<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended JANUARY 24, 1998
Commission file number 0-24990
WESTERN STAFF SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-1266151
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
301 LENNON LANE
WALNUT CREEK, CALIFORNIA 94598-2453
(510) 930-5300
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Outstanding at March 9, 1998
----------- ----------------------------
Common Stock, $.01 par value 10,336,200 shares
<PAGE>
WESTERN STAFF SERVICES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
January 24, 1998 and November 1, 1997 3
Condensed Consolidated Statements of Operations -
12 weeks ended January 24, 1998 and January 25, 1997 4
Condensed Consolidated Statements of Cash Flows -
12 weeks ended January 24, 1998 and January 25, 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WESTERN STAFF SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JANUARY 24, NOVEMBER 1,
1998 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,159 $ 4,796
Trade accounts receivable, less allowance for doubtful
accounts of $907 and $879 89,962 96,502
Due from licensees 7,168 6,825
Deferred income taxes 2,721 2,511
Other current assets 3,278 3,421
-------- --------
Total current assets 110,288 114,055
Property, plant and equipment, net 19,215 19,583
Deferred income taxes 685 143
Intangible assets, net 22,010 19,181
Other assets 1,728 1,568
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$ 153,926 $154,530
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 17,400 $ 19,700
Current portion of loans payable 850 625
Current portion of note payable to related party 972 973
Accounts payable and accrued expenses 42,942 42,787
Income taxes payable 3,250 4,786
-------- --------
Total current liabilities 65,414 68,871
Loans payable 19,233 16,659
Note payable to related party 972
Deferred income taxes 494
Other long-term liabilities 10,394 10,238
-------- --------
Total liabilities 95,041 97,234
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; authorized and
unissued: 1,000 shares
Common stock, $.01 par value; authorized:
25,000 shares; issued: 10,338 shares 103 103
Additional paid-in-capital 29,073 29,073
Retained earnings 31,230 28,994
Cumulative currency translation (393) (89)
-------- --------
60,013 58,081
Less treasury stock at cost, 96 shares at
January 24, 1998 1,128 785
-------- --------
Total stockholders' equity 58,885 57,296
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$153,926 $154,530
-------- --------
-------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
WESTERN STAFF SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
12 WEEKS ENDED
--------------------------
JANUARY 24, JANUARY 25,
1998 1997
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<S> <C> <C>
Sales of services $140,702 $118,646
License fees 453 319
-------- --------
Total sales of services and license fees 141,155 118,965
Costs of services 110,078 94,751
-------- --------
Gross profit 31,077 24,214
Franchise agents' share of gross profit 5,044 4,486
Selling and administrative expenses 20,155 16,472
Depreciation and amortization 1,561 1,235
-------- --------
Operating income 4,317 2,021
Interest expense 674 278
Interest income (83) (154)
-------- --------
Income before income taxes 3,726 1,897
Provision for income taxes 1,490 759
-------- --------
Net income $ 2,236 $ 1,138
-------- --------
-------- --------
Basic and diluted earnings per share $ 0.22 $ 0.11
-------- --------
-------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
WESTERN STAFF SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
12 WEEKS ENDED
--------------------------
JANUARY 24, JANUARY 25,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,236 $ 1,138
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation 1,162 1,003
Amortization of intangible assets 399 232
Provision for losses on doubtful accounts 242 159
Deferred income taxes (1,246) 2
Changes in assets and liabilities:
Trade accounts receivable 6,049 4,720
Due from licensees (343) 162
Other assets 410 (61)
Accounts payable and accrued expenses 312 (1,099)
Income taxes payable (1,519) (1,596)
Other long-term liabilities 156 71
-------- --------
Net cash from operating activities 7,858 4,731
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for purchases of fixed assets (863) (1,125)
Payments for intangibles and other investments (3,314) (1,342)
Other, net (453) 18
-------- --------
Net cash from investing activities (4,630) (2,449)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (repayments) borrowings under line of credit
agreements (2,300) 3,900
Principal payments on loans payable (1,222) (1,009)
Proceeds from issuance of loans payable 3,050
Purchase of treasury stock (343)
Distributions to stockholders (1,250)
-------- --------
Net cash from financing activities (815) 1,641
-------- --------
Effect of exchange rate on cash (50) (69)
-------- --------
Net change in cash and cash equivalents 2,363 3,854
Cash and cash equivalents at beginning of period 4,796 2,849
-------- --------
Cash and cash equivalents at end of period $ 7,159 $ 6,703
-------- --------
-------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
WESTERN STAFF SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Western
Staff Services, Inc. and its domestic and foreign subsidiaries
(together, the Company), as of and for the 12 week periods ended January
24, 1998 and January 25, 1997 are unaudited. Material intercompany
accounts and transactions have been eliminated.
The condensed consolidated financial statements, in the opinion of
management, reflect all adjustments, which are of a normal recurring
nature, necessary for a fair presentation of the financial position,
results of operations and cash flows for the periods presented.
Certain financial information which is normally included in financial
statements prepared in accordance with generally accepted accounting
principles, but which is not required for interim reporting purposes,
has been condensed or omitted. The accompanying condensed consolidated
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on
Form 10-K for the fiscal year ended November 1, 1997.
The Company's fiscal year is a fifty-two or fifty-three week period
ending the Saturday nearest the end of October. For interim reporting
purposes, the first three fiscal quarters comprise twelve weeks each
while the fourth fiscal quarter consists of sixteen or seventeen weeks.
The results of operations for the 12 week period ended January 24, 1998
are not necessarily indicative of the results to be expected for the
full fiscal year or for any future period.
Certain amounts in the January 25, 1997 financial statements have been
reclassified to conform to the presentation adopted for January 24,
1998.
2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
6
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WESTERN STAFF SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
12 WEEKS ENDED
--------------------------
JANUARY 24, JANUARY 25,
1998 1997
----------- -----------
<S> <C> <C>
Net income $ 2,236 $ 1,138
------- -------
Denominator for basic earnings per share -
weighted average shares 10,258 10,338
Effect of dilutive securities:
Stock options 66 2
------- -------
Denominator for diluted earnings per
share - adjusted weighted average
shares and assumed conversions 10,324 10,340
Basic earnings per share $ 0.22 $ 0.11
------- -------
------- -------
Diluted earnings per share $ 0.22 $ 0.11
------- -------
------- -------
</TABLE>
For the 12 weeks ended January 25, 1997, options to purchase 415 shares
of common stock were outstanding but were not included in the
computation of diluted earnings per share because the options' exercise
price was greater than the average market price of the common shares,
and, therefore, the effect would be antidilutive.
3. COMMITMENTS AND CONTINGENCIES
The Company is subject to claims and other actions arising in the
ordinary course of business. Some of these claims and actions have
resulted in lawsuits in which the Company is a defendant. Management
believes that the ultimate obligations, if any, which may result from
unfavorable outcomes of such lawsuits will not have a material adverse
effect on the business, financial position, results of operations or
cash flows of the Company and that such obligations, if any, would be
adequately covered by insurance.
4. SUBSEQUENT EVENTS
As of March 4, 1998, the Company entered into an agreement with its
existing syndicated bank group to provide senior secured credit
facilities totaling approximately $111.8 million. The facilities
consist of a $90.0 million, five-year revolving agreement and a $21.8
million six-year term loan. The facilities will be available to
refinance existing indebtedness, provide working capital needs, and for
general corporate purposes, including capital expenditures and
acquisitions. The new credit facility replaces the credit facility
existing as of January 24, 1998 which was to expire on March 31, 1998.
As of March 9, 1998, the Company had borrowed $20.0 million under the
revolving agreement and $18.0 million under the six-year term loan.
7
<PAGE>
WESTERN STAFF SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The following discussion is intended to assist in the understanding and
assessment of significant changes and trends related to the results of
operations and financial condition of Western Staff Services, Inc.,
together with its consolidated subsidiaries. This discussion and analysis
should be read in conjunction with the Company's Condensed Consolidated
Financial Statements and Notes thereto included herein and with the
Consolidated Financial Statements and Notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended November 1,
1997.
In addition to historical information, management's discussion and analysis
includes certain forward-looking statements regarding events and financial
trends which may affect the Company's future operating results and
financial position. These forward-looking statements include, but are not
limited to, statements regarding gross margins, workers' compensation
costs, selling and administrative expenses, interest expense, income taxes,
capital expenditures, capital resources and management information systems.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes
no obligation to publicly release the result of any revisions to these
forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
The forward-looking statements included herein are also subject to a number
of other risks and uncertainties that could cause the Company's actual
results and financial position to differ materially from those anticipated
in the forward-looking statements. Such risks and uncertainties include,
but are not limited to: demand for the Company's services, the competition
within its markets, the loss of a principal customer and the Company's
ability to increase the productivity of its existing offices, to control
costs, to expand operations and the availability of sufficient personnel.
Due to the foregoing factors, it is possible that in some future period the
Company's results of operations may be below the expectations of public
market analysts and investors. In addition, the Company's results of
operations have historically been subject to quarterly and seasonal
fluctuations, with demand for temporary staffing historically highest in
the fourth fiscal quarter, due largely to the planning cycles of many of
the Company's customers, and typically lower in the first fiscal quarter,
due, in part, to national holidays as well as to plant shutdowns during and
after the holiday season. These and other risks and uncertainties related
to the Company's business are described in detail in the "Business" section
of the Company's Annual Report on Form 10-K for the fiscal year ended
November 1, 1997.
OVERVIEW
The Company provides traditional temporary staffing services to businesses,
government agencies and health care organizations in regional and local
markets in the United States and selected international markets. The
Company was founded in 1948 with an office in San Francisco, gradually
expanding to over 400 offices in the United States, the United Kingdom,
Australia, New Zealand, Denmark and Norway. Beginning in the late 1950s,
the Company began its franchise agent program and in fiscal 1993 introduced
its licensing program.
8
<PAGE>
WESTERN STAFF SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The general level of economic activity significantly affects the demand for
temporary personnel. As economic activity has slowed, the use of temporary
employees often has been curtailed before permanent employees have been
released. In addition, an economic downturn may adversely affect the
demand for temporary personnel and may have a material adverse effect on
the Company's business, results of operations and financial condition. As
economic activity has increased, temporary employees often have been added
to the work force before permanent employees have been hired. During these
periods of increased economic activity and generally higher levels of
employment, the competition among temporary staffing firms for qualified
temporary personnel is intense. Further, the Company may face increased
competitive pricing pressures during such periods. There can be no
assurance that during these periods the Company will be able to recruit the
temporary personnel necessary to fill its customers' job orders or that
such pricing pressures will not adversely affect the Company's business,
results of operations and financial condition.
RESULTS OF OPERATIONS
SALES OF SERVICES AND LICENSE FEES. Sales of services increased $22.1
million or 18.6% for the fiscal quarter ended January 24, 1998 as compared
to the fiscal quarter ended January 25, 1997. The increase resulted from a
15.2% increase in billed hours and a 2.8% increase in average billing rates
per hour. Billed hours increased primarily due to increased demand in the
Company's existing offices, acquisitions and new office openings. Same
store sales increased approximately 14.4% for the first quarter of fiscal
1998 as compared to the first quarter of fiscal 1997. Acquisitions
accounted for approximately $7.8 million of the increase in sales for the
first quarter of fiscal 1998 as compared to the first quarter of fiscal
1997. Sales of services for the first quarter of fiscal 1998 increased
17.3%, 10.8 % and 43.3 %, respectively, for the Company's domestic business
services, international business services and medical services, as compared
to the first quarter of fiscal 1997. Excluding the effect of foreign
currency rate fluctuations, sales of services increased 23.4% for
international business services. The increase in average billing rates
reflects inflationary factors, the effects of the Company's gross profit
improvement program implemented during the first quarter of fiscal 1997 and
changes in the Company's overall business mix.
License fees are charged to licensed offices based either on a percentage
of sales or of gross profit generated by the licensed offices. License
fees increased $134,000 or 42.0% for the fiscal quarter ended January 24,
1998 as compared to the fiscal quarter ended January 25, 1997. During the
period from January 25, 1997 to January 24, 1998, two franchise agents
converted to the license program and one licensee converted from the
license program to the franchise program.
COSTS OF SERVICES. Costs of services include hourly wages of temporary
employees, employer payroll taxes, state unemployment and workers'
compensation insurance and other employee-related costs. Costs of services
increased $15.3 million or 16.2% for the fiscal quarter ended January 24,
1998 as compared to the fiscal quarter ended January 25, 1997. Gross
margin increased from 20.4% in the first quarter of fiscal 1997 to 22.0% in
the first quarter of fiscal
9
<PAGE>
WESTERN STAFF SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
1998, primarily due to the Company's gross profit improvement program
implemented during the first quarter of fiscal 1997, higher relative sales
for medical services (which typically generate higher gross margins), and
lower unemployment insurance costs as a percentage of sales of services and
license fees. During the first quarter of fiscal 1997 the Company began
implementation of a nationwide program directed toward maximizing gross
margins by increasing prices on a national basis to select customers and
targeting higher margin business. As a result of this program, the Company
generated progressively higher gross margins throughout fiscal 1997
increasing gross margins from 20.4% in the first quarter of fiscal 1997 to
21.0%, 21.3%, and 22.1%, respectively, for the second, third and fourth
quarters of fiscal 1997. Gross margins dropped slightly to 22.0% for the
first quarter of fiscal 1998 as compared to the fourth quarter of fiscal 1997
due to increased holiday pay and seasonal factors. While competition within
the staffing industry remains high, with the current levels of low
unemployment, the Company believes that opportunities exist to continue to
improve gross margins in fiscal 1998. However, there can be no assurance
that the Company will be successful in either increasing gross margins or
eliminating any decreases in gross margins.
Workers' compensation costs were 3.6% of payroll for each of the fiscal
quarters ended January 24, 1998 and January 25, 1997. The Company
currently estimates that the overall costs for workers' compensation as a
percentage of direct labor will be generally consistent for fiscal 1998 as
compared to fiscal 1997. The costs may vary depending upon the mix of
business between clerical, light industrial and medical. However, there
can be no assurance that the Company's programs to control workers'
compensation expenses will be effective or that loss development trends
will not require a charge to costs of services in future periods to
increase workers' compensation accruals.
FRANCHISE AGENTS' SHARE OF GROSS PROFIT. Franchise agents' share of gross
profit represents the net distribution paid to franchise agents based
either on a percentage of sales or of the gross profit generated by the
franchise agents' operation. Franchise agents' share of gross profit
increased $558,000 or 12.4% for the fiscal quarter ended January 24, 1998
as compared to the fiscal quarter ended January 25, 1997. As a percentage
of sales of services and license fees, franchise agents' share of gross
profit declined from 3.8% during the first quarter of fiscal 1997 to 3.6%
for the first quarter of fiscal 1998. This decrease is primarily the
result of a decrease in the proportion of sales and gross profits for
franchise offices as compared to Company-owned.
SELLING AND ADMINISTRATIVE EXPENSES (INCLUDING DEPRECIATION AND
AMORTIZATION). Selling and administrative expenses increased $4.0 million
or 22.6% for the first quarter of fiscal 1998 as compared to the same
period for fiscal 1997. As a percentage of sales of services and license
fees, selling and administrative expenses increased from 14.9% for the
fiscal 1997 quarter to 15.4% for the fiscal 1998 quarter. The increase in
selling and administrative expenses as a percentage of sales of services
and license fees is primarily due to higher incentive compensation costs, a
higher proportion of business generated through Company-owned offices as
compared to franchise offices, and higher amortization costs resulting from
increased acquisition activity.
10
<PAGE>
WESTERN STAFF SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The Company's incentive compensation plans are directed towards increasing
gross profits and operating income. These incentive costs increased during
the first quarter of fiscal 1998 as a direct result of the significant
increases in both gross profit and operating income for the first quarter of
fiscal 1998 as compared to the first quarter of fiscal 1997. The relative
volume of franchise business also affects the overall selling and
administrative costs. As the proportion of franchise sales and gross profits
declines relative to total sales, franchise agents' share of gross profit
declines as a percentage of sales of services and license fees, and selling
and administrative costs tend to increase as a percentage of sales of
services and license fees. The fiscal 1998 and fiscal 1997 quarters include
costs of $355,000 and $303,000, respectively, relating to employee
severances.
Selling and administrative expenses are also affected by the Company's
management information systems. Starting in fiscal 1995, the Company began
conversion of all domestic business services offices to a new comprehensive
payroll and billing system. This conversion was completed during the first
quarter of fiscal 1998. The Company is currently in the process of
completing the development of an integrated search and retrieval function
within the payroll and billing system and expects to begin roll-out of this
feature by the third quarter of fiscal 1998. The Company is also in the
process of evaluating and implementing available hardware and programming
options to increase the capacity of the system to meet projected volume
increases and is continuing to review its remaining financial accounting
and reporting systems. The Company anticipates changing certain of its
back office financial accounting and reporting systems during fiscal 1999
to enhance processing, inquiry and reporting functions. In addition to the
business services systems, the Company completed the conversion of its
medical services offices to a comprehensive clinical and financial
accounting and reporting package during the first quarter of fiscal 1998.
The Company is currently working on additional enhancements to the medical
system to improve efficiency and performance of the system. There can be no
assurance that the Company will meet its anticipated completion dates for
planned system enhancements to its search and retrieval, financial and
accounting reporting systems or its medical system, or that such
enhancements will support the Company's actual future growth or provide
significant gains in efficiency. The failure of the enhancements to meet
these expected goals could result in increased system costs and have a
material adverse effect on the Company's business, results of operations
and financial condition.
INTEREST EXPENSE. Interest expense increased $396,000 or 142.4% for the
fiscal quarter ended January 24, 1998 as compared to the fiscal quarter
ended January 25, 1997, reflecting higher average borrowings outstanding
during the fiscal 1998 quarter required to support the Company's internal
growth and acquisitions. As a result of increased borrowings required to
support the Company's growth, acquisitions and working capital needs, the
Company anticipates higher interest expense for the remainder of fiscal
1998 as compared to fiscal 1997.
PROVISION FOR INCOME TAXES. The provision for income taxes for the first
quarter of fiscal 1998 was $1.5 million as compared to $759,000 for the
first quarter of fiscal 1997. This increase was due primarily to the
increase in income before income taxes of $1.8 million. The effective
11
<PAGE>
WESTERN STAFF SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
income tax rate was 40.0% for each of the fiscal quarters ended January 24,
1998 and January 25, 1997. The Company currently estimates that the
effective income tax rate for fiscal 1998 will be approximately 40.0%.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its operations through cash
generated by operating activities and through various forms of external
financing, including term loans, mortgage financing and bank lines of
credit. The principal use of cash is for financing of accounts receivable,
particularly during periods of growth. Temporary personnel are generally
paid on a weekly basis while payments from customers are generally received
30 to 60 days after billing (or longer for medical). As a result of
seasonal fluctuations, accounts receivable balances are historically higher
in the fourth fiscal quarter and are generally at their lowest during the
first fiscal quarter. Short-term borrowings used to finance accounts
receivable follow a similar seasonal pattern.
Net cash flows from operating activities were $7.9 million and $4.7 million
for the fiscal quarter ended January 24, 1998 and the fiscal quarter ended
January 25, 1997, respectively. The increase in cash flows from operating
activities is primarily due to higher net income and seasonal collections
of accounts receivable. The Company is continuing to focus efforts on
collection of accounts receivable to reduce the overall days outstanding,
particularly for Medicare reimbursements. The Company has implemented a
number of procedures and incentive programs for both corporate and field
staff designed to reduce the average number of days outstanding. However,
there can be no assurance that these programs will be effective in
improving the cash flow related to Company receivables.
Cash used for capital expenditures, which are generally for software,
computers and peripherals, and office furniture and equipment, totaled
$863,000 for the fiscal quarter ended January 24, 1998 and $1.1 million for
the fiscal quarter ended January 25, 1997. During the first quarter of
fiscal 1998, the Company completed the conversion of its domestic business
services processing sites to the payroll and billing portion of the
Company's new management information system. While the payroll and
billing portion of the new system is in place, the Company expects to make
further enhancements to the system to increase the volume processing
capacity of the system, to provide additional search and retrieval
capabilities, to implement additional modules to streamline the processing
functions and to expand its hardware capabilities. Further, the Company is
in the process of reviewing its remaining financial accounting and
reporting systems and anticipates changing certain of its back office
financial accounting and reporting systems during fiscal 1999 to enhance
processing, inquiry and reporting functions. During the first quarter of
fiscal 1998, the Company also completed the conversion of its medical
services offices to a comprehensive clinical and financial accounting and
reporting package. The Company is currently working on additional
enhancements to the medical system to improve efficiency and performance of
the system. The Company has no other significant commitments for capital
purchases.
12
<PAGE>
WESTERN STAFF SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
During the fiscal quarters ended January 24, 1998 and January 25, 1997, cash
outflows for new acquisitions and for contingent payments under existing
acquisitions totaled $3.3 million and $1.3 million, respectively. Payments of
$1.0 million and $1.2 million related to acquisitions are due for both fiscal
1998 and fiscal 1999 with additional consideration contingent on sales, gross
profits or pre-tax income of the acquired businesses in future periods.
During the fiscal quarter ended January 24, 1998, the Company reduced overall
debt by $472,000. During the fiscal quarter ended January 25, 1997, the
Company increased borrowings by a net $2.9 million primarily to provide
working capital to support the Company's growth and operations. Distributions
to stockholders totaled $1.25 million in the first fiscal quarter of 1997
representing a portion of the remaining undistributed S corporation earnings
of the Company. The final distribution of S corporation earnings of $1.25
million was made in the second quarter of fiscal 1997. The Company does not
anticipate declaring or paying any dividends on its common stock in the
foreseeable future.
During the first quarter of fiscal 1998, the Company repurchased 20,000
shares of common stock on the open market for aggregate cash consideration of
$342,500. The repurchased shares may be reissued under the Company's stock
option and employee stock purchase plans. As of March 4, 1998 of the second
fiscal quarter, 94,002 shares were reissued under the employee stock option
and purchase plans with aggregate cash proceeds of $1.2 million.
As of January 24, 1998, the Company's credit facility provided for a secured
revolving line of credit in the amount of $40.0 million, with the maximum
amount of direct advances limited to $25.0 million and the maximum amount of
irrevocable standby letters of credit limited to $15.0 million. The facility
also provides for a non-revolving line of credit, to be used for
acquisitions, converting on March 31, 1998 to a six-year fully amortized term
loan in an amount up to $21.8 million. As of January 24, 1998, the Company
had $16.7 million available under its term loan and revolving credit
facility, consisting of $7.6 million available for direct advances, $5.0
million for irrevocable standby letters of credit and $4.1 million under the
non-revolving line of credit to be used for acquisitions.
As of March 4, 1998, the Company entered into an agreement with its existing
syndicated bank group to provide senior secured credit facilities totaling
approximately $111.8 million. The facilities consist of a $90.0 million,
five-year revolving agreement and a $21.8 million six-year term loan. The
facilities will be available to refinance existing indebtedness, provide
working capital needs, and for general corporate purposes, including capital
expenditures and acquisitions. The new credit facility replaces the credit
facility existing as of January 24, 1998 which was to expire on March 31,
1998. As of March 9, 1998, the Company had borrowed $20.0 million under
the revolving agreement and $18.0 million under the six-year term loan.
13
<PAGE>
WESTERN STAFF SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The Company believes that cash from operations and the Company's current
borrowing capacity will be sufficient to meet anticipated needs for working
capital and capital expenditures at least through the next twelve months.
14
<PAGE>
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 1. LEGAL PROCEEDINGS
The Company is not currently a party to any litigation that
could have a material adverse effect on its business, results of
operations, financial position or cash flows. However, from time
to time the Company has been threatened with, or named as a
defendant in, lawsuits, including countersuits brought by former
franchise agents, and administrative claims and lawsuits brought
by employees or former employees.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
10.8.7 Credit Agreement dated as of March 4, 1998
27.1 Financial Data Schedule
- ----------------
(b) Reports on Form 8-K
No reports on Form 8-K were filed in or for the 12 week
period ended January 24, 1998.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTERN STAFF SERVICES, INC.
March 10, 1998 /s/ Dirk A. Sodestrom
-------------- -------------------------------------
Date Dirk A. Sodestrom
Vice President and Controller
16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
Dated as of March 4, 1998
among
WESTERN STAFF SERVICES (USA), INC.
and
WESTERN MEDICAL SERVICES, INC.,
as Borrowers,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent and Issuing Bank,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO,
as Banks
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . 1
1.01 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Interpretive Provisions. . . . . . . . . . . . . . . . . . . . . 19
(a) Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . 19
(b) The Agreement. . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Certain Common Terms . . . . . . . . . . . . . . . . . . . . 19
(d) Performance; Time. . . . . . . . . . . . . . . . . . . . . . 19
(e) Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 19
(f) Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(g) Captions . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(h) Independence of Provisions . . . . . . . . . . . . . . . . . 19
(i) Interpretation . . . . . . . . . . . . . . . . . . . . . . . 20
1.03 Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE II
THE CREDITS . . . . . . . . . . . . . . 20
2.01 Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . . 20
(a) The Term Credit. . . . . . . . . . . . . . . . . . . . . . . 20
(b) The Revolving Credit . . . . . . . . . . . . . . . . . . . . 20
2.02 Loan Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.03 Procedure for Borrowing. . . . . . . . . . . . . . . . . . . . . . . . 21
2.04 Conversion and Continuation Elections. . . . . . . . . . . . . . . . . 22
2.05 Voluntary Termination or Reduction of Commitments. . . . . . . . . . . 23
2.06 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.07 Mandatory Prepayments of Loans . . . . . . . . . . . . . . . . . . . . 24
(a) Excess Outstandings . . . . . . . . . . . . . . . . . . . . . 24
(b) Sale of WMS . . . . . . . . . . . . . . . . . . . . . . . . . 24
(c) General . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(d) Reduction of Commitment . . . . . . . . . . . . . . . . . . . 24
2.08 Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) The Term Credit . . . . . . . . . . . . . . . . . . . . . . . 24
(b) The Revolving Credit. . . . . . . . . . . . . . . . . . . . . 24
2.09 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.10 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) Agency Fee. . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Unused Commitment Fee . . . . . . . . . . . . . . . . . . . . 25
(c) Revolving Commitment Fee. . . . . . . . . . . . . . . . . . . 26
2.11 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . . 26
2.12 Payments by the Borrowers. . . . . . . . . . . . . . . . . . . . . . . 26
2.13 Payments by the Banks to the Agent . . . . . . . . . . . . . . . . . . 27
2.14 Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . . . . 27
2.15 Security and Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE III
THE LETTERS OF CREDIT. . . . . . . . . . . . 28
3.01 The Letter of Credit Subfacility.. . . . . . . . . . . . . . . . . . . 28
3.02 Issuance, Amendment and Renewal of Letters of Credit . . . . . . . . . 29
3.03 Existing BofA Letters of Credit; Risk Participations, Drawings and
Reimbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.04 Repayment of Participations. . . . . . . . . . . . . . . . . . . . . . 32
3.05 Role of the Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . 32
3.06 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.07 Cash Collateral Pledge . . . . . . . . . . . . . . . . . . . . . . . . 34
3.08 Letter of Credit Fees. . . . . . . . . . . . . . . . . . . . . . . . . 34
3.09 Uniform Customs and Practice . . . . . . . . . . . . . . . . . . . . . 34
-i-
<PAGE>
Section Page
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ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . 35
4.01 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.03 Increased Costs and Reduction of Return. . . . . . . . . . . . . . . . 37
4.04 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.05 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . 39
4.06 Certificates of Banks. . . . . . . . . . . . . . . . . . . . . . . . . 39
4.07 Substitution of Banks. . . . . . . . . . . . . . . . . . . . . . . . . 39
4.08 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE V
CONDITIONS PRECEDENT. . . . . . . . . . . . 39
5.01 Conditions of Initial Credit Extensions. . . . . . . . . . . . . . . . 39
(a) Credit Agreement. . . . . . . . . . . . . . . . . . . . . . . 39
(b) Resolutions; Incumbency . . . . . . . . . . . . . . . . . . . 39
(c) Articles of Incorporation; By-laws and Good Standing. . . . . 40
(d) Collateral Documents. . . . . . . . . . . . . . . . . . . . . 40
(e) Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(f) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . 40
(g) Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . 41
(h) Repayment of Existing Credit Facilities . . . . . . . . . . . 41
(i) Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 41
(j) Financial Statements. . . . . . . . . . . . . . . . . . . . . 41
(k) Insurance Policies. . . . . . . . . . . . . . . . . . . . . . 41
(l) Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . 41
(m) Other Documents . . . . . . . . . . . . . . . . . . . . . . . 41
5.02 Conditions to All Credit Extensions. . . . . . . . . . . . . . . . . . 41
(a) Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(b) Continuation of Representations and Warranties. . . . . . . . 41
(c) No Existing Default . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . . . 42
6.01 Corporate Existence and Power. . . . . . . . . . . . . . . . . . . . . 42
6.02 Corporate Authorization; No Contravention. . . . . . . . . . . . . . . 42
6.03 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . 42
6.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.06 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.07 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.08 Use of Proceeds; Margin Regulations. . . . . . . . . . . . . . . . . . 43
6.09 Title to Properties. . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.11 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.12 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . 44
6.13 Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.14 Regulated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.15 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . 45
6.16 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.17 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.18 Copyrights, Patents, Trademarks and Licenses, etc. . . . . . . . . . . 45
6.19 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.20 Principal Place of Business. . . . . . . . . . . . . . . . . . . . . . 46
6.21 Licensee Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.22 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.23 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.24 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
-ii-
<PAGE>
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6.25 Swap Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.26 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VII
AFFIRMATIVE COVENANTS. . . . . . . . . . . . 47
7.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.02 Certificates; Other Information. . . . . . . . . . . . . . . . . . . . 47
7.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.04 Preservation of Corporate Existence, Etc . . . . . . . . . . . . . . . 50
7.05 Maintenance of Property. . . . . . . . . . . . . . . . . . . . . . . . 50
7.06 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.07 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . 50
7.08 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.09 Inspection of Property and Books and Records . . . . . . . . . . . . . 51
7.10 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.11 Use of Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.12 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.13 Inactive Subsidiaries; New Subsidiaries. . . . . . . . . . . . . . . . 51
7.14 Licensee Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.15 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.16 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VIII
NEGATIVE COVENANTS . . . . . . . . . . . . 53
8.01 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.02 Disposition of Assets. . . . . . . . . . . . . . . . . . . . . . . . . 54
8.03 Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . . . 54
8.04 Loans and Investments. . . . . . . . . . . . . . . . . . . . . . . . . 55
8.05 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . 56
8.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . 56
8.07 Use of Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.08 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . 56
8.09 Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.10 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . . . . . 56
8.11 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.12 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . 57
8.13 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.14 Current Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.15 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . 58
8.16 Total Debt to EBITDA Ratio . . . . . . . . . . . . . . . . . . . . . . 58
8.17 Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . 58
8.18 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . 58
8.19 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.20 Change in Structure. . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.21 Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE IX
EVENTS OF DEFAULT. . . . . . . . . . . . . 59
9.01 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . . 59
(b) Representation or Warranty. . . . . . . . . . . . . . . . . . 59
(c) Specific Defaults . . . . . . . . . . . . . . . . . . . . . . 59
(d) Other Defaults. . . . . . . . . . . . . . . . . . . . . . . . 59
(e) Cross-Default . . . . . . . . . . . . . . . . . . . . . . . . 59
(f) Insolvency; Voluntary Proceedings . . . . . . . . . . . . . . 59
(g) Involuntary Proceedings . . . . . . . . . . . . . . . . . . . 60
(h) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(i) Suits Filed by Trade Creditors. . . . . . . . . . . . . . . . 60
(j) Monetary Judgments. . . . . . . . . . . . . . . . . . . . . . 60
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<PAGE>
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(k) Non-Monetary Judgments. . . . . . . . . . . . . . . . . . . . 60
(l) Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . 60
(m) Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(n) Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . 61
(o) Guarantor Defaults. . . . . . . . . . . . . . . . . . . . . . 61
(p) Invalidity of Subordination Provisions. . . . . . . . . . . . 61
9.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.03 Specified Swap Contract Remedies . . . . . . . . . . . . . . . . . . . 62
9.04 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE X
THE AGENT AND ISSUING BANK . . . . . . . . . . 62
10.01 Appointment and Authorization . . . . . . . . . . . . . . . . . . . . 62
10.02 Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . . . . 63
10.03 Liability of Agent and Issuing Bank . . . . . . . . . . . . . . . . . 63
10.04 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.06 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.08 Agent in Individual Capacity. . . . . . . . . . . . . . . . . . . . . 65
10.09 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.10 Collateral Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.11 Co-Agents; Lead Managers. . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE XI
MISCELLANEOUS. . . . . . . . . . . . . . 66
11.01 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . 66
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.03 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . . . 67
11.04 Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.05 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
(a) General Indemnity . . . . . . . . . . . . . . . . . . . . . . 68
(b) Survival; Defense . . . . . . . . . . . . . . . . . . . . . . 68
11.06 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . 69
11.07 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . 69
11.08 Assignments, Participations, etc. . . . . . . . . . . . . . . . . . . 69
11.09 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.10 Automatic Debits of Fees. . . . . . . . . . . . . . . . . . . . . . . 71
11.11 Notification of Addresses, Lending Offices, Etc.. . . . . . . . . . . 71
11.12 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.13 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.14 No Third Parties Benefited. . . . . . . . . . . . . . . . . . . . . . 72
11.15 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.16 Governing Law and Jurisdiction. . . . . . . . . . . . . . . . . . . . 72
11.17 Arbitration; Reference Proceeding . . . . . . . . . . . . . . . . . . 72
11.18 Joint and Several Liability of the Borrowers; Waiver of
Certain Defenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.19 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
-iv-
<PAGE>
SCHEDULES
Schedule 2.01(a) Term Commitment
Schedule 2.01(b) Revolving Commitment
Schedule 3.03 Existing BofA Letters of Credit
Schedule 6.05 Litigation
Schedule 6.07 ERISA
Schedule 6.12 Environmental Matters
Schedule 6.19 Subsidiaries and Equity Investments
Schedule 6.21 Licensee Loans
Schedule 8.01 Permitted Liens
Schedule 8.08 Contingent Obligations
Schedule 11.02 Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Guaranty
</TABLE>
-v-
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of March 4, 1998, among WESTERN
STAFF SERVICES (USA), INC., a California corporation ("WSS"), WESTERN MEDICAL
SERVICES, INC., a California corporation ("WMS" and together with WSS,
collectively, the "BORROWERS" and individually, a "BORROWER"), the several
financial institutions from time to time party to this Agreement (collectively,
the "BANKS"; individually, a "BANK"), and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as letter of credit issuing bank and as agent for the
Banks.
