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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
- ----- ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
| X | EXCHANGE ACT OF 1934 [FEE REQUIRED]
- -----
For the fiscal year ended December 31, 1995
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Commission File No. 0-3532
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OLSTEN CORPORATION
- ------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 13-2610512
- ------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
175 Broad Hollow Road, Melville, New York 11747-8905
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 844-7800
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, $.10 par value New York Stock Exchange
Class B Common Stock Purchase Warrants New York Stock Exchange
4-7/8% Convertible Subordinated Debentures New York Stock Exchange
due 2003
Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock, $.10 par value
------------------------------------
(Title of class)
[Cover page 1 fo 2 pages]
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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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of Registrant's voting stock
(Common Stock and Class B Common Stock, assuming conversion of Class B
Common Stock into Common Stock on a share for share basis) held by
nonaffiliates of Registrant, as of February 27, 1996, was $1,479,861,000
based on the closing price of the Common Stock on the New York Stock Exchange
on such date.
The number of shares outstanding of Registrant's Common Stock
and Class B Common Stock, as of February 27, 1996, were 50,590,713
shares and 13,854,675 shares, respectively, after giving effect to the
three-for-two stock split declared on February 16, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Proxy Statement for 1996 Annual Meeting of Shareholders of
Registrant. Certain information to be included therein is
incorporated by reference into PART III hereof.
[Cover page 2 of 2 pages]
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PART I
Item 1. Business.
General
Olsten Corporation (herein, together with its subsidiaries
unless the context otherwise requires, generally referred to as
"Registrant") was incorporated in Delaware in 1967 as the successor to
a business founded in 1950. On July 30, 1993, Lifetime Corporation
merged into Registrant. The merger was accounted for as a pooling of
interests and materially increased Registrant's health care business.
Registrant operates through subsidiaries principally under
the trade names "Olsten Kimberly QualityCare" and "Olsten Staffing
Services" and engages in and derives substantially all of its revenues
from two industry segments, HealthCare Services and Staffing Services.
Registrant provides both network management services and health care
personnel (caregivers) for home health care and provides management
services to hospital-based home health agencies. In Staffing
Services, Registrant provides assignment employees to business,
industry and government and services for the design, development and
maintenance of information systems. Registrant's owned, licensed and
franchised operations conduct business through approximately 1,300
offices in 50 states, the District of Columbia, Puerto Rico, Canada,
Mexico, Argentina, Great Britain, Denmark, Germany, Norway and Sweden.
Selected financial information relating to Registrant's
industry segments is contained herein in Note 10 of Notes to
Consolidated Financial Statements.
Systemwide HealthCare and Staffing sales accounted for
approximately 44% and 56%, respectively, of Registrant's 1995
systemwide sales, approximately 47% and 53%, respectively, of
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Registrant's 1994 systemwide sales and approximately 53% and 47%,
respectively, of Registrant's 1993 systemwide sales. Systemwide sales
represent all services and home care visits provided by or through
Registrant's entire network, including Registrant, licensed and
franchised offices and hospital-based home health agencies under
management.
In HealthCare Services, Registrant provides home health care
through Registrant's licensed health care personnel, such as
registered nurses, offering a broad range of services, including
physician-prescribed skilled nursing treatments, patient and family
education, case management, pediatric and perinatal care, physical,
occupational, neurological and speech therapies, intravenous
administration of drugs, nutrients and other solutions, and
rehabilitation. Through its clinical pharmacy network, Registrant has
the ability to deliver nutrients and medications utilized in certain
of its home health care services. Home health care provided by
Registrant's unlicensed personnel, such as home health aides and
homemakers, may involve assistance with personal hygiene, feeding,
dressing, preparation of meals and light housekeeping. In carrying
out supplemental institutional staffing, Registrant's health care
professionals perform services for hospitals, nursing homes, clinics
and other health care facilities and furnish business and industry
with specialized staffing. Health care institutions use supplemental
staffing for peak periods, illnesses and vacations, helping these
facilities control employee costs.
Factors that Registrant believes have contributed to the
development of home health care in particular include institutional,
governmental and third-party payor recognition that home health care
is a cost-effective alternative to lengthy, more expensive
institutional care; an aging population; increasing consumer awareness
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and interest in home health care; the psychological benefits of
recuperating from an illness or accident in one's own home; and
advanced technology that allows more health care procedures to be
provided at home instead of only in hospital settings.
Of Registrant's systemwide HealthCare sales, approximately
30% are attributable to Medicare reimbursement and approximately 18%
are attributable to Medicaid reimbursement and state and local
government contracts. Registrant's home health care business is
subject to extensive Federal and state regulation covering, among
other things, Medicare and Medicaid reimbursement, reporting
requirements, certification and licensure standards for certain home
health agencies and, in some cases, certificate of need requirements.
Registrant is also subject to Federal and state laws regarding fraud
and abuse in the delivery of health care services. These laws
generally prohibit direct or indirect payments, including the offer or
solicitation of such payments, for the referral of patients.
Registrant is actively pursuing relationships with managed
care organizations as a provider and is expanding its capabilities as
a network manager for managed care organizations in home health care
delivery. In this role, Registrant manages and contracts for all home
health care services. Registrant believes that its nationwide office
network and the quality, range and cost-effectiveness of its services
are important factors as it seeks opportunities as a network manager.
In its managed care relationships, Registrant offers the direct and
managed provision of care as a single gatekeeper, thereby optimizing
utilization. Registrant is also expanding its health care service
delivery capabilities through hospital management contracts to manage
hospital-based home health operations in exchange for management fees.
In Staffing Services, Registrant provides skilled and semi-
skilled assignment employees in the following broad service areas:
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general office, office automation, information technology,
professional accounting support, technical/scientific, legal support,
production/assembly/distribution, marketing support and teleservices.
The provision of staffing services is not generally subject to
extensive Federal and state regulation.
By supplying an auxiliary work force to its Staffing Services
clients, Registrant believes it affords them economies, productivity
and flexibility in meeting their requirements for peak periods caused
by such recurring factors as seasonal demands, inventories, month-end
requirements and vacations and such unpredictable factors as special
projects, marketing promotions, illnesses and emergencies.
Assignments of personnel may be for hours, days, weeks, months or
longer periods.
Utilization of assignment employees has become a valuable and
recognized management tool for many companies to convert fixed costs
to variable costs, especially in view of corporate reengineering and
restructuring in a more competitive global environment. With the
availability of such services, a client can maintain on a
cost-effective basis a nucleus of core personnel that can be
supplemented by skilled specialists for long- and short-term
assignments. The expense and inconvenience to a client of hiring
additional permanent employees for assignments of a limited duration,
including advertising, interviewing and testing, are eliminated. The
use of Registrant's services also enables clients to eliminate the
record keeping, payroll taxes, insurance and administrative costs
usually associated with permanent personnel. A client pays only for
actual hours worked by Registrant's assignment employees and may
terminate their services immediately upon completion of the job
assignment without the adverse effects of lay-offs.
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In Staffing Services, Registrant is pursuing with clients
alternative staffing service relationships that are becoming
increasingly important to Registrant. Through its Partnership
Program (R) services with major corporate clients, Registrant acts as a
master vendor responsible for the recruitment, training and management
of large groups of employees for departments at a single site or at
multiple sites, allowing its clients to focus better on their core
businesses. Other clients have outsourced entire functions whereby
people, processes and technology are all managed by Registrant.
Registrant's services may also include customized training, billing
and electronic information exchange programs for its clients. These
arrangements can enable a client to better manage personnel expenses
and can save a client time and money by reducing its employee
recruitment and training efforts, particularly if the client is
experiencing a high employee turnover rate.
In general, Registrant obtains clients through personal sales
presentations, telephone marketing calls, direct mail solicitation,
referrals from other clients and advertising in a variety of local and
national media, including the Yellow Pages, newspapers, magazines,
trade publications and television. Registrant's marketing efforts for
HealthCare Services also involve personal contact with case managers
for managed health care programs, such as those involving health
maintenance organizations (HMOs) and preferred provider organizations
(PPOs), physicians and their staffs, hospital discharge planners,
nursing home supervisors, insurance company representatives and
employers with self-funded employee health benefit programs.
Registrant believes that its success in furnishing caregivers
and assignment employees is based, among other factors, on its
reputation for quality and its extensive office network. Registrant
utilizes an established system of procedures aimed at custom matching
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its assignment employees to the specific requirements of its clients.
Registrant has implemented an interviewing and evaluation process that
determines the level of skills of its caregivers and assignment
employees and aids in their proper selection and placement.
Thereafter, employees' performance is reviewed with the client to
provide quality control. Registrant empowers its branch managers and
branch directors with a high level of responsibility, providing strong
incentives to manage the business effectively at the local level--one
of the central ingredients in a business where relationships are vital
for success.
There is no one client that accounts for as much as 10% of
Registrant's revenues. In the opinion of Registrant, its business is
not seasonal to any material degree. Except for Registrant's entry
into the information technology services industry through the
acquisition of IMI Systems Inc. in the United States, P.J. Ward
Associates Ltd. in Canada and Data Vikar in Norway, there have not
been any significant changes in the kinds of services rendered or
methods of distribution of Registrant since the end of the last fiscal
year.
Registrant's caregivers and assignment employees, as well as
the employees of other firms providing similar services, are paid
weekly for their services while payments are generally received from
customers within five to ten weeks on average of the related billings
for such services. Consequently, as new offices are established or
acquired, or as existing offices expand, there is an ongoing
requirement for cash resources to fund current operations as well as
to provide for the expansion of the business.
Registrant has grown and is pursuing expansion opportunities
by strengthening relationships with many clients, making strategic
acquisitions within and outside the United States, opening additional
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offices and developing and extending specialized services,
particularly in health care, information technology, accounting and
legal support.
Franchise Operations
At December 31, 1995, approximately 100 offices were operated
by eight franchisees under franchises granted by Registrant.
Franchisees, most of whom provide only services similar to Olsten
Staffing Services, have the exclusive right to market and furnish
assignment employees within a designated geographic area using certain
of Registrant's trade names, service marks, advertising materials,
sales programs, manuals and forms. Franchisees receive training from
Registrant, attend seminars, participate in marketing programs and
utilize Registrant's sales literature. Registrant has established
operating procedures and standards to be followed by its franchisees.
Registrant provides franchisees with billing, payroll and other data
processing systems and services and offers them accounts receivable
financing. Registrant also assists its franchisees in obtaining
business from its national accounts and through its national and
cooperative local advertising.
Franchisees operate their businesses autonomously within the
framework of Registrant's policies and standards, and recruit, employ
and pay their own permanent and assignment employees. Registrant
receives royalty fees from each franchise based upon its gross
franchise sales. Royalty fees generally start at 5% of gross
franchise sales and decrease based upon volume. Sales by franchisees
to their clients are not included in Registrant's revenues but are
included in Registrant's systemwide sales. Franchise agreements are
generally for a term of ten years and typically are renewable at the
option of the franchisee for five additional five-year terms.
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Registrant may terminate a franchise if the franchisee fails to meet
Registrant's standards or otherwise breaches the franchise agreement.
Registrant is not granting new franchises and has not granted any
since 1980.
Licensed Area Representative Operations
At December 31, 1995, approximately 90 offices were operated
by 55 licensed area representatives. Substantially all of these
offices provided only Staffing Services. A licensed area
representative is a person authorized by Registrant to operate
Registrant's Staffing Services business within an exclusive marketing
area. The agreements governing licensed area representative
operations do not have a stated term. The licensed area
representative does not have an ownership interest in the business but
receives approximately 50% of the office's gross profit margin in the
form of commissions, which are reflected in Registrant's selling,
general and administrative expenses. Sales by licensed area
representatives are included in Registrant's revenues. The licensed
area representative is responsible for the office's operating
expenses, such as rent, utilities and permanent staff salaries, and
Registrant is responsible for the assignment employee wages and
related payroll taxes and insurances. Registrant also provides
national advertising, shares in the costs of certain local
advertising, conducts training seminars and furnishes operating
manuals, automated payroll systems, forms, sales materials and basic
supplies to the licensed area representatives.
Licensed area representatives are required to observe
Registrant's operating procedures and standards and act for Registrant
in recruiting, screening, classifying and employing assignment
employees. The licensed area representatives solicit orders for
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assignment employees from clients and assign Registrant's assignment
employees to clients in response to such orders. Registrant's
experience has shown that licensing is a more profitable method of
operation than franchising.
Source and Availability of Personnel
Caregivers and assignment employees are recruited through
advertising in local and, to a lesser extent, national media. In
addition, a substantial portion of new employees is obtained through
referrals by other employees of Registrant. Registrant interviews,
screens, checks references and evaluates the skills of applicants for
employment, utilizing systems and procedures that it has developed and
enhanced over the years. Caregivers and assignment employees are
generally employed by Registrant on an as-needed basis dependent upon
client demand. Registrant's employees are generally paid by
Registrant only for time they actually work, subject to a four-hour
daily minimum on the days they work. Although conditions may vary in
different areas of the country and with respect to different skill
categories, caregivers and assignment employees were generally less
available during 1995 than they were in the preceding year.
Importance and Effect of Trademarks Held
Various trademarks are registered with the United States
Patent and Trademark Office protecting OLSTEN. Certain other marks
that are registered or in the process of being registered and are
utilized in Registrant's business include AMERICA IS COMING HOME WITH US
(SM), CUSTOMIZED ADDED-VALUE (R), MAKE THE SURE CALL (SM), OFISS 2000 (SM),
PARTNERSHIP PROGRAM (R), PRECISE (R) and PROFILER (R). Under current law,
federal trademark registrations can be renewed indefinitely. National
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advertising and usage have, in the belief of Registrant, given
significance to these marks.
Competitive Position
The health care services and staffing services provided by
Registrant also are provided by several companies which operate, as
Registrant does, nationally throughout the United States and by
numerous regional and local firms and are highly competitive. Unlike
Registrant, such companies and firms usually provide either health
care services or staffing services, but not both. Registrant believes
that, in terms of systemwide sales, it is North America's largest
provider of home health care services and third largest provider of
staffing services, as well as one of the world's leading providers of
staffing services.
The principal methods of competing are availability of
personnel, quality of services and the price of such services.
Registrant believes that its favorable competitive position is
attributable to its early industry entry, to its widespread office
network and to the consistently high quality and targeted services it
has provided over the years to its clients, as well as to its
screening and evaluation procedures, its training programs and its
employee retention techniques.
Number of Persons Employed
At December 31, 1995, Registrant employed approximately 8,800
permanent employees and during 1995 employed approximately 560,000
caregivers and assignment employees. In addition, Registrant's
franchisees employed approximately 600 permanent employees as well as
approximately 90,000 assignment employees during 1995. Employees of
franchisees are not Registrant's employees.
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As the employer of its caregivers and assignment employees,
Registrant is responsible for and pays the employer's share of Social
Security taxes, federal and state unemployment taxes, workers'
compensation insurance and other similar costs. Wages are generally
paid to caregivers and assignment employees by Registrant on an hourly
basis and may vary in different geographic areas to give effect to
prevailing wages paid for particular skills in the community where the
services are performed. Registrant believes that its relationships
with its employees are generally good.
All caregivers and assignment employees of Registrant are
covered by general liability insurance and by a fidelity bond
maintained by Registrant. In addition, caregivers are covered by
professional medical liability insurance. Registrant believes that
its insurance coverages are adequate for the purposes of its business.
International Operations
Registrant, through its Office Angels subsidiary, operates
approximately 50 offices in Great Britain to provide temporary and
permanent placement services. Registrant, through subsidiaries,
operates approximately 25 offices to provide assignment employees and
20 offices to provide caregivers in Canada. In 1994, Registrant
purchased a majority interest in a Mexican staffing services company,
now called Olsten STAFF, and operates two offices in Mexico. In 1995
and early 1996, Registrant wholly acquired, or purchased majority
interests in: Norsk Personal A.S., Norway's second-largest staffing
company; OFFiS Unternehmen fur Zeitarbeit GmbH & Co. KG, Germany's
third-largest staffing firm; Kontorsjouren AB, Sweden's third-largest
staffing firm; Allegro Vikarservice ApS in Denmark; Olsten Ready
Office S.A., Argentina's largest independent staffing firm. In
addition, Registrant's Canadian staffing operation expanded its
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network in 1995 through the acquisition of P.J. Ward Associates Ltd.
and five other companies.
Item 2. Properties.
The international corporate headquarters of Registrant are
located at 175 Broad Hollow Road, Melville, New York. The building in
which the headquarters are located contains approximately 120,000
square feet of office space and is leased from Suffolk County
Industrial Development Agency under a lease terminating on April 13,
2007, at which time Registrant is obligated to purchase the premises
and building thereon for One Dollar. The industrial development
revenue bond issued in connection with the acquisition, construction,
renovation and equipping of the headquarters building is held by a
wholly-owned subsidiary of Registrant.
The leases for the operating offices utilized by Registrant's
subsidiaries expire at various dates. Registrant believes that such
facilities are adequate for its immediate needs. Registrant does not
anticipate that it will have any problem obtaining additional space if
needed in the future.
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which
Registrant or any of its subsidiaries is a party.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders
during the fourth quarter of Registrant's 1995 fiscal year.
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Item 4(a). Executive Officers of Registrant.
The following table sets forth certain information regarding
each of the executive officers of Registrant:
Executive Expiration
Officer of Term Positions and Offices
Name Since Age of Office with Registrant
- ---- ----- --- --------- ---------------
Frank N. Liguori 1976 49 April 1996 Chairman of the Board and
Chief Executive Officer
Stuart Olsten 1987 43 April 1996 President and
Vice Chairman
B. Garfield French 1996 41 April 1996 Executive Vice President
and Managing Director,
Olsten International,B.V.
Robert A. Fusco 1992 45 April 1996 Executive Vice President
and President, Olsten
Kimberly QualityCare
Gerald J. Kapalko 1993 49 April 1996 Executive Vice President
Richard A. Piske, III 1993 47 April 1996 Executive Vice President
and President, Olsten
Staffing Services
William P. Costantini 1992 48 April 1996 Senior Vice President and
General Counsel
Anthony J. Puglisi 1993 46 April 1996 Senior Vice President-
Finance and Treasurer
Frank N. Liguori has been Chairman of the Board of Registrant
since February 1992 and its Chief Executive Officer since April 1990. He
was Vice Chairman of Registrant from April 1990 to February 1992.
Stuart Olsten has been Vice Chairman of Registrant since August
1994 and President of Registrant since April 1990. He was Chief Operating
Officer of Registrant from April 1990 through July 1993.
B. Garfield French has been Executive Vice President of Registrant
since February 1996 and Managing Director of Olsten International, B.V.
since October 1994. From November 1987 to October 1994, he was Senior Vice
President - Canadian and Mid-America Division of Registrant.
Robert A. Fusco has been Executive Vice President of Registrant
since January 1992 and President, Olsten Kimberly QualityCare, since July
1993. He was General Manager, Olsten HealthCare, from January 1992 to July
1993. From November 1990 to December 1991, Mr. Fusco was Senior Vice
President of Olsten HealthCare.
Gerald J. Kapalko has been Executive Vice President of Registrant
since July 1993. From August 1987 to July 1993, he was Senior Vice
President - Corporate Development of Registrant.
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Richard A. Piske, III has been Executive Vice President of
Registrant and President, Olsten Staffing Services, since September 1993.
From March 1990 to September 1993, he was Senior Vice President - Southeast
Division of Registrant.
William P. Costantini has been Senior Vice President and General
Counsel of Registrant since June 1992. For more than five years prior
thereto, he was Vice President, General Counsel and Secretary of GEO
International Corporation, which had holdings in oil field services,
quality assurance and graphic arts.
Anthony J. Puglisi has been Senior Vice President-Finance and
Treasurer of Registrant since April 1993. From December 1988 to April
1993, he was Chief Financial Officer of NMB (USA) Inc., a high technology
manufacturer, and was President of IMC Magnetics Corp. from July 1988 to
April 1993.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
Market Information
Registrant has outstanding two classes of common equity
securities: Common Stock and Class B Common Stock. Registrant's Common
Stock (symbol OLS) has been listed on the New York Stock Exchange since
December 15, 1994. Prior thereto, it was listed on the American Stock
Exchange. The following table sets forth the high and low prices (rounded
to the nearest eighth after adjusting for the three-for-two stock split
declared on February 16, 1996) of the Common Stock for each quarter during
fiscal 1995 and 1994, as reported by the applicable Exchange:
1995 1994
_____________________________________________________________________________
High Low High Low
---- --- ---- ---
$ $ $ $
1st Quarter 23-3/4 20-1/2 23-1/4 18-3/4
2nd Quarter 24-1/4 18-7/8 23 19-3/8
3rd Quarter 26-3/8 21-1/2 25-1/4 20-3/4
4th Quarter 28-1/4 24-1/2 26 19-1/4
_____________________________________________________________________________
There is no established public trading market for Registrant's
Class B Common Stock, which is subject to significant restrictions on sale.
Registrant's Class B Common Stock, which has ten votes per share, is
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convertible at any time on a share for share basis into Registrant's Common
Stock, which has one vote per share.
Holders
On February 27, 1996 there were approximately 1,470 holders of
record of Registrant's Common Stock (including brokerage firms holding
Registrant's Common Stock in "street name" and other nominees) and 540
holders of record of Registrant's Class B Common Stock.
Dividends per share* Fiscal Year
-------------------- ------------------------
1995 1994
--------------------------
Cash dividends**
Common Stock $.21 $.16
Class B Common Stock .21 .16
_________________
* Per share data have been adjusted for three-for-two stock split
declared February 16, 1996.
** Registrant paid quarterly dividends in its two most recent fiscal
years.
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Item 6. Selected Financial Data.
<TABLE>
OLSTEN CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
-----------------------
(In thousands, except share amounts)
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
$ $ $ $ $
<S> <C> <C> <C> <C> <C>
Service sales, franchise fees,
management fees and other
income 2,518,875 2,307,667 2,196,678 1,990,733 1,725,166
Income (loss) before
extraordinary charge 90,469 71,242 (11,243) 27,531 (10,472)
Net income (loss) 90,469 71,242 (25,911) 27,531 (10,472)
Working capital 327,928 281,588 246,261 235,227 218,450
Total assets 891,918 739,978 701,038 672,470 641,339
Long-term debt 180,780 125,000 176,057 150,419 211,471
Shareholders' equity 472,045 389,728 306,866 320,564 239,081
SHARE INFORMATION:
Primary earnings (loss) per share:
Income (loss) before
extraordinary charge 1.39 1.11 (.19) .49 (.19)
Net income (loss) 1.39 1.11 (.43) .49 (.19)
Fully diluted earnings (loss)
per share:
Income (loss) before
extraordinary charge 1.33 1.07 (.19) .49 (.19)
Net income (loss) 1.33 1.07 (.43) .49 (.19)
Cash dividends .21 .16 .16 .13 .11
Book value 7.34 6.13 4.96 5.42 4.45
SYSTEMWIDE SALES:
HealthCare Services 1,321,440 1,214,543 1,288,870 1,238,221 1,115,377
Staffing Services 1,684,668 1,391,342 1,125,894 937,914 766,705
--------- --------- --------- --------- ----------
3,006,108 2,605,885 2,414,764 2,176,135 1,882,082
========= ========= ========= ========= =========
</TABLE>
Share information has been retroactively restated for the three-for-two stock
split declared on February 16, 1996.
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Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
OLSTEN CORPORATION & SUBSIDIARIES
MANAGEMENT'S DISCUSSION
---------------------
AND ANALYSIS OF
---------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Results of Operations
Operating results reflect the combined operations of Olsten Corporation (the
"Company") and IMI Systems Inc. ("IMI"), acquired August 2, 1995, and Lifetime
Corporation ("Lifetime"), pursuant to the merger completed on July 30, 1993.
Both of these transactions were accounted for as poolings of interests.
Comparisons with prior years are based on restated combined results. Results
for 1993 included merger and integration costs of $80.9 million, as well as an
extraordinary charge, net of taxes, of $14.7 million relating to the
prepayment of debt assumed in the Lifetime merger.
Primary earnings per share, as retroactively adjusted for the three-for-two
stock split declared on February 16, 1996, increased 25 percent to $1.39 in
1995 versus $1.11 in 1994. Excluding the effects of the non-recurring charges
described above, primary earnings per share for 1994 increased 41 percent from
$.79 in 1993.
Systemwide sales for the Company's two segments increased 15 percent, to $3
billion in 1995; 8 percent, to $2.6 billion in 1994; and 11 percent, to $2.4
billion in 1993. Systemwide sales represent sales generated by Company,
licensed and franchised offices, and hospital-based home health agencies under
management. The presentation of systemwide sales is provided to reflect the
entire scope of Olsten's operations. This has become a key statistic,
particularly in measuring the effect of the hospital contract management
services business entered into by the Company's HealthCare Services
subsidiary.
Revenues increased 9 percent in 1995 to $2.5 billion compared to $2.3 billion
in 1994. This increase reflects the continued strong demand for the Company's
services. Revenues in 1994 rose 5 percent from $2.2 billion in 1993.
HealthCare Services' revenues declined 6 percent in 1995 and 10 percent in
1994, as expected, resulting primarily from divestitures made by the Company
in order to strategically position itself to build its hospital contract
management services business. In connection with this strategy, the hospital
contract management services' systemwide sales increased to $247.5 million in
1995 from $37.5 million in 1994.
Staffing Services' revenues grew 24 percent in 1995 with 5 percent coming from
international acquisitions. Revenue increases were primarily attributable to
increased volume and improved bill rates. In addition, the Company continued
to improve its Partnership Program (R) services and strategic alliance business
with major U.S.-based multinational companies. Staffing Services revenues
grew 24 percent in 1994 as the Company capitalized on a strong demand for
assignment employees.
-19-
<PAGE> 20
Cost of services sold increased 8 percent, to $1.8 billion in 1995; 6 percent,
to $1.6 billion in 1994; and 11 percent, to $1.5 billion in 1993. As a
percentage of revenues, such expenses were 69.8 percent, 70.3 percent and 69.3
percent in 1995, 1994 and 1993, respectively. Gross margins as a percentage
of revenues were 30.2 percent in 1995, 29.7 percent in 1994 and 30.7 percent
in 1993. The increase in 1995 compared to 1994 was a result of revenue
growth, reduced workers' compensation and payroll tax costs together with the
additional management fees generated under the hospital contract management
services business. The decrease in 1994 from 1993 was a result of the faster
growth of the Staffing Services business, which operates at lower average
gross margins than HealthCare Services.
Selling, general and administrative expenses as a percentage of revenues were
23.8 percent, 24.1 percent and 26 percent in 1995, 1994 and 1993,
respectively. The decreases resulted from both enhanced cost control and
increased revenues.
Net interest expense of $4.8 million, $5.7 million and $18.4 million, in 1995,
1994 and 1993, respectively, reflected borrowing costs on long-term debt
offset by interest income on investments. The decrease in net interest
expense in 1995 resulted from repayment of debt in the third quarter of 1994
and increased income on investments. The decrease in net interest expense in
1994 resulted from the repayment of $137 million of double-digit coupon
Lifetime debt in 1993, the conversion to equity of $14 million of high coupon
debt assumed in the merger with Lifetime, and the repayment of $34 million of
borrowings under the Company's revolving credit agreement in 1994.
The combination of the factors previously described increased pre-tax income
from operations, excluding the merger and integration costs, to $156.2 million
in 1995, compared to $122.9 million in 1994 and $84.2 million in 1993.
Excluding the impact of the non-recurring charges, the 1995 effective income
tax rate was 41.3 percent, compared to 42 percent in 1994 and 43.7 percent in
1993. The Company's effective rate has exceeded the Federal statutory rate
primarily because of non-deductible goodwill amortization and state income
taxes, which vary from year to year in relation to the mix of taxable income
by state.
Liquidity and Capital Resources
Working capital at December 31, 1995, including $40 million in cash, was
$327.9 million, an increase of 16 percent over the prior year. Cash decreased
$28.6 million to $40 million as a result of cash paid for acquisitions of $90
million offset by cash generated from operations. Receivables increased $101
million primarily as a result of acquisitions and revenue growth. Fixed
assets, net, increased $20.1 million primarily relating to the Company's new
international headquarters building, computer systems and equipment.
The Company has revolving credit agreements with six banks for up to $210.8
million in borrowings and letters of credit. As of December 31, 1995, there
were $55.8 million in borrowings and $61.1 million in standby letters of
credit outstanding. The Company believes that its levels of working capital
and liquidity and available sources of funds are sufficient to support present
operations and to continue to fund future growth and business opportunities as
the Company increases its scope of services.
The Company's annual dividend on common stock and Class B common stock, as
adjusted for the three-for-two stock split, was 21 cents per share.
-20-
<PAGE> 21
Item 8. Financial Statements and Supplementary Data.
The following financial statements of Registrant are
included in this Report:
Page(s) in this Report
----------------------
Consolidated Financial Statements:
Balance Sheets as of December 31, 1995 and F-2
January 1, 1995
Statements of Income for the three years F-3
ended December 31, 1995
Statements of Changes in Shareholders' Equity F-4
for the three years ended December 31, 1995
Statements of Cash Flows for the three years F-5
ended December 31, 1995
Notes to Consolidated Financial Statements F-6 - F-16
Report of Independent Auditors F-17
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
There have been no such changes or disagreements.
PART III
Item 10. Directors and Executive Officers of the Registrant.
See the information under the caption "Election of
Directors" in Registrant's definitive Proxy Statement with
respect to its 1996 Annual Meeting of Shareholders to be filed
with the Securities and Exchange Commission, which information is
incorporated herein by reference. See also the information with
respect to executive officers of Registrant under Item 4(a) of
PART I hereof, which information is incorporated herein by
reference.
-21-
<PAGE> 22
Item 11. Executive Compensation.
See the information under the captions "Election of
Directors," "Summary Compensation Table," "Option Grants in Last
Fiscal Year," "Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values," "Retirement Plan,"
"Employment Contracts, Termination of Employment and Change-in-
Control Arrangements" and "Compensation Committee Report on
Executive Compensation" in Registrant's definitive Proxy
Statement with respect to its 1996 Annual Meeting of Shareholders
to be filed with the Securities and Exchange Commission, which
information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
See the information under the caption "Security
Ownership of Certain Beneficial Owners and Management" in
Registrant's definitive Proxy Statement with respect to its 1996
Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission, which information is incorporated herein
by reference.
Item 13. Certain Relationships and Related Transactions.
See the information under the caption "Certain
Relationships and Related Transactions" in Registrant's definitive
Proxy Statement with respect to its 1996 Annual Meeting of
Shareholders to be filed with the Securities and Exchange
Commission, which information is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K.
(a)(1) Financial Statements
See Index to Financial Statements attached (Page
F-1).
-22-
<PAGE> 23
(a)(2) Financial Statement Schedules
Schedules have been omitted since they are either
not required or are not applicable or the
required information is shown in the financial
statements or related notes.
(a)(3) Exhibits:
3(a) Restated Certificate of Incorporation
of Registrant, as amended, filed as
Exhibit 4.1 to Registrant's
Registration Statement on Form S-8
(File No. 33-61761), is incorporated
herein by reference.
3(b) By-Laws of Registrant, filed as Exhibit
3(b) to Registrant's Annual Report on
Form 10-K for the year ended January 2,
1994, are incorporated herein by
reference.
4(a) Restated Certificate of Incorporation
of Registrant, as amended, filed as
Exhibit 3(a).
4(b) By-Laws of Registrant, filed as Exhibit
3(b).
4(c) Indenture dated as of March 15, 1993
between Registrant and Bankers Trust
Company, as Trustee, relating to
Registrant's 4-7/8% Convertible
Subordinated Debentures due 2003, filed
as Exhibit 4 to Registrant's Quarterly
Report on Form 10-Q for the quarter
ended April 4, 1993, is incorporated
herein by reference.
4(d) Warrant Agreement between Lifetime
Corporation and American Stock Transfer
and Trust Company dated November 4,
1986, as amended as of December 11,
1989 and July 23, 1993, filed as
Exhibit 1 to Registrant's Registration
Statement on Form 8-A dated July 23,
1993, is incorporated herein by
reference.
-23-
<PAGE> 24
*10(a) Registrant's 1984 Incentive Stock
Option Plan, as amended, filed as
Exhibit 10(a) to Registrant's Annual
Report on Form 10-K for the year ended
January 2, 1994, is incorporated herein
by reference.
*10(b) Registrant's 1984 Non-Qualified Stock
Option Plan, as amended, filed as
Exhibit 10(b) to Registrant's Annual
Report on Form 10-K for the year ended
January 2, 1994, is incorporated herein
by reference.
*10(c) Registrant's Incentive Restricted Stock
Plan, as amended, filed as Exhibit
10(e) to Registrant's Annual Report on
Form 10-K for the year ended January 2,
1994, is incorporated herein by
reference.
*10(d) Form of agreement under Registrant's
Incentive Restricted Stock Plan, filed
as Exhibit 10(g) to Registrant's Annual
Report on Form 10-K for the year ended
December 30, 1990, is incorporated
herein by reference.
10(e) Amended and Restated Credit Agreement
dated as of September 9, 1994 among
Registrant and certain of its
Subsidiaries signatory thereto, the
Banks signatory thereto and The
Chase Manhattan Bank, N.A., as Agent,
covering $200 million credit facility,
filed as Exhibit 10(e) to Registrant's
Annual Report on Form 10-K for the year
ended January 1, 1995, is incorporated
herein by reference.
+10(f) First, Second and Third Amendments to
Amended and Restated Credit Agreement
dated as of September 9, 1994.
+10(g) Credit Agreement dated as of December
22, 1995 among Registrant, certain of
its subsidiaries signatory thereto and
Fleet Bank covering $10.8 million
credit facility.
____________________
*Management contract or compensatory plan or arrangement.
+Filed herewith.
-24-
<PAGE> 25
*10(h) Registrant's 1990 Non-Qualified Stock
Option Plan for Non-Employee Directors
and Consultants, as amended and
restated, is incorporated by reference
to Exhibit C to Registrant's definitive
Proxy Statement with respect to its
1995 Annual Meeting of Shareholders.
*10(i) Registrant's Supplemental Retirement
Plan for Key Executives filed as
Exhibit 10(k) to Registrant's Annual
Report on Form 10-K for the year ended
January 3, 1993, is incorporated herein
by reference.
*10(j) Registrant's Executive Voluntary
Deferred Compensation Plan and Trust
Agreement between Registrant and
Prudential Trust Company, filed as
Exhibit 10(k) to Registrant's Annual
Report on Form 10-K for the year ended
January 2, 1994, is incorporated herein
by reference.
*10(k) Registrant's Retirement Plan for
Outside Directors and Consultants,
filed as Exhibit 10(l) to Registrant's
Annual Report on Form 10-K for the year
ended January 2, 1994, is incorporated
herein by reference.
*10(l) Registrant's Deferred Compensation Plan
for Outside Directors, filed as Exhibit
10(m) to Registrant's Annual Report on
Form 10-K for the year ended January 2,
1994, is incorporated herein by
reference.
*10(m) 1987 Stock Option Plan, as amended, of
Lifetime Corporation, filed as Exhibit
10(c) to Lifetime Corporation's Annual
Report on Form 10-K for the year ended
December 31, 1992, is incorporated
herein by reference.
*10(n) 1989 Non-Employee Directors Stock
Option Plan, as amended, of Lifetime
Corporation, filed as Exhibit 10(d) to
Lifetime Corporation's Annual Report on
Form 10-K for the year ended December
31, 1992, is incorporated herein by
reference.
____________________
*Management contract or compensatory plan or arrangement.
-25-
<PAGE> 26
*10(o) Employment Agreement dated March 28,
1994 between Registrant and Frank N.
Liguori, filed as Exhibit 10(q) to
Registrant's Annual Report on Form 10-K
for the year ended January 2, 1994, is
incorporated herein by reference.
*10(p) Agreement dated November 8, 1993
between Registrant and Frank N. Liguori
covering incentive award under
Incentive Restricted Stock Plan and
amendment thereto dated March 27, 1994,
filed as Exhibit 10(r) to Registrant's
Annual Report on Form 10-K for the year
ended January 2, 1994, is incorporated
herein by reference.
*10(q) Form of change in control agreement
between Registrant and each of Robert
A. Fusco, Richard A. Piske, III and
Gerald J. Kapalko, filed as Exhibit
10(o) to Registrant's Annual Report on
Form 10-K for the year ended January 1,
1995, is incorporated herein by
reference.
*10(r) Registrant's 1994 Stock Incentive Plan,
as amended and restated, is
incorporated by reference to Exhibit B
to Registrant's definitive Proxy
Statement with respect to its 1995
Annual Meeting of Shareholders.
*10(s) Registrant's Executive Officer Bonus
Plan is incorporated by reference to
Exhibit C to Registrant's definitive
Proxy Statement with respect to its
1994 Annual Meeting of Shareholders.
+10(t) Lease Agreement dated as of April 1,
1995 between Suffolk County Industrial
Development Agency and OLS Holdings,
Inc. covering headquarters facility at
175 Broad Hollow Road, Melville, New
York.
+21 Subsidiaries of Registrant.
+23 Consent of Coopers & Lybrand L.L.P.,
independent auditors, appearing on page
F-18 of this Annual Report on Form
10-K.
+27 Financial Data Schedule.
____________________
*Management contract or compensatory plan or arrangement.
+Filed herewith.
-26-
<PAGE> 27
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during
the last quarter of the period covered by the
report.
-27-
<PAGE> 28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
OLSTEN CORPORATION
Date: March 4, 1996 By:/s/ Frank N. Liguori
---------------------
Frank N. Liguori
Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Date: March 4, 1996 By:/s/ Frank N. Liguori
---------------------
Frank N. Liguori
Chairman and Chief
Executive Officer and Director
(Principal Executive Officer)
Date: March 4, 1996 By:/s/ Anthony J. Puglisi
----------------------
Anthony J. Puglisi
Senior Vice President-Finance
and Treasurer
(Principal Financial and
Accounting Officer)
Date: March 4, 1996 By:/s/ Andrew N. Heine
-------------------
Andrew N. Heine
Director
Date: March 4, 1996 By:/s/ Stuart R. Levine
--------------------
Stuart R. Levine
Director
Date: March 4, 1996 By:/s/ John M. May
---------------
John M. May
Director
Date: March 4, 1996 By:/s/ Miriam Olsten
-----------------
Miriam Olsten
Director
Date: March 4, 1996 By:/s/ Stuart Olsten
-----------------
Stuart Olsten
Director
-28-
<PAGE> 29
Date: March 4, 1996 By:/s/ Richard J. Sharoff
----------------------
Richard J. Sharoff
Director
Date: March 4, 1996 By:/s/ Raymond S. Troubh
---------------------
Raymond S. Troubh
Director
Date: March 4, 1996 By:/s/ Josh S. Weston
------------------
Josh S. Weston
Director
-29-
<PAGE> 30
OLSTEN CORPORATION and SUBSIDIARIES
INDEX to FINANCIAL STATEMENTS
__________
Pages
-----
Consolidated Financial Statements:
Balance Sheets as of December 31, 1995 and F-2
January 1, 1995
Statements of Income for the three years F-3
ended December 31, 1995
Statements of Changes in Shareholders' Equity F-4
for the three years ended December 31, 1995
Statements of Cash Flows for the three F-5
years ended December 31, 1995
Notes to Consolidated Financial Statements F-6 - F-16
Report of Independent Auditors F-17
Consent of Independent Auditors F-18
F-1
<PAGE> 31
<TABLE>
OLSTEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
<CAPTION>
(In thousands, except share amounts) December 31, 1995 January 1, 1995
----------------- ---------------
<S> <C> <C>
ASSETS
Current assets
Cash $ 40,049 $ 68,628
Receivables, less allowance for
doubtful accounts of $24,621
and $13,722, respectively 430,919 329,902
Prepaid expenses and other current assets 25,047 23,316
Refundable and deferred taxes 12,888 28,969
------- -------
Total current assets 508,903 450,815
Fixed assets, net 92,879 72,739
Intangibles, principally goodwill, net of
accumulated amortization of $68,154
and $62,259, respectively 283,089 203,377
Other assets 7,047 13,047
------- -------
$ 891,918 $ 739,978
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accrued expenses $ 72,202 $ 73,001
Payroll and related taxes 49,434 32,765
Insurance costs 34,948 47,529
Accounts payable 24,391 15,932
------- -------
Total current liabilities 180,975 169,227
Long-term debt 180,780 125,000
Other liabilities 58,118 56,023
Commitments -- --
Shareholders' equity
Common stock $.10 par value; authorized
110,000,000 shares; issued 50,428,046
shares and 32,257,321 shares,
respectively 5,043 3,226
Class B common stock $.10 par value;
authorized 50,000,000 shares;
issued 13,906,891 shares and 10,113,511
shares, respectively 1,391 1,011
Additional paid-in capital 238,645 235,228
Retained earnings 228,721 151,757
Cumulative translation adjustment (1,755) (1,494)
------- -------
Total shareholders' equity 472,045 389,728
------- -------
$ 891,918 $ 739,978
======= =======
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE> 32
<TABLE>
OLSTEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
For the Three Years Ended December 31, 1995
<CAPTION>
(In thousands, except share amounts) December 31, 1995 January 1, 1995 January 2, 1994
----------------- --------------- ---------------
<S> <C> <C> <C>
Service sales, franchise
fees, management fees and
other income $2,518,875 $2,307,667 $2,196,678
Cost of services sold 1,757,319 1,622,060 1,523,133
--------- --------- ---------
Gross profit 761,556 685,607 673,545
Selling, general and administrative
expenses 600,607 557,005 570,906
Interest expense, net 4,761 5,697 18,449
Merger and integration costs -- -- 80,911
--------- ---------- ---------
Income before income taxes, minority
interests and extraordinary charge 156,188 122,905 3,279
Income taxes 64,568 51,663 14,522
--------- ---------- ---------
Income (loss) before minority interests
and extraordinary charge 91,620 71,242 (11,243)
Minority interests 1,151 -- --
---------- ---------- ---------
Income (loss) before extraordinary charge 90,469 71,242 (11,243)
Extraordinary charge, net -- -- (14,668)
---------- ---------- ---------
Net income (loss) $ 90,469 $ 71,242 $ (25,911)
========= ========== ==========
SHARE INFORMATION:
- -----------------
Primary earnings (loss) per share:
Income (loss) before extraordinary
charge $1.39 $1.11 $(.19)
Extraordinary charge, net -- -- (.24)
----- ----- -----
Net income (loss) $1.39 $1.11 $(.43)
===== ===== =====
Average shares outstanding 65,108 64,367 60,467
====== ====== ======
Fully diluted earnings (loss) per share:
Income (loss) before extraordinary
charge $1.33 $1.07 $(.19)
Extraordinary charge, net -- -- (.24)
----- ----- -----
Net income (loss) $1.33 $1.07 $(.43)
===== ===== =====
Average shares outstanding 70,704 70,073 60,467
====== ====== ======
</TABLE>
See notes to consolidated financial statements. F-3
<PAGE> 33
<TABLE>
OLSTEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS' EQUITY
-------------------------------
For the Three Years Ended December 31, 1995
<CAPTION>
Common stock Additional Cumulative
-------------- paid-in Retained translation
(In thousands, except share amounts) Shares Amount capital earnings adjustment Total
-------- -------- --------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 3, 1993 39,444,522 $ 3,944 $ 191,369 $ 124,319 $ 931 $ 320,563
Net loss -- -- -- (25,911) -- (25,911)
Cash dividends -- -- -- (7,997) -- (7,997)
Translation adjustment -- -- -- -- (2,535) (2,535)
Exercise of stock options and
employee stock purchases 1,509,181 151 17,510 -- -- 17,661
Issuance of restricted stock, net 342,000 34 -- -- -- 34
Amortization of restricted stock -- -- 5,049 -- -- 5,049
---------- ----- ------- ------ ----- -------
Balance at January 2, 1994 41,295,703 4,129 213,928 90,411 (1,604) 306,864
Net income -- -- -- 71,242 -- 71,242
Cash dividends -- -- -- (9,896) -- (9,896)
Conversion of debentures 636,109 64 13,821 -- -- 13,885
Translation adjustment -- -- -- -- 110 110
Exercise of stock options and
employee stock purchases 439,020 44 5,180 -- -- 5,224
Amortization of restricted stock -- -- 2,299 -- -- 2,299
---------- ----- ------- ----- ----- -------
Balance at January 1, 1995 42,370,832 4,237 235,228 151,757 (1,494) 389,728
Net income -- -- -- 90,469 -- 90,469
Cash dividends -- -- -- (13,505) -- (13,505)
Translation adjustment -- -- -- -- (261) (261)
Exercise of stock options and
employee stock purchases 519,126 52 4,860 -- -- 4,912
Amortization of restricted stock -- -- 702 -- -- 702
Three-for-two stock split 21,444,979 2,145 (2,145) -- -- --
---------- ----- ------ ----- ------ ------
Balance at December 31, 1995 64,334,937 $ 6,434 $ 238,645 $ 228,721 $ (1,755) $ 472,045
========== ===== ======= ======= ===== =======
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 34
<TABLE>
OLSTEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
For the Three Years Ended December 31, 1995
<CAPTION>
(In thousands) December 31, 1995 January 1, 1995 January 2, 1994
----------------- --------------- ---------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $90,469 $71,242 $(25,911)
Adjustments to reconcile net
income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 29,368 23,797 25,937
Deferred income taxes 4,965 16,116 (15,653)
Extraordinary charge, net -- -- 14,668
Changes in assets and liabilities,
net of effects from acquisitions
and dispositions:
Accounts receivable, refundable
taxes and prepaid expenses (37,895) (6,562) (21,029)
Current liabilities (26,329) 9,202 20,932
Other, net (16,550) 10,363 (3,095)
Net cash provided by (used in) ------ ------ ------
operating activities 44,028 124,158 (4,151)
INVESTING ACTIVITIES:
Acquisitions of businesses and
reacquisitions of franchises (90,249) (6,103) (2,797)
Purchases of fixed assets (45,686) (42,246) (30,129)
Disposition of fixed assets and
businesses 16,141 6,698 6,988
Net cash used in investing ------ ------ ------
activities (119,794) (41,651) (25,938)
------- ------ ------
FINANCING ACTIVITIES:
Net proceeds from (repayment of)
line of credit agreements 55,780 (34,000) 26,596
Cash dividends (13,505) (9,896) (7,997)
Issuances of common stock under
stock plans 4,912 5,224 17,661
Retirement of long-term debt -- -- (136,821)
Proceeds from issuance (and expenses
for conversion) of convertible
debentures -- -- 122,105
Net cash provided by (used in) ------ ------ -------
financing activities 47,187 (38,672) 21,544
------ ------ ------
Net (decrease) increase in cash (28,579) 43,835 (8,545)
Cash at beginning of year 68,628 24,793 33,338
------ ------ ------
Cash at end of year $ 40,049 $ 68,628 $ 24,793
====== ====== ======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments for income taxes $ 29,502 $ 20,463 $ 12,218
Cash payments for interest $ 7,584 $ 8,029 $ 21,120
Conversion of debt to equity $ -- $ 13,883 $ --
</TABLE>
See notes to consolidated financial statements. F-5
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share amounts)
Note 1. Summary of Significant Accounting Policies
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned and majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. The Company's
fiscal year ends on the Sunday nearest to December 31st. Certain prior
period amounts have been reclassified to conform with the current year
presentation.
Revenue Recognition
Service sales and the related labor costs and payroll taxes are recorded in
the period in which the services are performed. Franchise fees, which are
based upon contractual percentages of franchise sales, and management fees
generated from management services provided to hospital-based home health
agencies, are included with Company service sales and recorded in the period
in which the services are provided.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash
Cash includes equivalents which are highly liquid investments with original
maturities of three months or less.
Fixed Assets
Fixed assets are stated at cost and depreciated over the estimated useful
lives of the assets using the straight-line method. Leasehold improvements
are amortized over the shorter of the life of the lease or the life of the
improvement.
Intangibles
Intangibles, principally goodwill, associated with acquired businesses and
the unexpired terms of reacquired franchise contracts are being amortized on
a straight-line basis primarily over 40 years.
Foreign Currency Translation
The functional currencies of the Company's foreign subsidiaries are the
Canadian dollar, British pound sterling, Norwegian krone, Mexican peso and
Argentinean peso. Assets and liabilities of these subsidiaries are
translated into United States dollars at the rates of exchange in effect at
the appropriate balance sheet date. Results of operations are translated
using an average exchange rate for the appropriate periods. Translation
gains and losses and intercompany foreign currency transactions which are
long-term in nature are reflected as adjustments to shareholders' equity.
Net foreign currency transaction gains and losses recognized by the Company
have not been significant. Foreign currency exchange rate fluctuations have
not had a material effect on operating cash balances.
