EXHIBIT 10.16
STANDSTILL AGREEMENT (this "STANDSTILL AGREEMENT"), dated and effective as
of May 31, 2000 (the "Effective Date"), is entered into by and among (i)
Employee Solutions, Inc. (the "COMPANY"), an Arizona corporation, (ii) the
Guarantors (as defined in the Indenture referred to herein), (iii) the Holders
(as defined in the Indenture referred to herein) signatory hereto (collectively,
the "SIGNING HOLDERS") and (iv) The Huntington National Bank, as trustee under
the Indenture referred to herein (the "TRUSTEE").
W I T N E S S E T H:
WHEREAS, the Company and the Guarantors thereto have heretofore executed
and delivered to the Trustee the Indenture, dated as of October 15, 1997, as
amended from time to time (the "INDENTURE"), providing for the issuance of an
aggregate principal amount of up to $85 million of 10% Senior Notes Due 2004
(the "NOTES");
WHEREAS, the Company and Guarantors are not in compliance with certain
provisions of the Indenture, resulting in the occurrence of certain Defaults and
Events of Default under, and as defined in, the Indenture;
WHEREAS, the Trustee on May 19, 2000, issued a Notice of Default consistent
with the terms of the Indenture; and
WHEREAS, the Company has requested that the Signing Holders and Trustee
forbear in the exercise of remedies with respect to certain existing and
anticipated Defaults and Events of Default (as defined in the Indenture), and
the Signing Holders and the Trustee are willing to grant such forbearance on the
terms and conditions provided herein;
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto mutually agree and covenant as
follows:
SECTION 1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
SECTION 2. FORBEARANCE. The Signing Holders and Trustee agree, on the terms
and subject to the conditions hereof, to forbear during the period (the
"FORBEARANCE PERIOD") from and after the Effective Date until (but excluding)
the Forbearance Termination Date (as defined in Section 3) in the exercise of
the rights and remedies available under the Indenture and the Notes with respect
to any Default or Event of Default. Notwithstanding such forbearance, it is
understood by the Company and Guarantors that the Signing Holders and Trustee
have not waived any existing or anticipated Default or Event of Default, or any
rights or remedies in respect thereof, under the Indenture, Notes, or any other
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agreements, instruments or documents executed and delivered in connection
therewith or the transactions contemplated thereby (collectively, the "INDENTURE
DOCUMENTS"). During the Forbearance Period (and thereafter), the Signing Holders
and Trustee shall be permitted to exercise any and all of their rights and
remedies under the Indenture Documents, except as may be limited or provided
otherwise during the Forbearance Period pursuant to this Standstill Agreement.
SECTION 3. TERMINATION. The forbearance provided pursuant to Section 2
shall terminate and be of no further force or effect at 10:00 a.m. (Pacific
time) on the date (the "FORBEARANCE TERMINATION DATE") of the earliest to occur
of:
(a) thirty (30) days from the Effective Date;
(b) the date of commencement of any liquidation, bankruptcy,
receivership, assignment for the benefit of creditors or similar case or
proceeding by or against the Company or the Guarantors in a court of
competent jurisdiction, and in the case of an involuntary proceeding the
passage of twenty-five (25) days from the date of such filing without such
filing being dismissed or stayed, by or with respect to the Company or one
or more of the Guarantors; and
(c) the first date during the Forbearance Period that any new Default
or Event of Default ("NEW DEFAULT") or by breach by the Company or
Guarantors hereunder occurs; notwithstanding the foregoing, and for the
exclusive purposes of this Standstill Agreement, a New Default shall not
include a Default or an Event of Default that exists as of one (1) day
preceding Effective Date and that continues beyond that date.
From and after the Forbearance Termination Date, the forbearance set forth
herein shall terminate and be of no further force or effect, and the Signing
Holders and Trustee shall be entitled to immediately exercise and enforce any
and all rights and remedies available to the Signing Holders and Trustee as a
consequence of any Defaults or Events of Default that have occurred prior to,
during or after the Forbearance Period and are continuing. Each the Company and
each of the Guarantors hereby expressly waives any right of notice from the
Holders or the Trustee other than notice of any New Default under the Indenture.
SECTION 4. INFORMATION. The Company and Guarantors agree to deliver to the
Signing Holders and Trustee:
(a) By noon, Pacific time, on Wednesday of each week: (i) revenue
figures for the immediately preceding week, showing both weekly revenue
figures and aggregate monthly revenue figures for the reporting month, (ii)
cash flow projections for the four (4) weeks commencing with such week,
(iii) a listing of any new client contracts entered into by the Company or
the Guarantors during the immediately preceding week, and (iv) a listing of
any existing client contracts that were lost or terminated during the
immediately preceding week; and in each such case the financial information
in respect of Team Services (the "Team Services Information") shall be
limited to summary totals and reported separately from all other financial
information (the "Non-Team Services Information"). The Non-Team Services
Information will be produced from the Company's invoice register, and both
the Team Services Information and the Non-Team Services Information will be
provided online with hard copies available upon request.