WHEREAS, the Banks have agreed to make available to the Borrowers a term
loan and revolving credit facility, with letter of credit subfacility, upon the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINED TERMS. In addition to the terms defined elsewhere in this
Agreement, the following terms have the following meanings:
"ACQUIREE" means a Person or Business Unit which is the subject of an
Acquisition by a Borrower or any other Loan Party.
"ACQUISITION" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person or of any
Business Unit, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests or equity of any Person or otherwise causing
any Person to become a Subsidiary of the Parent, or (c) a merger or
consolidation or any other combination with another Person (other than a
Person that is a Subsidiary of the Parent) provided that one of the
Borrowers is the surviving entity in a merger in which any such Borrower is
a party.
"ACQUISITION RELATED INDEBTEDNESS" means all Indebtedness incurred or
created in connection with the Acquisition by a Borrower or any other Loan
Party of an Acquiree, including the assumption of existing Indebtedness of
an Acquiree and the portion of Aggregate Consideration payable in future
periods (including the estimated value of the " contingent earn-out" that
may be payable to the selling party or parties in future periods on the
basis of the Acquiree's future performance).
"AFFECTED BANK" has the meaning specified in Section 4.07.
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities, by
contract or otherwise. Without limitation, any director, executive officer
or beneficial owner of 5% or more of the equity of a Person shall for the
purposes of this Agreement, be deemed to control the other Person.
Notwithstanding the foregoing, (a) no Bank and (b) no Franchisee or
Licensee of WSS or WMS (solely by reason of a franchisor/franchisee or
licensee/licensor relationship) shall be deemed an "Affiliate" of WSS or
WMS or of any other Loan Party.
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"AGENT" means BofA in its capacity as agent for the Banks hereunder,
and any successor agent.
"AGENT-RELATED PERSONS" means BofA and any successor agent arising
under Section 10.09 and any successor letter of credit issuing bank
hereunder, together with their respective Affiliates, and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"AGENT'S PAYMENT OFFICE" means the address for payments set forth on
SCHEDULE 11.02 in relation to the Agent or such other address as the Agent
may from time to time specify in accordance with Section 11.02.
"AGGREGATE COMMITMENT" means the combined Commitments of the Banks in
the initial amount of One Hundred Eleven Million Eight Hundred Forty-Five
Thousand Dollars ($111,845,000), as such amount may be reduced from time to
time pursuant to this Agreement.
"AGGREGATE CONSIDERATION" means the total of all cash and other
assets paid or to be paid by a Borrower or any other Loan Party for an
Acquisition, including the amount of Acquisition Related Indebtedness
related to such Acquisition.
"AGGREGATE L/C COMMITMENT" means the combined L/C Commitments of the
Banks, in the initial amount of Twenty Million Dollars ($20,000,000), as
such amount may be reduced from time to time pursuant to this Agreement;
provided, that the Aggregate L/C Commitment is a part of the Aggregate
Revolving Commitment.
"AGGREGATE REVOLVING COMMITMENT" means the combined Revolving
Commitments of the Banks, in the initial amount of Ninety Million Dollars
($90,000,000), as such amount may be reduced from time to time pursuant to
this Agreement.
"AGGREGATE SPECIFIED SWAP AMOUNT" means, at any time, the sum of all
Specified Swap Amounts owing to all Swap Providers.
"AGREEMENT" means this Credit Agreement, as amended from time to time
in accordance with the terms hereof.
"APPLICABLE MARGIN" means
(i) with respect to Base Rate Loans, zero percent (0)%;
(ii) with respect to Offshore Rate Loans, the Applicable
Offshore Rate Margin.
"APPLICABLE OFFSHORE RATE MARGIN" means percentage determined as set
forth below:
(i) on the Closing Date and until such time as clause (ii),
(iii), (iv), (v), or (vi) below becomes applicable, .75%;
(ii) on and after the fifteenth day following receipt by the
Banks and the Agent of the financial statements required under
Section 7.01(a) and (b), which statements evidence a Total Debt To
EBITDA Ratio of 2.0:1 or less for the Parent and its consolidated
Subsidiaries for the most recently concluded fiscal quarter covered
by such financial statements, .75%;
(iii) on and after the fifteenth day following receipt by the
Banks and the Agent of the financial statements required under
Section 7.01(a) and (b), which statements evidence a Total Debt to
EBITDA Ratio of 2.5:1 or less, but greater than 2.0:1, for the Parent
and its consolidated Subsidiaries for the most recently
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concluded fiscal quarter covered by such financial statements, .875%;
(iv) on and after the fifteenth day following receipt by the
Banks and the Agent of the financial statements required under
Section 7.01(a) and (b), which statements evidence a Total Debt to
EBITDA Ratio of 2.75:1 or less, but greater than 2.5:1, for the
Parent and its consolidated Subsidiaries for the most recently
concluded fiscal quarter covered by such financial statements, 1.0%;
(v) on and after the fifteenth day following receipt by the
Banks and the Agent of the financial statements required under
Section 7.01(a) and (b), which statements evidence a Total Debt to
EBITDA Ratio which is greater than 2.75:1 for the Parent and its
consolidated Subsidiaries for the most recently concluded fiscal
quarter covered by such financial statements, 1.125%;
(vi) on and after the fifteenth day following the Borrowers'
failure to deliver to the Banks and the Agent the financial
statements required under Section 7.01(a) and (b) within the time
periods set forth therein, and until the fifteenth day following
receipt by the Bank and the Agent of such financial statements (at
which time clause (ii), (iii), (iv), or (v) above shall become
applicable), 1.125%.
"ASSIGNEE" has the meaning specified in subsection 11.08(a).
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in subsection
11.08(a).
"ATTORNEY COSTS" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost
of internal legal services and all reasonable disbursements of internal
counsel.
"BANK" has the meaning specified in the introductory clause hereto.
References to the "Banks" shall include references to BofA in its capacity
as Issuing Bank; for purposes of clarification only, to the extent that
BofA may have any rights or obligations in addition to those of the Banks
due to its status as Issuing Bank, its status as such will be specifically
referenced. Unless the context otherwise clearly requires, "Bank" includes
any such institution in its capacity as Swap Provider. Unless the context
otherwise clearly requires, references to any such institution as a "Bank"
shall also include any of such institution's Affiliates that may at any
time of determination be Swap Providers.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, ET SEQ.).
"BASE RATE" means, for any day, the higher of:
(a) the rate of interest in effect for such day as publicly
announced from time to time by BofA in San Francisco, California, as
its "reference rate." It is a rate set by BofA based upon various
factors including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such
announced rate; and
(b) one-half percent (0.50%) per annum above the latest Federal
Funds Rate.
Any change in the reference rate announced by BofA shall take effect at
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the opening of business on the day specified in the public announcement of
such change.
"BASE RATE LOAN" means a Revolving Loan, a Term Loan or an L/C
Advance that bears interest based on the Base Rate.
"BOFA" means Bank of America National Trust and Savings Association,
a national banking association.
"BORROWER SECURITY AGREEMENT" means the Security Agreement
(Receivables, Inventory, Equipment and General Intangibles) executed by the
Borrowers in favor of the Agent for the benefit of the Banks.
"BORROWING" means a borrowing hereunder consisting of Loans made to
the Borrowers on the same day by the Banks pursuant to Article II.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in San Francisco are authorized or required
by law to close and, if the applicable Business Day relates to any Offshore
Rate Loan, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"BUSINESS UNIT" means the assets constituting the business or a
division or operating unit thereof of any Person.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"CAPITAL EXPENDITURES" means, for any period and with respect to any
Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing of fixed or capital assets or
additions to equipment (including replacements, capitalized repairs and
improvements during such period) which should be capitalized under GAAP on
a consolidated balance sheet of such Person and its Subsidiaries. For the
purpose of this definition, the purchase price of equipment which is
purchased simultaneously with the trade-in of existing equipment owned by
such Person or any of its Subsidiaries or with insurance proceeds shall be
included in Capital Expenditures only to the extent of the gross amount of
such purchase price less the credit granted by the seller of such equipment
for such equipment being traded in at such time, or the amount of such
proceeds, as the case may be.
"CAPITAL LEASE" has the meaning specified in the definition of
"Capital Lease Obligations."
"CAPITAL LEASE OBLIGATIONS" means all monetary obligations of the
Borrowers or any other Loan Party under any leasing or similar arrangement
which, in accordance with GAAP, is classified as a capital lease ("CAPITAL
LEASE").
"CASH COLLATERALIZE" means to pledge and deposit with or deliver to
the Agent, for the benefit of the Agent, the Issuing Bank and the Banks, as
additional collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to
the Agent and the Issuing Bank. Derivatives of such term shall have
corresponding meaning. The Borrowers hereby grant the Agent, for the
benefit of the Agent, the Issuing Bank and the Banks, a security interest
in all such cash and deposit account balances. Cash collateral shall be
maintained in blocked, non-interest bearing deposit accounts at the Agent.
"CASH EQUIVALENTS" means:
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(a) securities issued or fully guaranteed or insured by the
United States Government or any agency thereof and backed by the full
faith and credit of the United States having maturities of not more
than six (6) months from the date of acquisition;
(b) certificates of deposit, time deposits, Eurodollar time
deposits, repurchase agreements, reverse repurchase agreements, or
bankers' acceptances, having in each case a tenor of not more than
six (6) months, issued by any Bank, or by any U.S. commercial bank
having combined capital and surplus of not less than One Hundred
Million Dollars ($100,000,000);
(c) commercial paper of an issuer rated at least A-1 by Standard
& Poor's Corporation or P-1 by Moody's Investors Service Inc. and in
either case having a tenor of not more than six (6) months.
"CASH FLOW FOR DEBT SERVICE" has the meaning specified in Section
8.17.
"CERCLA" has the meaning specified in the definition of
"Environmental Laws."
"CLOSING DATE" means the date on which all conditions precedent to
the initial Credit Extension set forth in Article V are satisfied or waived
by all Banks.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder as from time to time in
effect.
"COLLATERAL" means all personal property and interests in personal
property and proceeds thereof now owned or hereafter acquired by any
Borrower or any Guarantor as debtor and any other Loan Party in or upon
which a Lien now or hereafter exists in favor of the Banks, or the Agent on
behalf of the Banks, whether under this Agreement or under any other
documents executed by any such persons and delivered to the Agent or the
Banks.
"COLLATERAL DOCUMENTS" means, collectively, (i) the Borrower Security
Agreement, the Guarantor Security Agreement, and all other security
agreements, mortgages, deeds of trust, patent and trademark assignments,
lease assignments, guarantees and other similar agreements between the
Borrowers or any other Loan Party and the Banks or the Agent for the
benefit of the Banks now or hereafter delivered to the Banks or the Agent
pursuant to or in connection with the transactions contemplated hereby, and
all financing statements (or comparable documents now or hereafter filed in
accordance with the UCC or comparable law) against the Borrowers or any
other Loan Party as debtor in favor of the Banks or the Agent for the
benefit of the Banks as secured party and (ii) any amendments, supplements,
modifications, renewals, replacements, consolidations, substitutions and
extensions of any of the foregoing.
"COMMITMENT" means, for each Bank, the sum of its Revolving
Commitment and Term Commitment.
"COMMITMENT PERCENTAGE" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place) at such time of such Bank's Commitment divided by the Aggregate
Commitment. The initial Commitment Percentage of each Bank is set forth
opposite such Bank's name in SCHEDULE 2.01(b) under the heading "Commitment
Percentage."
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"COMPLIANCE CERTIFICATE" has the meaning specified in subsection
7.02(a).
"CONSOLIDATED NET WORTH" means, as of any date, Consolidated Total
Assets LESS Consolidated Total Liabilities.
"CONSOLIDATED TOTAL ASSETS" means, as of any date of determination,
all amounts which would, in accordance with GAAP, be included under total
assets on a consolidated balance sheet of the Parent and its Subsidiaries.
"CONSOLIDATED TOTAL LIABILITIES" means, as of any date of
determination, all amounts which would, in accordance with GAAP, be
included under total liabilities on a consolidated balance sheet of the
Parent and its Subsidiaries.
"CONTINGENT OBLIGATION" means, as to any Person, (a) any Guaranty
Obligation of that Person; and (b) any direct or indirect obligation or
liability, contingent or otherwise, of that Person, (i) in respect of any
Surety Instrument issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or payments, (ii)
to purchase any materials, supplies or other Property from, or to obtain
the services of, another Person if the relevant contract or other related
document or obligation requires that payment for such materials, supplies
or other Property, or for such services, shall be made regardless of
whether delivery of such materials, supplies or other Property is ever made
or tendered, or such services are ever performed or tendered, or (iii) in
respect of any Swap Contract. The amount of any Contingent Obligation
shall (subject, in the case of Guaranty Obligations, to the last sentence
of the definition of "Guaranty Obligation") be deemed equal to the maximum
reasonably anticipated liability in respect thereof, and shall, with
respect to item (b)(iii) of this definition, be equal to the Swap
Termination Value.
"CONTRACTUAL OBLIGATIONS" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document
or agreement to which such Person is a party or by which it or any of its
property is bound.
"CONVERSION DATE" means any date on which the Borrowers convert a
Base Rate Loan to an Offshore Rate Loan, or an Offshore Rate Loan to a Base
Rate Loan.
"CREDIT EXTENSION" means and includes (a) the making of any Loans
hereunder, and (b) the Issuance of any Letters of Credit hereunder
(including the Existing BofA Letters of Credit).
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"DOLLARS", "DOLLARS" and "$" each mean lawful money of the United
States.
"DOMESTIC LENDING OFFICE" means, with respect to each Bank, the
office of that Bank designated as such on SCHEDULE 11.02 or such other
office of the Bank as it may from time to time specify to the Borrower and
the Agent.
"EBITDA" has the meaning specified in Section 8.16.
"EFFECTIVE AMOUNT" means (i) with respect to any Revolving Loans and
Term Loans on any date, the aggregate outstanding principal amount
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thereof after giving effect to any Borrowings and prepayments or repayments
of Revolving Loans and Term Loans occurring on such date; and (ii) with
respect to any outstanding L/C Obligations on any date, the amount of such
L/C Obligations on such date after giving effect to any Issuances of
Letters of Credit occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a
result of any reimbursements of outstanding unpaid drawings under any
Letters of Credit or any reductions in the maximum amount available for
drawing under Letters of Credit taking effect on such date. For purposes
of subsection 2.07(a) the Effective Amount shall be determined without
giving effect to any mandatory prepayments to be made under subsection
2.07(b) or 2.07(c).
"ELIGIBLE ASSIGNEE" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least One Hundred Million Dollars ($100,000,000);
(ii) a commercial bank organized under the laws of any other country which
is a member of the Organization for Economic Cooperation and Development
(the "OECD"), or a political subdivision of any such country, and having a
combined capital and surplus of at least One Hundred Million Dollars
($100,000,000), provided that such bank is acting through a branch or
agency located in the United States; and (iii) a Person that is primarily
engaged in the business of commercial banking and that is (A) a Subsidiary
of a Bank, (B) a Subsidiary of a Person of which a Bank is a Subsidiary, or
(C) a Person of which a Bank is a Subsidiary.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural resources
damage, or otherwise alleging liability or responsibility for damages
(punitive or otherwise), cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive relief, or other type
of relief, resulting from or based upon the presence, placement, discharge,
emission or release (including intentional and unintentional, negligent and
non-negligent, sudden or non-sudden, accidental or non-accidental,
placement, spills, leaks, discharges, emissions or releases) of any
Hazardous Material at, in, or from Property, whether or not owned by the
Borrowers.
"ENVIRONMENTAL LAWS" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health,
safety and land use matters; including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air
Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-to-Know
Act, the California Hazardous Waste Control Law, the California Solid Waste
Management, Resource, Recovery and Recycling Act, the California Water Code
and the California Health and Safety Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder as from time
to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with any of the Borrowers within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o)
of the Code for purposes of provisions relating to Section 412 of
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the Code).
"ERISA EVENT" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by any Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any
Borrower or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (d) the filing of a notice
of intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings by
the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon any
Borrower or any ERISA Affiliate.
"EURODOLLAR RESERVE PERCENTAGE" has the meaning specified in the
definition of "Offshore Rate".
"EVENT OF DEFAULT" means any of the events or circumstances specified
in Section 9.01.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"EXISTING CREDIT AGREEMENT" means that certain Credit Agreement dated
as of February 21, 1996, as amended to date, among the Borrowers, the
Banks, and the Agent.
"EXISTING BOFA LETTERS OF CREDIT" means the letters of credit
described in SCHEDULE 3.03.
"FDIC" means the Federal Deposit Insurance Corporation, or any entity
succeeding to any of its principal functions.
"FEDERAL FUNDS RATE" means, for any period, the rate per annum set
forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (including
any such successor, "H.15(519)") for such day opposite the caption "Federal
Funds (Effective)". If on any relevant day such rate is not yet published
in H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for
U.S. Government Securities, or any successor publication, published by the
Federal Reserve Bank of New York (including any such successor, the
"Composite 3:30 p.m. Quotation") for such day under the caption "Federal
Funds Effective Rate". If on any relevant day the appropriate rate for
such previous day is not yet published in either H.15(519) or the Composite
3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as
determined by the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York time) on that day by
each of three (3) leading brokers of Federal funds transactions in New York
City selected by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"FEE LETTER" has the meaning specified in Section 2.10(a).
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"FIXED CHARGE COVERAGE RATIO" has the meaning specified in Section
8.17.
"FORM 1001" has the meaning specified in subsection 4.01(f).
"FORM 4224" has the meaning specified in subsection 4.01(f).
"FRANCHISEE" means a Person who has entered into a franchise
agreement with a Borrower pursuant to which (i) all accounts receivable
generated by the operations of such Person remain the property of such
Borrower, and (ii) all temporary employees who render services to customers
of such Person are employees of such Borrower.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the accounting profession), or in such other statements by
such other entity as may be in general use by significant segments of the
U.S. accounting profession, which are applicable to the circumstances as of
the date of determination.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"GUARANTOR" means, when used in the singular, any one of, and, when
used in the plural, collectively all of, the following companies: the
Parent, WESTERN MEDICAL SERVICES (NY), INC. (formerly known as Western
Staff Services (NY), Inc.), a New York corporation, WESTERN TECHNICAL
SERVICES, INC., a California corporation, MEDIAWORLD INTERNATIONAL, a
California corporation, WESTERN STAFF SERVICES (GUAM), INC., a Kansas
corporation, ALTERNATIVE BILLING SERVICES, INC., a California corporation,
BEST TEMPORARIES, INC., a District of Columbia corporation, BEST
TEMPORARIES FEDERAL SYSTEMS, INC., a District of Columbia corporation, and
any other Person that may, after the date hereof, execute a guaranty of
Borrowers' obligations under this Agreement.
"GUARANTOR SECURITY AGREEMENT" means the Security Agreement
(Receivables, Inventory, Equipment and General Intangibles) executed by the
Guarantors in favor of the Agent for the benefit of the Banks.
"GUARANTY" means a guaranty executed by each Guarantor in support of
the Borrowers' Obligations in the form attached hereto as EXHIBIT D, of
even date herewith, as the same may be amended, restated, modified or
supplemented at any time.
"GUARANTY OBLIGATION" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligations")
of another Person (the "primary obligor"), including any obligation of that
Person, whether or not contingent, (a) to purchase, repurchase or
otherwise acquire such primary obligations or any property constituting
direct or indirect security therefor, or (b) to advance or provide funds
(i) for the payment or discharge of any such primary obligation, or (ii) to
maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item,
level of income or financial condition of the primary obligor, or (c) to
purchase property, securities or services
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primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation, or (d) otherwise to assure or hold harmless the holder
of any such primary obligation against loss in respect thereof; in each
case (a), (b), (c) or (d), including arrangements wherein the rights and
remedies of the holder of the primary obligation are limited to
repossession or sale of certain property of such Person. The amount of any
Guaranty Obligation shall be deemed equal to the stated or determinable
amount of the primary obligation in respect of which such Guaranty
Obligation is made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof.
"HAZARDOUS MATERIALS" means all those substances which are regulated
by, or which may form the basis of liability under, any Environmental Law,
including all substances identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or
petroleum or petroleum derived substance or waste.
"HONOR DATE" has the meaning specified in subsection 3.03(c).
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business pursuant to
ordinary terms); (c) all non-contingent reimbursement or payment
obligations with respect to Surety Instruments; (d) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses; (e) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred
as financing, in either case with respect to Property acquired by the
Person (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale
of such property); (f) all Capital Lease Obligations; (g) all indebtedness
referred to in clauses (a) through (f) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien upon or in Property (including accounts and
contracts rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness; and (h) all
Guaranty Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (a) through (g) above.
"INDEMNIFIED LIABILITIES" has the meaning specified in subsection
11.05(a).
"INDEMNIFIED PERSON" has the meaning specified in subsection
11.05(a).
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors, or
other similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; in each case (a) and (b) undertaken
under U.S. Federal, State or foreign law, including the Bankruptcy Code.
"INTEREST PAYMENT DATE" means the last Business Day of each calendar
month; PROVIDED that if the last day of an Interest Period applicable to an
Offshore Rate Loan falls on a day other than the last Business Day of a
calendar month, the last day of such Interest Period shall also be an
Interest Payment Date.
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"INTEREST PERIOD" means, with respect to any Offshore Rate Loan, the
period commencing on the Business Day the Loan is disbursed or continued or
on the Conversion Date on which the Loan is converted to the Offshore Rate
Loan and ending on the date one (1), two (2), three (3) or six (6) months
thereafter, as selected by a Borrower in its Notice of Borrowing or Notice
of Conversion/Continuation; PROVIDED that:
(i) if any Interest Period pertaining to an Offshore Rate Loan
would otherwise end on a day which is not a Business Day, that
Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate Loan
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest
Period;
(iii) no Interest Period for any Term Loan shall extend beyond
the Term Maturity Date and no Interest Period for any Revolving Loan
shall extend beyond the Revolving Termination Date; and
(iv) no Interest Period applicable to a Term Loan or portion
thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of the Term Loans unless the aggregate
principal amount of Term Loans represented by Base Rate Loans or by
Offshore Rate Loans having Interest Periods that will expire on or
before such date is equal to or in excess of the amount of such
principal payment.
"ISSUE" means, with respect to any Letter of Credit, to incorporate
the Existing BofA Letters of Credit into this Agreement, or to issue or to
extend the expiry of, or to renew or increase the amount of, any Letter of
Credit; and the terms "ISSUED," "ISSUING" and "ISSUANCE" have corresponding
meanings.
"ISSUING BANK" means BofA in its capacity as issuer of one or more
Letters of Credit hereunder, together with any replacement letter of credit
issuer arising under Section 10.09.
"JOINT VENTURE" means a single-purpose corporation, partnership,
joint venture or other similar legal arrangement (whether created pursuant
to contract or conducted through a separate legal entity) now or hereafter
formed by a Borrower or any other Loan Party with another Person in order
to conduct a common venture or enterprise with such Person.
"L/C ADVANCE" means each Bank's participation in any L/C Borrowing in
accordance with its Commitment Percentage.
"L/C AMENDMENT APPLICATION" means an application form for amendment
of outstanding standby letters of credit as shall at any time be in use at
the Issuing Bank, as the Issuing Bank shall request.
"L/C APPLICATION" means an application form for issuances of standby
letters of credit as shall at any time be in use at the Issuing Bank, as
the Issuing Bank shall request.
"L/C BORROWING" means an extension of credit resulting from a
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drawing under any Letter of Credit which shall not have been reimbursed on
the date when made nor converted into a Borrowing of Revolving Loans under
subsection 3.03(c).
"L/C COMMITMENT" means for each Bank (including the Issuing Bank) the
commitment to participate in Letters of Credit (including the Existing BofA
Letters of Credit) Issued or outstanding pursuant to Article III and to
make L/C Advances, in an aggregate amount not to exceed on any date the
amount set forth opposite the Bank's name in SCHEDULE 2.01(B) under the
heading "L/C Commitment," as the same shall be reduced as a result of a
reduction in the Aggregate L/C Commitment pursuant to Section 2.05 or as a
result of any assignment pursuant to Section 11.08; provided that each
Bank's L/C Commitment is a part of its Revolving Commitment rather than a
separate, independent commitment.
"L/C OBLIGATIONS" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under all Letters of Credit, including
all outstanding L/C Borrowings.
"L/C-RELATED DOCUMENTS" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing Bank's
standard form documents for letter of credit issuances.
"LENDING OFFICE" means, with respect to any Bank, the office or
offices of the Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, on SCHEDULE
11.02, or such other office or offices of the Bank as it may from time to
time notify the Borrower and the Agent.
"LETTERS OF CREDIT" means the Existing BofA Letters of Credit and any
standby letter of credit Issued by the Issuing Bank pursuant to Article
III.
"LICENSEE" means a licensee of a Borrower under a license agreement.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a Capital Lease Obligation, any
financing lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the UCC or any comparable
law) and any contingent or other agreement to provide any of the foregoing,
but not including the interest of a lessor under an Operating Lease.
"LOAN" means an extension of credit, in the form of a Revolving Loan,
Term Loan or L/C Advance, by a Bank to the Borrowers pursuant to Article II
or III.
"LOAN DOCUMENTS" means this Agreement, the Collateral Documents, the
L/C-Related Documents, the Fee Letter, any documents evidencing or relating
to Specified Swap Contracts, and all other documents delivered to the Agent
or any Bank in connection with the transactions contemplated by this
Agreement.
"LOAN PARTIES" and "LOAN PARTY" means, collectively, the Borrowers
and the Guarantors and, individually, any one of the foregoing.
"MAJORITY BANKS" means at any time Banks then holding at least 66-
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2/3% of the then aggregate unpaid principal amount of the Loans, or, if no
such principal amount is then outstanding, Banks then having at least
66-2/3% of the Commitments, or, if the Commitments have been terminated and
no Loans are then outstanding, Banks then owed a Specified Swap Amount at
least 66-2/3% of the Aggregate Specified Swap Amount.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or
a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Borrowers or the
Parent and its Subsidiaries taken as a whole; (b) a material impairment of
the ability of any Borrower to perform under any Loan Document and avoid
any Event of Default; or (c) a material adverse effect upon (i) the
legality, validity, binding effect or enforceability of any Loan Document,
or (ii) the perfection or priority of any Lien granted to the Banks or to
the Agent for the benefit of the Banks under any of the Collateral
Documents.
"MATERIAL SUBSIDIARY" means, at any time, any Subsidiary of the
Parent having at such time either (i) total net income for the preceding
four (4) fiscal quarter period in excess of ten percent (10%) of the
Parent's consolidated net income for the comparable period or (ii) total
assets, as of the last day of the preceding fiscal quarter, having a net
book value in excess of ten percent (10%) of the Parent's consolidated
total assets as of that date, in each case, based upon the Parent's most
recent annual or quarterly financial statements delivered to the Agent
pursuant to Section 7.01.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", within the meaning
of Section 4001(a)(3) of ERISA, to which any Borrower or any ERISA
Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three (3) calendar years, has made, or been obligated
to make, contributions.
"NOTICE OF BORROWING" means a notice given by a Borrower to the Agent
pursuant to Section 2.03, in substantially the form of EXHIBIT A.
"NOTICE OF CONVERSION/CONTINUATION" means a notice given by a
Borrower to the Agent pursuant to Section 2.04, in substantially the form
of EXHIBIT B.
"NOTICE OF LIEN" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's
office, central filing office or other Governmental Authority for the
purpose of evidencing, creating, perfecting or preserving the priority of a
Lien securing obligations owing to a Governmental Authority.
"OBLIGATIONS" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Borrowers
or any other Loan Party to any Bank, the Agent, or any Indemnified Person,
whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter
arising.
"OFFSHORE LENDING OFFICE" means with respect to each Bank, the office
of such Bank designated as such on SCHEDULE 11.02 or such other office of
such Bank as such Bank may from time to time specify to the Borrower and
the Agent.
"OFFSHORE RATE" means, for each Interest Period in respect of
Offshore Rate Loans comprising part of the same Borrowing, an interest rate
per annum (rounded upward to the nearest 1/16th of 1%) determined pursuant
to the following formula:
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Offshore Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means the maximum reserve
percentage (expressed as a decimal, rounded upward to the nearest
1/100th of 1%) in effect on the date LIBOR for such Interest Period
is determined (whether or not applicable to any Bank) under
regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency
liabilities") having a term comparable to such Interest Period; and
"LIBOR" means the rate of interest per annum determined by the
Agent to be the arithmetic mean (rounded upward to the nearest 1/16th
of 1%) of the rates of interest per annum notified to the Agent by
each Reference Bank as the rate of interest at which dollar deposits
in the approximate amount of the amount of the Loan to be made or
continued as, or converted into, an Offshore Rate Loan by such
Reference Bank and having a maturity comparable to such Interest
Period would be offered to major banks in the London interbank market
at their request at or about 11:00 a.m. (London time) on the second
Business Day prior to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all Offshore Rate
Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
"OFFSHORE RATE LOAN" means a Loan that bears interest based on the
Offshore Rate.
