmful to the health or safety of human
or animal life or vegetation, regardless of whether such material be found on or
below the surface of the ground, in any surface or underground water, or
airborne in ambient air or in the air inside of any structure built or located
upon or below the surface of the ground, or in any machinery, equipment or
inventory located or used in any such structure, including, but in no event
limited to, all hazardous materials, hazardous wastes, toxic substances,
infectious wastes, pollutants and contaminants from time to time defined or
classified as such under any Environmental Law regardless of the quantity found,
used, manufactured or removed from a given location.
"Interest Expense" means the Borrower's interest expense as
reflected in its financial statements and calculated in accordance with GAAP.
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<PAGE>
"Leverage Ratio" shall mean, at a particular date for any
entity, such entity's ratio of Total Unsubordinated Liabilities to Effective Net
Worth.
"Lien" means any lien (statutory or otherwise), security
interest, mortgage, deed of trust, priority, pledge, charge, conditional sale,
title retention agreement, Capital Lease or other encumbrance or similar right
of others, or any agreement to give any of the foregoing.
"Loan" shall mean any loan made by the Bank pursuant to
Section 2.01 hereof.
"Margin" means (i) 1% on the date hereof; (ii) upon the
Borrower's receipt of a $1,000,000 equity infusion from the Guarantor and if the
aggregate outstanding principal balance of the Loans hereunder is less than the
then applicable Borrowing Base, 1/2 of 1%; and (iii) if the Borrower's Leverage
Ratio, as evidenced on financial statements provided to the Bank pursuant to
Section 5.08 hereof, is less than 1.0:1.0 and if each of the conditions
specified in the preceding clause of this definition are satisfied, 0%.
"Multiemployer Plan" means a Plan defined as such in Section
4001(a)(3) of ERISA to which contributions have been made by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Income" means with respect to any entity for any period,
such entity's net income after taxes for such period as reflected on such
entity's financial statements.
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<PAGE>
"Non-Cash Charges" means all charges and expenses reflected on
the Borrower's income statement in accordance with GAAP which do not require a
decrease in or payment of cash.
"Note" means the promissory note of the Borrower in the form
of Exhibit A hereto evidencing the Loans made by the Bank hereunder.
"Obligors" means, collectively, the Borrower and the
Guarantor.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA or to which Section
412 of the Code applies provided that such term shall not include plans
terminated prior to the date hereof.
"Prime Rate" means that rate of interest from time to time
announced by the Bank at its principal office as its prime commercial lending
rate.
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<PAGE>
"Purchase Agreement" means that certain Purchase Agreement
dated the 29th day of February 1996 and executed by the Borrower, as Purchaser,
the Seller and Bruce Anderson, an individual residing at Route 1, Box 19A,
Wauchula, Florida.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA as to which events the PBGC by regulation has not
waived the requirement of Section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event, provided that a failure to meet the
minimum funding standard of Section 412 of the Code or Section 302 of ERISA
shall be a Reportable Event regardless of any waivers given under Section 412(d)
of the Code.
"Security Agreement" means the Security Agreement to be
delivered by the Borrower under the terms of this Agreement.
"Seller" means Williams Communication Services, Inc., a
Florida corporation, as "Seller" under the Purchase Agreement.
"Solvent" means when used with respect to any Person on a
particular date, that on such date: (a) the present fair saleable value of its
assets is in excess of the total amount of its liabilities, including, without
limitation, the reasonably expected amount of such Person's obligations with
respect to contingent liabilities, (b) the present fair saleable value of the
assets of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its Debts as they become absolute and
matured, (c) such Person
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does not intend to, and does not believe that it will, incur Debts or
liabilities beyond such Person's ability to pay as such Debts and liabilities
mature and (d) such Person is not engaged in business or a transaction, for
which such Person's property would constitute an unreasonably small capital.
"Subordinated Debt" means unsecured Debt of the Borrower that
is subordinated on terms satisfactory to the Bank to the Borrower's obligations
to the Bank under this Agreement.
"Subsidiary" means, as to any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.
"Tangible Net Worth" means, at any particular date, the amount
of excess of Total Assets over Total Liabilities which would, in conformity with
GAAP, be included under shareholders' equity on a balance sheet of the Borrower
as at such date, excluding, however, from the determination of Total Assets all
intangible assets, including, without limitation, organizational expenses,
patents, trademarks, copyrights, goodwill, covenants not to compete, research
and developmental costs, training costs, and deferred charges.
"Termination Date" means the earlier of (i) the date on which
the Revolving Credit Loans are paid in full and the Commitment shall terminate
hereunder and the
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<PAGE>
obligations of the Borrower in connection therewith have been satisfied or (ii)
February 28, 1997; provided that if such date is not a Business Day, the
Termination Date shall be the next succeeding Business Day.
"Total Assets" means, at a particular date, all amounts which
would, in conformity with GAAP, be included under assets on a balance sheet of
the Borrower as at such date.
"Total Current Assets" means, at a particular time, excluding
the Borrower's cash plus accounts receivable, excluding inter-company accounts
receivable, plus inventory.
"Total Current Liabilities" means, at a particular date, all
amounts which would, in conformity with GAAP, be included under current
liabilities on a balance sheet of the Borrower as at such date and shall
include, without limitation (a) all obligations payable on demand or within one
year after the date on which the determination is made, and (b) all obligations
of the Borrower under the Revolving Credit Facility.
"Total Liabilities" means, at a particular date, all amounts
which would, in conformity with GAAP, be included under liabilities on a balance
sheet of the Borrower as at such date.
"Total Unsubordinated Liabilities" means Total Liabilities
less Subordinated Debt.
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<PAGE>
"Unfunded Vested Liabilities" means, with respect to any Plan,
the amount (if any) by which the present value of all vested benefits under the
Plan exceeds the fair market value of all Plan assets allocable to such
benefits, as determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA for calculating the potential liability
of the Borrower or any ERISA Affiliate to the PBGC or the Plan under Title IV of
ERISA.
Section 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP, and all
financial data required to be delivered hereunder shall be prepared in
accordance with GAAP.
ARTICLE 2. REVOLVING CREDIT FACILITY.
Section 2.01. Revolving Credit. The Bank agrees on the terms
and conditions hereinafter set forth, to make loans (the "Loans") to the
Borrower from time to time during the period from the date of this Agreement up
to but not including the Termination Date in an aggregate amount not to exceed
at any time outstanding Two Million Two Hundred Fifty Thousand Dollars
($2,250,000) (the "Commitment"); provided, however, that the aggregate principal
amount of Loans outstanding pursuant to this Section 2.01 shall not at any time
after April 15, 1996 exceed the Borrowing Base. The Loan is a revolving credit
and the Borrower may, within the limits of the Commitment, borrow, prepay
pursuant to Section 2.07, and reborrow under this Section 2.01. It is the
intention of the Bank and the Borrower that the aggregate of all Loans shall at
no time exceed the Commitment or, after April 15, 1996, the
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Borrowing Base and the Borrower agrees that if at any time such excess shall to
its knowledge arise, or if notified by the Bank that such excess has arisen, the
Borrower will promptly file a Borrowing Base Certificate reflecting such fact
and immediately repay the amount of such excess.