F-6
<PAGE> 36
Income Taxes
The Company provides for taxes based on current taxable income and the future
tax consequences of temporary differences between the financial reporting and
income tax carrying values of its assets and liabilities.
Earnings Per Share
On February 16, 1996, the Company's Board of Directors approved a three-for-
two stock split for all shareholders of record at the close of business on
February 28, 1996. Share information and amounts relating to the Company's
stock plans have been retroactively restated to account for the stock split.
Primary earnings per share are based on the weighted average number of shares
of common stock and Class B common stock outstanding during the period, after
giving effect to potentially dilutive options and warrants under the treasury
stock method. In calculating fully diluted earnings per share, both net
income and shares outstanding have been adjusted to assume the Company's
convertible debt had been converted to common stock at the beginning of each
period.
Note 2. Acquisitions, Mergers and Divestitures
In August 1995, the Company completed the acquisition of IMI Systems Inc.
("IMI"), a leading information technology services company. As a result, the
Company issued approximately 847,000 shares (1.3 million shares as restated
for the three-for-two stock split declared on February 16, 1996) of Class B
common stock in exchange for all the outstanding IMI capital stock.
Subsequently, substantially all of the Class B common stock issued was
converted into common stock. The acquisition was accounted for as a pooling
of interests and, accordingly, the consolidated financial statements of the
Company have been restated for all periods prior to the acquisition to
combine the accounts and operations of the Company and IMI. Operating
results previously reported for the separate companies for periods prior to
the acquisition are as follows:
<TABLE>
Year Ended Six Months Ended
------------------------ ------------------------
(Unaudited)
<CAPTION>
January 1, January 2, July 2, July 3,
1995 1994 1995 1994
----------- ----------- ----------- ----------
Service sales, franchise fees,
management fees and other income:
<S> <C> <C> <C> <C>
Olsten $2,260,331 $2,157,535 $1,177,196 $1,100,405
IMI 47,336 39,143 30,953 21,270
--------- --------- --------- ---------
$2,307,667 $2,196,678 $1,208,149 $1,121,675
========= ========= ========= =========
Net income (loss):
Olsten $ 70,121 $ (26,607) $ 39,657 $ 30,751
IMI 1,121 696 756 362
--------- --------- --------- ---------
$ 71,242 $ (25,911) $ 40,413 $ 31,113
========= ========= ========= =========
</TABLE>
During 1995, the Company acquired various businesses which were accounted for
by the purchase method of accounting.
F-7
<PAGE> 37
In March 1995, the Company acquired a 50.1 percent interest in Norsk Personal
A.S., Norway's second-largest staffing services company, for $24.8 million in
cash. In August 1995, the Company acquired P.J. Ward Associates, Ltd., a
Toronto-based leader in information technology services, for $3.7 million in
cash. In September 1995, the Company acquired a 65 percent interest in Ready
Office S.A., Argentina's oldest and largest independent staffing services
company, for $2.7 million in cash.
In June 1995, the Company completed the acquisition of Americare, a provider
of home nursing, infusion therapy and medical equipment, for $7.7 million in
cash. In September 1995, the Company completed a single transaction
involving the purchase of Nurse's House Call, the home health care business
of Hooper Holmes, Inc., for $72.6 million and the sale of the stock of its
wholly-owned subsidiary, ASB Meditest, which provides mobile diagnostic,
paramedical and occupational health services, for $40.6 million. The
difference in value was settled for $32 million in cash. In conjunction with
the sale of ASB Meditest, the Company recognized a gain of $1.6 million. In
November 1995, the Company acquired certain operations of the CareOne Group
for $22.4 million in cash.
The results of operations of the acquired companies are included in the
Company's 1995 consolidated statement of income from dates of acquisition.
Proforma results of operations are not presented as the impact of the
acquisitions was not significant to the Company's financial statements.
On July 30, 1993, Lifetime Corporation ("Lifetime") was merged into the
Company. As a result, the Company issued approximately 13.5 million shares
(20.3 million shares as restated for the three-for-two stock split declared
on February 16, 1996) of Class B common stock in exchange for all of the
outstanding Lifetime common stock and vested options based upon the
conversion ratio of 1.27 shares (1.91 shares as restated for the three-for-
two stock split declared on February 16, 1996) of Class B common stock for
each share of Lifetime common stock. Substantially all of the Class B common
stock issued in the merger was subsequently converted into common stock. The
merger was accounted for as a pooling of interests and, accordingly, the
consolidated financial statements of the Company were restated for all
periods prior to the merger to combine the accounts and operations of the
Company and Lifetime. Additionally, certain reclassifications were made in
order to conform Lifetime's accounts to the Company's presentation.
In the third quarter of 1993, the Company recorded merger and integration
costs of $80.9 million, consisting of transaction costs of $15 million,
compensation and severance costs of $33 million, asset writedowns of $16
million and integration costs of $17 million. These costs reduced net income
in 1993 by $58.7 million, net of tax, or $.97 per share.
In the last half of 1993, the Company prepaid $136.8 million representing
outstanding principal balances on certain Notes which were assumed as part of
the Lifetime merger. In connection with this early repayment, the Company
paid prepayment penalties, reflected as an extraordinary charge, totaling
$14.7 million, net of income tax benefit of $16.4 million.
In the fourth quarter of 1993, the Company sold National Mentor Inc.
("Mentor"), a subsidiary engaged in the provision of community-based
psychiatric care, for $13.6 million in cash. In conjunction with the sale,
the Company loaned Mentor $6 million in 9% subordinated debt and purchased
9,913 shares of its common stock for $1 million. The Company deferred the
F-8
<PAGE> 38
recognition of the after-tax gain on the sale of $3.9 million until the
Company's interest in the subordinated debt and stock was deemed fully
realizable. As a result of the subsequent resale of Mentor, the previously
deferred gain and related interest income was recognized in 1994, and was
included in revenues.
In 1996, the Company purchased Germany's third-largest staffing services
company, OFFiS Unternehmen fur Zeitarbeit GmbH & Co. KG (OFFiS) for $47.5
million in cash, Kontorsjouren AB, Sweden's third-largest staffing services
company for $7 million in cash and Top Notch Temporary Services, Inc. and
MultiForce Temporary Services, Inc., comprising the largest privately held
staffing operation in the Commonwealth of Puerto Rico, for $5.5 million in
cash plus net assets acquired of approximately $4 million. In 1996, the
Company also purchased two health care businesses for $12.5 million in cash.
Note 3. Fixed Assets, Net
December 31, 1995 January 1, 1995
----------------- ---------------
Furniture and fixtures $ 57,880 $ 49,031
Computer equipment and software 49,275 31,239
Buildings and improvements 40,305 32,527
Machinery and equipment 10,098 12,079
------- -------
157,558 124,876
Less accumulated depreciation
and amortization 64,679 52,137
------- -------
$ 92,879 $ 72,739
======= =======
Note 4. Long-Term Debt
December 31, 1995 January 1, 1995
----------------- ---------------
4-7/8% Convertible Subordinated
Debentures due 2003 $ 125,000 $ 125,000
Revolving credit agreements 55,780 --
------- -------
$ 180,780 $ 125,000
======= =======
In March 1993, the Company issued $125 million of 4-7/8% Convertible
Subordinated Debentures maturing in 2003 which are convertible into the
Company's common stock at $34.80 per share ($23.20 per share as restated for
the three-for-two stock split declared on February 16, 1996).
The Debentures are redeemable in whole or in part at the option of the
Company, together with accrued interest, except that no redemption may be
made prior to May 16, 1996.
The Company has revolving credit agreements with six banks providing for up
to $210.8 million in borrowings and letters of credit with interest rates
based on the London Interbank Offered Rate (LIBOR), the United States prime
F-9
<PAGE> 39
rate, or the Eurocurrency rate. Under the provisions of the agreements, on
December 15, 1996, any amounts outstanding can be converted to a term loan
and amortized over the remaining life of the facilities. The agreements
expire in the year 2000.
The agreements contain various covenants which, among other things, require
the maintenance of certain financial ratios and restrict the incurrence of
liens, additional indebtedness, payment of dividends, purchase or redemption
of stock or warrants, ability to merge, consolidate, or dispose of assets.
As of December 31, 1995, there were $55.8 million in borrowings and $61.1
million in standby letters of credit outstanding.
Interest expense is net of interest income of $3.8 million in 1995, $3
million in 1994, and $2.7 million in 1993.
Note 5. Lease Commitments
The Company rents certain properties under noncancellable, long-term
operating leases which expire at various dates. Certain of these leases
require additional payments for taxes, insurance and maintenance and, in many
cases, provide for renewal options. Rent expense under all leases was
$35,051 in 1995, $37,425 in 1994 and $40,565 in 1993.
Future minimum rental commitments for all noncancellable leases having a
remaining term in excess of one year at December 31, 1995 are as follows:
1996 $30,711
1997 $24,227
1998 $17,922
1999 $12,449
2000 $ 6,982
Thereafter $23,642
Note 6. Shareholders' Equity
On February 16, 1996, the Company's Board of Directors authorized a three-
for-two stock split for all holders of record of its common stock and Class B
common stock as of February 28, 1996.
As of December 31, 1995, a total of 21,444,979 shares of common and Class B
common stock would be issued in connection with the split. A total of $2,145
was reclassified from the Company's additional paid-in capital account to the
Company's common stock account. All references in the financial statements
to average numbers of shares outstanding, related prices, per share amounts
and stock option plan data have been restated to reflect the stock split.
Common stock consists of shares of common stock and Class B common stock as
follows:
December 31, 1995 January 1, 1995 January 2, 1994
----------------- --------------- ---------------
Common stock 50,428,046 32,257,321 29,976,240
Class B common stock 13,906,891 10,113,511 11,319,463
---------- ---------- ----------
64,334,937 42,370,832 41,295,703
========== ========== ==========
F-10
<PAGE> 40
Each share of Class B common stock is convertible into one share of common
stock, has a par value of $.10 and is entitled to ten votes. The Company is
also authorized to issue 250,000 shares of preferred stock; no shares have
been issued.
Lifetime had previously issued warrants to purchase shares of its common
stock in connection with the sale of convertible debentures which Lifetime
subsequently repaid. As a result of the merger, the warrant holders were
entitled to exchange six warrants (four warrants as restated for the three-
for-two stock split declared on February 16, 1996) plus $27.00 for 1.27
Olsten Class B common shares. In July 1995, the Company, as part of the
settlement of a class action lawsuit, reduced from $27.00 to $24.17 ($18.00
to $16.11 as restated for the three-for-two stock split declared on February
16, 1996) the cash payment required to exercise the Company's warrants. At
December 31, 1995, 4,195,000 warrants to purchase 888,000 shares (1,332,000
shares as restated for the three-for-two stock split declared on February 16,
1996) of Olsten Class B common stock, as adjusted for the merger, were
exercisable and expire on October 31, 1996.
Note 7. Stock Plans
In 1994, shareholders of the Company approved the adoption of the 1994 Stock
Incentive Plan ("1994 Plan") under which an aggregate of 3,000,000 shares of
common stock are reserved for issuance upon exercise of options thereunder.
These options may be awarded in the form of incentive stock options ("ISOs")
or non-qualified stock options ("NQSOs"). The option price of an ISO cannot
be less than 100%, and the option price of the NQSO cannot be less than 85%
of the fair market value at the date of the grant. This plan replaced the
1984 Incentive Stock Option Plan ("1984 ISO Plan") and the 1984 Non-Qualified
Stock Option Plan ("1984 NQSO Plan"), which terminated in February 1994
except as to options then outstanding. In 1995, shareholders of the Company
approved amendments to the 1994 Plan which increased the maximum term of
stock options granted under the 1994 Plan from five years to ten years and
extended eligibility under the 1994 Plan to the Company's franchisees and
licensees. Options become cumulatively exercisable commencing one year after
grant in four equal annual installments. At December 31, 1995, there were
options outstanding of 1,117,202 and 408,371 for the 1994 Plan and 1984 ISO
Plan, respectively.
In 1991, shareholders of the Company approved the adoption of the Non-
Qualified Stock Option Plan for Non-Employee Directors and Consultants
("Non-Employee Plan") authorizing the grant of options to outside directors
and consultants to purchase up to an aggregate of 225,000 shares of common
stock. In 1995, shareholders of the Company approved an amendment to the
Non-Employee Plan to increase the maximum term of stock options thereafter
granted under the Non-Employee Plan from five years to ten years. Under the
Non-Employee Plan, options may be granted at prices not less than fair market
value at the date of grant and become exercisable no earlier than six months
from the date of grant. At December 31, 1995, 76,500 options were
outstanding under this plan.
Lifetime maintained four stock option plans, including a Non-Employee
Director Stock Option Plan. Options were granted under all plans at not less
than the fair market value at the date of grant. At the merger date, all of
the currently vested options under these plans were exchanged for Olsten
Class B common stock equal to their net economic value. Remaining
F-11
<PAGE> 41
outstanding options were converted to options for Olsten Class B shares and
are exercisable over various periods not exceeding five years from the date
of grant. At December 31, 1995, 127,190 options were outstanding under the
plans.
IMI maintained three stock option plans, which authorized the grant of
options at not less then the fair market value at the date of grant. At the
acquisition date, all outstanding options were converted to options for
Olsten Class B shares and are exercisable over various periods not exceeding
ten years from their date of grant. At December 31, 1995, 30,743 options
were outstanding under these plans.
A summary of activity under all plans during 1995 is as follows:
Incentive stock options Shares Price
under option per share
------------ ----------
Options outstanding at January 1, 1995 1,255,122 $ 1.74 - 20.66
Granted 596,964 $ 24.83
Exercised (253,449) $ 1.74 - 20.66
Cancelled (86,295) $ 6.22 - 20.66
--------- ------------
Options outstanding at December 31, 1995 1,512,342 $ 4.99 - 24.83
========== ============
Non-qualified stock options
Options outstanding at January 1, 1995 613,983 $ 4.99 - 21.08
Granted 69,978 $ 21.83 - 26.25
Exercised (418,955) $ 4.99 - 21.83
Cancelled (17,344) $ 7.74 - 12.92
---------- ------------
Options outstanding at December 31, 1995 247,662 $ 4.99 - 26.25
========== ============
During 1994 and 1993, options on 658,329 and 2,160,363 shares, respectively,
were exercised under all plans at prices of $1.74 to $17.33 per share.
At December 31, 1995, options for an aggregate of 461,709 shares were
exercisable under all plans and options for an aggregate of 1,978,049 shares
were available for grant (2,599,275 shares at January 1, 1995) under the
plans.
Under an Incentive Restricted Stock Plan amended in 1993, up to 1,312,500
shares of common stock may be granted or sold at prices less than the
prevailing market price to officers, key employees and others subject to
restrictions as to transfer or sale. Shares under the plan are generally
subject to restrictions as to transfer which lapse ratably in three and five
equal annual installments commencing one year from the date of grant,
provided that recipients are continuously employed by the Company. At
December 31, 1995, 446,250 shares were available for future grants.
F-12
<PAGE> 42
In June 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation." The Statement allows companies to
measure compensation cost in connection with employee stock compensation
plans by using a fair value based method or to continue to use an intrinsic
value based method, which generally does not result in compensation cost to
the company. It is the Company's plan to continue using the intrinsic value
based method.
Additional paid-in capital is net of unearned compensation related to
restricted stock of $1 million, $1.7 million and $5 million for 1995, 1994,
and 1993, respectively.
Note 8. Income Taxes
Comparative analysis of the provisions for income taxes before extraordinary
charge follows:
December 31, 1995 January 1, 1995 January 2, 1994
----------------- --------------- ---------------
Current
Federal $48,637 $30,584 $22,925
State and local 6,550 2,635 5,475
Foreign 4,416 2,328 1,775
------- ------- -------
59,603 35,547 30,175
------- ------- -------
Deferred
Federal 3,991 12,332 (11,574)
State and local 974 3,784 (4,079)
------- ------- -------
4,965 16,116 (15,653)
------- ------- -------
$64,568 $51,663 $14,522
====== ====== ======
Reconciliations of the differences between income taxes computed at Federal
statutory rates and provisions for income taxes before extraordinary charge
are as follows:
December 31, 1995 January 1, 1995 January 2, 1994
----------------- --------------- ---------------
Income taxes computed at
Federal statutory tax rate $54,666 $43,017 $ 1,147
State income taxes, net of
Federal benefit 4,891 3,747 1,257
Amortization 2,279 2,404 2,822
Non-deductible merger costs -- -- 8,841
Other, net 2,732 2,495 455
------ ------ ------
$64,568 $51,663 $14,522
====== ====== ======
F-13
<PAGE> 43
Under SFAS No. 109, assets and liabilities acquired in purchase business
combinations are assigned their fair values, and deferred taxes are provided
for lower or higher tax bases. In adopting the provisions of SFAS No. 109,
effective January 4, 1993, the Company adjusted the carrying amounts of its
purchase business acquisitions. Such adjustments reduced goodwill by
approximately $7 million with a corresponding adjustment to deferred taxes.
The cumulative effect of this change in accounting principle on income before
income taxes and on income (loss) before extraordinary charge was not
material.
Deferred tax assets and liabilities are as follows:
December 31, 1995 January 1, 1995
----------------- ---------------
Deferred tax assets
Reserves $16,708 $18,126
Intangible assets 182 1,112
Other 38 459
------- -------
16,928 19,697
------- -------
Deferred tax liabilities
Capitalized software (5,228) (3,073)
Other (1,242) (1,201)
------- -------
(6,470) (4,274)
------- -------
Net deferred tax asset $10,458 $15,423
====== ======
Note 9. Benefit Plans for Permanent Employees
The Company and its subsidiaries maintain qualified and non-qualified defined
contribution retirement plans for its salaried employees which provide for a
partial match of employee savings under the plans and for discretionary
profit sharing contributions based on employee compensation. The Company
also maintains a non-qualified defined benefit retirement program for key
employees and officers which provides supplemental retirement benefits funded
in part by profit sharing contributions.
Company contributions under the above defined contribution plans were
approximately $4.7 million in 1995, $4.5 million in 1994 and $4.4 million in
1993.
Note 10. Business Segment Information
The Company operates in two business segments:
HealthCare Services
The Company provides home health care network management of a wide range of
services, including skilled nursing, home health aides, physical/
occupational/speech therapies, pediatric and perinatal care, rehabilitation
services, infusion therapy and institutional staffing; and also provides
management services to hospital-based home health agencies, including Olsten
on-site managers, systems, policies and procedures.
F-14
<PAGE> 44
Staffing Services
The Company provides staffing for office automation; general office and
administrative services; accounting and legal services; technical and
scientific services; production/ distribution/assembly; marketing support and
teleservices; design, development and maintenance of information systems on
both a project and individual staff supplementation basis; and a wide variety
of managed services for corporations.
Information about the Company's operations, net of merger and integration
costs of $80.9 million in 1993 related to HealthCare Services, included in
Corporate and other, is as follows:
<TABLE>
<CAPTION>
Service sales, Income before
franchise fees, income taxes,
management fees minority interests
and other and extraordinary Identifiable Depreciation Capital
income charge assets and amortization expenditures
------ -------- ------ ---------------- ------------
Year ended December 31, 1995
- ----------------------------
<S> <C> <C> <C> <C> <C>
HealthCare Services $1,083,228 $ 75,927 $ 468,810 $ 18,714 $ 14,593
Staffing Services 1,425,303 69,127 273,868 5,659 13,476
Corporate and other 10,344 11,134 149,240 4,995 17,617
--------- ------- ------- -------- -------
$2,518,875 $156,188 $ 891,918 $ 29,368 $ 45,686
========= ======= ======= ======== =======
Year ended January 1, 1995
- --------------------------
HealthCare Services $1,147,336 $ 64,836 $ 382,091 $ 17,027 $ 14,251
Staffing Services 1,145,971 47,278 179,128 3,063 5,865
Corporate and other 14,360 10,791 178,759 3,707 22,130
--------- ------- ------- ------ ------
$2,307,667 $122,905 $ 739,978 $ 23,797 $ 42,246
========= ======= ======= ====== =======
Year ended January 2, 1994
- --------------------------
HealthCare Services $1,278,219 $ 48,002 $ 201,458 $ 17,655 $ 15,584
Staffing Services 921,989 29,447 147,524 2,994 3,503
Corporate and other (3,530) (74,170) 352,056 5,288 11,042
--------- ------- ------- -------- -------
$2,196,678 $ 3,279 $ 701,038 $ 25,937 $ 30,129
========= ======= ======= ======= =======
</TABLE>
F-15
<PAGE> 45
Note 11. Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Year ended December 31, 1995
$ $ $ $
<S> <C> <C> <C> <C>
Service sales, franchise fees,
management fees and other income 590,350 617,799 647,317 663,409
Gross profit 177,167 186,588 197,291 200,510
Net income 19,092 21,321 23,855 26,201
SHARE INFORMATION:
Primary earnings per share .29 .33 .37 .40
Fully diluted earnings per share .29 .31 .35 .38
Year ended January 1, 1995
Service sales, franchise fees,
management fees and other income 547,775 573,900 591,004 594,988
Gross profit 164,870 166,660 174,099 179,978
Net income 14,546 16,567 18,524 21,605
SHARE INFORMATION:
Primary earnings per share .23 .26 .29 .33
Fully diluted earnings per share .23 .25 .27 .32
</TABLE>
F-16
<PAGE> 46
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of Olsten Corporation:
We have audited the accompanying consolidated balance sheets of
OLSTEN CORPORATION AND SUBSIDIARIES as of December 31, 1995 and January 1,
1995 and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
OLSTEN CORPORATION AND SUBSIDIARIES as of December 31, 1995 and January 1,
1995 and the consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 7, 1996
F-17
<PAGE> 47
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
__________
We consent to the incorporation by reference in the
Registration Statements of Olsten Corporation on Form S-8
(Registration Nos. 33-9804, 33-41603, 33-61761, 33-61763, 33-
64539, 33-66782 and 33-66784) and on Form S-3 (Registration Nos.
33-54463, 33-64267 and 33-66016) of our report dated February 7,
1996, on our audits of the consolidated financial statements of
OLSTEN CORPORATION AND SUBSIDIARIES as of December 31, 1995 and
January 1, 1995, and for each of the three years in the period
ended December 31, 1995, which report is included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
New York, New York
February 29, 1996
F-18
<PAGE> 48
EXHIBIT INDEX
-------------
Exhibit No. Description How Filed
----------- ----------- ---------
3(a) Restated Certificate of Incorporated by
Incorporation of Registrant, as reference
amended, filed as Exhibit 4.1 to
Registrant's Registration Statement
on Form S-8 (File No. 33-61761), is
incorporated herein by reference.
3(b) By-Laws of Registrant, filed as Incorporated by
Exhibit 3(b) to Registrant's Annual reference
Report on Form 10-K for the year
ended January 2, 1994, are
incorporated herein by reference.
4(a) Restated Certificate of Incorporated by
Incorporation of Registrant, as reference
amended, filed as Exhibit 3(a).
4(b) By-Laws of Registrant, filed as Incorporated by
Exhibit 3(b). reference
4(c) Indenture dated as of March 15, Incorporated by
1993 between Registrant and Bankers reference
Trust Company, as Trustee, relating
to Registrant's 4-7/8% Convertible
Subordinated Debentures due 2003,
filed as Exhibit 4 to Registrant's
Quarterly Report on Form 10-Q for
the quarter ended April 4, 1993, is
incorporated herein by reference.
4(d) Warrant Agreement between Lifetime Incorporated by
Corporation and American Stock reference
Transfer and Trust Company dated
November 4, 1986, as amended as of
December 11, 1989 and July 23,
1993, filed as Exhibit 1 to
Registrant's Registration Statement
on Form 8-A dated July 23, 1993, is
incorporated herein by reference.
*10(a) Registrant's 1984 Incentive Stock Incorporated by
Option Plan, as amended, filed as reference
Exhibit 10(a) to Registrant's
Annual Report on Form 10-K for the
year ended January 2, 1994, is
incorporated herein by reference.
_______________
*Management contract or compensatory plan or arrangement.
i
<PAGE> 49
EXHIBIT INDEX
-------------
Exhibit No. Description How Filed
----------- ----------- ---------
*10(b) Registrant's 1984 Non-Qualified Incorporated by
Stock Option Plan, as amended, reference
filed as Exhibit 10(b) to
Registrant's Annual Report on Form
10-K for the year ended January 2,
1994, is incorporated herein by
reference.
*10(c) Registrant's Incentive Restricted Incorporated by
Stock Plan, as amended, filed as reference
Exhibit 10(e) to Registrant's
Annual Report on Form 10-K for the
year ended January 2, 1994, is
incorporated herein by reference.
*10(d) Form of agreement under Incorporated by
Registrant's Incentive Restricted reference
Stock Plan, filed as Exhibit 10(g)
to Registrant's Annual Report on
Form 10-K for the year ended
December 30, 1990, is incorporated
herein by reference.
10(e) Amended and Restated Credit Incorporated by
Agreement dated as of September 9, reference
1994 among Registrant and certain
of its Subsidiaries signatory
thereto, the Banks signatory
thereto and The Chase Manhattan
Bank, N.A., as Agent, covering $200
million credit facility, filed as
Exhibit 10(e) to Registrant's
Annual Report on Form 10-K for the
year ended January 1, 1995, is
incorporated herein by reference.
10(f) First, Second and Third Amendments Filed herewith
to Amended and Restated Credit
Agreement dated as of September 9,
1994.
10(g) Credit Agreement dated as of Filed herewith
December 22, 1995 among Registrant,
certain of its subsidiaries
signatory thereto and Fleet Bank
covering $10.8 million credit
facility.
_______________
*Management contract or compensatory plan or arrangement.
ii
<PAGE> 50
EXHIBIT INDEX
-------------
Exhibit No. Description How Filed
----------- ----------- ---------
*10(h) Registrant's 1990 Non-Qualified Incorporated by
Stock Option Plan for Non-Employee reference
Directors and Consultants, as
amended and restated, is
incorporated by reference to
Exhibit C to Registrant's
definitive Proxy Statement with
respect to its 1995 Annual Meeting
of Shareholders.
*10(i) Registrant's Supplemental Incorporated by
Retirement Plan for Key Executives reference
filed as Exhibit 10(k) to
Registrant's Annual Report on Form
10-K for the year ended January 3,
1993, is incorporated herein by
reference.
*10(j) Registrant's Executive Voluntary Incorporated by
Deferred Compensation Plan and reference
Trust Agreement between Registrant
and Prudential Trust Company, filed
as Exhibit 10(k) to Registrant's
Annual Report on Form 10-K for the
year ended January 2, 1994, is
incorporated herein by reference.
*10(k) Registrant's Retirement Plan for Incorporated by
Outside Directors and Consultants, reference
filed as Exhibit 10(l) to
Registrant's Annual Report on Form
10-K for the year ended January 2,
1994, is incorporated herein by
reference.
*10(l) Registrant's Deferred Compensation Incorporated by
Plan for Outside Directors, filed reference
as Exhibit 10(m) to Registrant's
Annual Report on Form 10-K for the
year ended January 2, 1994, is
incorporated herein by reference.
*10(m) 1987 Stock Option Plan, as amended, Incorporated by
of Lifetime Corporation, filed as reference
Exhibit 10(c) to Lifetime
Corporation's Annual Report on Form
10-K for the year ended December
31, 1992, is incorporated herein by
reference.
_______________
*Management contract or compensatory plan or arrangement.
iii
<PAGE> 51
EXHIBIT INDEX
-------------
Exhibit No. Description How Filed
----------- ----------- ---------
*10(n) 1989 Non-Employee Directors Stock Incorporated by
Option Plan, as amended, of reference
Lifetime Corporation, filed as
Exhibit 10(d) to Lifetime
Corporation's Annual Report on Form
10-K for the year ended December
31, 1992, is incorporated herein by
reference.
*10(o) Employment Agreement dated March Incorporated by
28, 1994 between Registrant and reference
Frank N. Liguori, filed as Exhibit
10(q) to Registrant's Annual Report
on Form 10-K for the year ended
January 2, 1994, is incorporated
herein by reference.
*10(p) Agreement dated November 8, 1993 Incorporated by
between Registrant and Frank N. reference
Liguori covering incentive award
under Incentive Restricted Stock
Plan and amendment thereto dated
March 27, 1994, filed as Exhibit
10(r) to Registrant's Annual Report
on Form 10-K for the year ended
January 2, 1994, is incorporated
herein by reference.
*10(q) Form of change in control agreement Incorporated by
between Registrant and each of reference
Robert A. Fusco, Richard A. Piske,
III and Gerald J. Kapalko, filed as
Exhibit 10(o) to Registrant's
Annual Report on Form 10-K for the
year ended January 1, 1995, is
incorporated herein by reference.
*10(r) Registrant's 1994 Stock Incentive Incorporated by
Plan, as amended and restated, is reference
incorporated by reference to
Exhibit B to Registrant's
definitive Proxy Statement with
respect to its 1995 Annual Meeting
of Shareholders.
_______________
*Management contract or compensatory plan or arrangement.
iv
<PAGE> 52
EXHIBIT INDEX
-------------
Exhibit No. Description How Filed
----------- ----------- ---------
*10(s) Registrant's Executive Officer Incorporated by
Bonus Plan is incorporated by reference
reference to Exhibit C to
Registrant's definitive Proxy
Statement with respect to its 1994
Annual Meeting of Shareholders.
10(t) Lease Agreement dated as of April Filed herewith
1, 1995 between Suffolk County
Industrial Development Agency and
OLS Holdings, Inc. covering
headquarters facility at 175 Broad
Hollow Road, Melville, New York.
21 Subsidiaries of Registrant. Filed herewith
23 Consent of Coopers & Lybrand Filed herewith
L.L.P., independent auditors,
appearing on page F-18 of this
Annual Report on Form 10-K.
27 Financial Data Schedule. Filed herewith
_______________
*Management contract or compensatory plan or arrangement.
v
<PAGE> 1
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment"), dated as of March 2, 1995, among THE OLSTEN
CORPORATION, a corporation organized under the laws of the State of
Delaware ("Olsten") and certain of its Subsidiaries signatory hereto
(collectively with Olsten, the "Co-Borrowers"), each of the banks
which is a signatory hereto (individually, a "Bank", and
collectively, the "Banks") and THE CHASE MANHATTAN BANK, N.A., a
national banking association organized under the laws of the United
States of America, as agent for the Banks (in such capacity,
together with its successors in such capacity, the "Agent").
RECITALS:
--------
The parties hereto entered into a certain Amended and
Restated Credit Agreement dated as of September 9, 1994 (the "Credit
Agreement").
2. The parties hereto desire to amend the Credit
Agreement in certain respects on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
3. AMENDMENTS TO CREDIT AGREEMENT.
1.1 Section 8.08(e) of the Credit Agreement is hereby
deleted in its entirety and the following is substituted in its
place:
"(e) quarterly, on or before the 28th day of
each calendar month which immediately succeeds
a fiscal quarter end of the Borrower, through
the Termination Date, a duly completed and fully
executed Borrowing Base Certificate for the last
<PAGE> 2
day of each such fiscal quarter, together with
summary aging reports (including a breakdown of
Medicare and Medicaid Receivables), in form and
substance satisfactory to the Agent, provided that
the foregoing certificate and reports relating to
the fiscal quarter ending January 1, 1995 may be
furnished directly to each of the Banks on or
prior to March 31, 1995;"
1.2 Section 9.04 of the Credit Agreement is hereby
deleted in its entirety and the following is substituted in its
place:
"Section 9.04. Sale of Assets. Sell, lease,
assign, transfer or otherwise dispose of, or permit
any of its Subsidiaries to sell, lease, assign,
transfer or otherwise dispose of, any of its now
owned or hereafter acquired assets (including,
without limitation, shares of stock and indebtedness
of such Subsidiaries, receivables and leasehold
interests), except: (a) for assets disposed of in
the ordinary course of business; (b) the sale or
other disposition of assets no longer used or useful
in the conduct of its business; (c) that any
Co-Borrower may sell, lease, assign, or otherwise
transfer its assets to another Co-Borrower; (d)
for dispositions of shares of capital stock in
connection with a transaction permitted by Section
9.06; (e) sales or dispositions of assets in arm's
length transactions provided that the aggregate net
proceeds of all such sales shall not exceed $5,000,000
in any fiscal year (in addition to the transactions
described in any of subsections (a)-(d), (f) or (g)
of this Section 9.04); (f) the transactions described
in Schedule V hereto; and (g) the sale of all of the
issued and outstanding shares of capital stock of
Healthcare Staff Resources, Inc. on or prior to March
10, 1995 by Kimberly Services, Inc. pursuant to a
certain Stock Purchase and Sale Agreement (the "Stock
Purchase Agreement") dated as of February 17, 1995
between Kimberly Services, Inc. and Careerstaff
Unlimited, Inc., provided that no Default or Event of
Default shall occur under or with respect to any other
section of this Agreement as a result of or after
giving effect to the consummation of the transactions
contemplated by the Stock Purchase Agreement."
-2-
<PAGE> 3
1.3 Section 9.06 of the Credit Agreement is hereby
deleted in its entirety and the following is substituted in its
place:
"Section 9.06. Mergers, Etc. Merge or
consolidate with, or sell, assign, lease or
otherwise dispose of (whether in one transaction
or in a series of transactions) all or
substantially all of its assets (whether now
owned or hereafter acquired) to, any person, or
acquire all or substantially all of the assets
or the business of any Person (or enter into any
agreement to do any of the foregoing), or permit
any of its Subsidiaries to do so except: (a) that
any such Co-Borrower or Subsidiary may merge into
or transfer assets to a Co-Borrower; (b) that a
Co-Borrower may effect any Acceptable Acquisition
permitted by Section 9.07 by means of a merger or
otherwise provided that if such Acceptable Acquisition
is effected by means of a merger, the Co-Borrower
shall be the surviving entity, and further provided
that in any merger transaction referenced in either
(a) or (b) above involving Olsten, Olsten shall be
the surviving entity; and (c) for a transaction
permitted by Section 9.04 hereof."
1.4 Effective upon (and assuming) the closing of the
transactions contemplated by the Stock Purchase Agreement on or
prior to March 10, 1995, Healthcare Staff Resources, Inc.
("Healthcare Staff") shall be released as a Co-Borrower from the
Credit Agreement and neither it nor its properties shall thereafter
be subject or subjected to the Credit Agreement. Healthcare Staff's
release as a Co-Borrower from the Credit Agreement shall be
evidenced from time to time by a certain Confirmation of Release,
substantially in the form attached hereto as Exhibit A (the
"Confirmation of Release"), which shall be executed and delivered by
the Agent to Kimberly Services, Inc. at the request of the Co-
Borrowers.
-3-
<PAGE> 4
4. CONDITION TO EFFECTIVENESS OF SECTIONS 1.2, 1.3 AND 1.4.
4. The Amendments to the Credit Agreement set forth in
Sections 1.2, 1.3 and 1.4 hereof shall only become effective and be
deemed in effect upon the closing of the transactions contemplated
by the Stock Purchase Agreement on or prior to March 10, 1995.
5. ADDITIONAL TERMS.
3.1 The Co-Borrowers each hereby represent and warrant
to the Banks that (a) the execution, delivery and performance by
each of the Co-Borrowers of this Amendment and the Stock Purchase
Agreement, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary
corporate action, (b) the resolutions and corporate documents
delivered to the Agent pursuant to Section 6.01(a)(ii) of the Credit
Agreement on the date thereof have not been amended, revoked or
rescinded at any time on or subsequent to the date thereof and are
in effect at the date hereof, and (c) after giving effect to the
transactions contemplated hereby or referenced herein, the
representations and warranties in Article 7 of the Credit Agreement
are true and correct on the date hereof as though made on and as of
such date, and no event has occurred and is continuing, or will
occur and be continuing after giving effect to the consummation of
the transactions contemplated by the Stock Purchase Agreement, which
constitutes or will constitute a Default or Event of Default. The
Agent shall have received, on or before the date of this Amendment,
-4-
<PAGE> 5
a certificate of a duly authorized officer of each of the Co-
Borrowers, dated the date hereof, stating that the foregoing is true
and correct.
3.2 The parties hereto agree that all terms and
conditions of the Credit Agreement and the Facility Documents not
amended hereunder or pursuant hereto shall remain in full force and
effect.
3.3 All capitalized terms used herein and not defined
herein shall have the meanings given to them in the Credit
Agreement.
3.4 This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and
the same instrument, and any party hereto may execute this Amendment
by signing any such counterpart.
3.5 This Amendment shall be governed by, and interpreted
and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment to be duly executed as of the day and year first above
written.
CO-BORROWERS:
THE OLSTEN CORPORATION
OLSTEN STAFFING SERVICES, INC.
OLSTEN KIMBERLY QUALITYCARE, INC.
OLSTEN CERTIFIED HEALTHCARE CORP.
OLSTEN SERVICES OF NEW YORK, INC.
OLSTEN OF WESTCHESTER, INC.
OLSTEN SERVICES OF DELMAR, INC.
OLS HOLDINGS, INC.
OLSTEN HOME HEALTHCARE, INC.
NEW YORK HEALTHCARE SERVICES, INC.
ALL MEDICARE HOME HEALTH AGENCY, INC.
-5-
<PAGE> 6
AMERICAN HOME HEALTH CARE, INC.
FLYING NURSES, INC.
GOLD COAST SOUTH HOME HEALTH AGENCY, INC.
GULF COAST HOME HEALTH SERVICES CENTRAL, INC.
GULF COAST HOME HEALTH SERVICES EAST, INC.
GULF COAST HOME HEALTH SERVICES NORTH, INC.
GULF COAST HOME HEALTH SERVICES OF FLORIDA, INC.
GULF COAST HOME HEALTH SERVICES SOUTH, INC.
GULF COAST HOME HEALTH SERVICES SOUTHWEST, INC.
GULF COAST HOME HEALTH SERVICES WEST, INC.
HHC MANAGEMENT, INC.
HEALTHCARE STAFF RESOURCES, INC.
KIMBERLY HOME HEALTH CARE, INC.
KIMBERLY QUALITY CARE INFUSION THERAPY SERVICES, INC.
KIMBERLY SERVICES, INC.
KIMBERLY SERVICES OF NEW YORK, INC.
QC-MEDI CALIFORNIA, INC.
QC MEDI-ILLINOIS, INC.
QC MEDI-LOUISIANA, INC.
QC-MEDI MASS, INC.
QC-MEDI OF MICHIGAN, INC.
QC-MEDI NEW YORK, INC.
QC MEDI-TENN, INC.
QUALITY CARE-USA, INC.
QUALITY CARE, INC.
QUALITY CARE HEALTH SERVICES, INC.
QUALITY CARE HOME HEALTH, INC.
QUALITY CARE OF CONNECTICUT, INC.
QUALITY CARE SERVICE CORP.
RAINIER HOME HEALTH CARE, INC.
SUPERIOR CARE, INC.
UHH HOME SERVICES CORPORATION
AMERICAN SERVICE BUREAU, INC.
OLSTEN HOLDING COMPANY
By:_____________________________________
Name: Laurin L. Laderoute, Jr.
Title: Vice President for all of the above Co-Borrowers
AGENT:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:_____________________________________
Name: Richard G. Williams
Title: _________________________________
-6-
<PAGE> 7
BANKS:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:_____________________________________
Name: Richard G. Williams
Title: _________________________________
CHEMICAL BANK
By:______________________________________
Name: Sallyanne Ballweg
Title: __________________________________
BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY
By:_________________________________________
Name: Linda Jean Cole
Title: _____________________________________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
By:_________________________________________
Name: Brock Harris
Title: _____________________________________
FLEET BANK
By:_________________________________________
Name: Phil Davi
Title: _____________________________________
NATWEST BANK N.A.
By:_________________________________________
Name: Chris Mendelsohn
Title: _____________________________________
-7-
<PAGE> 8
EXHIBIT A
---------
CONFIRMATION OF RELEASE
The Chase Manhattan Bank, N.A., as Agent for the six Banks
signatory to that certain Amended and Restated Credit Agreement
dated as of September 9, 1994, as amended ("Credit Agreement"),
among The Olsten Corporation and certain of its subsidiaries
signatory thereto, DOES HEREBY CONFIRM that, effective upon the
closing of the transactions contemplated by that certain Stock
Purchase and Sale Agreement dated as of February 17, 1995 by and
between Kimberly Services, Inc. and Careerstaff Unlimited, Inc. on
March 3, 1995, Healthcare Staff Resources, Inc., a Texas
corporation, shall be deemed released as a party from the Credit
Agreement and neither it nor its properties shall be deemed subject
or subjected to the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this
instrument as of the 3rd day of March, 1995.
THE CHASE MANHATTAN BANK, N.A., as Agent
By_______________________________________
Richard G. Williams
Vice President
<PAGE> 9
CONFIRMATION OF RELEASE
The Chase Manhattan Bank, N.A., as Agent for the six Banks
signatory to that certain Amended and Restated Credit Agreement
dated as of September 9, 1994, as amended ("Credit Agreement"),
among The Olsten Corporation and certain of its subsidiaries
signatory thereto, DOES HEREBY CONFIRM that, effective upon the
closing of the transactions contemplated by that certain Stock
Purchase and Sale Agreement dated as of February 17, 1995 by and
between Kimberly Services, Inc. and Careerstaff Unlimited, Inc. on
March 3, 1995, Healthcare Staff Resources, Inc., a Texas
corporation, shall be deemed released as a party from the Credit
Agreement and neither it nor its properties shall be deemed subject
or subjected to the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this
instrument as of the 3rd day of March, 1995.
THE CHASE MANHATTAN BANK, N.A., as Agent
By_______________________________________
Richard G. Williams
Vice President
<PAGE> 10
EXHIBIT B
---------
SECRETARY'S CERTIFICATE
-----------------------
I, Laurin L. Laderoute, Jr., the duly elected Secretary
of each of the corporations listed on EXHIBIT A attached hereto
(each of such corporations being hereinafter referred to as a "Co-
Borrower"), in connection with the granting of certain waivers to
that certain FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT dated as of March 2, 1995 (as so amended, the "Credit
Agreement") among THE OLSTEN CORPORATION and certain of its
Subsidiaries signatory thereto, the Banks signatory thereto and THE
CHASE MANHATTAN BANK, N.A., as Agent, do hereby certify that:
1. The execution, delivery and performance by the Co-
Borrowers, the Subsidiaries of the Co-Borrowers and the Affiliates
of the Co-Borrowers which are or may be party to the Agreement (as
such term is defined in the attached waiver letter), or any of the
agreements, documents and instruments which may be executed, entered
into or delivered in connection with transactions contemplated
thereby, and the consummation of such transactions, have been or
will be duly authorized by all necessary corporate action.
2. The certificate or articles of incorporation and the
by-laws of each such Co-Borrower, copies of which were delivered to
the Banks and certified by the undersigned pursuant to Section
6.01(a)(ii) of the Original Agreement on the date thereof, have not
been amended, modified, revoked or rescinded at any time on or
subsequent to the date thereof and are in effect at the date hereof.
3. The representations and warranties in Article 7 of
the Credit Agreement are true and correct in all material respects
on the date hereof as though made on and as of such date (except
when such representation or warranty by its terms relates to a
specific date other than the date made), and no event has occurred
and is continuing, or will, after giving effect to the waivers which
are the subject of the attached letter, occur and be continuing upon
the consummation of the transactions contemplated by the Agreement,
which constitutes or will constitute a Default or an Event of
Default.
6. No material adverse change has occurred in the
business, financial condition or operations of the Co-Borrowers,
taken as a whole, since the date of the most recent financial
statements of the Co-Borrowers delivered to the Agent pursuant to
the Credit Agreement.
7. All capitalized terms used herein and not
defined herein shall have the meanings assigned to them in the
Credit Agreement.
<PAGE> 11
IN WITNESS WHEREOF, I have signed this Certificate on this
____ day of March, 1995.
______________________________
Laurin L. Laderoute, Jr.
<PAGE> 12
EXHIBIT A
---------
THE OLSTEN CORPORATION
OLSTEN STAFFING SERVICES, INC.
OLSTEN KIMBERLY QUALITYCARE, INC.
OLSTEN CERTIFIED HEALTHCARE CORP.
OLSTEN SERVICES OR NEW YORK, INC.
OLSTEN OF WESTCHESTER, INC.
OLSTEN SERVICES OF DELMAR, INC.
OLS HOLDINGS, INC.
OLSTEN HOME HEALTHCARE, INC.
NEW YORK HEALTHCARE SERVICES, INC.
ALL MEDICARE HOME HEALTH AGENCY, INC.
AMERICAN HOME HEALTH CARE, INC.
FLYING NURSES, INC.
GOLD COAST SOUTH HOME HEALTH AGENCY, INC.
GULF COAST HOME HEALTH SERVICES CENTRAL, INC.
GULF COAST HOME HEALTH SERVICES EAST, INC.
GULF COAST HOME HEALTH SERVICES NORTH, INC.
GULF COAST HOME HEALTH SERVICES OF FLORIDA, INC.
GULF COAST HOME HEALTH SERVICES SOUTHWEST, INC.
GULF COAST HOME HEALTH SERVICES WEST, INC.
HHC MANAGEMENT, INC.
HEALTHCARE STAFF RESOURCES, INC.
KIMBERLY HOME HEALTH CARE, INC.
KIMBERLY QUALITY CARE INFUSION THERAPY SERVICES, INC.
KIMBERLY SERVICES, INC.
KIMBERLY SERVICES OF NEW YORK, INC.
QC-MEDI CALIFORNIA, INC.
QC MEDI-ILLINOIS, INC.
QC MEDI-LOUISIANA, INC.
QC-MEDI MASS, INC.
QC-MEDI OF MICHIGAN, INC.
QC-MEDI NEW YORK, INC.
QC MEDI-TENN, INC.
QUALITY CARE-USA, INC.
QUALITY CARE, INC.
QUALITY CARE HEALTH SERVICES, INC.
QUALITY CARE HOME HEALTH, INC.
QUALITY CARE OF CONNECTICUT, INC.
QUALITY CARE SERVICE CORP.
RAINIER HOME HEALTH CARE, INC.
SUPERIOR CARE, INC.
UHH HOME SERVICES CORPORATION
AMERICAN SERVICE BUREAU, INC.
OLSTEN HOLDING COMPANY
<PAGE> 13
EXHIBIT C
---------
INCUMBENCY CERTIFICATE
----------------------
I, William P. Costantini, DO HEREBY CERTIFY that I am the
duly elected Senior Vice President of The Olsten Corporation, a
Delaware corporation (the "Company"), and Senior Vice President and
Assistant Secretary to each of the other co-borrowers (the "Other
Co-Borrowers") signatory to that certain First Amendment to Amended
and Restated Credit Agreement dated as of March 2, 1995 among the
Company, the Other Co-Borrowers, The Chase Manhattan Bank, N.A. (as
a Bank and as Agent) and the other Banks signatory thereto, and that
the following person is now and has been a duly elected, qualified
and acting officer of the Company and each of the Other Co-Borrowers
holding the offices set forth opposite his name and that signature
set forth opposite his name is the genuine signature of such person:
Name Office Signature
---- ------ ---------
Laurin L. Laderoute, Jr. Vice President and
Secretary of the
Company and each of
the Other Co-Borrowers ________________
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd
day of March, 1995.
____________________________________
William P. Costantini
Senior Vice President and
Assistant Secretary
I, Laurin L. Laderoute, Jr., Vice President and Secretary
of the Company and each of the Other Co-Borrowers, DO HEREBY CERTIFY
that William P. Costantini is the duly elected Senior Vice President
of the Company and Senior Vice President and Assistant Secretary of
each of the Other Co-Borrowers and that the signature set forth
immediately above is his genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd
day of March, 1995.
__________________________________
Laurin L. Laderoute, Jr.
Vice President and Secretary
<PAGE> 14
SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment"), dated as of September 28, 1995, among OLSTEN CORPORATION,
a corporation organized under the laws of the State of Delaware ("Olsten")
and certain of its Subsidiaries signatory hereto (collectively with Olsten,
the "Co-Borrowers"), each of the banks which is a signatory hereto
(individually, a "Bank", and collectively, the "Banks") and THE CHASE
MANHATTAN BANK, N.A., a national banking association organized under the laws
of the United States of America, as agent for the Banks (in such capacity,
together with its successors in such capacity, the "Agent").
RECITALS:
--------
A. The parties hereto entered into a certain Amended and Restated
Credit Agreement, dated as of September 9, 1994 (the "Credit Agreement"),
which Credit Agreement was amended by a certain First Amendment to Amended
and Restated Credit Agreement, dated as of March 2, 1995 (the "First
Amendment").
B. The parties hereto desire to further amend the Credit Agreement in
certain respects on the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. AMENDMENTS TO CREDIT AGREEMENT.