"OPERATING LEASE" means, as applied to any Person, any lease of
Property which is not a Capital Lease.
"ORDINARY COURSE OF BUSINESS" means, in respect of any transaction
involving any Borrower or any other Loan Party, the ordinary course of such
Person's business, as conducted by any such Person in accordance with past
practice and undertaken by such Person in good faith and not for purposes
of evading any covenant or restriction in any Loan Document.
"ORGANIZATION DOCUMENTS" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"OTHER TAXES" has the meaning specified in subsection 4.01(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its principal functions under ERISA.
"PARENT" means Western Staff Services, Inc., a Delaware corporation.
"PARTICIPANT" has the meaning specified in subsection 11.08(d).
"PENSION PLAN" means a pension plan, as defined in Section 3(2) of
ERISA, subject to Title IV of ERISA, which any Borrower or any ERISA
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Affiliate sponsors or maintains, or to which any Borrower or any ERISA
Affiliate makes, is making, or is obligated to make contributions, or in
the case of a multiple employer plan, as described in Section 4064(a) of
ERISA, has made contributions at any time during the immediately preceding
five (5) plan years; but excluding in all cases any Multiemployer Plan.
"PERMITTED LIENS" has the meaning specified in Section 8.01.
"PERMITTED SWAP OBLIGATIONS" means all obligations (contingent or
otherwise) of a Borrower or any other Loan Party existing or arising under
Swap Contracts, provided that each of the following criteria is satisfied:
(a) such obligations are (or were) entered into by such Person in the
Ordinary Course of Business for the purpose of directly mitigating risks
associated with liabilities, commitments or assets held or reasonably
anticipated by such Person, or changes in the value of securities issued by
such Person in conjunction with a securities repurchase program not
otherwise prohibited hereunder, and not for purposes of speculation or
taking a "market view;" (b) such Swap Contracts do not contain any
provision ("walk-away" provision) exonerating the non-defaulting party from
its obligation to make payments on outstanding transactions to the
defaulting party; and (c) a perfected security interest in such Person's
rights and interests to and in such Swap Contracts has been granted, and
exists, in favor of the Agent, for the benefit of the Banks, as collateral
for the Obligations.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Borrower sponsors or maintains or to which any Borrower
makes, is making, or is obligated to make contributions; and includes any
Pension Plan or Multiemployer Plan.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"REFERENCE BANK" means BofA.
"REPLACEMENT BANK" has the meaning specified in Section 4.07.
"REPORTABLE EVENT" means any of the events set forth in Section
4043(c) of ERISA or the regulations promulgated thereunder, other than any
such event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC.
"REQUIRED MINIMUM" means: (i) with respect to Revolving Loans made
as Offshore Rate Loans, One Million Dollars ($1,000,000) or any multiple of
One Hundred Thousand Dollars ($100,000) in excess thereof; (ii) with
respect to Revolving Loans made as Base Rate Loans, One Hundred Thousand
Dollars ($100,000) or any multiple of One Hundred Thousand Dollars
($100,000) in excess thereof; (iii) with respect to Term Loans made as
Offshore Rate Loans, One Million Dollars ($1,000,0000) or any amount in
excess thereof; or (iv) with respect to Term Loans made as Base Rate Loans,
One Hundred Thousand Dollars ($100,000) or any amount in excess thereof.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
"RESPONSIBLE OFFICER" means, as to any Loan Party, the chief
executive officer, chief operating officer, or the president of such
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Borrower, or any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants,
the chief financial officer or the treasurer of such Borrower, or any other
officer having substantially the same authority and responsibility.
"REVOLVING COMMITMENT", with respect to each Bank, has the meaning
specified in subsection 2.01(b).
"REVOLVING LOAN" has the meaning specified in subsection 2.01(b).
"REVOLVING TERMINATION DATE" means the earlier to occur of:
(i) March 31, 2003; and
(ii) the date on which the Aggregate Revolving Commitment shall
terminate in accordance with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any entity
succeeding to any of its principal functions.
"SOLVENT" means, as to any Person at any time, that (a) the fair
value of the Property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes of Section 101(32) of the Bankruptcy Code and, in the alternative,
for purposes of the California Uniform Fraudulent Transfer Act; (b) the
present fair saleable value of the Property 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 is
able to realize upon its Property and pay its debts and other liabilities
(including disputed, contingent and unliquidated liabilities) as they
mature in the normal course of business; (d) such Person 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 (e)
such Person is not engaged in business or a transaction, and is not about
to engage in business or a transaction, for which such Person's property
would constitute unreasonably small capital; PROVIDED, THAT with respect to
a Material Subsidiary which is a Guarantor, such Material Subsidiary's
contingent liabilities arising with respect to its Guaranty shall be
excluded for purposes of determining whether such Material Subsidiary is
Solvent.
"SPECIFIED SWAP AMOUNT" means, at any time, in respect of Specified
Swap Contracts to which any Swap Provider is party, the Swap Termination
Value relating thereto; provided that for purposes of this definition, any
Swap Termination Value that is negative as to (i.e., owing by) any Swap
Provider shall be deemed equal to zero (0).
"SPECIFIED SWAP CONTRACT" means any Swap Contract made or entered
into at any time, or in effect at any time (whether heretofore or
hereafter), whether directly or indirectly, and whether as a result of
assignment or transfer or otherwise, between WSS and any Swap Provider
which Swap Contract is or was intended by WSS to have been entered into, in
part or entirely, for purposes of mitigating interest rate or currency
exchange risk relating to any Loan (which intent shall conclusively be
deemed to exist if WSS so represents to the Swap Provider in writing), and
as to which the final scheduled payment by WSS is not later than the Term
Maturity Date.
"STANDBY LETTER OF CREDIT FEE" means percentage determined as set
forth below:
(i) on the Closing Date and until such time as clause (ii),
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(iii), (iv), (v), or (vi) below becomes applicable, .75%;
(ii) on and after the fifteenth day following receipt by the
Banks and the Agent of the financial statements required under
Section 7.01(a) and (b), which statements evidence a Total Debt To
EBITDA Ratio of 2.0:1 or less for the Parent and its consolidated
Subsidiaries for the most recently concluded fiscal quarter covered
by such financial statements, .75%;
(iii) on and after the fifteenth day following receipt by the
Banks and the Agent of the financial statements required under
Section 7.01(a) and (b), which statements evidence a Total Debt to
EBITDA Ratio of 2.5:1 or less, but greater than 2.0:1, for the Parent
and its consolidated Subsidiaries for the most recently concluded
fiscal quarter covered by such financial statements, .875%;
(iv) on and after the fifteenth day following receipt by the
Banks and the Agent of the financial statements required under
Section 7.01(a) and (b), which statements evidence a Total Debt to
EBITDA Ratio of 2.75:1 or less, but greater than 2.5:1, for the
Parent and its consolidated Subsidiaries for the most recently
concluded fiscal quarter covered by such financial statements, 1.0%;
(v) on and after the fifteenth day following receipt by the
Banks and the Agent of the financial statements required under
Section 7.01(a) and (b), which statements evidence a Total Debt to
EBITDA Ratio which is greater than 2.75:1 for the Parent and its
consolidated Subsidiaries for the most recently concluded fiscal
quarter covered by such financial statements, 1.125%;
(vi) on and after the fifteenth day following the Borrowers'
failure to deliver to the Banks and the Agent the financial
statements required under Section 7.01(a) and (b) within the time
periods set forth therein, and until the fifteenth day following
receipt by the Bank and the Agent of such financial statements (at
which time clause (ii), (iii), (iv), or (v) above shall become
applicable), 1.125%.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50%
of the voting stock or other equity interests (in the case of Persons other
than corporations), is owned or controlled directly or indirectly by the
Person, or one or more of the Subsidiaries of the Person, or a combination
thereof.
"SURETY INSTRUMENTS" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"SWAP CONTRACT" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or bill option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swaption, currency option or any other, similar
transaction (including any option to enter into any of the foregoing) or
any combination of the foregoing, and, unless the context otherwise clearly
requires, any master agreement relating to or governing any or all of the
foregoing.
"SWAP PROVIDER" means any Bank, or any Affiliate of any Bank, that is
at the time of determination party to a Swap Contract with WSS.
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"SWAP TERMINATION VALUE" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or
after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and
(b) for any date prior to the date referenced in clause (a) the amount(s)
determined as the mark-to-market value(s) for such Swap Contracts, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Swap Contracts (which
may include any Bank).
"TAXES" has the meaning specified in subsection 4.01(a).
"TERM COMMITMENT", with respect to each Bank, has the meaning
specified in subsection 2.01(a).
"TERM LOAN" has the meaning specified in subsection 2.01(a).
"TERM MATURITY DATE" means March 31, 2004.
"TOTAL DEBT" has the meaning specified in Section 8.16.
"TOTAL DEBT TO EBITDA RATIO" has the meaning specified in Section
8.16.
"TRANSFEREE" has the meaning specified in subsection 11.08(e).
"UCC" means the Uniform Commercial Code as in effect in the State of
California.
"UCP" has the meaning specified in Section 3.09.
"UNITED STATES" and "U.S." each means the United States of America.
"WMS SUBFACILITY" means the amount determined as set forth below:
(i) on the Closing Date and until such time as clause (ii),
(iii) or (iv) below becomes applicable, and during any period when
none of clause (ii), (iii) or (iv) below is applicable, Thirty-Five
Million Dollars ($35,000,000);
(ii) on and after the fifteenth day following receipt by the
Banks and the Agent of the financial statements required under
Section 7.01(a) and (b) evidencing that WMS, on an unconsolidated
basis, has achieved an EBITDA for the preceding four (4) fiscal
quarters of at least Five Million Dollars ($5,000,000), but less than
Five Million Five Hundred Thousand Dollars ($5,500,000), Forty
Million Dollars ($40,000,000);
(iii) on and after the fifteenth day following receipt by the
Banks and the Agent of the financial statements required under
Section 7.01(a) and (b) evidencing that WMS, on an unconsolidated
basis, has achieved an EBITDA for the preceding four (4) fiscal
quarters of at least Five Million Five Hundred Thousand Dollars
($5,500,000), but less than Six Million Five Hundred Thousand Dollars
($6,500,000), Forty-Five Million Dollars ($45,000,000);
(iv) on and after the fifteenth day following receipt by the
Banks and the Agent of the financial statements required under
Section 7.01(a) and (b) evidencing that WMS, on an unconsolidated
basis, has achieved an EBITDA for the preceding four (4) fiscal
quarters of Six Million Five Hundred Thousand Dollars ($6,500,000) or
more, Fifty Million Dollars ($50,000,000);
(v) on and after the fifteenth day following the Borrowers'
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failure to deliver to the Banks and the Agent the financial
statements required under Section 7.01(a) and (b) within the time
periods set forth therein, and until the fifteenth day following
receipt by the Bank and the Agent of such financial statements (at
which time clause (i), (ii), (iii), or (iv) above shall become
applicable), Thirty-Five Million Dollars ($35,000,000).
1.02 OTHER INTERPRETIVE PROVISIONS.
(a) DEFINED TERMS. Unless otherwise specified herein or therein,
all terms defined in this Agreement shall have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto. The
meaning of defined terms shall be equally applicable to the singular and plural
forms of the defined terms. Terms (including uncapitalized terms) not otherwise
defined herein and that are defined in the UCC shall have the meanings therein
described.
(b) THE AGREEMENT. The words "hereof", "herein", "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
subsection, section, schedule and exhibit references are to this Agreement
unless otherwise specified.
(c) CERTAIN COMMON TERMS.
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(d) PERFORMANCE; TIME. Whenever any performance obligation
hereunder (other than a payment obligation) shall be stated to be due or
required to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each mean
"to but excluding", and the word "through" means "to and including." If any
provision of this Agreement refers to any action taken or to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
interpreted to encompass any and all means, direct or indirect, of taking, or
not taking, such action.
(e) CONTRACTS. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document.
(f) LAWS. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or regulation.
(g) CAPTIONS. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(h) INDEPENDENCE OF PROVISIONS. The parties acknowledge that this
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
(i) INTERPRETATION. This Agreement is the result of negotiations
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among and has been reviewed by counsel to the Agent, the Issuing Bank, the
Borrowers and other parties, and is the product of all parties hereto.
Accordingly, this Agreement and the other Loan Documents shall not be construed
against the Banks, the Issuing Bank, or the Agent merely because of the Agent's,
the Issuing Bank's or Banks' involvement in the preparation of such documents
and agreements.
1.03 ACCOUNTING PRINCIPLES.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied.
(b) Unless the context otherwise clearly requires, references herein
to "fiscal year" and "fiscal quarter" refer to such fiscal periods of the
Parent.
ARTICLE II
THE CREDITS
2.01 AMOUNTS AND TERMS OF COMMITMENTS.
(a) THE TERM CREDIT. Each Bank severally agrees, on the terms and
conditions hereinafter set forth, to make Loans to WSS (each such Loan, a "TERM
LOAN") from time to time on any Business Day during the period from the Closing
Date to March 31, 1998, in an aggregate amount not to exceed the amount set
forth opposite such Bank's name in SCHEDULE 2.01(a) under the heading "Term
Commitment" (such amount, as the same may be reduced pursuant to Section 2.07 or
as a result of one or more assignments pursuant to Section 11.08, such Bank's
"TERM COMMITMENT"). Amounts borrowed as a Term Loan which are repaid or prepaid
by WSS may not be reborrowed.
(b) THE REVOLVING CREDIT. Each Bank severally agrees, on the terms
and conditions hereinafter set forth, to make Loans to the Borrowers (each such
Loan, a "REVOLVING LOAN") from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination Date, in an aggregate
amount not to exceed at any time outstanding the amount set forth opposite such
Bank's name in SCHEDULE 2.01(b) under the heading "Revolving Commitment" (such
amount as the same may be reduced pursuant to Section 2.05 or as a result of one
or more assignments pursuant to Section 11.08, such Bank's "REVOLVING
COMMITMENT"); PROVIDED, HOWEVER, that no Revolving Loan shall be made hereunder
if, after giving effect to any Borrowing of Revolving Loans (i) the Effective
Amount of all Revolving Loans and the Effective Amount of all L/C Obligations
shall exceed the Aggregate Revolving Commitment; (ii) the Effective Amount of
the Revolving Loans of any Bank plus the participation of such Bank in the
Effective Amount of all L/C Obligations shall exceed such Bank's Revolving
Commitment; or (iii) the Effective Amount of all Revolving Loans made for the
account of WMS shall exceed the WMS Subfacility. Within the foregoing limits,
and subject to the other terms and conditions hereof, the Borrowers may borrow
under this subsection 2.01(b), prepay pursuant to Section 2.06 and reborrow
pursuant to this subsection 2.01(b). Notwithstanding the foregoing, in the
event WSS ceases to own 100% of the outstanding capital stock of WMS, the WMS
Subfacility shall be terminated and WMS shall have no further right to request
Revolving Loans, nor shall the Banks have any further obligation to make
Revolving Loans to WMS under this Agreement.
2.02 LOAN ACCOUNTS. The Loans made by each Bank, and the Letters of
Credit Issued by the Issuing Bank, shall be evidenced by one or more loan or
letter of credit accounts maintained by such Bank or Issuing Bank, as the case
may be, in the ordinary course of business. The loan or letter of credit
accounts or records maintained by the Agent, the Issuing Bank and each Bank
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shall be conclusive absent manifest error of the amount of the Loans made by the
Banks to, and the Letters of Credit Issued by the Issuing Bank for the account
of, the Borrower and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Borrower hereunder to pay any amount owing with respect to
the Loans or Letters of Credit.
2.03 PROCEDURE FOR BORROWING.
(a) Each Borrowing of Term Loans by WSS and each borrowing of
Revolving Loans by any Borrower (other than a Borrowing pursuant to subsection
3.03(d)) shall be made upon the requesting Borrower's irrevocable written notice
delivered to the Agent in accordance with Section 11.02 in the form of a Notice
of Borrowing (which notice must be received by the Agent prior to 11:00 a.m.
(San Francisco time) (i) three (3) Business Days prior to the requested
Borrowing date, in the case of Offshore Rate Loans; and (ii) on the requested
Borrowing date, in the case of Base Rate Loans), specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate principal amount not less than the Required Minimum;
(B) the requested Borrowing date, which shall be a Business
Day;
(C) whether the Borrowing is of Revolving Loans or Term
Loans;
(D) whether the Borrowing is to be comprised of Offshore
Rate Loans or Base Rate Loans;
(E) the duration of the Interest Period applicable to such
Loans included in such notice. If the Notice of Borrowing shall fail
to specify the duration of the Interest Period for any Borrowing
comprised of Offshore Rate Loans, such Interest Period shall be three
(3) months.
PROVIDED, HOWEVER, that with respect to the Borrowing to be made on the Closing
Date, the Notice of Borrowing shall be delivered to the Agent not later than
10:00 a.m. (San Francisco time) one Business Day before the Closing Date and
such Borrowing will consist of Base Rate Loans only.
(b) Upon receipt of the Notice of Borrowing, the Agent will notify
each Bank thereof and of the amount of such Bank's Commitment Percentage of the
Borrowing. The Agent's notice to each Bank shall be given no later than (i)
1:00 p.m. (San Francisco time) on the same day as the Agent's receipt of such
notice in the case of Offshore Rate Loans, and (ii) 12:00 noon (San Francisco
time) on the same day as the Agent's receipt of such notice in the case of Base
Rate Loans.
(c) Each Bank will make the amount of its Commitment Percentage of
the Borrowing available to the Agent for the account of the requesting Borrower
at the Agent's Payment Office by 1:00 p.m. (San Francisco time) on the Borrowing
date requested in the Notice of Borrowing in funds immediately available to the
Agent. The proceeds of all such Loans will then be made available to the
requesting Borrower by the Agent at such office by crediting the account of the
requesting Borrower on the books of the Agent with the aggregate of the amounts
made available to the Agent by the Banks and in like funds as received by the
Agent.
(d) Unless the Majority Banks shall otherwise agree, during the
existence of a Default or an Event of Default, the Borrowers may not elect to
have a Loan be made as, or converted into or continued as, an Offshore Rate
Loan.
(e) After giving effect to any Borrowing, unless the Agent shall
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otherwise consent, there shall not be more than twelve (12) different Interest
Periods in effect.
2.04 CONVERSION AND CONTINUATION ELECTIONS.
(a) The Borrower for whose account a Loan has been made may upon
irrevocable written notice to the Agent in accordance with subsection 2.04(b):
(i) elect to convert on any Business Day, any Base Rate Loans
(or any part thereof in an amount not less than the Required Minimum) into
Offshore Rate Loans; or
(ii) elect to convert on the last day of the applicable Interest
Period any Offshore Rate Loans maturing on such day (or any part thereof in
an amount not less than the Required Minimum) into Base Rate Loans; or
(iii) elect to renew on the last day of the applicable Interest
Period any Offshore Rate Loans maturing on such day (or any part thereof in
an amount not less than the Required Minimum);
PROVIDED, that if the aggregate amount of Offshore Rate Loans in respect of any
Borrowing shall have been reduced, by payment, prepayment, or conversion of part
thereof to be less than One Million Dollars ($1,000,000), such Offshore Rate
Loans shall automatically convert into Base Rate Loans.
(b) The Borrower for whose account a Loan has been made shall
deliver a Notice of Conversion/Continuation in accordance with Section 11.02 to
be received by the Agent not later than 11:00 a.m. (San Francisco time) at least
(i) three (3) Business Days in advance of the Conversion Date or continuation
date, if the Loans are to be converted into or continued as Offshore Rate Loans;
and (ii) on the Conversion Date, if the Loans are to be converted into Base Rate
Loans; specifying:
(A) the proposed Conversion Date or continuation date;
(B) the aggregate amount of Loans to be converted or
renewed;
(C) the nature of the proposed conversion or continuation;
and
(D) the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Borrower for whose account such Offshore Rate Loans
have been made has failed to select timely a new Interest Period to be
applicable to such Offshore Rate Loans or if any Default or Event of Default
shall then exist, such Borrower shall be deemed to have elected to convert such
Offshore Rate Loans into Base Rate Loans effective as of the expiration date of
such current Interest Period.
(d) Upon receipt of a Notice of Conversion/Continuation, the Agent
will promptly notify each Bank thereof, or, if no timely notice is provided by
the Borrowers, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made pro rata
according to the Commitment Percentage of each Bank.
(e) Unless the Majority Banks shall otherwise agree, during the
existence of a Default or Event of Default, the Borrowers may not elect to have
a Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of any
Loans, unless the Agent shall otherwise consent, there shall not be more than
twelve (12) different Interest Periods in effect.
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2.05 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS. Any Borrower may,
upon not less than five (5) Business Days' prior notice to the Agent, terminate
the Aggregate Revolving Commitment or the Aggregate L/C Commitment, or
permanently reduce the Aggregate Revolving Commitment or the Aggregate L/C
Commitment by a minimum amount of One Million Dollars ($1,000,000) or any
multiple of One Million Dollars ($1,000,000) in excess thereof; PROVIDED that no
such reduction or termination shall be permitted if (a) with respect to a
reduction or termination of the Aggregate Revolving Commitment, the Effective
Amount of Revolving Loans and the Effective Amount of L/C Obligations would
exceed the amount of the Aggregate Revolving Commitment then in effect, or (b)
with respect to a reduction of the Aggregate L/C Commitment, the Effective
Amount of L/C Obligations would exceed the amount of the Aggregate L/C
Commitment then in effect; and, PROVIDED, FURTHER, that once reduced in
accordance with this Section 2.05, the Aggregate Revolving Commitment and the
Aggregate L/C Commitment may not be increased. Any reduction of the Aggregate
Revolving Commitment or the Aggregate L/C Commitment pursuant to this Section
2.05 shall be applied to each Bank's Revolving Commitment and L/C Commitment, as
applicable, in accordance with such Bank's Commitment Percentage. All accrued
commitment and letter of credit fees to, but not including, the effective date
of any reduction or termination of the Aggregate Revolving Commitment or the
Aggregate L/C Commitment, as applicable, shall be paid on the effective date of
such reduction or termination.
2.06 OPTIONAL PREPAYMENTS. Subject to Section 4.04, the Borrowers may, at
any time or from time to time, upon prior notice to the Agent, ratably prepay
Loans in whole or in part, in a minimum amount of One Million Dollars
($1,000,000), or, in the case of Revolving Loans, any multiple of One Hundred
Thousand Dollars ($100,000) in excess thereof, with respect to Offshore Rate
Loans, or in a minimum amount of One Hundred Thousand Dollars ($100,000), or, in
the case of Revolving Loans. any multiple of One Hundred Thousand Dollars
($100,000) in excess thereof, with respect to Base Rate Loans. Such notice of
prepayment shall be received by Agent by 11:00 a.m. (San Francisco time) at
least three (3) Business Days prior to the date of prepayment with respect to
Offshore Rate Loans and on the date of prepayment with respect to Base Rate
Loans, and shall specify the date and amount of such prepayment, whether such
prepayment is of Revolving Loans or Term Loans, and whether such prepayment is
of Base Rate Loans or Offshore Rate Loans, or any combination thereof. Such
notice shall not thereafter be revocable by any Borrower and the Agent will
promptly (but in any event not later than 1:00 p.m. (San Francisco time) on the
day on which such notice is timely received by the Agent) notify each Bank
thereof and of such Bank's Commitment Percentage of such prepayment. If such
notice is given by any Borrower, the Borrowers shall make such prepayment and
the payment amount specified in such notice shall be due and payable on the date
specified therein, and (in the event Offshore Rate Loans are being prepaid)
together with accrued interest to each such date on the amount prepaid and any
amounts required pursuant to Section 4.04. Optional prepayments of Term Loans
shall be applied in inverse order of maturity.
2.07 MANDATORY PREPAYMENTS OF LOANS.
(a) EXCESS OUTSTANDINGS. If on any date the Effective Amount of L/C
Obligations shall exceed the Aggregate L/C Commitment, the Borrowers shall Cash
Collateralize on such date the outstanding Letters of Credit in an amount equal
to the excess of the maximum amount then available to be drawn under the Letters
of Credit over the Aggregate L/C Commitment. Subject to Section 4.04, if on any
date after giving effect to any Cash Collateralization made on such date
pursuant to the preceding sentence, the Effective Amount of all Revolving Loans
then outstanding plus the Effective Amount of all L/C Obligations exceeds the
Aggregate Revolving Commitment, the Borrowers shall immediately, and without
notice or demand, prepay the outstanding principal amount of the Revolving Loans
and L/C Advances by an amount equal to the applicable excess.
(b) SALE OF WMS. If WSS shall make or agree to make a disposition
of the outstanding capital stock of WMS, WSS shall (i) promptly
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notify the Agent of such proposed disposition (including the amount of the
estimated net proceeds to be received by WSS in respect thereof) and
(ii) promptly upon, and in no event later than fifteen (15) days after, receipt
by WSS of the net proceeds of such disposition, WSS shall prepay Revolving Loans
under the WMS Subfacility in an aggregate amount equal to the amount of such net
proceeds.
(c) GENERAL. Any prepayments of Loans pursuant to this Section 2.07
shall be applied, first, to any Base Rate Loans then outstanding and then to
Offshore Rate Loans with the shortest Interest Periods remaining; PROVIDED,
HOWEVER, that if the amount of Base Rate Loans then outstanding is not
sufficient to satisfy the entire prepayment requirement, the Borrowers may, at
their option, place any amounts which they would otherwise be required to use to
prepay Offshore Rate Loans on a day other than the last day of the Interest
Period therefor in an interest-bearing account pledged to the Agent for the
benefit of the Banks until the end of such Interest Period at which time such
pledged amounts will be applied to prepay such Offshore Rate Loans. The
Borrowers shall pay, together with each prepayment under this Section 2.07,
accrued interest on the amount prepaid and any amounts required pursuant to
Section 4.04.
(d) REDUCTION OF COMMITMENT. Upon the making of any mandatory
prepayment of Term Loans under this Section 2.07, the Term Commitments of each
Bank shall automatically be reduced by an amount equal to such Bank's Commitment
Percentage of the aggregate of principal repaid, effective as of the earlier of
the date that such prepayment is made or the date by which such prepayment is
due and payable hereunder.
2.08 REPAYMENT.
(a) THE TERM CREDIT. The Borrowers shall repay principal of the Term
Loans in equal monthly installments, each in an amount equal to 1/72nd of the
aggregate principal amount of the Term Loans outstanding on March 31, 1998. The
monthly installments shall be payable on April 30, 1998, and on the last
Business Day of each month thereafter until the Term Maturity Date, on which
date the remaining principal amount of the Term Loans shall be payable in full.
(b) THE REVOLVING CREDIT. The Borrowers shall repay to the Banks in
full on the Revolving Termination Date the aggregate principal amount of the
Revolving Loans outstanding on the Revolving Termination Date.
2.09 INTEREST.
(a) Subject to subsection 2.09(d), each Loan shall bear interest on
the outstanding principal amount thereof from the date when made at a rate per
annum equal to the Offshore Rate or the Base Rate, as the case may be, PLUS the
Applicable Margin
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Offshore Rate Loans pursuant to Section 2.06 and 2.07 for the portion of the
Offshore Rate Loans so prepaid and, during the existence of any Event of
Default, interest shall be paid on demand.
(c) While any Event of Default exists or after acceleration, the
Borrowers shall pay interest (after as well as before entry of judgment thereon
to the extent permitted by law) on the principal amount of all outstanding Loans
at a rate per annum which is determined by adding two percent (2%) per annum to
the Applicable Margin then in effect for such Loans; PROVIDED, HOWEVER, that, on
and after the expiration of any Interest Period applicable to any Offshore Rate
Loan outstanding on the date of occurrence of such Event of Default or
acceleration, the principal amount of such Loan shall, during the continuation
of such Event of Default or after acceleration, bear interest at a rate per
annum equal to the Base Rate plus two percent
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(2%).
(d) Anything herein to the contrary notwithstanding, the obligations
of the Borrowers hereunder shall be subject to the limitation that payments of
interest shall not be required, for any period for which interest is computed
hereunder, to the extent (but only to the extent) that contracting for or
receiving such payment by the respective Bank would be contrary to the
provisions of any law applicable to such Bank limiting the highest rate of
interest which may be lawfully contracted for, charged or received by such Bank,
and in such event the Borrowers shall pay such Bank interest at the highest rate
permitted by applicable law.
2.10 FEES. In addition to fees described at Section 3.08:
(a) AGENCY FEE. The Borrowers shall pay an agency fee to the Agent
for the Agent's own account, as required by the letter agreement ("FEE LETTER")
between the Borrowers and the Agent dated January 14, 1998.
(b) UNUSED COMMITMENT FEE. The Borrowers shall pay to the Agent for
the ratable account of each Bank a commitment fee on the average daily unused
portion of such Bank's Revolving Commitment, computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter based upon the daily
utilization for that quarter as calculated by the Agent. The commitment fee
shall be calculated at the rate of .25% per annum unless, as of the last
Business Day of each calendar quarter for which the commitment fee is
calculated, the Total Debt to EBITDA Ratio of the Parent and its consolidated
Subsidiaries as of the most recent fiscal quarter for which the financial
statements required under Section 7.01(a) and (b) have been delivered to Agent
and Banks (and provided such financial statements have been delivered to Agent
and Banks within the time periods set forth in Section 7.01(a) and (b)) is less
than or equal to 2.5:1.0, in which case the commitment fee shall be calculated
at the rate of .20% per annum. Such commitment fee shall accrue from the
Closing Date to the Revolving Termination Date and shall be due and payable
quarterly in arrears on the last Business Day of each quarter commencing on
March 31, 1998, through the Revolving Termination Date, with the final payment
to be made on the Revolving Termination Date; provided that, in connection with
any reduction or termination of Commitments pursuant to Section 2.05, the
accrued commitment fee calculated for the period ending on such date shall also
be paid on the date of such reduction or termination, with the next succeeding
quarterly payment being calculated on the basis of the period from the reduction
or termination date to such quarterly payment date. The commitment fees
provided in this subsection shall accrue at all times after the above-mentioned
commencement date, including at any time during which one or more conditions in
Article IV are not met.
(c) REVOLVING COMMITMENT FEE. On the Closing Date, the Borrowers
shall pay to the Agent for the ratable account of the Banks, as determined by
each Bank's Commitment Percentage, a revolving commitment fee in the amount of
Two Hundred Twenty-Five Thousand Dollars ($225,000).
2.11 COMPUTATION OF FEES AND INTEREST.
(a) All computations of interest and fees under this Agreement shall
be made on the basis of a 360-day year and actual days elapsed, which results in
more interest being paid than if computed on the basis of a 365-day year.
Interest and fees shall accrue during each period during which interest or such
fees are computed from the first day thereof to the last day thereof.
(b) The Agent will, with reasonable promptness (but in any event no
later than 12:00 noon (San Francisco time) two (2) Business Days prior to the
effective date), notify the Borrowers and the Banks of each determination of an
Offshore Rate; PROVIDED that any failure to do so shall not relieve the
Borrowers of any liability hereunder or provide the basis for any claim against
the Agent. Any change in the interest rate on a Loan resulting from a change in
the Applicable Margin or Eurodollar Reserve Percentage shall become
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effective as of the opening of business on the day on which such change in the
Applicable Margin or Eurodollar Reserve Percentage becomes effective. The Agent
will with reasonable promptness notify the Borrowers and the Banks of the
effective date and the amount of each such change, PROVIDED that any failure to
do so shall not relieve the Borrowers of any liability hereunder or provide the
basis for any claim against the Agent.