Section 2.02. The Revolving Credit Note. The Loans shall be
evidenced by a single Note in favor of the Bank substantially in the form of
Exhibit A with appropriate insertions, duly executed and completed by the
Borrower. The Bank is hereby authorized to record the date and amount of each
Loan, the date and amount of each payment or prepayment of principal thereof and
the principal amount subject thereto in the Bank's records and/or on the
schedules annexed to and constituting a part of the Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that the failure to make any such recordation
shall not in any way affect the Borrower's obligation to repay the Loans. The
Note (a) shall be dated the date hereof, (b) be stated to mature on the
Termination Date and (c) shall bear interest from and including the date hereof
on the unpaid principal amount thereof from time to time outstanding as provided
herein.
Section 2.03. Use of Proceeds.
(a) The Borrower shall use the proceeds of the Loans to
finance the acquisition of certain assets of the Seller to finance future
Acquisitions subject to the terms and conditions hereof, and for general working
capital purposes. No part of the proceeds of
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<PAGE>
any of the Loans will be used for any purpose which violates the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System
as in effect on the date of making such Loans.
(b) The Borrower agrees to indemnify the Bank and hold the
Bank harmless from and against any and all liabilities, losses, damages, costs
and expenses of any kind (including, without limitation, the reasonable fees and
disbursements of counsel for the Bank in connection with any investigative,
administrative or judicial proceeding, whether or not the Bank shall be
designated a party thereto) which may be incurred by the Bank, relating to or
arising out of any actual or proposed use of proceeds of Loans hereunder.
Section 2.04. Notice and Manner of Borrowing. At such times as
the Borrower desires a Loan hereunder, the Borrower shall give the Bank
telephonic notice of requests for any Loans under this Agreement not later than
1:00 p.m. (New York time) on the date of such Loan, specifying the amount
thereof, immediately followed by telefax written confirmation of such Loan
request. So long as all Borrowing Base Certificates required to be delivered to
the Bank have been delivered and upon fulfillment of the applicable conditions
set forth in Article 3, the Bank will make such Loan available to the Borrower
in immediately available funds by crediting the amount thereof to the Borrower's
account with the Bank.
Section 2.05. Interest on Revolving Credit Loans. The Borrower
shall pay interest on the outstanding and unpaid principal amount of each Loan
made under this Agreement at a fluctuating rate per annum equal to the Prime
Rate from time to time in effect
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<PAGE>
plus the applicable Margin. Each change in the interest rate shall take effect
simultaneously with the corresponding change in the Prime Rate. Interest shall
be calculated on the basis of the actual number of days elapsed divided by a
year of three hundred sixty (360) days and shall be paid to the Bank in arrears
on the first day of each calendar quarter and on the Termination Date. Any
principal amount not paid when due (at maturity, on acceleration, or otherwise)
shall bear interest thereafter until paid at the Default Rate.
Section 2.06. Minimum Amounts. Except for borrowings which
exhaust the full remaining amount of the Commitment, and prepayments which
result in the prepayment of all Loans, each borrowing and prepayment of
principal of Loans shall be in an amount at least equal to $25,000, and, if
greater, integral multiples of $5,000.
Section 2.07. Revolving Commitment Fee. The Borrower shall pay
to the Bank a commitment fee equal to one-quarter of one percent (0.25%) on the
average daily unused portion of the Commitment. The commitment fee shall be due
and payable in arrears on the first day of each calendar quarter and on the
Termination Date.
Section 2.08. Default Interest. Notwithstanding any other
provision of this Agreement, upon the occurrence and continuance of an Event of
Default, each Loan outstanding hereunder shall bear interest at a rate per annum
equal to the Default Rate.
Section 2.09. Payments Generally. All payments under this
Agreement or the Notes, shall be made in Dollars in immediately available funds
not later than 1:00 p.m. New
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York City time on the relevant dates specified above (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day) at the Bank's office located at 1 Greenway Plaza, 135
Pinelawn Road, Melville, New York 11747; provided that, when a new Loan is to be
made by the Bank on a date the Borrower is to repay any principal of an
outstanding Loan, the Bank shall apply the proceeds thereof to the payment of
the principal to be repaid and only an amount equal to the difference between
the principal to be borrowed and the principal to be repaid shall be made
available by the Bank to the Borrower as provided in Section 2.04 or paid by the
Borrower to the Bank pursuant to this Section 3.05, as the case may be. The Bank
may (but shall not be obligated to) debit the amount of any such payment which
is not made by such time to any ordinary deposit account of the Borrower with
the Bank. The Borrower shall, at the time of making each payment under this
Agreement or the Note, specify to the Bank the principal or other amount payable
by the Borrower under this Agreement or the Note to which such payment is to be
applied (and in the event that it fails to so specify, or if a Default or Event
of Default has occurred and is continuing, the Bank may apply such payment as it
may elect in its sole discretion). If the due date of any payment under this
Agreement or the Note would otherwise fall on a day which is not a Business Day,
such date shall be extended to the next succeeding Business Day and interest
shall be payable for any principal so extended for the period of such extension.
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ARTICLE 3. CONDITIONS PRECEDENT
Section 3.01. Conditions to the Initial Borrowings Hereunder.