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(b) The Company's balance sheet for each the month of (i) April, 2000
by no later than two (2) business days following the date of this Agreement
and (ii) May, 2000 by no later than June 15,2000.
(c) By June 15, 2000, a written update regarding current business plan
of the Company and Guarantors as such plan pertains to cost reductions.
(d) All financial information and other documentation regarding the
Company and the Guarantors reasonably requested by the Signing Holders or
Trustee.
Upon the occurrence of any Default of its obligations hereunder, the
defaulting Company or defaulting Guarantor, as the case may be, shall promptly
notify the Signing Holders and Trustee of same.
Notwithstanding the provision of the information to the Signing Holders and
Trustee as identified in this Section 4, The Dreyfus Corporation ("Dreyfus"),
one of the Signing Holders, does not intend to receive any of said information.
Dreyfus and each the Company and the Guarantors agree and acknowledge that,
though Dreyfus will remain subject to the terms and obligations of this
Standstill Agreement, Dreyfus shall not be restricted from trading in any
securities by virtue of the information disseminated to the other Signing
Holders under this Standstill Agreement, except as would otherwise be required
by law. Dreyfus agrees and acknowledges that in the event that Dreyfus does
receive such information, any restrictions on trading will be coextensive with
those restrictions imposed upon the other Signing Holders under applicable law.
SECTION 5. INSTRUCTION TO TRUSTEE. The Signing Holders represent that they
hold an aggregate principal amount of approximately $66,850,000 of the Notes
which is a majority in aggregate principal amount of the outstanding Notes.
Pursuant to Section 6.11 of the Indenture, the Signing Holders hereby instruct
the Trustee, and the Trustee acknowledges receipt of such instruction, to honor
the provisions of this Standstill Agreement, and not issue any Notice of Default
or undertake any action that is contrary to the terms of this Standstill
Agreement.
SECTION 6. CONTINUING EFFECT. Except as expressly provided herein or as
hereafter may be modified, the Indenture Documents shall continue unchanged and
in full force and effect, and all rights, powers and remedies of the Signing
Holders, Trustee, Company and Guarantors thereunder are hereby expressly
reserved. Except to the extent expressly waived herein, each the Company and
each of the Guarantors remains obligated by the representations, warranties,
covenants and other provisions set forth in the Indenture Documents to which it
is a party.
SECTION 7. ACKNOWLEDGEMENTS. Each the Company and each of the Guarantors
hereby (i) acknowledges and agrees that as of the close of business on May 30,
2000, the outstanding amount of the principal and interest owing by the Company
and Guarantors under the Indenture Documents is as set forth in Schedule I
attached hereto, (ii) acknowledges and affirms, as of the Effective Date, all of
its obligations arising or incurred under or in connection with the Indenture
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Documents or this Standstill Agreement, (iii) acknowledges and agrees that,
nothing in this Standstill Agreement shall create a contractual restriction on
the Signing Holders, or any of them, which would restrict them from trading in
any securities that each would otherwise be entitled to trade in accordance with
applicable law and (iv) acknowledges and affirms that, that other than as
specifically set forth in this Standstill Agreement, neither the Signing Holders
nor Trustee has waived, forborne, modified or otherwise agreed not to exercise
any rights or remedies available to any of them under the Indenture Documents or
this Standstill Agreement.
SECTION 8. INDENTURE DOCUMENTS IN FULL FORCE. Each the Company and each
Guarantor hereby represents, warrants and agrees that the Indenture Documents
and the provisions of each thereof are and remain its legal, valid and binding
obligations, enforceable in accordance with their terms, and remain in full
force and effect except as amended or modified by this Standstill Agreement.
Each the Company and each Guarantor hereby reaffirms, reconfirms and restates,
all of its obligations under the Indenture Documents, as so modified. Each the
Company and each Guarantor hereby releases each of the Signing Holders and the
Trustee, and each of their respective present and former agents, employees,
officers, directors, shareholders, partners, principals, representatives,
attorneys, Affiliates, and any of their predecessors and successors, and all
persons acting, by and through, under or in concert with them, from any and all
claims, demands, debts, losses, obligations, liabilities, costs, expenses, and
rights of action and causes of action, of any kind or character whatsoever,
whether known or not, suspected or unsuspected, based upon facts occurring prior
to the date hereof or which may be hereafter claimed to arise out of any action,
inaction, event, or matter based upon facts occurring prior to the date hereof.