(c) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Borrowers and the Banks in the absence of manifest
error. The Agent will, at the request of any Borrower or any Bank, deliver to
the Borrower or the Bank, as the case may be, a statement showing the quotations
used by the Agent in determining any interest rate.
2.12 PAYMENTS BY THE BORROWERS.
(a) All payments (including prepayments) to be made by the Borrowers
on account of principal, interest, drawings under Letters of Credit, fees and
other amounts required hereunder shall be made without set-off, recoupment or
counterclaim; shall, except as otherwise expressly provided with respect to
drawings under Letters of Credit and elsewhere herein, be made to the Agent for
the ratable account of the Banks at the Agent's Payment Office, and shall be
made in dollars and in immediately available funds, no later than 11:00 a.m.
(San Francisco time) on the date specified herein. The Agent will promptly (but
in any event not later than 2:30 p.m. (San Francisco time) on the day on which
the Agent is deemed to have received such payment) distribute to each Bank its
Commitment Percentage (or other applicable share as expressly provided herein)
of such principal, interest, fees or other amounts, in like funds as received.
Any payment which is received by the Agent later than 11:00 a.m. (San Francisco
time) shall be deemed to have been received on the immediately succeeding
Business Day and any applicable interest or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be; subject to the provisions
set forth in the definition of "Interest Period" herein.
(c) Unless the Agent shall have received notice from a Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrowers will not make such payment in full as and when required hereunder, the
Agent may assume that the Borrowers have made such payment in full to the Agent
on such date in immediately available funds and the Agent may (but shall not be
so required), in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If and
to the extent the Borrowers shall not have made such payment in full to the
Agent, each Bank shall repay to the Agent on demand such amount distributed to
such Bank, together with interest thereon for each day from the date such amount
is distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate as in effect for each such day.
2.13 PAYMENTS BY THE BANKS TO THE AGENT.
(a) Unless the Agent shall have received notice from a Bank on the
Closing Date or, with respect to each Borrowing after the Closing Date, at least
one (1) Business Day prior to the date of any proposed Borrowing, that such Bank
will not make available to the Agent as and when required hereunder for the
account of the Borrower the amount of that Bank's Commitment Percentage of the
Borrowing, the Agent may assume that each Bank has made such amount available to
the Agent in immediately available funds on the Borrowing date and the Agent may
(but shall not be so required), in reliance upon such assumption, make available
to the Borrowers on such date a corresponding amount. If and to the extent any
Bank shall not have made its full amount available to the Agent in immediately
available funds and the Agent in such
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circumstances has made available to the Borrowers such amount, that Bank shall
on the next Business Day following the date of such Borrowing make such amount
available to the Agent, together with interest at the Federal Funds Rate for and
determined as of each day during such period. A notice of the Agent submitted
to any Bank with respect to amounts owing under this subsection 2.13(a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Agent shall constitute such Bank's Loan on the date of Borrowing
for all purposes of this Agreement. If such amount is not made available to the
Agent on the next Business Day following the date of such Borrowing, the Agent
shall notify the Borrower giving such Notice of Borrowing of such failure to
fund and, upon demand by the Agent, the Borrower shall pay such amount to the
Agent for the Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any date of Borrowing
shall not relieve any other Bank of any obligation hereunder to make a Loan on
the date of such Borrowing, but no Bank shall be responsible for the failure of
any other Bank to make the Loan to be made by such other Bank on the date of any
Borrowing.
2.14 SHARING OF PAYMENTS, ETC. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Obligations in its
favor any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder), such Bank shall forthwith (a) notify the Agent of such
fact, and (b) purchase from the other Banks such participations in the Loans
made by them as shall be necessary to cause such purchasing Bank to share the
excess payment ratably with each of them; PROVIDED, HOWEVER, that if all or any
portion of such excess payment is thereafter recovered from the purchasing Bank,
such purchase shall to that extent be rescinded and each other Bank shall repay
to the purchasing Bank the purchase price paid therefor, together with an amount
equal to such paying Bank's Commitment Percentage (according to the proportion
of (i) the amount of such paying Bank's required repayment to (ii) the total
amount so recovered from the purchasing Bank) of any interest or other amount
paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Borrowers agree that any Bank so purchasing a participation from
another Bank pursuant to this Section 2.14 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off, but
subject to Section 11.09) with respect to such participation as fully as if such
Bank were the direct creditor of the Borrowers in the amount of such
participation. The Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased pursuant
to this Section 2.14 and will in each case notify the Banks following any such
purchases or repayments.
2.15 SECURITY AND GUARANTY.
(a) All obligations of the Borrowers and the Guarantors under this
Agreement and all other Loan Documents shall be secured in accordance with the
Collateral Documents.
(b) All obligations of the Borrowers under this Agreement and all
other Loan Documents shall be unconditionally guaranteed by the Guarantors
pursuant to the Guaranty.
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ARTICLE III
THE LETTERS OF CREDIT
3.01 THE LETTER OF CREDIT SUBFACILITY.
(a) On the terms and conditions set forth herein (i) the Issuing Bank
agrees, (A) from time to time on any Business Day during the period from the
Closing Date to the Revolving Termination Date to issue Letters of Credit for
the account of WSS, and to amend or renew Letters of Credit previously issued by
it, in accordance with subsections 3.02(c) and 3.02(d), and (B) to honor drafts
under the Letters of Credit; and (ii) the Banks severally agree to participate
in Letters of Credit Issued for the account of WSS; PROVIDED, that the Issuing
Bank shall not be obligated to Issue, and no Bank shall be obligated to
participate in, any Letter of Credit if as of the date of Issuance of such
Letter of Credit (1) the Effective Amount of all L/C Obligations and the
Effective Amount of all Revolving Loans shall exceed the Aggregate Revolving
Commitment; (2) the participation of any Bank in the Effective Amount of all L/C
Obligations plus the Effective Amount of the Revolving Loans of any Bank shall
exceed such Bank's Revolving Commitment, or (3) the Effective Amount of L/C
Obligations shall exceed the Aggregate L/C Commitment. Within the foregoing
limits, and subject to the other terms and conditions hereof, WSS's ability to
obtain Letters of Credit shall be fully revolving, and, accordingly, WSS may,
during the foregoing period, obtain Letters of Credit to replace Letters of
Credit which have expired or which have been drawn upon and reimbursed.
(b) The Issuing Bank shall be under no obligation to Issue, and no
Bank shall be obligated to participate in, any Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority
or arbitrator shall by its terms purport to enjoin or restrain the Issuing
Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction
over the Issuing Bank shall prohibit, or request that the Issuing Bank
refrain from, the Issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to
such Letter of Credit any restriction, reserve or capital requirement (for
which the Issuing Bank is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the Issuing Bank any
unreimbursed loss, cost or expense which was not applicable on the Closing
Date and which the Issuing Bank in good faith deems material to it;
(ii) the Issuing Bank has received written notice from any Bank,
the Agent or any Borrower, on or prior to the Business Day prior to the
requested date of Issuance, of such Letter of Credit, that one or more of
the applicable conditions contained in Article V is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A)
more than 365 days after the date of Issuance, unless the Majority Banks
have approved such expiry date in writing, or (B) after the Revolving
Termination Date, unless all of the Banks have approved such expiry date in
writing;
(iv) any requested Letter of Credit does not provide for drafts,
or is not otherwise in form and substance acceptable to the Issuing Bank,
or the Issuance of a Letter of Credit shall violate any applicable policies
of the Issuing Bank;
(v) such Letter of Credit is to be used for a purpose other than
providing credit support for WSS's workers' compensation insurance
liabilities or is denominated in a currency other than Dollars.
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3.02 ISSUANCE, AMENDMENT AND RENEWAL OF LETTERS OF CREDIT.
(a) Each Letter of Credit shall be Issued upon the irrevocable
written request of WSS received by the Issuing Bank (with a copy sent by WSS to
the Agent) at least four (4) days (or such shorter time as the Issuing Bank may
agree in a particular instance in its sole discretion) prior to the proposed
date of Issuance. Each such request for Issuance of a Letter of Credit shall be
by facsimile, confirmed immediately in an original writing, in the form of an
L/C Application, and shall specify in form and detail satisfactory to the
Issuing Bank: (i) the proposed date of Issuance of the Letter of Credit (which
shall be a Business Day); (ii) the face amount of the Letter of Credit; (iii)
the expiry date of the Letter of Credit; (iv) the name and address of the
beneficiary thereof; (v) the documents to be presented by the beneficiary of the
Letter of Credit in case of any drawing thereunder; (vi) the full text of any
certificate to be presented by the beneficiary in case of any drawing
thereunder; and (vii) such other matters as the Issuing Bank may require.
(b) At least two (2) Business Days prior to the Issuance of any
Letter of Credit, the Issuing Bank will confirm with the Agent (by telephone or
in writing) that the Agent has received a copy of the L/C Application or L/C
Amendment Application from WSS and, if not, the Issuing Bank will provide the
Agent with a copy thereof. Unless the Issuing Bank has received notice on or
before the Business Day immediately preceding the date the Issuing Bank is to
Issue a requested Letter of Credit from the Agent (A) directing the Issuing Bank
not to Issue such Letter of Credit because such Issuance is not then permitted
under subsection 3.01(a) as a result of the limitations set forth in clauses (1)
and (2) thereof or subsection 3.01(b)(iii); or (B) that one or more conditions
specified in Article V are not then satisfied; then, subject to the terms and
conditions hereof, the Issuing Bank shall, on the requested date, Issue a Letter
of Credit for the account of WSS in accordance with the Issuing Bank's usual and
customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, the Issuing Bank will, upon the written
request of WSS received by the Issuing Bank (with a copy sent by WSS to the
Agent) at least four (4) days (or such shorter time as the Issuing Bank may
agree in a particular instance in its sole discretion) prior to the proposed
date of amendment, amend any Letter of Credit Issued by it. Each such request
for amendment of a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, made in the form of an L/C Amendment
Application and shall specify in form and detail satisfactory to the Issuing
Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of
amendment of the Letter of Credit (which shall be a Business Day); (iii) the
nature of the proposed amendment; and (iv) such other matters as the Issuing
Bank may require. The Issuing Bank shall be under no obligation to amend any
Letter of Credit, and no Bank shall be obligated to participate in any Letter of
Credit in its amended form, if: (A) the Issuing Bank would have no obligation
at such time to Issue such Letter of Credit in its amended form under the terms
of this Agreement; or (B) the beneficiary of any such Letter of Credit does not
accept the proposed amendment to the Letter of Credit.
(d) The Agent will promptly notify the Banks of the receipt by it of
any L/C Application or L/C Amendment Application. At the request of any Bank,
the Issuing Bank will deliver copies of such L/C Application or L/C Amendment
Application to such Bank.
(e) The Issuing Bank and the Banks agree that, while a Letter of
Credit is outstanding and prior to the Revolving Termination Date, at the option
of WSS and upon the written request of WSS received by the Issuing Bank (with a
copy sent by WSS to the Agent) at least four (4) days (or such shorter time as
the Issuing Bank may agree in a particular instance in its sole discretion)
prior to the proposed date of notification of renewal, the Issuing Bank shall be
entitled to authorize the automatic renewal of any Letter of
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Credit Issued by it. Each such request for renewal of a Letter of Credit shall
be made by facsimile, confirmed immediately in an original writing, in the form
of an L/C Amendment Application, and shall specify in form and detail
satisfactory to the Issuing Bank: (i) the Letter of Credit to be renewed; (ii)
the proposed date of notification of renewal of the Letter of Credit (which
shall be a Business Day); (iii) the revised expiry date of the Letter of Credit;
and (iv) such other matters as the Issuing Bank may require. The Issuing Bank
shall be under no obligation so to renew any Letter of Credit, and no Bank shall
be obligated to participate in any Letter of Credit in its renewed form, if: (A)
the Issuing Bank would have no obligation at such time to Issue or amend such
Letter of Credit in its renewed form under the terms of this Agreement; or (B)
the beneficiary of any such Letter of Credit does not accept the proposed
renewal of the Letter of Credit. If any outstanding Letter of Credit shall
provide that it shall be automatically renewed unless the beneficiary thereof
receives notice from the Issuing Bank that such Letter of Credit shall not be
renewed, and if at the time of renewal the Issuing Bank would be entitled to
authorize the automatic renewal of such Letter of Credit in accordance with this
subsection 3.02(e) upon the request of WSS but the Issuing Bank shall not have
received any L/C Amendment Application from WSS with respect to such renewal or
other written direction by WSS with respect thereto, the Issuing Bank shall
nonetheless be permitted to allow such Letter of Credit to renew, and WSS and
the Banks hereby authorize such renewal, and, accordingly, the Issuing Bank
shall be deemed to have received an L/C Amendment Application from WSS
requesting such renewal.
(f) The Issuing Bank may, at its election (or as required by the
Agent at the direction of the Majority Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Revolving Termination Date.
(g) This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).
(h) The Issuing Bank will also deliver to the Agent, concurrently or
promptly following its delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit. At the request of any Bank, the Issuing Bank will also
deliver copies of such documents to such Bank.
3.03 EXISTING BOFA LETTERS OF CREDIT; RISK PARTICIPATIONS, DRAWINGS AND
REIMBURSEMENTS.
(a) On and after the Closing Date, the Existing BofA Letters of
Credit shall be deemed for all purposes, including for purposes of the fees to
be collected pursuant to subsection 3.08(a), and reimbursement of costs and
expenses to the extent provided herein, Letters of Credit outstanding under this
Agreement and entitled to the benefits of this Agreement and the other Loan
Documents, and shall be governed by the applications and agreements pertaining
thereto and by this Agreement. Each Bank shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the Issuing Bank on the
Closing Date a participation in each such Letter of Credit and each drawing
thereunder in an amount equal to the product of (i) such Bank's Commitment
Percentage times (ii) the maximum amount available to be drawn under such Letter
of Credit and the amount of such drawing, respectively. For purposes of
subsection 2.01(b) and subsection 3.01(a), the Existing BofA Letters of Credit
shall be deemed to utilize in ratable fashion the Revolving Commitment of each
Bank.
(b) Immediately upon the Issuance of each Letter of Credit in
addition to those described in subsection 3.03(a), each Bank shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from the Issuing
Bank a participation in such Letter of Credit and each drawing
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thereunder in an amount equal to the product of (i) the Commitment Percentage of
such Bank, times (ii) the maximum amount available to be drawn under such Letter
of Credit and the amount of such drawing, respectively. For purposes of
subsection 2.01(b), each Issuance of a Letter of Credit shall be deemed to
utilize the Revolving Commitment of each Bank by an amount equal to the amount
of such participation.
(c) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank will promptly
notify WSS. WSS shall reimburse the Issuing Bank prior to 10:00 a.m. (San
Francisco time), on each date that any amount is paid by the Issuing Bank under
any Letter of Credit (each such date, an "HONOR DATE"), in an amount equal to
the amount so paid by the Issuing Bank. In the event WSS shall fail to
reimburse the Issuing Bank for the full amount of any drawing under any Letter
of Credit by 10:00 a.m. (San Francisco time) on the Honor Date, the Issuing Bank
will promptly notify the Agent and the Agent will promptly (but in any event no
later than 11:00 a.m. (San Francisco time) on the Honor Date) notify each Bank
thereof, and WSS shall be deemed to have requested that Base Rate Loans be made
by the Banks to be disbursed on the Honor Date under such Letter of Credit,
subject to the amount of the unutilized portion of the Revolving Commitment and
subject to the conditions set forth in Section 5.02. Any notice given by the
Issuing Bank or the Agent pursuant to this subsection 3.03(c) may be oral if
immediately confirmed in writing (including by facsimile); provided that the
lack of such an immediate confirmation shall not affect the conclusiveness or
binding effect of such notice.
(d) Each Bank shall upon receipt of any notice pursuant to
subsection 3.03(c) make available to the Agent for the account of the relevant
Issuing Bank an amount in Dollars and in immediately available funds equal to
its Commitment Percentage of the amount of the drawing, whereupon the
participating Banks shall (subject to subsection 3.03(e)) each be deemed to have
made a Revolving Loan consisting of a Base Rate Loan to WSS in that amount. If
any Bank so notified shall fail to make available to the Agent for the account
of the Issuing Bank the amount of such Bank's Commitment Percentage of the
amount of the drawing by no later than 12:00 noon (San Francisco time) on the
Honor Date, then interest shall accrue on such Bank's obligation to make such
payment, from the Honor Date to the date such Bank makes such payment, at a rate
per annum equal to (i) the Federal Funds Rate in effect from time to time during
the period commencing on the Honor Date and ending on the date three (3)
Business Days thereafter, and (ii) thereafter at the Base Rate as in effect from
time to time.
(e) With respect to any unreimbursed drawing which is not converted
into Revolving Loans consisting of Base Rate Loans to WSS in whole or in part,
because of WSS's failure to satisfy the conditions set forth in Section 5.02 or
for any other reason, WSS shall be deemed to have incurred from the Issuing Bank
an L/C Borrowing in the amount of such drawing, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at a rate
per annum equal to the Base Rate plus two percent (2%) per annum, and each
Bank's payment to the Issuing Bank pursuant to subsection 3.03(d) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Bank in satisfaction of its participation
obligation under this Section 3.03.
(f) Each Bank's obligation in accordance with this Agreement to make
the Revolving Loans or L/C Advances, as contemplated by this Section 3.03, as a
result of a drawing under a Letter of Credit shall be absolute and unconditional
and without recourse to the Issuing Bank and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against the Issuing Bank, WSS or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default, an Event of Default or a Material Adverse Effect; or (iii) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing; provided, however, that each Bank's obligation to make Revolving
Loans under this Section 3.03
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shall be subject to the conditions set forth in Section 5.02.
3.04 REPAYMENT OF PARTICIPATIONS.
(a) Upon (and only upon) receipt by the Agent for the account of the
Issuing Bank of funds from the Borrowers (i) in reimbursement of any payment
made by the Issuing Bank under a Letter of Credit with respect to which any Bank
has paid the Agent for the account of the Issuing Bank for such Bank's
participation in such Letter of Credit pursuant to Section 3.03, or (ii) in
payment of interest thereon, the Agent will pay to each Bank, in the same funds
as those received by the Agent for the account of the Issuing Bank, the amount
of such Bank's Commitment Percentage of such funds, and the Issuing Bank shall
receive the amount of the Commitment Percentage of such funds of any Bank that
did not so pay the Agent for the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to
return to any Borrower, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by a
Borrower to the Agent for the account of the Issuing Bank pursuant to subsection
3.04(a) in reimbursement of a payment made under the Letter of Credit or
interest or fee thereon, each Bank shall, on demand of the Agent, forthwith
return to the Agent or the Issuing Bank the amount of its Commitment Percentage
of any amounts so returned by the Agent or the Issuing Bank plus interest
thereon from the date such demand is made to the date such amounts are returned
by such Bank to the Agent or the Issuing Bank, at a rate per annum equal to the
Federal Funds Rate in effect from time to time.
3.05 ROLE OF THE ISSUING BANK.
(a) Each Bank and each Borrower agree that, in paying any drawing
under a Letter of Credit, the Issuing Bank shall not have any responsibility to
obtain any document (other than any sight draft and certificates expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of any such document or the authority of the Person executing or
delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuing Bank shall be liable to
any Bank for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Banks (including the Majority Banks, as
applicable); (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) WSS hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude WSS from pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. No Agent-Related
Person, nor any of the respective correspondents, participants or assignees of
the Issuing Bank, shall be liable or responsible for any of the matters
described in clauses (i) through (vii) of Section 3.06; provided, however,
anything in such clauses to the contrary notwithstanding, that WSS may have a
claim against the Issuing Bank, and the Issuing Bank may be liable to WSS, to
the extent, but only to the extent, of any direct, as opposed to consequential
or exemplary, damages suffered by WSS which WSS proves were caused by the
Issuing Bank's willful misconduct or gross negligence or the Issuing Bank's
willful failure to pay under any Letter of Credit after the presentation to it
by the beneficiary of a sight draft and certificate(s) strictly complying with
the terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing: (i) the Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary; and (ii)
the Issuing Bank shall not be responsible for the validity or sufficiency of any
instrument transferring or
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assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.
3.06 OBLIGATIONS ABSOLUTE. The obligations of WSS under this Agreement
and any L/C-Related Document to reimburse the Issuing Bank for a drawing under a
Letter of Credit, and to repay any L/C Borrowing and any drawing under a Letter
of Credit converted into Revolving Loans, shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances,
including the following:
(i) any lack of validity or enforceability of this Agreement or
any L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of WSS in respect of
any Letter of Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that WSS may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C-Related Documents or any unrelated
transaction;
(iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under any Letter of Credit;
(v) any payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of any Letter of Credit; or any payment made by the
Issuing Bank under any Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from any
other guarantee, for all or any of the obligations of WSS in respect of any
Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, WSS
or a guarantor.
3.07 CASH COLLATERAL PLEDGE. Upon (i) the request of the Agent, (A) if
the Issuing Bank has honored any full or partial drawing request on any Letter
of Credit and such drawing has resulted in an L/C Borrowing hereunder, or (B)
if, as of the Revolving Termination Date, any Letters of Credit may for any
reason remain outstanding and partially or wholly undrawn, or (ii) the
occurrence of the circumstances described in subsection 2.07(a) requiring the
Borrowers to Cash Collateralize Letters of Credit, then, the Borrowers shall
immediately Cash Collateralize the L/C Obligations in an amount equal to such
L/C Obligations. Amounts held as cash collateral shall be applied by the Agent
to the reimbursement of the Issuing Bank for any payment made by it of
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drafts drawn under Letters of Credit, and then to the Banks for payment of L/C
Advances, and the unused portion thereof, if any, after all such Letters of
Credit have expired or been fully drawn upon, shall be applied to repay other
Obligations hereunder. After all Letters of Credit have expired or been fully
drawn upon, all L/C Obligations have been satisfied, and all other Obligations
of the Borrowers hereunder have been paid in full, the balance, if any, of such
cash collateral shall be returned to the Borrower.
3.08 LETTER OF CREDIT FEES.
(a) WSS shall pay to the Agent for the ratable account of each of
the Banks a letter of credit fee with respect to each Letter of Credit issued by
the Issuing Bank at a rate per annum equal to the Standby Letter of Credit Fee
in effect on the date of Issuance of the Letter of Credit. Such fee shall be
computed on a quarterly basis in arrears on the last Business Day of each
calendar quarter based upon the average daily maximum amount available to be
drawn on the outstanding Letters of Credit during that quarter as calculated by
the Agent. Such letter of credit fees shall be due and payable quarterly in
arrears on the last Business Day of each calendar quarter during which Letters
of Credit are outstanding, commencing on the first such quarterly date to occur
after the Closing Date, through the Revolving Termination Date (or such later
date upon which the outstanding Letters of Credit shall expire), with the final
payment to be made on the Revolving Termination Date (or such later expiration
date).
(b) WSS shall pay to the Issuing Bank from time to time on demand
the normal issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of the Issuing Bank relating to Letters of
Credit as from time to time in effect. Each demand for payment of fees and
charges by the Issuing Bank pursuant to this subsection 3.08(b) shall be
accompanied by an itemized statement detailing the amounts payable to the
Issuing Bank.
3.09 UNIFORM CUSTOMS AND PRACTICE. The Uniform Customs and Practice for
Documentary Credits as most recently published by the International Chamber of
Commerce ("UCP") shall in all respects be deemed a part of this Article III as
if incorporated herein and (unless otherwise expressly provided in the Letters
of Credit) shall apply to the Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 TAXES.
(a) Subject to subsection 4.01(g), any and all payments by the
Borrowers to each Bank or the Agent under this Agreement shall be made free and
clear of, and without deduction or withholding for, any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Agent, such taxes (including income taxes or franchise taxes) as are imposed on
or measured by each Bank's net income by the jurisdiction under the laws of
which such Bank or the Agent, as the case may be, is organized or maintains a
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "TAXES").
(b) In addition, the Borrowers shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Documents (hereinafter referred to as "OTHER TAXES").
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(c) Subject to subsection 4.01(g), the Borrowers shall indemnify and
hold harmless each Bank and the Agent for the full amount of Taxes or Other
Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 4.01) paid by the Bank or the Agent and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within 30
days from the date the Bank or the Agent makes written demand therefor.
(d) If a Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any Bank
or the Agent, then, subject to subsection 4.01(g):
(i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.01) such Bank or the Agent, as
the case may be, receives an amount equal to the sum it would have received
had no such deductions been made;
(ii) such Borrower shall make such deductions; and
(iii) such Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(e) Within 30 days after the date of any payment by any Borrower of
Taxes or Other Taxes, such Borrower shall furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(f) Each Bank which is a foreign person (i.e., a person other than a
United States person for United States Federal income tax purposes) agrees that:
(i) it shall, no later than the Closing Date (or, in the case of
a Bank which becomes a party hereto pursuant to Section 11.08 after the
Closing Date, the date upon which the Bank becomes a party hereto) deliver
to the Borrowers through the Agent two (2) accurate and complete signed
originals of Internal Revenue Service Form 4224 or any successor thereto
("FORM 4224"), or two (2) accurate and complete signed originals of
Internal Revenue Service Form 1001 or any successor thereto ("FORM 1001"),
as appropriate, in each case indicating that the Bank is on the date of
delivery thereof entitled to receive payments of principal, interest and
fees under this Agreement free from withholding of United States Federal
income tax;
(ii) if at any time the Bank makes any changes necessitating a
new Form 4224 or Form 1001, it shall with reasonable promptness deliver to
the Borrower through the Agent in replacement for, or in addition to, the
forms previously delivered by it hereunder, two (2) accurate and complete
signed originals of Form 4224; or two (2) accurate and complete signed
originals of Form 1001, as appropriate, in each case indicating that the
Bank is on the date of delivery thereof entitled to receive payments of
principal, interest and fees under this Agreement free from withholding of
United States Federal income tax;
(iii) it shall, before or promptly after the occurrence of any
event (including the passing of time but excluding any event mentioned in
(ii) above) requiring a change in or renewal of the most recent Form 4224
or Form 1001 previously delivered by such Bank and deliver to the Borrowers
through the Agent two (2) accurate and complete original signed copies of
Form 4224 or Form 1001 in replacement for the forms previously delivered by
the Bank; and
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(iv) it shall, promptly upon any Borrower's or the Agent's
reasonable request to that effect, deliver to such Borrower or the Agent
(as the case may be) such other forms or similar documentation as may be
required from time to time by any applicable law, treaty, rule or
regulation in order to establish such Bank's tax status for withholding
purposes.
(g) The Borrowers will not be required to pay any additional amounts
in respect of United States Federal income tax pursuant to subsection 4.01(d) to
any Bank for the account of any Lending Office of such Bank:
(i) if the obligation to pay such additional amounts would not
have arisen but for a failure by such Bank to comply with its obligations
under subsection 4.01(f) in respect of such Lending Office;
(ii) if such Bank shall have delivered to the Borrowers a Form
4224 in respect of such Lending Office pursuant to subsection 4.01(f), and
such Bank shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by
the Borrowers hereunder for the account of such Lending Office for any
reason other than a change in United States law or regulations or in the
official interpretation of such law or regulations by any Governmental
Authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the date of delivery of such
Form 4224; or
(iii) if the Bank shall have delivered to the Borrowers a Form
1001 in respect of such Lending Office pursuant to subsection 4.01(f), and
such Bank shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by
the Borrowers hereunder for the account of such Lending Office for any
reason other than a change in United States law or regulations or any
applicable tax treaty or regulations or in the official interpretation of
any such law, treaty or regulations by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having
the force of law) after the date of delivery of such Form 1001.
(h) If, at any time, a Borrower requests any Bank to deliver any
forms or other documentation pursuant to subsection 4.01(f)(iv), then such
Borrower shall, on demand of such Bank through the Agent, reimburse such Bank
for any costs and expenses (including Attorney Costs) reasonably incurred by
such Bank in the preparation or delivery of such forms or other documentation.
(i) If the Borrowers are required to pay additional amounts to any
Bank or the Agent pursuant to subsection 4.01(d), then such Bank shall use its
reasonable best efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Borrowers which may thereafter accrue if such change
in the judgment of such Bank is not otherwise disadvantageous to such Bank.
(j) Nothing contained in this Section 4.01 shall override any term or
provision of any Specified Swap Contract regarding withholding taxes relating to
Swap Contracts.
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4.02 ILLEGALITY.
(a) If any Bank shall determine that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration thereof, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Bank or its Lending Office to make Offshore Rate Loans, then, on notice
thereof by the Bank to the Borrowers through the Agent, the obligation of that
Bank to make Offshore Rate Loans shall be suspended until the Bank shall have
notified the Agent and the Borrowers that the circumstances giving rise to such
determination no longer exists.
(b) If a Bank shall determine that it is unlawful to maintain any
Offshore Rate Loan, the Borrowers shall prepay in full all Offshore Rate Loans
of that Bank then outstanding, together with interest accrued thereon, either on
the last day of the Interest Period thereof if the Bank may lawfully continue to
maintain such Offshore Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Offshore Rate Loans, together with any
amounts required to be paid in connection therewith pursuant to Section 4.04.
(c) If the Borrowers are required to prepay any Offshore Rate Loan
immediately as provided in subsection 4.02(b), then concurrently with such
prepayment, the Borrowers shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
(d) Before giving any notice to the Agent pursuant to this Section
4.02, the affected Bank shall designate a different Lending Office with respect
to its Offshore Rate Loans if such designation will avoid the need for giving
such notice or making such demand and will not, in the judgment of the Bank, be
illegal or otherwise disadvantageous to the Bank.
4.03 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Bank or the Issuing Bank shall determine that, due to
either (i) the introduction of or any change after the Closing Date (other than
any change by way of imposition of or increase in reserve requirements included
in the calculation of the Offshore Rate) in or in the interpretation of any law
or regulation, or (ii) the compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law), which guideline or request is issued or made after the Closing Date, there
shall be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any Offshore Rate Loans or participating in any L/C
Obligations, or any increase in the cost to the Issuing Bank of agreeing to
Issue, Issuing or maintaining any Letter of Credit or of agreeing to Issue,
Issuing or maintaining any Letter of Credit or of agreeing to make or making,
funding or maintaining any unpaid drawing under any Letter of Credit, then the
Borrowers shall be liable for, and shall from time to time, upon demand therefor
by such Bank or the Issuing Bank, as the case may be (with a copy of such demand
to the Agent), pay to the Agent for the account of such Bank or the Issuing
Bank, additional amounts as are sufficient to compensate such Bank or the
Issuing Bank for such increased costs; PROVIDED, THAT no Bank shall be entitled
to compensation hereunder with respect to any period prior to six (6) months
prior to making such demand.
(b) If any Bank or the Issuing Bank shall have determined that (i)
the introduction after the Closing Date of any Capital Adequacy Regulation, (ii)
any change after the Closing Date in any Capital Adequacy Regulation, (iii) any
change after the Closing Date in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or the Issuing Bank, as the case may be, or any
corporation controlling the Bank or the Issuing Bank, as the case may be, with
any such Capital Adequacy Regulation
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implemented or changed after the Closing Date, affects or would affect the
amount of capital required or expected to be maintained by the Bank or the
Issuing Bank or any corporation controlling the Bank or the Issuing Bank and
(taking into consideration such Bank's, Issuing Bank's or such corporation's
policies with respect to capital adequacy and such Bank's, Issuing Bank's or
corporation's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitment, loans, credits,
participations in Letters of Credit, or obligations under this Agreement, then,
upon demand of such Bank (with a copy to the Agent), the Borrowers shall pay to
the Bank or Issuing Bank, from time to time as specified by the Bank or Issuing
Bank, additional amounts sufficient to compensate the Bank or Issuing Bank for
such increase; PROVIDED, THAT no Bank shall be entitled to compensation
hereunder with respect to any period prior to six (6) months prior to making
such demand.