The obligations of the Bank to make the Loans constituting the initial borrowing
hereunder are subject to the conditions precedent that:
(a) the Bank shall have received on or before the date of such
Loans each of the following, in form and substance reasonably satisfactory to
the Bank and its counsel:
(i) the Note duly executed by the Borrower;
(ii) a certificate of the Secretary or Assistant
Secretary of each Obligor, dated the Closing Date, attesting to all corporate
action taken by such Obligor, including resolutions of its Board of Directors
authorizing the execution, delivery and performance of the Facility Documents
and each other document to be delivered pursuant to this Agreement, together
with certified copies of the certificate or articles of incorporation and the
by-laws of such Obligor; each such certificate shall state that the resolutions
and corporate documents thereby certified have not been amended, modified,
revoked or rescinded as of the date of such certificate;
(iii) a certificate of the Secretary or Assistant
Secretary of each Obligor, dated the Closing Date, certifying the names and true
signatures of the officers of
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such Obligor executing the Facility Documents and the other documents to be
delivered by such Obligor under this Agreement;
(iv) a certificate of a duly authorized officer of
the Borrower, dated the Closing Date, stating that the representations and
warranties in Article 4 are true and correct on such date as though made on and
as of such date (unless made as of a specific date earlier than the date hereof,
in which case they shall be true and correct as of such earlier date) and that
no event has occurred and is continuing which constitutes a Default or Event of
Default;
(v) the Security Agreement duly executed by the
Borrower together with (a) Financing Statements on Form UCC-1 under the Uniform
Commercial Code for all jurisdictions necessary or, in the opinion of the Bank,
desirable to perfect the security interests created by the Security Agreement
and (b) UCC search results identifying all of the financing statements on file
with respect to the Borrower and the Seller in all jurisdictions referred to
under (a), indicating that no party claims an interest in any of the Collateral;
(vi) the Guaranty, duly executed by the Guarantor;
(vii) a favorable opinion of counsel for the
Obligors, dated the Closing Date, in form and substance satisfactory to the Bank
and counsel;
(viii) a "long form" good standing certificate from
the Secretary of State of Delaware with respect to each of the Obligors;
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<PAGE>
(ix) a balance sheet of the Borrower as of September
30, 1995, and an income statement and statement of cash flows for the
year-to-date period then ended, all prepared in accordance with GAAP;
(x) such other documents, instruments, approvals,
opinions and evidence as the Bank may reasonably require;
(b) the Borrower shall have paid or caused to be paid all fees
required to be paid hereunder or in connection herewith which are accrued
through the date hereof;
(c) the Obligors shall have obtained all consents, permits and
approvals required in connection with the execution, delivery and performance by
the Obligors of their respective obligations hereunder and under the other
Facility Documents and such consents, permits and approvals shall continue in
full force and effect;
(d) the satisfactory evidence that the Borrower is not in
default with respect to any material contractual obligations to which it is a
party and that the Guarantor is not in default with respect to any material
contractual obligation to which it is a party and which was entered on or after
October 17, 1995;
(e) satisfactory evidence that no litigation is pending or
threatened against either Obligor which, if adversely determined, may have a
materially adverse effect upon the
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<PAGE>
business, properties, assets, financial or other condition of such Obligor or on
the ability of such Obligor to perform its obligations hereunder or under the
Facility Documents;
(f) satisfactory evidence that the Borrower is in compliance
with all applicable laws and regulations, including without limitation all
Environmental Laws, which, if the Borrower were not in compliance therewith, may
have a materially adverse effect upon the business, properties, assets,
financial or other condition of the Borrower, or on the ability of the Borrower
to perform its obligations hereunder or under the Facility Documents;
(g) the Bank shall have received a certified or executed copy
of the Purchase Agreement, together with such other instruments or agreements
executed in connection therewith as the Bank shall reasonably request;
(h) evidence that prior to or concurrently with the closing of
the transactions contemplated hereby, (A) the transactions contemplated by the
Purchase Agreement shall have been consummated in accordance with the terms
thereof and (B) as a result of the consummation of such transaction, the
Borrower shall have acquired good and marketable title to all of the Acquired
Assets, free and clear of all Liens; and
(i) all legal matters in connection with this financing and in
connection with the transactions contemplated by the Purchase Agreement shall be
satisfactory to the Bank and its counsel.
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<PAGE>
Section 3.02. Conditions to All Borrowings. The obligations of
the Bank to make any Loan (including the initial Loans) hereunder shall be
subject to the further conditions precedent that on the date of such Loan:
(a) the following statements shall be true:
(i) the representations and warranties contained in
Article 4 are true and correct on and as of the date of such Loan as though made
on and as of such date (unless such representations and warranties are made as
of a specific earlier date in which case they shall be true and correct as at
such date);
(ii) no Default or Event of Default has occurred and
is continuing, or would result from such Loan; and
(iii) no material adverse change shall have occurred
in the business, financial condition or operations of either Obligor since the
date of the most recent financial statements of such Obligor delivered to the
Bank hereunder or in connection herewith; and
(b) the Bank shall have received such approvals, opinions,
documents or instruments as the Bank may have reasonably requested.
Section 3.03. Deemed Representations. Unless the Borrower
otherwise notifies the Bank prior to any borrowing, the acceptance by the
Borrower of the proceeds of any Loan
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shall constitute a representation and warranty that the statements contained in
Section 3.02(a) are true and correct as of the date of such Loan.
Section 3.04. Existing Relationship. The Borrower and the Bank
agree that as of the date of this Agreement any line of credit made available by
the Bank to the Borrower prior to the date of this Agreement shall be
terminated.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants that:
Section 4.01. Incorporation, Good Standing and Due
Qualification; Compliance with Law. Each Obligor is duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its assets and to
transact the business in which it is now engaged or proposed to be engaged, and
is duly qualified as a foreign corporation and in good standing under the laws
of each other jurisdiction in which such qualification is required. In addition,
each Obligor is in compliance with all laws, treaties, rules or regulations, or
determination of an arbitration or a court or other governmental authority, in
each case applicable to or binding upon it or any of its property or to which it
or any of its property is subject.
Section 4.02. Corporate Power and Authority; No Conflicts.
The execution, delivery and performance by each Obligor of the Facility
Documents have been duly
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authorized by all necessary corporate action and do not and will not: (a)
require any consent or approval of its stockholders that has not been obtained;
(b) contravene its charter or by-laws; (c) violate any provision of, or require
any filing (other than filings contemplated hereby and/or by the other Facility
Documents), registration, consent or approval under, any law, rule, regulation
(including, without limitation, the provisions of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System as in effect from time to
time), order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to such Obligor; (d) result in a breach
of or constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which such
Obligor is a party or by which any of its properties may be bound or affected;
(e) result in, or require, the creation or imposition of any Lien, upon or with
respect to any of the properties now owned or hereafter acquired by such Obligor
other than Liens created by this Agreement and/or the other Facility Documents;
or (f) cause such Obligor to be in default under any such rule, regulation,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument.
Section 4.03. Legally Enforceable Agreements. Each Facility
Document is, or when delivered under this Agreement will be, a legal, valid and
binding obligation of the Obligors, enforceable against the Obligors in
accordance with its terms, except to the extent that such enforcement may be
limited by general principles of equity or by applicable bankruptcy, insolvency
and other similar laws affecting creditors' rights generally.
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<PAGE>
Section 4.04. Litigation. Except as disclosed in Schedule 4.04
attached hereto, there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened, against or affecting the Obligors, or
either of them, before any court, governmental agency or arbitrator, which could
materially adversely effect, in any one case or in the aggregate, the financial
or other condition, operations, properties or business of Obligors, or either of
them, or the ability of either Obligor to perform its obligations under the
Facility Documents.
Section 4.05. Financial Statements; Projections. (a) The
balance sheet of the Borrower as at September 30, 1995, and the draft balance
sheet of the Borrower as at December 31, 1995 and the related income statements
and statements of cash flow of the Borrower for the fiscal periods then ended,
and the accompanying notes, copies of which have been furnished to the Bank,
fairly present the financial condition of the Borrower as at such dates and the
results of the operations of the Borrower for the periods covered by such
statements, all in accordance with GAAP consistently applied. As of the date
hereof, there are no liabilities of the Borrower, fixed or contingent, which are
material but are not reflected in the financial statements or in the notes
thereto, other than liabilities arising in the ordinary course of business since
December 31, 1995, and the liabilities created by this Agreement. No
information, exhibit or report furnished by the Borrower to the Bank in
connection with the negotiation of this Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not materially misleading. Since the
date of the most recent financial statements delivered to the Bank hereunder
through the date of this Agreement, there has been no material adverse
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<PAGE>
change in the condition (financial or otherwise), business, operations or, to
the knowledge of the Borrower, prospects of the Borrower. After the date of this
Agreement to the extent that this representation is deemed made, there shall
have been no material adverse change in the condition (financial or otherwise),
business, operations or, to the knowledge of the Borrower, prospects of the
Borrower.