Each the Company and each Guarantor hereby represents and warrants, as of the
date hereof, no action relating to claims, demands, debts, losses, obligations,
liabilities, costs, expenses, and rights of action and causes of action, of any
kind or character whatsoever has been taken or is threatened against any of the
Trustee or any Signing Holder by the Company or any of the Guarantors. Nothing
in this Standstill Agreement or in any document or instrument executed or
delivered in connection herewith or pursuant hereto shall constitute a
satisfaction as to all or any portion of the Company or any of the Guarantors'
Indebtedness or other obligations.
SECTION 9. GOVERNING LAW; JURISDICTION; WAIVER. THIS STANDSTILL AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH THE COMPANY
AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO AND ACCEPTS THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY UNITED STATES FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING FOR BREACH OF
THIS STANDSTILL AGREEMENT AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. EACH THE COMPANY AND EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY
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OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE SIGNING HOLDERS
OR TRUSTEE TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY OR ANY GUARANTOR IN ANY
OTHER JURISDICTION.
SECTION 10. NO COMMITMENT OR WAIVER. Neither this Standstill Agreement nor
any action or inaction on the part of the Signing Holders or Trustee shall be
construed to constitute or represent (i) a commitment by the Signing Holders or
Trustee, either in their capacities under the Indenture Documents or in any
other capacity, to restructure any indebtedness of the Company or the
Guarantors, or (ii) an intention by the Signing Holders or Trustee, either in
their capacities under the Indenture Documents or in any other capacity, except
as expressly provided in Section 2, to waive, modify or forbear from exercising
any of their rights, powers, privileges or remedies under the Indenture
Documents or under any other document or agreement, at law, in equity or
otherwise, and each the Company and each of the Guarantors acknowledges, agrees
and confirms, except as expressly provided in Section 2, that no such
commitment, waiver, modification or forbearance has been offered, granted,
extended or agreed to by the Signing Holders or Trustee, either in their
capacities under the Indenture Documents or in any other capacity. Nothing set
forth in this Standstill Agreement shall be construed so as to require the
Signing Holders or Trustee, either in their capacities under the Indenture
Documents or in any other capacity, to agree to the terms of any modification
proposed by the Company and the Guarantors to the Indenture Documents or any
other document or agreement to which the Signing Holders or Trustee are a party.
SECTION 11. ADMISSIBILITY. Each of the Company and each Guarantor hereby
acknowledges and agrees that (i) all terms and conditions of, written
statements, representations and warranties made by or on behalf of such party
in, and information delivered by or on behalf of such party in connection with,
this Standstill Agreement or any Indenture Document, are confirmed and admitted
by such party and shall be admissible in any proceeding in any forum regarding
any dispute with the Trustee or any Signing Holder, and (ii) the Trustee and
each Signing Holder retain all rights and defenses with respect to any
statements made in connection herewith or any Indenture Documents.
SECTION 12. REPRESENTATIONS AND WARRANTIES. In addition to any other
representations and warranties made or deemed made hereunder, each party hereto
represents and warrants to the other parties hereto that:
(a) such party has the full authority and legal right and power to
execute and deliver this Standstill Agreement, and to perform the terms
hereof and the transactions contemplated hereby;
(b) all necessary corporate or other action on the part of such party
to be taken in connection with the execution, delivery and performance of
this Standstill Agreement and the transactions contemplated hereby has been
duly and effectively taken; and
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(c) the execution, delivery and performance by such party does not
constitute a violation or breach of such party's articles of incorporation
or by-laws, or any law by which such party is bound.
SECTION 13. BENEFIT OF AGREEMENT. This Standstill Agreement is solely for
the benefit of the signatories hereto and, to the extent it is not a Signing
Holder or the Trustee, a Person (including without limitation any other creditor
of or claimant against the Company or a Guarantor, or any shareholder of any
thereof) shall not have any rights under, or because of the existence of, this
Standstill Agreement.
SECTION 14. ENTIRE AGREEMENT. This Standstill Agreement and the Indenture
Documents constitutes the entire and final agreement among the parties hereto
with respect to the subject matter hereof and there are no other agreements,
understandings, undertakings, representations or warranties among the parties
hereto with respect to the subject matter hereof except as set forth herein.
SECTION 15. AMENDMENTS; EXTENSIONS. The terms of this Standstill Agreement
may be modified, amended or waived only in writing, executed by each of the
Signing Holders, Trustee, Company and Guarantors. It is understood and agreed
that the Signing Holders and Trustee are not and shall not be under any
obligation, express or implied, to consent to any modification or amendment
hereof or to any extension of the Forbearance Period.