4.04 FUNDING LOSSES. The Borrowers agree to reimburse each Bank and to
hold each Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of:
(a) the failure of the Borrowers to make any payment or mandatory
prepayment of principal of any Offshore Rate Loan (including payments made after
any acceleration thereof);
(b) the failure of the Borrowers to borrow, continue or convert a
Loan after any Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Borrowers to make any prepayment in accordance
with any notice delivered under Section 2.06;
(d) the prepayment (including pursuant to Section 2.07) of an
Offshore Rate Loan on a day which is not the last day of the Interest Period
with respect thereto; or
(e) the conversion pursuant to Section 2.04 of any Offshore Rate Loan
to a Base Rate Loan on a day that is not the last day of the respective Interest
Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans hereunder or from
fees payable to terminate the deposits from which such funds were obtained.
Solely for purposes of calculating amounts payable by the Borrower to the Banks
under this Section 4.04 and under subsection 4.03(a), each Offshore Rate Loan
made by a Bank (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the LIBOR used
in determining the Offshore Rate for such Offshore Rate Loan by a matching
deposit or other borrowing in the interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Offshore Rate Loan is in
fact so funded.
4.05 INABILITY TO DETERMINE RATES. If the Agent shall have determined
that for any reason adequate and reasonable means do not exist for ascertaining
the Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan or that the Offshore Rate applicable pursuant to subsection
2.09(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Agent will forthwith give notice of such determination to
the Borrowers and each Bank. Thereafter, the obligation of the Banks to make or
maintain Offshore Rate Loans hereunder shall be suspended until the Agent upon
the instruction of the Majority Banks revokes such notice in writing. Upon
receipt of such notice, a Borrower may revoke any Notice of Borrowing or Notice
of Conversion/Continuation then submitted by it. If such Borrower does not
revoke such notice, the Banks shall make, convert or continue the Loans, as
proposed by such Borrower, in the amount specified in the applicable notice
submitted by such Borrower, but such Loans shall be
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made, converted or continued as Base Rate Loans instead of Offshore Rate Loans.
4.06 CERTIFICATES OF BANKS. Any Bank claiming reimbursement or
compensation pursuant to this Article IV shall deliver to the Borrowers (with a
copy to the Agent) a certificate setting forth in reasonable detail the amount
payable to the Bank hereunder and such certificate shall be conclusive and
binding on the Borrowers in the absence of manifest error.
4.07 SUBSTITUTION OF BANKS. Upon the receipt by the Borrowers from any
Bank (an "AFFECTED BANK") of a claim for compensation pursuant to Section 4.03,
the Borrowers may: (i) request the Affected Bank to use its best efforts to
obtain a replacement bank or financial institution satisfactory to the Borrowers
to acquire and assume all or part of such Affected Bank's Loans and Commitments
(a "REPLACEMENT BANK"); (ii) request one or more of the other Banks to acquire
and assume all or part of such Affected Bank's Loans and Commitments; or (iii)
designate a Replacement Bank. Any such designation of a Replacement Bank under
clause (i) or (iii) shall be subject to the prior written consent of the Agent
(which consent shall not be unreasonably withheld). Neither the designation of
a Replacement Bank nor the assumption by a Bank of the Affected Bank's Loans and
Commitments shall relieve the Borrowers of any obligation to pay compensation
pursuant to Section 4.03 which has accrued prior to the date of any such
designation or assumption.
4.08 SURVIVAL. The agreements and obligations of the Borrowers in this
Article IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.01 CONDITIONS OF INITIAL CREDIT EXTENSIONS. The obligation of each Bank
to make its initial Credit Extension hereunder is subject to the condition that
the Agent shall have received on or before the Closing Date all of the
following, in form and substance satisfactory to the Agent and each Bank and in
sufficient copies for each Bank:
(a) CREDIT AGREEMENT. This Agreement executed by the Borrowers, the
Agent, the Issuing Bank and each of the Banks;
(b) RESOLUTIONS; INCUMBENCY.
(i) Copies of the resolutions of the board of directors of each
Borrower approving and authorizing the execution, delivery and performance
by such Borrower of this Agreement and the other Loan Documents to be
delivered hereunder, and authorizing the borrowing of the Loans and the
other Credit Extensions, certified as of the Closing Date by the Secretary
or an Assistant Secretary of such Borrower;
(ii) Certified copies of the resolutions of the board of
directors of each Guarantor approving the Guaranty and the Guarantor
Security Agreement to be delivered by it hereunder; and
(iii) A certificate of the Secretary or Assistant Secretary of
each Borrower and each Guarantor certifying the names and true signatures
of the officers of each Borrower and each Guarantor authorized to execute,
deliver and perform, as applicable, this Agreement, the Guaranty, and all
other Loan Documents to be delivered hereunder;
(c) ARTICLES OF INCORPORATION; BY-LAWS AND GOOD STANDING. Each of
the following documents:
(i) the articles or certificate of incorporation of each
Borrower as in effect on the Closing Date, certified by the Secretary of
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State (or similar, applicable Governmental Authority) of the state of
incorporation of each Borrower as of a recent date and by the Secretary or
Assistant Secretary of each Borrower as of the Closing Date, and the bylaws
of each Borrower as in effect on the Closing Date, certified by the
Secretary or Assistant Secretary of each Borrower as of the Closing Date;
and
(ii) a good standing and tax good standing certificate for each
Borrower from the Secretary of State (or similar, applicable Governmental
Authority) of its state of incorporation and the state where each Borrower
maintains its chief executive office (if different from its state of
incorporation) as of a recent date;
(d) COLLATERAL DOCUMENTS. The Collateral Documents, executed by
each Borrower, in appropriate form for recording, where necessary, together
with:
(i) UCC-l financing statements executed by each Borrower and
each Guarantor to perfect the security interests of the Agent for the
benefit of the Banks as contemplated by the Loan Documents;
(ii) written advice relating to such Lien and judgment searches
as the Agent shall have requested of each Borrower and each Guarantor, and
such termination statements or other documents as may be necessary to
confirm that the Collateral is subject to no other Liens in favor of any
Persons (other than Permitted Liens);
(iii) evidence that all other actions necessary or, in the
opinion of the Agent or the Banks, desirable to perfect and protect the
first priority security interest created by the Collateral Documents have
been taken; and
(iv) evidence that all other actions necessary or, in the
opinion of the Agent or the Banks, desirable to perfect and protect the
first priority Lien created by the Collateral Documents, and to enhance the
Agent's ability to preserve and protect its interests in and access to the
Collateral, have been taken.
(e) GUARANTY. The Guaranty, executed by each Guarantor.
(f) LEGAL OPINION. An opinion of Robin A. Herman, counsel to the
Borrower and addressed to the Agent and the Banks, substantially in the form of
EXHIBIT D;
(g) PAYMENT OF FEES. The Borrowers shall have paid all accrued and
unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date, together with Attorney Costs of BofA to the extent invoiced prior
to or on the Closing Date, provided that such fees, costs, expenses and Attorney
Costs invoiced on the Closing Date shall not thereafter preclude final settling
of accounts between the Borrowers and BofA (including any such costs, fees and
expenses arising under or referenced in Sections 2.10, 4.01 and 11.04);
(h) REPAYMENT OF EXISTING CREDIT FACILITIES. The Borrowers shall
have repaid in full all principal, interest and fees outstanding under the
Existing Credit Agreement and the Existing Credit Agreement shall have been
terminated.
(i) CERTIFICATE. A certificate signed by a Responsible Officer of
each Borrower, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article VI
are true and correct on and as of such date, as though made on and as of
such date;
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(ii) no Default or Event of Default exists or would result from
the initial Credit Extension; and
(iii) there has occurred since November 2, 1997, no event or
circumstance that has resulted or could reasonably be expected to result in
a Material Adverse Effect;
(j) FINANCIAL STATEMENTS. A certified copy of financial statements
of the Parent and its Subsidiaries referred to in Section 6.11;
(k) INSURANCE POLICIES. Standard lenders' payable endorsements with
respect to the insurance policies or other instruments or documents evidencing
insurance coverage on the tangible Property comprising the Collateral in
accordance with Section 7.06;
(l) DUE DILIGENCE. Evidence of completion to the satisfaction of
the Agent of such investigations, reviews and audits with respect to the
Borrowers and the other Loan Parties as the Agent or any Bank may deem
appropriate; and
(m) OTHER DOCUMENTS. Such other approvals, opinions, documents or
materials pertaining to matters within the scope of this Agreement and the other
Loan Documents as the Agent or any Bank may reasonably request.
5.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Bank and
the Issuing Bank to make any Credit Extension to be made by it hereunder
(including its initial Credit Extension) or to continue or convert any Loan
pursuant to Section 2.04 is subject to the satisfaction of the following
conditions precedent on the relevant Credit Extension, continuation or
conversion date:
(a) NOTICE. The Agent shall have received a Notice of Borrowing; or
in the case of any Issuance of any Letter of Credit, the Issuing Bank and the
Agent shall have received an L/C Application or L/C Amendment Application, as
required under Section 3.02;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by the Borrowers contained in Article VI
shall be true and correct on and as of such Credit Extension, continuation or
conversion date with the same effect as if made on and as of such Credit
Extension, continuation or conversion date (except to the extent such
representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct as of such earlier date, and except as to Section
6.11, which shall be deemed to refer to the date of the most recent financial
statements delivered pursuant to subsections 7.01(a) and 7.01(b));
(c) NO EXISTING DEFAULT. No Default or Event of Default shall exist
or shall result from such Credit Extension or continuation or conversion.
Each Notice of Borrowing, L/C Application or L/C Amendment Application and
Notice of Continuation/Conversion submitted by any Borrower hereunder shall
constitute a representation and warranty by the Borrowers hereunder, as of the
date of each such notice or application and as of the date of each Borrowing,
continuation or conversion, as applicable, that the conditions in Section 5.02
are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Agent and each Bank that:
6.01 CORPORATE EXISTENCE AND POWER. Each Loan Party:
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(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and execute, deliver, and perform its obligations under, the Loan Documents to
which it is a party;
(c) is duly qualified as a foreign corporation, and licensed and in
good standing, under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
or license; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (c) or clause (d), to the extent that
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.
6.02 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery
and performance by each Loan Party of this Agreement and any other Loan Document
to which such Person is party have been duly authorized by all necessary
corporate action, and do not and will not:
(a) contravene the terms of any of that Person's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any material Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its Property is
subject; or
(c) violate any Requirement of Law.
6.03 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings or filings in connection with the
Liens granted to the Agent under the Collateral Documents) is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, any Loan Party of this Agreement or any other Loan Document
to which such Person is a party.
6.04 BINDING EFFECT. This Agreement and each other Loan Document to which
any Loan Party is a party constitute the legal, valid and binding obligations of
such Loan Party, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
6.05 LITIGATION. Except as specifically disclosed in SCHEDULE 6.05, there
are no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of any Borrower, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against any Borrower or any of
the other Loan Parties or any of their respective Properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to any Loan Party, would reasonably be
expected to have a Material Adverse Effect.
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No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
6.06 NO DEFAULT. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Borrowers or the grant or
perfection of the Agent's Liens on the Collateral. None of the Loan Parties is
in default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such defaults, could reasonably be
expected to have a Material Adverse Effect or that would, if such default had
occurred after the Closing Date, create an Event of Default under subsection
9.01(e).
6.07 ERISA COMPLIANCE. Except as specifically disclosed in SCHEDULE 6.07:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service and to the
best knowledge of the Borrowers, nothing has occurred which would cause the loss
of such qualification.
(b) There are no pending or, to the best knowledge of the Borrowers,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.
(c) As of the Closing Date and as disclosed pursuant to Section 7.03
subsequent to the Closing Date, none of the Borrowers nor any ERISA Affiliate
maintains or contributes to any Pension Plan or other Plan subject to Section
412 of the Code. None of the Borrowers nor any ERISA Affiliate has ever
contributed to any Multiemployer Plan.
6.08 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans are
intended to be and shall be used solely for the purposes set forth in and
permitted by Section 7.11, and are intended to be and shall be used in
compliance with Section 8.07. None of the Borrowers nor any other Loan Party is
generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
6.09 TITLE TO PROPERTIES. Each Loan Party has good record and marketable
title in fee simple to, or valid leasehold interests in, all real Property
necessary or used in the ordinary conduct of its respective businesses, except
for such defects in title as could not, individually or in the aggregate, have a
Material Adverse Effect. As of the Closing Date, the Property of the Loan
Parties is not subject to any Liens, other than Permitted Liens.
6.10 TAXES. Each Loan Party has filed all Federal and other material tax
returns and reports required to be filed, and has paid all Federal and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon it or its Properties, income or assets otherwise due and payable,
except those which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been provided in accordance with GAAP and
no Notice of Lien has been filed or recorded. There is no proposed tax
assessment against any Loan Party which would, if the assessment were made, have
a Material Adverse Effect.
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6.11 FINANCIAL CONDITION.
(a) The audited consolidated statements of financial condition of
the Parent and its Subsidiaries dated November 2, 1997, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for the fiscal year ended on that date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;
(ii) fairly present the financial condition of the Parent and
its Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(iii) show all material indebtedness and other liabilities,
direct or contingent of the Parent and its consolidated Subsidiaries as of
the date thereof, including liabilities for taxes, material commitments and
Contingent Obligations, to the extent required by GAAP.
(b) Since November 2, 1997, there has been no Material Adverse
Effect.
6.12 ENVIRONMENTAL MATTERS.
(a) Except as specifically disclosed in SCHEDULE 6.12 as of the
Closing Date, and as disclosed pursuant to Sections 7.03 and 7.10 subsequent to
the Closing Date, the on-going operations of each of the Loan Parties comply in
all respects with all Environmental Laws, except such non-compliance which is
not reasonably likely (if enforced in accordance with applicable law) to result
in liability in excess of One Million Dollars ($1,000,000) in the aggregate.
(b) Except as specifically disclosed in SCHEDULE 6.12 as of the
Closing Date, and as disclosed pursuant to Sections 7.03 and 7.10 subsequent to
the Closing Date, each of the Loan Parties has obtained all licenses, permits,
authorizations and registrations required under any Environmental Law
("ENVIRONMENTAL PERMITS") and necessary for its respective ordinary course
operations (except where failure to obtain any such Environmental Permit is not
reasonably likely to result in a Material Adverse Effect), all such
Environmental Permits are in good standing, and each of the Loan Parties is in
compliance with all material terms and conditions of such Environmental Permits.
(c) Except as specifically disclosed in SCHEDULE 6.12 as of the
Closing Date, and as disclosed pursuant to Sections 7.03 and 7.10 subsequent to
the Closing Date, none of the Loan Parties is subject to any outstanding written
order from or agreement with any Governmental Authority, nor subject to any
judicial or docketed administrative proceeding, respecting any Environmental
Law, Environmental Claim or Hazardous Material.
(d) Except as specifically disclosed in SCHEDULE 6.12 as of the
Closing Date, and as disclosed pursuant to Sections 7.03 and 7.10 subsequent to
the Closing Date, there are no Hazardous Materials or other conditions or
circumstances existing with respect to any Property, or arising from operations
prior to the Closing Date, of any of the Loan Parties that would reasonably be
expected to give rise to Environmental Claims with a potential liability of the
Loan Parties in excess of One Million Dollars ($1,000,000) in the aggregate for
any such condition, circumstance or Property. In addition, (i) none of the Loan
Parties has any underground storage tanks (x) that are not properly registered
or permitted under applicable Environmental Laws, or (y) that are leaking or
disposing of Hazardous Materials off-site, and (ii) the Loan Parties have met
all material notification requirements under Title III of CERCLA and all other
Environmental Laws.
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6.13 COLLATERAL DOCUMENTS.
(a) The provisions of each of the Collateral Documents are effective
to create in favor of the Agent for the benefit of the Banks, a legal, valid and
enforceable first priority security interest in all right, title and interest of
the Loan Parties in the collateral described therein.
(b) All representations and warranties of each of the Loan Parties
party thereto contained in the Collateral Documents are true and correct.
6.14 REGULATED ENTITIES. None of the Loan Parties is (a) an "Investment
Borrower" within the meaning of the Investment Company Act of 1940; or (b)
subject to regulation under the Public Utility Holding Borrower Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code,
or any other Federal or state statute or regulation limiting its ability to
incur Indebtedness.
6.15 NO BURDENSOME RESTRICTIONS. None of the Loan Parties is a party to
or bound by any Contractual Obligation, or subject to any charter or corporate
restriction, or any Requirement of Law, which could reasonably be expected to
have a Material Adverse Effect.
6.16 SOLVENCY. Each Borrower, the Parent, and each Material Subsidiary is
Solvent.
6.17 LABOR RELATIONS. There are no strikes, lockouts or other labor
disputes against any of the Loan Parties, or, to the best of the Borrowers'
knowledge, threatened against or affecting any of them, and no significant
unfair labor practice complaint is pending against any of the Loan Parties or,
to the best knowledge of the Borrowers, threatened against any of them before
any Governmental Authority.
6.18 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. Each of the Loan
Parties is licensed or otherwise has the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
authorizations and other rights that are reasonably necessary for the operation
of its business, without conflict with the rights of any other Person. To the
best knowledge of the Borrowers, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by any of the Loan Parties infringes upon any
rights held by any other Person; except as specifically disclosed in SCHEDULE
6.05, no claim or litigation regarding any of the foregoing is pending or
threatened, and no patent, invention, device, application, principle or any
statute, law, rule, regulation, standard or code is pending or, to the knowledge
of the Borrowers, proposed, which, in either case, could reasonably be expected
to have a Material Adverse Effect.
6.19 SUBSIDIARIES. Except as specifically disclosed in SCHEDULE 6.19 as
of the Closing Date, and as disclosed pursuant to Section 7.13 subsequent to the
Closing Date, the Parent and the Borrowers have no Subsidiaries other than those
specifically disclosed in part (a) of SCHEDULE 6.19 hereto and have no equity
investments in any other corporation or entity other than those specifically
disclosed in part (b) of SCHEDULE 6.19.
6.20 PRINCIPAL PLACE OF BUSINESS. Each Loan Party's principal place of
business is located at 301, 303 and 305 Lennon Lane, Walnut Creek, California,
or at 220, 230 and 298 North Wiget Lane, Walnut Creek, California. Each of the
Loan Parties keep its records, accounts, records pertaining to its accounts and
all other records pertaining to the transactions contemplated by the Loan
Documents at the foregoing locations.
6.21 LICENSEE LOANS. Except as specifically disclosed in SCHEDULE 6.21 as
of the Closing Date, and as disclosed pursuant to Section 7.14 subsequent to the
Closing Date, none of the Borrowers has made any loans to Licensees, and all
such loans to Licensees are in compliance with the requirements of
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subsection 8.04(c).
6.22 BROKER'S FEES. None of the Loan Parties has any obligation to any
Person in respect of any finder's, broker's or investment banker's fee in
connection with the transactions contemplated hereby.
6.23 INSURANCE. The Properties of the Loan Parties are insured with
financially sound and reputable insurance companies not Affiliates of the Loan
Parties, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar Properties in localities where each of the Loan Parties operates.
6.24 FULL DISCLOSURE. None of the representations or warranties made by
the Loan Parties in the Loan Documents as of the date such representations and
warranties are made or deemed made, and, to the best knowledge of the Borrowers,
none of the statements contained in each exhibit, report, statement or
certificate furnished by or on behalf of the Loan Parties in connection with the
Loan Documents (including the offering and disclosure materials delivered by or
on behalf of the Borrowers to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
6.25 SWAP OBLIGATIONS.
(a) None of the Loan Parties has incurred any outstanding obligations
under any Swap Contracts, other than Permitted Swap Obligations. Each Loan
Party has undertaken its own independent assessment of its consolidated assets,
liabilities and commitments and has considered appropriate means of mitigating
and managing risks associated with such matters and has not relied on any
Swap Provider or any Affiliate of any Swap Provider in determining whether to
enter into any Swap Contract.
(b) None of the Loan Parties has entered into any master agreement
relating to Swap Contracts and under which termination values resulting from
Swap Contracts that are Specified Swap Contracts are nettable against
termination values resulting from Swap Contracts that are not Specified Swap
Contracts, unless only Specified Swap Contracts are outstanding under such
master agreement.
6.26 YEAR 2000 COMPLIANCE. Each Loan Party has assessed its management
information systems and believes they are relatively free of "year 2000 issues"
(that is, the risk that computer applications used by any Person may be unable
to recognize and perform properly date-sensitive functions involving certain
dates prior to and any dates after December 31, 1999) and that costs to be
incurred to address such issues will not have a significant impact on its
business, results of operations, cash flows and financial condition.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Borrowers covenant and agree that, so long as any Bank shall have any
Commitment hereunder, or any Loan, Letter of Credit or other Obligation shall
remain unpaid or unsatisfied, unless the Majority Banks waive compliance in
writing:
7.01 FINANCIAL STATEMENTS. The Borrowers shall deliver to the Agent in
form and detail satisfactory to the Agent and the Majority Banks, with
sufficient copies for each Bank:
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(a) As soon as available, and in any event within one hundred twenty
(120) days after the close of each fiscal year of the Parent, a consolidated
balance sheet, statement of income and cash flow of the Parent and each
consolidated Subsidiary as at the close of and for such fiscal year and stating
in comparative form the figures as at the close of and for the previous fiscal
year, and an unaudited consolidating balance sheet and statement of income of
the Parent, all in reasonable detail, only the consolidated financial statements
to be audited by and with the unqualified opinion of certified public
accountants satisfactory to the Banks;
(b) As soon as available, and in any event within sixty (60) days
after the close of the first, second and third fiscal quarters of each fiscal
year, commencing with the fiscal quarter ending January 24, 1998, a consolidated
balance sheet, statement of income and cash flow of the Parent and each
consolidated Subsidiary at the close of such fiscal quarter and covering
operations for the portion of the Parent's and each Subsidiary's fiscal year
ending on the last day of such fiscal quarter, and a consolidating balance sheet
and statement of income of the Parent, all in reasonable detail and prepared in
accordance with GAAP by the Parent, subject, however, to year-end audit
adjustments; the consolidating income statement shall include a breakdown of
income and expenses by industry group;
7.02 CERTIFICATES; OTHER INFORMATION. The Borrowers shall furnish to the
Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsections 7.01(a) and (b) above, a Compliance Certificate in
the form of EXHIBIT C (the "COMPLIANCE CERTIFICATE") executed by a Responsible
Officer of each Borrower (i) stating that, to the best of such officer's
knowledge, the Borrowers, during such period, have observed and performed all of
their covenants and other agreements, and satisfied every condition contained in
this Agreement to be observed, performed or satisfied by the Borrowers, and that
such officer has obtained no knowledge of any Default or Event of Default except
as specified (by applicable subsection reference) in such certificate, and (ii)
showing in detail the calculations supporting such statement in respect of the
covenants set forth in Schedule 2 of the Compliance Certificate.
(b) As soon as available and in any event within sixty (60) days
after the close of each fiscal year of the Parent, projections of the financial
performance of the Parent and its consolidated and unconsolidated Subsidiaries
for the immediately succeeding fiscal year, to include a balance sheet, cash
flow and income statement, such projections to be prepared in good faith and
based on stated assumptions having a reasonable basis; PROVIDED, THAT the Agent
and the Banks agree that (i) such projections shall be treated as confidential
information, and (ii) such projections are the Borrowers' estimates of future
performance subject to the assumptions therein stated, and are not guaranties of
future performance under any circumstances;
(c) Within thirty (30) days after receipt by the Parent, a copy of
any management letter prepared by the Parent's certified public accountants.
(d) Within sixty (60) days after the end of each fiscal year, a
workers' compensation summary report, which report shall include (1) the number
of workers' compensation claims filed on a fiscal year to date basis by the
Borrowers; (2) the total of worker's compensation payments made on a fiscal year
to date basis by the Borrowers; and (3) the Dollar amount of the Borrowers'
payroll expense on a fiscal year to date basis;
(e) promptly after the same are sent, copies of all financial
statements and reports which the Parent sends to its shareholders generally; and
promptly after the same are filed, copies of all financial statements and
regular, periodical or special reports which the Parent may make to, or file
with, the Securities and Exchange Commission or any successor or similar
Governmental Authority; and
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(f) promptly, such additional business, financial, corporate affairs
and other information as the Agent or any Bank may from time to time reasonably
request; PROVIDED, HOWEVER, that the Borrowers shall not be deemed to have
waived their right to invoke the attorney-client privilege or assert the
attorney work product doctrine to the extent applicable to any such information
as may be requested by the Agent or any Bank.
7.03 NOTICES. The Borrowers shall promptly notify the Agent and each Bank
in writing:
(a) (i) of the occurrence of any Default or Event of Default, (ii)
of the occurrence or existence of any event or circumstance that foreseeably
will become a Default or Event of Default, and (iii) of the occurrence or
existence of any event or circumstance that would cause the condition to Credit
Extension set forth in subsection 5.02(b) not to be satisfied if a Credit
Extension were requested on or after the date of such event or circumstance;
(b) of (i) any breach or non-performance of, or any default under,
any Contractual Obligation of any Loan Party which is reasonably likely to
result in a Material Adverse Effect; and (ii) any dispute, litigation,
investigation, proceeding or suspension which may exist at any time between any
Loan Party and any Governmental Authority which is reasonably likely to result
in a Material Adverse Effect;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting any Loan Party (i) in which the amount of
damages claimed is One Million Dollars ($1,000,000) (or its equivalent in
another currency or currencies) or more, (ii) in which injunctive or similar
relief is sought and which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect, or (iii) in which the relief sought
is an injunction or other stay of the performance of this Agreement or any Loan
Document;
(d) upon, but in no event later than ten (10) days after, becoming
aware of (i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened against any Loan Party or
any of their respective Properties pursuant to any applicable Environmental
Laws, (ii) all other Environmental Claims if liability is reasonably likely to
exceed One Million Dollars ($1,000,000), and (iii) any environmental or similar
condition on any real property adjoining or in the vicinity of the property of
any Loan Party that could reasonably be anticipated to cause such property or
any part thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use of such property under any Environmental Laws;
(e) of any other litigation or proceeding affecting any Loan Party
which the Parent would be required to report to the SEC pursuant to the Exchange
Act, within four (4) days after reporting the same to the SEC;
(f) of the occurrence of any of the following events affecting the
Borrowers or the Parent any ERISA Affiliate (but in no event more than ten (10)
days after such event), and deliver to the Agent and each Bank a copy of any
notice with respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Borrowers or the
Parent or any ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) the adoption of any new Pension Plan or other Plan subject
to Section 412 of the Code by the Borrowers or the Parent or any ERISA
Affiliate; or
(iii) the commencement of contributions by the Borrowers or
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the Parent or any ERISA Affiliate to any Pension Plan, Multiemployer Plan,
or other Plan subject to Section 412 of the Code.
(iv) the representations and warranties in Section 6.07
concerning ERISA compliance cease to be true and correct;
(g) any Material Adverse Effect subsequent to the date of the most
recent audited financial statements of the Parent delivered to the Banks
pursuant to subsection 7.01(a) or 5.01(j);
(h) upon the occurrence of, but in no event more than thirty (30)
days after, any change in the location of any Loan Party's principal place of
business;
(i) upon the occurrence of, but in no event more than thirty (30)
days after, any change in the name or trade name of any Loan Party;
(j) of any change in accounting policies or financial reporting
practices by any Loan Party; and
(k) of any labor controversy resulting in or threatening to result
in any strike, work stoppage, boycott, shutdown or other labor disruption
against or involving any Loan Party which is reasonably likely to result in a
Material Adverse Effect.
(l) of the entry by WSS into any Specified Swap Contract, together
with the details thereof;
(m) of the occurrence of any default, event of default, termination
event or other event under any Specified Swap Contract that after the giving of
notice, passage of time or both, would permit either counterparty to such
Specified Swap Contract to terminate early any or all trades relating to such
contract; and
(n) upon the request from time to time of the Agent, the Swap
Termination Values, together with a description of the method by which such
amounts were determined, relating to any then-outstanding Swap Contracts to
which a Borrower or any other Loan Party is party.
Each notice pursuant to this Section shall be accompanied by a
written statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action such Loan Party proposes
to take with respect thereto and at what time. Each notice under subsection
7.03(a) shall describe with particularity any and all clauses or provisions of
this Agreement or other Loan Document that have been breached or violated.
7.04 PRESERVATION OF CORPORATE EXISTENCE, ETC. Each Borrower shall, and
shall cause each other Loan Party to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business except in connection with
transactions permitted by Section 8.03 and sales of assets permitted by Section
8.02;
(c) use its reasonable efforts, in the Ordinary Course of Business,
to preserve its business organization and preserve the goodwill and business of
the customers, suppliers and others having material business relations with it;
and
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(d) preserve or renew all of its registered trademarks, trade names
and service marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect.
7.05 MAINTENANCE OF PROPERTY. Each Borrower shall maintain and preserve,
and shall cause each other Loan Party to maintain and preserve, all its Property
which is used or useful in its business in good working order and condition,
ordinary wear and tear excepted.
7.06 INSURANCE. In addition to insurance requirements set forth in the
Collateral Documents, each Borrower shall maintain, and shall cause each other
Loan Party to maintain, with financially sound and reputable independent
insurers, insurance with respect to its Properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons; including workers'
compensation insurance, public liability and property and casualty insurance.
All casualty insurance covering the tangible Property comprising the Collateral
shall be in an amount equal to the full replacement value of such Collateral,
shall include a replacement cost endorsement, and shall name the Agent as loss
payee for the benefit of the Banks, as their interests may appear. Upon request
of the Agent or any Bank, the Borrower shall furnish the Agent, with sufficient
copies for each Bank, at reasonable intervals (but not more than once per
calendar year) a certificate of a Responsible Officer of each Borrower (and, if
requested by the Agent, any insurance broker of each Borrower) setting forth the
nature and extent of all insurance maintained by the Borrower and its
Subsidiaries in accordance with this Section 7.06 or any Collateral Documents
(and which, in the case of a certificate of a broker, were placed through such
broker).
7.07 PAYMENT OF OBLIGATIONS. Each Borrower shall pay and discharge, and
shall cause each other Loan Party to pay and discharge, as the same shall become
due and payable, all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained with respect thereto;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its Property, other than Permitted Liens; and
(c) all Indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
7.08 COMPLIANCE WITH LAWS. Each Borrower shall comply, and shall cause
each other Loan Party to comply, with all material Requirements of Law of any
Governmental Authority having jurisdiction over it or its business (including
the Federal Fair Labor Standards Act), except such as may be contested in good
faith or as to which a bona fide dispute may exist.
7.09 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. Each Borrower shall
maintain, and shall cause each other Loan Party to maintain, proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Borrowers and such other Loan
Parties. Each Borrower shall permit, and shall cause each other Loan Party to
permit, representatives and independent contractors of the Agent or any Bank, at
the expense of the Agent or such Bank in each case, to visit and inspect any of
their respective Properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all
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at such reasonable times during normal business hours, but not more frequently
than once every six (6) months, upon reasonable advance notice to the Borrowers
or such other Loan Parties; PROVIDED, HOWEVER, when an Event of Default exists
the Agent or any Bank may do any of the foregoing at the expense of the
Borrowers at any time during normal business hours and without advance notice.