(a) Section 8.08 is hereby amended to change the heading of
subsection "(o)" thereof to "(p)", and to add a new subsection "(o)", as
follows:
"(o) promptly after the occurrence of any Acceptable Acquisition,
notice of the identity of any Acceptable Acquisition and such other
information as is included in the press or other public releases
disseminated with regard to the Acceptable Acquisition; and "
<PAGE> 15
(b) The sum "$1,000,000" set forth in the sixth line of
Section 9.02(m) of the Credit Agreement is hereby deleted, and the sum
"$20,000,000" is hereby substituted in its place.
(c) Section 9.03 of the Credit Agreement is hereby deleted
in its entirety, and the following is substituted in its place:
"Section 9.03. Investments. Notwithstanding anything contained
in this Agreement to the contrary, make, or permit any ofits
Subsidiaries to make, any loan or advance to any Person or purchase
or otherwise acquire or redeem, or permit any such Subsidiary to
purchase or otherwise acquire, any capital stock, assets,
obligations or other securities of, make any capital contribution
to, or otherwise invest in, or acquire any interest in (each of the
foregoing, an "Investment"), any Person (including, without
limitation, any Co-Borrower or any Subsidiary or Affiliate of any
Co-Borrower), except (a) any of the following Investments: (i)
obligations issued or guaranteed by states or municipalities within
the United States of America and rated at least A-1 by Standard &
Poors or an equivalent rating by another recognized credit rating
agency approved by the Required Banks (an "Equivalent Rating");
(ii) obligations issued or guaranteed by the United States of
America or any agency or subdivision thereof, the payment or
guarantee of which constitutes a full faith and credit obligation
of the United States of America; (iii) certificates of deposit,
time deposits, Eurodollar certificates of deposit, bankers
acceptances and other "money market instruments" issued by any
bank, trust company or financial institution organized under the
laws of the United States of America or any state thereof (or, in
the case of Eurodollar certificates of deposit, a branch of any
such bank, trust company or financial institution) having capital
and surplus in an aggregate amount not less than $200,000,000 and
rated (i.e., the instrument) at least A-1 by Standard & Poors or
an Equivalent Rating, or by any of the Banks, or by any bank, trust
company or financial institution organized under the laws of a
jurisdiction other than the United States of America or any state
thereof having capital and surplus in an aggregate amount not less
than $200,000,000 and rated (i.e., the instrument) at least A-1 by
Standard & Poors or an Equivalent Rating; (iv) commercial paper
rated at least Prime-1 by Moody's Investor Services or A-1 by
Standard & Poors; (v) repurchase agreements entered into with any
bank, trust company or financial institution organized under the
laws of the United States of America or any state thereof having
capital and surplus in an aggregate amount not less than
$200,000,000, or with any of the Banks, or with any bank, trust
company or financial institution organized under the laws of a
jurisdiction other than the United States of America or any state
thereof having capital and surplus in an aggregate amount not less
than $200,000,000, and which (with respect to any such repurchase
-2-
<PAGE> 16
agreement referred to in this Section 9.03(v)) are fully secured
by obligations of the type described in Section 9.03(ii) hereof and
(vi) Investments, other than of any of the types referenced in
(a)(i)-(v) above or (b)-(f) below, which are of the same general
nature as the Co-Borrowers' Investments existing on the date
hereof, including, without limitation, loans to franchisees or
licensed area representatives of the Co-Borrowers or any of them,
provided that the recipient or beneficiary of any such Investment
referred to in this Section 9.03(a)(vi) is not an Affiliate of the
Co-Borrowers or any of them, and further provided that the
aggregate of such Investments (i.e., those referenced in this
clause (vi)) do not, at any time, in any case or in the aggregate,
exceed $20,000,000; and provided that in the case of any of the
Investments referred to in clauses (i), (ii), (iii) and (iv) above,
each such Investment matures or is maturing or being due or payable
in full not more than one year after the relevant Person's
acquisition thereof; (b) Acceptable Acquisitions with respect to
which the amounts paid or payable (which amount includes cash,
notes, issuance of equity securities and the assumption of debt)
do not at any time, in any case or in the aggregate, exceed
$125,000,000 during fiscal year 1995 (excluding the IMI and Norsk
Personal Gruppen acquisition) and $100,000,000 during any fiscal
year of Olsten thereafter during the term of this Agreement; (c)
Investments (including by the purchase of equity securities) to or
in non-Subsidiary entities that are Affiliates of the Co-Borrowers,
or any of them, provided that such entities are engaged in the
business of providing human resource services, including without
limitation, health care services, related office management
services or related businesses, and that such entities do not
become Subsidiaries of the Co-Borrowers or any of them as a result
of such loans, advances or investments; (d) Investments to or in
any Subsidiary that is not a Co-Borrower; provided, however, that
notwithstanding anything contained in this Agreement to the
contrary,in the case of any of the Investments referenced in either
of clauses (c) or (d) above, such Investments do not, at any time,
in any case or in the aggregate (i.e., any such Investments
referenced in clause (c) above plus any such Investments referenced
in clause (d) above), exceed $20,000,000; (e) Investments in
Subsidiaries for the purpose of making Acceptable Acquisitions with
respect to which the amounts paid or payable (which amount includes
cash, notes, issuance of equity securities and the assumption of
debt) do not at any time, in any case or in the aggregate, exceed
$100,000,000 during any fiscal year of Olsten; and (f) the
Investments described in paragraph A of Schedule V hereto.
For the purposes of clauses (c) and (e) above, the Acceptable
Acquisitions set forth in Schedule A to the Second Amendment to
Amended and Restated Credit Agreement shall be included in the
calculations of the amount of Acceptable Acquisitions for the
fiscal year of Olsten ending December 31, 1995.
Notwithstanding anything to the contrary in the foregoing
paragraphs, for the purpose hereof, the aggregate of all Acceptable
Acquisitions and Investments in Subsidiaries may not exceed
$100,000,000 during any fiscal year of Olsten."
-3-
<PAGE> 17
Section 9.04(e) of the Credit Agreement is hereby deleted in
its entirety, and the following is substituted in its place:
"(e) sales or dispositions of assets in arm's length transactions,
provided that the aggregate net proceeds of all such sales shall
not exceed $50,000,000 in any fiscal year;"
2. IDENTITY OF CO-BORROWERS.
The identity of the Co-Borrowers obligated under the Credit
Agreement shall be amended to include only those listed as signatories to
this Amendment, and those required to become Co-Borrowers under the Credit
Agreement. Resolutions and corporate documentation for each new Co-Borrower,
or Co-Borrower which has undergone a corporate name change, have been
delivered to the Agent pursuant to Section 6.01(a)(ii) of the Credit
Agreement as of the date hereof.
3. ADDITIONAL TERMS.
3.1 The Co-Borrowers each hereby represent and warrant to the
Banks that (a) the execution, delivery and performance by each of the Co-
Borrowers of this Amendment, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action, (b) the resolutions and corporate documents delivered to the Agent
pursuant to Section 6.01(a)(ii) of the Credit Agreement on the date thereof
have not been amended, revoked or rescinded at any time on or subsequent to
the date thereof and are in effect at the date hereof, and (c) after giving
effect to the transactions contemplated hereby or referenced herein, the
representations and warranties in Article 7 of the Credit Agreement are true
and correct on the date hereof as though made on and as of such date, and no
event has occurred and is continuing, which constitutes or will constitute
a Default or Event of Default. The Agent shall have received, on or before
the date of this Amendment, a certificate of a duly authorized officer of
-4-
<PAGE> 18
each of the Co-Borrowers, dated the date hereof, stating that the foregoing
is true and correct.
3.2 The parties hereto agree that all terms and conditions of the
Credit Agreement and the Facility Documents not amended hereunder or pursuant
hereto shall remain in full force and effect.
3.3 All capitalized terms used herein and not defined herein shall
have the meanings given to them in the Credit Agreement.
3.4 This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any party hereto may execute this Amendment by signing any such counterpart.
3.5 This Amendment shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
be duly executed as of the day and year first above written.
CO-BORROWERS:
OLSTEN CORPORATION f/k/a THE OLSTEN CORPORATION
OLSTEN KIMBERLY QUALITYCARE, INC.
OLSTEN CERTIFIED HEALTHCARE CORP.
OLSTEN SERVICE CORP. f/k/a OLSTEN HOLDING COMPANY
OLSTEN SERVICES OF NEW YORK, INC.
OLSTEN STAFFING SERVICES, INC. f/k/a FLYING NURSES, INC.
OLSTEN OF WESTCHESTER, INC.
OLS HOLDINGS, INC.
OLSTEN HOME HEALTHCARE, INC.
NEW YORK HEALTHCARE SERVICES, INC.
ALL MEDICARE HOME HEALTH AGENCY, INC.
AMERICAN HOME HEALTH CARE, INC.
GOLD COAST SOUTH HOME HEALTH AGENCY, INC.
GULF COAST HOME HEALTH SERVICES CENTRAL, INC.
GULF COAST HOME HEALTH SERVICES EAST, INC.
GULF COAST HOME HEALTH SERVICES NORTH, INC.
GULF COAST HOME HEALTH SERVICES OF FLORIDA, INC.
GULF COAST HOME HEALTH SERVICES SOUTHWEST, INC.
GULF COAST HOME HEALTH SERVICES WEST, INC.
HHC MANAGEMENT, INC.
KIMBERLY HOME HEALTH CARE, INC.
KIMBERLY QUALITY CARE INFUSION THERAPY SERVICES, INC.
KIMBERLY SERVICES, INC.
-5-
<PAGE> 19
QC-MEDI CALIFORNIA, INC.
QC MEDI-ILLINOIS, INC.
QC MEDI-LOUISIANA, INC.
QC-MEDI MASS, INC.
QC-MEDI OF MICHIGAN, INC.
QC-MEDI NEW YORK, INC.
QC MEDI-TENN, INC.
QUALITY CARE-USA, INC.
QUALITY CARE, INC.
QUALITY CARE HEALTH SERVICES, INC.
QUALITY CARE HOME HEALTH, INC.
QUALITY CARE OF CONNECTICUT, INC.
QUALITY CARE SERVICE CORP.
RAINIER HOME HEALTH CARE, INC.
SUPERIOR CARE, INC.
UHH HOME SERVICES CORPORATION
AMERICAN SERVICE BUREAU, INC.
AMERICARE, INC.
AMERICARE MEDICAL EQUIPMENT, INC.
AMERICARE PHARAMCEUTICALS, INC.
BROAD PINES DEVELOPMENT CORP.
DIRKA CO.
OLSTEN FLYING NURSES CORP.
OLSTEN MELVILLE CORP.
QUALITY MANAGED CARE, INC.
By:____________________________________
Name: Laurin L. Laderoute, Jr.
Title: Vice President for all of the above Co-Borrowers
AGENT:
THE CHASE MANHATTAN BANK, N.A.
By:___________________________
Name:__________________________
Title:_________________________
-6-
<PAGE> 20
BANKS:
THE CHASE MANHATTAN BANK, N.A.
By:___________________________
Name:__________________________
Title:_________________________
CHEMICAL BANK
By:___________________________
Name:__________________________
Title:_________________________
BOATMEN'S FIRST NATIONAL BANK OF
KANSAS CITY
By:____________________________
Name:__________________________
Title:_________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:____________________________
Name:__________________________
Title:_________________________
-7-
<PAGE> 21
FLEET BANK
By:____________________________
Name:__________________________
Title:_________________________
NATWEST BANK N.A.
By:____________________________
Name:__________________________
Title:_________________________
-8-
<PAGE> 22
EXHIBIT B
---------
SECRETARY'S CERTIFICATE
-----------------------
I, Laurin L. Laderoute, Jr., the duly elected Secretary of each of
the corporations listed on SCHEDULE A attached hereto (each of such
corporations being hereinafter referred to as a "Co-Borrower"), in connection
with the execution of that certain SECOND AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT, dated as of September ____, 1995 (the "Second Amendment")
among THE OLSTEN CORPORATION and certain of its Subsidiaries signatory
thereto, the Banks signatory thereto and THE CHASE MANHATTAN BANK, N.A., as
Agent, do hereby certify that:
4. The execution, delivery and performance by the Co-
Borrowers, the Subsidiaries of the Co-Borrowers and the Affiliates of the Co-
Borrowers which are or may be party to the Credit Agreement (as such term is
defined in the Second Amendment), or any of the agreements, documents and
instruments which may be executed, entered into or delivered in connection
with transactions contemplated thereby, and the consummation of such
transactions, have been or will be duly authorized by all necessary corporate
action.
5. The certificate or articles of incorporation and the by-
laws of each such Co-Borrower, copies of which were delivered to the Banks
and certified by the undersigned pursuant to Section 6.01(a)(ii) of the
Credit Agreement on the date thereof, have not been amended, modified,
revoked or rescinded at any time on or subsequent to the date thereof and are
in effect at the date hereof.
6. The representations and warranties in Article 7 of the
Credit Agreement are true and correct in all material respects on the date
hereof as though made on and as of such date (except when such representation
or warranty by its terms relates to a specific date other than the date
made), and no event has occurred and is continuing, or will, after giving
effect to the waivers which are the subject of the attached letter, occur and
be continuing upon the consummation of the transactions contemplated by the
Credit Agreement, which constitutes or will constitute a Default or an Event
of Default.
7. No material adverse change has occurred in the business,
financial condition or operations of the Co-Borrowers, taken as a whole,
since the date of the most recent financial statements of the Co-Borrowers
delivered to the Agent pursuant to the Credit Agreement.
8. All capitalized terms used herein and not defined herein
shall have the meanings assigned to them in the Credit Agreement.
<PAGE> 23
IN WITNESS WHEREOF, I have signed this Certificate on this ____ day
of September, 1995.
______________________________
Laurin L. Laderoute, Jr.
<PAGE> 24
SCHEDULE I
TO EXHIBIT B
------------
OLSTEN CORPORATION f/k/a THE OLSTEN CORPORATION
OLSTEN KIMBERLY QUALITYCARE, INC.
OLSTEN CERTIFIED HEALTHCARE CORP.
OLSTEN SERVICE CORP. f/k/a OLSTEN HOLDING COMPANY
OLSTEN SERVICES OF NEW YORK, INC.
OLSTEN STAFFING SERVICES, INC. f/k/a FLYING NURSES, INC.
OLSTEN OF WESTCHESTER, INC.
OLS HOLDINGS, INC.
OLSTEN HOME HEALTHCARE, INC.
NEW YORK HEALTHCARE SERVICES, INC.
ALL MEDICARE HOME HEALTH AGENCY, INC.
AMERICAN HOME HEALTH CARE, INC.
GOLD COAST SOUTH HOME HEALTH AGENCY, INC.
GULF COAST HOME HEALTH SERVICES CENTRAL, INC.
GULF COAST HOME HEALTH SERVICES EAST, INC.
GULF COAST HOME HEALTH SERVICES NORTH, INC.
GULF COAST HOME HEALTH SERVICES OF FLORIDA, INC.
GULF COAST HOME HEALTH SERVICES SOUTHWEST, INC.
GULF COAST HOME HEALTH SERVICES WEST, INC.
HHC MANAGEMENT, INC.
KIMBERLY HOME HEALTH CARE, INC.
KIMBERLY QUALITY CARE INFUSION THERAPY SERVICES, INC.
KIMBERLY SERVICES, INC.
QC-MEDI CALIFORNIA, INC.
QC MEDI-ILLINOIS, INC.
QC MEDI-LOUISIANA, INC.
QC-MEDI MASS, INC.
QC-MEDI OF MICHIGAN, INC.
QC-MEDI NEW YORK, INC.
QC MEDI-TENN, INC.
QUALITY CARE-USA, INC.
QUALITY CARE, INC.
QUALITY CARE HEALTH SERVICES, INC.
QUALITY CARE HOME HEALTH, INC.
QUALITY CARE OF CONNECTICUT, INC.
QUALITY CARE SERVICE CORP.
RAINIER HOME HEALTH CARE, INC.
SUPERIOR CARE, INC.
UHH HOME SERVICES CORPORATION
AMERICAN SERVICE BUREAU, INC.
AMERICARE, INC.
AMERICARE MEDICAL EQUIPMENT, INC.
AMERICARE PHARAMCEUTICALS, INC.
BROAD PINES DEVELOPMENT CORP.
DIRKA CO.
OLSTEN FLYING NURSES CORP.
OLSTEN MELVILLE CORP.
QUALITY MANAGED CARE, INC.
<PAGE> 25
EXHIBIT C
---------
INCUMBENCY CERTIFICATE
----------------------
I, William P. Costantini, DO HEREBY CERTIFY that I am the duly
elected Senior Vice President of The Olsten Corporation, a Delaware
corporation (the "Company"), and Senior Vice President and Assistant
Secretary to each of the other co-borrowers (the "Other Co-Borrowers")
signatory to that certain Second Amendment to Amended and Restated Credit
Agreement dated as of September __, 1995 among the Company, the Other Co-
Borrowers, The Chase Manhattan Bank, N.A. (as a Bank and as Agent) and the
other Banks signatory thereto, and that the following person is now and has
been a duly elected, qualified and acting officer of the Company and each of
the Other Co-Borrowers holding the offices set forth opposite his name and
that signature set forth opposite his name is the genuine signature of such
person:
Name Office Signature
---- ------ ---------
Laurin L. Laderoute, Jr. Vice President and
Secretary of the
Company and each of
the Other Co-Borrowers ________________
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
September, 1995.
____________________________________
William P. Costantini
Senior Vice President and
Assistant Secretary
I, Laurin L. Laderoute, Jr., Vice President and Secretary of the
Company and each of the Other Co-Borrowers, DO HEREBY CERTIFY that William
P. Costantini is the duly elected Senior Vice President of the Company and
Senior Vice President and Assistant Secretary of each of the Other Co-
Borrowers and that the signature set forth immediately above is his genuine
signature.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
September, 1995.
___________________________________
Laurin L. Laderoute, Jr.
Vice President and Secretary
<PAGE> 26
THIRD AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
dated as of January 4, 1996
among
OLSTEN CORPORATION
AND CERTAIN OF ITS SUBSIDIARIES
as the Co-Borrowers
and
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
as the Agent
and
THE BANKS SIGNATORY HERETO
as the Banks
<PAGE> 27
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT dated as
of January 4, 1996 among OLSTEN CORPORATION, a corporation organized under
the laws of the State of Delaware ("Olsten") and certain of its Subsidiaries
signatory hereto (each such Subsidiary, a "Consolidated Subsidiary", each of
the banks which is a signatory hereto (individually, a "Bank" and,
collectively, the "Banks"), and THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a national banking association organized under the laws of the
United States Of America, as agent for the Banks (the "Agent").
RECITALS:
--------
A. The parties hereto entered in to that certain Amended and
Restated Credit Agreement, dated as of September 9, 1994 (the "Credit
Agreement"), which Credit Agreement was amended by a certain First Amendment
to Amended and Restated Credit Agreement, dated as of March 2, 1995 (the
"First Amendment") and by a certain Second Amendment to Amended and Restated
Credit Agreement, dated as of September 28, 1995 (the "Second Amendment").
B. The parties hereto desire to further amend the Credit
Agreement to permit a sublimit of the equivalent of $100,000,000 in foreign
currency borrowings under the existing Commitment, and in certain other
respects, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
Section AMENDMENTS TO CREDIT AGREEMENT.
(A) Section 1.01 is hereby amended to delete the definitions of
"Banking Day", "Interest Period", and "Notes" set forth in the Credit
Agreement and substitute therefor the following definitions:
"Banking Day" means any day on which commercial banks are not
authorized or required to close in New York City, and whenever such day
relates to a Eurocurrency Loan or notice with respect to any Eurocurrency
Loan, a day on which dealings in deposits of the relevant currency are also
carried out in the relevant London interbank market and, in the case of a
Eurocurrency Loan denominated in an Optional Currency, a day on which
commercial banks are open for business in the place of payment of such
Optional Currency and on which dealings in the Optional Currency are carried
on in the applicable offshore foreign exchange interbank market in which
disbursement of or payment in such Optional Currency will be made or received
hereunder.
"Interest Period" means the period commencing on the date a
Eurodollar Loan or a Eurocurrency Loan is made and ending on the numerically
corresponding day in the first, second, third, sixth or (if available)
twelfth calendar month thereafter, as the Co-Borrowers may select pursuant
to Section 2.05 or 3.04, as the case may be, provided, however, that if any
Interest Period would otherwise expire on a day which is not a Banking Day,
such Interest Period shall expire on the next succeeding Banking Day unless
such next succeeding Banking Day would fall on the next calendar month, in
<PAGE> 28
which case such Interest Period shall end on the next preceding Banking Day,
and each such Interest Period which commences on the last Banking Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last
Banking Day of the appropriate calendar month.
"Notes" means the Revolving Credit Notes and the Term Notes, as
each is modified by the Note Schedule attached hereto as Exhibit "A".
(B) Section 1.01 is hereby amended to add the following
definitions:
"Eurocurrency Base Rate" means, for any Eurocurrency Loan, the rate
per annum (rounded upwards if necessary to the nearest 1/1 6 of 1%) quoted
by the Agent at approximately 11:00 a.m. London time at the principal London
branch of the Agent two Banking Days prior to the first day of the Interest
Period for such Loan for the offering to leading banks in the London
interbank market of deposits in the currency in which such Eurocurrency Loan
is to be denominated in immediately available funds for a period, and in an
amounts comparable to the Interest Period for, and principal amount of, the
Eurocurrency Loan which shall be, made by the Bank and outstanding during
such Interest Period.
"Eurocurrency Loan" means any Loan denominated in an Optional
Currency when and to the extent the interest rate therefor is determined on
the basis of the Eurocurrency Base Rate.
"Eurocurrency Rate" means for any Interest Period for any
Eurocurrency Loan a rate per annum determined pursuant to the following
formula:
Eurocurrency Eurocurrency (EuroRate) EuroRate
= Base + -------------------------
Rate Rate (1 - Reserve Requirement)
"EuroRate" means, with respect to a Eurocurrency Loan, the Base
Rate therefor as if such Eurocurrency Loan were denominated in Dollars as
determined pursuant to the Eurocurrency Base Rate.
"Optional Currency" means German Deutschemarks, Swedish Kroner, or
any other foreign currency for which the Agent is then issuing a quote on the
London interbank market or other relevant offshore interbank foreign exchange
market, and for which each of the Banks can provide Loans in such foreign
currency.
"Reserve Requirement" means, for any Eurocurrency Loan, the average
maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during the Interest Period
for such Loan under Regulation D by member banks of the Federal Reserve
System in New York City with deposits exceeding One Billion Dollars against
"Eurocurrency liabilities" (as such term is used in Regulation D). Without
<PAGE> 29
limiting the effect of the foregoing, the Reserve Requirement shall also
reflect any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the Base Rate for Eurocurrency Loans
is to be determined as provided in the definition of "Base Rate" this Section
1.01 or (ii) any category of extensions of credit or other assets which
include Eurocurrency Loans.
(C) The definition of "Commitment" in Section 1.01 is amended to
add the following sentence:
"Notwithstanding the foregoing, up to a maximum of $100,000,000 of
the Revolving Credit Loans/Term Loans may be requested in the equivalent
amount of Optional Currency."
(D) Sections 2.01, 2.05, 2.07, 3.04, 4.01, 4.02 (a), 4.03 (a),
4.03 (b), 4.03 (c), 5.01 (a), 5.01 (b), 5.03 and 5.04 are amended to add the
phrase "or Eurocurrency Loans" after the phrase "Eurodollar Loans", and the
definition of "Margin" and Section 5.05 are amended to add the phrase "or a
Eurocurrency Loan" after the phrase "Eurodollar Loan", wherever same shall
appear.
(E) An additional sentence is added to the end of Section 2.04,
as follows:
"If a Co-Borrower shall request in such notice a Loan in an
Optional Currency, the Agent will, not later than 1:00 p.m. (local time at
the country of issue of such Optional Currency) on the date specified for
such Loan and subject to the fulfillment of the conditions set forth in this
Agreement, make the amount of the Loan to be made by it on such day available
to such Borrower, in such requested currency in immediately available funds,
at such bank in the country of issue of such Optional Currency as shall have
been designated by such Co-Borrower."
(F) An additional subsection (a) (ii) is added to Section 4.01,
as follows, and the existing subsection (a) (ii) is renumbered as subsection
(a) (iii):
"(ii) at least four Banking Days" irrevocable telephonic
notice (confirmed in writing) of each Eurocurrency Loan (whether representing
an additional borrowing hereunder; a conversion of a borrowing hereunder from
a Variable Rate Loan or a Eurodollar Loan to a Eurocurrency Loan or a
continuation of a Eurocurrency Loan for an additional Interest Period) prior
to 10:30 a.m., New York, New York time on the day such notice is given and"
(G) An additional subsection (g) is added to the end to Section
4.02, as follows:
"If, upon the expiration of any Interest Period for a
Eurocurrency Loan, the Agent shall have determined that the aggregate Dollar
equivalent of all outstanding Eurocurrency Loans exceeds the combined
Commitments of the Banks, due to a change in applicable rates of exchange
between Dollars and the Optional Currency or Optional Currencies then in
effect for such outstanding Eurocurrency Loans, the Agent shall give notice
to the Co-Borrowers that a prepayment is required under this Section, and the
Co-Borrowers jointly and severally agree thereupon to make prepayments of the
<PAGE> 30
Loans such that, after giving effect to such prepayment, the aggregate Dollar
equivalent amount of all Loans does not exceed the combined Commitments."
(H) An additional phrase is added to Section 4.03 (a), after the
end of subsection (ii), as follows:
"; and (iii) for a Eurocurrency Loan, at a fixed rate equal to the
Eurocurrency Rate plus the applicable Margin."
(I) Section 4.07 (a) is hereby deleted and the following Section
4.07 (a) is substituted in its place:
"(a) Each payment to be made by any Co-Borrower hereunder in
respect of principal of and interest on any Loan denominated in Dollars shall
be made not later than 1:00 p.m. New York City time on the day when due in
Dollars in immediately available funds at the Principal Office for the
account of the applicable Banks and (ii) in an Optional Currency shall be
made not later than 1:00 p.m (local time at the place of payment) on the day
when due in such Optional Currency in immediately available funds to the
Agent at an office (in the country of issue of such Optional Currency) which
the Agent shall designate for such payment for the account of the applicable
Lending Office; provided that, each such payment made after such time on such
due date shall be deemed to have been made on the next succeeding Banking
Day, and provided, further, that if a new Loan is to be made by the Banks on
a date a Co-Borrower is to repay the principal of one or more outstanding
Loans in the same currency as the new Loan, the Agent shall apply the
proceeds of the new Loan to the payment of the principal to be repaid and
only an amount equal to the difference between the principal to be borrowed
and the principal to be repaid shall be made available by the Banks to such
Co-Borrower, or paid by such Co-Borrower to the Banks pursuant to this
Section, as the case may be. All other payments under this Agreement and the
Notes shall be made in Dollars in immediately available funds at the
Principal Office not later than 1:00 p.m. New York City time on the day such
payments are due (each such payment made after such time on such due date to
be doomed to have been made on the next succeeding Banking Day). The Agent
may (but shall not be obligated to) debit any or all accounts of any Co-
Borrower with the Agent the amount of any such payment which is not made by
such time. To the extent that such accounts are not maintained in the
currency due, the Agent is authorized to charge an amount in any other
currency equal to the equivalent in such other currency of the currency due.
Each Co-Borrower shall, at the time of making each payment under this
Agreement or its Note, specify to the Agent the principal or other amount
payable by such Co-Borrower under the Credit Agreement or its Note to which
such payment is to be applied (and in the event that it fails to so specify,
or if a Default or an Event of Default has occurred and is continuing, the
Agent may apply such payment as it may elect in its sole discretion). If the
due date of any payment under the Credit Agreement or any Note would
otherwise fall on a day which is not a Banking Day, such date shall be
extended to the next succeeding Banking Day and interest shall be payable for
any principal so extended for the period of such extension."
(J) A new Section 4.09 is added, as follows:
"Section 4.09 Optional Currencies.
<PAGE> 31
For purposes of the provisions of this Agreement, (i) the
equivalent in Dollars of any Optional Currency shall be determined by using
the quoted spot rate at which the Principal Office offers to exchange Dollars
for such Optional Currency in New York City at 11:00 a.m. Now York City time
two Banking Days prior to the date on which such equivalent is to be
determined, and (ii) the equivalent in any Optional Currency of Dollars shall
be determined by using the quoted spot rate at which the Principal Office
offers to exchange such Optional Currency for Dollars in New York City at
11:00 a.m. New York City time two Banking Days prior to the date on which
such equivalent is to be determined,
(b) The Agent's determination of each spot rate of exchange
pursuant to this Agreement shall be conclusive in the absence of manifest
error."
(K) A new Section 4.10 is added, as follows:
"Section 4.10 Judgment Currency. The currency in which each Loan
made hereunder is denominated and the place of payment designated therefor
is of the essence. The payment obligation of each Co-Borrower hereunder in
any designated currency and designated place of payment shall not be
discharged by an amount paid in another currency or in another place, whether
pursuant to a judgment or otherwise, to the extent that the amount so paid
on prompt conversion to the currency in which such Loan is denominated and
transfer to the designated place of payment under normal banking procedures
does not yield the amount owing hereunder at the designated place of payment.
In the event that any payment by a Borrower whether pursuant to a judgment
or otherwise, upon such conversion and transfer does not result in payment
of such amount in the currency in which such Loan is denominated at the
designated place of payment, the Agent shall be entitled to demand immediate
payment of, and shall have a separate cause of action against such Borrower
for, the additional amount necessary to yield the amount of such currency
owing hereunder."
(L) Section 5.01 (a) (ii) is amended to add the phrase "or
Eurocurrency Rate" after the phrase "Reserve Adjusted Eurodollar Rate".
.
(M) Section 5.02 is amended to add the following subsections:
"(c) the Agent determines (which determination shall be conclusive)
that quotations of interest rates for the relevant deposits referred to in
the definition of Eurocurrency Rate are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining the rate
of interest for any type of Eurocurrency Loans as provided in this Agreement,
or
(d) the relevant rates of interest referred to in the definition
of "Eurocurrency Rate" upon the basis of which the rate of interest for any
type of Eurocurrency Loans is to be determined do not adequately cover the
cost to the Banks of making or maintaining Loans of such type, then the Agent
shall give the Co-Borrowers and each other Bank prompt notice thereof (i.e.,
the condition described in (c) and or (d) above), and for so long as such
condition remains in effect, such Bank shall be under no obligation to make
Loans of such type."
<PAGE> 32
SECTION 2. IDENTITY OF CO-BORROWERS.
The identity of the Co-Borrowers obligated under the Credit
Agreement shall include only those listed a signatories to this Amendment,
and those required to become Co-Borrowers under the Credit Agreement.
SECTION 3. ADDITIONAL TERMS.
(A) The Co-Borrowers each hereby represent and warrant to the
Banks that (a) the execution, delivery and performance by each of the Co-
Borrowers of this Amendment, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action, (b) the resolutions and corporate documents delivered to the Agent
pursuant to Section 6.01(a)(ii) of the Credit Agreement on the date thereof
have not been amended, revoked or rescinded at any time on or subsequent to
the date thereof and are in effect at the date hereof, and (c) after giving
effect to the transactions contemplated hereby or referenced herein, the
representations and warranties in Article 7 of the Credit Agreement are true
and correct on the date hereof as though made on and as of such date, and no
event has occurred and is continuing, which constitutes or will constitute
a Default or Event of Default. The Agent shall have received, on or before
the date of this Amendment, a certificate of a duly authorized officer of
each of the Co-Borrowers, dated the date hereof, stating that the foregoing
is true and correct.
(B) The parties hereto agree that all terms and conditions of the
Credit Agreement and the Facility Documents not amended hereunder or pursuant
hereto shall remain in full force and effect.
(C) All capitalized terms used herein and not defined herein shall
have the meanings given to them in the Credit Agreement.
(D) This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any party hereto may execute this Amendment by signing any such counterpart.
(E) This Amendment shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CO-BORROWERS:
OLSTEN CORPORATION f/k/a THE OLSTEN CORPORATION
OLSTEN KIMBERLY QUALITYCARE, INC.
OLSTEN CERTIFIED HEALTHCARE CORP.
OLSTEN SERVICE CORP. f/k/a OLSTEN HOLDING COMPANY
OLSTEN SERVICES OF NEW YORK, INC.
OLSTEN STAFFING SERVICES, INC. f/k/a FLYING NURSES, INC.
<PAGE> 33
OLSTEN OF WESTCHESTER, INC.
OLS HOLDINGS, INC.
OLSTEN HOME HEALTHCARE, INC.
NEW YORK HEALTHCARE SERVICES, INC.
ALL MEDICARE HOME HEALTH AGENCY, INC.
AMERICAN HOME HEALTH CARE, INC.
GOLD COAST SOUTH HOME HEALTH AGENCY, INC.
GULF COAST HOME HEALTH SERVICES CENTRAL, INC.
GULF COAST HOME HEALTH SERVICES EAST, INC.
GULF COAST HOME HEALTH SERVICES NORTH, INC.
GULF COAST HOME HEALTH SERVICES OF FLORIDA, INC.
GULF COAST HOME HEALTH SERVICES SOUTHWEST, INC.
GULF COAST HOME HEALTH SERVICES WEST, INC.
HHC MANAGEMENT, INC.
IMI SYSTEMS INC.
KIMBERLY HOME HEALTH CARE, INC.
KIMBERLY QUALITY CARE INFUSION THERAPY SERVICES, INC.
KIMBERLY SERVICES, INC.
QC-MEDI CALIFORNIA, INC.
QC MEDI-ILLINOIS, INC.
QC MEDI-LOUISIANA, INC.
QC-MEDI MASS, INC.
QC-MEDI OF MICHIGAN, INC.
QC-MEDI NEW YORK, INC.
QC MEDI-TENN, INC.
QUALITY CARE-USA, INC.
QUALITY CARE, INC.
QUALITY CARE HEALTH SERVICES, INC.
QUALITY CARE HOME HEALTH, INC.
QUALITY CARE OF CONNECTICUT, INC.
QUALITY CARE SERVICE CORP.
RAINIER HOME HEALTH CARE, INC.
SUPERIOR CARE, INC.
UHH HOME SERVICES CORPORATION
AMERICAN SERVICE BUREAU, INC.
AMERICARE, INC.
AMERICARE MEDICAL EQUIPMENT, INC.
AMERICARE PHARAMCEUTICALS, INC.
BROAD PINES DEVELOPMENT CORP.
DIRKA CO.
OLSTEN FLYING NURSES CORP.
OLSTEN MELVILLE CORP.
QUALITY MANAGED CARE, INC.
By:_______________________________
Name: Laurin L. Laderoute, Jr.
Title: Vice President for all of the above Co-Borrowers
<PAGE> 34
AGENT:
THE CHASE MANHATTAN BANK, N.A.
By:_____________________________________
Name:___________________________________
Title:____________________________________
BANKS:
THE CHASE MANHATTAN BANK, N.A.
By:_____________________________________
Name:___________________________________
Title:____________________________________
<PAGE> 35
CHEMICAL BANK
By:_____________________________________
Name:___________________________________
Title:____________________________________
BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY
By:_____________________________________
Name:___________________________________
Title:____________________________________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By:_____________________________________
Name:___________________________________
Title:____________________________________
FLEET BANK
By:_____________________________________
Name:___________________________________
Title:____________________________________
NATWEST BANK NA
By:_____________________________________
Name:___________________________________
Title:____________________________________
<PAGE> 36
Lending Office for Eurocurrency Loans
Denominated in an Optional Currency made to
a U.S. Borrower:
The Chase Manhattan Bank, N.A.
Nassau Branch
Nassau, N.P. Bahamas
Lending Office for Loans Denominated in an
Optional Currency made to a non-U, S,
Borrower:
The International Banking Facility
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
<PAGE> 37
EXHIBIT "A"
Schedule
- --------
Date Made, Principal
Prepaid Loan Number Amount and Maturity Balance Notation
or Repaid and Type Currency Date Outstanding By
- --------- -------- -------- ---- ----------- --
<PAGE> 38
EXHIBIT B
---------
SECRETARY'S CERTIFICATE
-----------------------
I, Laurin L. Laderoute, Jr., the duly elected Secretary of each of
the corporations listed on SCHEDULE A attached hereto (each of such
corporations being hereinafter referred to as a "Co-Borrower"), in connection
with the execution of that certain THIRD AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT, dated as of December ____, 1995 (the "Second Amendment")
among THE OLSTEN CORPORATION and certain of its Subsidiaries signatory
thereto, the Banks signatory thereto and THE CHASE MANHATTAN BANK, N.A., as
Agent, do hereby certify that:
The execution, delivery and performance by the Co-Borrowers,
the Subsidiaries of the Co-Borrowers and the Affiliates of the Co-Borrowers
which are or may be party to the Credit Agreement (as such term is defined
in the Second Amendment), or any of the agreements, documents and instruments
which may be executed, entered into or delivered in connection with
transactions contemplated thereby, and the consummation of such transactions,
have been or will be duly authorized by all necessary corporate action.
The certificate or articles of incorporation and the by-laws
of each such Co-Borrower, copies of which were delivered to the Banks and
certified by the undersigned pursuant to Section 6.01(a)(ii) of the Credit
Agreement on the date thereof, have not been amended, modified, revoked or
rescinded at any time on or subsequent to the date thereof and are in effect
at the date hereof.
The representations and warranties in Article 7 of the Credit
Agreement are true and correct in all material respects on the date hereof
as though made on and as of such date (except when such representation or
warranty by its terms relates to a specific date other than the date made),
and no event has occurred and is continuing, or will, after giving effect to
the waivers which are the subject of the attached letter, occur and be
continuing upon the consummation of the transactions contemplated by the
Credit Agreement, which constitutes or will constitute a Default or an Event
of Default.
No material adverse change has occurred in the business,
financial condition or operations of the Co-Borrowers, taken as a whole,
since the date of the most recent financial statements of the Co-Borrowers
delivered to the Agent pursuant to the Credit Agreement.
All capitalized terms used herein and not defined herein shall
have the meanings assigned to them in the Credit Agreement.
<PAGE> 39
IN WITNESS WHEREOF, I have signed this Certificate on this ____ day
of December, 1995.
____________________
Laurin L. Laderoute, Jr.
<PAGE> 40
SCHEDULE I
TO EXHIBIT B
------------
OLSTEN CORPORATION f/k/a THE OLSTEN CORPORATION
OLSTEN KIMBERLY QUALITYCARE, INC.
OLSTEN CERTIFIED HEALTHCARE CORP.
OLSTEN SERVICE CORP. f/k/a OLSTEN HOLDING COMPANY
OLSTEN SERVICES OF NEW YORK, INC.
OLSTEN STAFFING SERVICES, INC. f/k/a FLYING NURSES, INC.
OLSTEN OF WESTCHESTER, INC.
OLS HOLDINGS, INC.
OLSTEN HOME HEALTHCARE, INC.
NEW YORK HEALTHCARE SERVICES, INC.
ALL MEDICARE HOME HEALTH AGENCY, INC.
AMERICAN HOME HEALTH CARE, INC.
GOLD COAST SOUTH HOME HEALTH AGENCY, INC.
GULF COAST HOME HEALTH SERVICES CENTRAL, INC.
GULF COAST HOME HEALTH SERVICES EAST, INC.
GULF COAST HOME HEALTH SERVICES NORTH, INC.
GULF COAST HOME HEALTH SERVICES OF FLORIDA, INC.
GULF COAST HOME HEALTH SERVICES SOUTHWEST, INC.
GULF COAST HOME HEALTH SERVICES WEST, INC.
HHC MANAGEMENT, INC.
IMI SYSTEMS INC.
KIMBERLY HOME HEALTH CARE, INC.
KIMBERLY QUALITY CARE INFUSION THERAPY SERVICES, INC.
KIMBERLY SERVICES, INC.
QC-MEDI CALIFORNIA, INC.
QC MEDI-ILLINOIS, INC.
QC MEDI-LOUISIANA, INC.
QC-MEDI MASS, INC.
QC-MEDI OF MICHIGAN, INC.
QC-MEDI NEW YORK, INC.
QC MEDI-TENN, INC.
QUALITY CARE-USA, INC.
QUALITY CARE, INC.
QUALITY CARE HEALTH SERVICES, INC.
QUALITY CARE HOME HEALTH, INC.
QUALITY CARE OF CONNECTICUT, INC.
QUALITY CARE SERVICE CORP.
RAINIER HOME HEALTH CARE, INC.
SUPERIOR CARE, INC.
UHH HOME SERVICES CORPORATION
AMERICAN SERVICE BUREAU, INC.
AMERICARE, INC.
AMERICARE MEDICAL EQUIPMENT, INC.
AMERICARE PHARAMCEUTICALS, INC.
BROAD PINES DEVELOPMENT CORP.
DIRKA CO.
OLSTEN FLYING NURSES CORP.
OLSTEN MELVILLE CORP.
QUALITY MANAGED CARE, INC.
<PAGE> 41
EXHIBIT C
---------
INCUMBENCY CERTIFICATE
----------------------
I, William P. Costantini, DO HEREBY CERTIFY that I am the duly
elected Senior Vice President of The Olsten Corporation, a Delaware
corporation (the "Company"), and Senior Vice President and Assistant
Secretary to each of the other co-borrowers (the "Other Co-Borrowers")
signatory to that certain Third Amendment to Amended and Restated Credit
Agreement dated as of December __, 1995 among the Company, the Other Co-
Borrowers, The Chase Manhattan Bank, N.A. (as a Bank and as Agent) and the
other Banks signatory thereto, and that the following person is now and has
been a duly elected, qualified and acting officer of the Company and each of
the Other Co-Borrowers holding the offices set forth opposite his name and
that signature set forth opposite his name is the genuine signature of such
person:
Name Office Signature
---- ------ ---------
Laurin L. Laderoute, Jr. Vice President and
Secretary of the
Company and each of
the Other Co-Borrowers ________________
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
December, 1995.
_________________________
William P. Costantini
Senior Vice President and
Assistant Secretary
I, Laurin L. Laderoute, Jr., Vice President and Secretary of the
Company and each of the Other Co-Borrowers, DO HEREBY CERTIFY that William
P. Costantini is the duly elected Senior Vice President of the Company and
Senior Vice President and Assistant Secretary of each of the Other Co-
Borrowers and that the signature set forth immediately above is his genuine
signature.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
December, 1995.
_________________________
Laurin L. Laderoute, Jr.
Vice President and Secretary
<PAGE> 1
CREDIT AGREEMENT
dated as of December 22, 1995
among
IMI SYSTEMS INC.,
OLSTEN CORPORATION and such of the Subsidiaries
of IMI and/or Olsten as are signatory hereto,
and
FLEET BANK
<PAGE> 2
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS . . . . . . . . . . .1
Section 1.01. Definitions . . . . . . . . . . . . . . . 1
Section 1.02. Accounting Terms . . . . . . . . . . . . . 14
ARTICLE 2. REVOLVING CREDIT COMMITMENT . . . . . . . . . . . 14
Section 2.01. Revolving Credit Loans . . . . . . . . . . 14
Section 2.02. The Revolving Credit Note . . . . . . . . 14
Section 2.03. Use of Proceeds . . . . . . . . . . . . . 14
Section 2.04. Borrowing Procedures for Revolving
Credit Loans. . . . . . . . . . . . . . . 15
Section 2.05. Interest Periods, Continuations and
Conversions . . . . . . . . . . . . . . . 15
Section 2.06. Changes of Commitments . . . . . . . . . . 16
Section 2.07. Minimum Amounts . . . . . . . . . . . . . 17
ARTICLE 3. TERM LOAN. . . . . . . . . . . . . . . . . . . . . 17
Section 3.01. Term Loan. . . . . . . . . . . . . . . . . 17
Section 3.02. The Term Note. . . . . . . . . . . . . . 17
Section 3.03. Amortization of Term Loan. . . . . . . . 18
Section 3.04. Interest Periods; Continuations and
Conversions.. . . . . . . . . . . . . . . 18
ARTICLE 4. GENERAL CREDIT PROVISIONS; FEES AND PAYMENTS . . . 19
Section 4.01. Certain Notices . . . . . . . . . . . . . 19
Section 4.02. Prepayments . . . . . . . . . . . . . . . 20
Section 4.03. Interest . . . . . . . . . . . . . . . . . 21
Section 4.04. Commitment Fee . . . . . . . . . . . . . . 22
Section 4.05. Payments Generally . . . . . . . . . . . . 22
Section 4.06. Term Loan Facility Fee. . . . . . . . . . 23
ARTICLE 5. YIELD PROTECTION; ETC. . . . . . . . . . . . . . . 24
Section 5.01. Additional Costs . . . . . . . . . . . . . 24
Section 5.02. Limitation on Types of Loans . . . . . . . 25
Section 5.03. Illegality . . . . . . . . . . . . . . . . 26
Section 5.04. Certain Variable Rate Loans Pursuant
To Sections 5.01, 5.02 and 5.03 . . . . . 26
Section 5.05. Certain Compensation . . . . . . . . . . . 26
-i-
<PAGE> 3
ARTICLE 6. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 27
Section 6.01. Documentary Conditions Precedent . . . . . 27
Section 6.02. Additional Conditions Precedent . . . . . 29
Section 6.03. No Default Certificate and Deemed
Representations . . . . . . . . . . . . . 30
ARTICLE 7. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 30
Section 7.01. Incorporation, Good Standing and Due
Qualification; Compliance with Law. . . . 30
Section 7.02. Corporate Power and Authority;
No Conflicts. . . . . . . . . . . . . . . 30
Section 7.03. Legally Enforceable Agreements . . . . . . 31
Section 7.04. Litigation . . . . . . . . . . . . . . . . 31
Section 7.05. Financial Statements . . . . . . . . . . . 31
Section 7.06. Ownership and Liens . . . . . . . . . . . 32
Section 7.07. Taxes . . . . . . . . . . . . . . . . . . 32
Section 7.08. ERISA . . . . . . . . . . . . . . . . . . 33
Section 7.09. Subsidiaries and Ownership of Stock . . . 33
Section 7.10. Credit Arrangements . . . . . . . . . . . 33
Section 7.11. Operation of Business . . . . . . . . . . 33
Section 7.12. Hazardous Substances . . . . . . . . . . . 34
Section 7.13. No Default on Outstanding Judgments
or Orders . . . . . . . . . . . . . . . . 34
Section 7.14. No Defaults on Other Agreements . . . . . 35
Section 7.15. Labor Disputes and Acts of God . . . . . . 35
Section 7.16. Governmental Regulation . . . . . . . . . 35
Section 7.17. Partnerships . . . . . . . . . . . . . . . 35
Section 7.18. No Forfeiture . . . . . . . . . . . . . . 35
Section 7.19. No Default or Event of Default . . . . . . 36
Section 7.20. Accounts Receivable . . . . . . . . . . . 36
Section 7.21. Solvency . . . . . . . . . . . . . . . . . 36
Section 7.22. Material Adverse Change . . . . . . . . . 36
Section 7.23. Consolidated Total Assets . . . . . . . . 36
ARTICLE 8. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . 36
Section 8.01. Maintenance of Existence . . . . . . . . . 36
Section 8.02. Conduct of Business . . . . . . . . . . . 37
Section 8.03. Maintenance of Properties . . . . . . . . 37
Section 8.04. Maintenance of Records . . . . . . . . . . 37
Section 8.05. Maintenance of Insurance . . . . . . . . . 37
Section 8.06. Compliance with Laws . . . . . . . . . . . 37
Section 8.07. Right of Inspection . . . . . . . . . . . 37
Section 8.08. Reporting Requirements . . . . . . . . . . 38
-ii-
<PAGE> 4
Section 8.09. Payment of Obligations . . . . . . . . . . 41
Section 8.10. Consolidated Total Assets . . . . . . . . 41
ARTICLE 9. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 42
Section 9.01. Debt . . . . . . . . . . . . . . . . . . . 42
Section 9.02. Liens . . . . . . . . . . . . . . . . . . 43
Section 9.03. Investments . . . . . . . . . . . . . . . 44
Section 9.04. Sale of Assets . . . . . . . . . . . . . . 46
Section 9.05. Transactions with Affiliates . . . . . . . 47
Section 9.06. Mergers, Etc. . . . . . . . . . . . . . . 47
Section 9.07. Acquisitions . . . . . . . . . . . . . . . 48
Section 9.08. No Activities Leading to Forfeiture . . . 48
Section 9.09. Amendments to Indenture; Certain
Voluntary Prepayments; etc. . . . . . . . 48
Section 9.10. Corporate Documents; Fiscal Year . . . . . 48
ARTICLE 10. FINANCIAL COVENANTS . . . . . . . . . . . . . . . 48
Section 10.01. Minimum Consolidated Working Capital . . 48
Section 10.02. Minimum Consolidated Tangible Net
Worth. . . . . . . . . . . . . . . . . . 49
Section 10.03. Current Ratio . . . . . . . . . . . . . . 49
Section 10.04. Consolidated Total Liabilities To
Consolidated Tangible Net Worth Ratio. . 50
Section 10.05. Fixed Coverage Ratio . . . . . . . . . . 50
Section 10.06. Funded Debt to Consolidated Net
Operating Cash Flow. . . . . . . . . . . 50
ARTICLE 11. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . 50
Section 11.01. Events of Default . . . . . . . . . . . . 51
Section 11.02. Remedies . . . . . . . . . . . . . . . . 53
ARTICLE 12. THIS ARTICLE IS INTENTIONALLY LEFT BLANK 53
ARTICLE 13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 53
Section 13.01. Amendments and Waivers . . . . . . . . . 53
Section 13.02. Usury . . . . . . . . . . . . . . . . . . 54
Section 13.03. Expenses . . . . . . . . . . . . . . . . 54
Section 13.04. Survival . . . . . . . . . . . . . . . . 54
Section 13.05. Assignment; Participation . . . . . . . . 54
Section 13.06. Special Provision With Respect To New
Subsidiaries . . . . . . . . . . . . . . 55
Section 13.07. Notices . . . . . . . . . . . . . . . . . 55
-iii-
<PAGE> 5
Section 13.08. Setoff . . . . . . . . . . . . . . . . . 56
Section 13.09. Jurisdiction; Immunities . . . . . . . . 56
Section 13.10. Table of Contents; Headings . . . . . . . 57
Section 13.11. Severability. . . . . . . . . . . . . . . 57
Section 13.12. Counterparts. . . . . . . . . . . . . . . 57
Section 13.13. Integration . . . . . . . . . . . . . . . 57
Section 13.14. Governing Law . . . . . . . . . . . . . . 57
Section 13.15. Treatment of Certain Information . . . . 57
Section 13.16. Co-Borrowers' Attorney-in-Fact . . . . . 57
Section 13.17. Joint and Several Obligations. . . . . 58
EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit A-1 Form of Term Note
Exhibit B Opinion of Counsel for Co-Borrowers
Exhibit C Form of Borrowing Base Certificate
SCHEDULES
Schedule I Subsidiaries of Olsten
Schedule II Indebtedness/Liens
Schedule III Partnerships
-iv-
<PAGE> 6
CREDIT AGREEMENT dated as of December 22, 1995 among
IMI SYSTEMS INC., a corporation organized under the laws of the
State of New York ("IMI" or a "Co-Borrower"), OLSTEN CORPORATION,
a corporation organized under the laws of the State of Delaware
("Olsten" or a "Co-Borrower"), such of the Subsidiaries of IMI
and/or Olsten as are signatory hereto (each such Subsidiary, a
"Co-Borrower"; and such Subsidiaries, collectively with IMI and
Olsten, the "Co-Borrowers"), and FLEET BANK (the "Bank").