SECTION 16. REMEDIES. No failure on the part of a Signing Holder or the
Trustee to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder or under the Indenture
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise by the Trustee or any Signing Holder of any right, power or remedy
hereunder or under the Indenture Documents preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
SECTION 17. VOLUNTARY AGREEMENT. Each the Company and each of the
Guarantors represents and warrants that it is represented by legal counsel of
its choice, is fully aware of the terms contained in this Standstill Agreement
and has voluntarily and without coercion or duress of any kind entered into this
Standstill Agreement, and the documents and agreements executed and to be
executed in connection with this Standstill Agreement.
SECTION 18. HEADINGS, ETC. "Section" or other headings contained in this
Standstill Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Standstill Agreement.
SECTION 19. NOTICES. Any documents, reports, notices, consents or requests
that are required or may be given hereunder shall be given to the parties at the
addresses and in the manner provided in the Indenture.
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SECTION 20. FURTHER ASSURANCES. Each the Company and each of the Guarantors
shall execute all additional documents and do all acts not specifically referred
to herein which are reasonably necessary to fully effect the intent of this
Standstill Agreement.
SECTION 21. TIME OF ESSENCE. Time is strictly of the essence of this
Standstill Agreement and full and complete performance of each and every
provision hereof.
SECTION 22. SUCCESSORS AND ASSIGNS. This Standstill Agreement, including,
without limitation, the representations, warranties, covenants and obligations
contained herein (i) shall inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted assigns, and (ii)
shall be binding upon and enforceable against the parties hereto and their
respective successors and assigns.
SECTION 23. SEVERABILITY. Any provision of this Standstill Agreement that
is determined to be invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
provisions of this Standstill Agreement or affecting the validity or
enforceability of any provisions of this Standstill Agreement in any other
jurisdiction.
SECTION 24. COUNTERPARTS. This Standstill Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Standstill
Agreement by signing any such counterpart.
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IN WITNESS WHEREOF, the undersigned have caused this Standstill Agreement
to be duly executed as of the day and year first above written.
COMPANY
EMPLOYEE SOLUTIONS, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
GUARANTORS
E.R.C. OF INDIANA, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
EMPLOYEE RESOURCES CORPORATION
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
EMPLOYEE SOLUTIONS - EAST, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
EMPLOYEE SOLUTIONS - MIDWEST, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
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EMPLOYEE SOLUTIONS - OHIO, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
EMPLOYEE SOLUTIONS OF ALABAMA, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
EMPLOYEE SOLUTIONS OF CALIFORNIA, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
EMPLOYEE SOLUTIONS OF TEXAS, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
EMPLOYEE SOLUTIONS - NORTH AMERICA, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
EMPLOYEE SOLUTIONS - SOUTHEAST, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
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ERC OF MINN INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
ERC OF OHIO, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
ESI-NEVADA HOLDING COMPANY, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
ESI AMERICA, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
ESI RISK MANAGEMENT AGENCY, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
ESI MIDWEST, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
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ESI-NEW YORK, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
FIDELITY RESOURCES CORPORATION
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
LOGISTICS PERSONNEL CORP.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
PHOENIX CAPITAL MANAGEMENT, INC.
By: /s/ KEVIN M. DUDDLESTEN
------------------------------------
Name: Kevin M. Duddlesten
Title: Corporate Secretary
SIGNING HOLDERS
ALLIANCE CAPITAL MANAGEMENT, L.P.,
as investment advisor
By: /s/ KATALIN E. KUTASI
------------------------------------
Name: Katalin E. Kutasi
Title: Senior Vice President
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THE DREYFUS CORPORATION
By: /s/ JOHN V. KOERBER
------------------------------------
Name: John V. Koerber
Title:
ML CLO XII PILGRIM AMERICA (CAYMAN)
LTD., by Pilgrim Investments, Inc.,
By: /s/ KEVEN G. MATHEWS
------------------------------------
Name: Keven G. Mathews
Title: S.V.P./SPM
ML CLO XV PILGRIM AMERICA (CAYMAN) LTD.,
by Pilgrim Investments, Inc.,
By: /s/ KEVEN G. MATHEWS
------------------------------------
Name: Keven G. Mathews
Title: S.V.P./SPM
SALOMON BROTHERS ASSET MANAGEMENT,
as Investment Advisor
By: /s/ FRANK LEE
------------------------------------
Name: Frank Lee
Title: Director
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THE TRUSTEE
THE HUNTINGTON NATIONAL BANK, as Trustee
By: /s/ CANDADA J. MOORE
------------------------------------
Name: Candada J. Moore
Title: Vice President
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