(b) The Borrower has also delivered to the Bank projections of
the future operations of the Borrower. Such projections represent the best
estimates of the Borrower as of the Closing Date and the Borrower does not
expect any material deviation from such projections.
Section 4.06. Ownership and Liens. The Borrower has title to,
or valid leasehold interests in, all of its properties and assets, real and
personal, reflected in the financial statements referred to in Section 4.05
(other than any properties or assets disposed of in the ordinary course of
business) and in all of the Acquired Assets, and none of the properties and
assets owned by the Borrower and none of its leasehold interests, is subject to
any Lien, except as may be permitted hereunder.
Section 4.07. Taxes. Each Obligor has filed all tax returns
(federal, state and local) required to be filed and each Obligor has paid all
taxes, assessments and governmental charges and levies thereon due, including
interest and penalties, other than taxes, assessments and governmental charges
and levies being contested in good faith by appropriate proceedings
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and with respect to which adequate reserves in conformity with GAAP shall have
been provided on the books of such Obligor.
Section 4.08. ERISA. The Borrower and each ERISA Affiliate is
in compliance in all material respects with all applicable provisions of ERISA.
No Reportable Event has occurred with respect to any Plan; no notice of intent
to terminate a Plan has been filed nor has any Plan been terminated; no
circumstance exists which constitutes grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administer, a Plan, nor has the PBGC instituted any such proceedings; none of
the Borrower nor any ERISA Affiliate has completely or partially withdrawn under
Sections 4201 or 4204 of ERISA from a Multiemployer Plan; the Borrower and each
of its ERISA Affiliates has met its minimum funding requirements under ERISA
with respect to all of its Plans and there are no Unfunded Vested Liabilities;
and none of the Borrower nor any ERISA Affiliate has incurred any liability to
the PBGC under ERISA.
Section 4.09. Subsidiaries. Except as disclosed on Schedule
4.09 annexed hereto, the Borrower has no Subsidiaries.
Section 4.10. Credit Arrangements. Schedule 4.10 is a complete
and correct list of all credit agreements, indentures, guaranties, Capital
Leases and other investments, agreements and arrangements in effect on the date
of this Agreement providing for or relating to extensions of credit to the
Obligors (including agreements and arrangements for the issuance of letters of
credit or for acceptance financing but excluding agreements or
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arrangements relating to trade indebtedness) amount in respect of which the
Obligors is in any manner directly or contingently obligated; and the maximum
principal or face amounts of the credit in question, outstanding and which can
be outstanding, are correctly stated, and all Liens of any nature given or
agreed to be given as security therefor are correctly described or indicated in
such Schedule.
Section 4.11. Operation of Business. (i) Each Obligor
possesses all licenses, permits, franchises, patents, copyrights, trademarks and
trade names, or rights thereto, to conduct its business substantially as now
conducted and as presently proposed to be conducted, and (ii) neither Obligor is
in violation of any valid rights of others with respect to any of the foregoing.
Section 4.12. Hazardous Substances. Except as disclosed in
Schedule 4.04, each Obligor is in compliance with all Environmental Laws, and
has obtained all necessary licenses and permits required to be issued pursuant
to any Environmental Law. As of the date of this Agreement, neither Obligor has
received any written notice or communication from any governmental agency with
respect to (i) any Hazardous Substance relative to its operations, property or
acts or (ii) any investigation, demand or request pursuant to or enforcing any
Environmental Law relating to it or its operations, and no such investigation is
pending or, to the knowledge of the Borrower, threatened.
Section 4.13. No Default on Outstanding Judgments or Orders.
Each Obligor has satisfied all judgments and neither Obligor is in default with
respect to any judgment,
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writ, injunction, decree, rule or regulation of any court, arbitrator or
federal, state, municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign.
Section 4.14. No Defaults on Other Agreements. Neither
Borrower, nor to the best of the Borrower's knowledge, the Guarantor, is a party
to any indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate restriction which would, in
any case or in the aggregate, have a material adverse effect on its ability to
carry out its obligations under the Facility Documents. The Borrower is not in
default in any respect in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument material to its business to which it is a party. The Guarantor is not
in default in any respect in the performance, observance, or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument dated on or after October 17, 1995 material to its business to which
it is a party.
Section 4.15. Labor Disputes and Acts of God. Neither the
business nor the properties of either Obligor is affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), materially and adversely affecting such
business or properties or the operations of the Obligors, or either of them.
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Section 4.16. Governmental Regulation. Neither Obligor is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Investment Company Act of 1940 or any other statute or regulation limiting its
ability to incur indebtedness for money borrowed as contemplated hereby.
Section 4.17. Partnerships. Neither Obligor is a partner in
any partnership.
Section 4.18. No Forfeiture. Neither Obligor is engaged in or
proposed to be engaged in any unlawful activity which could result in a
Forfeiture Proceeding and no Forfeiture Proceeding is pending against either
Obligors or, to the best of the Borrower's knowledge, threatened.
Section 4.19. No Default or Event of Default. No Default or
Event of Default has occurred and is continuing.
Section 4.20. Security Agreement. The provisions of the
Security Agreement are effective to create in favor of the Bank a legal, valid
and enforceable, security interest in all right, title and interest of the
Borrower in the Collateral described therein except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency or other
similar laws affecting creditors' rights generally.
Section 4.21. Solvency. Upon consummation of the transactions
contemplated by the Purchase Agreement, each Obligor is Solvent.
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Section 4.22. Name Changes. During the five years prior to the
making of this Agreement, except as disclosed on Schedule 4.22, the Borrower has
not been known under, or transacted business using any name other than its
current name nor has the Seller been known under or transacted business using
any name except "Williams Communication Services, Inc.".
Section 4.23. Relationships. There exists no actual or
threatened termination, cancellation or limitation of or any modification or
change in the business relationships of the Borrower with any customer or group
of customers whose purchases individually or in the aggregate are material to
the operations of the Borrower (or were material to the operations of the Seller
immediately prior to the consummation of the transactions contemplated by the
Purchase Agreement) or with any material supplier which would have a material
adverse effect on the business, financial condition, properties or profits of
the Borrower.
ARTICLE 5. AFFIRMATIVE COVENANTS.
So long as the Note shall remain unpaid or the Bank shall have
any Commitment under this Agreement, the Borrower shall:
Section 5.01. Maintenance of Existence. Except as otherwise
provided in this Agreement, preserve and maintain its corporate existence and
good standing in the jurisdiction of its incorporation, and qualify and remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is required.
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Section 5.02. Conduct of Business. Continue to engage in its
current business.
Section 5.03. Maintenance of Properties. Except as otherwise
provided herein, maintain, keep and preserve all of its properties (tangible and
intangible) necessary to the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
Section 5.04. Maintenance of Records. Keep records and books
of account, in which complete entries will be made in accordance with GAAP (or
with comparable foreign accounting principles), reflecting all financial
transactions of the Borrower.
Section 5.05. Maintenance of Insurance. Maintain insurance
with financially sound and reputable insurance companies or associations in such
amounts and covering such risks as are usually carried by companies engaged in
the same or a similar business and similarly situated. With respect to all such
insurance coverage, the Borrower shall cause the Bank to be named additional
insured as to all liability coverage and cause the Bank to be named loss payee
as to all property insurance coverage.