W I T N E S S E T H:
--------------------
WHEREAS, the Co-Borrowers have requested that the Bank,
upon the terms and subject to the conditions set forth in this
Agreement, extend credit to the Co-Borrowers in the aggregate
principal amount of $10,783,333, and
WHEREAS, the Bank is willing to extend such credit to
the Co-Borrowers upon the terms and subject to the conditions set
forth herein,
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement
the following terms have the following meanings (terms defined in
the singular to have a correlative meaning when used in the
plural and vice versa):
"Acceptable Acquisition" means any Acquisition of a
corporation, partnership or other entity engaged in the business
of providing information technology and related services, which
in the case of a corporation, has been either (a) approved by the
board of directors of such corporation which is the subject of
such Acquisition or (b) recommended for approval by such board to
the shareholders of such corporation and subsequently approved by
such shareholders as required under applicable law or by the
by-laws or the certificate of incorporation of such corporation;
provided, however, that no Acquisition shall be an Acceptable
Acquisition if, after giving effect thereto, a Default or Event
of Default shall have occurred and be continuing.
"Acquisition" means any transaction pursuant to which
the Co-Borrowers, or any of them, or any of their respective
Subsidiaries (a) acquires equity securities (or warrants, options
or other rights to acquire such securities) of any corporation or
<PAGE> 7
other business entity other than a Co-Borrower or any entity
which is a Subsidiary of a Co-Borrower, pursuant to a
solicitation of tenders therefor, or in one or more negotiated
block, market or other transactions not involving a tender offer,
or a combination of any of the foregoing, or (b) makes any entity
a subsidiary of a Co-Borrower, or causes any such entity to be
merged into a Co-Borrower or any of their respective
Subsidiaries, in any case pursuant to a merger, purchase of
assets or any reorganization providing for the delivery or
issuance to the holders of such entity's then outstanding
securities, in exchange for such securities, of cash or
securities of such Co-Borrower or any of its Subsidiaries, or a
combination thereof, or (c) purchases all or substantially all of
the business or assets of any entity.
"Additional Costs" shall have the meaning given to that
term in Section 5.01 hereof.
"Affiliate" means any Person: (a) which directly or
indirectly controls, or is controlled by, or is under common
control with, the Co-Borrowers or any of them or any of their
respective Subsidiaries; (b) which directly or indirectly
beneficially owns or holds 5% or more of any class of voting
stock of the Co-Borrowers or any of them or any of their
respective Subsidiaries; (c) 5% or more of the voting stock of
which is directly or indirectly beneficially owned or held by the
Co-Borrowers or any of them or any of their respective
Subsidiaries; or (d) which is a partnership in which the
Co-Borrowers or any of them or any of their respective
Subsidiaries is a general partner. The term "control" means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract,
or otherwise.
"Aggregate Outstandings" means, at any particular time,
the aggregate outstanding principal amount of the Revolving
Credit Loans or the Term Loan, as the case may be, at such time.
"Agreement" means this agreement, as amended or
supplemented from time to time (as distinguished from the "Credit
Agreement", as hereinafter defined). References to Articles,
Sections, Exhibits, Schedules and the like refer to the Articles,
Sections, Exhibits, Schedules and the like of this Agreement
unless otherwise indicated.
"Amortization" means amortization as determined in
accordance with GAAP.
-2-
<PAGE> 8
"Amortization Date" means the last day of each calendar
month, commencing on the first such day occurring after the
Conversion Date, up to (and including) the Termination Date;
provided that if any such day is not a Banking Day, such day
shall be the next succeeding Banking Day (or, if such next
succeeding Banking Day falls in the next calendar month, the next
preceding Banking Day).
"Banking Day" means any day on which commercial banks
are not authorized or required to close in New York City, and
whenever such day relates to a Eurodollar Loan or notice with
respect to any Eurodollar Loan, such term shall exclude any day
on which banks are not open for dealings in Dollar deposits in
the London interbank market.
"Bank" means Fleet Bank and any of its permitted
assigns pursuant to Section 13.05 hereof.
"Borrowing Base" means at any time an amount equal to
the sum of (i) eighty-five percent (85%) of the Co-Borrowers'
Eligible Receivables (other than Eligible Receivables from
Medicare or Medicaid) which have remained unpaid for no more than
63 days past their invoice date, (ii) seventy percent (70%) of
the Co-Borrowers' Eligible Receivables (other than Eligible
Receivables from Medicare or Medicaid) which have remained unpaid
for at least 64 days but no more than 91 days past their invoice
date and (iii) fifty percent (50%) of all Eligible Receivables
from Medicare or Medicaid which have remained unpaid for no more
than 91 days past their invoice date.
"Borrowing Base Certificate" means a certificate signed
by the Chief Financial Officer of Olsten in the form of Exhibit C
annexed hereto, with such changes as the Bank may require from
time to time.
"Capital Lease" means any lease which has been
capitalized on the balance sheet of the lessee in accordance with
GAAP.
"Closing Date" means December 22, 1995.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Commitment" means, subject to the other provisions of
this Agreement, the obligation of the Bank to extend credit to
the Co-Borrowers hereunder in the aggregate principal amount of
$10,783,333, as such amount may be reduced or otherwise modified
from time to time.
-3-
<PAGE> 9
"Commitment Fee" means the commitment fee payable by
the Co-Borrowers to the Bank pursuant to Section 4.04 hereof.
"Consolidated Current Assets" means, at a particular
date, all amounts which would, in conformity with GAAP, be
included under current assets on a consolidated balance sheet of
Olsten and its Consolidated Subsidiaries as at such date.
"Consolidated Current Liabilities" means, at a
particular date, all amounts which would, in conformity with
GAAP, be included under current liabilities on a consolidated
balance sheet of Olsten and its Consolidated Subsidiaries as at
such date including, without limitation, (a) all obligations
payable on demand or within one year after the date in which the
determination is made, and (b) installment and sinking fund
payments required to be made within one year after the date on
which determination is made, but excluding all such liabilities
or obligations which are renewable or extendable at the option of
the Co-Borrowers, or any of them, to a date more than one year
from the date of determination.
"Consolidated Interest Expense" means, for any fiscal
period, the gross interest expense for such period determined on
a consolidated basis in accordance with GAAP for Olsten and its
Consolidated Subsidiaries.
"Consolidated Net Loss" means, for any fiscal period,
the amount of consolidated net loss of the Co-Borrowers,
excluding (profits or) losses attributable to extraordinary
items, for such period, determined in accordance with GAAP.
"Consolidated Net Operating Cash Flow" means Net Profit
Before Taxes plus Depreciation plus Amortization plus
Consolidated Interest Expense, determined on a consolidated basis
in accordance with GAAP.
"Consolidated Subordinated Debt" means, at any
particular date, the Subordinated Debt of Olsten and its
Consolidated Subsidiaries outstanding on such date determined on
a consolidated basis in accordance with GAAP.
"Consolidated Subsidiary" means any direct or indirect
subsidiary of Olsten whose results are, in accordance with GAAP,
required to be recorded or reflected in or on the consolidated
financial statements of Olsten.
"Consolidated Tangible Net Worth" means, at any
particular date, the amount of excess of Consolidated Total
-4-
<PAGE> 10
Assets over Consolidated Total Liabilities which would, in
conformity with GAAP, be included under shareholders' equity on a
consolidated balance sheet of Olsten and its Consolidated
Subsidiaries as at such date, excluding, however, from the
determination of total assets all deferred charges included in
the line item "Goodwill and other Intangible Assets" on the
consolidated balance sheet of Olsten in conformity with GAAP and
all other intangible assets, including, without limitation,
customer lists, organizational expenses, patents, trademarks,
copyrights, goodwill, covenants not to compete, research and
developmental costs and training costs.
"Consolidated Total Assets" means, at a particular
date, all amounts which would, in conformity with GAAP, be
included under assets on a consolidated balance sheet of Olsten
and its Consolidated Subsidiaries as at such date.
"Consolidated Total Liabilities" means, at a particular
date, all amounts which would, in conformity with GAAP, be
included under liabilities on a consolidated balance sheet of
Olsten and its Consolidated Subsidiaries, as at such date.
"Consolidated Working Capital" means, at the date of
determination, the excess of Consolidated Current Assets over
Consolidated Current Liabilities as at such date.
"Conversion Date" means December 15, 1996.
"Credit Agreement" means that certain Amended and
Restated Credit Agreement dated as of September 9, 1994, as
amended, among Olsten, certain of its subsidiaries, The Chase
Manhattan Bank, N.A., as agent, and the banks signatory thereto.
"Debentures" means the 4 7/8% Convertible Subordinated
Debentures due 2003 and issued by Olsten pursuant to the
Indenture, a copy of which is included in Olsten's Registration
Statement on Form S-3 (Registration No. 33-58762) filed with the
Securities and Exchange Commission on February 25, 1993.
"Debt" means, with respect to any Person: (a)
indebtedness of such Person for borrowed money; (b) indebtedness
for the deferred purchase price of property or services (except
trade payables and accruals incurred in the ordinary course of
business, including insurance costs of the Co-Borrowers incurred
in connection with their workers compensation programs incurred
in the ordinary course of business); (c) Unfunded Vested
Liabilities of such Person (if such Person is not a Co-Borrower,
determined in a manner analogous to that of determining Unfunded
Vested Liabilities of the Co-Borrowers); (d) the face amount of
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any outstanding letters of credit issued for the account of such
Person including, without limitation, the maximum face amount of
all letters of credit issued hereunder or otherwise to support
workers' compensation programs; (e) obligations arising under
acceptance facilities; (f) guaranties, endorsements (other than
for collection in the ordinary course of business) and other
contingent obligations to purchase, to provide funds for payment,
to supply funds to invest in any Person, or otherwise to assure a
creditor against loss; (g) obligations secured by any Lien on
property of such Person; (h) obligations of such Person as lessee
under Capital Leases; and (i) indebtedness of such Person
evidenced by a note (other than notes payable to insurance
companies issued in connection with the Co-Borrowers' workers
compensation programs, if any), bond, indenture or similar
instrument; and (j) all obligations of such Person in respect of
interest rate swap agreements, currency swap agreements and other
similar agreements designed to hedge against fluctuations in
interest rates or foreign exchange.
"Default" means any event which with the giving of
notice or lapse of time, or both, would become an Event of
Default.
"Default Rate" means, with respect to the principal of
any Loan and, to the extent permitted by law, any other amount
payable by the Co-Borrowers, or any of them, under this Agreement
or the Note (a) a rate per annum equal to 3% above the rate of
interest otherwise applicable to such Loan, in the case of a past
due payment of principal, and (b) a rate per annum equal to 3%
above the rate that would be applicable to Variable Rate Loans
from time to time, in the case of a past due payment of any other
amount.
"Depreciation" means depreciation as determined in
accordance with GAAP.
"Dividends" means, for any period, dividends paid by
the Co-Borrowers, or any of them, during such period but shall
not include dividends paid by one Co-Borrower to another.
"Dollars" and the sign "$" mean lawful money of the
United States of America.
"Eligible Receivables" means and includes only the
gross amount of the Co-Borrowers' accounts receivable less any
discounts or allowances relating to accounts receivable recorded
on the books and records of the Co-Borrowers and reported on a
consolidated basis in accordance with GAAP, arising out of sales
in the ordinary course of business made by the Co-Borrowers which
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are not in dispute and for which records are maintained at a
location of the Co-Borrowers, or any of them, in the United
States; provided, however that intercompany receivables owing
from one Co-Borrower or Subsidiary thereof to another Co-Borrower
and receivables encumbered by any Lien (whether or not permitted
to exist hereunder) shall be ineligible. Any receivable shall be
ineligible if the account debtor for such receivable or any
entity that controls or is controlled by that account debtor has
filed and there is pending a case for bankruptcy or
reorganization under the Bankruptcy Code, or if any such case
under the Bankruptcy Code has been filed and is pending against
the account debtor, or any entity that controls or is controlled
by that account debtor, or if the account debtor or any entity
that controls or is controlled by that account debtor has made
and there is pending a general assignment for the benefit of
creditors, or if the account debtor or any entity that controls
or is controlled by that account debtor has failed, suspended
business operations, become insolvent, or has suffered or is
suffering a receiver or a trustee to be appointed for all or a
significant portion of its assets or affairs, or if any other
receivable owed from the account debtor on such receivable or
from any entity that controls or is controlled by the account
debtor to the Co-Borrowers is more than 91 days past its invoice
date. Notwithstanding the foregoing, at the request of the
Co-Borrowers, the Bank in its sole discretion and on a case by
case basis may elect to include as Eligible Receivables certain
receivables due from debtors in possession which would otherwise
be deemed ineligible under this definition. Any receivable shall
also be ineligible upon forty-five (45) days prior written notice
to the Co-Borrowers, if the Bank has reasonable grounds for
insecurity with respect to the collectability of such receivable
in relation to the amount of credit extended.
"Environmental Laws" means any and all federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.
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"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, including any rules
and regulations promulgated thereunder.
"ERISA Affiliate" means any corporation or trade or
business which is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code)
as the Co-Borrowers or is under common control (within the
meaning of Section 414(c) of the Code) with the Co-Borrowers.
"Eurocurrency Reserve Requirements" means, with respect
to each Interest Period for each Eurodollar Loan, the aggregate
(without duplication) of the maximum rates (expressed as a
percentage and rounded upward if necessary to the nearest 1/100th
of 1%) of reserve requirements current on the date two Banking
Days prior to the beginning of such Interest Period (including,
without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority having
jurisdiction with respect thereto), as now and/or from time to
time hereafter in effect, dealing with reserve requirements
prescribed for eurocurrency funding maintained by a member bank
of such System. Such reserve percentages shall include, without
limitation, those imposed under Regulation D. Eurodollar Loans
shall be deemed to constitute Eurocurrency Liabilities (as
defined in Regulation D) and as such shall be deemed to be
subject to such reserve requirements without benefit of or credit
for proration, exemptions or offsets which may be available from
time to time to the Bank under Regulation D. Eurocurrency
Reserve Requirements shall be adjusted automatically on and as of
the effective date of any change in any such reserve percentage.
"Eurodollar Base Rate" means, for any Eurodollar Loan,
the rate per annum (rounded upward if necessary to the nearest
1/16 of 1%) at which Dollar deposits in immediately available
funds, for a period and in an amount comparable to the Interest
Period and principal amount of such Eurodollar Loan, are offered,
at approximately 11:00 a.m. London time, to the principal London
branch of the Bank two Banking Days prior to the first day of the
Interest Period for such Loan.
"Eurodollar Loan" means any Revolving Credit Loan, or
any portion thereof, or the Term Loan, or any portion thereof,
when and to the extent the interest rate therefor is determined
on the basis of the Reserve Adjusted Eurodollar Rate.
"Event of Default" has the meaning given such term in
Section 11.01.
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<PAGE> 14
"Facility Documents" means this Agreement, the Note,
and all other documents or instruments executed in connection
herewith or therewith.
"Forfeiture Proceeding" means the commencement of any
action or proceeding affecting any Co-Borrower or any of their
Subsidiaries before any court, governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, which may result in the seizure or forfeiture of any of
their property which would cause a material adverse effect upon
the operations, business, properties or financial condition of
the Co-Borrowers taken as a whole.
"Funded Debt" means with respect to the Co-Borrowers,
at any particular time, the aggregate then outstanding principal
amount of indebtedness of the Co-Borrowers for borrowed money
excluding Subordinated Debt, plus (without duplication) the
aggregate amount then available to be drawn under any outstanding
letters of credit issued for the account of the Co-Borrowers,
plus (without duplication) the aggregate amount of any
reimbursement obligations of any Co-Borrower under any letters of
credit plus the excess of (i) the Commitment over (ii) Aggregate
Outstandings, plus the excess of (x) the "Total Commitments" (as
such term is defined in the Credit Agreement) over (y) "Aggregate
Outstandings" (as such term is defined in the Credit Agreement).
"GAAP" means generally accepted accounting principles
in the United States of America as in effect from time to time,
applied on a basis consistent with those used in the preparation
of the financial statements referred to in Section 7.05.
"Hazardous Substance" means any material, whether
animate or inanimate, raw, processed or waste by-product, which
in itself or as found or used, is potentially toxic, noxious or
harmful to the health or safety of human or animal life or
vegetation, regardless of whether such material be found on or
below the surface of the ground, in any surface or underground
water, or airborne in ambient air or in the air inside of any
structure built or located upon or below the surface of the
ground, or in any machinery, equipment or inventory located or
used in any such structure, including, but in no event limited to
all hazardous materials, hazardous wastes, toxic substances,
infectious wastes, pollutants and contaminants from time to time
defined or classified as such under any Environmental Law
regardless of the quantity found, used, manufactured or removed
from a given location.
"Indenture" means that certain Indenture dated as of
March 15, 1993, by and between Olsten and Bankers Trust Company,
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<PAGE> 15
as Trustee, a copy of which is included in Olsten's Registration
Statement on Form S-3 (Registration No. 33-58762) filed with the
Securities and Exchange Commission on February 25, 1993, as such
Indenture may be amended, supplemented or modified from time to
time.
"Interest Period" means the period commencing on the
date a Eurodollar Loan is made (i.e., an additional borrowing, a
conversion or a continuation), and ending, as the Co-Borrowers
may select pursuant to Section 2.05 or Section 3.04, as the case
may be, on the numerically corresponding day in the first,
second, third, or (as available) sixth or twelfth calendar month
thereafter; provided, however, that if any Interest Period would
otherwise expire on a day which is not a Banking Day, such
Interest Period shall expire on the next succeeding Banking Day
unless such next succeeding Banking Day would fall on the next
calendar month, in which case such Interest Period shall end on
the next preceding Banking Day, and any Interest Period which
commences on the last Banking Day of a calendar month (or on any
day for which there is no numerically corresponding day of the
last calendar month of such Interest Period) shall end on the
last Banking Day of the last month of such Interest Period.
"Lending Office" means, for each type of Loan, the
lending office of the Bank (or of an affiliate of the Bank)
designated as such for such type of Loan on its signature page
hereof or such other office of the Bank (or of an affiliate of
the Bank) as the Bank may from time to time specify to the
Co-Borrowers as the office by which its Loans of such type are to
be made and maintained.
"Lien" means any lien (statutory or otherwise),
security interest, mortgage, deed of trust, priority, pledge,
charge, conditional sale, title retention agreement, Capital
Lease or other encumbrance or similar right of others, or any
agreement to give any of the foregoing.
"Loan" means a Eurodollar Loan and/or a Variable Rate
Loan.
"Margin" means, for (a) a Variable Rate Loan
(i) comprising all or a portion of a Revolving Credit Loan, 0%
per annum or (ii) comprising all or a portion of the Term Loan,
1/4 of 1% per annum, and (b) for a Eurodollar Loan (i) comprising
all or a portion of a Revolving Credit Loan, 5/8 of 1% per annum
or (ii) comprising all or a portion of the Term Loan, 7/8 of 1%
per annum.
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<PAGE> 16
"Medicaid and Medicare Receivables" means all accounts
receivable of the Co-Borrowers or any of them which are payable
pursuant to Titles XVIII or XIX of the United States Social
Security Act and the regulations promulgated thereunder.
"Multiemployer Plan" means a Plan defined as such in
Section 4001(a)(3) of ERISA to which contributions have been made
by any Co-Borrower or any ERISA Affiliate and which is covered by
Title IV of ERISA.
"Net Profit Before Taxes" means, for any fiscal
quarterly period, the amount of consolidated net income (or loss)
of the Olsten and its Consolidated Subsidiaries for such period
excluding therefrom profits or losses attributable to
extraordinary or unusual items plus, to the extent reflected as a
charge in the statement of such consolidated net income for such
period, the sum of taxes measured by income.
"Note" means each and both of the Revolving Credit Note
and the Term Note.
"Obligations" means all of the obligations of the
Co-Borrowers to the Bank under or in relation to this Agreement,
the Note or any of the other Facility Documents, as such
agreements, documents and instruments are originally executed or
as modified, amended, restated, supplemented or extended from
time to time, and all obligations of the Co-Borrowers to the Bank
arising out of any extension, refinancing or refunding of any of
the foregoing obligations, whether such obligations are now
existing or hereafter acquired or arising, direct or indirect,
joint or several, absolute or contingent, due or to become due,
matured or unmatured, liquidated or unliquidated, arising by
contract, operation of law or otherwise.
"PBGC" means the Pension Benefit Guaranty Corporation
and any entity succeeding to any or all of its functions under
ERISA.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other
entity of whatever nature.
"Plan" means any employee benefit or other plan
established or maintained, or to which contributions have been
made, by any Co-Borrower or any ERISA Affiliate and which is
covered by Title IV of ERISA or to which Section 412 of the Code
applies provided that such term shall not include plans
terminated prior to the date hereof.
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"Prime Rate" means that rate of interest from time to
time announced by the Bank at its Principal Office as the Fleet
Peg Rate or "FPR."
"Principal Office" means the principal office, from
time to time, of the Bank, presently located at 300 Broad Hollow
Road, Melville, NY 11747-4852.
"Principal Payments" means, for any period, principal
payments of indebtedness for borrowed money, including any
principal payment under any note, bond, indenture or similar
instrument, made by Olsten and its Consolidated Subsidiaries on a
consolidated basis.
"Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System as the same may be
amended or supplemented from time to time.
"Regulatory Change" means any change after December 22,
1995 in United States federal, state, municipal or foreign laws
or regulations (including Regulation D) or the adoption or making
after such date of any interpretations, directives or requests
applying to a class of banks including the Bank of or under any
United States, federal, state, municipal or foreign laws or
regulations (whether or not having the force of law) by any court
or governmental or monetary authority charged with the
interpretation or administration thereof.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA as to which events the PBGC by
regulation has not waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of
such event, provided that a failure to meet the minimum funding
standard of Section 412 of the Code or Section 302 of ERISA shall
be a Reportable Event regardless of any waivers given under
Section 412(d) of the Code.
"Reserve Adjusted Eurodollar Rate" means, with respect
to the Interest Period for each Eurodollar Loan, the rate per
annum (rounded upwards to the nearest whole multiple of 1/100th
of one percent) equal to the following:
Eurodollar Base Rate
-----------------------------------------
1.00 - Eurocurrency Reserve Requirements.
"Revolving Credit Commitment" means the Commitment.
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"Revolving Credit Loan" means any Loan made by the Bank
pursuant to Section 2.01 hereof.
"Revolving Credit Note" means a promissory note of the
Co-Borrowers in the form of Exhibit A evidencing the Revolving
Credit Loans made by the Bank from time to time hereunder, as
such note may be amended from time to time.
"Solvent" means when used with respect to any Person on
a particular date, that on such date: (a) the fair saleable
value of its assets is in excess of the total amount of its
liabilities, including, without limitation, the reasonably
expected amount of such Person's obligations with respect to
contingent liabilities, (b) the present fair saleable value of
the assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its
Debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur Debts or
liabilities beyond such Person's ability to pay as such Debts and
liabilities mature and (d) such Person is not engaged in business
or a transaction, for which such Person's property would
constitute an unreasonably small capital.
"Subordinated Debt" means any unsecured Debt of the
Co-Borrowers, or any one of them (including, without limitation,
the Debentures), that is subordinated on terms satisfactory to
the Bank to the Co-Borrowers' obligations to the Bank under this
Agreement.
"Subsidiary" means, as to any Person, any corporation
or other entity of which at least a majority of the securities or
other ownership interests having ordinary voting power
(absolutely or contingently) for the election of directors or
other persons performing similar functions are at the time owned
directly or indirectly by such Person.
"Termination Date" means, (a) if the Co-Borrowers do
not elect to convert all outstanding Revolving Credit Loans to a
Term Loan on the Conversion Date pursuant to the provisions
hereof, the earliest of (i) the date on which all Loans are paid
in full, the Commitment terminates hereunder and the obligations
of the Co-Borrowers in connection therewith have been satisfied,
(ii) December 15, 1996, and (iii) such earlier date on which all
Loans are due and payable, or (b) if the Co-Borrowers have
converted all outstanding Revolving Credit Loans to a Term Loan
on the Conversion Date pursuant to the provisions hereof, the
earliest of (i) the date on which all Loans are paid in full and
the obligations of the Co-Borrowers in connection therewith have
been satisfied, (ii) December 15, 2000, and (iii) such earlier
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<PAGE> 19
date on which all Loans are due and payable; provided that if the
Termination Date (as referenced in subparagraph (a) or
subparagraph (b) above, as the case may be) is not a Banking Day,
the Termination Date shall be the next succeeding Banking Day
(or, if such next succeeding Banking Day falls in the next
calendar month, the next preceding Banking Day).
"Term Loan" means the credit facility extended by the
Bank pursuant to Section 3.01 hereof.
"Term Loan Facility Fee" means the Term Loan facility
fee payable by the Co-Borrowers to the Bank pursuant to Section
4.06 hereof.
"Term Loan Note" or "Term Note" means the promissory
note of the Co-Borrowers in the form of Exhibit A-1, evidencing
the Term Loan to be made by the Bank hereunder on the Conversion
Date (assuming conversion), as such note may be amended from time
to time.
"The date hereof" or "the date hereof" means the
Closing Date.
"Unfunded Vested Liabilities" means, with respect to
any Plan, the amount (if any) by which the present value of all
vested benefits under the Plan exceeds the fair market value of
all Plan assets allocable to such benefits, as determined on the
most recent valuation date of the Plan and in accordance with the
provisions of ERISA for calculating the potential liability of
any Co-Borrower or any ERISA Affiliate to the PBGC or the Plan
under Title IV of ERISA.
"Variable Rate" means, for any day, the Prime Rate for
such day.
"Variable Rate Loan" means any Revolving Credit Loan,
or any portion thereof, or the Term Loan, or any portion thereof,
when and to the extent the interest rate therefor is determined
on the basis of the Variable Rate.
Section 1.02. Accounting Terms. All accounting terms
not specifically defined in this Agreement shall be construed in
accordance with GAAP, and all financial data required to be
delivered hereunder shall be prepared in accordance with GAAP.
ARTICLE 2. REVOLVING CREDIT COMMITMENT.
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Section 2.01. Revolving Credit Loans. Subject to the
terms and conditions of this Agreement, the Bank agrees to make
revolving credit loans in Dollars (the "Revolving Credit Loans")
to the Co-Borrowers from time to time from and including the
Closing Date to but excluding the Termination Date up to but not
exceeding at any one time outstanding the amount of the
Commitment. The Revolving Credit Loans may be outstanding as
Variable Rate Loans or Eurodollar Loans. The Revolving Credit
Loans of each type shall be made and maintained at the Bank's
Lending Office for such type of Loans. Subject to the foregoing
limits, the Co-Borrowers may borrow, repay and reborrow, on or
after the Closing Date and prior to the Termination Date, all or
a portion of the Commitment.
Section 2.02. The Revolving Credit Note. The
Revolving Credit Loans of the Bank shall be evidenced by a single
promissory note in favor of the Bank substantially in the form of
Exhibit A, with appropriate insertions, duly executed and
completed by the Co-Borrowers. The Bank is hereby authorized to
record the date, type and amount of each Revolving Credit Loan,
the date and amount of each payment or prepayment of principal
thereof, the date of each interest rate conversion or
continuation pursuant to Section 2.05 and the principal amount
subject thereto and the Interest Period and interest rate with
respect thereto in the Bank's records and/or on the schedule
annexed to and constituting a part of the Revolving Credit Note,
and, absent manifest error, any such recordation shall constitute
conclusive evidence of the information so recorded; provided that
the failure to make any such recordation shall not in any way
affect the Co-Borrowers' obligation to repay the Revolving Credit
Loans. The Revolving Credit Note (a) shall be dated the Closing
Date, (b) be stated to mature on the Termination Date and (c)
shall bear interest from and including the Closing Date on the
unpaid principal amount thereof from time to time outstanding as
provided herein.
Section 2.03. Use of Proceeds.
(a) The Co-Borrowers shall, on the Closing Date, use
the proceeds of the Revolving Credit Loans to prepay in full the
Debt described in paragraph 1(b) of Schedule II hereto, and
thereafter, for general working capital purposes, to finance
Acceptable Acquisitions, and for general corporate purposes. No
part of the proceeds of any of the Loans will be used for any
purpose which violates the provisions of Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System as in
effect on the date of making such Loans.
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<PAGE> 21
(b) The Co-Borrowers, jointly and severally, agree to
indemnify the Bank and its Affiliates, agents, officers,
directors and employees (individually and collectively, an
"Indemnified Party") and hold each Indemnified Party harmless
from and against any and all liabilities, losses, damages, costs
and expenses of any kind (including, without limitation, the
reasonable fees and disbursements of counsel for any Indemnified
Party in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnified Party shall
be designated a party thereto) which may be incurred by any
Indemnified Party, relating to or arising out of this Agreement
or any actual or proposed use of proceeds of Loans hereunder;
provided, that no Indemnified Party shall have the right to be
indemnified hereunder for its own gross negligence, willful
misconduct or bad faith as determined by a court of competent
jurisdiction.
Section 2.04. Borrowing Procedures for Revolving
Credit Loans. The Co-Borrowers may request a Revolving Credit
Loan hereunder as provided in Section 4.01. Not later than
1:00 p.m. New York City time on the date of such borrowing, the
Bank shall, through its Lending Office and subject to the
conditions of this Agreement, make the amount of the Revolving
Credit Loan to be made by it on such day available to the
Co-Borrowers, in immediately available funds, by crediting an
account of the Co-Borrowers designated by the Co-Borrowers and
maintained with the Bank at the Principal Office.
Section 2.05. Interest Periods, Continuations and
Conversions.
(a) In the case of each Eurodollar Loan, the
Co-Borrowers shall select an Interest Period of any of the
durations set forth in the definition of Interest Period in
Section 1.01 and shall notify the Bank of such selection as
provided in Section 4.01 hereof.
(b) Upon the expiration of an Interest Period for any
Revolving Credit Loan which is a Eurodollar Loan, or any portion
thereof, such Revolving Credit Loan or portion thereof shall be
automatically converted to a Revolving Credit Loan which is a
Variable Rate Loan, except to the extent that such Loan shall be
repaid hereunder or shall be required to be repaid hereunder or
unless the Co-Borrowers shall have notified the Bank, as provided
in Section 4.01 hereof, of their intention to continue such
Revolving Credit Loan as a Eurodollar Loan and select an Interest
Period with respect thereto. Subject to the following conditions
and to the terms and conditions of this Agreement, the
Co-Borrowers shall have the right to convert or continue (as the
case may be) any Revolving Credit Loan or portion thereof as
aforesaid, provided that:
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<PAGE> 22
(i) if less than all Revolving Credit Loans at the
time outstanding shall be converted or continued,
the notice given by the Co-Borrowers to the Bank
shall specify the aggregate amount of Revolving
Credit Loans in each case to be converted or
continued;
(ii) in the case of a conversion or continuation of
less than all outstanding Revolving Credit Loans,
the aggregate principal amount of Revolving Credit
Loans to be converted or continued shall not be
less than (1) $500,000 (and if greater in integral
multiples of $100,000 in excess thereof) in the
case of conversions to or continuations of
Eurodollar Loans or (2) $100,000 (or if greater in
integral multiples of $100,000 in excess thereof)
in the case of conversions to Variable Rate Loans;
(iii) no Revolving Credit Loan may be converted to or
continued as a Eurodollar Loan less than one month
before the Termination Date;
(iv) a Eurodollar Loan may be converted to a Variable
Rate Loan only on the last day of an Interest
Period;
(v) no Revolving Credit Loan or portion thereof may be
converted to or continued as a Eurodollar Loan
after the occurrence and during the continuance of
a Default or an Event of Default;
(vi) the initial Interest Period for any Eurodollar
Loan shall commence on the date of the making of
such Loan (including the date of any conversion
from a Variable Rate Loan) and each Interest
Period occurring thereafter in respect of such
Loan shall commence on the date on which the next
preceding Interest Period expires; and
(vii) no Interest Period in respect of any Eurodollar
Loan shall extend beyond the Termination Date.
Section 2.06. Changes of Commitments.
(a) The Co-Borrowers shall have the right to reduce or
terminate the amount of the unused Commitment at any time or from
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<PAGE> 23
time to time prior to the Termination Date, provided that:
(i) the Co-Borrowers shall give notice of each such reduction or
termination to the Bank as provided in Section 4.01; and
(ii) each partial reduction shall be in an aggregate amount at
least equal to $500,000 or, if greater, in integral multiples of
$100,000 in excess thereof.
(b) Notwithstanding anything contained herein to the
contrary, the Co-Borrowers shall jointly and severally reduce or
terminate the amount of the Commitment at such time as the "Total
Commitments" (as such term is defined in the Credit Agreement)
shall be terminated in accordance with the provisions of the
Credit Agreement.
(c) The Commitment, once reduced or terminated, may
not be reinstated.
Section 2.07. Minimum Amounts. Except for borrowings
which exhaust the full remaining amount of the Revolving Credit
Commitment and prepayments (in the case of Variable Rate Loans
only) which result in the prepayment of all Revolving Credit
Loans, each borrowing and prepayment of principal of Variable
Rate Loans shall be in an amount at least equal to $100,000, and,
if greater, integral multiples of $100,000 in excess thereof, and
each borrowing of Eurodollar Loans of each type having concurrent
Interest Periods shall be in an amount at least equal to
$500,000, and, if greater, integral multiples of $100,000 in
excess thereof.
ARTICLE 3. TERM LOAN.
Section 3.01. Term Loan.
Subject to the terms and conditions hereof, if the
Co-Borrowers give the Bank irrevocable notice of their election
to convert all outstanding Revolving Credit Loans to a Term Loan
at least 30 Banking Days prior to the Conversion Date, and
provided that no Default or Event of Default shall have occurred
and be continuing at any time from and after the date of any such
notification to and including the Conversion Date, the Bank
agrees to permit the Co-Borrowers to convert the aggregate
outstanding principal amount of the Revolving Credit Loans at the
Conversion Date (but not less than such amount, and, in any
event, in an amount not to exceed $10,783,333) to a Term Loan in
Dollars; provided that the Term Loan shall not be made if
Aggregate Outstandings exceed the Borrowing Base in effect on the
Conversion Date.
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Section 3.02. The Term Note. The Term Loan shall be
evidenced by a single promissory note of the Co-Borrowers
substantially in the form of Exhibit A-1 hereto, with appropriate
insertions, payable to the order of the Bank and representing the
obligation of the Co-Borrowers to pay the unpaid principal amount
of the Term Loan, with interest thereon as described herein. The
Bank is hereby authorized to record the type of each Loan
comprising the Term Loan (i.e., a Eurodollar Loan or a Variable
Rate Loan), the date and amount of each payment or prepayment of
principal thereof, the date of each interest rate conversion or
continuation pursuant to Section 3.04 hereof and the principal
amount subject thereto and the Interest Period and interest rate
applicable thereto, in the Bank's records and/or on the schedule
annexed to and constituting a part of the Term Note, and, absent
manifest error, any such recordation shall constitute conclusive
evidence of the accuracy of the information so recorded; provided
that the failure to make any such recordation shall not affect
the obligation of the Co-Borrowers to repay the Term Loan. The
Term Note shall (a) be dated, and delivered to the Bank on, the
Conversion Date, (b) be stated to amortize and mature in 48 equal
consecutive monthly installments and (c) bear interest from the
date thereof on the unpaid principal amount thereof from time to
time outstanding as provided herein.
Section 3.03. Amortization of Term Loan. The
Co-Borrowers shall repay the Term Loan in 48 equal consecutive
monthly installments, such payments to be made in accordance with
Section 4.05 on each Amortization Date commencing on the first
Amortization Date to occur after the Conversion Date.
Section 3.04. Interest Periods; Continuations and
Conversions.
(a) Subject to the terms and conditions hereof, the
Term Loan may from time to time be comprised of either Variable
Rate Loans or Eurodollar Loans or any combination thereof.
(b) In the case of each Eurodollar Loan, the
Co-Borrowers shall select an Interest Period of any of the
durations set forth in the definition of the term "Interest
Period" in Section 1.01 hereof and shall notify the Bank of such
selection as provided in Section 4.01 hereof.
(c) Upon the expiration of an Interest Period for any
portion of the Term Loan which is a Eurodollar Loan, such portion
shall be automatically converted to a Variable Rate Loan, except
to the extent that such Loan shall be repaid hereunder or shall
be required to be repaid hereunder or unless the Co-Borrowers
shall have notified the Bank, as provided in Section 4.01 hereof,
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of their intention to continue the same as a Eurodollar Loan and
of their selection of the Interest Period with respect thereto.
Subject to the following conditions and to the terms and
conditions of this Agreement, the Co-Borrowers shall have the
right to convert or continue (as the case may be) any portion of
the Term Loan as aforesaid, provided that:
(i) if less than the full outstanding amount of the
Term Loan shall be converted or continued, the
notice given by the Co-Borrowers to the Bank shall
specify the principal amount to be converted or
continued;
(ii) in the case of a conversion or continuation of
less than the full outstanding amount of the Term
Loan, the principal amount to be converted or
continued shall not be less than (1) $500,000 (and
if greater in integral multiples of $100,000 in
excess thereof) in the case of conversions to or
continuations of Eurodollar Loans or (2) $100,000
(or if greater in integral multiples of $100,000
in excess thereof) in the case of conversions to
Variable Rate Loans;
(iii) no Loan may be converted to or continued as a
Eurodollar Loan less than one month before the
Termination Date;
(iv) a Eurodollar Loan may be converted to a Variable
Rate Loan only on the last day of an Interest
Period;
(v) no Loan or portion thereof may be converted to or
continued as a Eurodollar Loan after the
occurrence and during the continuance of a Default
or an Event of Default;
(vi) the initial Interest Period for any Eurodollar
Loan shall commence on the date of the making of
such Loan (including the date of any conversion
from a Variable Rate Loan) and each Interest
Period occurring thereafter in respect of such
Loan shall commence on the date on which the next
preceding Interest Period expires; and
(vii) no Interest Period in respect of any Eurodollar
Loan shall extend beyond the Termination Date.
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ARTICLE 4. GENERAL CREDIT PROVISIONS;
FEES AND PAYMENTS.
Section 4.01. Certain Notices. Notices by the
Co-Borrowers to the Bank of each prepayment pursuant to Section
4.02 and each reduction or termination of the Commitment pursuant
to Section 2.06 and of a conversion pursuant to Section 3.01
shall be irrevocable and shall be effective on the date of
receipt only if received by the Bank not later than 11:00 a.m.,
New York City time, on or prior to the date notice with respect
thereto is required to be given hereunder; and (a) the
Co-Borrowers shall give the Bank (i) at least three Banking Days'
irrevocable telephonic notice (confirmed in writing) of each
Eurodollar Loan (whether representing an additional borrowing
hereunder, a conversion of a borrowing hereunder from a Variable
Rate Loan to a Eurodollar Loan or a continuation of a Eurodollar
Loan for an additional Interest Period) prior to 10:30 a.m., New
York, New York time on the day such notice is given and (ii)
irrevocable telephonic notice (confirmed in writing) of each
Variable Rate Loan (whether representing an additional borrowing
hereunder or the conversion of an existing Eurodollar Loan to a
Variable Rate Loan at the end of the Interest Period with respect
to any such Eurodollar Loan) prior to 10:30 a.m., New York, New
York time on the day of the proposed Variable Rate Loan; and (b)
in the case of reductions or termination of the Commitment, given
thirty (30) days prior thereto. Each such notice relating to the
borrowing, continuation, conversion or prepayment of a Revolving
Credit Loan shall specify the Loans to be borrowed, converted,
continued or prepaid, and the amount (subject to Section 2.07 or
Section 3.04, as the case may be) and type of the Loans to be
borrowed or prepaid, the Interest Period with respect to any
Eurodollar Loan and the date of borrowing, conversion,
continuation or prepayment (which shall be a Banking Day). Each
such notice of reduction or termination of Commitment shall
specify the amount of the Commitment to be reduced or terminated.
Section 4.02. Prepayments.
(a) (i) The Co-Borrowers shall have the right at any
time and from time to time to prepay any Variable Rate Loan, in
whole or in part, upon at least one Banking Day's prior written
notice to the Bank in the case of prepayment of a Variable Rate
Loan; provided, however, that each such partial prepayment of
Variable Rate Loans shall be in a minimum aggregate principal
amount of $100,000 or, if greater, in amounts which are integral
multiples of $100,000 in excess thereof. Except as required by
paragraph (b) below or on the last day of an Interest Period with
respect thereto, the Co-Borrowers shall not be permitted to
prepay Eurodollar Loans. Each prepayment of the Term Loan under
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this subsection shall be applied to the installments thereof in
the inverse order of maturity. Amounts paid or prepaid in
respect of the Term Loan may not be reborrowed.
(ii) In the event that Aggregate Outstandings
exceed the Borrowing Base at any time prior to the Termination
Date, the Co-Borrowers jointly and severally shall promptly pay
or prepay so much of the Loans outstanding as shall be necessary
in order that Aggregate Outstandings, after giving effect to such
payment or prepayment, will not exceed the Borrowing Base then in
effect.
(b) On the date of any reduction or termination of the
Commitment as provided in Section 2.06, the Co-Borrowers jointly
and severally shall pay or prepay so much of the Revolving Credit
Loans as shall be necessary in order that (i) Aggregate
Outstandings will not exceed the lesser of the Commitment or the
Borrowing Base after giving effect to any such reduction or (ii)
Aggregate Outstandings will be paid in full after giving effect
to any such termination, as the case may be. All payments and
prepayments under this paragraph shall be subject to Section
5.05.
(c) All payments and prepayments required by paragraph
(b) above shall be applied first to Variable Rate Loans
outstanding and then to Eurodollar Loans outstanding.
(d) All payments and prepayments made pursuant to this
Section 4.02 shall be accompanied by the payment of all accrued
interest on the amount so prepaid and by all amounts required to
be paid pursuant to Section 5.05 in connection therewith.
Section 4.03. Interest.
(a) Interest shall accrue on the outstanding and unpaid
principal amount of each Loan for the period from and including
the date of such Loan to but excluding the date such Loan is due,
at the following rates per annum: (i) for a Variable Rate Loan,
at a variable rate per annum equal to the Variable Rate plus the
applicable Margin; and (ii) for a Eurodollar Loan, at a fixed
rate equal to the Reserve Adjusted Eurodollar Rate plus the
applicable Margin. Any principal amount not paid when due (at
maturity, by acceleration or otherwise) and, to the extent
permitted by law, any other amount payable hereunder which is not
paid when due, shall bear interest thereafter until paid in full,
at the Default Rate which shall be payable on demand.
(b) The interest rate on each Variable Rate Loan shall
change when the Variable Rate changes and interest on each such
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Loan shall be calculated on the basis of a year of 360 days for
the actual number of days elapsed. Interest on each Eurodollar
Loan shall be calculated on the basis of a year of 360 days for
the actual number of days elapsed. Promptly after the
determination of any interest rate provided for herein or any
change therein, the Bank shall notify the Co-Borrowers thereof.
(c) Accrued interest on Variable Rate Loans shall be
due and payable (i) for the period from the Closing Date to but
excluding the Conversion Date, quarterly in arrears on the last
day of each calendar quarter commencing on March 31, 1996 and
(ii) for the period commencing on the Conversion Date and
thereafter, on each Amortization Date, and (iii) on the
Termination Date. Accrued interest on Eurodollar Loans shall be
due and payable in arrears upon any payment of principal and on
the last day of the Interest Period with respect thereto and, in
the case of an Interest Period greater than three months, at
three-month intervals after the first day of such Interest
Period, and, in any event, on the Termination Date.
Notwithstanding the foregoing, interest accruing at the Default
Rate shall be due and payable from time to time on demand of the
Bank.
(d) Notwithstanding any other provision of this
Agreement, upon the occurrence and during the continuance of a
Default or an Event of Default, each Revolving Credit Loan or the
Term Loan, as the case may be, shall bear interest at a rate per
annum equal to the Default Rate.
Section 4.04. Commitment Fee.
The Co-Borrowers shall pay to the Bank a commitment fee
for the period from and including the date hereof to and
excluding the Conversion Date equal to one quarter of one percent
(.25%) per annum of the average daily unused portion of the
Commitment during the applicable period. The commitment fee
shall be due and payable in arrears on the last day of each
calendar quarter (i.e., the last day of each March, June,
September and December) and on the Conversion Date.
Section 4.05. Payments Generally.
(a) All payments under this Agreement, the Note or any
of the other Facility Documents shall be made in Dollars in
immediately available funds not later than 1:00 p.m. New York
City time on the relevant dates specified above or on the date
any such payment shall be due and payable (each such payment made
after such time on such due date to be deemed to have been made
on the next succeeding Banking Day) at the Principal Office for
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the account of the applicable Lending Office of the Bank;
provided that, when a new Loan is to be made by the Bank on a
date the Co-Borrowers are to repay any principal of an
outstanding Loan, the Bank shall apply the proceeds thereof to
the payment of the principal to be repaid and only an amount
equal to the difference between the principal to be borrowed and
the principal to be repaid shall be made available by the Bank to
the Co-Borrowers as provided in Section 2.04 or paid by the
Co-Borrowers to the Bank pursuant to this Section 4.05, as the
case may be. The Bank may (but shall not be obligated to) debit
the amount of any such payment which is not made by such time to
any ordinary deposit account of the Co-Borrowers, or any of them,
with the Bank. The Co-Borrowers shall, at the time of making
each payment under this Agreement or the Note, specify to the
Bank the principal or other amount payable by the Co-Borrowers
under this Agreement or the Note to which such payment is to be
applied (and in the event that it fails to so specify, or if a
Default or Event of Default has occurred and is continuing, the
Bank may apply such payment as it may elect in its sole
discretion. Unless otherwise specified herein, if the due date
of any payment under this Agreement, the Note or any of the other
Facility Documents would otherwise fall on a day which is not a
Banking Day, such date shall be extended to the next succeeding
Banking Day and interest shall be payable for any principal so
extended for the period of such extension.