7.10 ENVIRONMENTAL LAWS.
(a) Each Borrower shall, and shall cause each other Loan Party to,
conduct its operations and keep and maintain its Property in material compliance
with all material Environmental Laws.
(b) Upon the written request of the Agent or any Bank, each Borrower
shall submit, and shall cause each other Loan Party to submit, to the Agent with
sufficient copies for each Bank, at the Borrowers' sole cost and expense, at
reasonable intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue identified
in any notice or report required pursuant to subsection 7.03(d), that could,
individually or in the aggregate, result in liability in excess of One Million
Dollars ($1,000,000).
7.11 USE OF CREDITS. The Borrowers shall use the proceeds of the Loans and
the Letters of Credit solely as follows: (a) Revolving Loans shall be used for
working capital and other general corporate purposes not in contravention of any
Requirement of Law; (b) Term Loans shall be used to finance Acquisitions in
compliance with the provisions of Section 8.11 and to repay the principal
balance of the term loan outstanding under the Existing Credit Agreement; and
(c) Letters of Credit shall be used for the purpose of providing credit support
for the Borrower's workers' compensation insurance liabilities.
7.12 SOLVENCY. Each Borrower shall at all times be, and shall cause the
Parent and each Material Subsidiary to be, Solvent.
7.13 INACTIVE SUBSIDIARIES; NEW SUBSIDIARIES. The Borrowers shall:
(a) Cause any inactive domestic Subsidiary listed on SCHEDULE
6.19 hereto which, after the date hereof, commences to transact business
and becomes an active Material Subsidiary, to execute and deliver a
guaranty and security agreement in favor of Agent for the benefit of Banks,
and such other documentation as may be requested by Banks, in form and
substance acceptable to the Banks and the Borrowers, whose approval will
not unreasonably be withheld;
(b) Cause any domestic Subsidiary of the Parent or of any
Borrower acquired or established subsequent to the date of this Agreement,
if such Subsidiary is an active domestic Material Subsidiary, to execute
and deliver a guaranty and security agreement in favor of Agent for the
benefit of Banks, and such other documentation as may be requested by
Banks, in form and substance acceptable to the Banks and the Borrowers,
whose approval will not unreasonably be withheld;
(c) Not permit the total assets of all active domestic
Subsidiaries which are not Loan Parties to exceed twenty percent (20%) of
the total assets of the Parent and its consolidated domestic Subsidiaries
and cause one or more of such active domestic Subsidiaries to become Loan
Parties as provided in subsections (a) and (b) above as necessary to comply
with the foregoing limitation; and
(d) Deliver to each of the Banks and Agent a revised SCHEDULE
6.19 reflecting the changes referred to in subsections (a) and (b) of this
Section.
7.14 LICENSEE LOANS. The Borrowers shall:
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(a) Promptly notify the Banks and the Agent of the commencement
of the provision of loans in excess of Five Hundred Thousand Dollars
($500,000) by any Borrower to a Licensee which is not listed on SCHEDULE
6.21;
(b) Cause all loans in excess of Five Hundred Thousand Dollars
($500,000) to any Licensee to be made in accordance with the requirements
of Section 8.04(c); and
(c) Deliver to the Agent all original instruments evidencing
loans in excess of Five Hundred Thousand Dollars ($500,000)to any Licensee,
copies of all security agreements executed by each such Licensee, and all
Uniform Commercial Code financing statements filed by any Borrower against
each such Licensee and evidencing assignment of each such financing
statement to Agent for the benefit of Banks; PROVIDED, THAT, the Agent
shall use its best efforts to safeguard and return such original
instruments promptly to the Borrowers from time to time, at the Borrowers'
request, in connection with any collection or enforcement action undertaken
by or on behalf of the Borrowers with respect to such instruments.
7.15 FURTHER ASSURANCES.
(a) The Borrowers shall ensure that all written information,
exhibits and reports furnished by the Borrowers or any other Loan Party to
the Agent or the Banks pursuant to the terms of any Loan Document do not and
will not contain any untrue statement of a material fact and do not and will
not omit to state any material fact or any fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made, and will promptly disclose to the Agent and the Banks and correct
any defect or error that may be discovered therein or in any Loan Document or
in the execution, acknowledgement or recordation thereof.
(b) Promptly upon request by the Agent or the Majority Banks, the
Borrowers shall (and shall cause the other Loan Parties to) do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments the
Agent or such Banks, as the case may be, may reasonably require from time to
time in order (i) to carry out more effectively the purposes of this
Agreement or any other Loan Document, (ii) to subject to the Liens created by
any of the Collateral Documents any of the Properties, rights or interests
covered by any of the Collateral Documents, (iii) to perfect and maintain the
validity, effectiveness and priority of any of the Collateral Documents and
the Liens intended to be created thereby, and (iv) to better assure, convey,
grant, assign, transfer, preserve, protect and confirm to the Agent and Banks
the rights granted or now or hereafter intended to be granted to the Banks
under any Loan Document or under any other document executed in connection
therewith.
7.16 COMPLIANCE WITH ERISA. Each Borrower shall, and shall cause each of
its ERISA Affiliates and the Parent to: (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other federal or state law; and (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification.
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ARTICLE VIII
NEGATIVE COVENANTS
Each Borrower hereby covenants and agrees that, so long as any Bank shall
have any Commitment hereunder, or any Loan, Letter of Credit or other Obligation
shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance
in writing:
8.01 LIMITATION ON LIENS. No Borrower shall, and shall not suffer or
permit any other Loan Party to, directly or indirectly, make, create, incur,
assume or suffer to exist any Lien upon or with respect to any part of its
Property, whether now owned or hereafter acquired, other than the following
("PERMITTED LIENS"):
(a) any Lien (other than Liens on the Collateral) existing on the
Closing Date and set forth in SCHEDULE 8.01 securing Indebtedness outstanding on
such date, and any renewals, extensions, or refinancings thereof so long as the
principal amount of such Indebtedness is not thereby increased and such Lien is
not expanded to other Property;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 7.07, provided that no Notice
of Lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the Ordinary Course
of Business which to the Borrowers' knowledge are not delinquent or remain
payable without penalty or which are being contested in good faith and by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the Property subject thereto;
(e) Liens (other than any Lien imposed by ERISA and other than on
the Collateral) consisting of pledges or deposits required in the Ordinary
Course of Business in connection with workers' compensation, unemployment
insurance and other social security legislation;
(f) Liens on the Property of any foreign Subsidiary;
(g) Purchase money security interests on any Property acquired or
held by the Borrowers or any other Loan Party in the Ordinary Course of
Business, other than the Collateral, securing Indebtedness incurred or assumed
for the purpose of financing all or any part of the cost of acquiring such
Property; PROVIDED THAT (i) any such Lien attaches to such Property concurrently
with or within twenty (20) days after the acquisition thereof, (ii) such Lien
attaches solely to the Property so acquired in such transaction, and (iii) the
principal amount of the debt secured thereby does not exceed 100% of the cost of
such Property;
(h) Liens securing obligations in respect of Capital Leases on
assets subject to such leases, provided that such Capital Leases are otherwise
permitted hereunder;
(i) Liens on the assets of an Acquiree to the extent permitted under
Section 8.11(b); and
(j) Liens on the Collateral securing long-term Indebtedness incurred
after the date of this Agreement; PROVIDED THAT (i) the terms and conditions of
such long-term Indebtedness are reasonably acceptable to all Banks, and (ii) the
long-term lender enters into an intercreditor agreement with the Agent on behalf
of the Banks, with terms and conditions reasonably
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acceptable to all Banks, providing for a ratable sharing of the Collateral.
8.02 DISPOSITION OF ASSETS. The Borrowers shall not, and shall not suffer
or permit any other Loan Party to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any Property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the Ordinary Course of Business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment;
(c) except as otherwise limited by Section 8.04(i), transfers of
Property between Loan Parties or by a Loan Party or to a domestic Subsidiary of
any other Loan Party pursuant to reasonable business requirements; PROVIDED THAT
such domestic Subsidiary, prior to such transfer, executes and delivers a
guaranty, security agreement, and such other documentation as may be requested
by Banks pursuant to the provisions of Section 7.13;
(d) the sale by WSS to any Person of 100% of the issued and
outstanding capital stock of WMS, or all or substantially all of the assets of
WMS; PROVIDED, THAT (i) all net cash proceeds of such sale are used by WSS to
repay any outstanding Revolving Loans provided to WMS under the WMS Subfacility,
and (ii) this Agreement is amended to remove WMS as a party hereto; and
(e) the sale of real property owned by WSS on the Closing Date
located in Walnut Creek, California, PROVIDED, THAT (i) the net sale proceeds
received by WSS are not less than the book value of the property at the time of
sale, and (ii) all net cash proceeds from such sale are used by WSS to prepay
outstanding Revolving Loans.
8.03 CONSOLIDATIONS AND MERGERS. The Borrowers shall not, and shall not
suffer or permit any other Loan Party to, merge, consolidate with or into, or
convey, transfer, 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 or in favor of any Person, except:
(a) any Loan Party may merge with or into any other Person in
connection with an Acquisition otherwise permitted herein, PROVIDED, THAT such
Loan Party shall be the continuing or surviving corporation following any such
merger;
(b) any Loan Party may merge with or into any other Loan Party,
PROVIDED, THAT if any transaction shall be between a Borrower and any other Loan
Party, such Borrower shall be the continuing or surviving corporation following
any such merger; and
(c) any Loan Party (other than a Borrower) may sell all or
substantially all of its assets (upon voluntary liquidation or otherwise), to
any Borrower or any other Loan Party.
8.04 LOANS AND INVESTMENTS. The Borrowers shall not purchase or acquire,
or suffer or permit any other Loan Party to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of any Borrower, except for:
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(a) investments in Cash Equivalents;
(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
Ordinary Course of Business;
(c) loans by WSS or WMS to Licensees, PROVIDED THAT (i) such loans
are secured by such Licensees' accounts receivable, (ii) WSS or WMS, as
applicable, has perfected its security interests by Uniform Commercial Code
financing statements filed in the appropriate state and/or local offices, and
(iii) with respect to loans in excess of Five Hundred Thousand Dollars
($500,000) to any Licensee, all such Uniform Commercial Code financing
statements are assigned to the Agent for the benefit of the Banks and all
original instruments evidencing such Licensee loans are delivered to the Agent
(subject to the Agent's obligation on a best efforts basis to return such
original instruments in connection with a collection or enforcement action as
provided in subsection 7.14(c)), together with copies of all security agreements
executed by each Licensee and all Uniform Commercial Code financing statements
filed by the WSS or WMS, as applicable, with respect to the collateral described
in such security agreements.
(d) investments incurred in order to consummate Acquisitions
otherwise permitted herein;
(e) loans to and investments in foreign Subsidiaries or Affiliates
in an aggregate amount not exceeding twenty-five percent (25%) of Consolidated
Net Worth;
(f) investments in Joint Ventures to the extent permitted under
Section 8.09;
(g) loans to Franchisees for working capital purposes or to finance
the purchase by a Franchisee of an interest in an Acquisition consummated by a
Borrower;
(h) investments in the stock of publicly traded corporations engaged
in the same line of business as conducted by the Borrowers and the other Loan
Parties on the Closing Date; PROVIDED, THAT such investments shall not exceed in
the aggregate an acquisition cost of Five Hundred Thousand Dollars ($500,000) at
any time;
(i) existing and additional investments in, and existing and
additional loans to, any other Loan Party or to a domestic Subsidiary of the
Parent; PROVIDED, THAT, each such domestic Subsidiary, prior to the receipt of
investment or loan proceeds, executes and delivers a guaranty, security
agreement, and such other documentation as may be requested by Banks pursuant to
the provisions of Section 7.13; and FURTHER PROVIDED THAT the aggregate amount
of loans made by WSS or any other Loan Party to WMS PLUS the outstanding amount
of Revolving Loans to WMS shall not exceed at any one time the WMS Subfacility;
and
(j) Investments constituting Permitted Swap Obligations or payments
or advances under Swap Contracts relating to Permitted Swap Obligations.
8.05 [Intentionally Omitted].
8.06 TRANSACTIONS WITH AFFILIATES. The Borrowers shall not, and shall not
suffer or permit any other Loan Party to, enter into any transaction with any of
its Affiliates or Subsidiaries, except (a) as expressly permitted by this
Agreement, or (b) in the Ordinary Course of Business and pursuant to the
reasonable requirements of the business of the Borrowers or such Subsidiary or
Affiliate; in each case (a) and (b), upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary or Affiliate than would be obtained
in a comparable arm's-length transaction with a Person not an
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Affiliate or Subsidiary.
8.07 USE OF CREDITS. The Borrowers shall not and shall not suffer or
permit any other Loan Party to use any portion of the Loan proceeds or any
Letter of Credit, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance indebtedness of the Borrower or others
incurred to purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.
8.08 CONTINGENT OBLIGATIONS. The Borrowers shall not, and shall not
suffer or permit any other Loan Party to, create, incur, assume or suffer to
exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the Ordinary Course of
Business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations existing as of the Closing Date and
listed in SCHEDULE 8.08;
(d) Contingent Obligations under the Loan Documents;
(e) Guaranties of performance from time to time executed by the
Borrowers in respect of the obligations of any Subsidiary in connection with
state franchise registrations and obligations under franchise/license
agreements;
(f) Guaranties of performance from time to time executed by the
Parent or WSS in respect of the obligations of any Subsidiary under real
property leases entered into in the ordinary course of business, none of which
individually involve aggregate rental obligations in excess of One Hundred
Thousand Dollars ($100,000); and
(g) additional Contingent Obligations in an aggregate amount not
exceeding Three Hundred Thousand Dollars ($300,000) at any one time.
8.09 JOINT VENTURES. The Borrowers shall not, and shall not suffer or
permit any other Loan Party to, enter into any Joint Venture, other than in the
same line of business as conducted by the Borrowers or any other Loan Party on
the Closing Date, and PROVIDED, THAT the aggregate amount invested in all such
Joint Ventures shall not exceed One Million Dollars ($1,000,000) at any time.
8.10 COMPLIANCE WITH ERISA. The Borrowers shall not, and shall not suffer
or permit any ERISA Affiliate to engage in a prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan which has
resulted or could reasonably be expected to result in liability of any Borrower
in an aggregate amount in excess of One Million Dollars ($1,000,000).
8.11 ACQUISITIONS. The Borrowers shall not make or commit to make, or
suffer or permit any other Loan Party to make or commit to make, any
Acquisitions unless all of the following conditions are satisfied:
(a) The Aggregate Consideration paid or to be paid for any single
Acquisition shall not exceed Ten Million Dollars ($10,000,000) unless all Banks
have expressly approved such Acquisition in writing.
(b) The assets of Acquiree shall not be subject to any Liens as of
the Acquisition date, other than (i) Permitted Liens of the types described in
subsections 8.01(c), 8.01(d) and 8.01(e), and (ii) purchase money security
interests on any Property acquired or held by the Acquiree in the Ordinary
Course of Business securing Indebtedness incurred or assumed for the purpose
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of financing all or any part of the cost of acquiring such Property.
(c) The assets of the Acquiree shall relate directly to the same
lines of business as conducted by the Borrowers or any other Loan Party on the
Closing Date.
(d) The Acquisition is undertaken in accordance with all applicable
Requirements of Law.
(e) Immediately prior to, and immediately after, the consummation
of the Acquisition, no Default or Event of Default shall have occurred and be
continuing and the Borrowers shall be in compliance with the financial covenants
set forth in Sections 8.13 - 8.17. If the Aggregate Consideration paid or to be
paid for any single Acquisition exceeds Ten Million Dollars ($10,000,000), the
Borrowers shall provide each Bank, upon consummation of the Acquisition, a
Compliance Certificate, duly completed and signed.
(f) The aggregate amount of cash expenditures on a cumulative basis
after November 3, 1997, for all Acquisitions, whether consummated prior to or
after November 3, 1997, and including payments in satisfaction of Acquisition
Related Indebtedness, shall not exceed the amounts indicated as of the end of
each fiscal year set forth below:
<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
----------- ------
<S> <C>
1998 $20,000,000
1999 $45,000,000
2000 $60,000,000
2001 $70,000,000
2002 $80,000,000
</TABLE>
8.12 [INTENTIONALLY OMITTED].
8.13 CAPITAL EXPENDITURES. The Borrowers shall not, and shall not permit
any other Loan Party to, make or commit to make Capital Expenditures in excess
of an aggregate of Eight Million Dollars ($8,000,000) in any fiscal year. For
purposes of computing compliance with this section, (a) the unused portion of
permitted Capital Expenditures shall not be carried forward from one fiscal year
to a succeeding fiscal year, and (b) fixed or capital assets acquired through
Acquisitions otherwise permitted herein shall not be included in the foregoing
limitations.
8.14 CURRENT RATIO. The Borrowers shall cause the Parent and its
consolidated Subsidiaries (as of the end of any fiscal quarter) to maintain a
ratio of current assets to current liabilities of not less than 1.35:1.0. For
purposes of the foregoing calculation, current liabilities shall include all
Revolving Loans outstanding as of the end of the fiscal quarter for which the
ratio is calculated, irrespective of whether the Revolving Termination Date is
less than or more than twelve (12) months after such date.
8.15 [Intentionally Omitted].
8.16 TOTAL DEBT TO EBITDA RATIO. The Borrowers shall not permit the Total
Debt To EBITDA Ratio of the Parent and its consolidated Subsidiaries to exceed
3.0:1.0.
"TOTAL DEBT TO EBITDA RATIO" means, with respect to the Parent and its
consolidated Subsidiaries, the ratio obtained by dividing (a) Total Debt
outstanding as of the last day of the fiscal quarter then ended, by (b) EBITDA
for the four (4) fiscal quarter period then ended.
"EBITDA" means, for any period, the sum of net income after taxes, interest
expense, depreciation, amortization, other non-cash extraordinary charges, and
tax expense.
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"TOTAL DEBT" means, without duplication, the sum of Revolving Loans, L/C
Obligations, Capital Leases, Acquisition Related Indebtedness, and long term
liabilities (including the current portion thereof).
8.17 FIXED CHARGE COVERAGE RATIO. The Borrowers shall cause the Parent
and its consolidated Subsidiaries to maintain a Fixed Charge Coverage Ratio for
the four (4) fiscal quarter period immediately preceding the last day of the
fiscal quarter then ended of not less than 1.25:1.0.
"FIXED CHARGE COVERAGE RATIO" means, with respect to the Parent and its
consolidated Subsidiaries, the ratio obtained by dividing (a) Cash Flow for Debt
Service, by (b) the sum of the current portion of long term liabilities
(measured as of the last day of the calculation period), interest expense,
Operating Lease expense, and 12-1/2% of Revolving Loans and L/C Obligations
outstanding as of the last day of the calculation period.
"CASH FLOW FOR DEBT SERVICE" means the sum of net income after taxes,
interest expense, Operating Lease expense, depreciation, amortization, other
non-cash extraordinary charges, losses on asset sales, and cash proceeds from
employee stock purchases, MINUS cash dividends, cash expenditures for the
repurchase of the Parent's stock (including for the purpose of employee stock
options and stock purchase plans), and gains on asset sales.
8.18 [Intentionally Omitted] .
8.19 CHANGE IN BUSINESS. The Borrowers shall not, and shall not permit
any other Loan Party to, engage in any material line of business substantially
different from those lines of business carried on by it on the date hereof.
8.20 CHANGE IN STRUCTURE. Except as expressly permitted under Section
8.03, the Borrowers shall not, and shall not permit any other Loan Party to,
make any changes in its equity capital structure (including in the terms of its
outstanding stock), or amend its certificate of incorporation or by-laws in any
material respect.
8.21 ACCOUNTING CHANGES. The Borrowers shall not, and shall not suffer or
permit any other Loan Party to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Borrowers or any other Loan Party; PROVIDED, HOWEVER, that
the Borrowers or any other Loan Party may make a one-time change to either a
September 30 or December 31 fiscal year-end and may adopt a
thirteen-week/four-quarter fiscal period.
ARTICLE IX
EVENTS OF DEFAULT
9.01 EVENT OF DEFAULT. Any of the following shall constitute an "EVENT OF
DEFAULT":
(a) NON-PAYMENT. The Borrowers fail to make, (i) when and as
required to be made herein, payments of any amount of principal of any Loan or
any amount of any L/C Obligation, or (ii) when and as required to be paid under
any Specified Swap Contract, any payment or transfer under such Specified Swap
Contract, or (iii) within five (5) Business Days after the same becomes due,
payment of any interest, fee or any other amount payable hereunder or under any
other Loan Document (other than a Specified Swap Contract); or
(b) REPRESENTATION OR WARRANTY. Any representation or warranty by
the Borrowers or any other Loan Party made or deemed made herein, in any other
Loan Document other than a Specified Swap Contract, or which is contained in any
certificate, document or financial or other statement by the Borrowers or any
other Loan Party, or any Responsible Officer, furnished at any time under
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this Agreement, or in or under any other Loan Document other than a Specified
Swap Contract, shall prove to have been incorrect in any material respect on or
as of the date made or deemed made; or
(c) SPECIFIC DEFAULTS. The Borrowers fail to perform or observe any
term, covenant or agreement contained in Sections 7.01, 7.02, 7.03 or 7.09 or
Article VIII; or
(d) OTHER DEFAULTS. The Borrowers fail to perform or observe any
other term or covenant contained in this Agreement or any other Loan Document
other than a Specified Swap Contract, and such default shall continue unremedied
for a period of twenty (20) days after the earlier of (i) the date upon which a
Responsible Officer knew or should have known of such failure or (ii) the date
upon which written notice thereof is given to the Borrowers by the Agent or any
Bank; or
(e) CROSS-DEFAULT. (i) Any Borrower or any other Loan Party (A)
fails to make any payment in respect of any Indebtedness or Contingent
Obligation (other than in respect of Swap Contracts), in either case having an
aggregate principal amount in excess of Two Hundred Thousand Dollars ($200,000))
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto on the date of
such failure; or (B) fails to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under any agreement
or instrument relating to any such Indebtedness or Contingent Obligation, and
such failure continues after the applicable grace or notice period, if any,
specified in the document relating thereto on the date of such failure, if the
effect of such failure, event or condition is to cause, or to permit the holder
or holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and payable prior to its stated maturity, or such Contingent Obligation to
become payable or cash collateral in respect thereof to be demanded; or (ii)
there occurs under any Specified Swap Contract an Early Termination Date (as
defined in such Specified Swap Contract) resulting from (1) any event of default
under such Specified Swap Contract as to which WSS is the Defaulting Party (as
defined in such Specified Swap Contract) or (2) any Termination Event (as so
defined) as to which WSS is an Affected Party (as so defined), and, in either
event, the Swap Termination Value owed by WSS as a result thereof is greater
than Two Hundred Thousand Dollars ($200,000).
(f) INSOLVENCY; VOLUNTARY PROCEEDINGS. Any Borrower or the Parent or
any Material Subsidiary (i) ceases or fails to be Solvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing; or
(g) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against any Borrower or any other Loan Party,
or any writ, judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of any Borrower's or any such Loan
Party's Properties, and any such proceeding or petition shall not be stayed or
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within sixty (60) days
after commencement, filing or levy; (ii) any Borrower or any other Loan Party
admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) any Borrower or any other Loan
Party acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its Property or
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business;
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably expected to
result in liability of any Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of One Million
Dollars ($1,000,000); or (ii) any of the representations and warranties
contained in Section 6.07 shall cease to be true and correct and could
reasonably be expected to result in a Material Adverse Effect; or
(i) SUITS FILED BY TRADE CREDITORS. One or more suits shall be filed
against any Borrower or any other Loan Party by a trade creditor or trade
creditors in the aggregate amount of One Million Dollars ($1,000,000) or more;
or
(j) MONETARY JUDGMENTS. One or more non-interlocutory judgments,
orders or decrees shall be entered against any Borrower or any other Loan Party
involving in the aggregate a liability (not fully covered by independent
third-party insurance) as to any single or related series of transactions,
incidents or conditions, of One Million Dollars ($1,000,000) or more, and the
same shall remain unsatisfied, unvacated and unstayed pending appeal for a
period of ten (10) days after the entry thereof; or
(k) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree shall be rendered against any Borrower or any other Loan Party which does
or would reasonably be expected to have a Material Adverse Effect, and there
shall be any period of ten (10) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(l) COLLATERAL.
(i) any provision of any Collateral Document shall for any
reason cease to be valid and binding on or enforceable against any Borrower
or any other Loan Party which is party thereto or any Borrower or any other
Loan Party shall so state in writing or bring an action to limit its
obligations or liabilities thereunder; or
(ii) any Collateral Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest in
the Collateral purported to be covered thereby or such security interest
shall for any reason cease to be a perfected and first priority security
interest subject only to Permitted Liens; or
(m) OWNERSHIP. (i) The Parent ceases to own one hundred percent
(100%) of the issued and outstanding capital stock of WSS, or (ii) WSS ceases to
own one hundred percent (100%) of the issued and outstanding capital stock of
WMS, except as otherwise permitted under Section 8.02(d); or
(n) ADVERSE CHANGE. There shall occur a Material Adverse Effect; or
(o) GUARANTOR DEFAULTS. Any Guarantor shall fail in any material
respect to perform or observe any term, covenant or agreement in the Guaranty;
or the Guaranty shall for any reason be partially (including with respect to
future advances) or wholly revoked or invalidated, or otherwise cease to be in
full force and effect, or any Guarantor or any other Person shall contest in any
manner the validity or enforceability thereof or deny that it has any further
liability or obligation thereunder; or any event described at paragraphs (f) or
(g) above shall occur with respect to any Guarantor; or
(p) INVALIDITY OF SUBORDINATION PROVISIONS. The subordination
provisions of any agreement or instrument governing any subordinated debt shall
for any reason be revoked or invalidated, or otherwise cease to be in full force
and effect, or any Person shall contest in any manner the validity
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or enforceability thereof or deny that it has any further liability or
obligation thereunder, or the Indebtedness hereunder shall for any reason be
subordinated or shall not have the priority contemplated by this Agreement or
such subordination provisions; or
9.02 REMEDIES. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Majority Banks,
(a) declare the Commitment of each Bank and any obligation of the
Issuing Bank to Issue Letters of Credit to be terminated, whereupon such
Commitments and obligation shall forthwith be terminated;
(b) declare an amount equal to the maximum aggregate amount that is
or at any time thereafter may become available for drawing under any outstanding
Letters of Credit (whether or not any beneficiary shall have presented, or shall
be entitled at such time to present, the drafts or other documents required to
draw under such Letters of Credit) to be immediately due and payable, and
declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable; without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrowers;
(c) demand that the Borrowers Cash Collateralize L/C Obligations to
the extent of outstanding and wholly or partially undrawn Letters of Credit,
whereupon the Borrowers shall so Cash Collateralize; and
(d) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
PROVIDED, HOWEVER, that upon the occurrence of any event specified in paragraph
(f) or (g) of Section 9.01 above (in the case of clause (i) of paragraph (g)
upon the expiration of the 60-day period mentioned therein), the obligation of
each Bank to make Loans and any obligation of the Issuing Bank to Issue Letters
of Credit shall automatically terminate, and such amount available for drawing
under Letters of Credit and the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable without further act or notice by the Agent, the Issuing Bank or any
Bank, which are hereby expressly waived by the Borrowers.
9.03 SPECIFIED SWAP CONTRACT REMEDIES. Notwithstanding any other
provision of this Article IX, each Swap Provider shall have the right, with
prior notice to the Agent, but without the approval or consent of the Agent or
the other Banks, with respect to any Specified Swap Contract of such
Swap Provider, (a) to declare an event of default, termination event or other
similar event thereunder and to create an Early Termination Date, (b) to
determine net termination amounts in accordance with the terms of such Specified
Swap Contracts and to set-off amounts between Specified Swap Contracts, and
(c) to prosecute any legal action against WSS to enforce net amounts owing to
such Swap Provider.
9.04 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE X
THE AGENT AND ISSUING BANK
10.01 APPOINTMENT AND AUTHORIZATION.
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(a) Each of the Banks and the Issuing Bank hereby irrevocably
appoints, designates and authorizes the Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Bank or the Issuing Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against the Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" in this Agreement with reference to the Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties.
(b) The Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit Issued by it and the documents associated therewith until
such time and except for so long as the Agent may agree at the request of the
Majority Banks to act for such Issuing Bank with respect thereto; PROVIDED,
HOWEVER, that the Issuing Bank shall have all of the benefits and immunities
(i) provided to the Agent in this Article X with respect to any acts taken or
omissions suffered by the Issuing Bank in connection with Letters of Credit
Issued by it or proposed to be Issued by it and the application and agreements
for letters of credit pertaining to the Letters of Credit as fully as if the
term "Agent", as used in this Article X, included the Issuing Bank with respect
to such acts or omissions, and (ii) as additionally provided in this Agreement
with respect to the Issuing Bank.
10.02 DELEGATION OF DUTIES. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.03 LIABILITY OF AGENT AND ISSUING BANK. None of the Agent-Related
Persons shall (i) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan Document
(except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Banks for any recital, statement,
representation or warranty made by the Borrower or any Subsidiary or Affiliate
of the Borrower, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document, or for the value of any
Collateral or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
the Borrower or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the Properties, books or records of any
Borrower or any other Loan Party.
10.04 RELIANCE BY AGENT.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
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genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Borrowers), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Majority Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.
10.05 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Banks, unless the Agent shall have
received written notice from a Bank or a Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a notice, the
Agent shall promptly give notice thereof to the Banks. The Agent shall take
such action with respect to such Default or Event of Default as shall be
requested by the Majority Banks in accordance with Article IX; PROVIDED,
HOWEVER, that unless and until the Agent shall have received any such request,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable or in the best interest of the Banks.
10.06 CREDIT DECISION. Each Bank expressly acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrowers and the other Loan Parties, shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank represents to
the Agent that it has, independently and without reliance upon the Agent and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers
and the other Loan Parties, and all applicable bank regulatory laws relating to
the transactions contemplated thereby, and made its own decision to enter into
this Agreement and extend credit to the Borrowers hereunder. Each Bank also
represents that it will, independently and without reliance upon the Agent and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by the Agent,
the Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrowers
which may come into the possession of any of the Agent-Related Persons.
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10.07 INDEMNIFICATION. Whether or not the transactions contemplated
hereby shall be consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrowers and without limiting the obligation of the Borrowers to do so),
ratably from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind whatsoever which may at any time (including at any time following the
termination of the Letters of Credit and the repayment of the Loans and the
termination or resignation of the related Agent) be imposed on, incurred by or
asserted against any such Person any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by any such Person under or in connection with any of the foregoing; PROVIDED,
HOWEVER, that no Bank shall be liable for the payment to the Agent-Related
Persons of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such Person's gross negligence or willful misconduct. Without limitation
of the foregoing, each Bank shall reimburse the Agent upon demand for its
ratable share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein to the extent that the Agent
is not reimbursed for such expenses by or on behalf of the Borrower. Without
limiting the generality of the foregoing, if the Internal Revenue Service or any
other Governmental Authority of the United States or other jurisdiction asserts
a claim that the Agent did not properly withhold tax from amounts paid to or for
the account of any Bank (because the appropriate form was not delivered, was not
properly executed, or because such Bank failed to notify the Agent of a change
in circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section,
together with all costs and expenses (including Attorney Costs). The obligation
of the Banks in this Section shall survive the payment of all Obligations
hereunder.