Section 5.06. Compliance with Laws. Comply in all material
respects with all applicable laws, rules, regulations and orders.
Section 5.07. Right of Inspection. At any reasonable time and
from time to time permit the Bank or any agent or representative thereof, to
examine and make copies and abstracts from the records and books of account of,
and visit the properties of, the Borrower,
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and to discuss the affairs, finances and accounts of the Borrower with its
officers and directors and the Borrower's independent accountants.
Section 5.08. Reporting Requirements. Furnish directly to the
Bank:
(a) Not later than the 15th Business Day of each calendar
month, a monthly borrowing base certificate and monthly accounts receivable
agings and inventory reports, each certified by the Borrower's President or
Chief Financial Officer and each in form and substance reasonably satisfactory
to the Bank;
(b) Annually, within 120 days of the Borrower's fiscal
year-end, the audited financial statements of the Borrower and of the Guarantor
which shall include profit and loss statements, balance sheets, statements of
cash flows and such other reports as the Bank shall require, each with an
unqualified opinion of Coopers & Lybrand or another firm of independent
certified public accountants reasonably acceptable to the Bank, together with a
copy of the management letter prepared by such independent certified public
accountants;
(c) Quarterly, within 90 days after the end of each of the
first, second and third fiscal quarters, quarterly financial statements of the
Borrower and the Guarantor, which statements shall include profit and loss
statements, balance sheets, statements of cash flows and such other reports as
the Bank shall require, each prepared in accordance with GAAP, certified by the
Borrower's President or Chief Financial Officer, and in form and substance
reasonably satisfactory to the Bank;
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(d) Simultaneously with the delivery of the financial
statements referred to in subsections (b) and (c) above, a certificate of an
officer of the Borrower (i) certifying that no Default or Event of Default has
occurred and is continuing or, if a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto, and (ii) with computations
demonstrating compliance with the covenants contained in Article 7;
(e) promptly after the Borrower becomes aware of the
commencement thereof, notice of all actions, suits, and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, in which the Borrower is a party,
including, without limitation, any such proceeding relating to any alleged
violation of any Environmental Law, which, if determined adversely to the
Borrower, would have a material adverse effect on the financial condition,
properties, or operations of the Borrower, or on the ability of the Borrower to
perform its obligations hereunder or under the other Facility Documents;
(f) as soon as possible and in any event within five business
days after the occurrence of each Default or Event of Default, a written notice
specifying and describing in reasonable detail such Default or Event of Default
and describing in reasonable detail the action which is proposed to be taken by
the Borrower with respect thereto;
(g) promptly after the commencement thereof or promptly after
the Borrower knows of the commencement or threat thereof, notice of any
Forfeiture Proceeding;
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(h) promptly upon becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by Borrower or the Guarantor to its security holders, of all regular
and periodic reports and all registration statements and prospectuses filed by
the Borrower or the Guarantor with any securities exchange or with the
Securities and Exchange Commission or any governmental body succeeding to any of
its functions, and of all statements generally made available by Borrower or the
Guarantor concerning material developments in the business of the Borrower or
the Guarantor.
(i) as soon as possible and in any event within five business
days after the Borrower knows that any of the events or conditions specified
below with respect to any Plan or Multiemployer Plan have occurred or exist, a
statement signed by an officer of the Borrower setting forth details respecting
such event or condition and the action, if any, which the Borrower or its ERISA
Affiliate proposes to take with respect thereto (and a copy of any report or
notice required to be filed with or given to PBGC by the Borrower, or an ERISA
Affiliate with respect to such event or condition):
(i) any Reportable Event;
(ii) the filing under Section 4041 of ERISA of a
notice of intent to terminate any Plan or the termination of any Plan;
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(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Borrower, or any ERISA Affiliate, of
a notice from a Multiemployer Plan that such action has been taken by PBGC with
respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal by the
Borrower or any ERISA Affiliate under Section 4201 or 4204 of ERISA from a
Multiemployer Plan, or the receipt by the Borrower, or any ERISA Affiliate, of
notice from a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA; and
(v) the institution of a proceeding by a fiduciary
or any Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;
(j) as soon as available and in any event within 15 days after
the end of each calendar month an accounts receivable aging in form and
substance satisfactory to the Bank as of the last day of such month; and
(k) as soon as available, and in any event within 15 days of
the end of each calendar month a certificate of an officer of the Borrower
certifying that the Borrower's payroll taxes are current;
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(l) such other information respecting the condition or
operations, financial or otherwise, of the Borrower as the Bank may from time to
time reasonably request.
Section 5.09. Payment of Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent by its
specific term, or if there are no specific terms before an action for collection
is commenced, as the case may be, all of its material Debt and other material
obligations of whatever nature (including any obligation for taxes and wages).
Section 5.10. Escrow Funds under Purchase Agreement. If the
Borrower receives a refund of any portion of the purchase price escrowed
pursuant to the Purchase Agreement, the Borrower shall apply such amounts to
reduce the outstanding principal balance of the Loans hereunder on a dollar for
dollar basis.
Section 5.11. Business Acquired under Purchase Agreement. The
Borrower shall conduct the business acquired under the Purchase Agreement as a
division of the Borrower.
ARTICLE 6. NEGATIVE COVENANTS.
So long as the Note shall remain unpaid or the Bank shall have
any Commitment under this Agreement, the Borrower shall not:
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Section 6.01. Debt. Create, incur, assume or suffer to exist
any Debt, except for any of the following types of Debt:
(a) Debt of the Borrower under this Agreement or the Note;
(b) Debt described in Schedule 4.10, and any renewals,
extensions or refinancing thereof, provided that such renewals, extensions or
refinancing are on terms no less favorable to the Borrower than the original
terms of such Debt;
(c) Subordinated Debt;
(d) Debt incurred in connection with operating leases or
Capital Leases entered into by the Borrower, consistent with past practices or
in the ordinary course of business;
(e) Debt of the Borrower secured by purchase money Liens
permitted by Section 6.02; and
(f) unsecured trade indebtedness incurred in the ordinary
course of business.
Section 6.02. Liens. Create, incur, assume or suffer to exist
any Lien, upon or with respect to any of its properties, n ow owned or hereafter
acquired, except:
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(a) Liens in favor of the Bank securing the Loans hereunder;
(b) Liens for taxes or assessments or other government charges
or levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained in conformity with GAAP;
(c) Liens imposed by law, such as mechanic's, supplier's,
materialmen's, landlord's, warehousemen's and carrier's Liens, and other similar
Liens, securing obligations incurred in the ordinary course of business which
are not past due for more than 30 days, or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established;
(d) Liens under workers' compensation unemployment insurance,
social security or similar legislation (other than ERISA);
(e) easements, zoning restrictions, rights-of-way, and other
similar restrictions and encumbrances which, in the aggregate, do not materially
interfere with the occupation, use and enjoyment by the Borrower of the property
or assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto;
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(f) purchase money Liens on any property heretofore or
hereafter acquired or the assumption of any Lien on property existing at the
time of such acquisition, or a Lien incurred in connection with any conditional
sale or other title retention agreement or a Capital Lease or an operating
lease; provided that such liens attach only to the property as acquired and do
not extend to any additional property of the Borrower; and
(g) Liens existing on the date hereof and described on
Schedule 4.10 hereto.