(b) All payments made by the Co-Borrowers under this
Agreement, the Note or the other Facility Documents shall be made
free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any governmental or taxing authority of
any jurisdiction located outside of the United States, excluding,
in the case of the Bank, income taxes and franchise taxes
(imposed in lieu of income taxes) imposed on the Bank as a result
of a present or former connection between the jurisdiction of the
government or the taxing authority imposing such tax and the Bank
(excluding a connection arising solely from the Bank having
executed, delivered, or performed its obligations or received a
payment under, or enforced, this Agreement, the Note or the other
Facility Documents) or any political subdivision or taxing
authority thereof or therein (all such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "Taxes"). If any Taxes are
required to be withheld from any amounts payable to the Bank
hereunder or under the Facility Documents, the amounts so payable
to the Bank shall be increased to the extent necessary to yield
to the Bank (after payment of all Taxes) interest or any such
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other amounts payable hereunder at the rates or in the amounts
specified in this Agreement, the Note and the other Facility
Documents. Whenever any Taxes are payable by the Co-Borrowers,
or any of them, as promptly as possible thereafter the
Co-Borrowers shall send to the Bank a certified copy of an
original official receipt received by the Co-Borrowers (or any of
them) showing payment thereof. If the Co-Borrowers, or any of
them, fail to pay any Taxes when due to the appropriate taxing
authority or fail to remit to the Bank the required receipts or
other required documentary evidence, the Co-Borrowers shall
indemnify the Bank for any incremental taxes, interest or
penalties that may become payable by the Bank as a result of any
such failure. The agreements in this subsection shall survive
the termination of this Agreement and the Facility Documents and
the payment of the Note and all other amounts payable hereunder
or thereunder.
Section 4.06. Term Loan Facility Fee.
If all outstanding Revolving Credit Loans are converted to a
Term Loan on the Conversion Date pursuant to the provisions of
this Agreement, the Co-Borrowers jointly and severally shall, on
the Conversion Date, pay to the Bank a Term Loan Facility Fee in
an amount equal to 1/8 of 1% of the outstanding principal amount
of the Term Loan on such date.
ARTICLE 5. YIELD PROTECTION; ETC.
Section 5.01. Additional Costs.
(a) The Co-Borrowers shall pay directly to the Bank
from time to time on demand such amounts as the Bank may
determine to be necessary to compensate it for any costs which
the Bank determines are attributable to its making or maintaining
any Eurodollar Loans under this Agreement or the Note or its
obligation to make any such Loans, or any reduction in any amount
receivable by the Bank hereunder in respect of any such Loans or
such obligation (such increases in costs and reductions in
amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change which: (i) changes the basis
of taxation of any amounts payable to the Bank under this
Agreement or the Note in respect of any of such Loans (other than
taxes imposed on the overall net income of the Bank or of its
Lending Office for any of such Loans by the jurisdiction in which
the Bank has its Principal Office or such Lending Office); or
(ii) imposes or modifies any reserve, special deposit, deposit
insurance or assessment, minimum capital, capital ratio or
similar requirements relating to any extensions of credit, or
commitments therefor, or other assets of, or any deposits with or
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other liabilities of, the Bank (including any of such Loans or
any deposits referred to in the definition of "Reserve Adjusted
Eurodollar Rate" in Section 1.01); or (iii) imposes any other
condition affecting this Agreement or the Note (or any of such
extensions of credit, or commitments therefor, or liabilities).
The Bank will notify the Co-Borrowers of any event occurring
after the date of this Agreement which will entitle the Bank to
compensation pursuant to this Section 5.01(a) as promptly as
practicable after it obtains knowledge thereof and determines to
request such compensation. If the Bank requests compensation
from the Co-Borrowers under this Section 5.01(a), or under
Section 5.01(c), the Co-Borrowers may, by notice to the Bank,
suspend the obligation of the Bank to make Loans of the type with
respect to which such compensation is requested (in which case
the provisions of Section 5.04 shall be applicable).
(b) Without limiting the effect of the foregoing
provisions of this Section 5.01, in the event that, by reason of
any Regulatory Change, the Bank either (i) incurs Additional
Costs based on or measured by the excess above a specified level
of the amount of a category of deposits or other liabilities of
the Bank which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in
this Agreement or a category of extensions of credit or other
assets of the Bank which includes Eurodollar Loans or
(ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if the
Bank so elects by notice to the Co-Borrowers, the obligation of
the Bank to make Loans of such type hereunder shall be suspended
until the date such Regulatory Change ceases to be in effect (in
which case the provisions of Section 5.04 shall be applicable).
(c) Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the
Co-Borrowers shall pay directly to the Bank from time to time on
request such amounts as the Bank may determine to be necessary to
compensate the Bank for any costs which it determines are
attributable to the maintenance by it or any of its affiliates
pursuant to any law or regulation of any jurisdiction or any
interpretation, directive or request (whether or not having the
force of law and whether in effect on the date of this Agreement
or thereafter) of any court or governmental or monetary authority
of capital in respect of its Loans hereunder (such compensation
to include, without limitation, an amount equal to any reduction
in return on assets or equity of the Bank to a level below that
which it could have achieved but for such law, regulation,
interpretation, directive or request). The Bank will notify the
Co-Borrowers if it is entitled to compensation pursuant to this
Section 5.01(c) as promptly as practicable after it determines to
request such compensation.
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(d) Determinations and allocations by a Bank for
purposes of this Section 5.01 of the effect of any Regulatory
Change pursuant to subsections (a) or (b), or of the effect of
capital maintained pursuant to subsection (c), on its costs of
making or maintaining Loans or its obligation to make Loans, or
on amounts receivable by, or the rate of return to, it in respect
of Loans, or such obligation, and of the additional amounts
required to compensate the Bank under this Section 5.01, shall be
conclusive absent manifest error, provided that such
determinations and allocations are made on a reasonable basis and
provided further that the Bank provides the Co-Borrowers with
copies of the calculations made by the Bank to enable such
determination or allocation to be made.
Section 5.02. Limitation on Types of Loans. Anything
herein to the contrary notwithstanding, if:
(a) the Bank determines (which determination shall be
conclusive) that quotations of interest rates for the relevant
deposits referred to in the definition of "Reserve Adjusted
Eurodollar Rate" in Section 1.01 are not being provided in the
relevant amounts or for the relevant maturities for purposes of
determining the rate of interest for any Eurodollar Loans as
provided in this Agreement; or
(b) the Bank reasonably determines (which determination
shall be conclusive) that the relevant rates of interest referred
to in the definition of "Reserve Adjusted Eurodollar Rate" in
Section 1.01 upon the basis of which the rate of interest for any
Eurodollar Loans is to be determined do not cover the cost to the
Bank of making or maintaining such Loans, then the Bank shall
give the Co-Borrowers prompt notice thereof (i.e., the condition
described in (a) or (b) above), and so long as such condition
remains in effect, the Bank shall be under no obligation to make
Loans of such type.
Section 5.03. Illegality. Notwithstanding any other
provision in this Agreement, in the event that it becomes
unlawful for the Bank or its Lending Office to honor its
obligation to make or maintain Eurodollar Loans hereunder, then
the Bank shall promptly notify the Co-Borrowers thereof and the
Bank's obligation to make or maintain Eurodollar Loans hereunder
shall be suspended until such time as the Bank may again make and
maintain such affected Loans (in which case the provisions of
Section 5.04 shall be applicable).
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<PAGE> 33
Section 5.04. Certain Variable Rate Loans Pursuant To
Sections 5.01, 5.02 and 5.03. If the obligations of the Bank to
make Eurodollar Loans (Eurodollar Loans being herein called
"Affected Loans") shall be suspended pursuant to Section 5.01,
5.02 or 5.03, all Affected Loans shall be made instead as
Variable Rate Loans and, if an event referred to in Section
5.01(b), 5.02 or 5.03 has occurred and the Bank so requests by
notice to the Co-Borrowers, all Affected Loans of the Bank then
outstanding shall be automatically converted into Variable Rate
Loans on the date specified by the Bank in such notice, and, to
the extent that Affected Loans are so made as (or converted into)
Variable Rate Loans, all payments of principal which would
otherwise be applied to the Bank's Affected Loans shall be
applied instead to its Variable Rate Loans. In the event of any
conversion of any Eurodollar Loan to a Variable Rate Loan
pursuant to this Section 5.04 prior to the last day of the
Interest Period with respect to such Eurodollar Loan, the
Co-Borrowers jointly and severally shall pay to the Bank all
amounts required to be paid pursuant to Section 5.05 hereof.
Section 5.05. Certain Compensation. The Co-Borrowers
shall pay to the Bank, upon the request of the Bank, such amount
or amounts as shall be sufficient (in the reasonable opinion of
the Bank) to compensate it for any loss, cost or expense which
the Bank determines is attributable to:
(a) any prepayment by the Co-Borrowers of a Eurodollar
Loan made by the Bank (whether by reason of the mandatory
prepayment provisions of this Agreement or otherwise) or any
failure by the Co-Borrowers to pay principal or interest on a
Eurodollar Loan made by the Bank when due as required hereunder;
or
(b)(i) any failure by the Co-Borrowers to borrow,
convert into or continue a Eurodollar Loan to be made by the Bank
on the date specified therefor in the relevant notice under
Section 4.01 or (ii) any conversion under Section 5.04; or
(c) any failure by the Co-Borrowers to prepay a
Eurodollar Loan on the date required pursuant to Section 4.02.
Without limiting the foregoing, such compensation shall include
an amount equal to the excess, if any, of: (i) the amount of
interest which otherwise would have accrued on the principal
amount so paid or converted or not borrowed (i.e., not borrowed,
not converted or not continued) for the period from and including
the date of such payment or failure to borrow (i.e., failure to
borrow, failure to convert or failure to continue) to but
excluding the last day of the Interest Period for such Loan (or,
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<PAGE> 34
in the case of a failure to borrow, to but excluding the last day
of the Interest Period for such Loan which would have commenced
on the date specified therefor in the relevant notice) at the
applicable rate of interest for such Loan provided for herein;
over (ii) the amount of interest (as reasonably determined by the
Bank) the Bank would have bid in the London interbank market for
Dollar deposits for amounts comparable to such principal amount
and maturities comparable to such period. A determination of the
Bank as to the amounts payable pursuant to this Section 5.05
shall be conclusive absent manifest error provided that such
determination is made on a reasonable basis and provided further
that the Bank provides the Co-Borrowers with copies of the
calculations made by the Bank in making such determination.
ARTICLE 6. CONDITIONS PRECEDENT.
Section 6.01. Documentary Conditions Precedent. The
obligation of the Bank to make Loans constituting any borrowing
on the date hereof, to enter into this Agreement and to
consummate the transactions contemplated hereby is subject to the
conditions precedent that:
(a) the Bank shall have received, on or before the
Closing Date, each of the following, in form and substance
satisfactory to the Bank and its counsel:
(i) the Revolving Credit Note duly executed by the
Co-Borrowers;
(ii) a certificate of the Secretary or Assistant
Secretary of each Co-Borrower, dated the Closing Date,
attesting to all corporate action taken by such
Co-Borrower, including resolutions of its Board of
Directors authorizing the execution, delivery and
performance of the Facility Documents and each other
document to be delivered pursuant to this Agreement,
together with certified (by the Secretary or Assistant
Secretary) copies of the certificates or articles of
incorporation and by-laws of each of IMI and Olsten;
and, such certificate shall state that the resolutions
and corporate documents thereby certified have not been
amended, modified, revoked or rescinded as of the date
of such certificate;
(iii) a certificate of the Secretary or Assistant
Secretary of each Co-Borrower, dated the Closing Date,
certifying the names and true signatures of the
officers of each Co-Borrower authorized to sign the
Facility Documents and the other documents to be
delivered by such Co-Borrower under this Agreement;
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<PAGE> 35
(iv) a certificate of a duly authorized officer of
IMI and Olsten, dated the Closing Date, stating that
the representations and warranties in Article 7 are
true and correct on such date as though made on and as
of such date (except when such representation or
warranty by its terms relates to a specific date other
than the date made or the date hereof) and that no
event has occurred and is continuing which constitutes
a Default or an Event of Default;
(v) a favorable opinion of counsel for the
Co-Borrowers, dated the Closing Date, in substantially
the form of Exhibit B and as to such other matters as
the Bank may reasonably request;
(vi) good standing certificates evidencing that
each of IMI and Olsten is duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation;
(vii) evidence of the payment in full of the Debt
described in paragraph 1(b) of Schedule II hereto and
the release of all obligations, liabilities and Liens
arising out of or under, or relating to, such Debt;
(viii) such other documents, instruments,
approvals, opinions and evidence as the Bank may
require; and
(ix) a Borrowing Base Certificate (dated the
Closing Date) with information thereon as of October
29, 1995;
(b) the Co-Borrowers shall have paid or caused to be
paid all fees required to be paid hereunder or in connection
herewith;
(c) the Co-Borrowers shall have obtained all consents,
permits and approvals required in connection with the execution,
delivery and performance by the Co-Borrowers of their obligations
hereunder and such consents, permits and approvals shall continue
in full force and effect; and
(d) all legal matters in connection with this
financing shall be satisfactory to the Bank and its counsel.
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Section 6.02. Additional Conditions Precedent. The
obligation of the Bank to make any Loan (including, without
limitation, the Term Loan on the Conversion Date) shall be
subject to the further conditions precedent that on the date of
such Loan:
(a) the following statements shall be true:
(i) the representations and warranties contained
in Article 7 are true and correct on and as of the date of such
Loan as though made on and as of such date (except when such
representation or warranty relates to a specific date other than
the Closing Date);
(ii) no Default or Event of Default has occurred
and is continuing or would result from such Loan; and
(iii) no material adverse change shall have
occurred in the business, financial condition or operations of
the Co-Borrowers, taken as a whole, since the date of the then
most recent financial statements of the Co-Borrowers delivered to
the Bank hereunder or in connection herewith; and
(b) with respect to the conversion of all outstanding
Revolving Credit Loans to a Term Loan on the Conversion Date
only,
(i) the Bank shall have received, on or before
the Conversion Date, the Term Note evidencing the Term Loan duly
completed and executed by the Co-Borrowers; and
(ii) the Co-Borrowers shall have paid or caused to
be paid all fees required to be paid hereunder or in connection
herewith and all accrued fees and expenses of the Bank in
connection with such conversion, if any; and
(c) the Bank shall have received such approvals,
opinions, documents or instruments as the Bank may reasonably
request.
Section 6.03. No Default Certificate and Deemed
Representations. Each notice of a Loan (including, without
limitation, the Term Loan on the Conversion Date) shall be
accompanied by a certificate of the chief financial officer of
Olsten certifying that the statements contained in Section
6.02(a) are true and correct on the date of such notice or
submission and, unless the Co-Borrowers otherwise notify the Bank
prior to such borrowing, the acceptance by the Co-Borrowers of
the proceeds thereof shall constitute a representation and
warranty that such statements are true and correct as of the date
of such Loan.
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ARTICLE 7. REPRESENTATIONS AND WARRANTIES.
The Co-Borrowers hereby represent and warrant that:
Section 7.01. Incorporation, Good Standing and Due
Qualification; Compliance with Law. Each of the Co-Borrowers and
their respective Subsidiaries is duly incorporated, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power and authority to
own its assets and to transact the business in which it is now
engaged or proposed to be engaged, and is duly qualified as a
foreign corporation and in good standing under the laws of each
other jurisdiction in which such qualification is required except
where the failure to so qualify and/or be in good standing would
not in any case or in the aggregate, have a material adverse
effect on the operations, business, property or financial
condition of the Co-Borrowers taken as a whole or on the ability
of the Co-Borrowers to perform their obligations hereunder. In
addition, each of the Co-Borrowers and their respective
Subsidiaries is in compliance with all laws, treaties, rules or
regulations, or determination of an arbitration or a court or
other governmental authority, in each case applicable to or
binding upon it or any of its material property or to which it or
any of its material property is subject, except to the extent
that the failure to so comply would not, in any case or in the
aggregate, have a material adverse effect on the operations,
business, property or financial condition of the Co-Borrowers
taken as a whole or on the ability of the Co-Borrowers to perform
their obligations hereunder.
Section 7.02. Corporate Power and Authority; No
Conflicts. The execution, delivery and performance by each of
the Co-Borrowers of the Facility Documents have been duly
authorized by all necessary corporate action and do not and will
not: (a) require any consent or approval of its stockholders;
(b) contravene its charter or by-laws; (c) violate any provision
of, or require any filing, registration, consent or approval
under, any law, rule, regulation (including, without limitation,
the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve system as in effect from time to
time), order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to such
Co-Borrower or any of its Subsidiaries; (d) result in a breach of
or constitute a default or require any consent under any
indenture or loan or credit agreement or any other agreement,
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lease or instrument to which such Co-Borrower is a party or by
which any of its properties may be bound or affected; (e) result
in, or require, the creation or imposition of any Lien upon or
with respect to any of the properties now owned or hereafter
acquired by such Co-Borrower; or (f) cause such Co-Borrower (or
any Subsidiary) to be in default under any such rule, regulation,
order, writ, judgment, injunction, decree, determination or award
or any such indenture, agreement, lease or instrument, except, in
the case of clauses (c), (d), (e) and (f) above, where such
violation, failure to satisfy such requirement, breach, default,
failure to obtain consent or creation or imposition of a lien, as
the case may be, would not, in any case or in the aggregate, have
a material adverse effect upon the operations, business, property
or financial condition of the Co-Borrowers taken as a whole or on
the ability of the Co-Borrowers to perform their obligations
hereunder.
Section 7.03. Legally Enforceable Agreements. Each
Facility Document is, or when delivered under this Agreement will
be, a legal, valid and binding obligation of each of the
Co-Borrowers party thereto enforceable against such Co-Borrowers
in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency
and other similar laws affecting creditors' rights generally.
Section 7.04. Litigation. There are no actions, suits
or proceedings pending or, to the knowledge of the Co-Borrowers,
threatened, against or affecting the Co-Borrowers or any of them
or any of their respective Subsidiaries before any court,
governmental agency or arbitrator, which may, in any one case or
in the aggregate, materially adversely affect the financial
condition, operations, properties or business of the
Co-Borrowers, taken as a whole, or on the ability of the
Co-Borrowers to perform their obligations under the Facility
Documents.
Section 7.05. Financial Statements. The consolidated
balance sheet of Olsten and its Consolidated Subsidiaries as at
January 1, 1995 and the related consolidated income statements
and statements of cash flow of Olsten and its Consolidated
Subsidiaries for the fiscal year then ended, and the accompanying
notes, together with the opinion thereon of Coopers & Lybrand,
independent certified public accountants, copies of which have
been furnished to the Bank, and the interim financial statements
of Olsten and its Consolidated Subsidiaries as at and as of (as
the case may be) October 1, 1995 for the nine month period then
ended, copies of which have been furnished to the Bank, are
complete and correct and fairly present the consolidated
financial condition of Olsten and its Consolidated Subsidiaries
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as at such dates, and the consolidated results of the operations
of Olsten and its Consolidated Subsidiaries for the periods
covered by such statements all in accordance with GAAP
consistently applied (subject, in the case of interim financial
statements, to year-end adjustments and except, in the case of
such interim financial statements, for the absence of GAAP Notes
thereto). As of the date hereof, there are no liabilities of
such Co-Borrowers, fixed or contingent, which are material but
are not reflected in the financial statements or in the notes
thereto, other than liabilities arising in the ordinary course of
business since October 1, 1995, and the liabilities created by
this Agreement. No information, exhibit or report furnished by
the Co-Borrowers to the Bank in connection with the negotiation
of this Agreement contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make
the statements contained therein not materially misleading.
Since the date of the most recent financial statements delivered
to the Bank hereunder, there has been no material adverse change
in the condition (financial or otherwise), business, operations
or prospects of the Co-Borrowers taken as a whole.
Section 7.06. Ownership and Liens. Each of the
Co-Borrowers has title to, or valid leasehold interests in, all
of its properties and assets, real and personal, including the
properties and assets, and leasehold interests reflected in the
financial statements referred to in Section 7.05 (other than any
properties or assets disposed of in the ordinary course of
business), and none of the properties and assets owned by the
Co-Borrowers, or any of them, and none of their leasehold
interests is subject to any Lien, except as disclosed in
Schedule II or as may be permitted hereunder.
Section 7.07. Taxes. Each of the Co-Borrowers and
their respective Subsidiaries has filed all tax returns (federal,
state and local) required to be filed except where the failure to
file would not, in any case, or in the aggregate, have a material
adverse effect upon the operations, business, property or
financial condition of the Co-Borrowers taken as a whole or on
the ability of the Co-Borrowers to perform their obligations
hereunder and each of the Co-Borrowers and their respective
Subsidiaries has paid all taxes, assessments and governmental
charges and levies thereon to be due, including interest and
penalties other than taxes, assessments and governmental changes
and levies being contested in good faith by appropriate
proceedings and with respect to which adequate reserves in
conformity with GAAP shall have been provided on the books of the
Co-Borrowers or their Subsidiaries, as the case may be.
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Section 7.08. ERISA. Each of the Co-Borrowers and
their respective Subsidiaries is in compliance in all material
respects with all applicable provisions of ERISA. No Reportable
Event has occurred with respect to any Plan; no notice of intent
to terminate a Plan has been filed nor has any Plan been
terminated; no circumstance exists which constitutes grounds
under Section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a
Plan, nor has the PBGC instituted any such proceedings; none of
the Co-Borrowers nor any ERISA Affiliate has completely or
partially withdrawn under Sections 4201 or 4204 of ERISA from a
Multiemployer Plan; each of the Co-Borrowers and each of its
ERISA Affiliates has met its minimum funding requirements under
ERISA with respect to all of its Plans and there are no Unfunded
Vested Liabilities; and none of the Co-Borrowers nor any ERISA
Affiliate has incurred any liability to the PBGC under ERISA.
Section 7.09. Subsidiaries and Ownership of Stock.
Schedule I is a complete and accurate list of the Subsidiaries of
Olsten, showing the jurisdiction of incorporation or organization
of each Subsidiary and showing the percentage of the Olsten's
ownership of the outstanding stock or other interest of each such
Subsidiary. All of the outstanding capital stock or other
interest of each such Subsidiary has been validly issued, is
fully paid and nonassessable and is owned by Olsten free and
clear of all Liens. Except as disclosed in Schedule I, none of
the Co-Borrowers has any Subsidiaries.
Section 7.10. Credit Arrangements. Schedule II is a
complete and correct list of all credit agreements, indentures,
purchase agreements, guaranties, Capital Leases and other
investments, agreements and arrangements in effect on the date of
this Agreement providing for or relating to extensions of credit
to the Co-Borrowers or any of them (including agreements and
arrangements for the issuance of letters of credit or for
acceptance financing) which provide for maximum availability of
$100,000 or more in principal or face amount in respect of which
the Co-Borrowers, or any of them, or any of their respective
Subsidiaries is in any manner directly or contingently obligated;
and the maximum principal or face amounts of the credit in
question, outstanding and which can be outstanding, are correctly
stated, and all Liens of any nature given or agreed to be given
as security therefor are correctly described or indicated in such
Schedule.
Section 7.11. Operation of Business. Each of the
Co-Borrowers and each of their respective Subsidiaries possesses
all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct their
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business substantially as now conducted and as presently proposed
to be conducted except where the failure to do so would not, in
any case or in the aggregate, have a material adverse effect upon
the operations, business, property or financial condition of the
Co-Borrowers taken as a whole or on the ability of the
Co-Borrowers to perform their obligations hereunder; and none of
the Co-Borrowers nor any of their respective Subsidiaries is in
violation of any valid rights of others with respect to any of
the foregoing, except where such violation would not, in any case
or in the aggregate, have a material adverse effect upon the
operations, business, property or financial condition of the
Co-Borrowers taken as a whole or on the ability of the
Co-Borrowers to perform their obligations hereunder. Without
limiting the generality of the foregoing, all health care
personnel employed by the Co-Borrowers, or any of them, including
all nurses, home health aides, therapists, etc. are properly
licensed, to the extent required, to perform the duties of their
employment in each jurisdiction where such duties are performed,
except where the failure to be properly licensed would not, in
any case or in the aggregate, have a material adverse effect upon
the operations, business, property or financial condition of the
Co-Borrowers taken as a whole or on the ability of the
Co-Borrowers to perform their obligations hereunder.
Section 7.12. Hazardous Substances. Each of the
Co-Borrowers, and each of their respective Subsidiaries, is in
compliance with all Environmental Laws, and has obtained all
necessary licenses and permits required to be issued pursuant to
any Environmental Law except where the failure to so comply or to
obtain such licenses or permits would not in any case or in the
aggregate have a material adverse effect on the business,
property or financial condition of the Co-Borrowers taken as a
whole or on the ability of the Co-Borrowers to perform their
obligations hereunder. To the best of the Co-Borrowers'
knowledge, none of the Co-Borrowers, nor any of their respective
Subsidiaries, has received any notice or communication from any
governmental agency with respect to (i) any Hazardous Substance
relative to its operations, property or acts or (ii) any
investigation, demand or request pursuant to or enforcing any
Environmental Law relating to it or its operations, no such
investigation is pending or threatened.
Section 7.13. No Default on Outstanding Judgments or
Orders. Each of the Co-Borrowers and each of their respective
Subsidiaries has satisfied all judgments and none of the
Co-Borrowers nor any of their respective Subsidiaries is in
default with respect to any judgment, writ, injunction, decree,
rule or regulation of any court, arbitrator or federal, state,
municipal or other governmental authority, commission, board,
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bureau, agency or instrumentality, domestic or foreign except to
the extent that such defaults would not, in any case or in the
aggregate, have a material adverse effect on the operations,
business, property or financial condition of the Co-Borrowers
taken as a whole or on the ability of the Co-Borrowers to perform
their obligations hereunder.
Section 7.14. No Defaults on Other Agreements. None
of the Co-Borrowers nor any of their respective Subsidiaries is a
party to any indenture, loan or credit agreement or any lease or
other agreement or instrument or subject to any charter or
corporate restriction which would in any case or in the aggregate
have a material adverse effect on its ability to carry out its
obligations under the Facility Documents or on the business,
properties, assets, operations or condition, financial or
otherwise, of the Co-Borrowers taken as a whole or on the ability
of the Co-Borrowers to perform their obligations hereunder. None
of the Co-Borrowers, nor any of their respective Subsidiaries is
in default in any respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument material to its business
to which it is a party except where such default would not, in
any case or in the aggregate, have a material adverse effect on
the business, properties, assets, operations or condition,
financial or otherwise of the Co-Borrowers taken as a whole or on
the ability of the Co-Borrowers to perform their obligations
hereunder.
Section 7.15. Labor Disputes and Acts of God. Neither
the business nor the properties of the Co-Borrowers or any of
them or any of their respective Subsidiaries are affected by any
fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or
of the public enemy or other casualty (whether or not covered by
insurance), materially and adversely affecting such business or
properties or the operations of the Co-Borrowers taken as a whole
or the ability of the Co-Borrowers to perform their obligations
hereunder.
Section 7.16. Governmental Regulation. None of the
Co-Borrowers nor any of their respective Subsidiaries is subject
to regulation under the Public Utility Holding Company Act of
1935, the Investment Company Act of 1940 or any other statute or
regulation limiting its ability to incur indebtedness for money
borrowed as contemplated hereby.
Section 7.17. Partnerships. Except as disclosed on
Schedule III hereto, none of the Co-Borrowers nor any of their
respective Subsidiaries is a partner in any partnership.
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Section 7.18. No Forfeiture. To the best of the
Co-Borrowers' knowledge, none of the Co-Borrowers, nor any of
their respective Subsidiaries is engaged in or proposes to be
engaged in the conduct of any business or activity which could
result in a Forfeiture Proceeding and no Forfeiture Proceeding
against any of them is pending or, to the best of the
Co-Borrowers' knowledge, threatened.
Section 7.19. No Default or Event of Default. No
Default or Event of Default has occurred and is continuing.
Section 7.20. Accounts Receivable. To the best of the
Co-Borrowers' knowledge, each account receivable shown on each
Borrowing Base Certificate shall be based upon an actual bona
fide sale and shipment of delivery of goods or rendition of
services to customers, made by the Co-Borrowers in the ordinary
course of its business; the goods and inventory being sold and
the accounts thereby created and created by services being
rendered are the Co-Borrowers' exclusive property and are not and
shall not be subject to any Lien (other than Liens permitted
hereunder or which are disclosed on Schedule II hereto); and
except as the Co-Borrowers may otherwise advise the Bank pursuant
to Section 8.08(o), the Co-Borrowers' customers have accepted
such goods or services and owe and are obligated to pay the full
amount stated in the invoices according to their terms, without
dispute, offset, defense or counterclaim.
Section 7.21. Solvency. The Co-Borrowers are Solvent
on a consolidated basis.
Section 7.22. Material Adverse Change. No event or
series of events has occurred since October 1, 1995 which would
result in a material adverse effect on the operations, business,
property or financial condition of the Co-Borrowers taken as a
whole or on the ability of the Co-Borrowers to perform their
obligations hereunder.
Section 7.23. Consolidated Total Assets. At least 90%
of the amount of Consolidated Total Assets of, owned or held by
Olsten and its Consolidated Subsidiaries as at the date hereof
are the amount of Consolidated Total Assets of, owned or held by
one or more of the Co-Borrowers.
ARTICLE 8. AFFIRMATIVE COVENANTS.
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So long as the Note shall remain unpaid or the Bank
shall have any Commitment under this Agreement, the Co-Borrowers
and each of them shall:
Section 8.01. Maintenance of Existence. Except as
otherwise provided in this Agreement, preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, its
corporate existence and good standing in the jurisdiction of its
incorporation, and qualify and remain qualified, and cause each
of its Subsidiaries to qualify and remain qualified, as a foreign
corporation in each jurisdiction in which such qualification is
required except where the failure to remain qualified as a
foreign corporation would not, in any case or in the aggregate,
have a material adverse effect upon the operations, business,
property or financial condition of the Co-Borrowers taken as a
whole or on the ability of the Co-Borrowers to perform their
obligations hereunder.
Section 8.02. Conduct of Business. In all material
respects to continue, and cause each of its Subsidiaries to
continue, to engage in an efficient and economical manner in the
business of providing human resource services including, without
limitation, office management services, health care services and
other related businesses, or information technology services.
Section 8.03. Maintenance of Properties. Maintain,
keep and preserve, and cause each of its Subsidiaries to
maintain, keep and preserve, all of its properties (tangible and
intangible) necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and
tear excepted.
Section 8.04. Maintenance of Records. Keep, and cause
each of its Subsidiaries to keep, adequate records and books of
account, in which complete entries will be made in accordance
with GAAP, reflecting all financial transactions of such
Co-Borrower and its Subsidiaries.
Section 8.05. Maintenance of Insurance. Maintain, and
cause each of its Subsidiaries (i) to maintain insurance with
financially sound and reputable insurance companies or
associations or (ii) to maintain self-insurance in accordance
with prudent business practices, in each case, in such amounts
and covering such risks as are usually carried by companies
engaged in the same or a similar business and similarly situated,
which insurance may provide for reasonable deductibles or
self-retained amounts.
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Section 8.06. Compliance with Laws. Comply, and cause
each of its Subsidiaries to comply, in all respects with all
applicable laws, rules, regulations and orders except where the
failure to so comply would not have a material adverse effect
upon the operations, business, properties or financial condition
of the Co-Borrowers taken as a whole or on the ability of the
Co-Borrowers to perform their obligations hereunder.
Section 8.07. Right of Inspection. At any reasonable
time during normal business hours and from time to time, permit
the Bank or any agent or representative thereof, to examine and
make copies and abstracts from the records and books of account
of, and visit the properties of, such Co-Borrower and any of its
Subsidiaries, and to discuss the affairs, finances and accounts
of such Co-Borrower and any such Subsidiary with any of their
respective officers and directors and such Co-Borrower's
independent accountants; provided, that prior to the occurrence
and continuance of a Default or Event of Default, the costs of
any such examination or visit shall not be charged to the
Co-Borrowers hereunder but shall be borne by the Bank.
Notwithstanding the foregoing, the costs of any reports delivered
to the Bank under Section 8.08 below shall be borne by the
Co-Borrowers.
Section 8.08. Reporting Requirements. Furnish
directly to the Bank:
(a) as soon as available and in any event within
90 days after the end of each fiscal year of Olsten, an audited
consolidated balance sheet of Olsten and its Consolidated
Subsidiaries as of the end of such fiscal year and a consolidated
income statement, balance sheet and statement of cash flows of
such entities for such fiscal year, all in reasonable detail (and
including a complete listing and description of all deferred
charges by line item and by category) and stating in comparative
form the respective consolidated figures for the corresponding
date and period in the prior fiscal year and all prepared in
accordance with GAAP and as to the consolidated statements
accompanied by an opinion thereon acceptable to the Bank by
Coopers & Lybrand or other independent certified public
accountants acceptable to the Bank which opinion neither includes
an exception as to adherence with GAAP nor expresses an adverse
opinion nor contains a disclaimer;
(b) as soon as available and in any event within
45 days after the end of each of the first three quarters of each
fiscal year of Olsten, a consolidated balance sheet of Olsten and
its Consolidated Subsidiaries as of the end of such quarter and a
consolidated income statement, balance sheet and statements of
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cash flow of such entities for the period commencing at the end
of the previous fiscal year and ending with the end of such
quarter, all in reasonable detail (and including a complete
listing and description of all deferred charges by line item and
by category) and stating in comparative form the respective
consolidated figures for the corresponding date and period in the
previous fiscal year and all prepared in accordance with GAAP and
attested to by the chief financial officer of Olsten (subject to
year-end adjustments);
(c) promptly following receipt thereof, copies of any
management letter prepared by the Co-Borrowers' independent
certified public accountants relating to the consolidated
financial statements of the Co-Borrowers and delivered to Olsten;
(d) simultaneously with the delivery of the financial
statements referred to above, a certificate of the chief
financial officer of Olsten (i) certifying that to the best of
his knowledge no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and the
action which is proposed to be taken with respect thereto, and
(ii) with computations demonstrating compliance with the
covenants contained in Article 10;
(e) quarterly, on or before the 28th day of each
calendar month which immediately succeeds a fiscal quarter end of
the Co-Borrowers, through the Termination Date, a duly completed
and fully executed Borrowing Base Certificate for the last day of
each such fiscal quarter, together with summary aging reports
(including a breakdown of Medicare and Medicaid Receivables), in
form and substance satisfactory to the Bank;
(f) simultaneously with the delivery of the annual
financial statements referred to in Section 8.08(a), (i) a
certificate of the independent public accountants who audited
such statements to the effect that, in making the examination
necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes a Default
or Event of Default, or if such accountants shall have obtained
knowledge of any such condition or event, specifying in such
certificate each such condition or event of which they have
knowledge and the nature and status thereof and (ii) an
affirmation by such accountants of the information contained in
the Borrowing Base Certificate delivered by the Co-Borrowers to
the Bank providing information for December of such fiscal year;
(g) promptly after the Co-Borrowers become aware of
the commencement thereof, notice of all actions, suits, and
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proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Co-Borrowers, or any of them, or any of
their respective Subsidiaries including, without limitation, any
such proceeding relating to any alleged violation of any
Environmental Law, which, if determined adversely to the
Co-Borrowers or such Subsidiary, would have a material adverse
effect on the financial condition, properties, or operations of
the Co-Borrowers, taken as a whole or on the ability of the
Co-Borrowers to perform their obligations hereunder;
(h) as soon as possible and in any event within five
days after the occurrence of each Default or Event of Default a
written notice setting forth the details of such Default or Event
of Default and the action which is proposed to be taken by the
Co-Borrowers with respect thereto;
(i) as soon as possible and in any event within five
days after the Co-Borrowers know or have reason to know that any
of the events or conditions specified below with respect to any
Plan or Multiemployer Plan have occurred or exist, a statement
signed by a senior financial officer of Olsten setting forth
details respecting such event or condition and the action, if
any, which the Co-Borrowers or their ERISA Affiliate proposes to
take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC by the Co-Borrower, or
any of them or an ERISA Affiliate with respect to such event or
condition):
(i) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued thereunder,
with respect to a Plan, as to which PBGC has not by
regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the
occurrence of such event (provided that a failure to
meet the minimum funding standard of Section 412 of the
Code or Section 302 of ERISA shall be a reportable
eventregardless of the issuance of any waivers in
accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a
notice of intent to terminate any Plan or the
termination of any Plan;
(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or
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the receipt by the Co-Borrowers, or any of them or any
ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by PBGC with respect to
such Multiemployer Plan;
(iv) the complete or partial withdrawal by the
Co-Borrowers or any of them or any ERISA Affiliate
under Section 4201 or 4204 of ERISA from a
Multiemployer plan, or the receipt by the Co-Borrowers,
or any of them or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or
that it intends to terminate or has terminated under
Section 4041A of ERISA; and
(v) the institution of a proceeding by a
fiduciary or any Multiemployer Plan against the
Co-Borrowers or any ERISA Affiliate to enforce Section
515 of ERISA, which proceeding is not dismissed within
30 days;
(j) promptly after the furnishing thereof, copies of
any statement or report furnished to any other party pursuant to
the terms of any indenture, loan or credit or similar agreement
and not otherwise required to be furnished to the Bank pursuant
to any other clause of this Section 8.08;
(k) promptly, and in any event within five business
days, after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which the
Co-Borrowers, or any of them or any of their respective
Subsidiaries sends to its stockholders, and copies of all
regular, periodic and special reports and all registration
statements which the Co-Borrowers, or any of them or any such
Subsidiary files with the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or
with any national securities exchange or state securities
administrator;
(l) promptly after the commencement thereof or
promptly after the Co-Borrowers know of the commencement or
threat thereof, notice of any Forfeiture Proceeding;
(m) promptly following the creation thereof, notice of
the creation of any Subsidiary of any Co-Borrower and disclosure
in reasonable detail of the assets transferred to or Investments
in any such Person;
(n) promptly, notice of any matter materially
adversely affecting the value, enforceability or collectability
of the Eligible Receivables taken as a whole including, without
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limitation, notice of all material customer disputes, offsets,
defenses, counterclaims, returns and rejections and all reclaimed
or repossessed merchandise or goods;
(o) promptly after the occurrence of any Acceptable
Acquisition, notice of the identity of any Acceptable Acquisition
and such other information as is included in the press or other
public releases disseminated with regard to the Acceptable
Acquisition; and
(p) such other information respecting the condition or
operations, financial or otherwise, of the Co-Borrowers, or any
of them or any of their respective Subsidiaries as the Bank may
from time to time reasonably request.
Section 8.09. Payment of Obligations. Each
Co-Borrower will, and will cause each of its Subsidiaries to,
pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all of its
material Debt and other material obligations of whatever nature
(including any obligation for taxes and wages), except for any
Debt or other material obligation which is being contested in
good faith and with respect to which on a consolidated basis,
adequate reserves in conformity with GAAP shall have been
provided on the books of the Co-Borrowers or their Subsidiaries,
as the case may be.
Section 8.10. Consolidated Total Assets. At least 90%
of the amount of Consolidated Total Assets of, owned or held by
Olsten and its Consolidated Subsidiaries shall at all times be
the amount of Consolidated Total Assets of, owned or held by, one
or more of the Co-Borrowers.
ARTICLE 9. NEGATIVE COVENANTS.
So long as the Note shall remain unpaid, or the Bank
shall have any Commitment under this Agreement, neither the
Co-Borrowers nor any of them shall:
Section 9.01. Debt. Create, incur, assume or suffer
to exist, or permit any of its Subsidiaries to create, incur,
assume or suffer to exist any Debt, except:
(a) Debt of the Co-Borrowers under this Agreement or
the Note;
(b) Debt described in Schedule II hereto, and any
renewals, extensions or refinancings of any of such items of
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Debt, provided, that such renewals, extensions or refinancings
are on terms no less favorable to the Co-Borrowers than the
original terms of such Debt and that such terms are reasonably
satisfactory to the Bank, and further provided, that no such
renewals, extensions or refinancings shall increase the Debt
(i.e., either with respect to outstandings or availability) of
the Co-Borrowers, or any of them, and further provided, that with
respect to the item of Debt described in paragraph 3(a) of
Schedule II hereto, the Bank shall at all times be deemed a
holder of "Senior Debt" under the instruments or agreements
evidencing such scheduled Debt and that any amendment,
supplementation or modification of the terms of such scheduled
Debt shall be subject to Section 9.09 hereof;
(c) Subordinated Debt;
(d) Debt of any Co-Borrower to any other Co-Borrower;
(e) Debt incurred in connection with operating leases
entered into by the Co-Borrowers, or any of them, consistent with
past practices or in the ordinary course of business;
(f) Notwithstanding anything contained in Section 9.01
hereof to the contrary and in addition to any of the Debt
described in any of Sections 9.01(a)-(j) hereof (other than this
Section 9.01(f)), Debt incurred after the date of this Agreement
(including, without limitation, Debt of any Co-Borrower to any
Subsidiary of any Co-Borrower which is not itself a Co-Borrower
and guarantees by any Co-Borrower of the Debt of any Subsidiary
of any Co-Borrower which is not itself a Co-Borrower) in an
aggregate principal amount not to exceed the difference of
$40,000,000 less the amount of the Debt of the Co-Borrowers under
this Agreement, the Note or any of the other Facility Documents
at any time outstanding as to all such Persons;
(g) Debt of the Co-Borrowers or any of them secured by
purchase money Liens permitted by Section 9.02(i);
(h) Debt of the Co-Borrowers or any of them secured by
a mortgage on the property of Olsten located at One Merrick
Avenue, Westbury, New York or any adjacent property in an amount
not to exceed $7,000,000 or if such property is sold by Olsten,
the property of Olsten or another Co-Borrower located at
175 Broad Hollow Road, Melville, New York and any adjacent
property in an amount not to exceed $15,000,000;
(i) Guarantees by any Co-Borrower of the Debt of any
other Co-Borrower; and
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(j) Debt incurred as a result of bid bonds or
performance bonds incurred by any Co-Borrower in the ordinary
course of its business consistent with past practices.
Section 9.02. Liens. Create, incur, assume or suffer
to exist, or permit any of its Subsidiaries to create, incur,
assume or suffer to exist, any Lien, upon or with respect to any
of its properties, now owned or hereafter acquired, except:
(a) Liens in favor of the Bank securing the Loans
hereunder;
(b) Liens for taxes or assessments or other government
charges or levies if not yet due and payable or if due and
payable if they are being contested in good faith by appropriate
proceedings and for which appropriate reserves are maintained in
conformity with GAAP;
(c) Liens imposed by law, such as mechanic's,
materialmen's, landlord's, warehousemen's and carrier's Liens,
and other similar Liens, securing obligations incurred in the
ordinary course of business which are not past due for more than
30 days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have
been established;
(d) Liens under workers' compensation, unemployment
insurance, social security or similar legislation (other than
ERISA);
(e) Liens, deposits or pledges to secure the
performance of bids, tenders, contracts (other than contracts for
the payment of money), leases, public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary
course of business;
(f) judgment and other similar Liens arising in
connection with court proceedings; provided that the execution or
other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith
and by appropriate proceedings;
(g) easements, rights-of-way, restrictions and other
similar encumbrances which, in the aggregate, do not materially
interfere with the occupation, use and enjoyment by the
Co-Borrower or any such Subsidiary of the property or assets
encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
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(h) Liens securing obligations of any Co-Borrower to
another Co-Borrower;
(i) purchase money Liens on any property heretofore or
hereafter acquired or the assumption of any Lien on property
existing at the time of such acquisition, or a Lien incurred in
connection with any conditional sale or other title retention
agreement or a Capital Lease; provided, that such liens attach
only to the property as acquired and do not extend to any
additional property of the Co-Borrowers;
(j) Liens existing on the date hereof and described on
Schedule II hereto;
(k) Liens securing indebtedness permitted by Section
9.01(h) hereof;
(l) Notwithstanding anything contained in this Section
9.02 to the contrary, Liens securing indebtedness of any of the
Co-Borrowers in an aggregate principal amount outstanding or
available to be drawn at any one time respecting all of the
Co-Borrowers, not in excess of $1,000,000, provided that such
Liens do not attach to the accounts receivable of the
Co-Borrowers, or any of them; and
(m) Liens on accounts receivable acquired by the
Co-Borrowers (or any of them) in Acceptable Acquisitions or on
accounts receivable of entities acquired by the Co-Borrowers (or
any of them) in Acceptable Acquisitions which secure indebtedness
provided that all such indebtedness so secured shall not be in
excess of $20,000,000 at any one time outstanding.
Section 9.03. Investments. Notwithstanding anything
contained in this Agreement to the contrary, make, or permit any
of its Subsidiaries to make, any loan or advance to any Person or
purchase or otherwise acquire or redeem,or permit any such
Subsidiary to purchase or otherwise acquire, any capital stock,
assets, obligations or other securities of, make any capital
contribution to, or otherwise invest in, or acquire any interest
in (each of the foregoing, an "Investment"), any Person
(including, without limitation, any Co-Borrower or any Subsidiary
or Affiliate of any Co-Borrower), except (a) any of the following
Investments: (i) obligations issued or guaranteed by states or
municipalities within the United States of America and rated at
least A-1 by Standard & Poors or an equivalent rating by another
recognized credit rating agency approved by the Bank (an
"Equivalent Rating"); (ii) obligations issued or guaranteed by
the United States of America or any agency or subdivision
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thereof, the payment or guarantee of which constitutes a full
faith and credit obligation of the United States of America;
(iii) certificates of deposit, time deposits, Eurodollar
certificates of deposit, bankers acceptances and other "money
market instruments" issued by any bank, trust company or
financial institution organized under the laws of the United
States of America or any state thereof (or, in the case of
Eurodollar certificates of deposit, a branch of any such bank,
trust company or financial institution) having capital and
surplus in an aggregate amount not less than $200,000,000 and
rated (i.e., the instrument) at least A-1 by Standard & Poors or
an Equivalent Rating, or by the Bank, or by any bank, trust
company or financial institution organized under the laws of a
jurisdiction other than the United States of America or any state
thereof having capital and surplus in an aggregate amount not
less than $200,000,000 and rated (i.e., the instrument) at least
A-1 by Standard & Poors or an Equivalent Rating; (iv) commercial
paper rated at least Prime-1 by Moody's Investor Services or A-1
by Standard & Poors; (v) repurchase agreements entered into with
any bank, trust company or financial institution organized under
the laws of the United States of America or any state thereof
having capital and surplus in an aggregate amount not less than
$200,000,000 or with the Bank, or with any bank, trust company or
financial institution organized under the laws of a jurisdiction
other than the United States of America or any state thereof
having capital and surplus in an aggregate amount not less than
$200,000,000, and which (with respect to any such repurchase
agreement referred to in this Section 9.03(v)) are fully secured
by obligations of the type described in Section 9.03(ii) hereof
and (vi) Investments, other than of any of the types referenced
in (a)(i)-(v) above or (b)-(f) below, which are of the same
general nature as the Co-Borrowers' Investments existing on the
date hereof, including without limitation, loans to franchisees
or licensed area representatives of the Co-Borrowers or any of
them, provided that the recipient or beneficiary of any such
Investment referred to in this Section 9.03(a)(vi) is not an
Affiliate of the Co-Borrowers or any of them, and further
provided that the aggregate of such Investments (i.e., those
referenced in this clause (vi)) do not, at any time, in any case
or in the aggregate, exceed $20,000,000; and provided that in the
case of any of the Investments referred to in clauses (i), (ii),
(iii) and (iv) above, each such Investment matures or is maturing
or being due or payable in full not more than one year after the
relevant Person's acquisition thereof; (b) Acceptable
Acquisitions with respect to which the amounts paid or payable
(which amount includes cash, notes, issuance of equity securities
and the assumption of debt) do not at any time, in any case or in
the aggregate, exceed $125,000,000 during fiscal year 1995
(excluding the IMI, Norsk Personal Gruppen and OFFiS Unternehmen
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fur Zeitarbeit GmbH & Co KG acquisitions) and $100,000,000 during
any fiscal year of Olsten thereafter (excluding the OFFiS
Unternehmen fur Zeitarbeit GmbH & Co KG acquisition during fiscal
year 1996) during the term of this Agreement; (c) Investments
(including by the purchase of equity securities) to or in non-
Subsidiary entities that are Affiliates of the Co-Borrowers, or
any of them, provided that such entities are engaged in the
business of providing human resource services, including without
limitation, health care services, related office management
services or related businesses, and that such entities do not
become Subsidiaries of the Co-Borrowers or any of them as a
result of such loans, advances or investments; (d) Investments to
or in any Subsidiary that is not a Co-Borrower; provided,
however, that notwithstanding anything contained in this
Agreement to the contrary, in the case of any of the Investments
referenced in either of clauses (c) or (d) above, such
Investments do not, at any time, in any case or in the aggregate
(i.e., any such Investments referenced in clause(c) above plus
any such Investments referenced in clause (d) above), exceed
$20,000,000; (e) Investments in Subsidiaries that are not Co-
Borrowers for the purpose of making Acceptable Acquisitions with
respect to which the amounts paid or payable (which amount
includes cash, notes, issuance of equity securities and the
assumption of debt) do not at any time, in any case or in the
aggregate, exceed $125,000,000 during fiscal year 1995 and
$100,000,000 during any fiscal year of Olsten thereafter during
the term of this Agreement; provided that any such Subsidiary
must be a "new Subsidiary" within the meaning given to such
phrase in Section 13.06 hereof; and (f) Investments to or in any
Co-Borrower.