10.08 AGENT IN INDIVIDUAL CAPACITY. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrowers and the other Loan
Parties as though BofA were not the Agent or the Issuing Bank hereunder and
without notice to or consent of the Banks. With respect to its Loans and
participation in Letters of Credit, BofA shall have the same rights and powers
under this Agreement as any other Bank and may exercise the same as though it
were not the Agent or the Issuing Bank, and the terms "Bank" and "Banks" shall
include BofA in its individual capacity.
10.09 SUCCESSOR AGENT. The Agent may, and at the request of the Majority
Banks shall, resign as Agent upon thirty (30) days' notice to the Banks. If the
Agent shall resign as Agent under this Agreement, the Majority Banks shall
appoint from among the Banks a successor agent for the Banks. If no successor
agent is appointed prior to the effective date of the resignation of the Agent,
the Agent may appoint, after consulting with the Banks and the Borrower, a
successor agent from among the Banks. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and the term "Agent" shall mean such
successor agent and the retiring Agent's appointment, powers and duties as Agent
shall be terminated. After any retiring Agent's resignation hereunder as Agent,
the provisions of this Article X and Sections 11.04 and 11.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor
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agent has accepted appointment as Agent by the date which is thirty (30) days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Banks shall
perform all of the duties of the Agent hereunder until such time, if any, as the
Majority Banks appoint a successor agent as provided for above. Notwithstanding
the foregoing, however, BofA may not be removed as the Agent at the request of
the Majority Banks unless BofA shall also simultaneously be replaced as "Issuing
Bank" hereunder pursuant to documentation in form and substance reasonably
satisfactory to BofA.
10.10 COLLATERAL MATTERS.
(a) The Agent is authorized on behalf of all the Banks, without the
necessity of any notice to or further consent from the Banks, from time to time
to take any action with respect to any Collateral or the Collateral Documents
which may be necessary to perfect and maintain perfected the security interest
in and Liens upon the Collateral granted pursuant to the Collateral Documents.
(b) The Banks irrevocably authorize the Agent, at its option and in
its discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment in full of all
Loans and all other Obligations payable under this Agreement and under any other
Loan Document; (ii) constituting Property sold or to be sold or disposed of as
part of or in connection with any disposition permitted hereunder; (iii)
constituting Property in which none of the Borrowers or any other Loan Party
owned an interest at the time the Lien was granted or at any time thereafter;
(iv) constituting Property leased to any Borrower or any other Loan Party under
a lease which has expired or been terminated in a transaction permitted under
this Agreement or is about to expire and which has not been, and is not intended
by such Borrower or such other Loan Party to be, renewed or extended; (v)
consisting of an instrument evidencing Indebtedness or other debt instrument, if
the indebtedness evidenced thereby has been paid in full; or (vi) if approved,
authorized or ratified in writing by all the Banks, as the case may be, as
provided in subsection 11.01(f). Upon request by the Agent at any time, the
Banks will confirm in writing the Agent's authority to release particular types
or items of Collateral pursuant to this subsection 10.10(b).
(c) Each Bank agrees with and in favor of each other (which
agreement shall not be for the benefit of the Borrowers or any other Loan
Parties) that the Borrowers' obligation to such Bank under this Agreement and
the other Loan Documents is not and shall not be secured by any real property
collateral now or hereafter acquired by such Bank.
10.11 CO-AGENTS; LEAD MANAGERS. None of the Banks identified on the
facing page or signature pages of this Agreement as a "co-agent" or
"lead-manager" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Banks as such. Each Bank acknowledges that it has not relied, and will not
rely, on any of the Banks so identified in deciding to enter into this Agreement
or in taking or not taking action hereunder.
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ARTICLE XI
MISCELLANEOUS
11.01 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrowers therefrom, shall be effective unless the same shall
be in writing and signed by the Majority Banks, the Borrowers and acknowledged
by the Agent, and then such waiver shall be effective only in the specific
instance and for the specific purpose for which given; PROVIDED, HOWEVER, that
no such waiver, amendment, or consent shall, unless in writing and signed by all
the Banks, the Borrowers and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment (including the L/C Commitment)
of any Bank (or reinstate any Commitment terminated pursuant to subsection
9.02(a)) or subject any Bank to any additional obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due to the Banks (or any of them) hereunder or
under any Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or of any fees or other amounts payable hereunder or
under any Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Banks or
any of them to take any action hereunder;
(e) amend or waive this Section 11.01 or Sections 2.14, 8.04(e),
8.11, 8.13, 8.14, 8.16, or 8.17 (including changes to any defined terms
contained in any of these Sections) or any provision providing for consent or
other action by all Banks; or
(f) discharge in whole or in part any Guarantor, or release any
portion of the Collateral except as otherwise may be provided in the Collateral
Document or this Agreement;
and, PROVIDED FURTHER, that (A) no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Bank in addition to the Majority Banks or all
the Banks, as the case may be, affect the rights or duties of the Issuing Bank
under this Agreement or any L/C-Related Document relating to any Letter of
Credit Issued by it, and (B) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Majority Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document.
11.02 NOTICES.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly otherwise
provides, by facsimile transmission, provided that any matter transmitted by any
Borrower by facsimile (i) shall be immediately confirmed by a telephone call to
the recipient at the number specified on SCHEDULE 11.02, and (ii) shall be
followed promptly by a hard copy original thereof) and mailed, faxed or
delivered, to the address or facsimile number specified for notices on SCHEDULE
11.02; or, as directed to a Borrower or the Agent, to such other address as
shall be designated by such party in a written notice to the other parties, and
as directed to each other party, at such other address as shall be designated by
such party in a written notice to the Borrowers and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
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overnight (next day) delivery, or transmitted by facsimile machine,
respectively, or if mailed, upon the third Business Day after the date deposited
into the U.S. mail, or if delivered, upon delivery; except that notices pursuant
to Article II, III or XI to the Agent shall not be effective until actually
received by the Agent, and notices pursuant to Article III to the Issuing Bank
shall not be effective until actually received by the Issuing Bank at the
address specified for the "Issuing Bank" on the applicable signature page
hereof.
(c) The Borrowers acknowledge and agree that any agreement of the
Agent, the Issuing Bank and the Banks at Articles II and III herein to receive
certain notices by telephone and facsimile is solely for the convenience and at
the request of the Borrowers. The Agent, the Issuing Bank and the Banks shall
be entitled to rely on the authority of any Person purporting to be a Person
authorized by a Borrower to give such notice and the Agent, the Issuing Bank and
the Banks shall not have any liability to any Borrower or other Person on
account of any action taken or not taken by the Agent, the Issuing Bank or the
Banks in reliance upon such telephonic or facsimile notice. The obligation of
the Borrowers to repay the Loans and drawings under Letters of Credit shall not
be affected in any way or to any extent by any failure by the Agent, the Issuing
Bank and the Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Agent, the Issuing Bank and the Banks of
a confirmation which is at variance with the terms understood by the Agent, the
Issuing Bank and the Banks to be contained in the telephonic or facsimile
notice.
11.03 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Agent, the Issuing Bank or any Bank, any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
11.04 COSTS AND EXPENSES. The Borrowers shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) pay or reimburse BofA (including in its capacity as Agent and
Issuing Bank) within fifteen (15) Business Days after demand (subject to
subsection 5.01(g)) for all reasonable costs and expenses incurred by BofA
(including in its capacity as Agent and Issuing Bank) in connection with the
development, preparation, delivery, administration and execution of, and any
amendment, supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including the reasonable Attorney Costs
incurred by BofA (including in its capacity as Agent and Issuing Bank) with
respect thereto; PROVIDED, HOWEVER, that so long as no more than three (3)
revision drafts of this Agreement are required to be prepared and the Borrowers
and the Banks do not engage in protracted negotiations in connection with the
finalization of this Agreement and the remaining Loan Documents, the liability
of Borrowers to BofA for Attorney Costs incurred in connection with the
preparation and negotiation of the Loan Documents required as of the Closing
Date shall not exceed Twenty Five Thousand Dollars ($25,000).
(b) pay or reimburse each Bank and the Agent within fifteen (15)
Business Days after demand (subject to subsection 5.01(g)) for all reasonable
costs and expenses incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies (including in
connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding) under this
Agreement, any other Loan Document, and any such other documents, including
Attorney Costs incurred by the Agent and any Bank; and
(c) pay or reimburse BofA (including in its capacity as Agent and
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Issuing Bank) within fifteen (15) Business Days after demand (subject to
subsection 5.01(g)) for all appraisal (including the allocated cost of internal
appraisal services), audit, environmental inspection and review (including the
allocated cost of such internal services), search and filing costs, fees and
expenses, incurred or sustained by BofA (including in its capacity as Agent and
Issuing Bank) in connection with the matters referred to under subsections (a)
and (b) of this Section.
11.05 INDEMNITY. Whether or not the transactions contemplated hereby
shall be consummated:
(a) GENERAL INDEMNITY. The Borrowers shall pay, indemnify, and
hold each Bank, the Issuing Bank, the Agent and each of their respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"INDEMNIFIED PERSON") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements which are reasonably and necessarily incurred
in connection therewith (including Attorney Costs) of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement and any other Loan Documents, or the
transactions contemplated hereby and thereby, and with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to this Agreement or the Specified Swap Contracts
or the Loans or the Letters of Credit, or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED, that the Borrowers shall
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of such Indemnified Person; and PROVIDED FURTHER, that the Borrowers shall have
no obligation hereunder with respect to Indemnified Liabilities owed by an
Indemnified Person to another Indemnified Person.
(b) SURVIVAL; DEFENSE. The obligations in this Section 11.05 shall
survive payment of all other Obligations. At the election of any Indemnified
Person, the Borrowers shall defend such Indemnified Person using legal counsel
mutually satisfactory to such Indemnified Person and the Borrowers, which
consent shall not unreasonably be withheld, at the sole cost and expense of the
Borrowers. All amounts owing under this Section 11.05 shall be paid within
thirty 30 days after demand. The Indemnified Person shall not settle a claim or
demand without the prior written consent of the Borrowers, which consent shall
not unreasonably be withheld.
11.06 MARSHALLING; PAYMENTS SET ASIDE. None of the Agent, the Issuing
Bank or the Banks shall be under any obligation to marshall any assets in favor
of the Borrowers or any other Person or against or in payment of any or all of
the Obligations. To the extent that the Borrowers make a payment or payments to
the Agent, the Issuing Bank or the Banks, or the Agent, the Issuing Bank or the
Banks enforce their Liens or exercise their rights of set-off, and such payment
or payments or the proceeds of such enforcement or set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Agent or the Issuing Bank in its discretion) to be repaid to a trustee, receiver
or any other party in connection with any Insolvency Proceeding, or otherwise,
then (a) to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or set-off
had not occurred, and (b) each Bank severally agrees to pay to the Agent or the
Issuing Bank, as the case may be, upon demand its ratable share of the total
amount so recovered from or repaid by the Agent.
11.07 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that no Borrower may assign or transfer any of
its rights or obligations under this Agreement without the
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prior written consent of the Agent, the Issuing Bank and each Bank.
11.08 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) Any Bank may, with the written consent of the Borrowers at all
times other than during the existence of an Event of Default and the Agent and
the Issuing Bank, which consents shall not be unreasonably withheld, at any time
assign and delegate to one or more Eligible Assignees (provided that no written
consent of the Agent or the Issuing Bank shall be required in connection with
any assignment and delegation by a Bank to an Eligible Assignee that is an
Affiliate of such Bank) (each an "ASSIGNEE") all, or any ratable part of all, of
the Loans, the Revolving Commitment (including the L/C Commitment contained
therein), the Term Commitment, and the other rights and obligations of such Bank
hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the
Borrowers, the Issuing Bank and the Agent may continue to deal solely and
directly with such Bank in connection with the interest so assigned to an
Assignee until (A) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Borrowers and the Agent by such Bank and the
Assignee; (B) such Bank and its Assignee shall have delivered to the Borrowers
and the Agent an Assignment and Acceptance in the form of EXHIBIT E ("ASSIGNMENT
AND ACCEPTANCE") and (C) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of Three Thousand Five Hundred Dollars ($3,500) and
provided further that (A) the aggregate amount of the Revolving Commitment, Term
Commitment, the Loans, and the participation in L/C Obligations of the assigning
Bank being assigned pursuant to any Assignment and Acceptance (determined as of
the date of the Assignment and Acceptance with respect to such assignment) shall
in no event be less than Five Million Dollars ($5,000,000), and (B), after
giving effect to such assignment and all prior assignments by such Bank, the
assigning Bank, together with the Bank Affiliates of such Bank, shall continue
to hold a beneficial interest in an aggregate amount of its or their Revolving
Commitment, Term Commitment, Loans, and participation in L/C Obligations equal
to at least 50% of the aggregate amount of the assigning Bank's original
Revolving Commitment and Term Commitment (each as adjusted to take into account
any reduction thereof in accordance with this Agreement).
(b) From and after the date that the Agent notifies the assignor
Bank that it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank under
the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights
and obligations hereunder and under the other Loan Documents have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement, shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Revolving
Commitments, Revolving Loan Commitments, Term Commitments, and L/C Commitments
arising therefrom. The Revolving Commitment, Revolving Loan Commitment, Term
Commitment, and L/C Commitment allocated to an Assignee shall reduce the
Revolving Commitment, Revolving Loan Commitment, Term Commitment, and L/C
Commitment of the assigning Bank PRO TANTO.
(d) Any Bank may at any time sell to one or more commercial banks
or other Persons not Affiliates of any Borrower (a "PARTICIPANT") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
PROVIDED, HOWEVER, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating
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Bank shall remain solely responsible for the performance of such obligations,
(iii) the Borrowers, the Issuing Bank and the Agent shall continue to deal
solely and directly with the originating Bank in connection with the originating
Bank's rights and obligations under this Agreement and the other Loan Documents,
and (iv) no Bank shall transfer or grant any participating interest under which
the Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to the
extent such amendment, consent or waiver would require unanimous consent of the
Banks as described in the FIRST PROVISO to Section 11.01. In the case of any
such participation, the Participant shall not have any rights under this
Agreement, or any of the other Loan Documents, and all amounts payable by the
Borrowers hereunder shall be determined as if such Bank had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information provided to
it by or on behalf of any Borrowers or any other Loan Party, or by the Agent on
such Borrower's or other Loan Party's behalf, in connection with this Agreement
or the transactions contemplated hereby or any other Loan Document, and neither
it nor any of its Affiliates shall use any such information for any purpose or
in any manner other than pursuant to the terms contemplated by this Agreement;
except to the extent such information (i) was or becomes generally available to
the public other than as a result of a disclosure by the Bank, or (ii) was or
becomes available on a non-confidential basis from a source other than any
Borrower, provided that such source is not bound by a confidentiality agreement
with such Borrower known to the Bank; PROVIDED FURTHER, HOWEVER, that any Bank
may disclose such information (A) at the request or pursuant to any requirement
of any Governmental Authority to which such Bank is subject or in connection
with an examination of such Bank by any such authority; (B) upon reasonable
advance notice to the Borrowers if such notice is allowed by applicable
Requirements of Law, pursuant to subpoena or other court process; (C) upon
reasonable advance notice to the Borrowers if such notice is allowed by
applicable Requirements of Law, when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) upon reasonable advance
notice to the Borrowers if such notice is allowed by applicable Requirements of
Law, to the extent reasonably required in connection with any litigation or
proceeding to which the Agent, any Bank or their respective Affiliates may be
party; (E) to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document, and (F) to such Bank's
independent auditors and other professional advisors who have been advised of
the terms of this confidentiality provision. Notwithstanding the foregoing, the
Borrowers authorize each Bank to disclose to any Participant or Assignee (each,
a "TRANSFEREE") and to any prospective Transferee, such financial and other
information in such Bank's possession concerning the Borrowers or any other Loan
Party which has been delivered to Agent or the Banks pursuant to this Agreement
or which has been delivered to the Agent or the Banks by the Borrowers in
connection with the Banks' credit evaluation of the Borrowers prior to entering
into this Agreement; PROVIDED that, unless otherwise agreed by the Borrowers,
such Transferee agrees in writing to such Bank to keep such information
confidential to the same extent required of the Banks hereunder.
(f) Notwithstanding any other provision contained in this Agreement
or any other Loan Document to the contrary, any Bank may assign all or any
portion of the Loans held by it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Federal Reserve
Board and any Operating Circular issued by such Federal Reserve Bank, provided
that any payment in respect of such assigned Loans made by the Borrowers to or
for the account of the assigning or pledging Bank in
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accordance with the terms of this Agreement shall satisfy the Borrowers'
obligations hereunder in respect to such assigned Loans to the extent of such
payment. No such assignment shall release the assigning Bank from its
obligations hereunder.
11.09 SET-OFF. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists, each Bank is authorized at any
time and from time to time, without prior notice to any Borrower, any such
notice being waived by the Borrowers to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing to, such Bank to or for the credit or the account of any Borrower against
any and all Obligations owing to such Bank, now or hereafter existing,
irrespective of whether or not the Agent or such Bank shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Bank agrees promptly to notify the Borrowers and
the Agent after any such set-off and application made by such Bank; PROVIDED,
HOWEVER, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this Section 11.09
are in addition to the other rights and remedies (including other rights of
set-off) which such Bank may have.
11.10 AUTOMATIC DEBITS OF FEES. With respect to any commitment fee,
facility fee, letter of credit fee or other fee, or any other cost or expense
(including Attorney Costs) due and payable to the Agent, the Issuing Bank or
BofA under the Loan Documents, each Borrower hereby authorizes BofA to debit any
deposit account of such Borrower with BofA in an amount such that the aggregate
amount debited from all such deposit accounts does not exceed such fee or other
cost or expense. If there are insufficient funds in such deposit accounts to
cover the amount of the fee or other cost or expense then due, such debits will
be reversed (in whole or in part, in BofA's sole discretion) and such amount not
debited shall be deemed to be unpaid. No such debit under this Section 11.10
shall be deemed a set-off.
11.11 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of its Offshore Lending Office, of
payment instructions in respect of all payments to be made to it hereunder and
of such other administrative information as the Agent shall reasonably request.
11.12 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement in any number of separate counterparts, each of which,
when so executed, shall be deemed an original, and all of said counterparts
taken together shall be deemed to constitute but one and the same instrument. A
set of the copies of this Agreement signed by all the parties shall be lodged
with the Borrowers and the Agent.
11.13 SEVERABILITY. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
11.14 NO THIRD PARTIES BENEFITED. This Agreement is made and entered into
for the sole protection and legal benefit of the Borrowers, the Banks, the
Issuing Bank and the Agent, and their permitted successors and assigns, and no
other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents. None of the Borrowers, the Agent, the
Issuing Bank or any Bank shall have any obligation to any Person not a party to
this Agreement or other Loan Documents, except to an Indemnified Person.
11.15 TIME. Time is of the essence as to each term or provision of this
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Agreement and each of the other Loan Documents.
11.16 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA EXCEPT, IN THE CASE OF
ARTICLE III, TO THE EXTENT THAT SUCH LAWS ARE INCONSISTENT WITH THE UCP;
PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) EXCEPT AS OTHERWISE LIMITED BY SECTION 11.17, ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND ANY OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE
NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE BORROWERS, THE AGENT, THE ISSUING BANK AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE BORROWERS, THE AGENT, THE ISSUING
BANK AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
(c) Nothing contained in this Section shall override any contrary
provision contained in any Specified Swap Contract.
11.17 ARBITRATION; REFERENCE PROCEEDING.
(a) Any controversy or claim between or among the parties arising
out of or relating to this Agreement or any agreements or instruments relating
hereto or delivered in connection herewith and any claim based on or arising
from an alleged tort with respect thereto, shall at the request of any party be
determined by arbitration. The arbitration shall be conducted in accordance
with the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement, and under the Commercial Rules of the
American Arbitration Association ("AAA"). The arbitrator(s) shall have
appropriate or relevant experience in the subject matter at issue. The
arbitrator(s) shall give effect to statutes of limitation in determining any
claim. Any controversy concerning whether an issue is arbitrable may be
determined by the arbitrator(s) or by court order. Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
(b) Notwithstanding the provisions of subparagraph (a), no
controversy or claim shall be submitted to arbitration without the consent of
all parties if, at the time of the proposed submission, such controversy or
claim arises from or relates to an obligation to the Banks which is secured by
real property collateral located in California. If all parties do not consent
to submission of such a controversy or claim to arbitration, the controversy or
claim shall be determined as provided in subparagraph (c).
(c) A controversy or claim which is not submitted to arbitration as
provided and limited in subparagraphs (a) and (b) shall, at the request of any
party, be determined by a reference in accordance with California Code of Civil
Procedure Sections 638 ET SEQ. If such an election is made, the parties shall
designate to the court a referee or referees selected under the auspices of the
AAA in the same manner as arbitrators are selected in AAA-sponsored proceedings
and having appropriate or relevant experience in the subject matter at issue.
The presiding referee of the panel, or the referee if there is a single referee,
shall be an active attorney or retired judge. Judgment upon the award rendered
by such referee or referees shall be entered in the court in which such
proceeding was commenced in accordance with California
-72-
<PAGE>
Code of Civil Procedure Sections 644 and 645.
(d) No provision of this Paragraph shall limit the right of any
party to this Agreement to exercise self-help remedies such as setoff, to
foreclose against or sell any real or personal property collateral or security,
or to obtain provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of any party to
resort to arbitration or reference. At the option of Majority Banks,
foreclosure under a deed of trust or mortgage may be accomplished either by
exercise of power of sale under the deed of trust or mortgage or by judicial
foreclosure.
(e) Whether pursuant to arbitration, reference or some other remedy
under subparagraphs (a), (b), (c), or (d), the successful or prevailing party or
parties shall be entitled to recover reasonable Attorney Costs, in addition to
any other relief to which it or they may be entitled, with respect to any
controversy or claim between or among the parties arising out of or relating to
this Agreement or any agreements or instruments delivered in connection herewith
and any claim based on or arising from a tort with respect thereto.
11.18 JOINT AND SEVERAL LIABILITY OF THE BORROWERS; WAIVER OF CERTAIN
DEFENSES.
(a) The obligation of each Borrower to pay all the Obligations
under this Agreement is a direct, primary, separate, joint and several, and
independent obligation, is not in whole or in part a surety relationship, is
absolute and unconditional, and is not dependent in whole or in part upon the
obligations of the other Borrower. Each Borrower is liable to the Agent and the
Banks for the entire amount of the Obligations, and a separate action may be
brought against such Borrower whether such action is brought against the other
Borrower or any guarantor or whether the other Borrower or any such guarantor is
joined in such action. Each Borrower's liability hereunder is immediate and not
contingent upon the exercise or enforcement by the Agent or the Banks of
whatever remedies they may have against the other Borrower or any guarantor, or
the enforcement of any lien or realization upon any security the Agent or the
Banks may at any time possess. Any release which may be given by the Agent and
the Banks to any Borrower or any guarantor shall not release the other Borrower.
The Agent and the Banks shall be under no obligation to marshall any assets of
any Borrower or any guarantor in favor of the other Borrower or against or in
payment of any or all of the Obligations.
(b) To the maximum extent permitted by applicable law, each
Borrower hereby waives, solely in respect of any claims or defenses which such
Borrower might otherwise have by reason of being determined to be a surety for
or guarantor of the obligations of the other Borrower with respect to the
Obligations:
(i) any right to assert against the Agent or the Bank any
defense (legal or equitable), set-off, counterclaim, or claim which such
Borrower may now or at any time hereafter have against the other Borrower
or any guarantor;
(ii) any defense, set-off, counterclaim, or claim, of any kind
or nature, arising directly or indirectly from the present or future lack
of perfection, sufficiency, validity, or enforceability of the Obligations
or any security therefor or the legal liability of the other Borrower or
any guarantor or any claim that any of the Obligations (whether for
principal, interest, costs, expenses, or otherwise and whether incurred or
accruing pre- or post petition in any Insolvency Proceeding) is not an
allowable claim in any Insolvency Proceeding with respect to the other
Borrower or any guarantor;
(iii) any defense arising by reason of any claim or defense
-73-
<PAGE>
based upon an election of remedies by the Agent or the Banks, including any
defense based upon an election of remedies by the Agent or the Banks under
the provisions of Section 580d and 726 of the California Code of Civil
Procedure, or any similar law of California or any other jurisdiction;
(iv) any defense based on any alteration, impairment or release
of the Obligations or any security therefor, whether or not resulting from
any act or failure to act by the Agent or the Banks; and
(v) any right to require the Agent or the Banks to institute
suit against the other Borrower or any guarantor or to exhaust any rights
and remedies which the Agent or the Banks have or may have against the
other Borrower or any guarantor.
(c) Without notice to or by any Borrower and without affecting or
impairing the obligation of such Borrower hereunder, the Agent and the Banks
may, by action or inaction, compromise or settle, extend the period of duration
or time for the payment, or discharge the performance of, or may refuse to, or
otherwise not enforce, or may, by action or inaction, release all or any one or
more parties to, any one or more of the Loan Documents or may grant other
indulgences to the other Borrower or any guarantor in respect thereof, or may
agree to amend or modify in any manner and at any time (or from time to time)
any one or more of the Loan Documents, or may, by action or inaction, release or
substitute any guarantor of the Obligations, or may enforce, exchange, release,
or waive, by action or inaction, any security for the Obligations or any
guaranty of the Obligations, or any portion thereof.
11.19 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Borrowers,
the Banks, the Issuing Bank and the Agent, and supersedes all prior or
contemporaneous Agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
WESTERN STAFF SERVICES (USA), INC.
By /s/
---------------------------------------
Dirk A. Sodestrom
Vice President and Controller
By /s/
---------------------------------------
Michael W. Ehresman
Vice President and Treasurer
-74-
<PAGE>
WESTERN MEDICAL SERVICES, INC.
By /s/
---------------------------------------
Michael J. Nicholson
President, Chief Operating Officer
and Chief Financial Officer
By /s/
---------------------------------------
Cynthia L. Sloneker
Controller
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By /s/
---------------------------------------
Patrick W. Zetzman
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
and as Issuing Bank
By /s/
---------------------------------------
Lisa M. Thomas
Vice President
COMERICA BANK-CALIFORNIA, as a Bank
By /s/
---------------------------------------
Lori S. Edwards
First Vice President and Group
Manager
SANWA BANK CALIFORNIA,
as a Bank
By /s/
---------------------------------------
David J. Neagle
Vice President
-75-
<PAGE>
SCHEDULE 2.01(a)
----------------
TERM COMMITMENT
---------------
<TABLE>
<CAPTION>
NAME OF BANK TERM COMMITMENT
- ------------ ---------------
<S> <C>
Bank of America National Trust
and Savings Association $ 9,485,144
Comerica Bank - California $ 7,281,667
Sanwa Bank California $ 5,078,189
-----------
TOTAL $21,845,000
</TABLE>
SCHEDULE 2.01(b)
----------------
REVOLVING COMMITMENT
--------------------
<TABLE>
<CAPTION>
COMMITMENT REVOLVING L/C
NAME OF BANK PERCENTAGE COMMITMENT COMMITMENT
- ------------ ---------- ---------- ----------
<S> <C> <C> <C>
Bank of America 43.420210000% $39,078,189 $ 8,684,042
National Trust
and Savings
Association
Comerica Bank - 33.333333333% $30,000,000 $ 6,666,667
California
Sanwa Bank 23.246456667% $20,921,811 $ 4,649,291
California ------------- ----------- -----------
TOTAL 100.000000000% $90,000,000 $20,000,000
</TABLE>
-76-
<PAGE>
SCHEDULE 3.03
-------------
EXISTING BOFA LETTERS OF CREDIT
-------------------------------
<TABLE>
<CAPTION>
L/C NUMBER AMOUNT EXPIRY DATE BENEFICIARY
- ---------- ------ ----------- -----------
<S> <C> <C> <C>
134556 $4,000,000 12/31/98 The Travelers
139501 $4,500,000 12/31/98 The Travelers
Indemnity Company
of Illinois
LASB-223339 $1,500,000 12/31/98 The Travelers
Indemnity Company
of Illinois
</TABLE>
<PAGE>
SCHEDULE 6.05
-------------
LITIGATION
----------
None
<PAGE>
SCHEDULE 6.07
-------------
ERISA
-----
None
<PAGE>
SCHEDULE 6.12
-------------
ENVIRONMENTAL MATTERS
---------------------
None
<PAGE>
SCHEDULE 6.19
-------------
SUBSIDIARIES AND
----------------
EQUITY INVESTMENTS
------------------
Active Domestic Subsidiaries
- ----------------------------
Western Medical Services (NY), Inc.
Western Technical Services, Inc.
MediaWorld International
Western Staff Services (Guam), Inc.
Alternative Billing Services, Inc.
Best Temporaries, Inc.
Best Temporaries Federal Systems, Inc.
Inactive Domestic Subsidiaries
- ------------------------------
Western Legal Services, Inc.
Western Television News, Inc.
Western Permanent Services Agency, Inc.
Western Service, Inc.
Kontorservice, Inc.
Foreign Subsidiaries
- --------------------
AUSTRALIA:
Western Staff Services Pty. Ltd.
Western Personnel Services Pty. Ltd.
Western Temporary Services Pty. Ltd.
DENMARK:
Western Service A/S
Aksten's Kontorservice "Vikar" ApS
NEW ZEALAND:
Western Staff Services (N.Z.) Limited
NORWAY:
Western Staff Services A/S
Kontorservice A/S
UNITED KINGDOM:
Western Staff Services (U.K.) Limited
<PAGE>
SCHEDULE 6.21
-------------
LICENSEE LOANS
--------------
<TABLE>
<CAPTION>
Name of Licensee Outstanding Loans
- ---------------- as of 1/24/98
-----------------
Medical Licensees
-----------------
<S> <C>
Aim Home Care Management Services, Inc.; $1,959,844.69
American International Medical Nursing
Professional Services, Inc.; American
International Medical Home Care, Inc.;
Aim Home Care, Inc.,; Glendale and Aim
Home Care, Inc. - Encino
Aim Home Care Management Services, Inc.; $1,324,308.96
American International Medical Nursing
Professional Services, Inc.; American
International Medical Home Care, Inc.;
Aim Home Care, Inc. - West LA*
Western Medical Services of Oberlin, Ohio, Inc.* $ 517,965.58
Western Medical Services of Oberlin, Inc.* $1,065,840.03
Western Medical Services of Tallahassee, Inc. $ 335,138.89
(Tallahassee, FL)**
Western Medical Services of Tallahassee, Inc.
(Jacksonville, FL)**
SUBTOTAL $5,203,098.15
</TABLE>
Office & Light Industrial and Technical Licensees
-------------------------------------------------
<TABLE>
<S> <C>
Western Staff Services of Shreveport, Inc. $ 151,255.61
Western Staff Services of Jackson, Inc. $ 476,112.19
(Jackson, MS)**
Western Staff Services of Jackson, Inc.
(Hattiesburg, MS)**
Western Temporary Services of $ 697,847.79
Utica/Syracuse, Inc.
(New Hartford, NY)**
Western Temporary Services of
Utica/Syracuse, Inc.
(Liverpool, NY)**
Western Staff Services of Wytheville, Inc. $ 554,839.02
(Wytheville, VA)**
Western Staff Services of Wytheville, Inc.
(Marion, VA)**
<PAGE>
Western Staff Services of Palatka, Inc. $ 94,941.36
(Palatka, FL)**
Western Staff Services of Palatka, Inc.
(St. Augustine, FL)**
Western Staff Services of Palatka, Inc.
(Bunnell, FL)**
SUBTOTAL $1,974,995.97
TOTAL $7,178,094.12
</TABLE>
*Corporations are parties to only one license agreement.