Section 6.03. Investments and Advances. Make any loan or
advance to any Person or, except as otherwise provided herein, purchase or
otherwise acquire any capital stock, assets, obligations or other securities of,
make any capital contribution to, or otherwise invest in, or acquire any
interest in, any Person.
Section 6.04. Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of any of its now owned or hereafter acquired assets except:
(a) for assets disposed of in the ordinary course of business; or (b) the sale
or other disposition of assets no longer used or useful in the conduct of its
business.
Section 6.05. Transactions with Affiliates. Enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the Borrower's
business and upon fair and reasonable terms not
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materially less favorable to the Borrower than would be obtained in a comparable
arm's length transaction with a Person not an Affiliate.
Section 6.06. Mergers, Etc. Except in connection with an
Acquisition permitted under Section 6.07, merge or consolidate with, or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person, or acquire all or substantially all of the
assets or the business of any Person (or enter into any agreement to do any of
the foregoing).
Section 6.07. Acquisitions. Make any Acquisition unless the
Bank shall have been delivered such documents as are necessary in the Bank's
discretion to permit the Bank to have a perfected lien upon the assets so
acquired and unless the Bank shall have first been provided a management
prepared balance sheet of the Borrower demonstrating compliance on a pro forma
basis, with the covenants contained in Article 7 immediately after the
Acquisition, and unless the Bank shall have been provided satisfactory evidence
that the sum of all consideration paid or to be paid (including all future
payments other than contingent consideration to be paid based upon the
performance of the company or assets acquired, whether or not such payments are
to be paid during such fiscal year) by the Borrower in connection with such
Acquisition, when aggregated with the consideration paid or to be paid in
connection with all other Acquisitions during such fiscal year, does not exceed
$500,000. Notwithstanding the foregoing, no Acquisition shall be permitted
hereunder unless (i) the Guarantor shall have made an equity contribution to the
Borrower of $1,000,000 or more,
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which shall have been applied by the Borrower to reduce the outstanding
principal balance of the Loans hereunder and (ii) the Bank shall be satisfied
that the Borrower's outstanding loans shall be less than the Borrowing Base
immediately before and after the relevant Acquisition.
Section 6.08. No Activities Leading to Forfeiture. Engage in
any unlawful activity which could result in a Forfeiture Proceeding.
Section 6.09. Corporate Documents; Fiscal Year. Change its
fiscal year or amend, modify or supplement its certificate or articles of
incorporation or by-laws in any way which would adversely affect (i) the ability
of the Bank to exercise its remedies hereunder or under the Facility Documents,
or (ii) the Borrower to perform its obligations hereunder or under the Facility
Documents.
Section 6.10. Subsidiaries; Partnerships. Create, any new
Subsidiaries or become a partner in a partnership without the consent of the
Bank, or permit its Subsidiary, Sumtech, Inc., to have at any time assets of
more than $5,000 or to incur Debt.
ARTICLE 7. FINANCIAL COVENANTS.
So long as the Note shall remain unpaid or the Bank shall have
any Commitment under this Agreement:
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Section 7.01. Maximum Leverage. The Borrower shall maintain at
each of the dates set forth below a ratio of (A) Total Unsubordinated
Liabilities to (B) Effective Net Worth of not more than the amounts set forth
opposite such date:
Period Ratio
------ -------
6/30/96 1.5:1.0
9/30/96 1.25:1.0
12/31/96 1.0:1.0
Section 7.02. Minimum Coverage Ratio. The Borrower shall
maintain at each of the dates set forth below a ratio of (A) Total Current
Assets to (B) Total Liabilities of not less than the ratios set forth opposite
such dates:
Date Ratio
---- -----
6/30/96 1.25:1.0
9/30/96 1.25:1.0
12/31/96 1.50:1.0
Section 7.03. Dividends. During the term of this Agreement,
the Borrower shall not pay Dividends.
Section 7.04. No Quarterly Losses. During the term of this
Agreement, the Borrower shall not suffer a loss in any fiscal quarter.
Section 7.05. Minimum Net Retained Profit. The Borrower shall
retain profits of at least $1,500,000 during its fiscal year ending December 31,
1996.
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Section 7.06. Minimum Interest Coverage. The Borrower shall
maintain a ratio of (A) EBIT to (B) Interest Expense of not less than 4.0:1.0 on
June 30, 1996, September 30, 1996 and December 31, 1996.
Compliance with all of the financial covenants contained in
this Article 7 shall be determined by reference to the financial statements of
the Borrower delivered to the Bank in accordance with Section 5.08 hereof.
ARTICLE 8. EVENTS OF DEFAULT.
Section 8.01. Events of Default. Any of the following events
shall be an "Event of Default":
(a) The Borrower shall (i) fail to pay the principal of or
interest on the Note as and when due and payable; or (ii) fail to pay any fee or
other amount due hereunder as and when due and payable and in the case of this
clause (ii) only such failure shall continue for a period of 15 days after
notice;
(b) Any representation or warranty made or deemed made by the
Borrower in this Agreement or in any other Facility Document or which is
contained in any certificate, document, opinion, financial or other statement
furnished to the Bank at any time pursuant to any Facility Document shall prove
to have been incorrect in any material respect on or as of the date made or
deemed made;
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(c) (i) The Borrower shall fail to perform or observe any
term, covenant or agreement contained in Sections 2.03(b), or in Article 6 or 7;
or (ii) either Obligor fail to perform any other term, covenant or agreement on
its part to be performed or observed (other than obligations specifically
referred to in Section 8.01(a)) in any Facility Document and, in the case of
this clause (ii) only, such failure shall continue for 30 consecutive days or,
if such failure cannot by its nature be cured within 30 days, for such longer
period as may be reasonably necessary to cure such failure provided that the
Borrower shall diligently attempt to correct such failure and shall have
provided the Bank with satisfactory assurance that such failure will be cured;
(d) Either Obligor shall: (i) fail to make when due any
payments with respect to any Debt, including but not limited to indebtedness for
borrowed money (other than the payment obligations described in (a) above), of
such Obligor, or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) or, if such
Debt has no stated due date, before an action for collection is commenced,
unless, in either case, such Debt is being contested in good faith and with
respect to which adequate reserves are maintained in accordance with GAAP; or
(ii) fail to perform or observe any term, covenant or condition on its part to
be performed or observed under any agreement or instrument relating to any Debt
when required to be performed or observed, if the effect of such failure to
perform or observe is to accelerate, or to permit the acceleration of, after the
giving of notice or passage of time, or both, the maturity of such Debt, whether
or not such failure to perform or observe shall be waived by the holder of such
Debt; or (iii)
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any Debt 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;
(e) Either Obligor (i) shall generally not, or be unable to,
or shall admit in writing its or their inability to, pay its or their debts as
such debts become due; or (ii) shall make an assignment for the benefit of
creditors, petition or apply to any court or otherwise for the appointment of a
custodian, receiver or trustee for it or a substantial part of its or their
assets; or (iii) shall, as debtor, commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or (iv)
shall have had any such petition or application filed or any such proceeding
shall have been commenced, against it in which an adjudication or appointment is
made or order for relief is entered, and which petition, application or
proceeding remains undismissed for a period of 45 days or more, or (v) by any
act or omission shall indicate its or their consent to, approval of or
acquiescence in any such petition, application or proceeding or order for relief