Notwithstanding anything to the contrary in the foregoing
paragraphs, for the purpose hereof, the aggregate of the amounts
paid or payable with respect to Acceptable Acquisitions under
Section 9.03(b) hereof and Investments in Subsidiaries that are
not Co-Borrowers under Section 9.03 hereof may not exceed
$125,000,000 during fiscal year 1995 and $100,000,000 during any
fiscal year of Olsten thereafter during the term of this
Agreement.
Section 9.04. Sale of Assets. Sell, lease, assign,
transfer or otherwise dispose of, or permit any of its
Subsidiaries to sell, lease, assign, transfer or otherwise
dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness
of such Subsidiaries, receivables and leasehold interests),
except: (a) for assets disposed of in the ordinary course of
business; (b) the sale or other disposition of assets no longer
used or useful in the conduct of its business; (c) that any
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Co-Borrower may sell, lease, assign, or otherwise transfer its
assets to another Co-Borrower; (d) for dispositions of shares of
capital stock in connection with a transaction permitted by
Section 9.06; (e) sales or dispositions of assets in arm's length
transactions, provided that the aggregate net proceeds of all
such sales shall not exceed $50,000,000 in any fiscal year (in
addition to the transactions described in any of subsections
(a)-(d) or (f) of this Section 9.04); and (f) the sale of all of
the issued and outstanding shares of capital stock of Healthcare
Staff Resources, Inc. on or prior to March 10, 1995 by Kimberly
Services, Inc. pursuant to a certain Stock Purchase and Sale
Agreement (the "Stock Purchase Agreement") dated as of February
17, 1995 between Kimberly Services, Inc. and Careerstaff
Unlimited, Inc., provided that no Default or Event of Default
shall occur under or with respect to any other section of this
Agreement as a result of or after giving effect to the
consummation of the transactions contemplated by the Stock
Purchase Agreement.
Section 9.05. Transactions with Affiliates. Enter
into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any
service, with any Affiliate or permit any of its Subsidiaries to
enter into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any
service, with any Affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of such Co-Borrower's or
such Subsidiary's business and upon fair and reasonable terms no
less favorable to such Co-Borrower or such Subsidiary than would
obtain in a comparable arm's length transaction with a Person not
an Affiliate.
Section 9.06. Mergers, Etc. Merge or consolidate
with, or sell, assign, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter
acquired) to, any person, or acquire all or substantially all of
the assets or the business of any Person (or enter into any
agreement to do any of the foregoing), or permit any of its
Subsidiaries to do so except: (a) that any such Co-Borrower or
Subsidiary may merge into or transfer assets to a Co-Borrower;
(b) that a Co-Borrower may effect any Acceptable Acquisition
permitted by Section 9.07 by means of a merger or otherwise
provided that if such Acceptable Acquisition is effected by means
of a merger, the Co-Borrower shall be the surviving entity, and
further provided that in any merger transaction referenced in
either (a) or (b) above involving Olsten, Olsten shall be the
surviving entity; and (c) for a transaction permitted by Section
9.04 hereof.
Section 9.07. Acquisitions. Make any Acquisition
other than an Acceptable Acquisition.
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Section 9.08. No Activities Leading to Forfeiture.
None of the Co-Borrowers nor any of their respective Subsidiaries
shall engage in the conduct of any business or activity which
could result in a Forfeiture Proceeding.
Section 9.09. Amendments to Indenture; Certain
Voluntary Prepayments; etc. Amend, supplement or modify any term
or provision of the Indenture or of any Subordinated Debt or of
any of the items of Debt referenced in any of Schedule II which
would adversely affect the rights of the Bank, including, without
limitation, amendments to the subordination provisions of the
Subordinated Debt and amendments, modifications or changes which
would accelerate the maturity or increase the amount of any
payment of principal thereof or which would increase the rate or
accelerate the date for the payment of interest thereon, or
consent to or permit any such amendment, supplement or
modification; or make any voluntary or optional prepayment,
repurchase or redemption of or with respect to any Debt other
than the item of Subordinated Debt referenced in Schedule II,
paragraph 3(a).
Section 9.10. Corporate Documents; Fiscal Year.
Amend, modify or supplement its certificate or articles of
incorporation or by-laws in any way which would adversely affect
the ability of the Co-Borrowers to perform their obligations
hereunder or change its fiscal year.
ARTICLE 10. FINANCIAL COVENANTS.
Note: The fiscal year-end dates for the 1993, 1994,
1995, 1996, 1997, 1998 and 1999 fiscal years of Olsten are
1/2/94, 1/1/95, 12/31/95, 12/29/96, 12/28/97, 1/3/99 and 1/2/00,
respectively.
So long as the Note shall remain unpaid or the Bank
shall have any Commitment under this Agreement:
Section 10.01. Minimum Consolidated Working Capital.
The Co-Borrowers shall maintain at all times an excess of
Consolidated Current Assets over Consolidated Current Liabilities
(hereinafter, "CWC") of not less than the amount set forth below
opposite the applicable period:
Period Amount
- ------ ------
The date hereof through 12/30/95 $149,000,000
12/31/95-12/28/96 $156,000,000
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12/29/96-12/27/97 CWC as at 12/31/95 plus
$35,000,000
12/28/97-1/2/99 CWC as at 12/29/96 plus
$35,000,000
1/3/99-1/1/00 CWC as at 12/28/97 plus
$35,000,000
1/2/00 and thereafter CWC as at 1/3/99 plus
$35,000,000
Section 10.02. Minimum Consolidated Tangible Net
Worth. The Co-Borrowers shall maintain at all times during each
of the periods set forth below, a Consolidated Tangible Net Worth
of not less than the amount set forth below opposite such period:
Period Amount
- ------ ------
1/2/94-12/31/94 $80,000,000
1/1/95-12/30/95 Consolidated Tangible Net
Worth as at 1/2/94 plus
$35,000,000
12/31/95-12/28/96 Consolidated Tangible Net
Worth as at 1/1/95 plus
$35,000,000
12/29/96-12/27/97 Consolidated Tangible Net
Worth as at 12/31/95 plus
$35,000,000
12/28/97-1/2/99 Consolidated Tangible Net
Worth as at 12/29/96 plus
$35,000,000
1/3/99-1/1/00 Consolidated Tangible Net
Worth as at 12/28/97 plus
$35,000,000
1/2/00 and thereafter Consolidated Tangible Net
Worth as at 1/3/99 plus
$35,000,000
Section 10.03. Current Ratio. The Co-Borrowers shall
maintain, determined as of the last day of each fiscal quarter
ending prior to the Termination Date, a ratio of Consolidated
Current Assets to Consolidated Current Liabilities of not less
than 2.00:1.00.
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Section 10.04. Consolidated Total Liabilities To
Consolidated Tangible Net Worth Ratio. The Co-Borrowers shall
not permit, determined as of the last day of each fiscal quarter
ending prior to the Termination Date, the ratio of Consolidated
Total Liabilities minus Consolidated Subordinated Debt to
Consolidated Tangible Net Worth plus Consolidated Subordinated
Debt to be greater than the ratio set forth opposite the
applicable period:
Period Ratio
- ------ -----
The date hereof through 12/30/95 1.35
12/31/95-12/28/96 1.25
12/29/96 and thereafter 1.00
Section 10.05. Fixed Coverage Ratio. The Co-Borrowers
shall not permit on a consolidated basis determined as of the
last day of each fiscal quarter ending prior to the Termination
Date, for the period of four consecutive fiscal quarters then
ended, the ratio of (i) Net Profit Before Taxes plus Depreciation
plus Amortization plus Interest Expense to (ii) Principal
Payments plus Dividends plus Interest Expense plus Capital
Expenditures, to be less than 2.00:1.00; provided, that the
Co-Borrowers shall not permit Net Profit Before Taxes for any
four consecutive quarterly periods to be less than or equal to
zero ($0) Dollars.
Section 10.06. Funded Debt to Consolidated Net
Operating Cash Flow. The Co-Borrowers shall not permit the ratio
of Funded Debt to Consolidated Net Operating Cash Flow to exceed,
at any time during the period from the date hereof to but
excluding the Termination Date, 2.50:1.00. For purposes of
calculating this ratio, Funded Debt shall be determined on the
date of calculation and Consolidated Net Operating Cash Flow
shall be the aggregate Consolidated Net Operating Cash Flow for
the four consecutive quarterly periods immediately preceding the
date of calculation.
Compliance with all of the financial covenants
contained in this Article 10 shall be determined by reference to
the consolidated financial statements of Olsten and its
Consolidated Subsidiaries delivered to the Bank in accordance
with Section 8.08 hereof.
ARTICLE 11. EVENTS OF DEFAULT.
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Section 11.01. Events of Default. Any of the
following events shall be an "Event of Default":
(a) The Co-Borrowers shall: (i) fail to pay the
principal of the Note as and when due and payable; or (ii) fail
to pay interest on the Note or any fee or other amount due
hereunder or under any of the other Facility Documents as and
when due and payable.
(b) Any representation or warranty made or deemed made
by the Co-Borrowers or any of them in this Agreement or in any
other Facility Document or which is contained in any certificate,
document, opinion, financial or other statement furnished at any
time under or in connection with any Facility Document shall
prove to have been incorrect in any material respect on or as of
the date made or deemed made;
(c) The Co-Borrowers shall: (i) fail to perform or
observe any term, covenant or agreement contained in Section 2.03
or in Articles 9 or 10; or (ii) fail to perform or observe any
term, covenant or agreement on their part to be performed or
observed (other than the obligations specifically referred to in
Section 11.01(a), Section 11.01(b), Section 11.01(c)(i) or any of
Sections 11.01(d)-(h)) which is contained in any Facility
Document and such failure shall continue for 30 consecutive days;
(d)(i) The Co-Borrowers, or any of them or any of
their respective Subsidiaries shall: (A) fail to pay any Debt,
including but not limited to indebtedness for borrowed money
(other than the payment obligations described in (a) above), of
the Co-Borrowers, or such Subsidiary, as the case may be, or any
interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or
otherwise); or (B) fail to perform or observe any term, covenant
or condition on its part to be performed or observed under any
agreement or instrument relating to any such Debt, when required
to be performed or observed, if the effect of such failure to
perform or observe is to accelerate, or to permit the
acceleration of, after the giving of notice or passage of time,
or both, the maturity of such Debt, whether or not such failure
to perform or observe shall be waived by the holder of such Debt;
or (ii) any such Debt (other than under the circumstances and
with respect to the Debt described in Section 11.01(d)(iii)
hereof) shall be declared due and payable, or shall be required
to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; or (iii) the
Debentures, or any portion thereof, shall be declared or deemed
due and payable or shall be required, pursuant to a "Repurchase
Event" (as such term is defined in the Indenture) or otherwise,
to be repurchased or prepaid, as the case may be, prior to the
stated maturity thereof (including, without limitation, prior to
the "Stated Maturity" as such term is defined in the Indenture);
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provided, that, for purposes of clauses (i) and (ii) hereof only,
such events shall only constitute "Events of Default" if the
affected Debt, in any case or in the aggregate, exceeds
$1,000,000 in principal amount outstanding; and further provided,
that for purposes of clause (iii) hereof only, such events shall
only constitute "Events of Default" if the principal amount of
Debentures which are declared due and payable or are required to
be repurchased or prepaid prior to the stated maturity thereof as
set forth in such clause (iii) hereof, in any case or in the
aggregate, exceeds $1,000,000.
(e) The Co-Borrowers, or any of them, or any of their
respective Subsidiaries (i) shall generally not, or be unable to,
or shall admit in writing its or their inability to, pay its or
their debts as such debts become due; or (ii) shall make an
assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee
for it or a substantial part of its or their assets; or
(iii) shall commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (iv) shall have had any such petition or
application filed or any such proceeding shall have been
commenced, against it or them, in which an adjudication or
appointment is made or order for relief is entered, or which
petition, application or proceeding remains undismissed for a
period of 30 days or more; or shall be the subject of any
proceeding under which its or their assets may be subject to
seizure, forfeiture or divestiture (other than a proceeding in
respect of a Lien permitted under Section 9.02(b)); or (v) by any
act or omission shall indicate its or their consent to, approval
of or acquiescence in any such petition, application or
proceeding or order for relief or the appointment of a custodian,
receiver or trustee for all or any substantial part of its or
their property; (vi) shall suffer any such custodianship,
receivership or trusteeship to continue undischarged for a period
of 30 days or more; or (vii) on a consolidated basis with the
other Co-Borrowers, shall cease to be Solvent;
(f) One or more judgments, decrees or orders for the
payment of money in excess of $1,000,000 in the aggregate shall
be rendered against the Co-Borrowers, or any of them, or any of
their respective Subsidiaries and such judgments, decrees or
orders shall continue unsatisfied and in effect for a period of
30 consecutive days without being vacated, discharged, satisfied
or stayed or bonded pending appeal;
(g) An event or condition specified in Section 8.08(i)
hereof shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result of such event or condition,
together with all other such events or conditions, the
Co-Borrowers, or any of them, or any ERISA Affiliate shall incur
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<PAGE> 61
or in the opinion of the Bank shall be reasonably likely to incur
a liability to a Plan, a Multiemployer Plan or PBGC (or any
combination of the foregoing) which is, in the determination of
the Bank, material in relation to the consolidated financial
condition, operations, business or prospects taken as a whole of
the Co-Borrowers and their Subsidiaries; or
(h) Any Forfeiture Proceeding shall have been
commenced or the Co-Borrowers shall have given the Bank written
notice of the commencement of any Forfeiture Proceeding as
provided in Section 8.08(l).
Section 11.02. Remedies. If any Event of Default
shall occur and be continuing, the Bank may, by notice to the
Co-Borrowers, (a) declare the Commitment to be terminated,
whereupon the same shall forthwith terminate, and (b) declare the
outstanding principal of the Note, all interest thereon and all
other amounts payable under this Agreement, the Note or the other
Facility Documents to be forthwith due and payable, whereupon the
Note, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly
waived by the Co-Borrowers; provided, that notwithstanding the
foregoing, upon the occurrence of an Event of Default referred to
in any of Sections 11.01(d)(iii), 11.01(e) or 11.01(h) above, the
Commitment shall be immediately terminated, and the Note, all
interest thereon and all other amounts payable under this
Agreement, the Note or the other Facility Documents shall be
immediately due and payable without notice, presentment, demand,
protest or other formalities of any kind, all of which are hereby
expressly waived by the Co-Borrowers.
ARTICLE 12. THIS ARTICLE IS INTENTIONALLY LEFT BLANK.
ARTICLE 13. MISCELLANEOUS.
Section 13.01. Amendments and Waivers. Except as
otherwise expressly provided in this Agreement, any provision of
this Agreement may be amended or modified only by an instrument
in writing signed by the Co-Borrowers and the Bank; and any
provision of this Agreement may be waived by the Co-Borrowers, if
such provision requires performance by the Bank, without the
written consent of the Bank, or by the Bank, if such provision
requires performance by the Co-Borrowers or any of them, without
the written consent of the Co-Borrowers or any of them. No
failure on the part of the Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof
or preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
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<PAGE> 62
Section 13.02. Usury. Anything herein to the contrary
notwithstanding, the obligations of the Co-Borrowers under this
Agreement and the Note shall be subject to the limitation that
payments of interest shall not be required to the extent that
receipt thereof would be contrary to provisions of law applicable
to the Bank limiting rates of interest which may be charged or
collected by the Bank.
Section 13.03. Expenses. The Co-Borrowers shall
reimburse the Bank for all of its reasonable costs and expenses
(including, without limitation, the Bank's allocated costs of its
in-house counsel) in connection with the enforcement or
preservation of any rights under this Agreement, the Note or the
other Facility Documents. The Co-Borrowers agree to indemnify
the Bank and its Affiliates, directors, officers, employees and
agents from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages or expenses incurred by any
of them arising out of or by reason of any investigation or
litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to any
actual or proposed use by the Co-Borrowers, or any of them, or
any of their respective Subsidiaries of the proceeds of the
Loans, including without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such
investigation or litigation or other proceedings (but excluding
any such losses, liabilities, claims, damages or expenses
incurred by reason of the gross negligence, willful misconduct or
bad faith of the Person to be indemnified).
Section 13.04. Survival. The obligations of the
Co-Borrowers under Section 2.03(b), Article V and Section 13.03
shall survive the repayment of the Loans and the termination of
the Commitment.
Section 13.05. Assignment; Participation. This
Agreement shall be binding upon, and shall inure to the benefit
of, the Co-Borrowers, the Bank and their respective successors
and assigns, except that the Co-Borrowers may not assign or
transfer their rights or obligations hereunder. The Bank may
assign, or sell participations in, all or any part of any Loan or
the Commitment to another bank or other entity, in which event
(a) in the case of an assignment, upon notice thereof by the Bank
to the Co-Borrowers, the assignee shall have, to the extent of
such assignment (unless otherwise provided therein), the same
rights, benefits and obligations as it would have if it were a
Bank hereunder, and concomitantly, the assignor shall, to the
extent of such assignment (unless otherwise provided therein),
have relinquished such rights and benefits and be released from
such obligations; and (b) in the case of a participation, the
participant shall have no rights under the Facility Documents and
all amounts payable by the Co-Borrowers under Article 4 or
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<PAGE> 63
Article 5 shall be determined as if the Bank had not sold such
participation. The agreement executed by the Bank in favor of
the participant shall not give the participant the right to
require the Bank to take or omit to take any action hereunder
except action directly relating to (i) the extension of a payment
date with respect to any portion of the principal of or interest
on any amount outstanding hereunder allocated to such
participant, (ii) the reduction of the principal amount
outstanding hereunder or (iii) the reduction of the rate of
interest payable on such amount or any amount of fees payable
hereunder to a rate or amount, as the case may be, below that
which the participant is entitled to receive under its agreement
with the Bank. The Bank may furnish any information concerning
the Co-Borrowers in the possession of the Bank from time to time
to assignees and participants (including prospective assignees
and participants); provided that the Bank shall require any such
prospective assignee or such participant (prospective or
otherwise) to agree in writing to maintain the confidentiality of
such information.
Section 13.06. Special Provision With Respect To New
Subsidiaries. Upon receiving notice that a Co-Borrower has
established a new Subsidiary in accordance with Section 8.08(m),
the Bank may require the Co-Borrowers to designate such new
Subsidiary to act as a Co-Borrower hereunder, in which case such
new Subsidiary shall agree to abide by all of the terms,
covenants, conditions and obligations applicable to the
Co-Borrowers herein. The Co-Borrowers agree to take all action
necessary to cause such new Subsidiary to become a Co-Borrower
hereunder promptly upon the request of the Bank. Alternatively,
at the option of the Bank, such new Subsidiary may become a
guarantor of the Co-Borrowers' obligations hereunder in which
event it will execute and deliver a guarantee in form and
substance satisfactory to the Bank. Notwithstanding any other
provision of this Agreement, no such new Subsidiary shall be
formed unless Olsten includes such Subsidiary in its consolidated
financial statements required to be delivered hereunder.
Section 13.07. Notices. Unless the party to be
notified otherwise notifies the other party in writing as
provided in this Section, and except as otherwise provided in
this Agreement, notices shall be given to the Bank by telephone,
confirmed by telecopy or other writing, and to the Co-Borrowers
by certified or registered mail or by recognized overnight
delivery services, to such party at its address on the signature
page of this Agreement, provided that notices to the
Co-Borrowers, or to any of them, shall be effective if delivered
at the following address: 175 Broad Hollow Road, Melville, New
York 11747, Attn.: General Counsel. Notices shall be effective:
(a) if given by registered or certified mail, 72 hours after
deposit in the mails with postage prepaid, addressed as
aforesaid; (b) if given by recognized overnight delivery service,
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<PAGE> 64
on the business day following deposit with such service addressed
as aforesaid; and (c) if given by telecopy, when the telecopy is
transmitted to the telecopy number as aforesaid; provided that
all notices to the Bank shall be effective upon receipt.
Section 13.08. Setoff. The Co-Borrowers agree that,
in addition to (and without limitation of) any right of setoff,
banker's lien or counterclaim the Bank may otherwise have, the
Bank shall be entitled, at its option without any prior notice to
the Co-Borrowers (any such notice being expressly waived by the
Co-Borrowers to the extent permitted by applicable law), to
offset balances (general or special, time or demand, provisional
or final) held by it for the account of the Co-Borrowers or any
of them at any of the Bank's offices, in Dollars or in any other
currency, against any amount payable by the Co-Borrowers or any
of them to the Bank under this Agreement, the Note or any other
Facility Document which is not paid when due (regardless of
whether such balances are then due to the Co-Borrowers), in which
case it shall promptly notify the Co-Borrowers thereof; provided
that the Bank's failure to give such notice shall not affect the
validity thereof. Payments by the Co-Borrowers hereunder shall be
made without setoff or counterclaim.
Section 13.09. Jurisdiction; Immunities.
(a) The Co-Borrowers hereby irrevocably submit to the
jurisdiction of any New York State or United States Federal court
sitting in New York County over any action or proceeding arising
out of or relating to this Agreement, the Note or any other
Facility Document, and the Co-Borrowers hereby irrevocably agree
that all claims in respect of such action or proceeding may be
heard and determined in such New York State or Federal court.
The Co-Borrowers irrevocably consent to the service of any and
all process in any such action or proceeding by the mailing (by
certified or registered mail) of copies of such process to the
Co-Borrowers at the address specified in Section 13.07. The
Co-Borrowers agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. The Co-Borrowers further waive any objection to
venue in such State and any objection to an action or proceeding
in such State on the basis of forum non conveniens. The
Co-Borrowers further agree that any action or proceeding brought
against the Bank shall be brought only in New York State or
United States Federal court sitting in New York County. Each of
the Bank and each of the Co-Borrowers waives any right it may
have to a jury trial.
(b) Nothing in this Section 13.09 shall affect the
right of the Bank to serve legal process in any other manner
permitted by law or affect the right of the Bank to bring any
action or proceeding against the Co-Borrowers, or any of them, or
their or its property in the courts of any other jurisdictions.
-59-
<PAGE> 65
(c) To the extent that the Co-Borrowers have or
hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether from service or notice,
attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property,
the Co-Borrowers hereby irrevocably waive such immunity in
respect of its obligations under this Agreement, the Note and the
other Facility Documents.
Section 13.10. Table of Contents; Headings. Any table
of contents and the headings and captions hereunder are for
convenience only and shall not affect the interpretation or
construction of this Agreement.
Section 13.11. Severability. The provisions of this
Agreement are intended to be severable. If for any reason any
provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any
other jurisdiction or the remaining provisions hereof in any
jurisdiction.
Section 13.12. Counterparts. This Agreement may be
executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing any such
counterpart.
Section 13.13. Integration. The Facility Documents
set forth the entire agreement among the parties hereto relating
to the transactions contemplated thereby and supersede any prior
oral or written statements or agreements with respect to such
transactions.
Section 13.14. Governing Law. This Agreement shall be
governed by, and interpreted and construed in accordance with,
the law of the State of New York.
Section 13.15. Treatment of Certain Information. The
Co-Borrowers (a) acknowledge that services may be offered or
provided to it (in connection with this Agreement or otherwise)
by the Bank or by one or more of its Subsidiaries or Affiliates
and (b) acknowledges that information delivered to the Bank by
the Co-Borrowers may be provided to each such Subsidiary and
Affiliate.
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<PAGE> 66
Section 13.16. Co-Borrowers' Attorney-in-Fact. Each
Co-Borrower, other than Olsten, hereby irrevocably appoints
Olsten as such Co-Borrower's attorney-in-fact to act on behalf of
such Co-Borrower to execute such documents, instruments or
agreements as may be required from such Co-Borrower from time to
time pursuant to the terms of the Facility Documents.
Section 13.17. Joint and Several Obligations. Each of
the Co-Borrowers acknowledges and agrees that the obligations and
liabilities of the Co-Borrowers for the payment and performance
of the Obligations shall be joint and several.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
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<PAGE> 67
CO-BORROWERS:
OLSTEN CORPORATION f/k/a THE OLSTEN CORPORATION
OLSTEN KIMBERLY QUALITYCARE, INC.
OLSTEN CERTIFIED HEALTHCARE CORP.
OLSTEN SERVICE CORP. f/k/a OLSTEN HOLDING COMPANY
OLSTEN SERVICES OF NEW YORK, INC.
OLSTEN STAFFING SERVICES, INC. f/k/a FLYING NURSES, INC.
OLSTEN OF WESTCHESTER, INC.
OLS HOLDINGS, INC.
OLSTEN HOME HEALTHCARE, INC.
NEW YORK HEALTHCARE SERVICES, INC.
ALL MEDICARE HOME HEALTH AGENCY, INC.
AMERICAN HOME HEALTH CARE, INC.
GOLD COAST SOUTH HOME HEALTH AGENCY, INC.
GULF COAST HOME HEALTH SERVICES CENTRAL, INC.
GULF COAST HOME HEALTH SERVICES EAST, INC.
GULF COAST HOME HEALTH SERVICES NORTH, INC.
GULF COAST HOME HEALTH SERVICES OF FLORIDA, INC.
GULF COAST HOME HEALTH SERVICES SOUTHWEST, INC.
GULF COAST HOME HEALTH SERVICES WEST, INC.
HHC MANAGEMENT, INC.
IMI SYSTEMS INC.
KIMBERLY HOME HEALTH CARE, INC.
KIMBERLY QUALITY CARE INFUSION THERAPY SERVICES, INC.
KIMBERLY SERVICES, INC.
QC-MEDI CALIFORNIA, INC.
QC MEDI-ILLINOIS, INC.
QC MEDI-LOUISIANA, INC.
QC-MEDI MASS, INC.
QC-MEDI OF MICHIGAN, INC.
QC-MEDI NEW YORK, INC.
QC MEDI-TENN, INC.
QUALITY CARE-USA, INC.
QUALITY CARE, INC.
QUALITY CARE HEALTH SERVICES, INC.
QUALITY CARE HOME HEALTH, INC.
QUALITY CARE OF CONNECTICUT, INC.
QUALITY CARE SERVICE CORP.
RAINIER HOME HEALTH CARE, INC.
SUPERIOR CARE, INC.
UHH HOME SERVICES CORPORATION
AMERICARE, INC.
AMERICARE MEDICAL EQUIPMENT, INC.
AMERICARE PHARMACEUTICALS, INC.
BROAD PINES DEVELOPMENT CORP.
DIRKA CO.
OLSTEN FLYING NURSES CORP.
OLSTEN MELVILLE CORP.
QUALITY MANAGED CARE, INC.
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<PAGE> 68
By:_____________________________________
Name: Laurin L. Laderoute, Jr.
Title: Vice President for all of the above Co-Borrowers
Address for Notices: 175 Broad Hollow Road
Melville, New York 11747
Attn: General Counsel
Telephone No.: (516) 844-7800
Telefax No.: (516) 844-7266
BANK:
FLEET BANK
By:_______________________________________
Name: Philip A. Davi
Title: Vice President
Lending Office and Address for Notices:
Fleet Bank
300 Broad Hollow Road
Corporate Banking Division, 4th Floor
Melville, New York 11747-4852
Attn: Philip A. Davi
Telephone No.: (516) 547-7834
Telefax No.: (516) 547-7701
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<PAGE> 69
Exhibit A
---------
REVOLVING CREDIT NOTE
$___________ December 22, 1995
The undersigned (the "Co-Borrowers"), for value received,
hereby jointly and severally promise to pay to the order of Fleet
Bank (the "Bank"), at the principal office of Fleet Bank at 300
Broad Hollow Road, Melville, New York 11747-4852 (the "Bank"), the
principal sum of ____________________________________ ($_________)
Dollars, or, if less, the amount loaned as Revolving Credit Loans
by the Bank to the Co-Borrowers pursuant to the Agreement referred
to below, in lawful money of the United States of America and in
immediately available funds, on the date(s) and in the manner
provided in said Agreement. The Co-Borrowers also jointly and
severally promise to pay interest on the unpaid principal balance
hereof, for the period such balance is outstanding, at said
principal office for the account of said principal office, in like
money, at the rates of interest as provided in the Agreement
described below, on the date(s) and in the manner provided in said
Agreement.
The date and amount of each Revolving Credit Loan made by
the Bank to the Co-Borrowers under the Agreement referred below,
maturity date and each payment of principal thereof, shall be
recorded by the Bank on its books and, prior to any transfer of
this Note (or, at the discretion of the Bank, at any other time),
endorsed by the Bank on the schedule attached hereto or any
continuation thereof.
This is the Revolving Credit Note referred to in that
certain Agreement (as amended, modified or restated from time to
time the "Agreement") dated as of December 22, 1995 among the Co-
Borrowers and the Bank and evidences the Revolving Credit Loans
made by the Bank thereunder. All terms not defined herein shall
have the meanings given to them in the Agreement.
The Agreement provides for the acceleration of the
maturity of principal upon the occurrence of certain Events of
Default and for prepayments on the terms and conditions specified
therein.
The Co-Borrowers waive presentment, notice of dishonor,
protest and any other notice or formality with respect to this
Note.
<PAGE> 70
This Note shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New York.
OLSTEN CORPORATION f/k/a THE OLSTEN CORPORATION
OLSTEN KIMBERLY QUALITYCARE, INC.
OLSTEN CERTIFIED HEALTHCARE CORP.
OLSTEN SERVICE CORP. f/k/a OLSTEN HOLDING COMPANY
OLSTEN SERVICES OF NEW YORK, INC.
OLSTEN STAFFING SERVICES, INC. f/k/a FLYING NURSES, INC.
OLSTEN OF WESTCHESTER, INC.
OLS HOLDINGS, INC.
OLSTEN HOME HEALTHCARE, INC.
NEW YORK HEALTHCARE SERVICES, INC.
ALL MEDICARE HOME HEALTH AGENCY, INC.
AMERICAN HOME HEALTH CARE, INC.
GOLD COAST SOUTH HOME HEALTH AGENCY, INC.
GULF COAST HOME HEALTH SERVICES CENTRAL, INC.
GULF COAST HOME HEALTH SERVICES EAST, INC.
GULF COAST HOME HEALTH SERVICES NORTH, INC.
GULF COAST HOME HEALTH SERVICES OF FLORIDA, INC.
GULF COAST HOME HEALTH SERVICES SOUTHWEST, INC.
GULF COAST HOME HEALTH SERVICES WEST, INC.
HHC MANAGEMENT, INC.
IMI SYSTEMS INC.
KIMBERLY HOME HEALTH CARE, INC.
KIMBERLY QUALITY CARE INFUSION THERAPY SERVICES, INC.
KIMBERLY SERVICES, INC.
QC-MEDI CALIFORNIA, INC.
QC MEDI-ILLINOIS, INC.
QC MEDI-LOUISIANA, INC.
QC-MEDI MASS, INC.
QC-MEDI OF MICHIGAN, INC.
QC-MEDI NEW YORK, INC.
QC MEDI-TENN, INC.
QUALITY CARE-USA, INC.
QUALITY CARE, INC.
QUALITY CARE HEALTH SERVICES, INC.
QUALITY CARE HOME HEALTH, INC.
QUALITY CARE OF CONNECTICUT, INC.
QUALITY CARE SERVICE CORP.
RAINIER HOME HEALTH CARE, INC.
SUPERIOR CARE, INC.
UHH HOME SERVICES CORPORATION
AMERICARE, INC.
AMERICARE MEDICAL EQUIPMENT, INC.
AMERICARE PHARMACEUTICALS, INC.
BROAD PINES DEVELOPMENT CORP.
DIRKA CO.
OLSTEN FLYING NURSES CORP.
OLSTEN MELVILLE CORP.
QUALITY MANAGED CARE, INC.
<PAGE> 71
By______________________________________________
Name: Laurin L. Laderoute, Jr.
Title: Vice President
<PAGE> 72
Exhibit A-1
-----------
FORM OF TERM NOTE
$___________ December 15, 1996
[Insert names of Co-Borrowers] (the "Co-Borrowers"), for
value received, hereby jointly and severally promise to pay to the
order of Fleet Bank (the "Bank"), at the principal office of Fleet
Bank at __________________________________________________ (the
"Bank"), the principal sum of ____________________________________
($_________) Dollars, in lawful money of the United States of
America and in immediately available funds, in the principal
amounts, on the dates and in the manner provided in the Agreement
described below. The Co-Borrowers also jointly and severally
promise to pay interest on the unpaid principal balance hereof, for
the period such balance is outstanding, at said principal office
for the account of said principal office, in like money, at the
rates of interest as provided in the Agreement described below, on
the date(s) and in the manner provided in said Agreement.
The date and amount of each payment or prepayment of
principal hereof, the date of each interest rate conversion or
continuation pursuant to Section 3.04 of the Agreement described
below and the principal amount subject thereto and the Interest
Period and interest rate applicable thereto shall be recorded by
the Bank on its books and, prior to any transfer of this Note (or,
at the discretion of the Bank, at any other time), endorsed by the
Bank on the schedule attached hereto or any continuation thereof.
This is the Term Note referred to in that certain
Agreement (as amended, modified or restated from time to time the
"Agreement") dated as of ______________, 1995 among the
Co-Borrowers and the Bank and evidences the Term Loan made by the
Bank thereunder. All terms not defined herein shall have the
meanings given to them in the Agreement.
The Agreement provides for the acceleration of the
maturity of principal upon the occurrence of certain Events of
Default and for prepayments on the terms and conditions specified
therein.
The Co-Borrowers waive presentment, notice of dishonor,
protest and any other notice or formality with respect to this
Note.
<PAGE> 73
This Note shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New York.
[INSERT NAMES OF CO-BORROWERS]
<PAGE> 74
Exhibit C
---------
Form of
Borrowing Base Certificate
--------------------------
Reference is made to that certain Credit Agreement dated
as of ___________, 199_ (the "Agreement") by and between The Olsten
Corporation and certain of its subsidiaries signatory thereto (the
"Co-Borrowers") and Fleet Bank (the "Bank"). All capitalized terms
used herein and not defined herein shall have the respective
meanings given to them in the Agreement.
The undersigned hereby certifies to the Bank that as of
__________, 199_ the following information was true, correct and
accurate:
Column 1 Column 2 Column 3
Total Percent Col. 1 x
Col. 2
A. Available Borrowing Base
Eligible Receivables $_____ 85% $
(other than Eligible ============
Receivables from Medicare
or Medicaid) (no more than
63 days past invoice date)
Eligible Receivables $______ 70% $
(other than Eligible Receivables ============
from Medicare or Medicaid)
(at least 64 days but no more
than 91 days past invoice date)
Eligible Receivables which $______ 50% $
are Medicare and Medicaid ============
Receivables (not more than
91 days past their invoice date)
Available Borrowing Base $
============
B. Under the Agreement
1. Commitment $
============
<PAGE> 75
2. Outstanding Principal $
Amount of Note ============
3. Remaining Commitment $
(Item B1 minus Item B2)* ============
C. Under the "Credit Agreement"
1. Revolving Credit Commitment $125,000,000
===========
2. Total Aggregate Outstanding $
Principal Amount of Notes ===========
3. Remaining Revolving Credit $
Commitment (Item C1 minus ===========
Item C2)
4. Letter of Credit Commitment $ 75,000,000
===========
5. Aggregate LC Outstandings $
===========
6. Remaining Letter of Credit $
Commitment (Item C4 minus ===========
Item C5)*
D. Remaining Availability (Item A $
minus the aggregate of Items B2, ===========
C2 and C5)*
E. Mandatory Prepayment, if any (the $
amount necessary to cause Item B2 ===========
to be equal to or less than Item
B1 and [, without duplication,]
the amount necessary to cause the
aggregate of Items B3, C3 and C6
to be equal to or less than
Item A)
IN WITNESS WHEREOF, the undersigned has executed this
certificate this ____ day of ________, 19__.
OLSTEN CORPORATION
By:______________________________
Name:
Title: Chief Financial Officer
*Negative nubers are to be entered as "$0".
-2-
<PAGE> 76
REVOLVING CREDIT NOTE
$___________ December 22, 1995
The undersigned (the "Co-Borrowers"), for value received,
hereby jointly and severally promise to pay to the order of Fleet
Bank (the "Bank"), at the principal office of Fleet Bank at 300
Broad Hollow Road, Melville, New York 11747-4852 (the "Bank"), the
principal sum of ____________________________________ ($_________)
Dollars, or, if less, the amount loaned as Revolving Credit Loans
by the Bank to the Co-Borrowers pursuant to the Agreement referred
to below, in lawful money of the United States of America and in
immediately available funds, on the date(s) and in the manner
provided in said Agreement. The Co-Borrowers also jointly and
severally promise to pay interest on the unpaid principal balance
hereof, for the period such balance is outstanding, at said
principal office for the account of said principal office, in like
money, at the rates of interest as provided in the Agreement
described below, on the date(s) and in the manner provided in said
Agreement.
The date and amount of each Revolving Credit Loan made by
the Bank to the Co-Borrowers under the Agreement referred below,
maturity date and each payment of principal thereof, shall be
recorded by the Bank on its books and, prior to any transfer of
this Note (or, at the discretion of the Bank, at any other time),
endorsed by the Bank on the schedule attached hereto or any
continuation thereof.
This is the Revolving Credit Note referred to in that
certain Agreement (as amended, modified or restated from time to
time the "Agreement") dated as of December 22, 1995 among the Co-
Borrowers and the Bank and evidences the Revolving Credit Loans
made by the Bank thereunder. All terms not defined herein shall
have the meanings given to them in the Agreement.
The Agreement provides for the acceleration of the
maturity of principal upon the occurrence of certain Events of
Default and for prepayments on the terms and conditions specified
therein.
The Co-Borrowers waive presentment, notice of dishonor,
protest and any other notice or formality with respect to this
Note.
<PAGE> 77
This Note shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New York.
OLSTEN CORPORATION f/k/a THE OLSTEN CORPORATION
OLSTEN KIMBERLY QUALITYCARE, INC.
OLSTEN CERTIFIED HEALTHCARE CORP.
OLSTEN SERVICE CORP. f/k/a OLSTEN HOLDING COMPANY
OLSTEN SERVICES OF NEW YORK, INC.
OLSTEN STAFFING SERVICES, INC. f/k/a FLYING NURSES, INC.
OLSTEN OF WESTCHESTER, INC.
OLS HOLDINGS, INC.
OLSTEN HOME HEALTHCARE, INC.
NEW YORK HEALTHCARE SERVICES, INC.
ALL MEDICARE HOME HEALTH AGENCY, INC.
AMERICAN HOME HEALTH CARE, INC.
GOLD COAST SOUTH HOME HEALTH AGENCY, INC.
GULF COAST HOME HEALTH SERVICES CENTRAL, INC.
GULF COAST HOME HEALTH SERVICES EAST, INC.
GULF COAST HOME HEALTH SERVICES NORTH, INC.
GULF COAST HOME HEALTH SERVICES OF FLORIDA, INC.
GULF COAST HOME HEALTH SERVICES SOUTHWEST, INC.
GULF COAST HOME HEALTH SERVICES WEST, INC.
HHC MANAGEMENT, INC.
IMI SYSTEMS INC.
KIMBERLY HOME HEALTH CARE, INC.
KIMBERLY QUALITY CARE INFUSION THERAPY SERVICES, INC.
KIMBERLY SERVICES, INC.
QC-MEDI CALIFORNIA, INC.
QC MEDI-ILLINOIS, INC.
QC MEDI-LOUISIANA, INC.
QC-MEDI MASS, INC.
QC-MEDI OF MICHIGAN, INC.
QC-MEDI NEW YORK, INC.
QC MEDI-TENN, INC.
QUALITY CARE-USA, INC.
QUALITY CARE, INC.
QUALITY CARE HEALTH SERVICES, INC.
QUALITY CARE HOME HEALTH, INC.
QUALITY CARE OF CONNECTICUT, INC.
QUALITY CARE SERVICE CORP.
RAINIER HOME HEALTH CARE, INC.
SUPERIOR CARE, INC.
UHH HOME SERVICES CORPORATION
AMERICARE, INC.
AMERICARE MEDICAL EQUIPMENT, INC.
AMERICARE PHARMACEUTICALS, INC.
BROAD PINES DEVELOPMENT CORP.
DIRKA CO.
OLSTEN FLYING NURSES CORP.
OLSTEN MELVILLE CORP.
QUALITY MANAGED CARE, INC.
<PAGE> 78
By______________________________________________
Name: Laurin L. Laderoute, Jr.
Title: Vice President
<PAGE> 1
Transcript Document No. 2
_________________________
SUFFOLK COUNTY INDUSTRIAL DEVELOPMENT AGENCY
SUFFOLK COUNTY, NEW YORK
and
OLS HOLDINGS, INC.
_________________________
LEASE AGREEMENT
_________________________
Dated as of April 1, 1995
$30,000,000
Suffolk County Industrial Development Agency
1995 Taxable Industrial Development Revenue Bond
(OLS Holdings, Inc./The Olsten Corporation Facility)
Duplicate
No Security Interest Can Be
Created Herein Except By
Possession Of The Original
Counterpart Hereof.
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE II
REPRESENTATIONS AND COVENANTS
SECTION 2.1 Representations and Covenants of Issuer . . . . .4
SECTION 2.2 Representations and Covenants of Company. . . . .5
SECTION 2.3 Covenant with Owners. . . . . . . . . . . . . . .6
ARTICLE III
FACILITY SITE AND TITLE INSURANCE
SECTION 3.1 Agreement to Convey to Issuer . . . . . . . . . .7
SECTION 3.2 Title Insurance . . . . . . . . . . . . . . . . .7
SECTION 3.3 Subordination of Lease Agreement. . . . . . . . .7
ARTICLE IV
ACQUISITION, RENOVATION, CONSTRUCTION AND EQUIPPING OF FACILITY;
ISSUANCE OF THE BOND
SECTION 4.1 Acquisition, Renovation, Construction and
Equipping of Facility. . . . . . . . . . .8
SECTION 4.2 Issuance of the Bond;
Disbursement of Bond Proceeds. . . . . . . .9
SECTION 4.3 Application of Bond Proceeds. . . . . . . . . . .9
SECTION 4.4 Certificates of Completion. . . . . . . . . . . 10
SECTION 4.5 Completion by Company . . . . . . . . . . . . . 10
SECTION 4.6 [Reserved]. . . . . . . . . . . . . . . . . . . 10
SECTION 4.7 Remedies to be Pursued Against Contractors,
Subcontractors Materialmen and their
Sureties . . . . . . . . . . . . . . . . . 11
ARTICLE V
DEMISING CLAUSES AND RENTAL PROVISIONS
SECTION 5.1 Demise of Facility. . . . . . . . . . . . . . . 12
SECTION 5.2 Duration of Lease Term; Quiet Enjoyment . . . . 12
SECTION 5.3 Rents and Other Amounts Payable . . . . . . . . 12
SECTION 5.4 Obligations of Company Hereunder Unconditional. 13
SECTION 5.5 Payment of Additional Moneys in Prepayment
of Bond. . . . . . . . . . . . . . . . . . 13
SECTION 5.6 Rights and obligations of Company upon
Prepayment of Bond . . . . . . . . . . . . 14
SECTION 5.7 Security Interest . . . . . . . . . . . . . . . 14
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<PAGE> 3
ARTICLE VI
MAINTENANCE, MODIFICATIONS,
TAXES AND INSURANCE
SECTION 6.1 Maintenance and Modifications of
Facility by Company. . . . . . . . . . . . 15
SECTION 6.2 Installation of Additional Equipment. . . . . . 15
SECTION 6.3 Taxes, Assessments and Utility Charges. . . . . 16
SECTION 6.4 Insurance Required. . . . . . . . . . . . . . . 17
SECTION 6.5 Additional Provisions Respecting Insurance. . . 18
SECTION 6.6 Application of Net Proceeds of Insurance. . . . 19
SECTION 6.7 Right of Bondholder to Pay Taxes, Insurance
Premiums and Other Charges . . . . . . . . 19
SECTION 6.8 Compliance with Articles 31 and 31-B of Tax Law 20
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
SECTION 7.1 Damage or Destruction of the Facility . . . . . 22
SECTION 7.2 Condemnation. . . . . . . . . . . . . . . . . . 23
SECTION 7.3 Condemnation of Company-Owned Property. . . . . 25
SECTION 7.4 Recovery Against Contractor, Etc. . . . . . . . 25
SECTION 7.5 Waiver of Real Property Law Section 227 . . . . 26
ARTICLE VIII
SPECIAL COVENANTS
SECTION 8.1 No Warranty of Condition or Suitability
by Issuer. . . . . . . . . . . . . . . . . 27
SECTION 8.2 Hold Harmless Provisions. . . . . . . . . . . . 27
SECTION 8.3 Right to Inspect Facility . . . . . . . . . . . 28
SECTION 8.4 Company to Maintain Its Existence . . . . . . . 28
SECTION 8.5 Qualification in State. . . . . . . . . . . . . 28
SECTION 8.6 Agreement to File Annual Statements and
provide Information. . . . . . . . . . . . 28
SECTION 8.7 Books of Record and Account; Financial
Statements . . . . . . . . . . . . . . . . 28
SECTION 8.8 Compliance With Orders, Ordinances, Etc . . . . 28
SECTION 8.9 Discharge of Liens and Encumbrances . . . . . . 31
SECTION 8.10 Identification of Equipment . . . . . . . . . . 31
SECTION 8.11 Depreciation Deductions and Investment
Tax Credit . . . . . . . . . . . . . . . . 32
SECTION 8.12 Employment Opportunities, Notice of Jobs. . . . 32
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<PAGE> 4
ARTICLE IX
RELEASE OF CERTAIN LAND; ASSIGNMENTS AND
SUBLEASING; PLEDGE OF INTERESTS
SECTION 9.1 Restriction On Sale of Facility; Release of
Certain Land . . . . . . . . . . . . . . . 33
SECTION 9.2 Removal of Equipment. . . . . . . . . . . . . . 33
SECTION 9.3 Assignment and Subleasing . . . . . . . . . . . 34
SECTION 9.4 Mortgage of Facility; Pledge of Issuer's
Interests to Bondholder. . . . . . . . . . 34
SECTION 9.5 Merger of Issuer. . . . . . . . . . . . . . . . 35
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1 Events of Default Defined . . . . . . . . . . . 36
SECTION 10.2 Remedies on Default . . . . . . . . . . . . . . 38
SECTION 10.3 Remedies Cumulative . . . . . . . . . . . . . . 38
SECTION 10.4 Agreement to Pay Attorneys' Fees and Expenses . 38
SECTION 10.5 No Additional Waiver Implied by one Waiver. . . 38
ARTICLE XI
EARLY TERMINATION OF LEASE AGREEMENT;
OPTION IN FAVOR OF COMPANY
SECTION 11.1A Voluntary Termination of Lease Agreement. . . . 39
SECTION 11.1B Mandatory Termination of Lease Agreement. . . . 39
SECTION 11.2A Conditions to Early Termination of Lease
Agreement. . . . . . . . . . . . . . . . . 39
SECTION 11.2B Conditions to Early Termination of Lease
Agreement. . . . . . . . . . . . . . . . . 39
SECTION 11.3 Obligation to Purchase Facility . . . . . . . . 40
SECTION 11.4 Conveyance on Purchase. . . . . . . . . . . . . 40
SECTION 11.5 Amounts Remaining on Deposit with Bondholder
upon Payment of Bond . . . . . . . . . . . 41
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices . . . . . . . . . . . . . . . . . . . . 42
SECTION 12.2 Binding Effect. . . . . . . . . . . . . . . . . 42
SECTION 12.3 Severability. . . . . . . . . . . . . . . . . . 42
SECTION 12.4 Amendments, Changes and Modifications . . . . . 42
SECTION 12.5 Execution of Counterparts . . . . . . . . . . . 43
SECTION 12.6 Applicable Law. . . . . . . . . . . . . . . . . 43
SECTION 12.7 List of Additional Equipment; Further
Assurances . . . . . . . . . . . . . . . . 43
SECTION 12.8 Survival of Obligations . . . . . . . . . . . . 43
SECTION 12.9 Table of Contents and Section
Headings not Controlling . . . . . . . . . 43
EXHIBIT A - Legal Description of Real Property
EXHIBIT B - Equipment
-iii-
<PAGE> 5
THIS LEASE AGREEMENT dated as of April 1, 1995 is
between the SUFFOLK COUNTY INDUSTRIAL DEVELOPMENT AGENCY, a
public benefit corporation of the State of New York having its
office at 220 Rabro Drive, P.O. Box 6100, New York 11788-0099
(the "Issuer"), and OLS HOLDINGS, INC., a business corporation
duly organized and validly existing under the laws of the State
of New York having an office at 175 Broad Hollow Road, Melville,
New York 11747 (the "Company").