**Corporation is party to two or more license agreements; loan balances are
consolidated
<PAGE>
SCHEDULE 8.01
--------------
PERMITTED LIENS
---------------
Personal Property Liens
- -----------------------
1. Danish government bonds in the amount of DKR 3,005.645 pledged to
Unibank A/S for line of credit.
Real Property Liens
- -------------------
1. Deed of Trust on real property known as 220, 230 and 298 N. Wiget Lane,
Walnut Creek, California, to secure indebtedness in the principal amount of
$2,000,000 payable to Sanwa Bank California, as amended on July 3, 1996.
<PAGE>
SCHEDULE 8.08
-------------
CONTINGENT OBLIGATIONS
----------------------
1. The guaranty by Parent and/or WSS of certain real property leases
entered into in the ordinary course of business by the Subsidiaries,
none of which individually involve aggregate rental obligations in
excess of $100,000.
2. The guaranty by the Borrowers and each Subsidiary of the indebtedness of
the Parent to Sanwa Bank California in the amount of $2,000,000 per the
Term Loan Agreement dated June 21, 1994.
<PAGE>
SCHEDULE 11.02
--------------
ADDRESSES FOR NOTICES
---------------------
BORROWERS
- ---------
Western Staff Services (USA), Inc.
Western Medical Services, Inc.
P.O. Box 9280
301 Lennon Lane
Walnut Creek, CA 94598
Attn: Treasurer
Fax: (510) 930-5361
Tel: (510) 930-5300
With a copy to (with respect to
notices required under Articles
IX and XI only):
General Counsel
Legal Department
P.O. Box 9280
301 Lennon Lane
Walnut Creek, CA 94598
BANK OF AMERICA NATIONAL TRUST
- ------------------------------
AND SAVINGS ASSOCIATION, as Agent
- ---------------------------------
FOR ADMINISTRATIVE NOTICES REGARDING BORROWINGS, PAYMENTS,
CONVERSIONS, CONTINUATION, LETTERS OF CREDIT, FEES AND INTEREST:
Bank of America National Trust
and Savings Association
Agency Administrative Services #5596
1850 Gateway Blvd.
Concord, CA 94520
Attention: Amalia Luna
Telephone: (510) 675-8423
Facsimile: (510) 675-8500
FOR NOTICES REGARDING WAIVERS, AMENDMENTS, FINANCIAL STATEMENTS,
ASSIGNMENTS AND ALL OTHER NOTICES:
Bank of America National Trust
and Savings Association
Agency Management #10831
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Leandro Balidoy
Vice President
Telephone: (415) 436-4008
Facsimile: (415) 436-3425
<PAGE>
BANK OF AMERICA NATIONAL TRUST
- ------------------------------
AND SAVINGS ASSOCIATION, as a Bank
- ----------------------------------
Bank of America National Trust
and Savings Association
East Bay Commercial Banking Office #1472
300 Lakeside Drive, Suite 250
Oakland, CA 94612
Attention: Lisa Thomas
Vice President
Telephone: (510) 273-5324
Facsimile: (510) 273-5299
DOMESTIC AND OFFSHORE LENDING OFFICE:
1850 Gateway Boulevard
Concord, CA 94520
BANK OF AMERICA NATIONAL TRUST
- ------------------------------
AND SAVINGS ASSOCIATION, as Issuing Bank
- ----------------------------------------
Bank of America National Trust
and Savings Association
International Trade Banking Division #5655
333 S. Beaudry Ave., 19th Floor
Los Angeles, CA 90017
COMERICA BANK - CALIFORNIA, as a Bank
- -------------------------------------
Comerica Bank - California
155 Grand Avenue, Suite 402
Oakland, CA 94612
Attention: Lori Edwards
Vice President
Telephone: (510) 645-2203
Facsimile: (510) 645-2220
DOMESTIC AND OFFSHORE LENDING OFFICE:
155 Grand Avenue, Suite 402
Oakland, CA 94612
SANWA BANK CALIFORNIA, as a Bank
- --------------------------------
Sanwa Bank California
Commercial Banking Center
2127 Broadway
Oakland, CA 94612
Attention: David J. Neagle
Vice President
Telephone: (510) 444-1409
(510) 268-0700
DOMESTIC AND OFFSHORE LENDING OFFICE:
2127 Broadway
Oakland, CA 94612
<PAGE>
EXHIBIT A
NOTICE OF BORROWING
Date: ________________, 199_
To: Bank of America National Trust and Savings Association as Agent for the
Banks parties to the Credit Agreement dated as of March 4, 1998 (as
extended, renewed, amended or restated from time to time, the "CREDIT
AGREEMENT") among Western Staff Services (USA), Inc., Western Medical
Services, Inc., certain Banks which are signatories thereto and Bank of
America National Trust and Savings Association, as Agent
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, the terms defined therein
being used herein as therein defined, and hereby gives you notice irrevocably,
pursuant to Section 2.03 of the Credit Agreement, of the Borrowing specified
below for the account of the undersigned:
1. The proposed Borrowing is for the account of:
/ / Western Staff Services (USA), Inc.
/ / Western Medical Services, Inc.
2. The Business Day of the proposed Borrowing is
, 19 .
------------------------ ---
3. The aggregate amount of the proposed Borrowing is
$ .
---------------------
4. The Borrowing is of [Revolving Loans] [Term Loans] to be comprised
of $ of [Base Rate] [Offshore Rate] Loans.
-----------
5. The duration of the Interest Period for the Offshore Rate Loans
included in the Borrowing shall be [_____ days] [_____ months].
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Borrowers contained in
Article VI of the Credit Agreement are true and correct as though made on
and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and
correct as of such date, and except as to the representations and
warranties set forth in Section 6.11 of the Credit Agreement which shall be
deemed to refer to the most recent financial statements delivered pursuant
to subsections 7.01(a) and 7.01(b) of the Credit Agreement);
(b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed Borrowing; and
[(c) If the proposed Borrowing is of Revolving Loans, the proposed
Borrowing will not cause (i) the aggregate principal amount of all
outstanding Revolving Loans PLUS the aggregate amount available for drawing
under all outstanding Letters of Credit PLUS the aggregate principal amount
of all outstanding L/C Borrowings to exceed the Aggregate Revolving
Commitment, or (ii) the aggregate principal amount
A-1
<PAGE>
of all outstanding Revolving Loans made for the account of Western Medical
Services, Inc. to exceed the WMS Subfacility.]
[(c) If the proposed Borrowing is of Term Loans, the proposed
Borrowing will not cause the aggregate principal amount of all outstanding
Term Loans to exceed the combined Term Commitments of the Banks.]
WESTERN STAFF SERVICES (USA), INC.
By:
-------------------------
Title:
----------------------
A-2
<PAGE>
EXHIBIT B
NOTICE OF CONVERSION/CONTINUATION
Date: , 199
---------------- --
To: Bank of America National Trust and Savings Association, as Agent for the
Banks parties to the Credit Agreement dated as of March 4, 1998 (as
extended, renewed, amended or restated from time to time, the "CREDIT
AGREEMENT") among Western Staff Services (USA), Inc., Western Medical
Services, Inc., certain Banks which are signatories thereto and Bank of
America National Trust and Savings Association, as Agent
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, the terms defined therein
being used herein as therein defined, and hereby gives you notice irrevocably,
pursuant to Section 2.04 of the Credit Agreement, of the [conversion]
[continuation] of the Loans specified herein which were made for the account of
the undersigned, that:
1. The Conversion/Continuation pertains to Loans made for the account
of:
/ / Western Staff Services (USA), Inc.
/ / Western Medical Services, Inc.
2. The Conversion/Continuation Date is , 19 .
------------ --
3. The aggregate amount of the [Revolving Loans] [Term Loans] to be
[converted] [continued] is $ .
--------------
4. The Loans are to be [converted into] [continued as]
[Offshore Rate] [Base Rate] Loans.
5. [If applicable:] The duration of the Interest Period for the
Loans included in the [conversion] [continuation] shall be [ days] [
months]. ---- ---
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the proposed Conversion/Continuation Date,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Borrowers contained in
Article VI of the Credit Agreement are true and correct as though made on
and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and
correct as of such date, and except as to the representations and
warranties set forth in Section 6.11 of the Credit Agreement which shall be
deemed to refer to the most recent financial statements delivered pursuant
to subsections 7.01(a) and 7.01(b) of the Credit Agreement));
(b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed [conversion] [continuation]; and
[(c) If the proposed [conversion] [continuation] is of Revolving
Loans, the proposed [conversion] [continuation] will not cause (i) the
aggregate principal amount of all outstanding Revolving Loans PLUS the
B-1
<PAGE>
aggregate amount available for drawing under all outstanding Letters of
Credit PLUS the aggregate principal amount of all outstanding L/C
Borrowings to exceed the Aggregate Revolving Commitment, or (ii) the
aggregate principal amount of all outstanding Revolving Loans made for the
account of Western Medical Services, Inc. to exceed the WMS Subfacility.]
[(c) If the proposed [conversion] [continuation] is of Term Loans,
the proposed [conversion] [continuation] will not cause the aggregate
principal amount of all outstanding Term Loans to exceed the combined Term
Commitments of the Banks.]
WESTERN STAFF SERVICES (USA), INC.
By:
-------------------------
Title:
----------------------
B-2
<PAGE>
EXHIBIT C
WESTERN STAFF SERVICES (USA), INC.
AND
WESTERN MEDICAL SERVICES, INC.
COMPLIANCE CERTIFICATE
Financial
Statement Date: , 199
------------ ---
Reference is made to that certain Credit Agreement dated as of March 4,
1998 (as extended, renewed, amended or restated from time to time, the "CREDIT
AGREEMENT") among Western Staff Services (USA), Inc., a California corporation
("WSS"), Western Medical Services, Inc., a California corporation ("WMS"), the
several financial institutions from time to time parties to this Credit
Agreement (the "BANKS") and Bank of America National Trust and Savings
Association, as agent for the Banks (in such capacity, the "AGENT"). Unless
otherwise defined herein, capitalized terms used herein have the respective
meanings assigned to them in the Credit Agreement.
The person signing below on behalf of WSS hereby certifies as of the date
hereof that he/she is the __________________ of WSS, and that, as such, he/she
is a Responsible Officer authorized to execute and deliver this Certificate to
the Banks and the Agent on the behalf of WSS. The person signing below on
behalf of WMS hereby certifies as of the date hereof that he/she is the
_______________ of WMS, and that, as such, he/she is a Responsible Officer
authorized to execute and deliver this Certificate to the Banks and the Agent on
the behalf of WMS. Each of the undersigned hereby further certifies that:
[USE THE FOLLOWING PARAGRAPH IF THIS CERTIFICATE IS DELIVERED IN CONNECTION WITH
THE FINANCIAL STATEMENTS REQUIRED BY SUBSECTION 7.01(a) OF THE CREDIT
AGREEMENT.]
1. Attached as SCHEDULE 1 hereto are (a) a true and correct copy of the
audited consolidated balance sheet of the Parent and its consolidated
Subsidiaries as at the end of the fiscal year ended _______________, 199__, and
the related consolidated statements of income and cash flows for such fiscal
year, setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the opinion of ______________________
[or another nationally-recognized certified independent public accounting firm],
which report states that such consolidated financial statements are complete and
correct and have been prepared in accordance with GAAP, and fairly present, in
all material respects, the financial position and results of operations of the
Parent and its consolidated Subsidiaries for the periods indicated and on a
basis consistent with prior periods; and (b) the unaudited consolidating balance
sheet of the Parent and its consolidated Subsidiaries as of the end of the
fiscal year ended ______________, 199__, and the related consolidating
statements of income for such fiscal year, which I hereby certify were prepared
in accordance with GAAP (subject only to ordinary, good faith year-end audit
adjustments and the absence of footnotes) and fairly present, in all material
respects, the financial position and the results of operations of the Parent and
its consolidated Subsidiaries.
C-1
<PAGE>
OR
[USE THE FOLLOWING PARAGRAPH IF THIS CERTIFICATE IS DELIVERED IN CONNECTION WITH
THE FINANCIAL STATEMENTS REQUIRED BY SUBSECTION 7.01(b) OF THE CREDIT
AGREEMENT.]
1. Attached as SCHEDULE 1 hereto are (a) a true and correct copy of the
unaudited consolidated balance sheet of the Parent and its consolidated
Subsidiaries as of the end of the fiscal quarter ended __________, 199__, and
the related unaudited consolidated statements of income and cash flows for the
period commencing on the first day and ending on the last day of such quarter,
and (b) the consolidating balance sheet the Parent and its consolidated
Subsidiaries as of the end of the fiscal quarter ended ______________, 199__,
and the related consolidating statements of income for such fiscal quarter.
Each of the undersigned hereby certifies that such financial statements were
prepared in accordance with GAAP (subject only to ordinary, good faith year-end
audit adjustments and the absence of footnotes) and fairly present, in all
material respects, the financial position and the results of operations of the
Parent and its consolidated Subsidiaries.
2. To the best of each of the undersigned's knowledge, each of WSS and
WMS, during such period, has observed, performed or satisfied all of its
covenants and other agreements, and satisfied every condition in the Credit
Agreement to be observed, performed or satisfied by it, and neither of the
undersigned has any knowledge of any Default or Event of Default.
3. The following financial covenant analyses and information set forth on
SCHEDULE 2 attached hereto are true and accurate on and as of the date of this
Certificate.
IN WITNESS WHEREOF, the each of undersigned has executed this Certificate
as of , 199 .
------------------- --
WESTERN STAFF SERVICES (USA), INC.
By:
------------------------------
Title:
---------------------------
WESTERN MEDICAL SERVICES, INC.
By:
------------------------------
Title:
---------------------------
C-2
<PAGE>
SCHEDULE 2
TO OFFICER'S COMPLIANCE CERTIFICATE (1)
Dated , 19
----------- ---
<TABLE>
<S> <C> <C>
I. FINANCIAL COVENANTS
-------------------
A. Current Ratio (Section 8.14)
-------------
1. Consolidated current assets $
--------------
2. Divided by: Consolidated current
----------
Liabilities (including all Revolving
Loans outstanding) $
--------------
Actual current ratio for
Parent and its Subsidiaries =
--------------
Minimum current ratio required
for Parent and its Subsidiaries 1.35:1.0
B. Total Debt to EBITDA Ratio (Section 8.16)
--------------------------
1. Revolving Loans outstanding $
--------------
2. Plus: L/C Obligations + $
---- --------------
3. Plus: Capital Leases + $
---- --------------
4. Plus: Acquisition Related
---- Indebtedness outstanding + $
--------------
5. Plus: Long term liabilities
---- (including current portion) + $
--------------
SUBTOTAL: $
-------------
all divided by
--------------
1. NPAT $
--------------
2. Plus: Non-cash charges + $
---- --------------
3. Plus: Interest expense + $
---- --------------
4. PLUS: Tax expense + $
---- --------------
SUBTOTAL: $
--------------
Actual Total Debt to EBITDA Ratio: to 1.0
----
Maximum Total Debt to EBITDA Ratio Permitted: 3.0 to 1.0
</TABLE>
- ---------------------------
(1) The tables set forth herein are for convenience of computation only
and do not modify or amend the terms set forth in the Agreement. Reference is
hereby made to the Agreement for the definitions of capitalized accounting terms
not otherwise defined herein.
C-3
<PAGE>
<TABLE>
<S> <C> <C>
E. Fixed Charge Coverage Ratio (Section 8.17)
---------------------------
1. NPAT $
----------
2. Plus: Non-Cash Charges + $
---- ----------
3. Plus: Interest Expense + $
---- ----------
4. Plus: Operating Lease expense + $
---- ----------
5. Plus: Losses on Asset Sales + $
---- ----------
6. Plus: Cash Proceeds from Employee
---- Stock Purchases + $
----------
7. Less: Cash Dividends - $
---- ----------
8. Less: Cash Expenditures for
---- Repurchase of Stock - $
----------
9. Less: Gains on Asset Sales - $
---- ----------
SUBTOTAL: $
----------
all divided by
--------------
1. Scheduled Debt $
----------
2. Plus: Interest Expense + $
---- ----------
3. Plus: Operating Lease expense + $
---- ----------
4. Plus: 12-1/2% of Revolving Loans
----
and L/C Obligations outstanding + $
----------
SUBTOTAL: $
----------
Actual Fixed Charge Coverage Ratio: to 1.0
----
Minimum Fixed Charge Coverage Ratio Required: 1.25 to 1.0
II. CAPITAL EXPENDITURES (Section 8.13)
Actual Capital Expenditures
to date for fiscal year 19 $
--- ----------
Maximum aggregate Capital Expenditures
permitted during each fiscal year $8,000,000
C-4
<PAGE>
III. ACQUISITIONS (Subsection 8.11(f))
Cash expenditures for Acquisitions
to date for fiscal year 19 $
--- -----------
Cumulative cash expenditures for
Acquisitions since November 3, 1997 $
-----------
</TABLE>
Maximum permitted on a cumulative basis since
November 3, 1997 as of each fiscal yearend:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1998 $20,000,000
1999 $45,000,000
2000 $60,000,000
2001 $70,000,000
2002 $80,000,000
</TABLE>
IV. FOREIGN LOANS AND INVESTMENTS (Subsection 8.04(e))
Total loans to and investments in foreign
Affiliates and foreign Subsidiaries $
-----------
Maximum loans/investments permitted:
Consolidated Net Worth $
multiplied by .25 ------------ = $
-----------
C-5
<PAGE>
EXHIBIT D
FORM OF OPINION OF BORROWER'S COUNSEL
[Date]
Bank of America National Trust and
Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Re: Western Staff Services (USA), Inc.
and Western Medical Services, Inc.
----------------------------------
Ladies and Gentlemen:
Pursuant to subsection 5.01(f) of the Credit Agreement (the "Credit
Agreement") dated as of March 4, 1998, among Western Staff Services, Inc., a
California corporation ("WSS"), Western Medical Services, Inc. ("WMS" and
together with WSS, collectively, the "BORROWERS" and individually, a
"BORROWER"), each of the financial institutions party thereto (collectively,
"Banks") and Bank of America National Trust and Savings Association, as agent
for Banks (in such capacity, "AGENT"), we are giving our opinion as counsel for
Borrowers and each of the Guarantors on certain matters set forth below.
Terms defined in the Credit Agreement have the same meanings in this
opinion.
We have examined and relied upon such records, documents,
certificates, opinions and other matters as are in our judgment necessary or
appropriate to enable us to render the opinion expressed herein. Based on the
foregoing, we are of the opinion that:
1. Each Borrower and each Guarantor:
(a) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its
business and execute, deliver, and perform its obligation under, the Loan
Documents;
(c) is duly qualified as a foreign corporation and licensed and
in good standing, under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license; and
(d) is in compliance with all Requirements of Law to the extent
that the failure to do so could reasonably be expected to have a Material
Adverse Effect.
2. The execution, delivery and performance by the Borrowers and the
Guarantors of the Credit Agreement and any other Loan Document to which such
Person is party, have been duly authorized by all necessary corporate action,
and do not and will not:
(a) contravene the terms of any of that Person's Organization
Documents;
(b) conflict with or result in any breach or contravention of,
or the creation of any Lien under, any document evidencing any
D-1
<PAGE>
Contractual Obligation to which such Person is a party or any order,
injunction, writ or decree of any Governmental Authority to which such
Person or its Property is subject; or
(c) violate any Requirement of Law.
3. No approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any Governmental Authority is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, any Borrower or any Guarantor of the Credit Agreement or
any other Loan Document.
4. The Credit Agreement and each other Loan Document to which any
Borrower or any Guarantor is a party constitute the legal, valid and binding
obligations of such Person, enforceable against such Person in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
5. There are no actions, suits, proceedings, claims or disputes
pending, or to the best knowledge of the undersigned, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against any Borrower, any Guarantor, or any of their respective
Properties which:
(a) purport to affect or pertain to the Credit Agreement or any
other Loan Document, or any of the transactions contemplated thereby; or
(b) if determined adversely to any Borrower or any Guarantor,
would reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature
has been issued by any court or other Governmental Authority purporting
to enjoin or restrain the execution, delivery or performance of the
Credit Agreement or any other Loan Document, or directing that the
transactions provided therein not be consummated as therein provided.
6. No Default or Event of Default exists or would result from the
incurring of any Obligations by any Borrower or any Guarantor. None of the
Borrowers or Guarantors is in default under or with respect to any Contractual
Obligation in any respect which, individually or together with all such
defaults, could reasonably be expected to have a Material Adverse Effect or that
would, if such default had occurred after the Closing Date, create an Event of
Default under subsection 9.01(e) of the Credit Agreement.
7. None of the Borrowers, nor any Person controlling any Borrower,
nor any subsidiary of any Borrower, is (a) an "Investment Company" within the
meaning of the Investment Company Act of 1940; or (b) subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
8. None of the Borrowers nor any ERISA Affiliate maintains or
contributes to any Pension Plan or other Plan subject to Section 412 of the
Code. None of the Borrowers nor any ERISA Affiliate has ever contributed to any
Multiemployer Plan.
------------------------------
D-2
<PAGE>
EXHIBIT E
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "ASSIGNMENT AND
ACCEPTANCE") dated as of ______________, 199__ is made between _______________
______________________________ (the "ASSIGNOR") and __________________________
(the "ASSIGNEE").
RECITALS
WHEREAS, the Assignor is party to that certain
Credit Agreement dated as of March 4, 1998 (as amended, amended and restated,
modified, supplemented or renewed, the "CREDIT AGREEMENT") among Western Staff
Services (USA), Inc., a California corporation ("WSS"), Western Medical
Services, Inc. ("WMS" and together with WSS, collectively, the "BORROWERS" and
individually, a "BORROWER"), the several financial institutions from time to
time party thereto (including the Assignor, the "BANKS"), Bank of America
National Trust and Savings Association as agent for the Banks (the "AGENT"), and
Bank of America National Trust and Savings Association as letter of credit
issuing bank ("ISSUING BANK"). Any terms defined in the Credit Agreement and
not defined in this Assignment and Acceptance are used herein as defined in the
Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to making Loans (the "COMMITTED LOANS") to the Borrowers in an
aggregate amount not to exceed $__________ (the "COMMITMENT");
WHEREAS, [the Assignor has made Committed Loans in the aggregate
principal amount of $__________ to the Borrowers] [no Committed Loans are
outstanding under the Credit Agreement];
WHEREAS, [the Assignor has acquired a participation in the Issuing
Bank's liability under Letters of Credit in an aggregate principal amount of
$____________ (the "L/C OBLIGATIONS")] [no Letters of Credit are outstanding
under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part of the]
[all] rights and obligations of the Assignor under the Credit Agreement in
respect of its Commitment, [together with a corresponding portion of each of its
outstanding Committed Loans and L/C Obligations,] in an amount equal to
$__________ (the "ASSIGNED AMOUNT") on the terms and subject to the conditions
set forth herein and the Assignee wishes to accept assignment of such rights and
to assume such obligations from the Assignor on such terms and subject to such
conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. ASSIGNMENT AND ACCEPTANCE.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) _____% (the "ASSIGNEE'S PERCENTAGE
SHARE") of (A) the Commitment [and the Committed Loans and the L/C Obligations]
of the Assignor and (B) all related rights, benefits, obligations, liabilities
and indemnities of the Assignor under and in connection with the Credit
Agreement and the Loan Documents.
E-1
<PAGE>
[IF APPROPRIATE, ADD PARAGRAPH SPECIFYING PAYMENT TO ASSIGNOR BY
ASSIGNEE OF OUTSTANDING PRINCIPAL OF, ACCRUED INTEREST ON, AND FEES WITH RESPECT
TO, COMMITTED LOANS AND L/C OBLIGATIONS ASSIGNED.]
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Bank under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform
in accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank. It is the intent
of the parties hereto that the Commitment of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; provided, however, the Assignor shall not relinquish its rights under
Sections _____ and _____ of the Credit Agreement to the extent such rights
relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignee's Commitment will be $__________.
(d) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignor's Commitment will be $__________.
2. PAYMENTS.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $__________,
representing the Assignee's Pro Rata Share of the principal amount of all
Committed Loans.
(b) The [Assignor] [Assignee] further agrees to pay to the Agent a
processing fee in the amount specified in Section 11.08(a) of the Credit
Agreement.
3. REALLOCATION OF PAYMENTS.
Any interest, fees and other payments accrued to the Effective Date with
respect to the Commitment, Committed Loans and L/C Obligations shall be for the
account of the Assignor. Any interest, fees and other payments accrued on and
after the Effective Date with respect to the Assigned Amount shall be for the
account of the Assignee. Each of the Assignor and the Assignee agrees that it
will hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.
4. INDEPENDENT CREDIT DECISION.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements referred to in Section 7.01(a) and (b) of the
Credit Agreement, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Acceptance; and (b) agrees that it will, independently and
without reliance upon the Assignor, the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.
E-2
<PAGE>
5. EFFECTIVE DATE; NOTICES.
(a) As between the Assignor and the Assignee, the effective date
for this Assignment and Acceptance shall be __________, 199__ (the "EFFECTIVE
DATE"); PROVIDED that the following conditions precedent have been satisfied on
or before the Effective Date:
(i) this Assignment and Acceptance shall be executed and delivered
by the Assignor and the Assignee;
(ii) the consent of the Borrower, the Issuing Bank and the Agent
required for an effective assignment of the Assigned Amount by the
Assignor to the Assignee under Section 11.08(a) of the Credit Agreement
shall have been duly obtained and shall be in full force and effect as of
the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due to the
Assignor under this Assignment and Acceptance;
(iv) the processing fee referred to in Section 2(b) hereof and in
Section 11.08(a) of the Credit Agreement shall have been paid to the
Agent; and
(v) the Assignor shall have assigned and the Assignee shall have
assumed a percentage equal to the Assignee's Percentage Share of the
rights and obligations of the Assignor under the Credit Agreement (if
such agreement exists).
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Borrower, the Issuing Banks and
the Agent for acknowledgement by the Agent, a Notice of Assignment substantially
in the form attached hereto as SCHEDULE 1.
6. AGENT.
(a) The Assignee hereby appoints and authorizes the Assignor to
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the Banks pursuant to the
terms of the Credit Agreement.
[(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Agent under the Credit Agreement.] [INCLUDE ONLY IF
ASSIGNOR IS AGENT]
7. WITHHOLDING TAX.
The Assignee (a) represents and warrants to the Agent and the Borrowers
that under applicable law and treaties no tax will be required to be withheld by
the Agent or the Borrowers with respect to any payments to be made to the
Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of
any jurisdiction other than the United States or any State thereof) to the Agent
and the Borrowers prior to the time that the Agent or a Borrower is required to
make any payment of principal, interest or fees hereunder, duplicate executed
originals of either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein the Assignee claims entitlement to the
benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new Forms 4224 or 1001 upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by the Assignee, and (c) agrees
to comply with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
E-3
<PAGE>
8. REPRESENTATIONS AND WARRANTIES.
(a) The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any Lien or other adverse claim; (ii) it is
duly organized and existing and it has the full power and authority to take, and
has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and
(iv) this Assignment and Acceptance has been duly executed and delivered by it
and constitutes the legal, valid and binding obligation of the Assignor,
enforceable against the Assignor in accordance with the terms hereof, subject,
as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors' rights and
to general equitable principles.
(b) The Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Borrowers, or the performance or observance by the Borrowers, of any of
their respective obligations under the Credit Agreement or any other instrument
or document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; and (iv) it is an
Eligible Assignee.
9. FURTHER ASSURANCES.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Borrowers or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
E-4
<PAGE>
10. MISCELLANEOUS.
(a) Any amendment or waiver of any provision of this Assignment
and Acceptance shall be in writing and signed by the parties hereto. No failure
or delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off
or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number
of counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. The Assignor
and the Assignee each irrevocably submits to the non-exclusive jurisdiction of
any State or Federal court sitting in California over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such California State or Federal court. Each party
to this Assignment and Acceptance hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).
[OTHER PROVISIONS TO BE ADDED AS MAY BE NEGOTIATED BETWEEN THE
ASSIGNOR AND THE ASSIGNEE, PROVIDED THAT SUCH PROVISIONS ARE NOT INCONSISTENT
WITH THE CREDIT AGREEMENT.]
E-5
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:
-----------------------------------
Title:
--------------------------------
By:
-----------------------------------
Title:
--------------------------------
Address:
[ASSIGNEE]
By:
-----------------------------------
Title:
--------------------------------
By:
-----------------------------------
Title:
--------------------------------
Address:
E-6
<PAGE>
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
, 19
--------------- ---
Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Agency Management Services #5596
Bank of America National Trust
and Savings Association, as Issuing Bank
International Trade
Banking Division #5655
333 S. Beaudry Ave., 19th Floor
Los Angeles, CA 90017
Western Staff Services (USA), Inc.
301 Lennon Lane
Walnut Creek, CA 94598
Western Medical Services, Inc.
301 Lennon Lane
Walnut Creek, CA 94598
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of March 4, 1998 (as amended,
amended and restated, modified, supplemented or renewed from time to time the
"CREDIT AGREEMENT") among Western Staff Services (USA), Inc. ("WSS"), Western
Medical Services, Inc. ("WMS" and together with WSS, collectively, the
"BORROWERS" and individually, a "BORROWER"), the Banks referred to therein (the
"BANKS"), Bank of America National Trust and Savings Association, as agent for
the Banks (the "AGENT"), and Bank of America National Trust and Savings
Association, as letter of credit issuing bank ("ISSUING BANK"). Terms defined
in the Credit Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "ASSIGNOR") to _______________ (the
"ASSIGNEE") of _____% of the right, title and interest of the Assignor in and to
the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitments of the Assignor[,] [and] all
outstanding Loans made by the Assignor [and the Assignor's participation in the
Letters of Credit]) pursuant to the Assignment and Acceptance Agreement attached
hereto (the "ASSIGNMENT AND ACCEPTANCE"). Before giving effect to such
assignment the Assignor's Commitment is $ ___________, the aggregate amount of
its outstanding Loans is $_____________, and its participation in L/C
Obligations is $_____________.
2. The Assignee agrees that, upon receiving the consent of the Agent,
the Issuing Banks and, if applicable, the Borrowers, to such assignment, the
Assignee will be bound by the terms of the Credit Agreement as fully and to the
same extent as if the Assignee were the Bank originally holding such interest in
the Credit Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name:
--------------------------
E-7
<PAGE>
Address:
-------------------------------
-----------------------------
-----------------------------
Attention:
-----------------------------
Telephone: ( )
--- -----------------------
Telecopier: ( )
--- -----------------------
Telex (Answerback):
---------------------
(B) Payment Instructions:
Account No.:
---------------------------
At:
---------------------------
---------------------------
---------------------------
Reference:
---------------------------
Attention:
---------------------------
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice
of Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
---------------------------------
Title:
--------------------
By:
---------------------------------
Title:
--------------------
[NAME OF ASSIGNEE]
By:
---------------------------------
Title:
--------------------
By:
---------------------------------
Title:
--------------------
E-8
<PAGE>
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
WESTERN STAFF SERVICES (USA), INC.
By:
---------------------------------
Title:
--------------------
By:
---------------------------------
Title:
--------------------
WESTERN MEDICAL SERVICES, INC.
By:
---------------------------------
Title:
--------------------
By:
---------------------------------
Title:
--------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By:
---------------------------------
Title:
--------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Issuing Bank
By:
---------------------------------
Title:
--------------------
E-9
<PAGE>
EXHIBIT F
FORM OF GUARANTY
[Attach copy of Guaranty]
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet as of January 24, 1998; the Condensed
Consolidated Statement of Operations for the 12 Weeks Ended January 24, 1998;
and the Condensed Consolidated Statement of Cash Flows for the 12 Weeks Ended
January 24, 1998, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
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0
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