or the appointment of a custodian, receiver or trustee for all or any
substantial part of its or their property; (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a period
of 45 days or more; or (vii) shall cease to be Solvent;
(f) One or more judgments, decrees or orders for the payment
of money in excess of $50,000 in the aggregate in respect of uninsured or
unbonded claims shall be rendered against either Obligor and such judgments,
decrees or orders shall continue
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<PAGE>
unsatisfied and in effect for a period of 30 consecutive days without being
vacated, discharged, satisfied or stayed or bonded pending appeal;
(g) An event or condition specified in Section 5.08(g) hereof
shall occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, the Borrower or any ERISA Affiliate shall incur or in the opinion of
the Bank shall be reasonably likely to incur a liability to a Plan, a
Multiemployer Plan or PBGC (or any combination of the foregoing) which is, in
the reasonable determination of the Bank, material in relation to the financial
condition, operations, business or prospects of the Borrower;
(h) Any Forfeiture Proceeding shall have been commenced or the
Borrower shall have given the Bank written notice of the commencement of any
Forfeiture Proceeding as provided in Section 5.08(f);
(i) The Security Agreement shall at any time after its
execution and delivery and for any reason, cease: (a) to create a valid and
perfected first priority security interest in and to property purported to be
subject to the Security Agreement; or (b) to be in full force and effect or
shall be declared null and void, or the validity or enforceability thereof shall
be contested by the Borrower or the Borrower shall deny that it has any further
liability or obligation under a Security Agreement, or the Borrower shall fail
to perform any of its material obligations under the Security Agreement;
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(j) The Guaranty shall at anytime after its execution and
delivering and for any reason cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability thereof shall be
contested by the Guarantor or the Guarantor shall deny that it has further
liability or obligation under the Guaranty or the Guarantor shall fail to
perform any of its material obligations under the Guaranty; and
(k) If the Guarantor shall fail to make an equity infusion to
the Borrower of at least $1,000,000 on or before April 15, 1996 or the Borrower
shall fail to apply the full amount of such equity infusion to reduce the
principal balance of the Loans.
Section 8.02. Remedies. If any Event of Default shall occur,
the Bank may, by notice to the Borrower, (a) declare the Commitment to be
terminated, whereupon the same shall forthwith terminate, and (b) declare the
outstanding principal of the Note, all interest thereon and all other amounts
payable under this Agreement and the Note to be forthwith due and payable,
whereupon the Note, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided that, in the case of an Event of Default referred to in Section 8.01(e)
or Section 8.01(h) above, the Commitment shall be immediately terminated, and
the Note, all interest thereon and all other amounts payable under this
Agreement and the Note shall be immediately due and payable without notice,
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
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<PAGE>
ARTICLE 9. MISCELLANEOUS.
Section 9.01. Amendments and Waivers. Except as otherwise
expressly provided in this Agreement, any provision of this Agreement may be
amended or modified only by an instrument in writing signed by the Borrower and
the Bank. No failure on the part of the Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof or 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 9.02. Usury. Anything herein to the contrary
notwithstanding, the obligations of the Borrower under this Agreement and the
Note shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions of
law applicable to the Bank limiting rates of interest which may be charged or
collected by the Bank.
Section 9.03. Expenses. The Borrower shall pay on demand all
costs and expenses in connection with the preparation, execution, delivery,
filing, recording and administration of the Agreement, the Note and the other
Facility Documents, including without limitation, the reasonable fees and out of
pocket expenses of counsel for the Bank with respect thereto and with respect to
advising the Bank as to its rights and responsibilities under any of the
Facility Documents. The Borrower shall reimburse the Bank for all of its
reasonable costs and expenses in connection with the enforcement or preservation
of any
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<PAGE>
rights under this Agreement, the Note or the other Facility Documents. The
Borrower agrees to indemnify the Bank and its directors, officers, employees and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses incurred by any of them arising out of
or by reason of any investigation or litigation or other proceedings (including
any threatened investigation or litigation or other proceedings) relating to any
actual or proposed use by the Borrower of the proceeds of the Loans, including,
without limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
Section 9.04. Assignment; Participation. This Agreement shall
be binding upon, and shall inure to the benefit of, the Borrower, the Bank and
their respective successors and assigns, except that the Borrower may not assign
or transfer their rights or obligations hereunder.
Section 9.05. Notices. All notices and other communications
provided for under this Agreement and under the other Facility Documents shall
be in writing (including telegraphic or telefax communication) and mailed,
telegraphed, telefaxed or delivered, if to the Borrower, at 2001 Marcus Avenue,
Lake Success, New York 11042; Telecopier (516) 352-3362; Attention: Christopher
P. Franco; and if to the Bank, at its address at 1 Greenway Plaza, 135 Pinelawn
Road, Melville, New York 11747; Telecopier: (516) 756-0260; Attention: Stephen
M. Zajac, Second Vice President; or, as to each party, at such other address as
shall
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<PAGE>
be designated by such party in a written notice to the other party complying as
to delivery with the terms of this Section 9.05. All such notices and
communications shall, if telefaxed or telegraphed, be effective when delivered
to the telegraph or telephone company, respectively, provided that the party
sending such notice or communication promptly confirms the same by overnight
delivery service addressed as aforesaid, or if mailed, three days after
deposited in the mails addressed as aforesaid.
Section 9.06. Setoff. The Borrower agrees that, in addition to
(and without limitation of) any right of setoff, banker's lien or counterclaim
the Bank may otherwise have, the Bank shall be entitled, at its option without
any prior notice to the Borrower (any such notice being expressly waived by the
Borrower to the extent permitted by applicable law), to offset balances (general
or special, time or demand, provisional or final) held by it for the account of
the Borrower or any of them at any of the Bank's offices, in Dollars or in any
other currency, against any amount then due and payable by the Borrower to the
Bank under this Agreement or the Note which is not paid when due (regardless of
whether such balances are then due to the Borrower). Payments by the Borrower
hereunder shall be made without setoff or counterclaim.
Section 9.07. Jurisdiction; Immunities.
(a) The Borrower hereby irrevocably submits to the
jurisdiction of any New York State or United States Federal court sitting in New
York County over any action or proceeding arising out of or relating to this
Agreement or the Note, and the Borrower hereby
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<PAGE>
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or Federal court. To the extent
permitted by applicable law, the Borrower irrevocably consents to the service of
any and all process in any such action or proceeding by the mailing (by
certified or registered mail) of copies of such process to it at its address
specified in Section 9.05. The Borrower agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the Borrower further waives any
objection to venue in such State or Federal Court and any objection to an action
or proceeding in such State or Federal Court on the basis of forum non
conveniens. The Borrower further agrees that any action or proceeding brought
against the Bank shall be brought only in New York State or United States
Federal court sitting in New York County.