R E C I T A L S
Title 1 of Article 18-A of the General Municipal Law of
the State of New York was duly enacted into law as Chapter 1030
of the Laws of 1969 of the State of New York;
The aforesaid act authorizes the creation of industrial
development agencies for the Public Purposes of the State;
The aforesaid act further authorizes each such agency
to lease any or all of its facilities at such rentals and on such
other terms and conditions as it deems advisable, to issue its
bonds for the purpose of carrying out any of its corporate
purposes and, as security for the payment of the principal and
redemption price of, and interest on, any such bonds so issued
and any agreements made in connection therewith, to mortgage any
or all of its facilities or to create security interests therein
and to assign and pledge the revenues and receipts from the
leasing of its facilities;
Pursuant to and in accordance with the provisions of
the aforesaid act, the Issuer was created and is empowered under
the Act to undertake the providing, financing and leasing of the
Facility defined below;
The Facility shall consist of the acquisition of 7.5
acres located on the southeast corner of 175 Broad Hollow Road
(NYS Route 110) and Pinelawn Road (also known as Wellwood
Avenue)(County Route 3) at 175 Broad Hollow Road and at 25
Pinelawn Road, Melville, Town of Huntington, Suffolk County, New
York and the renovation and equipping thereon of an approximately
70,000 square foot two-story building and the construction of an
approximately 50,000 square foot two-story addition to the
existing building including the construction of associated
parking areas;
The Issuer proposes to provide the Facility and to
finance the cost thereof by the issuance of the Bond;
The Issuer proposes to lease the Facility to the
Company, and the Company desires to rent the Facility from the
Issuer, upon the terms and conditions set forth in this Lease
Agreement;
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<PAGE> 6
The Company will then sublease the Facility to The
Olsten Corporation, a Delaware corporation duly authorized to do
business in the State of New York, having an office at 175 Broad
Hollow Road, Melville, New York 11747 (the "Sublessee"), and the
Sublessee desires to rent the Facility from the Company, upon the
terms and conditions set forth in the Sublease Agreement dated
April 13, 1995 (the "Sublease").
The Company and the Sublessee have agreed with the
Issuer, on behalf of the Issuer and as the Issuer's agent, to
acquire, renovate, contract and equip the Facility in accordance
with the Plans and Specifications;
The Issuer and the Company propose to grant a Mortgage
and Security Agreement dated April 13, 1995 (the "Mortgage") to
Broad Pines Development Corp. (the "Purchaser") as security for
the Bonds and for the Company's obligations under the Lease
Agreement as the same may be modified, amended, renewed or
extended from time to time.
AGREEMENT
For and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto do hereby
mutually agree as follows:
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<PAGE> 7
ARTICLE I
DEFINITIONS
All capitalized terms used in this Lease Agreement and not
otherwise defined shall have the meanings assigned thereto in the
Schedule of Definitions attached to the Bond Purchase Agreement
(the "Bond Purchase Agreement"), dated April 13, 1995 by and
among the Issuer, the Company and the Bondholder which are
incorporated herein and made a part hereof by reference.
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<PAGE> 8
ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1 Representations and Covenants of Issuer.
The Issuer makes the following representations and covenants as
the basis for the undertakings on its part herein contained:
(a) The Issuer is duly established and validly
existing under the provisions of the Act and has full legal
right, power and authority to execute, deliver and perform each
of the Issuer Documents and the other documents contemplated
thereby. Each of the Issuer Documents and the other documents
contemplated thereby have been duly authorized, executed and
delivered by the Issuer.
(b) The Issuer will cause the Land to be acquired, the
Improvements to be constructed and the Equipment to be acquired
and installed and will lease the Facility to the Company pursuant
to this Lease Agreement, all for the Public Purposes of the
State.
(c) To finance certain of the Costs of the Facility,
the Issuer will issue the Bond in the aggregate principal amount
of $30,000,000. The Bond will be issued, mature, bear interest,
be redeemable and have other terms and provisions as provided for
in the Bond and the Bond Purchase Agreement.
(d) By resolution adopted on March 23, 1994, the
Issuer determined that, based upon the review by the Issuer of
the materials submitted and the representations made by the
Company relating to the Facility, the Facility would not have a
"significant impact" or "significant effect" on the environment
within the meaning of the SEQR Act.
(e) Neither the execution and delivery of any of the
Issuer Documents and the other documents contemplated thereby or
the consummation of the transactions contemplated thereby nor the
fulfillment of or compliance with the provisions of any of the
Issuer Documents and the other documents contemplated thereby,
will conflict with or result in a breach of or constitute a
default under any of the terms, conditions or provisions of the
Act, any other law or ordinance of the State or any political
subdivision thereof or of the Issuer's Certificate of
Establishment or By-laws, as amended, or of any corporate
restriction or any agreement or instrument to which the Issuer is
a party or by which it is bound, or result in the creation or
imposition of any Lien of any nature upon any of the Property of
the Issuer under the terms of the Act or any such law, ordinance,
Certificate of Establishment, By-laws, restriction, agreement or
instrument, except for Permitted Encumbrances.
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<PAGE> 9
(f) Each of the Issuer Documents and the other
documents contemplated thereby constitutes a legal, valid and
binding obligation of the Issuer enforceable against the Issuer
in accordance with its terms.
Section 2.2 Representations and Covenants of Company.
The Company makes the following representations and covenants as
the basis for the undertakings on its part herein contained:
(a) The Company is a business corporation duly
organized and validly existing under the laws of the State of New
York, is in good standing under the laws of the State and has
full legal right, power and authority to execute, deliver and
perform each of the Company Documents and the other documents
contemplated thereby. Each of the Company Documents and the
other documents contemplated thereby has been duly authorized,
executed and delivered by the Company.
(b) Neither the execution and delivery of any of the
Company Documents and the other documents contemplated thereby or
the consummation of the transactions contemplated thereby nor the
fulfillment of or compliance with the provisions of any of the
Company Documents and the other documents contemplated thereby,
will conflict with or result in a breach of or constitute a
default under any of the terms, conditions or provisions of any
law or ordinance of the State or any political subdivision
thereof or of the Company's Certificate of Incorporation or By-
laws, as amended, or any corporate restriction or any agreement
or instrument to which the Company is a party or by which it is
bound, or result in the creation or imposition of any Lien of any
nature upon any of the Property of the Company under the terms of
any such law, ordinance, Certificate of Incorporation or By-laws,
as amended, restriction, agreement or instrument, except for
Permitted Encumbrances.
(c) The Facility and the design, acquisition,
construction, equipping, use and operation thereof will conform
with all applicable zoning, planning, building and environmental
laws, ordinances, rules and regulations of governmental
authorities having jurisdiction over the Facility.
(d) The Company shall perform or cause to be
performed, for and on behalf of the Issuer each and every
obligation of the Issuer under and pursuant to the Bond Purchase
Agreement and the Mortgage.
(e) Each of the Company Documents and the other
documents contemplated thereby constitutes a legal, valid and
obligation of the Company enforceable against the Company in
accordance with its terms.
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<PAGE> 10
Section 2.3 Covenant with Owners. The Issuer and the
Company agree that this Lease Agreement is executed in part to
induce the purchase by the Bondholder of the Bond. Accordingly,
all covenants and agreements on the part of the Issuer and the
Company set forth in this Lease Agreement is hereby declared to
be for the benefit of the Bondholder.
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<PAGE> 11
ARTICLE III
FACILITY SITE AND TITLE INSURANCE
Section 3.1 Agreement to Convey to Issuer. The Company
has conveyed or has caused to be conveyed to the Issuer (i) good
and marketable title to the Land, including any buildings,
structures or other improvements thereon, and (ii) lien-free
title to the Equipment except as otherwise set forth on EXHIBIT B
hereto, in each case except for Permitted Encumbrances.
Section 3.2 Title Insurance. The Company and/or the
Sublessee has obtained title insurance for the benefit of the
Agency in an amount equal to $30,000,000, insuring title to the
Land and the Improvements thereon, except for Permitted
Encumbrances.
Section 3.3 Subordination of Lease Agreement. This
Lease Agreement and any and all modifications, amendments,
renewals and extensions thereof is subject and subordinate to the
Mortgage and the Bond Purchase Agreement and to any and all
modifications, amendments, consolidations, extensions, renewals,
replacements and increases thereof.
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ARTICLE IV
ACQUISITION, RENOVATION, CONSTRUCTION AND EQUIPPING OF FACILITY;
ISSUANCE OF THE BOND
Section 4.1 Acquisition, Renovation, Construction and
Equipping of Facility.
(a) The Company and the Sublessee agrees that, on
behalf of the Issuer, it will renovate and equip the entire
Facility in accordance with the Plans and Specifications.
(b) The Company and the Sublessee may revise the Plans
and Specifications from time to time with the written approval of
the Bondholder, which approval may not be unreasonably withheld
but may be subject to such conditions as the Bondholder may deem
appropriate.
(c) Title to all materials, equipment, machinery and
other items of Property incorporated or installed in the Facility
shall vest in the Issuer immediately upon the Company's and/or
the Sublessee's obtaining an interest in or to the materials,
equipment, machinery and other items of Property. The Company
and/or the Sublessee shall execute, deliver and record or file
all instruments necessary or appropriate to so vest title to the
Issuer and shall take all action necessary or appropriate to
protect such title against claims of any third Persons.
(d) The Issuer hereby appoints the Company and the
Sublessee its true and lawful agent, and the Company hereby
accepts such agency (i) to renovate and equip the Facility in
accordance with the Plans and Specifications, (ii) to make,
execute, acknowledge and deliver any contracts, orders, receipts,
writings and instructions with any other Persons, and in general
to do all things which may be requisite or proper, all for
acquisition and renovation of the Improvements and acquiring and
installing the Equipment with the same powers and with the same
validity as the Issuer could do if acting on its own behalf,
(iii) to pay all fees, costs and expenses incurred in the
acquisition and renovation of the Improvements and the
acquisition and installation of the Equipment from funds made
available therefor in accordance with this Lease Agreement, and
(iv) to ask, demand, sue for, levy, recover and receive all such
sums or money, debts, dues and other demands whatsoever which may
be due, owing and payable to the Issuer under the terms of any
contract, order, receipt, or writing in connection with
acquisition, renovation, and completion of the Improvements and
the acquisition and installation of the Equipment, and to enforce
the provisions of any contract, agreement, obligation, bond or
other performance security.
(e) The Issuer shall enter into, and accept the
assignment of, such contracts as the Company may request in order
to effectuate the purposes of this Section 4.1.
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<PAGE> 13
(f) The Company and/or the Sublessee, as the case may
be, as agent for the Issuer, shall comply with all provisions of
the Labor Law of the State except as hereinafter noted,
applicable to the acquisition, renovation and equipping of the
Facility and shall include in all construction contracts all
provisions which may be required to be inserted therein by such
provisions. In addition, the Company specifically represents
that it will comply with Section 220 of the Labor Law of the
State, as if such Section was applicable to the Facility.
Section 4.2 Issuance of the Bond; Disbursement of Bond
Proceeds. In order to provide funds for payment of the Costs of
the Facility, together with other payments and incidental
expenses in connection therewith, the Issuer agrees that it will
issue, sell and cause the Bond to be delivered on the terms set
forth in the Bond Purchase Agreement. Bond Proceeds shall be
disbursed in accordance with the provisions of the Bond Purchase
Agreement and Section 4.3 hereof.
Section 4.3 Application of Bond Proceeds. Bond
Proceeds, upon the written direction of an Authorized
Representative of the Company, and on the conditions provided for
in the Bond Purchase Agreement, shall be applied to pay only the
following costs and items of expense paid and incurred by or on
behalf of the Issuer:
(i) the cost of preparing the Plans and
Specifications (including any preliminary study or
planning of the Facility or any aspect thereof),
(ii) all costs of acquiring, renovating, and
equipping the Facility (including architectural,
engineering and supervisory services with respect to
the Facility),
(iii) all fees, taxes, charges and other expenses
for recording or filing, as the case may be, the
instrument or instruments conveying the Land to the
Issuer, and any other documents that the Issuer or the
Bondholder may deem desirable in order to protect or
perfect the title to the Land and any security interest
contemplated by the Mortgage and the Bond Purchase
Agreement,
(iv) interest payable on the Bond during the
Construction Period and interest payable during the
Construction Period on such interim financing as the
Company may have secured with respect to the Facility
in contemplation of the issuance of the Bond,
(v) all legal, accounting and any other fees,
costs and expenses incurred in connection with the
preparation, printing, reproduction, authorization,
issuance, execution, sale and distribution of the Bond
and Bond Documents and all other documents in
connection herewith or therewith, with the acquisition
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<PAGE> 14
of title to the Facility and with any other
transaction contemplated by this Lease Agreement or
Bond Purchase Agreement,
(vi) any administrative fee of the Issuer, and
(vii) reimbursement to the Company for any of the
above-enumerated costs and expenses.
Section 4.4 Certificates of Completion. To establish
the Completion Date, the Company shall deliver to the Issuer and
the Bondholder a certificate signed by an Authorized
Representative of the Company (i) stating that acquisition,
renovation, and equipping of the Facility has been completed in
accordance with the Plans and Specifications therefor; (ii)
stating that except for amounts retained in funds or accounts as
the Bondholder and Company deem necessary for the payment of
incurred, but unpaid, items of the Costs of the Facility, the
payment of all labor, services, materials and supplies used in
such acquisition, renovation, and equipping has been made or
provided for; and (iii) such certificates as may be satisfactory
to the Bondholder, including without limitation, a final
certificate of occupancy, if applicable. The Company agrees to
complete the acquisition, renovation, construction and equipping
of the Facility on or before June 1, 1995.
Section 4.5 Completion by Company.
(a) In the event that the Net Proceeds of the Bond are
not sufficient to pay in full all costs of acquiring, renovating,
and equipping the Facility in accordance with the Plans and
Specifications, the Company agrees to pay, for the benefit of the
Issuer and the Bondholder, all such sums as may be in excess of
the Net Proceeds of the Bond. Title to all portions of the
Facility installed or constructed at the Company's cost or
expense shall immediately upon such installation or construction
vest in the Issuer. The Company shall execute, deliver and
record or file such instruments as the Issuer or the Bondholder
may request in order to perfect or protect the Issuer's title to
or lien of the Mortgage on such portions of the Facility.
(b) The Company shall not be entitled to any
reimbursement for such excess cost or expense from the Issuer or
Bondholder or the Owner of the Bond nor shall it be entitled to
any diminution or abatement of any other amounts payable by the
Company under this Lease Agreement.
Section 4.6 Reserved.
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Section 4.7 Remedies to be Pursued Against Contractors,
Subcontractors, Materialmen and their Sureties. In the event of
a default by any contractor, subcontractor, materialman or other
Person under any contract made by it in connection with the
Facility or in the event of a breach of warranty or other
liability with respect to any materials, workmanship, or
performance guaranty, the Company and/or the Sublessee, as the
case may be at its expense, either separately or in conjunction
with others, may pursue any and all remedies available to it and
the Issuer, as appropriate, against the contractor,
subcontractor, materialman or other Person so in default and
against any surety for the performance of such contract. The
Company and/or the Sublessee, as the case may be in its own name
or in the name of the Issuer, may prosecute or defend any action
or proceeding or take any other action involving any such
contractor, subcontractor, materialman or surety or other Person
which the Company and/or the Sublessee, as the case may be deems
reasonably necessary, and in such event the Issuer, at the
Company's or the Sublessee's expense, hereby agrees to cooperate
fully with the Company and/or the Sublessee, as the case may be,
and to take all action necessary to effect the substitution of
the Company for the Issuer in any such action or proceeding. The
Net Proceeds of any recovery from a contractor or subcontractor
or materialman or other Person shall be deposited in the Renewal
Fund and applied as provided in Section 7.4 hereof and the Bond
Purchase Agreement.
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<PAGE> 16
ARTICLE V
DEMISING CLAUSES AND RENTAL PROVISIONS
Section 5.1 Demise of Facility. The Issuer hereby
leases the Facility, consisting of the Land as particularly
described in Exhibit A attached hereto, the Improvements and the
Equipment as particularly described in Exhibit B attached hereto,
to the Company and the Company hereby takes the Facility from the
Issuer upon the terms and conditions of this Lease Agreement.
Section 5.2 Duration of Lease Term; Quiet Enjoyment.
(a) The Issuer shall deliver to the Company sole and
exclusive possession of the Facility (subject to Sections 8.3 and
10.2 hereof) and the leasehold estate created hereby shall
commence on the Closing Date and the Company shall accept
possession of the Facility on the Closing Date.
(b) Except as provided in Section 10.2 hereof, the
leasehold estate created hereby shall terminate at 11:59 p.m. on
April 13, 2007 or on such earlier date as may be permitted by
Section 11.1 hereof; provided, however, that, except as provided
in Section 10.2 hereof, in no event shall this Lease Agreement be
terminated until the Bond shall have been paid in full or
provision for such full payment shall have been made.
(c) Except as provided in Sections 8.3 and 10.2
hereof, the Issuer shall neither take nor suffer or permit any
action to prevent the Company during the Lease Term from having
quiet and peaceable possession and enjoyment of the Facility and
will, at the request of the Company and at the Company's cost,
cooperate with the Company in order that the Company may have
quiet and peaceable possession and enjoyment of the Facility as
hereinabove provided.
Section 5.3 Rents and Other Amounts Payable.
(a) The Company shall pay basic rent for the Facility
on or before each Bond Payment Date directly to the Bondholder,
in an amount equal to the Debt Service Payment becoming due and
payable on the Bond on such Bond Payment Date (with a 3 day grace
period).
(b) In addition to the payments of rent pursuant to
Section 5.3(a) hereof, throughout the Lease Term, the Company
shall pay to the Issuer as additional rent, within ten (10) days
of the receipt of demand therefor, an amount equal to the sum of
the expenses of the Issuer and the members thereof incurred (i)
by reason of the Issuer's ownership, financing or leasing of the
Facility or (ii) in connection with the carrying out of the
Issuer's duties and obligations under the Issuer Documents, the
payment of which is not otherwise provided for under this Lease
Agreement. The foregoing shall not be deemed to include any
annual or continuing administrative or management fee beyond any
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<PAGE> 17
initial administrative fee or fee for services rendered by the
Issuer.
(c) The Company, under the provisions of this Section
5.3, agrees to make the above-mentioned payments in immediately
available funds and without any further notice in lawful money of
the United States of America. In the event the Company shall
fail to timely make any payment required in Section 5.3(a) the
Company shall pay the same together with all late payment
penalties specified in the Bond. In the event the Company shall
fail to timely make any payment required in Section 5.3(b), the
Company shall pay the same together with interest on such payment
at the rate set forth in the Bond, but in no event at a rate
higher than the maximum lawful prevailing rate, from the date on
which such payment was due until the date on which such payment
is made.
Section 5.4 Obligations of Company Hereunder
Unconditional. The obligations of the Company to make the
payments required in Section 5.3 hereof, and to perform and
observe any and all of the other covenants and agreements on its
part contained herein shall be a general obligation of the
Company, and shall be absolute and unconditional irrespective of
any defense or any rights of setoff, recoupment or counterclaim
it may otherwise have against the Issuer. The Company agrees it
will not (i) suspend, discontinue or abate any payment required
hereunder, (ii) fail to observe any of its other covenants or
agreements in this Lease Agreement or (iii) terminate this Lease
Agreement for any cause whatsoever unless and until the Bond,
including premium, if any, and interest thereon, is paid or
provided for.
Subject to the foregoing provisions, nothing contained
in this Section shall be construed to release the Issuer from the
- -performance of any of the agreements on its part contained in
this Lease Agreement or to affect the right of the Company to
seek reimbursement, and in the event the Issuer should fail to
perform any such agreement, the Company may institute such
separate action against the Issuer as the Company may deem
necessary to compel performance or recover damages for non-
performance, and the Issuer covenants that it will not, subject
to the provisions of Section 8.3 and Article X hereof, take,
suffer or permit any action which will adversely affect, or
create any defect in its title to the Facility or which will
otherwise adversely affect the rights or estate of the Company
hereunder, except upon written consent of the Company.
Section 5.5 Payment of Additional Moneys in Prepayment
of Bond. In addition to any other moneys required or permitted
to be paid pursuant to this Lease Agreement, the Company may,
subject to the terms of the Bond Purchase Agreement, pay moneys
to the Bondholder (i) to be applied as the prepayment of amounts
to become due and payable by the Company pursuant to Section
5.3(a) hereof, or (ii) to be used for the redemption or
prepayment of any Bond at such time or times and on such terms
and conditions as is provided in such Bond and in the Bond
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<PAGE> 18
Purchase Agreement. The Company shall notify the Issuer and the
Bondholder in writing as to the purpose of any such payment.
Section 5.6 Rights and obligations of the Company upon
Prepayment of Bond. In the event the Bond shall have been paid
in full prior to the termination date specified in Section 5.2(b)
hereof or provision for such payment shall have been made in
accordance with the Bond Purchase Agreement, (i) all references
in this Lease Agreement to the Bond, the Assignment, the Mortgage
and the Bond Purchase Agreement shall be ineffective and (ii) the
Company shall be entitled, at its option, to the exclusive use,
occupancy and enjoyment of the Facility from the date of such
payment until the scheduled expiration of the Lease Term, without
the payment of any further basic rent under Section 5.3(a)
hereof, but otherwise on all of the terms and conditions hereof,
except that the Company shall not be required to carry any
insurance for the benefit of the Bondholder, or the Company may,
at its option, require the Issuer to convey the Facility to the
Company pursuant to the terms of Section 11.3 hereof. In the
event of any such payment or the making of any such provision,
the Issuer, at the sole cost of the Company, shall obtain and
record or file appropriate discharges or releases of the
Assignment and any other security interest relating to the
Facility or this Lease Agreement.
Section 5.7 Security Interest. The Company
acknowledges that this Lease Agreement is intended as security
for payment of the principal of and redemption premium, if any,
and interest on the Bond.
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<PAGE> 19
ARTICLE VI
MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE
Section 6.1 Maintenance and Modifications of Facility
by Company.
(a) The Company shall not abandon the Facility or
cause or permit any waste to the Improvements. During the Lease
Term, the Company shall not remove any part of the Facility
outside of the jurisdiction of the Issuer and shall (i) keep the
Facility in as reasonably safe condition as its operations shall
permit; (ii) make all necessary repairs and replacements to the
Facility (whether ordinary or extraordinary, structural or
nonstructural, foreseen or unforeseen); and (iii) operate the
Facility in a sound and economic manner.
(b) With the written consent of the Issuer and the
Bondholder, which shall not be unreasonably withheld or delayed,
the Company from time to time may make any structural additions,
modifications or improvements to the Facility or any part
thereof, provided such actions do not adversely affect the
structural integrity of the Facility. All such additions,
modifications or improvements made by the Company shall become a
part of the Facility and the Property of the Issuer. The Company
agrees to deliver to the Issuer all documents which may be
necessary or appropriate to convey to the Issuer title to such
Property.
Section 6.2 Installation of Additional Equipment.
Subject to the provisions of Section 8.10 hereof, the Company or
any permitted sublessee of the Company from time to time may
install additional machinery, equipment or other personal
property in the Facility (which may be attached or affixed to the
Facility), and such machinery, equipment or other personal
property shall not become, or be deemed to become, a part of the
Facility, provided that the acquisition and installation of such
property is not financed from either the Construction Fund or the
Renewal Fund. The Company from time to time may create or permit
to be created any Lien on such machinery, equipment or other
personal property. Further, the Company from time to time may
remove or permit the removal of such machinery, equipment and
other personal property from the Facility, provided that any such
removal of such machinery, equipment or other personal property
shall not occur (i) if any Event of Default has occurred; or (ii)
if any such removal shall adversely affect the structural
integrity of the Facility or impair the overall operating
efficiency of the Facility for the purposes for which it is
intended, and provided further, that if any damage is occasioned
to the Facility by such removal, the Company agrees to promptly
repair such damage at its own expense.
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<PAGE> 20
6.3 Taxes, Assessments and Utility Charges.
(a) The Company agrees to pay, as the same become due
and before any fine, penalty, interest (except interest which is
payable in connection with legally permissible installment
payments) or other cost may be added thereto or become due or be
imposed by operation of law for the non-payment thereof, (i) all
taxes, payments in lieu of taxes and governmental charges of any
kind whatsoever which may at any time be lawfully assessed or
levied against or with respect to the Facility and any machinery,
equipment or other Property installed or brought by the Company
therein or thereon, including, without limiting the generality of
the foregoing, any sales or use taxes imposed with respect to the
Facility or any part or component thereof, or the rental or sale
of the Facility or any part thereof and any taxes levied upon or
with respect to the income or revenues of the Issuer from the
Facility; (ii) all utility and other charges, including service
charges, incurred or imposed for or with respect to the
operation, maintenance, use, occupancy, upkeep and improvement of
the Facility; and (iii) all assessments and charges of any kind
whatsoever lawfully made by any governmental body for public
improvements; and (iv) at the option of the Bondholder all
insurance required to be maintained by Section 6.4 hereof;
provided that, with respect to special assessments or other
governmental charges that may lawfully be paid in installments
over a period of years, the Company shall be obligated under this
Lease Agreement to pay only such installments as are required to
be paid during the Lease term.
(b) The Company may in good faith contest any such
taxes, assessments and other charges. In the event of any such
proceedings, the Company may permit the taxes, assessments or
other charges so contested to remain unpaid during the period of
such proceedings and any appeal therefrom, provided, however,
that (i) neither the Facility nor any part thereof or interest
therein would be in any immediate danger of being sold, forfeited
or lost by reason of such proceedings and (ii) the Company shall
have set aside on its books adequate reserves with respect
thereto and shall have furnished such security, if any, as may be
required in such proceedings or requested by the Issuer or the
Bondholder.
(c) The Issuer agrees that if it or the Company
contests any taxes, assessments or other charges provided for in
paragraph (b) hereof, all sums returned, as a result thereof,
will be promptly transmitted by the Issuer to the Company and
that the Company shall be entitled to retain all such amounts.
(d) Within thirty (30) days of receipt of written
request therefor, the Company shall deliver to the Bondholder
official receipts of the appropriate taxing authorities or other
reasonably satisfactory to the Bondholder evidencing payment of
any tax.
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<PAGE> 21
Section 6.4 Insurance Required. At all times
throughout the Lease Term, including, when indicated herein,
during the Construction Period, the Company shall, at its sole
cost and expense, maintain or cause to be maintained insurance
against such risks and for such amounts as are customarily
insured against by facilities of like size and type and shall
pay, as the same become due and payable, all premiums with
respect thereto, including, but not necessarily limited to:
(a) Insurance against loss or damage by fire,
lightning and other casualties customarily insured against, with
a uniform standard extended coverage endorsement, such insurance
to be in an amount not less than the full replacement value of
the completed Improvements, exclusive of footings and
foundations, as determined by a recognized appraiser or insurer
selected by the Company, but in no event less than the principal
amount of the Bonds. During the Construction Period, such policy
shall be written in the so-called "Builder's Risk Completed Value
Non-Reporting Form" and shall contain a provision granting the
insured permission to complete and/or occupy.
(b) Workers' compensation insurance, disability
benefits insurance and each other form of insurance which the
Company is required by law to provide, covering loss resulting
from injury, sickness, disability or death of employees of the
Company who are located at or assigned to the Facility. This
coverage shall be in effect from and after the Completion Date or
on such earlier date as any employees of the Company first occupy
the Facility.
(c) Insurance protecting the Issuer and the Company
against loss or losses from liability imposed by law or assumed
in any written contract (including the contractual liability
assumed by the Company under Section 8.2 hereof) and arising from
personal injury, including bodily injury or death, or damage to
the property of others, caused by an accident or occurrence with
a limit of liability of not less than $1,000,000 (combined single
limit for personal injury, including bodily injury or death, and
property damage) and with a blanket excess liability coverage in
an amount not less than $9,000,000 combined single limit or
equivalent protecting the Issuer and the Company against any loss
or liability or damage for personal injury, including bodily
injury or death, or property damage. This coverage shall also be
in effect during the Construction Period.
(d) During the Construction Period (and for at least
one year thereafter in the case of Products and Completed
Operations as set forth below), the Company shall cause the
general contractor to carry liability insurance of the type and
providing the minimum limits set forth below:
(i) Workers, compensation and employer's
liability with limits in accordance with applicable law.
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<PAGE> 22
(ii) Comprehensive general liability providing
coverage for:
Premises and Operations
Products and Completed Operations
Owners Protective
Contractors Protective
Contractual Liability
Personal Injury Liability
Broad Form Property Damage
(including completed operations)
Explosion Hazard
Collapse Hazard
Underground Property Damage Hazard
Such insurance shall have a limit of liability of not less than
$1,000,000 (combined single limit for personal injury, including
bodily injury or death, and property damage).
(iii) Comprehensive auto liability, including all
owned, non-owned and hired autos, with a limit of liability of
not less than $1,000,000 (combined single limit for personal
injury, including bodily injury or death, and property damage).
(iv) Excess "umbrella" liability providing
liability insurance in excess of the coverages in (i), (ii) and
(iii) above with a limit of not less than $9,000,000.
Section 6.5 Additional Provisions Respecting Insurance.
(a) All insurance required by Section 6.4 hereof shall
be procured and maintained in financially sound and generally
recognized responsible insurance companies selected by the entity
required to procure the same and authorized to write such
insurance in the State. Such insurance may be written with
deductible amounts comparable to those on similar policies
carried by other companies engaged in businesses similar in size,
character and other respects to those in which the procuring
entity is engaged. All policies of insurance required by Section
6.4 hereof shall provide for at least thirty (30) days' prior
written notice of the restriction, cancellation or modification
thereof to the Issuer. The policy evidencing the insurance
required by Section 6.4(c) hereof shall name the Issuer as
additional named insured. All policies evidencing the insurance
required by Sections 6.4(d)(ii) and (iv) shall name the
Issuer and the Company as additional named insured.
(b) A copy of the policy or certificate (or binder) of
insurance required by Section 6.4(c) hereof shall be delivered to
the Issuer on or before the Closing Date. A copy of the policies
or original certificates (or original binders) of insurance
required by Sections 6.4(d)(i), (ii) and (iv) hereof shall be
delivered to the Issuer on or before the Closing Date. The
Company shall deliver to the Issuer before the first Business Day
of April in each calendar year thereafter a certificate dated not
earlier than the immediately preceding month reciting that there
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<PAGE> 23
is in full force and effect, with a term covering at least the
next succeeding twelve (12) months, insurance of the types and in
the amounts required by Section 6.4 hereof and complying with the
additional requirements of Section 6.5(a) hereof. Prior to the
expiration of each such policy, the Company shall furnish the
appropriate Person with evidence that such policy has been
renewed or replaced or is no longer required by this Lease
Agreement. The Company shall provide such further information
with respect to the insurance coverage required by this Lease
Agreement as the Issuer may from time to time reasonably require.
Section 6.6 Application of Net Proceeds of Insurance.
The Net Proceeds of the insurance carried pursuant to the
provisions of Section 6.4 hereof shall be applied as follows: (i)
the Net Proceeds of the insurance required by Sections 6.4(a)
hereof shall be applied as provided in Section 7.1 hereof and
(ii) the Net Proceeds of the insurance required by Sections
6.4(b), (c), and (d) hereof shall be applied toward
extinguishment or satisfaction of the liability with respect to
which such insurance proceeds may be paid.
Section 6.7 Right of Bondholder to Pay Taxes, Insurance
Premiums and Other Charges. If the Company fails (i) to pay any
tax, together with any fine, penalty, interest or cost which may
have been added thereto or become due or been imposed by
operation of law for nonpayment thereof, or payments-in-lieu-of-
taxes pursuant to the PILOT Agreement, assessment or other
governmental charge required to be paid by Section 6.3 hereof,
(ii) to maintain any insurance required to be maintained by
Section 6.4 hereof, (iii) to pay any amount required to be paid
by any law or ordinance relating to the use or occupancy of the
Facility or by any requirement, order or notice of violation
thereof issued by any governmental person, (iv) to pay any
mechanic's Lien which is recorded or filed against the Facility
or any part thereof (unless contested in accordance with the
provisions of Section 8.9(b) hereof), (v) to pay any real
property transfer gains tax, together with any interest and
penalties thereon, which is due and payable by reason of a
conveyance of the leasehold estate in and to the Facility
pursuant to a judicial sale in any foreclosure action or by deed
and/or assignment in lieu of foreclosure or (vi) to pay any other
amount or perform any act hereunder required to be paid or
performed by the Company hereunder, the Issuer or the Bondholder
may pay or cause to be paid such tax or payments-in-lieu-of-taxes
pursuant to the PILOT Agreement, assessment or other governmental
charge or the premium for such insurance or any such other
payment or may perform any such act. No such payment shall be
made or act performed by the Issuer or the Bondholder until at
least ten (10) days shall have elapsed since notice shall have
been given by the Bondholder to the Issuer, with a copy of such
notice being given to the Company (or by the Issuer to the
Company and the Bondholder), and in the case of any tax,
assessment or governmental charge or the amounts specified in
paragraphs (iii), (vi) and (v) hereof, no such payment shall be
made in any event if the Company is contesting the same in good
faith to the extent and as permitted by this Lease Agreement
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<PAGE> 24
unless an Event of Default hereunder shall have occurred and be
continuing. No such payment by the Issuer or the Bondholder
shall affect or impair any rights of the Issuer hereunder or of
the Bondholder under the Bond Purchase Agreement or the Mortgage
arising in consequence of such failure by the Company. The
Company shall, on demand, reimburse the Issuer or the Bondholder
for any amount so paid or for expenses or costs incurred in the
performance of any such act by the Issuer or the Bondholder
pursuant to this Section (which shall include all reasonable
legal fees and disbursements), together with interest thereon
from the date of payment of such amount, expense or cost by the
Issuer or the Bondholder at the rate set forth in the Bond and
such amount, together with such interest, shall become additional
indebtedness secured by the Mortgage.
Section 6.8. Compliance with Articles 31 and 31-B of Tax
Law.
(a) The Company shall keep true and complete records
pertaining to its acquisition of title to the fee or the
leasehold estate in and to the Facility, all subsequent transfers
of any interests therein or any part thereof and all changes in
the controlling interest (by way of changes in stock ownership,
capital, profits, beneficial interest or otherwise) in the
Company or any related entity which may hereafter own and/or
acquire title to the fee or the leasehold estate in and to the
Facility, including, but not limited to, a copy of the contract
of sale, title report, assignment of lease, closing statement,
transferor's affidavit, questionnaire or return, statement of
tentative assessment and any other notices or determinations of
tax received from the New York State Department of Taxation and
Finance, transferor's supplemental return, the date and cost of
all "capital improvements" made to the Land, the Improvements or
any part thereof and evidence of the payment of any real property
transfer gains tax imposed by reason of Article 31-B of the New
York Tax Law and the filing of all reports and any other
information or documentation required by the New York State
Department of Taxation and Finance by reason of said Article or
any regulations promulgated thereunder. All such records shall
be made available to the Issuer and the Bondholder for inspection
from time to time upon their request.
(b) If any real property transfer gains tax shall be
due and payable upon the conveyance of the leasehold estate in
and to the Facility pursuant to a judicial sale in any
foreclosure action or by deed and/or assignment in lieu of
foreclosure, the Company shall, at the request of the Issuer or
the Bondholder, (i) provide the Issuer and/or the Bondholder with
a copy of all such records and will prepare, execute, deliver and
file any affidavits, questionnaires, returns or supplemental
returns required of the Company, as transferor, including, but
not limited to, a statement in affidavit form as to the "original
purchase price" of the fee or the leasehold estate in and to the
Facility and the cost of all "capital improvements" made to the
Land, the Improvements or any part thereof by the Company or any
related entity and the date or dates on which such improvements
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<PAGE> 25
were made and (ii) pay or cause to be paid any real property
transfer gains tax, together with any interest and penalties
thereon, which may be due and payable by reason of such
conveyance. The Company hereby appoints the Bondholder its true
and lawful agent and attorney-in-fact (which appointment shall be
deemed to be an agency coupled with an interest), with full power
of substitution, to prepare, execute, deliver and file on its
behalf any and all affidavits, questionnaires, returns and
supplemental returns which the Company, as transferor, has failed
or refused to execute and deliver to the Issuer or the Bondholder
within thirty (30) days after notice and request therefor.
(c) If any real property transfer tax shall be due and
payable upon the conveyance of the leasehold estate in and to the
Facility by the Issuer to the Company pursuant to this Lease, the
Company shall, (i) provide the Issuer with a copy of all such
records, and will prepare, execute, deliver and file any
affidavits, questionnaires, returns, or supplemental returns
required of the Company, as transferee, and (ii) pay or cause to
be paid any real property transfer tax, together with any
interest and penalties thereon, which may be due and payable by
reason of conveyance. The Company hereby appoints the Bondholder
its true and lawful agent and attorney-in-fact (which appointment
shall be deemed to be an agency coupled with an interest), with
full power of substitution, to prepare, execute, deliver and file
on its behalf any and all affidavits, questionnaires, returns and
supplemental returns which the Company, as transferee, has failed
or refused to execute and deliver to the Issuer or the Bondholder
within thirty (30) days after notice and request therefor.
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<PAGE> 26
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1 Damage or Destruction of the Facility.
(a) If the Facility shall be damaged or destroyed (in
whole or in part) at any time during the Lease Term:
(i) the Issuer shall have no obligation to
replace, repair, rebuild, restore or relocate the
Facility; and
(ii) there shall be no abatement or reduction in
the amounts payable by the Company under this Lease
Agreement (whether or not the Facility is replaced,
repaired, rebuilt or restored); and
(iii) upon the occurrence of such damage or
destruction, the Net Proceeds derived from the
insurance shall be paid to the Bondholder and deposited
in the Renewal Fund and except as otherwise provided in
Section 11.1 and subsection (f) hereof, the Company
shall at its option either (A) replace, repair, rebuild
or restore the Facility or (B) prepay a portion of the
Bond in a principal amount equal to such Net Proceeds
in accordance with the Bond Purchase Agreement.
If the Company replaces, repairs, rebuilds or restores
the Facility, the Bondholder shall disburse the Net Proceeds from
the Renewal Fund in the manner set forth in Section 4.06 of the
Bond Purchase Agreement to pay or reimburse the Company for the
cost of such replacement, repair, rebuilding or restoration.
(b) Any such replacements, repairs, rebuilding or
restorations shall be subject to the following conditions:
(i) the Facility shall be in substantially the
same condition and value as an operating entity as
existed prior to the damage or destruction;
(ii) the Facility shall continue to constitute a
"project" as such term is defined in the Act; and
(iii) the Facility will be subject to no Liens,
other than Permitted Encumbrances.
(c) All such repair, replacement, rebuilding or
restoration of the Facility shall be effected with due diligence
in a good and workmanlike manner in compliance with all
applicable legal requirements and be promptly and fully paid for
Company in accordance with the terms of the applicable contracts.
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<PAGE> 27
(d) In the event such Net Proceeds are not sufficient
to pay in full the costs of such replacement, repair, rebuilding
or restoration the Company shall nonetheless complete the work
and pay from its own moneys that portion of the costs thereof in
excess of such Net Proceeds. All such replacements, repairs,
rebuilding, restoration or relocations made pursuant to this
Section, whether or not requiring the expenditure of the
Company's own money, shall automatically become a part of the
Facility as if the same were specifically described herein.
(e) Any balance of such Net Proceeds remaining in the
Renewal Fund after payment of all costs of replacement, repair,
rebuilding or restoration shall be used to prepay the Bond as
provided in the Bond Purchase Agreement.
(f) If the Company shall exercise its option to
terminate this Lease Agreement pursuant to Section 11.1 hereof
such Net Proceeds shall be applied to the payment of the amounts
required to be paid by Section 11.2 hereof. If an Event of
Default hereunder shall have occurred and the Bondholder shall
have exercised its remedies under Section 10.2 hereof such Net
Proceeds shall be applied to the payment of the amounts required
to be paid by Section 10.2 and Section 10.4 hereof.
(g) If the entire amount of the Bond and interest
thereon has been fully paid, or provision therefor has been made
in accordance with the Bond Purchase Agreement, all such
remaining Net Proceeds shall be paid to the Company.
(h) Except upon the occurrence of an Event of Default,
the Company with the consent of the Bondholder shall have the
right to settle and adjust all claims under any policies of
insurance required by Section 6.4(a), and (e) hereof on behalf of
the Issuer and on its own behalf.
Section 7.2 Condemnation.
(a) If title to or use of the Facility shall be taken
by Condemnation (in whole or in part) at any time during the
Lease Term:
(i) the Issuer shall have no obligation to
replace, repair, rebuild, restore or relocate the
Facility or acquire, by construction or otherwise,
facilities of substantially the same nature as the
Facility ("Substitute Facilities,,); and
(ii) there shall be no abatement or reduction in
the amounts payable by the Company under this Lease
Agreement (whether or not the Facility is replaced,
repaired, rebuilt, restored or relocated or Substitute
Facilities acquired); and
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<PAGE> 28
(iii) upon the occurrence of such Condemnation,
the Net Proceeds derived therefrom shall be paid to the
Bondholder and deposited in the Renewal Fund and except
as otherwise provided in Section 11.1 and subsection
(f) hereof, the Company shall either:
(A) replace, repair, rebuild, restore or
relocate the Facility or acquire Substitute
Facilities, or
(B) prepay a portion of the Bond in an
amount equal to such Net Proceeds in accordance
with the Bond Purchase Agreement.
If the Company replaces, repairs, rebuilds, restores or
relocates the Facility or acquires Substitute Facilities, the
Bondholder shall disburse the Net Proceeds from the Renewal Fund
in the manner set forth in Section 4.06 of the Bond Purchase
Agreement to pay or reimburse the Company for the cost of such
replacement, repair, rebuilding, restoration, relocation or
acquisition of Substitute Facilities.
(b) Any such replacements, repairs, rebuilding,
restorations, relocations or acquisitions of Substitute
Facilities shall be subject to the following conditions:
(i) the Facility or the Substitute Facilities
shall be in substantially the same condition and value
as an operating entity as existed prior to the
condemnation;
(ii) the Facility or the Substitute Facilities
shall continue to constitute a "project" as such term
is defined in the Act; and
(iii) the Facility or the Substitute Facilities
will be subject to no Liens, other than Permitted
Encumbrances.
(c) All such repair, replacement, rebuilding,
restoration or relocation of the Facility shall be effected with
due diligence in a good and workmanlike manner in compliance with
all applicable legal requirements and be promptly and fully paid
for by the Company in accordance with the terms of the applicable
contracts.
(d) In the event such Net Proceeds are not sufficient
to pay in full the costs of such replacement, repair, rebuilding,
restoration, relocation or acquisition of Substitute Facilities,
the Company shall nonetheless complete the work or the
acquisition and pay from its own moneys that portion of the costs
thereof in excess of such Net Proceeds. All such replacements,
repairs, rebuilding, restoration, relocations and such
acquisition of Substitute Facilities made pursuant to this
Section, whether or not requiring the expenditure of the
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<PAGE> 29
Company's own money, shall automatically become a part of the
Facility as if the same were specifically described herein.
(e) Any balance of such Net Proceeds remaining in the
Renewal Fund after payment of all costs of replacement, repair,
rebuilding, restoration, relocation or acquisition of Substitute
Facilities shall be used to redeem the Bonds as provided in the
Bond Purchase Agreement.
(f) If the Company shall exercise its option to
terminate this Lease Agreement pursuant to Section 11.1 hereof
such Net Proceeds shall be applied to the payment of the amounts
required to be paid by Section 11.2 hereof. If any Event of
Default hereunder shall have occurred and the Bondholder shall
have exercised its remedies under Section 10.2 hereof such Net
Proceeds shall be applied to the payment of the amounts required
to be paid by Section 10.2 and Section 10.4 hereof.
(g) If the entire amount of the Bond and interest
thereon has been fully paid, or provision therefor has been made
in accordance with the Bond Purchase Agreement, all such
remaining Net Proceeds shall be paid to the Company.
(h) Except upon the occurrence of an Event of Default,
the Company shall have the right to settle and adjust all claims
under any Condemnation proceedings on behalf of the Issuer and on
its own behalf.
Section 7.3 Condemnation of Company-owned Property.
The Company shall be entitled to the proceeds of any Condemnation
award or portion thereof made for damage to or taking of any
Property which, at the time of such damage or taking, is not part
of the Facility.
Section 7.4 Recovery Against Contractor, Etc.
(a) If at any time during the Lease Term, provided no
Event of Default under Section 10.1 has occurred, proceeds shall
become available from any recovery against a contractor,
subcontractor, materialman or other Person with respect to the
Facility, such proceeds shall be deposited in the Renewal Fund
and be applied as follows:
(i) if received prior to the Completion Date, the
Net Proceeds of such recovery shall be applied in the
manner and subject to the conditions set forth in
Sections 4.03 and 4.04 of the Bond Purchase Agreement
to the Costs of the Facility as if such proceeds were
deposited in the Construction Fund and the balance
remaining in the Renewal Fund, if any, shall be applied
to redeem the Bond pursuant to the Bond Purchase
Agreement;
(ii) if received subsequent to the Completion
Date, the Net Proceeds of such recovery shall be paid
to the Company as reimbursement for the Costs of the
Facility which were
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not paid out of Bond Proceeds upon requisitions by the
Company substantially in accordance with Section 4.03
and Section 4.04 of the Bond Purchase Agreement with
such variations as are appropriate and the balance
remaining in the Renewal Fund, if any, shall be applied
to redeem the Bond pursuant to the Bond Purchase
Agreement.
(b) After the occurrence of an Event of Default under
Section 10.1 hereof, the proceeds of any such recovery against a
contractor, subcontractor, materialman, or other Person with
respect to the Facility shall be applied as provided in Section
10.2 hereof.
(c) If the entire amount of the Bond and interest
thereon have been fully paid, or provision therefor has been made
in accordance with the Bond Purchase Agreement, the surplus
thereof shall be paid to the Company for its business purposes.
(d) Except upon the occurrence of an Event of Default,
the Company shall have the right to settle and adjust all claims
against such contractors, subcontractors, materialmen or other
Persons.
Section 7.5 Waiver of Real Property Law Section 227.
The Company hereby waives the provisions of Section 227 of the
Real Property Law of the State or any law of like import now or
hereafter in effect.
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ARTICLE VIII
SPECIAL COVENANTS
Section 8.1 No Warranty of Condition or Suitability by
Issuer. THE ISSUER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED,
AS TO THE CONDITION, TITLE, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS OF THE FACILITY OR THAT IT IS OR WILL BE SUITABLE FOR THE
COMPANY'S PURPOSES OR NEEDS.
Section 8.2 Hold Harmless Provisions.
(a) The Company agrees that the Issuer shall not be
liable for and agrees to defend, indemnify, release and hold the
Issuer harmless from and against any and all (i) liability for
loss or damage to Property or injury to or death of any and all
Persons that may be occasioned by, directly or indirectly, any
cause whatsoever pertaining to the Facility or arising by reason
of or in connection with the occupation or the use thereof or the
presence of any Person or Property on, in or about the Facility
or the Land or (ii) liability arising from or expense incurred by
the Issuer's financing, acquisition, renovation and equipping,
owning and leasing of the Facility, including without limiting
the generality of the foregoing, all claims arising from the
breach by the Company of any of its covenants contained herein,
the exercise by the Company of the authority conferred upon it
pursuant to Section 4.1(d) of this Lease Agreement and all causes
of action and attorneys' fees and any other expenses incurred in
defending any suits or actions which may arise as a result of any
of the foregoing, provided that any such losses, damages,
liabilities or expenses of the Issuer are not incurred or do not
result from the gross negligence or intentional or willful
wrongdoing of the Issuer or any of its members, agents or
employees. The foregoing indemnities shall apply notwithstanding
the fault or negligence in part of the Issuer or any of its
members, directors, officers, agents or employees and
irrespective of the breach of a statutory obligation or the
application of any rule of comparative or apportioned liability.
The foregoing indemnities are limited only to the extent of any
prohibitions imposed by law.