(b) EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY
HAVE TO JURY TRIAL.
(c) Nothing in this Section 9.07 shall affect the right of the
Bank to serve legal process in any other manner permitted by law or affect the
right of the Bank to bring any action or proceeding against the Borrower, or its
property in the courts of any other jurisdictions.
(d) To the extent that the Borrower has or hereafter may
acquire any immunity from jurisdiction of any court or f rom any legal process
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<PAGE>
whether from service or notice, attachment prior to judgment, attachment in aid
of execution, execution or otherwise) with respect to itself or its property,
the Borrower hereby irrevocably waives, to the extent permitted by applicable
law, such immunity in respect of its obligations under this Agreement and the
Note.
Section 9.08. Headings. The headings and captions hereunder
are for conve- nience only and shall not affect the interpretation or
construction of this Agreement.
Section 9.09. Severability. The provisions of this Agreement
are intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 9.10. Integration. The Facility Documents set forth
the entire agreement among the parties hereto relating to the transactions
contemplated thereby and supersede any prior oral or written statements or
agreements with respect to such transactions.
Section 9.11. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE
STATE OF NEW YORK.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
COMFORCE GLOBAL, INC.
By:
Name: Christopher P. Franco
Title: Executive Vice President
THE CHASE MANHATTAN BANK, N.A.
By:
Name: Stephen M. Zajac
Title: Second Vice President
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<PAGE>
List of Exhibits and Schedules
Exhibits
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Borrowing Base Certificate - to come
Schedules
Schedule 4.04 Litigation
Schedule 4.09 Subsidiaries
Schedule 4.10 List of Credit Agreements, etc.
Schedule 4.22 Names
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<PAGE>
EXHIBIT A
---------
REVOLVING CREDIT NOTE
$2,250,000 February 29, 1996
Suffolk County, New York
COMFORCE GLOBAL, INC., a corporation organized under the laws
of New York (the "Borrower"), for value received, hereby promises to pay to the
order of THE CHASE MANHATTAN BANK, N.A., a national banking association (the
"Bank") at the Bank's office at 1 Greenway Plaza, 135 Pinelawn Road, Melville,
New York 11747, on or before February 28, 1997, the principal sum of TWO MILLION
TWO HUNDRED FIFTY THOUSAND DOLLARS ($2,250,000), or, if less, the amount loaned
by the Bank to the Borrower pursuant to the Credit Agreement referred to below,
in lawful money of the United States of America and in immediately available
funds, on the date(s) and in the manner provided in said Credit Agreement. The
Borrower also promises to pay interest on the unpaid principal balance hereof,
for the period such balance is outstanding, at said office, in like money, at
the rate of interest as provided in the Credit Agreement described below, on the
date(s) and in the manner provided in said Credit Agreement.
The holder of this Revolving Credit Note shall record the date
and amount of each Loan made by the Bank, and the date and amount of each
payment or prepayment of principal of or interest on any Loan, on the schedule
attached hereto or on such computer, magnetic disk, tape or other such
electronic data storage and retrieval system deemed adequate for such purpose by
the Bank, in its sole and absolute discretion, which record shall constitute
prima facie evidence of the accuracy of the information so recorded, but no
failure so to record or any error in so recording shall affect the obligation of
the Borrower to repay any such Loans, with interest thereon, as provided in the
Credit Agreement or herein.
This is the Note referred to in that certain Revolving Credit
Agreement (as amended from time to time the "Credit Agreement") dated as of
February 29, 1996 between the Borrower, and the Bank and evidences the Loans
made by the Bank thereunder. All terms not defined herein shall have the
meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of principal upon the occurrence of certain Events of Default and for
prepayments on the terms and conditions specified therein. The Borrower waives
presentment, notice of dishonor, protest and any other notice or formality with
respect to this Note except as may be set forth in the Credit Agreement.
The terms of this Note may not be changed orally, but only by
an instrument duly executed by the Borrower and the Bank.
<PAGE>
This Note shall be governed by, and interpreted and construed
in accordance with, the laws of the State of New York.
COMFORCE GLOBAL, INC.
By:_______________________
Name:
Title:
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<PAGE>
Schedule 4.04
Litigation
The Guarantor, formerly known as The Lori Corporation, ("Lori"), also
formerly known as APECO Corporation (and prior thereto, as American Photocopy
Equipment Company), operated in excess of 20 manufacturing facilities in the
United States prior to its entry in the jewelry business in 1985. The former
operations of Lori included the manufacture of photocopy machines, photographics
chemicals, paper coatings, pleasure boats, recreational vehicles, modular and
mobile homes, marine windshields and gasoline tanks. These operations were sold
or discontinued in the late 1970s and early 1980s. In addition, Lori's Rosecraft
subsidiary and its predecessors formerly used its facility to manufacture,
assemble and finish jewelry.
Certain of these facilities may have used and/or generated hazardous
materials and may have disposed of the hazardous substances, directly or through
third party waste disposal firms at various off-site waste disposal locations,
in most cases before laws had been enacted governing the safe disposal of
hazardous substances. The number of these off-site waste disposal locations that
may have been used by third party waste disposal contractors is neither known
nor reasonably determinable by the Obligor. Although Lori has been notified by
the Federal Environment Protection Agency that it is a potentially responsible
party for the disposal of hazardous substances by its predecessor company at a
site on Ninth Avenue in Gary, Indiana, it has no records indicating that it
deposited hazardous substances at this site and has stated its intention to
vigorously defend itself in this matter.
Lori was unable to conduct a comprehensive audit of potential
environmental liability at the facilities formerly owned or operated by Lori or
its predecessors and their subsidiaries since it is no longer the owner or
operator of most of the properties at which it or its predecessors or their
affiliates conducted manufacturing operations and did not keep records of the
companies with which it contracted for the disposal of wastes before such
record-keeping became mandated by law. Although a comprehensive review of public
records located at the state, local and Federal levels, of internal documents
(if available) respecting off-site hazardous materials disposal and of available
computer data bases could reveal additional potential liabilities to Lori for
the costs of environmental clean-up, the cost of conducting such a review is
prohibitively expensive.
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<PAGE>
Schedule 4.09
Subsidiaries
Sumtech, Inc.
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Schedule 4.10
Credit Arrangements and Liens
A. COMFORCE Global, Inc.
1. Credit Arrangements
$800,000 Line of Credit Facility with Bank as Lender
2. Liens
UCC-1 Financing Statements filed in conjunction with the
extension of credit by Bank referred to in part A(1) of this
Schedule
B. COMFORCE Corporation
To the best of both Obligors' knowledge, the following Credit
Arrangements and Liens exist:
1. Credit Arrangements
See Schedule A appended hereto and incorporated by reference
2. Liens
UCC-1 Financing Statement filed January 9, 1996 at File No.
96-000253 in Nassau County, New York listing Bankers Capital,
Northbrook, IL as Secured Party
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<PAGE>
Schedule 4.22
Previous Names
Spectrum Global Services, Inc.
Yield Global, Inc.
Yield, Inc.
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