(b) Notwithstanding any other provisions of this Lease
Agreement, the obligations of the Company pursuant to this
Section 8.2 shall remain in full force and effect after the
termination of this Lease Agreement until the expiration of the
period stated in the applicable statute of limitations during
which a claim, cause of action or prosecution relating to the
matters herein described may be brought and payment in full or
the satisfaction of such claim, cause of action or prosecution
relating to the matters herein described and the payment of all
expenses and charges incurred by the Issuer, or its respective
directors, officers, agents and employees, relating to the
enforcement of the provisions herein specified.
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(c) In the event of any claim against the Issuer, the
Bondholder or their respective members, directors, officers,
agents or employees by any employee or contractor of the Company
or anyone directly or indirectly employed by any of them or
anyone for whose acts any of them may be liable, the obligations
of the Company hereunder shall not be limited in any way by any
limitation on the amount or type of damages, compensation,
disability benefits or other employee benefit acts.
Section 8.3 Right to Inspect Facility. The Issuer and
the Bondholder and the duly authorized agents of either of them
shall have the right at all reasonable times to inspect the
Facility.
Section 8.4 Company to Maintain Its Existence. The
Company agrees that during the Lease Term it will maintain its
existence, will not dissolve, liquidate or otherwise dispose of
substantially all of its assets and will not consolidate with or
merge into another corporation or permit one or more corporations
to consolidate with or merge into it.
Section 8.5 Qualification in State. The Company
throughout the Lease Term shall continue to be duly authorized to
do business in the State.
Section 8.6 Agreement to File Annual Statements and
Provide Information. The Company shall file with the New York
State Department of Taxation and Finance an annual statement of
the value of all sales and use tax exemptions claimed in
connection with the Facility in compliance with Section 874(8) of
the New York State General Municipal Law. The Company shall
submit a copy of such annual statement to the Issuer at the time
of filing with the Department of Taxation and Finance. The
Company further agrees whenever requested by the Issuer to
provide and certify or cause to be provided and certified such
information concerning the Company, its finances, its operations
and its affairs necessary to enable the Issuer to make any report
required by law, governmental regulation or any of the Issuer
Documents or Company Documents.
Section 8.7 Books of Record and Account: Financial
Statements. The Company at all times agrees to maintain proper
accounts, records and books in which full and correct entries
shall be made, in accordance with generally accepted accounting
principles, of all transactions and events relating to the
business and affairs of the Company. The Company shall furnish
to the Issuer and to the Bondholder within thirty (30) days of
their filing, copies of all reports, if any, filed with the
Securities and Exchange Commission, pursuant to the Securities
Exchange Act of 1934, as amended, relative to the Company.
Section 8.8 Compliance With Orders, Ordinances, Etc.
(a) The Company, throughout the Lease Term, agrees
that it will promptly comply, and cause any sublessee or occupant
of the Facility to comply, with all statutes, codes, laws, acts,
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ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements, ordinary or extraordinary, which now or at any time
hereafter may be applicable to the Facility or any part thereof
or to the acquisition, renovation and equipping thereof, or to
any use, manner of use or condition of the Facility or any part
thereof, of all federal, state, county, municipal and other
governments, departments, commissions, boards, courts,
authorities, officials and officers and companies or associations
insuring the premises having jurisdiction of the Facility or any
part thereof, or to the acquisition, renovation and equipping
thereof, or to any use, manner of use or condition of the
Facility or any part thereof.
(b) The Company shall keep or cause the Facility to be
kept free of Hazardous Materials (as defined hereinafter) and
Hazardous Substances. Without limiting the foregoing, the
Company shall not cause or permit the Facility to be used to
generate, manufacture, refine, transport, treat, store, handle,
dispose, transfer, produce or process Hazardous Materials and
Hazardous Substances, except in compliance with all applicable
federal, state and local laws or regulations, nor shall the
Company cause or permit, as a result of any intentional or
unintentional act or omission on the part of the Company or any
contractor, subcontractor, tenant or subtenant, a release of
Hazardous Materials and Hazardous Substances onto the Facility or
onto any other property. The Company shall comply with and
ensure compliance by all contractors, subcontractors, tenants and
subtenants with all applicable federal, state and local laws,
ordinances, rules and regulations, whenever and by whomever
,triggered, and shall obtain and comply with, and ensure that all
contractors, subcontractors, tenants and subtenants obtain and
comply with, any and all approvals, registrations or permits
required thereunder. The Company shall (a) conduct and complete
all investigations, studies, sampling, and testing, and all
remedial, removal, and other actions necessary to clean up and
remove all Hazardous Materials and Hazardous Substances, on,
from, or affecting the Facility (i) in accordance with all
applicable federal, state, and local laws, ordinances, rules,
regulations, and policies, (ii) to the satisfaction of the
Bondholder and the Issuer and (iii) in accordance with the orders
and directives of all federal, state, and local governmental
authorities; and (b) defend, indemnify, and hold harmless the
Bondholder and the Issuer, their employees, agents, officers, and
directors, from and against any claims, demands, penalties,
fines, liabilities, settlements, damages, costs, or expenses of
whatever kind or nature, known or unknown, contingent or
otherwise, arising out of, or in any way related to (i) the
presence, disposal, release, or threatened release of any
Hazardous Materials and Hazardous Substances which are on, from
or affecting the soil, water, vegetation, buildings, personal
property, persons, animals, or otherwise, (ii) any bodily injury,
personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to such Hazardous
Materials and Hazardous Substances, (iii) any lawsuit brought or
threatened, settlement reached, or government order relating to
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such Hazardous Materials and Hazardous Substances, and/or (iv)
any violation of laws, orders, regulations, requirements, or
demands of government authorities, or any policies or
requirements of the Bondholder and the Issuer, which are based
upon or in any way related to such Hazardous Materials and
Hazardous Substances, including, without limitation, attorney and
consultant fees, investigation and laboratory fees, court costs,
and litigation expenses. For purposes of this Section,
"Hazardous Materials" includes, without limitation, any flammable
explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances, or related materials
defined in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C.
Sections 9601, et seq.), the Superfund Amendments and
Reauthorization Act of 1986 (Pub.L. No. 99-499, 100 stat. 1613
(1986), the Hazardous Materials Transportation Act, as amended
(49 U.S.C. Sections 1801, et seq.), and in the regulations
adopted and publications promulgated pursuant thereto, or any
other federal, state or local environmental law, ordinance, rule,
or regulation. The provisions of this Section shall be in
addition to any and all other obligations and liabilities the
Company may have to the Bondholder at common law, and shall
survive the transactions contemplated herein.
(c) Notwithstanding the provisions of subsections (a)
and (b) hereof, the Company may in good faith contest the
validity or the applicability of any requirement of the nature
referred to in such subsections (a) and (b) by appropriate legal
proceedings conducted in good faith and with due diligence. In
such event, the Company may fail to comply with the requirement
or requirements so contested during the period of such contest
and any appeal therefrom, unless the Issuer or the Bondholder
shall notify the Company that by failure to comply with such
requirement or requirements, the Facility or any part thereof may
be subject to loss, penalty or forfeiture, in which event the
Company shall promptly take such action with respect thereto or
provide such security as shall be satisfactory to the Bondholder
and to the Issuer. If at any time the then existing use or
occupancy of the Facility shall, pursuant to any zoning or other
law, ordinance or regulation, be permitted only so long as such
occupancy shall continue, the Company shall use its best efforts
to not cause or permit such use or occupancy to be discontinued
without the prior written consent of the Issuer and the
Bondholder.
(d) Notwithstanding the provisions of this Section
8.8, if, because of a breach or violation of the provisions of
subsections (a) or (b) hereof (without giving effect to
subsection (c) hereof), either the Issuer, the Bondholder, or any
of their respective members, directors, officers, agents, or
employees, shall be threatened with a fine, liability, expense or
imprisonment, then, upon notice from the Issuer or the
Bondholder, the Company shall immediately provide legal
protection and/or pay amounts necessary in the opinion of the
Issuer or the Bondholder, as the case may be, and their
respective members, directors, officers, agents and employees
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deem sufficient, to the extent permitted by applicable law, to
remove the threat of such fine, liability, expense or
imprisonment.
(e) Notwithstanding any provisions of this Section,
the Bondholder and the Issuer retain the right to defend
themselves in any action or actions which are based upon or in
any way related to such Hazardous Materials. In any such defense
of themselves, the Bondholder and the Issuer shall each select
their own counsel, and any and all costs of such defense,
including, without limitation, attorney and consultant fees,
investigation and laboratory fees, court costs, and litigation
expenses, shall be paid by the Company.
Section 8.9 Discharge of Liens and Encumbrances.
(a) The Company, throughout the Lease Term, shall not
permit or create or suffer to be permitted or created any Lien,
except for Permitted Encumbrances, upon the Facility or any part
thereof by reason of any labor, services or materials rendered or
supplied or claimed to be rendered or supplied with respect to
the Facility or any part thereof.
(b) Notwithstanding the provisions of subsection (a)
hereof, the Company may in good faith contest any such Lien. In
such event, the Company may permit the items so contested to
remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom, unless the Issuer or the
Bondholder shall notify the Company that by nonpayment of any
such item or items, the lien of the Mortgage may be materially
endangered or the Facility or any part thereof may be subject to
loss or forfeiture, in which event the Company shall promptly
secure payment of all such unpaid items by filing a bond, in form
and substance satisfactory to the Bondholder, thereby causing
such Lien to be removed or by taking such other actions as may be
satisfactory to the Bondholder to protect its interests.
Mechanics' Liens shall be discharged or bonded within thirty (30)
days of the filing or perfection thereof.
Section 8.10 Identification of Equipment. All
Equipment which is or may become the Property of the Issuer
pursuant to the provisions of this Lease Agreement shall be
properly identified by the Company by such appropriate records,
including computerized records. All Equipment and other Property
of whatever nature affixed or attached to the Land or used or to
be used by the Company in connection with the Land or the
Improvements shall be deemed presumptively to be owned by the
Issuer, rather than the Company, unless the same were utilized
for purposes of construction of the Facility or were installed by
the Company and title thereto was retained by the Company as
provided in Section 6.2 of this Lease Agreement and such
Equipment and other Property were properly identified by such
appropriate records.
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Section 8.11 Depreciation Deductions and Investment Tax
Credit. The parties agree that, as between them, the Company
shall be entitled to all depreciation deductions with respect to
any depreciable property comprising a part of the Facility
pursuant to Section 167 or Section 168 of the Code and to any
investment credit pursuant to Section 38 of the Code with respect
to any part of the Facility which constitutes "Section 38
Property".
Section 8.12 Employment Opportunities; Notice of Jobs.
The Company covenants and agrees that, in consideration of the
participation of the Issuer in the transactions contemplated
herein, it will, except as otherwise provided by collective
bargaining contracts or agreements to which it is a party, cause
any new employment opportunities created in connection with the
Facility to be listed with the New York State Department of
Labor, Community Services Division and with the administrative
entity of the service delivery area created pursuant to the Job
Training Partnership Act (PL 97-300) in which the Facility is
located (collectively, the "Referral Agencies"). The Company
also agrees that it will, except as otherwise provided by
collective bargaining contracts or agreements to which it is a
party, first consider for such new employment opportunities
persons eligible to participate in federal job training
partnership (PL 97-300) programs who shall be referred by the
Referral Agencies.
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ARTICLE IX
RELEASE OF CERTAIN LAND; ASSIGNMENTS
AND SUBLEASING; PLEDGE OF INTERESTS
Section 9.1 Restriction on Sale of Facility; Release of
Certain Land.
(a) Except as otherwise specifically provided in this
Article IX and in Article X hereof, the Issuer shall not sell,
convey, transfer, encumber or otherwise dispose of the Facility
or any part thereof or any of its rights under this Lease
Agreement, without the prior written consent of the Company and
the Bondholder.
(b) The Issuer and the Company from time to time may
release from the provisions of this Lease Agreement and the
leasehold estate created hereby any part of, or interest in, the
Land which is not necessary, desirable or useful for the
Facility. In such event, the Issuer, at the Company's sole cost
and expense, shall execute and deliver, and request the
Bondholder to execute and deliver, any and all instruments
necessary or appropriate to so release such part of, or interest
in, the Land and convey such title thereto or interest therein to
the Company or such other Person as the Company may designate.
As a condition to such conveyance, the Bondholder shall be
provided with a copy of the instrument transferring such title or
interest in such Land.
(c) No conveyance of any part of, or interest in the
Land effected under the provisions of this Section 9.1 shall
entitle the Company to any abatement or diminution of the rents
payable by it under this Lease Agreement.
Section 9.2 Removal of Equipment.
(a) The Issuer shall not be under any obligation to
remove, repair or replace any inadequate, obsolete, worn out,
unsuitable, undesirable or unnecessary item of Equipment. In any
instance where the Company determines that any item of Equipment
has become inadequate, obsolete, worn out, unsuitable,
undesirable or unnecessary, the Company, may remove such items
from the Facility and may sell, trade-in, exchange or otherwise
dispose of the same, as a whole or in part, provided that such
removal will not materially impair the operation of the Facility
for the purpose for which it is intended or change the nature of
the Facility so that it does not constitute a "project" under the
Act.
(b) The Issuer shall execute and deliver to the
Company all instruments necessary or appropriate to enable the
Company to sell or otherwise dispose of any such item of
Equipment. The Company shall pay any costs (including counsel
fees) incurred in transferring title to any item of Equipment
removed pursuant to this Section 9.2.
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(c) The removal of any item of Equipment pursuant to
this Section shall not entitle the Company to any abatement or
diminution of the rents payable by it under this Lease Agreement
or any abatement or diminution of the amounts payable by it under
the PILOT Agreement.
Section 9.3 Assignment and Subleasing.
(a) This Lease Agreement may not be assigned, in whole
or in part, and the Facility may not be subleased, in whole or in
part, without the prior written consent of the Issuer in each
instance which consent will not be unreasonably withheld or
delayed. The Agency hereby expressly consents to the Sublease
between the Company and the Sublessee. Any assignment or
sublease shall be on the following conditions:
(i) no assignment or sublease shall relieve the
Company from primary liability for any of its
obligations hereunder;
(ii) the assignee or sublessee shall assume the
obligations of the Company hereunder to the extent of
the interest assigned or subleased;
(iii) the Company shall, within ten (10) days
after the delivery thereof, furnish or cause to be
furnished to the Issuer a true and complete copy of
such assignment or sublease and the instrument of
assumption;
(iv) neither the validity nor the enforceability
of the Bond or any Bond Document shall be adversely
affected thereby; and
(v) the Facility shall continue to constitute a
"project" as such quoted term is defined in the Act.
(b) If the Bondholder or the Issuer shall so request,
as of the purported effective date of any assignment or sublease
pursuant to subsection (a) of this Section 9.3, the Company at
its cost shall furnish the Bondholder or the Issuer, as
appropriate, with an opinion, in form and substance satisfactory
to the Issuer, (i) of Bond Counsel as to item (v) above, and (ii)
of Independent Counsel as to items (i), (ii) and (iv) above.
Section 9.4 Mortgage of Facility; Pledge of Issuer's
Interests to Bondholder. The Issuer and the Company have
mortgaged their respective right, title and interest to the
Bondholder as security for the payment of the principal of, and
premium, if any, and interest on the Bond. The Issuer shall
pledge and assign its rights to and interest in this Lease
Agreement and in all amounts payable by the Company pursuant to
Section 5.3 hereof and all other provisions of this Lease
Agreement (other than Unassigned Rights), to the Bondholder as
security for the payment of the principal of, and premium, if
any, and interest on the Bond. The Company hereby acknowledges
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and consents to such mortgage pledge and assignment by the
Issuer. Notwithstanding the foregoing, all indemnities herein
contained shall subsequent to such pledge and assignment continue
to run to the Issuer for its benefit as well as for the benefit
of the Bondholder.
Section 9.5 Merger of Issuer.
(a) Nothing contained in this Lease Agreement shall
prevent the consolidation of the Issuer with, or merger of the
Issuer into, or transfer of title to the entire Facility to any
other public benefit corporation or political subdivision which
has the legal authority to own and lease the Facility, provided
that upon any such consolidation, merger or transfer, the due and
punctual performance and observance of all the agreements and
conditions of this Lease Agreement to be kept and performed by
the Issuer shall be expressly assumed in writing by the public
benefit corporation or political subdivision resulting from such
consolidation or surviving such merger or to which the Facility
shall be transferred.
(b) Within thirty (30) days after the consummation of
any such consolidation, merger or transfer of title, the Issuer
shall give notice thereof in reasonable detail to the Company and
the Bondholder and shall furnish to the Company and the
Bondholder a favorable opinion of Independent Counsel as to
compliance with the provisions of Section 9.5(a) hereof. The
Issuer promptly shall furnish such additional information with
respect to any such transaction as the Company or the Bondholder
may reasonably request.
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ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1 Events of Default Defined.
(a) The following shall be "Events of Default" under
this Lease Agreement:
(i) the failure by the Company to pay or cause to
be paid on the date due or within the applicable grace
period, the amount specified to be paid pursuant to
Section 5.3(a) hereof;
(ii) the failure by the Company to pay or cause
to be paid any sums pursuant to S 5.3(b) hereof for a
period of sixty (60) days after written notice given to
the Company by the Issuer;
(iii) the failure by the Company to observe and
perform any covenant contained in Section 9.3 hereof;
(v) the failure by the Company to comply with the
terms and conditions of the PILOT Agreement for a
period of sixty (60) days after written notice,
specifying such failure and requesting that it be
remedied, given to the Company by the Issuer;
(iv) any representation or warranty of the Company
herein or in the Bond Purchase Agreement shall prove to
have been false or misleading in any material respect;
(vi) the failure by the Company to observe and
perform any covenant, condition or agreement hereunder
on its part to be observed or performed (except
obligations referred to in 10.1(a)(i), (ii), (iii),
(iv) and (v)) for a period of thirty (30) days after
written notice, specifying such failure and requesting
that it be remedied, given to the Company by the Issuer
or the Bondholder;
(vii) the dissolution or liquidation of the
Company; or the failure by the Company to release,
stay, discharge, lift or bond within thirty (30) days
any execution, garnishment, judgment or attachment of
such consequence as may impair its ability to carry on
its operations; or the failure by the Company generally
to pay its debts as they become due; or an assignment
by the Company for the benefit of creditors; the
commencement by the Company (as the debtor) of a case
Bankruptcy or any proceeding under any other insolvency
law; or the commencement of a case in Bankruptcy or any
proceeding under any other insolvency law against the
Company (as the debtor) and a court having jurisdiction
in the premises enters a decree or order for relief
against the Company as the debtor in such case
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or proceeding, or such case or proceeding is consented
to by the Company or remains undismissed for forty (40)
days, or the Company consents to or admits the material
allegations against it in any such case or proceeding;
or a bondholder, receiver or agent (however named) is
appointed or authorized to take charge of substantially
all of the property of the Company for the purpose of
enforcing a lien against such Property or for the
purpose of general administration of such Property for
the benefit of creditors;
(viii) an Event of Default under the Bond
Purchase Agreement shall have occurred and be
continuing; or
(ix) the invalidity, illegality or
unenforceability of any material term of any of the
Bond Documents.
(b) Notwithstanding the provisions of Section 10.1(a),
if by reason of force majeure any party hereto shall be unable in
whole or in part to carry out its obligations under Sections 4.1
and 6.1 of this Lease Agreement and if such party shall give
notice and full particulars of such force majeure in writing to
the other party and to the Bondholder, within a reasonable time
after the occurrence of the event or cause relied upon, such
obligations under this Lease Agreement of the party giving such
notice (and only such obligations), so far as they are affected
by such force majeure, shall be suspended during continuance of
the inability, which shall include a reasonable time for the
removal of the effect thereof. The term "force majeure" as used
herein shall include, without limitation, acts of God, strikes,
lockouts or other industrial disturbances, acts of public enemies
acts, priorities or orders of any kind of the government of the
United States of America or of the State or any of their
departments, agencies, governmental subdivisions, or officials,
any civil or military authority, insurrections, riots, epidemics,
landslides, lightning, earthquakes, fire, hurricanes, storms,
floods, washouts, droughts, arrests, restraint of government and
people, civil disturbances, explosions, breakage or accident to
machinery, transmission pipes or canals, shortages of labor or
materials or delays of carriers, partial or entire failure of
utilities, shortage of energy or any other cause or event not
reasonably within the control of the party claiming such
inability and not due to its fault. The party claiming such
inability shall remove the cause for the same with all reasonable
promptness. It is agreed that the settlement of strikes,
lockouts and other industrial disturbances shall be entirely
within the discretion of the party having difficulty, and the
party having difficulty shall not be required to settle any
strike, lockout and other industrial disturbances by acceding to
the demands of the opposing party or parties.
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Section 10.2 Remedies on Default.
(a) Whenever any Event of Default shall have occurred,
the Issuer may on ten (10) days written notice to the Company,
terminate the Lease Term and transfer the Facility to the Company
or its designee pursuant to Sections 11.1B and 11.3 hereof:
(b) Reserved
(c) Any sums payable to the Issuer as a consequence of
any action taken pursuant to this Section 10.2 (other than those
sums attributable to Unassigned Rights) shall be paid to the and
Bondholder applied to the payment of the Bond.
(d) Reserved
Section 10.3 Remedies Cumulative. No remedy herein
conferred upon or reserved to the Issuer or the Bondholder is
intended to be exclusive of any other available remedy, but each
and every such remedy shall be cumulative and in addition to
every other remedy given under this Lease Agreement or now or
hereafter existing at law or in equity. No delay or omission to
exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In
order to entitle the Issuer or the Bondholder, as appropriate, to
exercise any remedy reserved to it in this Article X, it shall
not be necessary to give any notice, other than such notice as
may be herein expressly required in this Lease Agreement.
Section 10.4 Agreement to Pay Attorneys' Fees and
Expenses. In the event the Company should default under any of
the provisions of this Lease Agreement and the Issuer should
employ attorneys or incur other expenses for the collection of
amounts payable hereunder or the enforcement of performance or
observance of any obligations or agreements on the part of the
Company herein contained, the Company shall, on demand therefor,
pay to the Issuer the reasonable fees of such attorneys and such
other expenses so incurred.
Section 10.5 No Additional Waiver Implied by one
Waiver. In the event any agreement contained herein should be
breached by any party and thereafter waived by any other party,
such waiver shall be limited to the particular breach so waived
and shall not be deemed to waive any other breach hereunder.
-38-
<PAGE> 43
ARTICLE XI
EARLY TERMINATION OF LEASE AGREEMENT;
OPTION IN FAVOR OF COMPANY
Section 11.1A Voluntary Termination of Lease Agreement.
The Company shall have the option to terminate this Lease
Agreement at any time that the Bond is subject to prepayment in
whole under the Bond Purchase Agreement and upon filing with the
Issuer and the Bondholder a certificate signed by an Authorized
Representative of the Company stating the Company's intention to
do so pursuant to this Section and the date upon which such
payment shall be made (which date shall not be less than 20 nor
more than 90 days from the date such certificate is filed) and
upon compliance with the requirements set forth in Section 11.2A
hereof.
Section 11.1B Mandatory Termination of Lease Agreement.
In the event that an Event of Default has occurred hereunder, the
Issuer may terminate the Lease Agreement and the Facility shall
be conveyed to the Company pursuant to Section 11.3 hereof.
Section 11.2A Conditions to Voluntary Termination of
Lease Agreement. In the event the Company exercises its option
to terminate this Lease Agreement in accordance with the
provisions of Section 11.1A hereof, the Company shall make the
following payments, as applicable:
(a) To the Bondholder for the account of the Issuer:
an amount certified by the Bondholder which, when added to the
total amount on deposit with the Bondholder for the account of
the Issuer and the Company and available for such purpose, will
be sufficient to pay the principal of, premium, if any, interest
and any other sums on the Bond.
(b) To the Issuer: an amount certified by the Issuer
sufficient to pay all unpaid fees and expenses of the Issuer
incurred under the Bond Documents.
(c) To the appropriate Person: an amount sufficient to
pay all other fees, expenses or charges, if any, due and payable
or to become due and payable under the Bond Documents.
Section 11.2B Conditions to Mandatory Termination of
Lease Agreement. In the event that the Issuer terminates the
Lease Agreement in accordance with the provisions of Section
11.1B, the Company shall make a payment to the Issuer of an
amount certified as of the termination date by the Issuer
sufficient to pay all unpaid fees and expenses of the Issuer
incurred under the Bond Documents to the date of termination. if
the Bonds remain outstanding subsequent to any such termination,
notwithstanding the termination of the Lease Agreement, the
Company agrees that it shall be contractually obligated to pay to
the Issuer, within ten (10) days of the receipt of demand
therefor, any reasonable expenses incurred by the Issuer incurred
-39-
<PAGE> 44
in connection with the carrying out of the Issuer's duties and
obligations (it being expressly understood that any such expenses
shall not include any amounts due pursuant to the terms and
conditions of the Bonds) under the Issuer Documents subsequent to
said termination date. In the event that the Company should fail
to make any required payment under this Section and the Issuer
employs attorneys or incurs expenses for the collection of
amounts payable hereunder, the Company shall, in addition, on
demand pay to the Issuer the reasonable fees of such attorneys
and such other reasonable and customary expenses so incurred.
This Section shall survive the termination of the Lease Agreement
and the Company (including each general partner thereof) shall be
fully liable for any and all payments which may become due
hereunder.
Section 11.3 Obligation to Purchase Facility. Upon
termination or expiration of the Lease Term, in accordance with
Sections 5.2 or 11.1A or 11.1B hereof, the Issuer will sell and
the Company or its designee shall purchase the Facility from the
Issuer for the purchase price of One Dollar ($1.00) plus all
unpaid payments in lieu of taxes pursuant to the PILOT Agreement
through the date upon which this Lease Agreement terminates or
expires. The Company shall purchase the Facility by giving
written notice to the Issuer and to the Bondholder (which may be
contained in the certificate referred to in Section 11.1A hereof)
(i) declaring the Company's election to purchase and (ii) fixing
the date of closing such purchase, which shall be the date on
which this Lease Agreement is to be terminated.
Section 11.4 Conveyance on Purchase. At the closing of
any purchase of the Facility pursuant to Section 11.3 hereof, the
Issuer shall, upon receipt of the purchase price of One Dollar
($1.00), deliver and request the Bondholder to deliver to the
Company all necessary documents (i) to convey to the Company
title to the Property being purchased, as such Property exists,
subject only to the following: (A) any Liens to which title to
such Property was subject when conveyed to the Issuer, (B) any
Liens created at the request of the Company, to the creation of
which the Company consented or in the creation of which the
Company acquiesced, (C) any Permitted Encumbrances and (D) any
Liens resulting from the failure of the Company to perform or
observe any of the agreements on its part contained in this Lease
Agreement or arising out of an Event of Default hereunder, (ii)
to release and convey to the Company all of the Issuer's rights
and interest in and to any rights of action or any Net Proceeds
of insurance or Condemnation awards with respect to the Facility
(but not including any Unassigned Rights).
(b) At the closing of any purchase of the Facility
pursuant to Sections 11.1B and 11.3 hereof, the Issuer shall
deliver to the Company all necessary documents (and the Company
shall accept the same, and in the event that the Company refuses
to accept the same, the recording of a quitclaim deed subject to
all then existing Liens (including all Permitted Encumbrances) in
the Suffolk County Clerk's Office conveying title from the Issuer
to the Company shall be deemed delivery of title to the Company
-40-
<PAGE> 45
and the Company hereby expressly waives any and all objections
which it may have, now or in the future, to such procedure) (i)
to convey title to Facility as it then exists, (ii) terminating
the Lease Agreement, and (iii) releasing all of the Issuer's
rights or interest in and to any Net Proceeds of insurance or
Condemnation awards with respect to the Facility (but not
including any Unassigned Rights). In the event that the Company
fails to make the payment to Issuer described in Section
11.2(A)(b) hereof, the Company shall remain fully and personally
liable to the Issuer therefore.
(c) Notwithstanding the conveyance of the Facility by
the Issuer to the Company, the Company shall remain fully and
personally liable to the Issuer with respect to any indemnities
of the Company in favor of the Issuer contained herein.
Section 11.5 Amounts Remaining on Deposit with the
Bondholder upon Payment of Bond. After payment in full of the
principal of, premium, if any, and interest on the Bond and the
payment of all fees, charges, expenses and other amounts required
to be paid under the Bond Documents, all amounts on deposit with
the Bondholder for the account of the Issuer and the Company
under the Bond Documents (except for amounts attributable to
Unassigned Rights) shall belong to and be paid to the Company by
the Bondholder as an overpayment of rent, and neither the
Bondholder nor the Owners of the Bond shall have any rights
hereunder, except those that shall have theretofore vested.
-41-
<PAGE> 46
ARTICLE XII
MISCELLANEOUS
Section 12.1 Notices. All notices, certificates and
other communications hereunder shall be in writing and shall be
either delivered personally or sent by certified mail, postage
prepaid, return receipt requested, or sent by overnight courier
service addressed as follows or to such other address as any
party may specify in writing to the other:
To the Issuer:
Suffolk County Industrial Development Agency
220 Rabro Drive
P.O. Box 610
Hauppauge, New York 11788-0099
Attention: Administrative Director
To the Company:
OLS Holdings, Inc.
175 Broad Hollow Road
Melville, New York 11747
Attention: General Counsel
A duplicate copy of each notice, certificate and other
written communication given hereunder by either the Issuer or the
Company to the other shall also be given to the Bondholder and a
duplicate copy of each notice, certificate and any other written
communication given hereunder by either the Bondholder or the
Issuer to the other shall also be given to the Company at the
addresses herein set forth or provided for. Such notice shall be
deemed to have been given upon receipt or upon refusal of the
party being notified to accept delivery of such notice.
Section 12.2 Binding Effect. This Lease Agreement
shall inure to the benefit of and shall be binding upon the
parties and their respective successors and assigns.
Section 12.3 Severability. In the event any
provision of this Lease Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other
provision hereof.
Section 12.4 Amendments, Changes and Modifications.
This Lease Agreement may not be amended, changed, modified,
altered or terminated except in a writing executed by the parties
hereto and without the concurring written consent of the
Bondholder.
-42-
<PAGE> 47
Section 12.5 Execution of Counterparts. This Lease
Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one
and the same instrument. Only possession of the counterpart
marked "Secured Party's Original" shall be effective to perfect
the rights of any holder of the Lease as counterparts shall be
marked "Duplicate" and no security interest therein can be
created except by possession of the "Secured Party's Original"
counterpart.
Section 12.6 Applicable Law. This Lease Agreement
shall be governed exclusively by the applicable laws of the State
without regard or reference to its conflict of laws principles.
Section 12.7 List of Additional Equipment; Further
Assurances.
(a) Upon the Completion Date with respect to the
Facility and the installation of all of the Equipment therein,
the Company shall prepare and deliver to the Issuer and the
Bondholder a schedule listing all of the Equipment not previously
described in this Lease Agreement. If requested by the Issuer or
the Bondholder, the Company shall thereafter furnish to the
Issuer and the Bondholder, within sixty (60) days after the end
of each calendar year, a schedule listing all of the Equipment
not theretofore previously described herein or in the aforesaid
schedule.
(b) The Issuer and the Company shall execute and
deliver all instruments and shall furnish all information
necessary or appropriate to perfect or protect any security
interest created or contemplated by this Lease Agreement and Bond
Purchase Agreement.
Section 12.8 Survival of Obligations. This Lease
Agreement shall survive the purchase and sale of the Bond and the
performance of the obligations of the Company to make payments
required by Section 5.3 and all indemnities shall survive the
foregoing and any termination or expiration of this Lease
Agreement and the payment of the Bond.
Section 12.9 Table of Contents and Section Headings not
Controlling. The Table of Contents and the headings of the
several Sections in this Lease Agreement have been prepared for
convenience of reference only and shall not control or affect the
meaning of or be taken as an interpretation of any provision of
this Lease Agreement.
-43-
<PAGE> 48
IN WITNESS WHEREOF, the Issuer and the Company have
caused this Lease Agreement to be executed in their respective
names by their duly authorized officers, all as of April 1, 1995.
SUFFOLK COUNTY INDUSTRIAL
DEVELOPMENT AGENCY
By
---------------------------------
Bruce E. Ferguson
Its Administrative Director
OLS HOLDINGS, INC.
By
---------------------------------
Gerald J. Kapalko
Its Executive Vice President
-44-
<PAGE> 49
IN WITNESS WHEREOF, the Issuer and the Company have
caused this Lease Agreement to be executed in their respective
names by their duly authorized officers, all as of April 1, 1995.
SUFFOLK COUNTY INDUSTRIAL
DEVELOPMENT AGENCY
By
---------------------------------
Bruce E. Ferguson
Its Administrative Director
OLS HOLDINGS, INC.
By
---------------------------------
Laurin L. Laderoute, Jr.
Its Vice President
-45-
<PAGE> 50
STATE OF NEW YORK)
SS.:
COUNTY OF SUFFOLK)
On this 12 day of April, 1995, before me personally
came Bruce E. Ferguson, to me known, who, being by me duly sworn,
did depose and say that he resides in Jamesport, New York; that
he is the Administrative Director of the SUFFOLK COUNTY
INDUSTRIAL DEVELOPMENT AGENCY, the public benefit corporation of
the State of New York described in and which executed the within
Lease Agreement; and that he signed his name thereto by order of
the members of said public benefit corporation.
ANTHONY J. CATAPANO
NOTARY PUBLIC, State of New York
No. 4853562
Qualified In Suffolk County
Commission Expires Feb. 17, 199 C
-46-
<PAGE> 51
STATE OF NEW YORK)
SS. :
COUNTY OF NASSAU )
On this 13th day of April, 1995, before me personally
came Laurin L. Laderoute, Jr., to me known, who, being by me duly
sworn, did depose and say that he resides at Garden City, New
York; that he is the Vice President of OLS HOLDINGS, INC., the
business corporation described in and which executed the within
Lease Agreement; and that he signed his name thereto by order of
the Board of Directors of said corporation.
------------------------------
Notary Public
-47-
<PAGE> 52
EXHIBIT A
---------
LEGAL DESCRIPTION OF REAL PROPERTY
All that certain plot, piece or parcel of land, with the
buildings and improvements thereon erected, situate, lying and
being in Melville, in the Town of Huntington, County of Suffolk
and State of New York, being more particularly bounded and
described as follows:
BEGINNING on the new southwesterly side of Pinelawn Road
(Wellwood Ave.) (Co. Rd. No. 3) where same is intersected by the
southeasterly end of a straight line which connects the
southeasterly side of Broadhollow Road (New York State Highway
Route 110, Huntington-Amityville Road, State Highway 794) Said
line bearing South 85 degrees 27 minutes 35 seconds West a
distance of 25.52 feet;
RUNNING THENCE easterly along the Southwesterly side of Pinelawn
Road the following 5 courses and distances:
1) South 28 degrees 42 minutes 35 seconds East 374.84 feet;
2) Along an arc of a curve bearing to the right having a radius
of 31,068.20 feet a distance of 237.96 feet;
3) North 61 degrees 56 minutes 05 seconds East 12.00 feet;
4) Along an arc of a curve having a radius of 31,080.20 feet a
distance of 111.49 feet;
5) South 28 degrees 03 minutes 55 seconds East 220.87 feet;
THENCE South 61 degrees 56 minutes 05 seconds West 391.15 feet;
THENCE North 28 degrees 46 minutes 00 seconds West 205.20 feet;
THENCE North 29 degrees 02 minutes 00 seconds West 486.47 feet to
the Southeasterly side of Broadhollow Road;
THENCE Northerly along the Southeasterly side of Broadhollow Road
the following 2 courses and distances:
1) North 26 degrees 42 minutes 47 seconds East 256.82 feet;
2) Along an arc of a curve having a radius of 2,356.83 feet a
distance of 189.82 feet to the extreme Southwesterly end of
the first above mentioned line which connects the
Southeasterly side of Broadhollow Road with the
Southwesterly side of Pinelawn Road;
THENCE North 85 degrees 27 minutes 35 seconds East 25.52 feet to
the Southwesterly side of Pinelawn Road to the point or place of
BEGINNING.
<PAGE> 53
EXHIBIT B
---------
EQUIPMENT
All equipment, fixtures, machinery, building materials and
items of personal property acquired, constructed and installed
and/or to be acquired, constructed and installed in connection
with the completion of OLS Holdings, Inc./The Olsten Corporation
Facility located in Suffolk County, New York, excluding therefrom
certain equipment, fixtures, machinery and personal property
currently the subject of financing statements as follows:
1. Secured Party - Vicom Computer Services, Inc., 585 Stewart
Avenue, Garden City, NY 11530;
Debtor - The Olsten Corporation 175 Broad Hollow Road,
Melville, NY 11747;
Secured Equipment - (1) 3422-A01 Tape Drive; (1) 3840-A22
Tape Drive W/F1511, 1512, 1513; (4) 3480-B22 Tape Drive
W/F2511;
Date/Filing - September 22, 1994 in the Suffolk County
Clerk's Office;
2. Secured Party - American Classic Spec Corp., 1565D Fifth
Industrial Court, Bayshore, NY 11706;
Debtor - Olsten Corp., 175 Broad Hollow Road, Melville, NY
11747; and Lackman Foods, 303 Crossway Park Dr., Woodbury,
NY 11797;
Secured Equipment - Freezer on loan as per agreement on
contract on file with secured party; 1 CAR Table Top SER#
8313166;
Date/Filing - November 1, 1994 in the Suffolk County Clerk's
Office;
3. Secured Party - Vicom Computer Services, Inc., 585 Stewart
Avenue, Garden City, NY 11530;
Debtor - The Olsten Corporation 175 Broad Hollow Road,
Melville, NY 11747;
Secured Equipment - (1) 'LIC' SYS UNIT; (1) DATA LOSS
PROTECTION; (1) 12.0 RPR PROCESSOR 64 MB; (2) EIA 232/V.24
TWO-LINE ADPT; (1) 16/4 MBPS TOKEN-RING/HP; (1) SIX LINE
COMM CONTROLLER; (1) 32MB MAIN STORAGE; (17) ADDTL DISK UNIT
(1.96GB); (1) 16 DISK UNIT STORAGE EXPANSION; (1) SYSTEM
UNIT EXPTWR (OPTICAL); (1) BULK 400W POWER SUPPLY; (1)
TWINAX WKST CTRL - ENHANCED; (1) 2.5GB 1/4-INCH CART TAPE;
(1) DSK UNIT CNTRLRFOR RAID; (1) OPT DISK UNIT (1.96GB); (1)
MODEM; (1) TAPE ATTACHMENT; (1) OPERATING SYSTEM/400 V3; (1)
CLNT ACC/400 FAMILY V3; (1) APP DEV TOOLSET/400 V3; (1) ILE
RPG/400 V3; and (1) SQL;
Date Filing - February 10, 1995 in the Suffolk County
Clerk's Office; February 13, 1995 in New York State.
<PAGE> 1
EXHIBIT 21
<TABLE>
SUBSIDIARIES OF OLSTEN CORPORATE
--------------------------------
<CAPTION>
JURISDICTION
OF
SUBSIDIARY INCORPORATION BUSINESS NAME
<S> <C> <C>
Allegro Vikar Service APS Denmark
The Accounts Team Limited England/Wales The Accountants Team
Archangel Executive Appointments Limited England/Wales
Broad Pines Development Corp. Delaware
Dirka Co. Delaware
GMS, Inc. Ohio
Health Care Services Olsten Limited Delaware
IMI Systems Inc. New York
Integrated Computer Technology Ltd. England/Wales
Kimberly Home Health Care, Inc. Missouri Olsten Kimberly QualityCare
Lifetime Corporation (UK) Limited England/Wales
New York HealthCare Services, Inc. New York Olsten Kimberly QualityCare
Norsk Personal AS Norway
Norsk Personal Benanning AS Norway
Norsk Prosjekt Konsult AS Norway
Norsk Verdiskring AS Norway
Office Angels Limited England/Wales
Office Angels (Properties) Limited England/Wales
Office Angels (Recruitment) Limited England/Wales
Office Angels (U.K.) Limited England/Wales
Office Legals Limited England/Wales
OFFiS Unternehemen fur Zeitarbeit GmbH & Co. KG Germany
OLS Holdings, Inc. New York
Olsten Certified HealthCare Corp. Delaware Olsten Kimberly QualityCare
Olsten de Argentina S.A. Argentina
Olsten de Mexico, S.A. de C.V. Mexico
Olsten de Puerto Rico, Inc. Puerto Rico
Olsten Flying Nurses Corp. Delaware
Olsten Home HealthCare, Inc. Delaware Olsten Kimberly QualityCare
and Olsten Staffing Services
Olsten International B.V. Netherlands
Olsten Integrated Management Services, Inc. Delaware
Olsten Kimberly QualityCare Foundation, Inc. Florida
Olsten Kimberly QualityCare, Inc. Delaware Olsten Kimberly QualityCare
Olsten Melville Corp. Delaware
Olsten Norway AS Norway
Olsten of Westchester, Inc. New York Covertemp
Olsten Ready Office S.A. Argentina
Olsten Service Corp. Delaware
Olsten Services S.A. Argentina
Olsten Services Limited Ontario
Olsten Services of New York, Inc. New York Olsten Kimberly QualityCare
Olsten Staffing Corporation Delaware
Olsten Staff, S.A. de C.V. Mexico
Olsten UK Limited England/Wales
Partnersfirst Management, Inc. Florida
Personal Eventual de Occidente, S.A. de C.V. Mexico
Projobs, S.A. de C.V. Mexico
P.J. Ward Associates Ltd. Ontario
P.J. Ward Holdings Inc. Ontario
<PAGE> 2
QC Medi - New York, Inc. New York Olsten Kimberly QualityCare
Quality Care - USA., Inc. New York Olsten Kimberly QualityCare
Quality Managed Care, Inc. Delaware Olsten Kimberly QualityCare
RSF Holdings, Inc. England/Wales
Skandinavisk Personaluthyrning AB Sweden Kontorsjouren
Top Level, S.A. de C.V. Mexico
271933 Alberta Ltd. Alberta Olsten Kimberly QualityCare
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Olsten
Corporation and Subsidiaries Consolidated Balance Sheets at December 31, 1995
(unaudited) and Olsten Corporation and Subsidiaries Consolidated Statements
of Income for the nine months ended December 31, 1995 (unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 40,049
<SECURITIES> 0
<RECEIVABLES> 455,540
<ALLOWANCES> 24,621
<INVENTORY> 0
<CURRENT-ASSETS> 508,903
<PP&E> 157,558
<DEPRECIATION> 64,679
<TOTAL-ASSETS> 891,918
<CURRENT-LIABILITIES> 180,975
<BONDS> 0
<COMMON> 6,434
0
0
<OTHER-SE> 465,611
<TOTAL-LIABILITY-AND-EQUITY> 891,918
<SALES> 2,518,875
<TOTAL-REVENUES> 2,518,875
<CGS> 1,757,319
<TOTAL-COSTS> 1,757,319
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,315
<INTEREST-EXPENSE> 8,564
<INCOME-PRETAX> 156,188
<INCOME-TAX> 64,568
<INCOME-CONTINUING> 90,469
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 90,469
<EPS-PRIMARY> 1.39
<EPS-DILUTED> 1.33
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Olsten
Corporation and Subsidiaries Consolidated Balance Sheets at October 1, 1995
(unaudited) and Olsten Corporation and Subsidiaries Consolidated Statements
of Income for the nine months ended October 1, 1995 (unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> OCT-01-1995
<CASH> 19,480
<SECURITIES> 0
<RECEIVABLES> 446,417
<ALLOWANCES> 13,758
<INVENTORY> 0
<CURRENT-ASSETS> 490,703
<PP&E> 153,009
<DEPRECIATION> 63,495
<TOTAL-ASSETS> 841,730
<CURRENT-LIABILITIES> 198,783
<BONDS> 0
<COMMON> 4,281
0
0
<OTHER-SE> 445,955
<TOTAL-LIABILITY-AND-EQUITY> 841,730
<SALES> 1,855,466
<TOTAL-REVENUES> 1,855,466
<CGS> 1,294,420
<TOTAL-COSTS> 1,294,420
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,932
<INTEREST-EXPENSE> 6,115
<INCOME-PRETAX> 111,174
<INCOME-TAX> 46,161
<INCOME-CONTINUING> 65,013
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,268
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 1.42
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Olsten
Corporation and Subsidiaries Consolidated Balance Sheets at July 2, 1995
(unaudited) and Olsten Corporation and Subsidiaries Consolidated Statements
of Income for the six months ended July 2, 1995 (unaudited) and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUL-02-1995
<CASH> 60,608
<SECURITIES> 0
<RECEIVABLES> 364,470
<ALLOWANCES> 12,346
<INVENTORY> 0
<CURRENT-ASSETS> 447,288
<PP&E> 153,345
<DEPRECIATION> 63,136
<TOTAL-ASSETS> 769,064
<CURRENT-LIABILITIES> 163,165
<BONDS> 0
<COMMON> 4,177
0
0
<OTHER-SE> 418,115
<TOTAL-LIABILITY-AND-EQUITY> 769,064
<SALES> 1,177,196
<TOTAL-REVENUES> 1,177,196
<CGS> 822,064
<TOTAL-COSTS> 822,064
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,423
<INTEREST-EXPENSE> 3,549
<INCOME-PRETAX> 68,548
<INCOME-TAX> 28,516
<INCOME-CONTINUING> 39,657
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,657
<EPS-PRIMARY> .94
<EPS-DILUTED> .90
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Olsten
Corporation and Subsidiaries Consolidated Balance Sheets at April 2, 1995
(unaudited) and Olsten Corporation and Subsidiaries Consolidated Statements
of Income for the three months ended April 2, 1995 (unaudited) and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> APR-02-1995
<CASH> 89,131
<SECURITIES> 0
<RECEIVABLES> 336,197
<ALLOWANCES> 12,959
<INVENTORY> 0
<CURRENT-ASSETS> 453,114
<PP&E> 136,953
<DEPRECIATION> 55,397
<TOTAL-ASSETS> 737,887
<CURRENT-LIABILITIES> 155,812
<BONDS> 0
<COMMON> 4,170
0
0
<OTHER-SE> 399,527
<TOTAL-LIABILITY-AND-EQUITY> 737,887
<SALES> 575,503
<TOTAL-REVENUES> 575,503
<CGS> 402,602
<TOTAL-COSTS> 402,602
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 735
<INTEREST-EXPENSE> 1,405
<INCOME-PRETAX> 32,098
<INCOME-TAX> 13,385
<INCOME-CONTINUING> 18,702
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,702
<EPS-PRIMARY> .44
<EPS-DILUTED> .43
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Olsten
Corporation and Subsidiaries Consolidated Balance Sheets at January 1, 1995
(unaudited) and Olsten Corporation and Subsidiaries Consolidated Statements
of Income for the year ended January 1, 1995 (unaudited) and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-01-1995
<PERIOD-END> JAN-01-1995
<CASH> 68,338
<SECURITIES> 0
<RECEIVABLES> 333,295
<ALLOWANCES> 13,682
<INVENTORY> 0
<CURRENT-ASSETS> 439,526
<PP&E> 124,600
<DEPRECIATION> 52,057
<TOTAL-ASSETS> 725,958
<CURRENT-LIABILITIES> 165,056
<BONDS> 0
<COMMON> 4,153
0
0
<OTHER-SE> 381,850
<TOTAL-LIABILITY-AND-EQUITY> 725,958
<SALES> 2,260,331
<TOTAL-REVENUES> 2,260,331
<CGS> 1,588,148
<TOTAL-COSTS> 1,588,148
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 414
<INTEREST-EXPENSE> 5,106
<INCOME-PRETAX> 120,899
<INCOME-TAX> 50,778
<INCOME-CONTINUING> 70,121
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70,121
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.61
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Olsten
Corporation and Subsidiaries Consolidated Balance Sheets at October 2, 1994
(unaudited) and Olsten Corporation and Subsidiaries Consolidated Statements
of Income for the nine months ended October 2, 1994 (unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-01-1995
<PERIOD-END> OCT-02-1994
<CASH> 66,847
<SECURITIES> 0
<RECEIVABLES> 346,015
<ALLOWANCES> 13,253
<INVENTORY> 0
<CURRENT-ASSETS> 439,034
<PP&E> 130,584
<DEPRECIATION> 60,293
<TOTAL-ASSETS> 721,650
<CURRENT-LIABILITIES> 175,564
<BONDS> 0
<COMMON> 4,149
0
0
<OTHER-SE> 362,546
<TOTAL-LIABILITY-AND-EQUITY> 721,650
<SALES> 1,678,704
<TOTAL-REVENUES> 1,678,704
<CGS> 1,182,608
<TOTAL-COSTS> 1,182,608
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 519
<INTEREST-EXPENSE> 5,288
<INCOME-PRETAX> 84,576
<INCOME-TAX> 35,641
<INCOME-CONTINUING> 48,935
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,935
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 0
</TABLE>
